Document:

Exhibit 10.6

    
      

      

    

    

      SECURED
        PROMISSORY NOTE

      

      

      
        	 	
                Sacramento,
                  California

              
	
                $__________

              	
                September
                  ___2006

              

      

      

      This
        Secured Promissory Note (this "Note") is made and delivered pursuant to that
        certain Credit Facility Agreement dated as of September __, 2006 between
        Solar
        Power, Inc., a California corporation (“Borrower”) and Welund Fund, Inc., a
        Nevada corporation (“Lender” or “Holder”), as such may be amended from time to
        time (the "Credit Agreement"). Unless otherwise defined herein, all capitalized
        terms used in this Note shall have the same meanings that are given to such
        terms in the Credit Agreement, the terms of which are incorporated into this
        Note by reference.

       

       

      1.    Obligation.
        The
        Borrower hereby promises to pay to the order of Lender or Holder on or before
        the Maturity Date, at Lender's principal place of business, or at such other
        place as Holder may direct, the principal sum of TWO MILLION Dollars
        ($2,000,000.00) or so much thereof as may be advanced and outstanding, together
        with all interest accrued on unpaid principal, to be computed on each Advance
        from the date of its disbursement to Borrower, at a rate equal to eight percent
        (8%) simple interest per annum, as provided in the Credit Agreement. The
        outstanding principal amount of this Note, together with accrued interest
        thereon, shall be due and payable in full on the Maturity Date. The outstanding
        unpaid principal balance of this Note at any time shall be the total principal
        amounts advanced hereunder by Holder less the amounts of payments of principal
        made hereon by Borrower, which balance may be endorsed hereon from time to
        time
        by Holder in accordance with Section 2.

      

      2.    Recording
        Advances and Payments.
        Holder
        is authorized to record on Schedule A hereto, and on any continuation(s)
        of such
        Schedule that may be attached to this Note: (a) the date and principal amount
        of
        each Advance by Lender under the Credit Agreement; and (b) the date and amount
        of each payment or prepayment of principal and/or accrued interest of any
        Advance; which recordation will constitute prima facie evidence of the accuracy
        of the information so endorsed on Schedule A; provided however, that any
        failure
        to record such information on such Schedule or continuation thereof will
        not in
        any manner affect the obligations of Borrower to make payments of principal
        and
        interest in accordance with the terms of this Note. Holder will promptly
        provide
        Borrower with a copy of each recordation made by Holder on Schedule A attached
        hereto.

      

      3.    Prepayment.
        Prepayment of unpaid principal and/or interest due under this Note may be
        made
        at any time without penalty as specified in the Credit Agreement. Unless
        otherwise agreed in writing by Holder, all payments will be made in lawful
        tender of the United States and will be applied (a) first, to the payment
        of
        accrued interest, and (b) second, (to the extent that the amount of such
        prepayment exceeds the amount of all such accrued interest), to the payment
        of
        principal.

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      4.    Default,
        Acceleration of Obligation.
        Borrower will be deemed to be in default under this Note and the outstanding
        unpaid principal balance of this Note, together with all interest accrued
        thereon, will immediately become due and payable in full, without the need
        for
        any further action on the part of Holder, upon the occurrence of any Event
        of
        Default (as defined in the Credit Agreement) not otherwise remedied pursuant
        to
        the terms of the Credit Agreement.

      

      5.    Remedies
        on Default; Acceleration.
        Upon
        any Event of Default, Holder will have, in addition to its rights and remedies
        under this Note and the Credit Agreement, full recourse against any real,
        personal, tangible or intangible assets of Borrower, and may pursue any legal
        or
        equitable remedies that are available to Holder, and may declare the entire
        unpaid principal amount of this Note and all unpaid accrued interest under
        this
        Note to be immediately due and payable in full.

      

      6.    Waiver
        and Amendment.
        Any
        provision of this Note may be amended or modified only by a writing signed
        by
        both Borrower and Holder. Except as provided below with respect to waivers
        by
        Borrower, no waiver or consent with respect to this Note will be binding
        or
        effective unless it is set forth in writing and signed by the party against
        whom
        such waiver is asserted. No course of dealing between Borrower and Holder
        will
        operate as a waiver or modification of any party's rights or obligations
        under
        this Note. No delay or failure on the part of either party in exercising
        any
        right or remedy under this Note will operate as a waiver of such right or
        any
        other right. A waiver given on one occasion will not be construed as a bar
        to,
        or as a waiver of, any right or remedy on any future occasion.

      

      7.    Waiver
        of Borrower.
        Borrower
        hereby waives presentment, notice of non-payment, notice of dishonor, protest,
        demand and diligence. This Note may be amended only by a writing executed
        by
        Borrower and Holder.

      

      8.    Governing
        Law.
        This
        Note will be governed by and construed in accordance with the internal laws
        of
        the State of California as applied to agreements between residents thereof
        to be
        performed entirely within such State, without reference to that body of law
        relating to conflict of laws or choice of law.

      

      9.    Severability;
        Headings.
        The
        invalidity or unenforceability of any term or provision of this Note will
        not
        affect the validity or enforceability of any other term or provision hereof.
        The
        headings in this Note are for convenience of reference only and will not
        alter
        or otherwise affect the meaning of this Note.

      

      10.  
          Jurisdiction;
        Venue.
        Borrower, by its execution of this Note, hereby irrevocably submits to the
        in
        personal jurisdiction of the state courts of the State of California and
        of the
        United States District Court for the Northern District of California that
        are
        located in Sacramento, California, for the purpose of any suit, action or
        other
        proceeding arising out of or based upon this Note.

      

      11.      
         Assignment.
        This
        Note is not assignable by Holder without the written consent of Borrower.
        This
        Note may not be assigned or delegated by Borrower, whether by voluntary
        assignment or transfer, operation of law, merger or otherwise.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      12.      
         Credit
        Agreement.
        This
        Note incorporates by reference all the provisions of the Credit Agreement,
        including but not limited to all provisions contained therein with respect
        to
        Events of Default, waivers, remedies and covenants, and the description of
        the
        benefits, rights and obligations of each of Borrower and Holder under the
        Credit
        Agreement.

      

      IN
        WITNESS WHEREOF, the Borrower has executed and delivered this Note effective
        as
        of the date first above written.

      

      

      
        	 	
                SOLAR
                  POWER, INC.

              
	 	 
	 	
                /s/
                  Glenn
                  Carnahan                                             
                  

              
	 	
                Glenn
                  Carnahan, Chief Financial Officer

              

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      

      SCHEDULE
        A

      

      LOANS
        AND
        PAYMENTS OF PRINCIPAL

       

      
        

      

      
        	
                Date

              	
                Amount
                  of Loan

              	
                Amount
                  of Principal Repaid

              	
                Notation
                  Made By

              

      

      
        

      

       

      
        

      

       

      
      

      
        

      

       

      
        

      

       

      
        

      

        

      
      

      
        
  

      
        
 

      
        
 

        
 

        

      

    

     

    
      
 

    
      
 

    
      
 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    4Exhibit 10.79

 

 

 

CREDIT
AGREEMENT

Dated as of
September 19, 2006

among

GUESS ?, INC.,

as the Domestic
Borrower,

GUESS? CANADA CORPORATION,

as the Canadian
Borrower,

BANK OF AMERICA, N.A.,

as Domestic
Administrative Agent and Domestic L/C Issuer,

BANK OF AMERICA, N.A.,

acting through its Canada
Branch,

as Canadian
Administrative Agent and Canadian L/C Issuer,

and

The Other Lenders
Party Hereto

 

 

 

TABLE OF CONTENTS

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
  1.01

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
   

  	
  Other
  Interpretive Provisions

  	
   

  	
  27

  
	
  1.03

  	
   

  	
  Accounting
  Terms

  	
   

  	
  28

  
	
  1.04

  	
   

  	
  Rounding

  	
   

  	
  28

  
	
  1.05

  	
   

  	
  Times
  of Day

  	
   

  	
  28

  
	
  1.06

  	
   

  	
  Letter of Credit
  Amounts

  	
   

  	
  29

  
	
  1.07

  	
   

  	
  Currency Equivalents
  Generally

  	
   

  	
  29

  
	
  ARTICLE
  II

  	
  THE COMMITMENTS AND CREDIT EXTENSIONS

  	
   

  	
  29

  
	
  2.01

  	
   

  	
  Committed
  Loans

  	
   

  	
  29

  
	
  2.02

  	
   

  	
  Committed
  Borrowings, Conversions and Continuations of Committed Loans

  	
   

  	
  30

  
	
  2.03

  	
   

  	
  Letters
  of Credit

  	
   

  	
  32

  
	
  2.04

  	
   

  	
  Prepayments

  	
   

  	
  41

  
	
  2.05

  	
   

  	
  Reduction
  or Termination of Commitments

  	
   

  	
  42

  
	
  2.06

  	
   

  	
  Repayment
  of Loans

  	
   

  	
  42

  
	
  2.07

  	
   

  	
  Interest

  	
   

  	
  42

  
	
  2.08

  	
   

  	
  Fees

  	
   

  	
  43

  
	
  2.09

  	
   

  	
  Computation of
  Interest and Fees

  	
   

  	
  43

  
	
  2.10

  	
   

  	
  Evidence
  of Debt

  	
   

  	
  44

  
	
  2.11

  	
   

  	
  Payments
  Generally; Administrative Agent’s Clawback

  	
   

  	
  44

  
	
  2.12

  	
   

  	
  Sharing of
  Payments by Lenders

  	
   

  	
  46

  
	
  2.13

  	
   

  	
  Reallocation
  of Aggregate Commitments

  	
   

  	
  49

  
	
  2.14

  	
   

  	
  Suballocation
  of Letter of Credit Sublimits

  	
   

  	
  50

  
	
  ARTICLE
  III

  	
  TAXES, YIELD PROTECTION AND
  ILLEGALITY

  	
   

  	
  50

  
	
  3.01

  	
   

  	
  Taxes

  	
   

  	
  50

  
	
  3.02

  	
   

  	
  Illegality

  	
   

  	
  52

  
	
  3.03

  	
   

  	
  Inability to
  Determine Rates

  	
   

  	
  53

  
	
  3.04

  	
   

  	
  Increased
  Costs; Reserves on Eurodollar Rate Loans

  	
   

  	
  53

  
	
  3.05

  	
   

  	
  Compensation for Losses

  	
   

  	
  55

  
	
  3.06

  	
   

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
   

  	
  55

  

 

 i
 

 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.07

  	
   

  	
  Survival

  	
   

  	
  56

  
	
  ARTICLE
  IV

  	
  CONDITIONS PRECEDENT TO CREDIT
  EXTENSIONS

  	
   

  	
  56

  
	
  4.01

  	
   

  	
  Conditions
  of Initial Credit Extension

  	
   

  	
  56

  
	
  4.02

  	
   

  	
  Conditions to
  all Credit Extensions

  	
   

  	
  58

  
	
  ARTICLE
  V

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  59

  
	
  5.01

  	
   

  	
  Existence,
  Qualification and Power

  	
   

  	
  59

  
	
  5.02

  	
   

  	
  Authorization;
  No Contravention

  	
   

  	
  59

  
	
  5.03

  	
   

  	
  Governmental
  Authorization; Other Consents

  	
   

  	
  59

  
	
  5.04

  	
   

  	
  Binding
  Effect

  	
   

  	
  60

  
	
  5.05

  	
   

  	
  Financial
  Statements; No Material Adverse Effect; No Internal Control Event

  	
   

  	
  60

  
	
  5.06

  	
   

  	
  Litigation

  	
   

  	
  61

  
	
  5.07

  	
   

  	
  No
  Default

  	
   

  	
  61

  
	
  5.08

  	
   

  	
  Ownership of
  Real Property; Liens

  	
   

  	
  61

  
	
  5.09

  	
   

  	
  Environmental
  Compliance

  	
   

  	
  61

  
	
  5.10

  	
   

  	
  Insurance

  	
   

  	
  61

  
	
  5.11

  	
   

  	
  Taxes

  	
   

  	
  62

  
	
  5.12

  	
   

  	
  ERISA
  Compliance

  	
   

  	
  62

  
	
  5.13

  	
   

  	
  Subsidiaries;
  Equity Interests; Loan Parties

  	
   

  	
  62

  
	
  5.14

  	
   

  	
  Margin
  Regulations; Investment Company Act; Public Utility Holding Company Act

  	
   

  	
  63

  
	
  5.15

  	
   

  	
  Disclosure

  	
   

  	
  63

  
	
  5.16

  	
   

  	
  Compliance
  with Laws

  	
   

  	
  63

  
	
  5.17

  	
   

  	
  Intellectual
  Property; Licenses, Etc

  	
   

  	
  63

  
	
  ARTICLE
  VI

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  64

  
	
  6.01

  	
   

  	
  Financial Statements

  	
   

  	
  64

  
	
  6.02

  	
   

  	
  Certificates;
  Other Information

  	
   

  	
  65

  
	
  6.03

  	
   

  	
  Notices

  	
   

  	
  67

  
	
  6.04

  	
   

  	
  Payment of Obligations

  	
   

  	
  67

  
	
  6.05

  	
   

  	
  Preservation of
  Existence, Etc

  	
   

  	
  67

  
	
  6.06

  	
   

  	
  Maintenance of
  Properties

  	
   

  	
  68

  

 

 ii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.07

  	
   

  	
  Maintenance of
  Insurance

  	
   

  	
  68

  
	
  6.08

  	
   

  	
  Compliance
  with Laws

  	
   

  	
  68

  
	
  6.09

  	
   

  	
  Books
  and Records

  	
   

  	
  68

  
	
  6.10

  	
   

  	
  Inspection
  Rights

  	
   

  	
  68

  
	
  6.11

  	
   

  	
  Use
  of Proceeds

  	
   

  	
  68

  
	
  6.12

  	
   

  	
  Covenant to
  Guarantee Obligations and Give Security

  	
   

  	
  69

  
	
  6.13

  	
   

  	
  Compliance
  with Environmental Laws

  	
   

  	
  71

  
	
  6.14

  	
   

  	
  Further
  Assurances

  	
   

  	
  72

  
	
  6.15

  	
   

  	
  Compliance
  with Terms of Leaseholds

  	
   

  	
  72

  
	
  6.16

  	
   

  	
  Cash Collateral
  Accounts

  	
   

  	
  72

  
	
  ARTICLE
  VII

  	
  NEGATIVE COVENANTS

  	
   

  	
  72

  
	
  7.01

  	
   

  	
  Liens

  	
   

  	
  73

  
	
  7.02

  	
   

  	
  Indebtedness

  	
   

  	
  74

  
	
  7.03

  	
   

  	
  Investments

  	
   

  	
  75

  
	
  7.04

  	
   

  	
  Fundamental
  Changes

  	
   

  	
  77

  
	
  7.05

  	
   

  	
  Dispositions

  	
   

  	
  78

  
	
  7.06

  	
   

  	
  Restricted
  Payments

  	
   

  	
  79

  
	
  7.07

  	
   

  	
  Change in Nature of
  Business

  	
   

  	
  79

  
	
  7.08

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
  79

  
	
  7.09

  	
   

  	
  Burdensome Agreements

  	
   

  	
  80

  
	
  7.10

  	
   

  	
  Use
  of Proceeds

  	
   

  	
  80

  
	
  7.11

  	
   

  	
  Financial
  Covenants

  	
   

  	
  80

  
	
  7.12

  	
   

  	
  Amendments
  of Organization Documents

  	
   

  	
  81

  
	
  7.13

  	
   

  	
  Accounting
  Changes

  	
   

  	
  81

  
	
  ARTICLE
  VIII

  	
  EVENTS OF DEFAULT AND REMEDIES

  	
   

  	
  81

  
	
  8.01

  	
   

  	
  Events
  of Default

  	
   

  	
  81

  
	
  8.02

  	
   

  	
  Remedies upon
  Event of Default

  	
   

  	
  83

  
	
  8.03

  	
   

  	
  Application
  of Funds

  	
   

  	
  84

  
	
  ARTICLE
  IX

  	
  ADMINISTRATIVE AGENTS

  	
   

  	
  85

  
	
  9.01

  	
   

  	
  Appointment and
  Authority

  	
   

  	
  85

  

 

 iii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.02

  	
   

  	
  Rights
  as a Lender

  	
   

  	
  85

  
	
  9.03

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  86

  
	
  9.04

  	
   

  	
  Reliance by
  Administrative Agent

  	
   

  	
  87

  
	
  9.05

  	
   

  	
  Delegation
  of Duties

  	
   

  	
  87

  
	
  9.06

  	
   

  	
  Resignation
  of Administrative Agent

  	
   

  	
  87

  
	
  9.07

  	
   

  	
  Non-Reliance
  on Administrative Agents and Other Lenders

  	
   

  	
  88

  
	
  9.08

  	
   

  	
  Administrative
  Agents May File Proofs of Claim

  	
   

  	
  88

  
	
  9.09

  	
   

  	
  Collateral and
  Guaranty Matters

  	
   

  	
  89

  
	
  ARTICLE X

  	
  MISCELLANEOUS

  	
   

  	
  90

  
	
  10.01

  	
   

  	
  Amendments,
  Etc

  	
   

  	
  90

  
	
  10.02

  	
   

  	
  Notices;
  Effectiveness; Electronic Communications

  	
   

  	
  91

  
	
  10.03

  	
   

  	
  No Waiver;
  Cumulative Remedies

  	
   

  	
  93

  
	
  10.04

  	
   

  	
  Expenses;
  Indemnity; Damage Waiver

  	
   

  	
  93

  
	
  10.05

  	
   

  	
  Payments
  Set Aside

  	
   

  	
  95

  
	
  10.06

  	
   

  	
  Successors and Assigns

  	
   

  	
  95

  
	
  10.07

  	
   

  	
  Treatment of
  Certain Information; Confidentiality

  	
   

  	
  99

  
	
  10.08

  	
   

  	
  Right
  of Setoff

  	
   

  	
  100

  
	
  10.09

  	
   

  	
  Interest Rate
  Limitation

  	
   

  	
  101

  
	
  10.10

  	
   

  	
  Counterparts;
  Integration; Effectiveness

  	
   

  	
  101

  
	
  10.11

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  	
  101

  
	
  10.12

  	
   

  	
  Severability

  	
   

  	
  101

  
	
  10.13

  	
   

  	
  Replacement of Lenders

  	
   

  	
  102

  
	
  10.14

  	
   

  	
  GOVERNING LAW;
  JURISDICTION; ETC

  	
   

  	
  102

  
	
  10.15

  	
   

  	
  WAIVER
  OF JURY TRIAL

  	
   

  	
  103

  
	
  10.16

  	
   

  	
  No Advisory
  or Fiduciary Responsibility

  	
   

  	
  103

  
	
  10.17

  	
   

  	
  USA PATRIOT Act Notice

  	
   

  	
  104

  
	
  10.18

  	
   

  	
  California
  Judicial Reference

  	
   

  	
  104

  

 

 iv
 

 

 

	
  SCHEDULES

  	
   

  	
   

  	
   

  
	
  2.01

  	
   

  	
  Commitments and Applicable Percentages

  	
   

  	
   

  
	
  5.06

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  5.08(c)

  	
   

  	
  Owned Real Property

  	
   

  	
   

  
	
  5.08(d)

  	
   

  	
  Leased Real Property

  	
   

  	
   

  
	
  5.09

  	
   

  	
  Environmental Matters

  	
   

  	
   

  
	
  5.13

  	
   

  	
  Subsidiaries and Other Equity Investments; Loan
  Parties

  	
   

  	
   

  
	
  5.17

  	
   

  	
  Intellectual Property Matters

  	
   

  	
   

  
	
  6.12

  	
   

  	
  Guarantors

  	
   

  	
   

  
	
  7.01

  	
   

  	
  Existing Liens

  	
   

  	
   

  
	
  7.02

  	
   

  	
  Existing Indebtedness

  	
   

  	
   

  
	
  7.03

  	
   

  	
  Existing Investments

  	
   

  	
   

  
	
  7.08

  	
   

  	
  Existing Transactions with Affiliates

  	
   

  	
   

  
	
  7.09

  	
   

  	
  Certain Existing Agreements

  	
   

  	
   

  
	
  10.02

  	
   

  	
  Administrative Agents’ Offices, Certain Addresses
  for Notices

  	
   

  	
   

  
	
  10.06

  	
   

  	
  Processing and Recordation Fees

  	
   

  	
   

  

 

EXHIBITS

Form of

	
  A

  	
   

  	
  Committed Loan Notice

  
	
  B

  	
   

  	
  Note

  
	
  C

  	
   

  	
  Compliance Certificate

  
	
  D

  	
   

  	
  Assignment and
  Assumption

  
	
  E

  	
   

  	
  Guaranty

  
	
  F

  	
   

  	
  Security
  Agreement

  
	
  G

  	
   

  	
  Opinion
  Matters – Counsel to Loan Parties

  

 v

 

CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered
into as of September 19, 2006, among Guess ?, Inc., a Delaware corporation (the
“Domestic Borrower”), Guess? Canada Corporation, a Canadian corporation
and wholly-owned subsidiary of the Domestic Borrower (together with the
Domestic Borrower, collectively, the “Borrowers” and individually, a “Borrower”),
each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”), Bank of America, N.A., as Domestic
Administrative Agent and Domestic L/C Issuer, and Bank of America, N.A., acting
through its Canada Branch, as Canadian Administrative Agent and Canadian L/C
Issuer.

In consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

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

“Administrative Agents”
means the Domestic Administrative Agent and the Canadian Administrative Agent.

“Administrative Agent’s
Office” means, with respect to either Administrative Agent, such
Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02,
or such other address or account as such Administrative Agent may from time to
time notify to the Domestic Borrower and the Domestic Lenders, or the Canadian
Borrower and the Canadian Lenders, as the case may be.

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

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

“Aggregate Applicable
Percentage” means at any time, with respect to each Lender, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is such Lender’s aggregate Commitments and the denominator
of which is the sum of the Aggregate Domestic Commitments and the Dollar
Equivalent of the Aggregate Canadian Commitments, in each case immediately
prior to any termination of the Commitments.

“Aggregate Canadian
Commitments” means the Commitments of all the Canadian Lenders with respect
to the Canadian Loans and the Canadian Letters of Credit, which shall not
exceed the Dollar Equivalent of $15,000,000 in the aggregate, subject to Section 2.13.

 

 

“Aggregate Commitments”
means the Commitments of all the Lenders.

“Aggregate Credit
Exposures” means, at any time, the sum of (i) the unused portion of the
Revolving Credit Facility at such time and (ii) the Total Outstandings at such
time.

“Aggregate Domestic
Commitments” means the Commitments of all the Domestic Lenders with respect
to the Domestic Loans and the Domestic Letters of Credit, which shall not
exceed $70,000,000 in the aggregate, subject to Section 2.13.

“Agreement” means
this Credit Agreement.

“Applicable Commitment
Fee Percentage” means, at any time, in respect of the Revolving Credit
Facility, (a) from the Closing Date to the date on which the Domestic
Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(a)
for the fiscal quarter ending September 30, 2006, 0.125% per annum and (b)
thereafter, the applicable percentage per annum set forth below determined by
reference to the Total Adjusted Leverage Ratio as set forth in the most recent
Compliance Certificate received by the Domestic Administrative Agent pursuant
to Section 6.02(a):

	
  Applicable Commitment Fee Percentage

  
	
  Pricing Level

  	
   

  	
  Total Adjusted

  Leverage Ratio

  	
   

  	
  Commitment Fee

  
	
  1

  	
   

  	
  <3.00:1

  	
   

  	
  0.125%

  
	
  2

  	
   

  	
  >3.00:1 but
  <4.00:1

  	
   

  	
  0.250%

  
	
  3

  	
   

  	
  >4.00:1

  	
   

  	
  0.375%

  

 

Any increase or decrease
in the Applicable Commitment Fee Percentage resulting from a change in the
Total Adjusted Leverage Ratio shall become effective as of the first Business
Day immediately following the date a Compliance Certificate is delivered
pursuant to Section 6.02(a); provided, however, that
if a Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level 3 shall apply as of the first Business Day after
the date on which such Compliance Certificate was required to have been
delivered until the date such Compliance Certificate is delivered.

“Applicable Percentage”
means at any time, with respect to each Domestic Lender in regard to the
Domestic Loans and the Domestic Letters of Credit, or with respect to each
Canadian Lender in regard to the Canadian Loans, the Canadian Letters of
Credit, a fraction (expressed as a percentage, carried out to the ninth decimal
place), the numerator of which is the Dollar Equivalent amount of the
Commitment of such Lender at such time in regard to the Domestic Loans and the
Domestic Letters of Credit or in regard to the Canadian Loans and the Canadian
Letters of Credit, and the denominator of which is the amount of the Aggregate
Domestic Commitments or the Dollar Equivalent of the Aggregate Canadian
Commitments as applicable at such time. 
If the commitment of each Lender to make Loans and the obligation of the
L/C Issuers to make L/C Credit Extensions have been terminated pursuant to Section 8.02,
or if the Commitments have expired, then the Applicable Percentage of each
Lender in respect of the applicable

 2
 

 

Facility shall be
determined based on the Applicable Percentage of such Lender in respect of such
Facility most recently in effect, giving effect to any subsequent
assignments.  The initial Applicable
Percentage of each Lender in respect of each Facility is set forth opposite the
name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

“Applicable Rate”
means (i) from the Closing Date to the date on which the Domestic
Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(a)
for the fiscal quarter ending September 30, 2006, 0.00% per annum for Base
Rate Loans and 0.75% per annum for Eurodollar Rate Loans and (ii) thereafter,
the applicable percentage per annum set forth below determined by reference to
the Total Adjusted Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Domestic Administrative Agent pursuant to Section 6.02(a):

	
  Applicable Rate

  
	
  Pricing Level

  	
   

  	
  Total Adjusted

  Leverage Ratio

  	
   

  	
  Eurodollar Rate 

  (Standby Letters of Credit)

  	
   

  	
  Base Rate

  
	
  1

  	
   

  	
  <2.00:1

  	
   

  	
  0.50%

  	
   

  	
  0.00%

  
	
  2

  	
   

  	
  >2.00:1 but
  <3.00:1

  	
   

  	
  0.75%

  	
   

  	
  0.00%

  
	
  3

  	
   

  	
  >3.00:1 but
  <4.00:1

  	
   

  	
  1.00%

  	
   

  	
  0.00%

  
	
  4

  	
   

  	
  >4.00:1

  	
   

  	
  1.25%

  	
   

  	
  0.25%

  

 

Any increase or decrease
in the Applicable Rate resulting from a change in the Total Adjusted Leverage
Ratio shall become effective as of the first Business Day immediately following
the date a Compliance Certificate is delivered pursuant to Section 6.02(a);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level 4 shall
apply as of the first Business Day after the date on which such Compliance
Certificate was required to have been delivered until the date such Compliance
Certificate is delivered.

“Appropriate Lender”
means, at any time, (a) with respect to either Facility, a Lender that has a
Commitment with respect to such Facility or holds a Committed Loan under such
Facility, at such time and (b) with respect to a Letter of Credit Sublimit, (i)
the applicable L/C Issuer and (ii) if any Letters of Credit have been issued
pursuant to Section 2.03(a), the Lenders holding a risk
participation therein.

“Approved Currency”
means Dollars, Canadian Dollars and Euros.

“Approved Fund”
means 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.

“Assignee Group”
means two or more Eligible Assignees that are Affiliates of one another or two
or more Approved Funds managed by the same investment advisor.

“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an Eligible Assignee (with the consent of any party whose consent is

 3
 

 

required by Section 10.06(b),
and accepted by the applicable Administrative Agent, in substantially the form
of Exhibit D or any other form approved by the applicable
Administrative Agent.

“Attributable
Indebtedness” means, on any date, (a) in respect of any Capitalized Lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, (b) in
respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease or similar payments under the relevant lease or other
applicable agreement or instrument that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease or other
agreement or instrument were accounted for as a Capitalized Lease and (c) all
Synthetic Debt of such Person.

“Audited Financial
Statements” means the audited consolidated balance sheet of the Domestic
Borrower and its Subsidiaries for the fiscal year ended December 31, 2005,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Domestic Borrower and its
Subsidiaries, including the notes thereto.

“Auto-Extension Letter
of Credit” has the meaning specified in Section 2.04(b).

“Availability Period”
means the period from and including the Closing Date to the earliest of (i) the
Maturity Date, (ii) the date of termination of the Commitments pursuant to Section 2.05,
and (iii) the date of termination of the commitment of each Lender to make
Committed Loans and of the obligation of the L/C Issuers to make L/C Credit
Extensions pursuant to Section 8.02.

“Bank of America”
means Bank of America, N.A. and its successors.

“Bank of America
Canada” means Bank of America, N.A., acting through its Canada Branch, and
its successors.

“Base Rate” means
for any day a fluctuating rate per annum equal to the higher of (a) in the case
of Domestic Loans, the Federal Funds Rate plus 1/2 of 1%, and in the case of
Canadian Loans, the average rate for 30 day Canadian Dollar bankers’
acceptances that appears on the Reuters Screen CDOR Page at 10:00 a.m. (Toronto
time) on that day, plus 1/2 of 1% per annum, and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
(in the case of Domestic Loans) as its “prime rate” for loans in Dollars or
Bank of America Canada (in the case of Canadian Loans) as its “prime rate” for
loans in Canadian Dollars.  The “prime
rate” is a rate set by Bank of America or Bank of America Canada (as
applicable) based upon various factors including its costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.  Any change in such rate announced
by Bank of America or Bank of America Canada (as applicable) shall take effect
at the opening of business on the day specified in the public announcement of
such change.

“Base Rate Loan”
means a Loan that bears interest based on the Base Rate.

 4
 

 

“Borrower Materials”
has the meaning specified in Section 6.02.

“Borrowers” has
the meaning specified in the introductory paragraph hereto.

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Administrative Agent’s Office of the Domestic Administrative
Agent is located and, if such day relates to any Canadian Loan or Canadian
Letter of Credit, means any such day other than a day on which commercial banks
are authorized to close under the Laws of, or are in fact closed in, New York
City or the province where the Administrative Agent’s Office of the Canadian
Administrative Agent is located, and, in either case, if such day relates to
any Eurodollar Rate Loan, means any such day on which dealings in Dollar and
Canadian Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.

“Canadian
Administrative Agent” means Bank of America Canada in its capacity as
Canadian administrative agent under any of the Loan Documents, or any Canadian
Lender which is a successor Canadian administrative agent hereunder.

“Canadian Borrower”
means Guess? Canada Corporation, a Canadian corporation and wholly-owned
subsidiary of the Domestic Borrower, or any successor thereto.

“Canadian Dollar”
and “Cdn. $” mean lawful money of Canada.

“Canadian Facility”
means, at any time, the aggregate amount of the Canadian Lenders’ Commitments
at such time.

“Canadian L/C Issuer”
means Bank of America Canada in its capacity as issuer of Canadian Letters of
Credit hereunder, or if Bank of America Canada shall have resigned as Canadian
Administrative Agent, any other Canadian Lender and any successor issuer of
Canadian Letters of Credit hereunder.

“Canadian Lender”
means any Lender which is either (i) a resident of Canada within the meaning of
the ITA or (ii) a deemed resident of Canada pursuant to subsection 212 (13.3)
of the ITA in respect of any amount paid or credited hereunder and in either
case identified as a Canadian Lender on Schedule 2.01 as amended or
modified from time to time in accordance with this Agreement.

“Canadian Letter of
Credit” means any Letter of Credit issued by the Canadian L/C Issuer for
the account of the Canadian Borrower.

“Canadian Letter of
Credit Sublimit” means the Letter of Credit Sublimit for Canadian Letters
of Credit.

“Canadian Loan”
means any Loan extended by a Canadian Lender to the Canadian Borrower.

 5
 

 

“Canadian Subsidiary”
means any Subsidiary that is organized under the laws of Canada or any
political subdivision of Canada.

“Capital Expenditures”
means, with respect to any Person for any period, any expenditure categorized
as a capital expenditure in such Person’s financial statements prepared in
accordance with GAAP.

“Capitalized Leases”
means all leases that have been or should be, in accordance with GAAP, recorded
as capitalized leases.

“Cash Collateral Account”
means a blocked, non-interest bearing deposit account of one or more of the
Loan Parties at Bank of America or Bank of America Canada (or another
commercial bank selected in compliance with Section 6.16) in the
name of the applicable Administrative Agent and under the sole dominion and
control of such Administrative Agent, and otherwise established in a manner
satisfactory to such Administrative Agent.

“Cash Collateralize”
has the meaning specified in Section 2.03(g).

“Cash Equivalents”
means any of the following types of Investments, to the extent owned by a
Borrower or any of its Subsidiaries free and clear of all Liens (other than
Liens created under the Collateral Documents and other Liens permitted
hereunder):

(a)           readily marketable obligations issued
or directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof having maturities of not more than 360
days from the date of acquisition thereof; provided that the full faith
and credit of the United States of America is pledged in support thereof;

(b)           time deposits with, or insured
certificates of deposit or bankers’ acceptances of, any commercial bank that
(i) (A) is a Lender or (B) is organized under the laws of the United States of
America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state thereof or the District of Columbia, and is
a member of the Federal Reserve System, and (ii) has combined capital and
surplus of at least $250,000,000, in each case with maturities of not more than
90 days from the date of acquisition thereof;

(c)           commercial paper issued by any Person
organized under the laws of any state of the United States of America and rated
at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”
(or the then equivalent grade) by S&P, in each case with maturities of not
more than 180 days from the date of acquisition thereof;

(d)           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 financial institution having combined
capital and surplus of at least $250,000,000;

(e)           repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States

 6
 

 

of America or
issued by any governmental agency thereof and backed by the full faith and
credit to the United States of America, in each case maturing within 90 days or
less from the date of acquisition; provided, that the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985;

(f)            any evidence of Indebtedness issued
by a state, city, town, county or their agencies and paying interest which is
exempt from federal tax, provided that the maturity is 180 days or less and the
Indebtedness is rated at least A-1, SP-1 or AAA by S&P or at least P-1,
MIG-1 or Aaa by Moody’s; and

(g)           Investments, classified in accordance
with GAAP as current assets of the Domestic Borrower or any of its
Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or
S&P, and the portfolios of which are limited solely to Investments of the
character, quality and maturity described in clauses (a) through (f) of this
definition.

Without limitation of the
foregoing, with respect to the Canadian Borrower and its Subsidiaries, the term
“Cash Equivalents” shall include any Canadian Investments that are substantially
similar to any of the foregoing.

“Cash Management
Agreement” means any agreement to provide cash management services,
including treasury, depository, overdraft, credit or debit card, electronic
funds transfer and other cash management arrangements.

“Cash Management Bank”
means any Person that, at the time it enters into a Cash Management Agreement,
is a Lender or an Affiliate of a Lender, in its capacity as a party to such
Cash Management Agreement.

“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980.

“CERCLIS” means
the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection Agency.

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

“Change of Control”
means an event or series of events by which:

 7
 

 

(a)           any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
but excluding any Permitted Holder or any employee benefit plan of such person
or its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) other than
the Permitted Holders becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that
such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an “option
right”) directly or indirectly, of 50% or more of the equity securities of the
Domestic Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Domestic Borrower on a fully-diluted basis
(and taking into account all such securities that such “person” or “group” has
the right to acquire pursuant to any option right); or

(b)           any Person or two or more Persons
(excluding any Permitted Holder) acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will result in its or their acquisition of the
power to exercise, directly or indirectly, control of the management or
policies of the Domestic Borrower, or control over the equity securities of the
Domestic Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Domestic Borrower on a fully-diluted basis
(and taking into account all such securities that such Person or Persons have
the right to acquire pursuant to any option right) representing 50% or more of
the combined voting power of such securities; or

(c)           a “change of control” or any
comparable term under, and as defined in, the Senior Notes Documents shall have
occurred.

“Closing Date”
means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

“Code” means the
Internal Revenue Code of 1986.

“Collateral” means
all of the “Collateral” referred to in the Collateral Documents and all
of the other property that is or is intended under the terms of the Collateral
Documents to be subject to Liens in favor of the Administrative Agent for the
benefit of the Secured Parties.

“Collateral Documents”
means, collectively, the Pledge Agreement, the Security Agreement, each of the
Security Agreement Supplements, security agreements, pledge agreements or other
similar agreements delivered to the Domestic Administrative Agent pursuant to Section 6.12,
and each of the other agreements, instruments or documents that creates or
purports to create a Lien in favor of the Domestic Administrative Agent for the
benefit of the Secured Parties.

“Commitment” means
the Revolving Credit Commitment of each Lender. 
The Commitments of the Domestic Lenders shall be denominated in Dollars
and inure to the

 8
 

 

benefit of the
Domestic Borrower.  The Commitments of
the Canadian Lenders shall be denominated in Canadian Dollars and inure to the
benefit of the Canadian Borrower.

“Committed Borrowing”
means a borrowing consisting of simultaneous Committed Loans of the same Type
and, in the case of Eurodollar Rate Committed Loans, having the same Interest
Period.

“Committed Canadian
Loan” has the meaning specified in Section 2.01(b).

“Committed Domestic
Loan” has the meaning specified in Section 2.01(a).

“Committed Loan”
means a Committed Domestic Loan or a Committed Canadian Loan.

“Committed Loan Notice”
means a notice of (a) a Committed Borrowing, (b) a conversion of Loans from one
Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A.

“Compliance
Certificate” means a certificate substantially in the form of Exhibit C.

“Consolidated Fixed
Charge Coverage Ratio” means, at any date of determination, the ratio of
(a) (i) EBITDAR, less (ii) the aggregate amount of Federal, state, local
and foreign income taxes paid in cash, less (iii) the aggregate amount
of all Maintenance Capital Expenditures (but in no event less than $10,000,000)
to (b) the sum of (i) Consolidated Interest Charges, (ii) the aggregate
principal amount of all regularly scheduled and/or contractual principal
payments or redemptions or similar acquisitions for value of outstanding debt
for borrowed money, but excluding any such payments to the extent refinanced
through the incurrence of additional Indebtedness otherwise expressly permitted
under Section 7.02, (iii) real property rental expense and (iv) the
aggregate amount of all Restricted Payments (exclusive of any Restricted
Payments permitted pursuant to Section 7.06(e)), in each case, of
or by the Domestic Borrower and its Subsidiaries for the most recently
completed four fiscal quarter period.

“Consolidated Funded
Indebtedness” means, as of any date of determination, for the Domestic
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) without duplication of amounts included in clauses (a), (c) or
(d) hereof, all direct obligations arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds,
shipside bonds and similar instruments, (c) all obligations in respect of the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business, accrued expenses, earn-outs and
purchase price adjustments, consultant fees, payroll and bonus payments to
employees, and other similar obligations, in each case only to the extent that
such obligation is not classified as indebtedness under GAAP), (d) all
Attributable Indebtedness, (e) without duplication, all 

 9
 

 

Guarantees with
respect to outstanding Indebtedness of the types specified in clauses (a)
through (d) above of Persons other than the Domestic Borrower or any
Subsidiary, and (f) all Indebtedness of the types referred to in clauses (a)
through (f) above of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which the
Domestic Borrower or a Subsidiary is a general partner or joint venturer,
unless such Indebtedness is expressly made non-recourse to the Domestic
Borrower or such Subsidiary.

“Consolidated Interest
Charges” means, for any period of four fiscal quarters of the Domestic
Borrower and its Subsidiaries, the sum of (a) all interest, premium payments,
debt discount, fees, charges and related expenses in connection with borrowed
money (including capitalized interest) or in connection with the deferred
purchase price of assets, in each case to the extent treated as interest in
accordance with GAAP, plus (b) the portion of rent expense under Capitalized
Leases that is treated as interest in accordance with GAAP, in each case, of or
by the Domestic Borrower and its Subsidiaries on a consolidated basis for the
most recently completed period of four fiscal quarters of the Domestic
Borrower.

“Consolidated Net
Income” means, at any date of determination, the net income (or loss) of
the Domestic Borrower and its Subsidiaries on a consolidated basis and in
accordance with GAAP for the most recently completed four fiscal quarter
period; provided that Consolidated Net Income shall exclude
extraordinary gains and extraordinary losses for such period.

“Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any material agreement, instrument or other undertaking to
which such Person is a party.

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

“Credit Extension”
means each of the following:  (a) a
Committed Borrowing and (b) an L/C Credit Extension.

“Debtor Relief Laws”
means the Bankruptcy Code of the United States, the Bankruptcy and Insolvency
Act (Canada) and the Companies’ Creditors Arrangement Act (Canada) and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States, Canada or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Default” means
any event or condition that constitutes an Event of Default or that, with the
giving of any notice, the passage of time, or both, would be an Event of
Default.

 10
 

 

“Default Rate”
means (a) when used with respect to Obligations other than Letter of Credit
Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan,
the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Loan plus
2% per annum and (b) when used with respect to Letter of Credit Fees, a rate
equal to the Applicable Rate plus 2% per annum.

“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Committed Loans
or participations in L/C Obligations required to be funded by it hereunder
within one Business Day of the date required to be funded by it hereunder, (b)
has otherwise failed to pay over to the applicable Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

“Disclosed Litigation”
has the meaning set forth in Section 5.06.

“Disposition” or “Dispose”
means the sale, transfer, license, lease or other disposition (including any
sale and leaseback transaction) of any property (other than cash) by any Person
(or the granting of any option or other right to do any of the foregoing),
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith.  For the avoidance
of doubt, the grant of a Lien or security interest in any assets (including but
not limited to accounts receivable) shall not constitute a “Disposition” for
purposes of this Agreement.

“Dollar” and “$”
mean lawful money of the United States.

“Dollar Equivalents”
means, with respect to any amounts of Canadian Dollars, an equivalent amount of
Dollars determined in accordance with subsection 1.07.

“Domestic
Administrative Agent” means Bank of America in its capacity as domestic
administrative agent under any of the Loan Documents, or any successor domestic
administrative agent.

“Domestic Borrower”
has the meaning specified in the introductory paragraph hereto.

“Domestic Facility”
means, at any time, the aggregate amount of the Domestic Lenders’ Commitments
at such time.

“Domestic L/C Issuer”
means Bank of America in its capacity as issuer of Domestic Letters of Credit
hereunder, or if Bank of America shall have resigned as Domestic Administrative
Agent, any other Domestic Lender and any successor issuer of Domestic Letters
of Credit hereunder.

 11
 

 

“Domestic Lender”
means any Lender identified as a Domestic Lender on Schedule 2.01
as amended or modified from time to time in accordance with this Agreement.

“Domestic Letter of
Credit” means any Letter of Credit issued by the Domestic L/C Issuer for
the account of the Domestic Borrower.

“Domestic Letter of
Credit Sublimit” means the Letter of Credit Sublimit for Domestic Letters
of Credit.

“Domestic Loan”
means any Loan extended by a Domestic Lender to the Domestic Borrower.

“Domestic Subsidiary”
means any Subsidiary that is organized under the laws of any political
subdivision of the United States.

“EBITDAR” means,
at any date of determination, an amount equal to Consolidated Net Income
(including income recognized from deferred revenues on payments made by licensees)
of the Domestic Borrower and its Subsidiaries on a consolidated basis for the
most recently completed four fiscal quarters plus (a) the following to
the extent deducted in calculating such Consolidated Net Income:  (i) Consolidated Interest Charges, (ii) the
provision for Federal, state, local and foreign income Taxes payable, (iii)
depreciation and amortization expense (including stock-based award expense
amortization), (iv) real property rental expense, (v) customary fees, costs and
expenses incurred in connection with any equity or debt offering, Investments
or Indebtedness permitted by this Agreement or in connection with the
consummation of acquisitions permitted pursuant to Section 7.03(h),
(vi) restructuring charges or reserves (including, without limitation, non-cash
retention, severance, systems establishment costs, excess pension charges,
contract termination costs including future lease commitments, and costs to
consolidate facilities and relocate employees) in an aggregate amount not to exceed
$50,000,000 through the Maturity Date and (vii) other non-recurring expenses
(excluding losses generated from barter transactions) reducing such
Consolidated Net Income which do not represent a cash item in such period or
any future period (in each case of or by the Domestic Borrower and its
Subsidiaries for such four fiscal quarter period) and minus (b) the
following to the extent included in calculating such Consolidated Net
Income:  (i) Federal, state, local and
foreign income Tax credits and (ii) all non-recurring non-cash items (excluding
gains generated from barter transactions) increasing Consolidated Net Income
(in each case of or by the Domestic Borrower and its Subsidiaries for such four
fiscal quarter period).

“Eligible Assignee”
means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii),
(v),  (vi) and (vii) (subject to such consents, if any, as
may be required under Section 10.06(b)(iii)).

“Environmental Laws”
means any and all Federal, state, provincial, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating

 12
 

 

to pollution and
the protection of the environment or the release of any materials into the
environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of either Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

“Environmental Permit”
means any material permit, approval, identification number license or other
authorization required under any Environmental Law.

“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.

“ERISA” means the
Employee Retirement Income Security Act of 1974.

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

“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal
by the Domestic Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by the Domestic Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Pension Plan or Multiemployer Plan; or (f)

 13
 

 

the imposition of
any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Domestic Borrower or any
ERISA Affiliate.

“Eurodollar Rate”
means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate
per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated from time to time by the Domestic
Administrative Agent in the case of Domestic Loans and the Canadian
Administrative Agent in the case of Canadian Loans) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits in the case of Domestic Loans and Canadian Dollars
in the case of Canadian Loans (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period.  If such rate is not available at such time
for any reason, then the “Eurodollar Rate” for such Interest Period shall be
the rate per annum determined by the applicable Administrative Agent to be the
rate at which deposits in Dollars or Canadian Dollars as applicable for
delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America or Bank of America Canada, as applicable, and with
a term equivalent to such Interest Period would be offered by Bank of America’s
London Branch to major banks in the London interbank eurodollar market at their
request at approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.

“Eurodollar Rate Loan”
means a Committed Loan that bears interest at a rate based on the Eurodollar
Rate.

“Event of Default”
has the meaning specified in Section 8.01.

“Excluded Taxes”
means, with respect to either Administrative Agent, any Lender, any L/C Issuer
or any other recipient of any payment to be made by or on account of any
obligation of either Borrower hereunder, (a) Taxes imposed on or measured by
its overall net income, assets or capital (however denominated) and franchise
Taxes imposed on it (in lieu of net income Taxes) by (i) the United States or
Canada (or any political subdivision thereof), (ii) any other Governmental
Authority under the laws of which any Lender or Administrative Agent (as the
case may be) is organized or has its principal office or maintains its
applicable Lending Office or in which the Lender or Administrative Agent is
otherwise carrying on business or is deemed to be carrying on business, or
(iii) any Governmental Authority solely as a result of a present or former
connection between such recipient and the jurisdiction of such Governmental
Authority (other than any such connection arising solely from such recipient
having executed, delivered or performed its obligations or received a payment
under, or enforced, any of the Loan Documents), (b) any branch profits Taxes
imposed by the United States or any similar Tax imposed by Canada or any other
jurisdiction in which the applicable Borrower is located, and (c) any
withholding, backup withholding or similar Tax that is (i) imposed on amounts
payable to such recipient at the time such recipient becomes a party hereto or
otherwise acquires an interest hereunder (or 

 14
 

 

designates a new
Lending Office), (ii) attributable to such recipient’s failure or inability
(other than as a result of a Change in Law occurring after the time such
recipient becomes a party hereto or otherwise acquires a beneficial interest
hereunder (or designates a new Lending Office)) to comply with Section 3.01(e),
except to the extent that such recipient (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment),
to receive additional amounts from the Borrower with respect to such Tax
pursuant to Section 3.01(a), or (iii) required to be deducted under
applicable law from any payment hereunder on the basis of the information
provided by such recipient pursuant to Section 3.01(e).

“Existing Credit
Agreement” means (i) that certain Amended and Restated Loan and Security
Agreement dated as of December 20, 2002 among the Domestic Borrower,
Guess? Retail, Inc., Guess.com, Inc., Wachovia Securities, Inc., as arranger,
and the lenders party thereto, as amended from time to time and (ii) that
certain Canadian Loan and Security Agreement dated as of December 20, 2002
among the Canadian Borrower, Guess? Canada Retail, Inc., and Wachovia
Securities, Inc., as arranger, and the lenders party thereto, as amended from
time to time.

“Facility” means
each of the Domestic Facility and the Canadian Facility.

“Federal Funds Rate”
means, for any day, the rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate (rounded upward, if
necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Domestic Administrative
Agent.

“Fee Letter” means
the letter agreement, dated September 19, 2006, among the Domestic
Borrower and the Domestic Administrative Agent.

“Foreign Subsidiary”
means any Subsidiary that is organized under the laws of any jurisdiction other
than a political subdivision of the United States.

“Foreign Subsidiary
Restructuring” means (i) the transfer of the equity interests of the
Canadian Borrower such that the Canadian Borrower becomes a second- or
lower-tier Foreign Subsidiary of the Domestic Borrower, (ii) conversion,
transfer or other corporate restructuring of the Canadian Borrower to another
form of entity or entities (including but not limited to a partnership or
limited liability company), and (iii) transfer of the equity interests of
Guess? Europe, B.V. such that Guess? Europe, B.V. becomes a second- or
lower-tier Foreign Subsidiary of the Domestic Borrower.

 15
 

 

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

“Fund” means 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” means
generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.

“Governmental
Authority” means the government of the United States or any other nation,
or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“Granting Lender”
has the meaning specified in Section 10.06(h).

“Guarantee” means,
as to any Person, (a) any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services
for the purpose of assuring the obligee in respect of such Indebtedness or
other obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) any Lien
on any assets of such Person securing any Indebtedness or other obligation of
any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien). 
The amount of any Guarantee shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 16
 

 

“Guaranty” means,
collectively, the Guaranty made by Domestic Borrower and the Guarantors in
favor of the Secured Parties, substantially in the form of Exhibit E,
together with each other guaranty and guaranty supplement delivered pursuant to
Section 6.12.

“Guarantors”
means, collectively, the Subsidiaries of the Domestic Borrower listed on Schedule 6.12
and each other Subsidiary of the Domestic Borrower that shall be required to
execute and deliver a guaranty or guaranty supplement pursuant to Section 6.12,
but excluding Guess? Royalty Finance LLC, Guess? Licensing, Inc., Guess? IP GP
LLC, Guess? IP LP LLC and Guess? IP Holder L.P.

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

“Hedge Bank” means
any Person that, at the time it enters into a Secured Hedge Agreement, is a
Lender or an Affiliate of a Lender, in its capacity as a party to such Secured
Hedge Agreement.

“Hong Kong Subfacility”
means the subfacility of the Letter of Credit Sublimits described in Section 2.14.

“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

(a)           all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;

(b)           all direct or contingent obligations
of such Person arising under outstanding letters of credit (including standby
and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments;

(c)           net obligations of such Person under
any Swap Contract;

(d)           all obligations of such Person to pay
the deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business, accrued expenses, earn-outs and
purchase price adjustments, consultant fees, payroll and bonus payments to
employees, and other similar obligations, in each case only to the extent that
such accounts, expenses, earn-outs, adjustments and similar obligations are not
classified as indebtedness under GAAP);

(e)           indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under 

 17
 

 

conditional sales
or other title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse;

(f)            all Attributable Indebtedness in respect
of Capitalized Leases and Synthetic Lease Obligations of such Person and all
Synthetic Debt of such Person;

(g)           to the extent that any of the
following shall be classified as indebtedness under GAAP, obligations of such
Person to purchase, redeem, retire, defease or otherwise make any payment in
respect of any Equity Interest in such Person or any other Person or any
warrant, right or option to acquire such Equity Interest, valued, in the case
of a redeemable preferred interest, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; and

(h)           all Guarantees of such Person in
respect of any of the foregoing.

For all purposes hereof,
the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such
Person.  The amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date. 
Capitalized Lease or Synthetic Lease Obligations as of any date shall be
deemed to be the amount of Attributable Indebtedness in respect thereof as of
such date.

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

“Indemnitees” has
the meaning specified in Section 10.04(b).

“Information” has
the meaning specified in Section 10.07.

“Interbank Reference
Rate” means the interest rate expressed as a percentage per annum which is
customarily used by the Canadian Administrative Agent when calculating interest
due by it or owing to it arising from correction of errors between it and other
chartered banks.

“Interest Payment Date”
means, (a) as to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan and the Maturity Date; provided, however,
that if any Interest Period for a Eurodollar Rate Loan exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base
Rate Loan, the last Business Day of each March, June, September and December
and the Maturity Date.

“Interest Period”
means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar
Rate Loan and ending on the date one, two, three, six or nine months
thereafter, as selected by a Borrower in its Committed Loan Notice provided
that:

 18
 

 

(a)           any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;

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

(c)           no Interest Period shall extend
beyond the Maturity Date.

“Internal Control
Event” means a material weakness in, or fraud that involves management or
other employees who have a significant role in, the Domestic Borrower’s
internal controls over financial reporting, in each case as described in the
Securities Laws.

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
Equity Interests of another Person, (b) a loan, advance or capital contribution
to, Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or interest in, another Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit or all or a substantial part of
the business of, such Person.  For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment. 
For the avoidance of doubt, the purchase of aircraft shall not
constitute an “Investment” for purposes of this Agreement.

“IP Rights” has
the meaning specified in Section 5.17.

“IRS” means the
United States Internal Revenue Service.

“ISP” means, with
respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance).

“Issuer Documents”
means with respect to any Letter of Credit, the Letter of Credit Application,
and any other document, agreement and instrument entered into by the applicable
L/C Issuer and the applicable Borrower (or any Subsidiary) or in favor of such
L/C Issuer and relating to such Letter of Credit.

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

“Laws” means,
collectively, all international, foreign, Federal, state, provincial and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement,

 19

 

interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case whether or not having the force of
law.

“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation
in any L/C Borrowing in accordance with its Applicable Percentage.

“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Committed Borrowing.

“L/C Credit Extension”
means, with respect to any Letter of Credit, the issuance thereof or extension
of the expiry date thereof, or the increase of the amount thereof.

“L/C Issuers”
means collectively, the Domestic L/C Issuer and the Canadian L/C Issuer.

“L/C Obligations”
means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.  For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14 of
the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

“Lender” has the
meaning specified in the introductory paragraph hereto.

“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify the Domestic Borrower and the Domestic
Administrative Agent.

“Letter of Credit”
means any letter of credit issued hereunder. 
A Letter of Credit may be a commercial letter of credit or a standby
letter of credit.

“Letter of Credit
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the
applicable L/C Issuer.

“Letter of Credit
Expiration Date” means the day that is seven days prior to the Maturity
Date then in effect (or, if such day is not a Business Day, the next preceding
Business Day).

“Letter of Credit Fee”
has the meaning specified in Section 2.03(i).

 20
 

 

“Letter of Credit
Sublimit” means, with respect to the Domestic Letters of Credit, an amount
equal to Sixty Million Dollars ($60,000,000) and, with respect to the Canadian
Letters of Credit, an amount equal to Fifteen Million Dollars
($15,000,000).  The applicable Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Domestic
Commitments and the Aggregate Canadian Commitments, respectively.

“Lien” means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
interest or preferential arrangement in the nature of a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing).

“Loan” means an
extension of credit by a Lender to a Borrower under Article II in
the form of a Committed Loan.

“Loan Documents”
means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d)
the Collateral Documents, (e) the Fee Letter, (f) each Issuer Document, (g)
each Secured Hedge Agreement, (h) each Secured Cash Management Agreement and
(i) each Secured Foreign Exchange Agreement.

“Loan Parties”
means, collectively, each Borrower and each Guarantor.

“Maintenance Capital
Expenditures” means capital expenditures for the maintenance, repair,
restoration or refurbishment of tangible property, but excluding any
Capital Expenditures which adds to or significantly improves any such property.

“Material Adverse
Effect” means (a) a material adverse change in, or a material adverse
effect upon, the business, assets, properties, liabilities (actual or
contingent), operations, or condition (financial or otherwise) of the Domestic
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of
the rights and remedies of the Administrative Agents or any Lender under any
Loan Document, or of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against
any Loan Party of any Loan Document to which it is a party.

“Maturity Date”
means September 30, 2011; provided, however, that, in each
case, if such date is not a Business Day, the Maturity Date shall be the next
preceding Business Day.

“Moody’s” means
Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan”
means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Domestic Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

“Non-Extension Notice
Date” has the meaning specified in Section 2.04(b)(iii).

 21
 

 

“Note” means a
promissory note made by a Borrower in favor of a Lender evidencing Loans made
by such Lender, substantially in the form of Exhibit B.

“NPL” means the
National Priorities List under CERCLA.

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or otherwise with
respect to any Loan or Letter of Credit, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due,
now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Loan Party or any Affiliate thereof of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding.

“Organization
Documents” means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

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

“Outstanding Amount”
means (a) with respect to Committed Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Committed Loans occurring on such date; and (b)
with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by a
Borrower of Unreimbursed Amounts.

“Participant” has
the meaning specified in Section 10.06(d).

“PBGC” means the
Pension Benefit Guaranty Corporation.

“PCAOB” means the
Public Company Accounting Oversight Board.

“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject
to Title IV of ERISA and is sponsored or maintained by the Domestic Borrower or
any

 22
 

 

ERISA Affiliate or
to which the Domestic Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

“Permitted Holder”
means collectively Paul Marciano, the Paul Marciano Trust, Marciano Financial
Holdings II, LLC, the Paul Marciano Foundation, Maurice Marciano, the Maurice
Marciano Trust, the Maurice Marciano Family Foundation, and as to Paul Marciano
and Maurice Marciano, the members of their families, their respective estates,
spouses, heirs and any trust of which one or more of the foregoing are the
trustors, the trustees and/or the beneficiaries.

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

“Plan” means any “employee
benefit plan” (as such term is defined in Section 3(3) of ERISA) established
by the Domestic Borrower or, with respect to any such plan that is subject to
Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“Platform” has the
meaning specified in Section 6.02.

“Pledge Agreement”
means the Pledge Agreement delivered in accordance with Section 4.01(iv)
by the Domestic Borrower and each Domestic Subsidiary that holds Equity
Interests in another Domestic Subsidiary or in a first-tier Foreign Subsidiary,
together with any supplement delivered pursuant to Section 6.12.

“Register” has the
meaning specified in Section 10.06(c).

“Registered Public
Accounting Firm” has the meaning specified by the Securities Laws and shall
be independent of the Domestic Borrower as prescribed by the Securities Laws.

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

“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other than
events for which the 30 day notice period has been waived.

“Request for Credit
Extension” means (a) with respect to a Committed Borrowing, conversion or
continuation of Committed Loans, a Committed Loan Notice and (b) with respect
to an L/C Credit Extension, a Letter of Credit Application.

“Required Lenders”
means, as of any date of determination, Lenders holding more than 50% of the
sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s
risk participation and funded participation in L/C Obligations being deemed “held”
by such Lender for purposes of this definition) and (b) aggregate unused 

 23
 

 

Revolving Credit
Commitments; provided that the unused Revolving Credit Commitment of,
and the portion of the Total Outstandings held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders.

“Responsible Officer”
means the chief executive officer, president, chief operating officer, chief
financial officer, treasurer, assistant treasurer, controller or vice president
of finance of a Loan Party and any other officer of the applicable Loan Party
so designated by any of the foregoing officers in a notice to the applicable
Administrative Agent.  Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of any
Person or any of its Subsidiaries, or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, defeasance, acquisition, cancellation
or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to any Person’s stockholders, partners or
members (or the equivalent of any thereof), or any option, warrant or other
right to acquire any such dividend or other distribution or payment.

“Revolving Credit
Commitment” means, as to each Lender, its obligation to (a) make Loans to
the Borrowers pursuant to Section 2.01 and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01 under the caption “Revolving Credit Commitment” or
opposite such caption in the Assignment and Assumption pursuant to which such
Lender becomes a party hereto, as applicable, as such amount may be adjusted
from time to time in accordance with this Agreement.

“Revolving Credit
Facility” means, at any time, the aggregate amount of the Lenders’
Revolving Credit Commitments at such time.

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

“Sarbanes-Oxley”
means the Sarbanes-Oxley Act of 2002.

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

“Secured Cash Management
Agreement” means any Cash Management Agreement that is entered into by and
between a Borrower and any Cash Management Bank.

 24
 

 

“Secured Foreign
Exchange Agreement” means any agreement to provide foreign exchange
services that is entered into by and between a Borrower and any Lender or an
Affiliate of a Lender.

“Secured Hedge
Agreement” means any interest rate or foreign currency Swap Contract
permitted under Article VI or VII that is entered into by
and between a Borrower and any Hedge Bank.

“Secured Parties”
means, collectively, the Administrative Agents, the Lenders, the L/C Issuers,
the Hedge Banks, the Cash Management Banks, the Lenders (or Affiliates thereof)
party to any Secured Foreign Exchange Agreement, each co-agent or sub-agent
appointed by an Administrative Agent from time to time pursuant to Section 9.05,
and the other Persons the Obligations owing to which are or are purported to be
secured by the Collateral under the terms of the Collateral Documents.

“Securities Laws”
means the Securities Act of 1933, the Securities Exchange Act of 1934,
Sarbanes-Oxley, and the applicable accounting and auditing principles, rules,
standards and practices promulgated, approved or incorporated by the SEC or the
PCAOB.

“Security Agreement”
has the meaning specified in Section 4.01(a)(iii).

“Security Agreement
Supplement” means a supplement to the Security Agreement, in form and
substance satisfactory to the Domestic Borrower and the Domestic Administrative
Agent.

“Senior Notes”
means the 6.75% secured senior notes of Guess? Royalty Finance LLC, an indirect
wholly-owned Subsidiary of the Domestic Borrower, due June 2012 in an aggregate
principal amount of $75,000,000 issued and sold pursuant to the Senior Notes
Documents.

“Senior Notes
Documents” means the note purchase agreement, the Senior Notes and all
other agreements, instruments and other documents pursuant to which the Senior
Notes have been issued or otherwise setting forth the terms of the Senior Notes
from time to time.

“Subsidiary” of a
Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Domestic Borrower.

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,

 25
 

 

forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related confirmations,
which are subject to the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any related
schedules, a “Master Agreement”), including any such obligations or
liabilities under any Master Agreement.

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

“Synthetic Debt”
means, with respect to any Person as of any date of determination thereof, all
obligations of such Person in respect of transactions entered into by such
Person that are intended to function primarily as a borrowing of funds but are
not otherwise included in the definition of “Indebtedness” or as a
liability on the consolidated balance sheet of such Person and its Subsidiaries
in accordance with GAAP.

“Synthetic Lease
Obligation” means the monetary obligation of a Person under (a) a so-called
synthetic, off-balance sheet or Tax retention lease, or (b) an agreement for
the use or possession of property (including sale and leaseback transactions),
in each case, creating obligations that do not appear on the balance sheet of
such Person but which, upon the application of any Debtor Relief Laws to such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).

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

“Threshold Amount”
means $20,000,000.

“Total Adjusted
Leverage Ratio” means, as of any date of determination, the ratio of (a)
the sum of (i) Consolidated Funded Indebtedness as of such date and (ii) eight
(8)

 26
 

 

times the real
property rental expense of the Domestic Borrower and its Subsidiaries for the
most recently completed period of four fiscal quarters to (b) EBITDAR of the
Domestic Borrower and its Subsidiaries on a consolidated basis for the most
recently completed period of four fiscal quarters of the Domestic Borrower.

“Total Outstandings”
means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

“Type” means, with
respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

“UCC” means the
Uniform Commercial Code as in effect in the State of California; provided that,
if perfection or the effect of perfection or non-perfection or the priority of
any security interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of California, “UCC”
means the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

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

“United States”
and “U.S.” mean the United States of America.

“Unreimbursed Amount”
has the meaning specified in Section 2.03(c)(i).

“U.S. Loan Party”
means any Loan Party that is organized under the laws of one of the states of
the United States of America and that is not a Foreign Subsidiary.

1.02        Other
Interpretive Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise specified herein or in
such other Loan Document:

(a)           The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined.  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, (i)
any definition of or reference to any agreement, instrument or other document
(including any Organization Document) 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 or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, 

 27
 

 

Preliminary Statements, Exhibits and Schedules shall
be construed to refer to Articles and Sections of, and Preliminary Statements,
Exhibits and Schedules to, the Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

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

(c)           Section headings herein and in the
other Loan Documents are included for convenience of reference only and shall
not affect the interpretation of this Agreement or any other Loan Document.

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

(b)           Changes in GAAP.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Domestic Borrower or the Required Lenders shall
so request, the Administrative Agents, the Lenders and the Borrowers shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the
approval of the Required Lenders); provided that, until so amended, (i)
such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Domestic Borrower shall provide to
the Administrative Agents and the Lenders financial statements and other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

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

1.05        Times
of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Pacific time (daylight or standard, as
applicable), except where such references pertain to Canadian Loans or Canadian
Letters of Credit, in which case such references shall be to Eastern time
(daylight or standard, as applicable).

 28
 

 

1.06        Letter
of Credit Amounts.  Unless otherwise
specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount
of such Letter of Credit in effect at such time; provided, however,
that with respect to any Letter of Credit that, by its terms or the terms of
any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum stated amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum stated amount
is in effect at such time.

1.07        Currency
Equivalents Generally.  Any amount
specified in this Agreement (other than in Articles IX and X) or any of the other
Loan Documents to be in Dollars shall also include the equivalent of such
amount in any currency other than Dollars (including, without limitation,
Canadian Dollars), such equivalent amount thereof in the applicable currency to
be determined by an Administrative Agent at such time on the basis of the Spot
Rate (as defined below) for the purchase of such currency with Dollars.  For purposes of this Section 1.07,
the “Spot Rate” for a currency means the rate determined by an
Administrative Agent to be the rate quoted by the Person acting in such
capacity as the spot rate for the purchase by such Person of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date of
such determination; provided that such Administrative Agent may obtain
such spot rate from another financial institution designated by such
Administrative Agent if the Person acting in such capacity does not have as of
the date of determination a spot buying rate for any such currency.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01        Committed
Loans.

(a)           Subject to the terms and conditions
set forth herein, each Domestic Lender severally agrees to make loans (each
such loan, a “Committed Domestic Loan”) to the Domestic Borrower from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Domestic Lender’s Commitment with respect to Domestic Loans and Domestic
Letters of Credit; provided, however, that after giving effect to
any Committed Borrowing, (i) the Total Outstandings with respect to Domestic
Loans and Domestic Letters of Credit shall not exceed the Aggregate Domestic
Commitments minus the amount allocated to the Hong Kong Subfacility at such
time, and (ii) the aggregate Outstanding Amount of the Committed Domestic Loans
of any Domestic Lender, plus such Domestic Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations with respect to Domestic Letters
of Credit shall not exceed such Lender’s Commitment with respect to Domestic Loans
and Domestic Letters of Credit.  Within
the limits of each Domestic Lender’s Commitment, and subject to the other terms
and conditions hereof, the Domestic Borrower may borrow under this Section 2.01(a),
prepay under Section 2.04, and reborrow under this Section 2.01(a).  Committed Domestic Loans may be Base Rate
Loans or Eurodollar Rate Loans, as further provided herein.  Committed Domestic Loans shall be funded and
repaid in Dollars.

(b)           Subject to the terms and conditions
set forth herein, each Canadian Lender severally agrees to make loans in
Canadian Dollars (each such loan, a “Committed Canadian

 29
 

 

Loan”)
to the Canadian Borrower from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time outstanding
the amount of such Canadian Lender’s Commitment with respect to Canadian Loans
and Canadian Letters of Credit; provided, however, that after
giving effect to any Committed Borrowing, (i) the Total Outstandings with
respect to Canadian Loans and Canadian Letters of Credit shall not exceed the
Aggregate Canadian Commitments, and (ii) the aggregate Outstanding Amount of
the Committed Canadian Loans of any Canadian Lender, plus such Canadian Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations with
respect to Canadian Letters of Credit shall not exceed such Lender’s Commitment
with respect to Canadian Loans and Canadian Letters of Credit.  Within the limits of each Canadian Lender’s
Commitment, and subject to the other terms and conditions hereof, the Canadian
Borrower may borrow under this Section 2.01(b), prepay Committed
Canadian Loans under Section 2.04 and reborrow Committed Canadian
Loans under this Section 2.01(b). 
Committed Canadian Loans may be Base Rate Loans or Eurodollar Rate
Loans, as further provided herein. 
Committed Canadian Loans shall be funded and repaid in Canadian Dollars.

(c)           If the Dollar Equivalent of the sum
of Outstanding Amounts of Canadian Loans and L/C Obligations in respect of
Canadian Letters of Credit for any reason shall exceed 100% of the Aggregate
Canadian Commitments, the Canadian Borrower shall within 10 Business Days after
notice from the Canadian Administrative Agent of such excess repay Canadian
Loans by the amount of such excess.  Amounts
repaid in accordance with this Section 2.01(c) may be reborrowed in
accordance with the terms and conditions of this Agreement.

2.02        Committed
Borrowings, Conversions and Continuations of Committed Loans.

(a)           The Domestic Borrower may request
Committed Domestic Loans by notice to the Domestic Administrative Agent, and
the Canadian Borrower may request Committed Canadian Loans by notice to the
Canadian Administrative Agent, all as provided below.  Each Committed Borrowing, each conversion of
Committed Loans from one Type to the other, and each continuation of Committed
Loans as the same Type shall be made upon the applicable Borrower’s irrevocable
notice to the applicable Administrative Agent, which may be given by
telephone.  Each such notice from the Domestic
Borrower must be received by the Domestic Administrative Agent not later than
10:00 a.m. (i) three Business Days prior to the requested date of any Committed
Borrowing of, conversion to or continuation of Eurodollar Rate Committed Loans
or of any conversion of Eurodollar Rate Committed Loans to Base Rate Committed
Loans, and (ii) on the requested date of any Committed Borrowing of Base Rate
Committed Loans.  Each such notice from
the Canadian Borrower must be received by the Canadian Administrative Agent not
later than (i) 1:00 p.m. three Business Days prior to the requested date of any
Committed Borrowing of, conversion to or continuation of Eurodollar Rate
Committed Loans or of any conversion of Eurodollar Rate Committed Loans to Base
Rate Committed Loans, and (ii) 10:00 a.m. on the requested date of any
Committed Borrowing of Base Rate Committed Loans.  Each such telephonic notice must be confirmed
promptly by delivery to the applicable Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the applicable Borrower.  Each
Committed Borrowing of, conversion to or continuation of Eurodollar Rate
Committed Loans shall be in a principal amount of $1,000,000 (or Cdn.
$1,000,000) or a whole multiple of 

 30
 

 

$100,000 (or Cdn. $100,000) in excess thereof.  Each Committed Borrowing of or conversion to
Base Rate Committed Loans shall be in a principal amount of $500,000 (or Cdn.
$500,000) or a whole multiple of $100,000 (or Cdn. $100,000) in excess thereof.  Each Committed Loan Notice (whether
telephonic or written) shall specify (i) whether the applicable Borrower is
requesting a Committed Borrowing, a conversion of Committed Loans from one Type
to the other, or a continuation of Eurodollar Rate Committed Loans, (ii) the
requested date of the Committed Borrowing, conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of
Committed Loans to be borrowed, converted or continued, (iv) the Type of
Committed Loans to be borrowed or to which existing Committed Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto.  If the applicable
Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice
or if such Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Committed Loans shall be made as, or
converted to, Base Rate Loans.  Any such
automatic conversion to Base Rate Loans shall be effective as of the last day
of the Interest Period then in effect with respect to the applicable Eurodollar
Rate Committed Loans.  If the applicable
Borrower requests a Committed Borrowing of, conversion to, or continuation of
Eurodollar Rate Committed Loans in any such Committed Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.

(b)           Following receipt of a Committed Loan
Notice, the applicable Administrative Agent shall promptly notify each
applicable Lender of its Applicable Percentage of the applicable Committed
Loans, and if no timely notice of a conversion or continuation is provided by
the applicable Borrower, such Administrative Agent shall notify each such
Lender of the details of any automatic conversion to Base Rate Loans described
in the preceding subsection.  In the case
of a Committed Borrowing, each applicable Lender shall make the amount of its
Committed Loan available to the applicable Administrative Agent in immediately
available funds at the applicable Administrative Agent’s Office not later than
11:00 a.m. in the case of Domestic Loans and Canadian Eurodollar Rate Committed
Loans and 1:00 p.m. in the case of Canadian Base Rate Committed Loans on the
Business Day specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Committed
Borrowing is the initial Credit Extension, Section 4.01), the
applicable Administrative Agent shall make all funds so received available to
the applicable Borrower in like funds as received by such Administrative Agent
by crediting the account of such Borrower on the books of Bank of America or
Bank of America Canada (as applicable) with the amount of such funds or
otherwise disbursing such funds in accordance with the applicable Borrower’s
written instructions; provided, however, that if, on the date of
a Committed Borrowing there are L/C Borrowings by such Borrower outstanding,
then the proceeds of such Committed Borrowing shall be applied, first,
to the payment in full of any such L/C Borrowings, and second, to such
Borrower as provided above.

(c)           Except as otherwise provided herein,
a Eurodollar Rate Committed Loan may be continued or converted only on the last
day of an Interest Period for such Eurodollar Rate Committed Loan.  During the existence of a Default, no Loans
may be requested as, converted to or continued as Eurodollar Rate Committed
Loans without the consent of the Required Lenders.

(d)           The applicable Administrative Agent
shall promptly notify the applicable Borrower and the applicable Lenders of the
interest rate applicable to any Interest Period for 

 31
 

 

Eurodollar Rate Committed Loans upon determination of
such interest rate.  The determination of
the Eurodollar Rate by such Administrative Agent shall be conclusive in the
absence of manifest error.  The
applicable Administrative Agent shall notify the applicable Borrower and the
applicable Lenders of any change in the prime rate of Bank of America or Bank
of America Canada (as applicable) used in determining the Base Rate promptly
following the public announcement of such change if any Base Rate Loans are
then outstanding.

(e)           After giving effect to all Committed
Borrowings, all conversions of Committed Loans from one Type to the other, and
all continuations of Committed Loans as the same Type, there shall not be more
than ten (10) Interest Periods in effect with respect to Domestic Loans and not
more than ten (10) Interest Periods in effect with respect to Canadian Loans.

2.03        Letters
of Credit.

(a)           The Letter of Credit Commitment.  (i) The Domestic Borrower may request
Domestic Letters of Credit by notice to the Domestic L/C Issuer and the
Domestic Administrative Agent, and the Canadian Borrower may request Canadian
Letters of Credit upon notice to the Canadian L/C Issuer and the Canadian
Administrative Agent, all as provided below. 
Subject to the terms and conditions set forth herein, (A) the applicable
L/C Issuer agrees, in reliance upon the agreements of the other applicable
Lenders set forth in this Section 2.03, (1) from time to time on
any Business Day during the period from the Closing Date until the Maturity
Date, to issue Letters of Credit for the account of the applicable Borrower,
and to amend Letters of Credit previously issued by it, in accordance with
subsection (b) below, and (2) to honor drafts under the Letters of Credit as
required under applicable law; and (B) such Lenders severally agree to
participate in Letters of Credit issued for the account of such Borrower; provided
that the Domestic L/C Issuer shall not be obligated to make any L/C Credit
Extension with respect to any Domestic Letter of Credit, and no Domestic Lender
shall be obligated to participate in, any Domestic Letter of Credit if as of
the date of such L/C Credit Extension, (x) the Total Outstandings with respect
to Domestic Loans and Domestic Letters of Credit would exceed the Aggregate
Domestic Commitments, (y) the aggregate Outstanding Amount of the Committed
Domestic Loans of any Domestic Lender, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Domestic L/C Obligations would
exceed such Lender’s Commitment with respect to Domestic Loans and Domestic
Letters of Credit, or (z) the Outstanding Amount of the Domestic L/C
Obligations would exceed the Letter of Credit Sublimit; provided, further,
the Canadian L/C Issuer shall not be obligated to make any L/C Credit Extension
with respect to any Canadian Letter of Credit, and no Canadian Lender shall be
obligated to participate in any Canadian Letter of Credit if as of the date of
such L/C Credit Extension (x) the Total Outstandings with respect to Canadian
Loans and Canadian Letters of Credit would exceed the Aggregate Canadian
Commitments, (y) the aggregate Outstanding Amount of the Committed Canadian
Loans of any Canadian Lender, plus such Canadian Lender’s Applicable Percentage
of the Outstanding Amount of all Canadian L/C Obligations would exceed such
Lender’s Commitment with respect to Canadian Loans and Canadian Letters of
Credit or (z) the Outstanding Amount of Canadian L/C Obligations would exceed
the Letter of Credit Sublimit.  Each
request by a Borrower for the issuance or amendment of a Letter of Credit shall
be deemed to be a representation by such Borrower that the L/C Credit Extension
so requested complies with the conditions set forth in clauses (x) and (z) of
the

 32
 

 

applicable proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, the Borrowers’ ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrowers may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.

(ii)           An L/C Issuer shall not issue any
Letter of Credit if:

(A)          subject to Section 2.03(b)(iii),
the expiry date of such requested Letter of Credit would occur more than twelve
months after the date of issuance or last extension, unless the Required
Lenders have approved such expiry date; or

(B)           the expiry date of such requested
Letter of Credit would occur after the Letter of Credit Expiration Date, unless
all the Lenders have approved such expiry date.

(iii)          An L/C Issuer shall not be under any
obligation to issue any Letter of Credit if:

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

(B)           the issuance of such Letter of Credit
would violate one or more policies of such L/C Issuer applicable to letters of
credit generally;

(C)           such Letter of Credit is to be
denominated in a currency other than Dollars or an Approved Currency in the
case of Domestic Letters of Credit and Canadian Dollars or an Approved Currency
in the case of Canadian Letters of Credit;

(D)          such Letter of Credit contains any
provisions for automatic reinstatement of the stated amount after any drawing
thereunder; or

(E)           a default of any Lender’s obligations
to fund under Section 2.03(c) exists or any Lender is at such time
a Defaulting Lender hereunder, unless such L/C Issuer has entered into
satisfactory arrangements with

 33
 

 

the applicable Borrower
or such Lender to eliminate such L/C Issuer’s risk with respect to such Lender.

(iv)          An L/C Issuer shall not amend any
Letter of Credit if such L/C Issuer would not be permitted at such time to
issue such Letter of Credit in its amended form under the terms hereof.

(v)           An L/C Issuer shall be under no
obligation to amend any Letter of Credit if (A) such L/C Issuer 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.

(vi)          An L/C Issuer shall act on behalf of
the Domestic Lenders or Canadian Lenders, as applicable, with respect to any
Letters of Credit issued by it and the documents associated therewith, and such
L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken
or omissions suffered by such L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article IX included such L/C Issuer with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.

(b)           Procedures for Issuance and
Amendment of Letters of Credit; Auto-Extension Letters of Credit.  (i) Each Letter of Credit shall be issued or
amended, as the case may be, upon the request of the applicable Borrower
delivered to the applicable L/C Issuer (with a copy to the applicable
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of such
Borrower.  Such L/C Application must be
received by the applicable L/C Issuer and the applicable Administrative Agent
not later than 8:00 a.m. in the case of Domestic Letters of Credit and 12:00
noon in the case of Canadian Letters of Credit at least two Business Days (or
such later date and time as such L/C Issuer may agree in a particular instance
in its sole discretion) prior to the proposed issuance date or date of amendment,
as the case may be.  In the case of a
request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the applicable L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full text
of any certificate to be presented by such beneficiary in case of any drawing
thereunder; and (G) such other matters as such L/C Issuer may require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the applicable L/C Issuer (A) the
Letter of Credit to be amended; (B) the proposed date of amendment thereof
(which shall be a Business Day); (C) the nature of the proposed amendment; and
(D) such other matters as such L/C Issuer may require.  Additionally, the applicable Borrower shall
furnish to the applicable L/C Issuer and the applicable Administrative Agent
such other documents and information pertaining to such requested Letter of
Credit issuance or amendment, including any Issuer Documents, as such L/C
Issuer or such Administrative Agent may require.

 34
 

 

(ii)           Promptly after receipt of any Letter
of Credit Application, the applicable L/C Issuer will confirm with such
Administrative Agent (by telephone or in writing) that such Administrative
Agent has received a copy of such Letter of Credit Application from the
applicable Borrower and, if not, such L/C Issuer will provide such
Administrative Agent with a copy thereof. 
Unless the applicable L/C Issuer has received written notice from any
Lender, an Administrative Agent or any Loan Party, at least one Business Day
prior to the requested date of issuance or amendment of the applicable Letter
of Credit, that one or more applicable conditions contained in Article IV
shall not then be satisfied, then, subject to the terms and conditions hereof,
such L/C Issuer shall, on the requested date, issue a Letter of Credit for the
account of the applicable Borrower or enter into the applicable amendment, as
the case may be, in each case in accordance with such L/C Issuer’s usual and
customary business practices. 
Immediately upon the issuance of each Domestic Letter of Credit, each
Domestic Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Domestic L/C Issuer a risk participation in such
Domestic Letter of Credit in an amount equal to the product of such Domestic
Lender’s Applicable Percentage times the amount of such Domestic Letter of
Credit.  Immediately upon the issuance of
each Canadian Letter of Credit, each Canadian Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Canadian
L/C Issuer a risk participation in such Canadian Letter of Credit in an amount
equal to the product of such Canadian Lender’s Applicable Percentage times the
amount of such Canadian Letter of Credit.

(iii)          If a Borrower so requests in any
applicable Letter of Credit Application, the applicable L/C Issuer may, in its
sole and absolute discretion, agree to issue a Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit such
L/C Issuer to prevent any such extension at least once in each twelve-month
period (commencing with the date of issuance of such Letter of Credit) by
giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed upon at the
time such Letter of Credit is issued. 
Unless otherwise directed by the applicable L/C Issuer, the applicable
Borrower shall not be required to make a specific request to such L/C Issuer
for any such extension.  Once an
Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to
have authorized (but may not require) the applicable L/C Issuer to permit the
extension of such Letter of Credit at any time to an expiry date not later than
the Letter of Credit Expiration Date; provided, however, that
such L/C Issuer shall not permit any such extension if (A) such L/C Issuer has
determined that it would not be permitted, or would have no obligation at such
time to issue such Letter of Credit in its revised form (as extended) under the
terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a)
or otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the applicable Administrative Agent that the
Required Lenders have elected not to permit such extension or (2) from the
applicable Administrative Agent, any applicable Lender or the applicable
Borrower that one or more of the applicable conditions specified in Section 4.02
is not then satisfied, and in each such case directing such L/C Issuer not to
permit such extension.

 35
 

 

(iv)          Promptly after its delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank
with respect thereto or to the beneficiary thereof, the applicable L/C Issuer
will also deliver to the applicable Borrower and the applicable Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

(c)           Drawings and Reimbursements;
Funding of Participations.  (i) Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the applicable L/C Issuer shall notify the
applicable Borrower and the applicable Administrative Agent thereof.  Not later than 11:00 a.m. on the date of any
payment by the applicable L/C Issuer under a Letter of Credit (each such date,
an “Honor Date”), the applicable Borrower shall reimburse the applicable
L/C Issuer through the applicable Administrative Agent in an amount equal to the
amount of such drawing.  If such Borrower
fails to so reimburse such L/C Issuer by such time, such Administrative Agent
shall promptly notify each applicable Lender of the Honor Date, the amount of
the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of
such Lender’s Applicable Percentage thereof. 
In such event, such Borrower shall be deemed to have requested a
Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an
amount equal to the Unreimbursed Amount, without regard to the minimum and
multiples specified in Section 2.02 for the principal amount of
Base Rate Loans, but subject to the amount of the unutilized portion of the
Aggregate Domestic Commitments or the Aggregate Canadian Commitments as
applicable and the conditions set forth in Section 4.02 (other than
the delivery of a Committed Loan Notice). 
Any notice given by an L/C Issuer or an Administrative Agent pursuant to
this Section 2.03(c)(i) may be given by telephone if immediately
confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.

(ii)           Each applicable Lender shall upon any
notice pursuant to Section 2.03(c)(i) make funds available to the
applicable Administrative Agent for the account of the applicable L/C Issuer at
such Administrative Agent’s Office in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by such Administrative Agent, whereupon, subject
to the provisions of Section 2.03(c)(iii), each Lender that so
makes funds available shall be deemed to have made a Base Rate Loan to the
applicable Borrower in such amount.  The
applicable Administrative Agent shall remit the funds so received to the
applicable L/C Issuer.

(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans
because the conditions set forth in Section 4.02 cannot be
satisfied or for any other reason, the applicable Borrower shall be deemed to
have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of
the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be
due and payable on demand (together with interest) and shall bear interest at
the Default Rate.  In such event, each
Lender’s payment to the applicable Administrative Agent for the account of such
L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment
in respect of its participation in such L/C Borrowing and shall constitute an
L/C Advance from such Lender in satisfaction of its participation obligation
under this Section 2.03.

 36
 

 

(iv)          Until each Lender funds its Committed
Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse
the applicable L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Applicable Percentage of such amount shall
be solely for the account of such L/C Issuer.

(v)           Each Lender’s obligation to make
Committed Loans or L/C Advances to reimburse an L/C Issuer for amounts drawn
under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against such L/C Issuer, the Borrowers
or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c)
is subject to the conditions set forth in Section 4.02 (other than
delivery by a Borrower of a Committed Loan Notice).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of a Borrower to reimburse the
applicable L/C Issuer for the amount of any payment made by such L/C Issuer
under any Letter of Credit, together with interest as provided herein.

(vi)          If any Lender fails to make available
to the applicable Administrative Agent for the account of the applicable L/C
Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
such L/C Issuer shall be entitled to recover from such Lender (acting through
such Administrative Agent), on demand, such amount with interest thereon for
the period from the date such payment is required to the date on which such
payment is immediately available to such L/C Issuer at a rate per annum equal
to the greater of the Federal Funds Rate (in the case of the Domestic L/C
Issuer) or the Interbank Reference Rate (in the case of the Canadian L/C
Issuer) and a rate determined by such L/C Issuer in accordance with banking
industry rules on interbank compensation, plus any administrative, processing
or similar fees customarily charged by such L/C Issuer in connection with the
foregoing.  If such Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case
may be.  A certificate of the applicable
L/C Issuer submitted to any Lender (through the applicable Administrative
Agent) with respect to any amounts owing under this Section 2.03(c)(vi)
shall be conclusive absent manifest error.

(d)           Repayment of Participations.  (i) At any time after an L/C Issuer has made
a payment under any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c),
if the applicable Administrative Agent receives for the account of such L/C
Issuer any payment in respect of the related Unreimbursed Amount or interest
thereon (whether directly from the applicable Borrower or otherwise, including
proceeds of Cash Collateral applied thereto by such Administrative Agent), such
Administrative Agent will distribute to such Lender its Applicable Percentage
thereof in the same funds as those received by such Administrative Agent.

 37
 

 

(ii)           If any payment received by an
Administrative Agent for the account of an L/C Issuer pursuant to Section 2.03(c)(i)
is required to be returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by such L/C Issuer in its
discretion), each applicable Lender shall pay to the applicable Administrative
Agent for the account of such L/C Issuer its Applicable Percentage thereof on
demand of such Administrative Agent, plus interest thereon from the date
of such demand to the date such amount is returned by such Lender, at a rate
per annum equal to the Federal Funds Rate (in the case of the Domestic L/C
Issuer) or the Interbank Reference Rate (in the case of the Canadian L/C
Issuer) from time to time in effect.  The
obligations of the Lenders under this clause shall survive the payment in full
of the Obligations and the termination of this Agreement.

(e)           Obligations Absolute.  The obligation of each Borrower to reimburse
the applicable L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

(i)            any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other Loan
Document;

(ii)           the existence of any claim,
counterclaim, setoff, defense or other right that such Borrower or any
Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), such L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

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

(iv)          any payment by such L/C Issuer under
such Letter of Credit against presentation of a draft or certificate that does
not strictly comply with the terms of such Letter of Credit; or any payment
made by such L/C Issuer under such Letter of Credit to any Person purporting to
be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any arising
in connection with any proceeding under any Debtor Relief Law; or

(v)           any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, such Borrower or any of its Subsidiaries.

 38
 

 

The applicable Borrower shall promptly examine a copy
of each Letter of Credit and each amendment thereto that is delivered to it and,
in the event of any claim of noncompliance with such Borrower’s instructions or
other irregularity, such Borrower will immediately notify the applicable L/C
Issuer.  Such Borrower shall be
conclusively deemed to have waived any such claim against such L/C Issuer and
its correspondents unless such notice is given as aforesaid.

(f)            Role of L/C Issuers.  Each Lender and the Borrowers agree that, in
paying any drawing under a Letter of Credit, the L/C Issuers shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuers, the Administrative
Agents, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuers shall be liable to any Lender for
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document.  Each Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee
with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude such Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuers, the Administrative Agents, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuers shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided, however,
that anything in such clauses to the contrary notwithstanding, a Borrower may
have a claim against an L/C Issuer, and such L/C Issuer may be liable to a
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by such Borrower which such
Borrower proves were caused by such L/C Issuer’s willful misconduct or gross
negligence or such L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit.  In furtherance and not in
limitation of the foregoing, an L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and such L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

(g)           Cash Collateral.  Upon the request of the applicable
Administrative Agent, (i) if an L/C Issuer has honored any full or partial drawing
request under any Letter of Credit and such drawing has resulted in an L/C
Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C
Obligation for any reason remains outstanding, the applicable Borrower shall,
in each case, immediately Cash Collateralize the then Outstanding Amount of all
L/C Obligations.  Sections 2.04
and 8.02(c) set forth certain additional requirements to deliver Cash
Collateral hereunder.  For purposes of
this Section 2.03, Section 2.04 and Section 8.02(c),
“Cash Collateralize” means to pledge and deposit with or deliver to the
applicable Administrative Agent, for the benefit of the applicable L/C Issuer
and the applicable Lenders, as collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and

 39
 

 

substance satisfactory to such Administrative Agent
and such L/C Issuer (which documents are hereby consented to by the
Lenders).  Derivatives of such term have
corresponding meanings.  Each Borrower
hereby grants to the applicable Administrative Agent, for the benefit of the
applicable L/C Issuer and the Lenders, a security interest in all such cash,
deposit accounts and all balances therein and all proceeds of the
foregoing.  Cash Collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Bank of America
or Bank of America Canada, as applicable. 
If at any time an Administrative Agent determines that any funds held as
Cash Collateral are subject to any right or claim of any Person other than such
Administrative Agent or that the total amount of such funds is less than the
aggregate Outstanding Amount of all applicable L/C Obligations, the applicable
Borrower will, forthwith upon demand by the applicable Administrative Agent,
pay to such Administrative Agent, as additional funds to be deposited as Cash
Collateral, an amount equal to the excess of (x) such aggregate Outstanding
Amount over (y) the total amount of funds, if any, then held as Cash Collateral
that such Administrative Agent determines to be free and clear of any such
right and claim.  Upon the drawing of any
Letter of Credit for which funds are on deposit as Cash Collateral, such funds
shall be applied, to the extent permitted under applicable Laws, to reimburse
the applicable L/C Issuer.

(h)           Applicability of ISP and UCP.  Unless otherwise expressly agreed by the
applicable L/C Issuer and Borrower when a Letter of Credit is issued, (i) the
rules of the ISP shall apply to each standby Letter of Credit, and (ii) the
rules of the Uniform Customs and Practice for Documentary Credits, as most
recently published by the International Chamber of Commerce at the time of
issuance shall apply to each commercial Letter of Credit.

(i)            Letter of Credit Fees.  Each Borrower shall pay to the applicable
Administrative Agent for the account of each applicable Lender in accordance
with its Applicable Percentage a Letter of Credit fee (the “Letter of Credit
Fee”) (i) for each commercial Letter of Credit issued for such Borrower’s
account at such rates as may be mutually agreed by such Borrower and L/C Issuer
and (ii) for each standby Letter of Credit issued for such Borrower’s account
equal to the Applicable Rate for Eurodollar Rate Loans times the daily
amount available to be drawn under such Letter of Credit.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due and
payable on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand and
(ii) computed on a quarterly basis in arrears. 
If there is any change in the Applicable Rate during any quarter, the
daily amount available to be drawn under each Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

(j)            Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer. 
Each Borrower shall pay directly to the applicable L/C Issuer for its
own account a fronting fee (i) with respect to each commercial Letter of Credit
issued for such Borrower’s account, at such rates as may be mutually agreed by
such Borrower and L/C Issuer, (ii) with

 40
 

 

respect to any amendment of a commercial Letter of
Credit increasing the amount of such Letter of Credit, at a rate separately
agreed between such Borrower and the L/C Issuer, computed on the amount of such
increase, and payable upon the effectiveness of such amendment, and (iii) with
respect to each standby Letter of Credit, at such rates as may be mutually
agreed by such Borrower and L/C Issuer; provided that no fronting fee
shall be charged with respect to any period when there is only one Lender under
this Agreement.  Such fronting fee
pursuant to clauses (i) and (iii) above shall be due and payable on the last
Business Day of each March, June, September and December in respect of the most
recently-ended quarterly period (or portion thereof, in the case of the first
payment), commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter
on demand.  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, such Borrower shall pay directly
to the applicable L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of such L/C Issuer relating to letters of credit as from time to time
in effect.  Such customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

(k)           Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

(l)            Letters of Credit Issued for
Subsidiaries.  Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, the applicable Borrower
shall be obligated to reimburse the applicable L/C Issuer hereunder for any and
all drawings under such Letter of Credit. 
Each Borrower hereby acknowledges that the issuance of Letters of Credit
for the account of its Subsidiaries inures to the benefit of such Borrower, and
that such Borrower’s business derives substantial benefits from the businesses
of such Subsidiaries.

2.04        Prepayments.  (a) Each Borrower may, upon notice to the
applicable Administrative Agent, at any time or from
time to time voluntarily prepay Committed Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by such
Administrative Agent not later than 10:00 a.m. (A) three Business Days prior to
any date of prepayment of Eurodollar Rate Committed Loans, and (B) on the date
of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar
Rate Committed Loans shall be in a principal amount of  $5,000,000 (or Cdn. $5,000,000) or a whole
multiple of $1,000,000 (or Cdn. $1,000,000) in excess thereof; and (iii) any
prepayment of Base Rate Committed Loans shall be in a principal amount of
$500,000 (or Cdn. $500,000) or a whole multiple of $100,000 (or Cdn. $100,000)
in excess thereof.  Each such notice
shall specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid.  Such
Administrative Agent will promptly notify each applicable Lender of its receipt
of each such notice, and of such Lender’s Applicable Percentage of such
prepayment.  If such notice is given by a
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein.  Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest thereon, together with
any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
applicable Committed Loans of the applicable Lenders in accordance with their
respective Applicable Percentages.

 41
 

 

(b)           If for any reason the Outstanding
Amount of all Domestic Loans and Domestic L/C Obligations at any time exceeds
the Aggregate Domestic Commitments then in effect, the Domestic Borrower shall
immediately prepay Domestic Loans and/or Cash Collateralize the Domestic L/C
Obligations in an aggregate amount equal to such excess.  If for any reason the Outstanding Amount of
all Canadian Loans and Canadian L/C Obligations at any time exceeds the
Aggregate Canadian Commitments then in effect, the Canadian Borrower shall
immediately prepay Canadian Loans and/or Cash Collateralize the Canadian L/C
Obligations in an aggregate amount equal to such excess.

2.05        Reduction
or Termination of Commitments.  (a)
Each Borrower may, upon notice to the applicable Administrative Agent,
terminate the Aggregate Commitments, or permanently reduce the sum thereof to
an amount not less than the then Outstanding Amount of all Loans to, and L/C
Obligations of, the Borrowers; provided that (i) any such notice shall
be received by such Administrative Agent not later than 10:00 a.m. two Business
Days prior to the date of termination or reduction, (ii) such Borrower shall
specify which Commitment is to be so reduced, and (iii) any such partial
reduction shall be in an aggregate amount of $5,000,000 (or Cdn. $5,000,000) or
any whole multiple of $1,000,000 (or Cdn. $1,000,000) in excess thereof;

(b)           The applicable Administrative Agent
shall promptly notify the applicable Lenders of any such notice of reduction or
termination of the Aggregate Commitments. 
Once reduced in accordance with this Section, the Aggregate Commitments
may not be increased.  Any such reduction
shall be applied to the Commitment of each applicable Lender according to its
Applicable Percentage.  All fees accrued
on the Aggregate Domestic Commitments or Aggregate Canadian Commitments that
are terminated, until the effective date of any termination, shall be paid on
the effective date of such termination.

2.06        Repayment
of Loans.  Each Borrower shall repay
to the applicable Lenders on the Maturity Date the aggregate principal amount of Committed
Loans outstanding on such date to such Borrower.

2.07        Interest.  (a) Subject to the provisions of Section 2.07(b),
(i) each Eurodollar Rate Committed Loan shall bear
interest on the outstanding principal amount thereof for each Interest Period
at a rate per annum equal to the Eurodollar Rate for such Interest Period plus
the Applicable Rate; and (ii) each Base Rate Committed Loan shall bear interest
on the outstanding principal amount thereof from the applicable borrowing date
at a rate per annum equal to the applicable Base Rate plus the Applicable Rate.

(b)           (i)            If
any amount of principal of any Loan is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter, upon the election of Required Lenders,
bear interest at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.

(ii)           If any amount (other than principal
of any Loan) payable by either Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, then upon the request of the Required
Lenders such amount shall thereafter bear interest at a

 42
 

 

fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.

(iii)          Upon the request of the Required
Lenders, while any Event of Default exists, the Borrowers shall pay interest on
the principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.

(iv)          Accrued and unpaid interest on past
due amounts (including interest on past due interest) shall be due and payable
upon demand.

(c)           Interest on each Loan shall be due
and payable in arrears on each Interest Payment Date applicable thereto and at
such other times as may be specified herein. 
Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

2.08        Fees.  In addition to certain fees described in
subsections (i) and (j) of Section 2.03:

(a)           Commitment Fee.  Each Borrower shall pay to the applicable
Administrative Agent for the account of each applicable Lender in accordance
with its Applicable Percentage, a commitment fee equal to the Applicable
Commitment Fee Percentage times the actual daily amount by which the Aggregate
Domestic Commitments or Aggregate Canadian Commitments as applicable, exceed
the sum of (i) the Outstanding Amount of Committed Loans to such Borrower and
(ii) the Outstanding Amount of L/C Obligations of such Borrower.  The commitment fee shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September
and December, commencing with the first such date to occur after the Closing
Date, and on the Maturity Date.  The
commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Commitment Fee Percentage during any quarter, the
actual daily amount shall be computed and multiplied by the Applicable
Commitment Fee Percentage separately for each period during such quarter that
such Applicable Commitment Fee Percentage was in effect.  The commitment fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article IV is not met.

(b)           Other Fees.  Each Borrower shall pay to the Administrative
Agents fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.  The Borrowers shall pay to the Lenders such
fees as shall have been separately agreed upon in writing in the amounts and at
the times so specified.  Such fees shall
be fully earned when paid and shall not be refundable.

2.09        Computation
of Interest and Fees.  All
computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime
rate” shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed.  All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the

 43
 

 

basis of a 365-day year).  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof,
for the day on which the Loan or such portion is paid, provided that any
Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a),
bear interest for one day.  Each rate of
interest which is calculated with reference to a period (the “deemed interest
period”) that is less than the actual number of days in the calendar year of
calculation is, for the purposes of the Interest Act
(Canada), equivalent to a rate based on a calendar year calculated by
multiplying such rate of interest by the actual number of days in the calendar
year of calculation and dividing by the number of days in the deemed interest
period.  Each determination by an
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

2.10        Evidence
of Debt.  (a) The Credit Extensions
made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender
and by the applicable Administrative Agent in the ordinary course of
business.  The accounts or records
maintained by the Administrative Agents and each Lender shall be conclusive
absent manifest error of the amount of the Credit Extensions made by the
Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in doing
so shall not, however, limit or otherwise affect the obligation of the
Borrowers hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agents in respect of such matters, the accounts and records
of the applicable Administrative Agent shall control in the absence of manifest
error.  Upon the request of any Lender
made through the applicable Administrative Agent, the applicable Borrower shall
execute and deliver to such Lender (through the applicable Administrative
Agent) a Note, which shall evidence such Lender’s Loans in addition to such
accounts or records.  Each Lender may
attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect
thereto.

(b)           In addition to the accounts and
records referred to in Section 2.10(a), each Lender and the
Administrative Agents shall maintain in accordance with their usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit.  In
the event of any conflict between the accounts and records maintained by the
Administrative Agents and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agents shall
control in the absence of manifest error.

2.11        Payments
Generally; Administrative Agent’s Clawback. 
(a) General.  All payments
to be made by the Borrowers
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder shall
be made to the applicable Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office of such Administrative Agent in Dollars or, in the case of payments
regarding Canadian Loans or Canadian Letters of Credit, in Canadian Dollars,
and, in all cases, in immediately available funds not later than 2:00 p.m. on
the date specified herein.  Such
Administrative Agent will promptly distribute to each applicable Lender its
Applicable Percentage (or other applicable share as provided herein) of such
payment in like funds as received by wire transfer to such Lender’s Lending
Office.  All payments received by the

 44

 

Administrative Agents after 2:00 p.m. shall be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue.  If any payment
to be made by the Borrowers shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of
time shall be reflected on computing interest or fees, as the case may be.

(b)           (i)            Funding
by Lenders; Presumption by Administrative Agent.  Unless an Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Committed
Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing
of Base Rate Loans, prior to 12:00 noon on the date of such Committed
Borrowing) that such Lender will not make available to such Administrative
Agent such Lender’s share of such Committed Borrowing, such Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.02 (or, in the case of a Committed
Borrowing of Base Rate Loans, that such Lender has made such share available in
accordance with and at the time required by Section 2.02) and may,
in reliance upon such assumption, make available to the applicable Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Committed Borrowing
available to the applicable Administrative Agent, then the applicable Lender
and Borrower severally agree to pay to such Administrative Agent forthwith on
demand such corresponding amount in immediately available funds with interest
thereon, for each day from and including the date such amount is made available
to such Borrower to but excluding the date of payment to such Administrative
Agent, at (A) in the case of a payment to be made by such Lender to the
Domestic Administrative Agent, the greater of the Federal Funds Rate and a rate
determined by the Domestic Administrative Agent in accordance with banking
industry rules on interbank compensation and in the case of a payment to be
made by such Lender to the Canadian Administrative Agent, the Interbank
Reference Rate, plus in either case any administrative, processing or similar
fees customarily charged by such Administrative Agent in connection with the
foregoing, and (B) in the case of a payment to be made by a Borrower, the
interest rate applicable to Base Rate Loans. 
If a Borrower and such Lender shall pay such interest to an
Administrative Agent for the same or an overlapping period, such Administrative
Agent shall promptly remit to such Borrower the amount of such interest paid by
such Borrower for such period.  If such
Lender pays its share of the applicable Committed Borrowing to the applicable
Administrative Agent, then the amount so paid shall constitute such Lender’s
Loan included in such Committed Borrowing. 
Any payment by a Borrower shall be without prejudice to any claim such
Borrower may have against a Lender that shall have failed to make such payment
to the applicable Administrative Agent.

(ii)           Payments by Borrowers;
Presumptions by Administrative Agents. 
Unless an Administrative Agent shall have received notice from a
Borrower prior to the time at which any payment is due to the Administrative
Agent for the account of the Lenders or the L/C Issuer hereunder that such
Borrower will not make such payment, such 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 Appropriate Lenders or
the L/C Issuer, as the case may be, the amount due.  In such event, if a Borrower has not in fact
made such payment, then each of the Appropriate Lenders or the L/C Issuer, as
the case may be, severally agrees to repay to such Administrative Agent forthwith
on demand the amount so distributed to such Lender

 45
 

 

or the L/C Issuer, in
immediately available funds 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 such Administrative Agent, in the case of repayments to the
Domestic Administrative Agent at the greater of the Federal Funds Rate and a
rate determined by such Administrative Agent in accordance with banking
industry rules on interbank compensation and in the case of repayments to the
Canadian Administrative Agent, at the Interbank Reference Rate.

A notice of an Administrative Agent to any Lender or
Borrower with respect to any amount owing under this subsection (b) shall be
conclusive, absent manifest error.

(c)           Failure to Satisfy Conditions
Precedent.  If any Lender makes
available to an Administrative Agent funds for any Loan to be made by such
Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the applicable Borrower by such
Administrative Agent because the conditions to the applicable Credit Extension
set forth in Article IV are not satisfied or waived in accordance
with the terms hereof, such Administrative Agent shall return such funds (in
like funds as received from such Lender) to such Lender, without interest.

(d)           Obligations of Lenders Several.  The obligations of the Lenders hereunder to
make Loans, to fund participations in Letters of Credit and to make payments
pursuant to Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan,
to fund any such participation or to make any payment under Section 10.04(c)
on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan, to
purchase its participation or to make its payment under Section 10.04(c).

(e)           Funding Source.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.

(f)            Insufficient Funds.  If at any time insufficient funds are
received by and available to an Administrative Agent to pay fully all amounts
of principal, L/C Borrowings, 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 (ii) second,
toward payment of principal and L/C Borrowings then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of principal
and L/C Borrowings then due to such parties.

2.12        Sharing
of Payments by Lenders.  (a) If any
Domestic Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain
payment in respect of (a) Obligations due and payable to such Domestic Lender
hereunder and under the other Loan Documents at such time in excess of its
ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Domestic Lender at such time to (ii) the
aggregate amount of the Obligations due and payable to all Domestic Lenders
hereunder and under the other Loan Documents at such time) of payments on
account of the Obligations due and payable to all

 46
 

 

Domestic Lenders hereunder and under the other Loan Documents
at such time obtained by all the Domestic Lenders at such time or (b)
Obligations owing (but not due and payable) to such Domestic Lender hereunder
and under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing (but
not due and payable) to such Domestic Lender at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Domestic
Lenders hereunder and under the other Loan Documents at such time) of payment
on account of the Obligations owing (but not due and payable) to all Domestic
Lenders hereunder and under the other Loan Documents at such time obtained by
all of the Domestic Lenders at such time then the Domestic Lender receiving
such greater proportion shall (a) notify the Domestic Administrative Agent of
such fact, and (b) purchase (for cash at face value) participations in the
Domestic Loans and subparticipations in L/C Obligations of the other Domestic
Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Domestic Lenders ratably in
accordance with the aggregate amount of Obligations then due and payable to the
Domestic Lenders or owing (but not due and payable) to the Domestic Lenders, as
the case may be, provided that:

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

(ii)           the provisions of this Section shall
not be construed to apply to (A) any payment made by the Domestic Borrower
pursuant to and in accordance with the express terms of this Agreement or (B)
any payment obtained by a Lender as consideration for the assignment of or sale
of a participation in any of its Domestic Loans or subparticipations in L/C
Obligations to any assignee or participant, other than to the Domestic Borrower
or any Subsidiary thereof (as to which the provisions of this Section shall
apply).

(b)           If any Canadian Lender shall, by
exercising any right of setoff or counterclaim or otherwise, obtain payment in
respect of (a) Obligations due and payable to such Canadian Lender hereunder
and under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Canadian Lender at such time to (ii) the aggregate amount of
the Obligations due and payable to all Canadian Lenders hereunder and under the
other Loan Documents at such time) of payments on account of the Obligations
due and payable to all Canadian Lenders hereunder and under the other Loan Documents
at such time obtained by all the Canadian Lenders at such time or (b)
Obligations owing (but not due and payable) to such Canadian Lender hereunder
and under the other Loan Documents at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing (but
not due and payable) to such Canadian Lender at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Canadian
Lenders hereunder and under the other Loan Documents at such time) of payment
on account of the Obligations owing (but not due and payable) to all Canadian
Lenders hereunder and under the other Loan Documents at such time obtained by
all of the Canadian Lenders at such time then the Canadian Lender receiving
such greater proportion shall (a) notify the Canadian Administrative Agent of
such fact, and (b) purchase (for cash at face

 47
 

 

value) participations in the Canadian Loans and
subparticipations in L/C Obligations of the other Canadian Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Canadian Lenders ratably in accordance with the
aggregate amount of Obligations then due and payable to the Canadian Lenders or
owing (but not due and payable) to the Canadian Lenders, as the case may be,
provided that:

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

(ii)           the provisions of this Section shall
not be construed to apply to (A) any payment made by the Canadian Borrower
pursuant to and in accordance with the express terms of this Agreement or (B)
any payment obtained by a Canadian Lender as consideration for the assignment
of or sale of a participation in any of its Canadian Loans or subparticipations
in L/C Obligations to any assignee or participant, other than to the Canadian
Borrower or any Subsidiary thereof (as to which the provisions of this Section
shall apply).

(c)           From and after the earlier of (i) the
occurrence of an Event of Default under Section 8.01(f) or (g)
or (ii) the occurrence of any Event of Default and the acceleration of the
Obligations hereunder (each such occurrence, a “Sharing Event”), each
Lender (x) agrees to purchase from each other Lender, and each such other
Lender agrees to sell, a risk participation in such other Lender’s outstanding
Loans such that, after giving effect to such purchase and sale, each Lender
holds a risk participation in each outstanding Loan in an amount equal to such
Lender’s Aggregate Applicable Percentage and (y) agrees that its risk
participation in each L/C Obligation shall be adjusted (through purchase and
sale or otherwise) to an amount equal to such Lender’s Aggregate Applicable
Percentage thereof.  It is the intention
of the Lenders that after giving effect to the foregoing, each Lender shall
hold an interest in each outstanding Loan and L/C Obligation equal to such
Lender’s Aggregate Applicable Percentage, and each Lender agrees to take such
actions as may be reasonably requested by the Administrative Agents to effect
the foregoing.  Notwithstanding anything
to the contrary in Section 2.13(a) or (b), if, from and
after a Sharing Event, any Lender shall obtain on account of the Committed
Loans made by it, or its participations in L/C Borrowings regarding Letters of
Credit, any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its Aggregate Applicable
Percentage thereof, such Lender shall immediately (a) notify the Administrative
Agents of such fact, and (b) purchase from the other Lenders such participations
in the Committed Loans made by them and/or such subparticipations in the
participations in L/C Borrowings regarding Letters of Credit as shall be
necessary to cause such purchasing Lender to share the excess payment in
respect of such Committed Loans or such participations, as the case may be,
with each of them according to each such Lender’s Aggregate Applicable
Percentage; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each such other Lender shall
repay to the purchasing Lender the purchase price paid therefor, together with
an amount equal to such paying Lender’s ratable share (according to the
proportion of (i) the amount of such paying Lender’s required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender

 48
 

 

in respect of the total amount so recovered.  The Borrowers agree that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.08) with respect to such
participation as fully as if such Lender were the direct creditor of the
applicable Borrower in the amount of such participation.  The Administrative Agents will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.  Each Lender that purchases a participation
pursuant to this Section shall from and after such purchase have the right to
give all notices, requests, demands, directions and other communications under
this Agreement with respect to the portion of the Obligations purchased to the
same extent as though the purchasing Lender were the original owner of the
Obligations purchased.

(d)           The Borrowers consent to the foregoing
and agree, to the extent they may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against each Borrower rights of setoff and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of such
Borrower in the amount of such participation.

2.13        Reallocation
of Aggregate Commitments.

(a)           Request for Reallocation.  Provided there exists no Event of Default,
upon notice to the Domestic Administrative Agent (which shall promptly notify
the Canadian Administrative Agent and the Lenders), the Borrowers may from time
to time request a reallocation of the Aggregate Commitments between the
Domestic Facility and the Canadian Facility; provided that (i) any such
request shall be in a minimum amount of $1,000,000, (ii) the Borrowers may make
a maximum of twelve such requests in any year, and (iii) in no event shall the
Aggregate Canadian Commitments exceed the Dollar Equivalent of $15,000,000 as of
the date of such reallocation.

(b)           Lender Elections to Reallocate.  Each Lender shall notify the Domestic
Administrative Agent within ten days of the receipt of such notice from a
Borrower whether or not it agrees to reallocate its Commitments and, if so,
whether by an amount equal to, greater than, or less than its Applicable
Percentage of such requested reallocation. 
Any Lender not responding within such time period shall be deemed to
have declined.  Notwithstanding the
foregoing, only a Canadian Lender may have a Commitment for a Canadian Loan.

(c)           Notification by Domestic
Administrative Agent; Additional Lenders. 
The Domestic Administrative Agent shall promptly notify the Canadian
Administrative Agent, the Borrowers and each Lender of the Lenders’ responses
to each request made hereunder.  To
achieve the full amount of a requested reallocation, and subject to the
approval of the Domestic Administrative Agent and the L/C Issuers (which
approvals shall not be unreasonably withheld), the Borrowers may also invite
additional Eligible Assignees to become Lenders pursuant to a joinder agreement
in form and substance satisfactory to the Domestic Administrative Agent.

(d)           Effective Date and Allocations.  If the Aggregate Commitments are reallocated
in accordance with this Section, the Domestic Administrative Agent and the

 49
 

 

Borrowers shall determine the effective date (the “Effective
Date”) of such reallocation and the final allocations, which shall in no
event be later than fifteen Business Days after receipt by the Domestic
Administrative Agent of the Borrower’s request therefor (unless such Borrower
consents to a later date).  The Domestic
Administrative Agent shall promptly notify the Canadian Administrative Agent,
the Borrowers and the Lenders of the final allocations and the Effective Date.

(e)           Conditions to Effectiveness.  The Borrowers shall prepay any Committed
Loans outstanding on the Effective Date (and pay any additional amounts
required pursuant to Section 3.05) to the extent necessary to keep
the outstanding Committed Loans ratable with any revised Applicable Percentages
arising from any reallocation of the Commitments under this Section.

2.14        Suballocation
of Letter of Credit Sublimits.

(a)           Request for Allocation.  Upon notice to the Domestic Administrative
Agent (which shall promptly notify the Domestic Lenders or the Canadian
Lenders, as applicable), a Borrower may from time to time request an allocation
or reallocation of a portion of the Domestic Letter of Credit Sublimit or the
Canadian Letter of Credit Sublimit to the Hong Kong Branch of the Domestic
Administrative Agent; provided that (i) any such request shall be in a
minimum amount of $100,000, (ii) the Borrowers may make a maximum of twelve
such requests in any year, (iii) in no event shall the amount so allocated by
the Canadian Borrower exceed the Canadian Letter of Credit Sublimit then in
effect and (iv) in no event shall the aggregate amount so allocated by the
Domestic Borrower and the Canadian Borrower exceed the Domestic Letter of Credit
Sublimit then in effect.  Any amounts so
allocated or reallocated may be reallocated by the Borrower to its Letter of
Credit Sublimit at any time and from time to time.  If a Borrower shall allocate or reallocate
amounts to or from its Letter of Credit Sublimit, the Domestic Administrative
Agent and such Borrower shall determine the effective date of such allocation
or reallocation, which shall in no event be before the fifth Business Day
immediately following the date of such notice. 
The Hong Kong Subfacility is part of, and not in addition to, the
Domestic Letter of Credit Sublimit and the Canadian Letter of Credit Sublimit.

(b)           Utilization of Hong Kong
Subfacility.  It is understood that
amounts allocated to the Domestic Administrative Agent’s Hong Kong Branch may
be utilized by the Borrowers for the issuance of commercial Letters of Credit,
the issuance of shipside bonds of up to 180 days and other trade products
reasonably acceptable to the Hong Kong Branch of the Domestic Administrative
Agent, and that availability for Letters of Credit under the Domestic
Commitments or Canadian Commitments, as applicable, shall be reduced by the
allocation to the Hong Kong Subfacility. 
The applicable Borrower shall pay to the Domestic Administrative Agent’s
Hong Kong office fees on any shipside bonds and other trade products at such
rates and times as may be mutually agreed by such Borrower and office. 

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01        Taxes.  (a) Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any
other Loan Document shall be made free

 50
 

 

and clear of and without reduction or withholding for
any Indemnified Taxes or Other Taxes, provided that if the Borrowers shall be
required by applicable law to deduct or withhold 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 or
withholdings (including deductions applicable to additional sums payable under
this Section) the applicable Administrative Agent, any Lender or the applicable
L/C Issuer, as the case may be, receives an amount equal to the sum it would
have received had no such deductions or withholdings been made, (ii) the
applicable Borrower shall make such deductions or withholdings and (iii) the
applicable Borrower shall timely pay the full amount deducted or withheld to
the relevant Governmental Authority in accordance with applicable law.

(b)           Payment of Other Taxes by the
Borrowers.  Without limiting the
provisions of subsection (a) above, the Borrowers shall timely pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)           Indemnification by the Borrowers.  The Borrowers shall indemnify the
Administrative Agents, each Lender and the L/C Issuers, 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 such Administrative Agent, such
Lender or such L/C Issuer, 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 the applicable Borrower by a Lender or L/C
Issuer (with a copy to the applicable Administrative Agent), or by an
Administrative Agent on its own behalf or on behalf of a Lender or an L/C
Issuer, shall be conclusive absent manifest error.

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

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

 51
 

 

(f)            Treatment of Certain Refunds.  If an Administrative Agent, any Lender or an
L/C Issuer determines, in its good faith discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by a
Borrower or with respect to which a Borrower has paid additional amounts
pursuant to this Section 3.01, it shall pay to such Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by such Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out of pocket
expenses of such Administrative Agent, such Lender or such L/C Issuer, 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 such
Borrower, upon the request of such Administrative Agent, such Lender or such
L/C Issuer, agrees to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Administrative Agent, such Lender or such L/C Issuer if such
Administrative Agent, such Lender or such L/C Issuer is required to repay such
refund to such Governmental Authority. 
This subsection shall not be construed to require any Administrative
Agent, any Lender or any L/C Issuer to make available its Tax returns (or any
other information relating to its Taxes that it deems confidential) to the
Borrowers.

(g)           Contest.  If a Borrower determines in good faith that a
reasonable basis exists for contesting a Tax or Other Tax with respect to which
the Borrower has paid an additional amount under this Section 3.01,
the relevant Lender, Administrative Agent or L/C Issuer, as applicable, shall
cooperate with the Borrower (but shall have no obligation to disclose any
confidential information, unless arrangements satisfactory to the relevant
Lender have been made to preserve the confidential nature of such information)
in challenging such Tax or Other Tax at the Borrower’s expense if requested by
the Borrower (it being understood and agreed that none of the Administrative
Agents, L/C Issuers or any Lender shall have any obligation to contest, or any
responsibility for contesting, any Tax), and any cost incurred by the relevant
Lender, Administrative Agent, or L/C Issuer in connection with its cooperation
shall be borne by the relevant Borrower.

3.02        Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority
has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or to determine or
charge interest rates based upon the Eurodollar Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to the applicable Borrower
through the applicable Administrative Agent, any obligation of such Lender to
make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies such
Administrative Agent and such Borrower that the circumstances giving rise to
such determination no longer exist.  Upon
receipt of such notice, such Borrower shall, upon demand from such Lender (with
a copy to the applicable Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate
Loans.  Upon any such prepayment or
conversion, the applicable Borrower shall also pay accrued interest on the
amount so prepaid or converted.  

 52
 

 

3.03        Inability
to Determine Rates.  If the Required
Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan
or a conversion to or continuation thereof that (a) Dollar deposits are not
being offered to banks in the London interbank eurodollar market for the
applicable amount and Interest Period of such Eurodollar Rate Loan, (b)
adequate and reasonable means do not exist for determining the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the
cost to such Lenders of funding such Loan, the Administrative Agents will
promptly so notify the Borrower and each Lender.  Thereafter, the obligation of the Lenders to
make or maintain Eurodollar Rate Loans shall be suspended until the Administrative
Agents (upon the instruction of the Required Lenders) revoke such notice.  Upon receipt of such notice, the Borrowers
may revoke any pending request for a Committed Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Committed Borrowing of Base Rate
Loans in the amount specified therein.

3.04        Increased
Costs; Reserves on Eurodollar Rate Loans. 
(a) Increased Costs Generally. 
Subject to the provisions
of Section 3.01 (which shall be conclusive with respect to matters
covered thereby), 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
contemplated by Section 3.04(e)) or any L/C Issuer; 

(ii)           subject any Lender or any L/C Issuer
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 Rate Loan
made by it, or change the basis of taxation of payments to such Lender or L/C
Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered
by Section 3.01 and the imposition of, or any change in the rate
of, any Excluded Tax payable by such Lender or L/C Issuer); or

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

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Rate
Loan (or of maintaining its obligation to make any such Loan), or to increase
the cost to such Lender or such L/C Issuer 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 such L/C Issuer hereunder
(whether of principal, interest or any other amount) then, upon request of such
Lender or L/C Issuer, the applicable Borrower will pay to such Lender or such
L/C Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or such L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.

 53
 

 

(b)           Capital Requirements.  If any Lender or any L/C Issuer determines
that any Change in Law affecting such Lender or such L/C Issuer or any Lending
Office of such Lender or such Lender’s or such L/C Issuer’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 L/C Issuer’s capital or on the
capital of such Lender’s or such L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by such L/C Issuer, to a level below that which such Lender or
such L/C Issuer or such Lender’s or such L/C Issuer’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s
or such L/C Issuer’s policies and the policies of such Lender’s or such L/C
Issuer’s holding company with respect to capital adequacy), then from time to
time the applicable Borrower will pay to such Lender or such L/C Issuer, as the
case may be, such additional amount or amounts as will compensate such Lender
or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company for
any such reduction suffered.

(c)           Certificates for Reimbursement.  A certificate of a Lender or an L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or such
L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the applicable Borrower
shall be conclusive absent manifest error. 
Such Borrower shall pay such Lender or such L/C Issuer, 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
any L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender’s or such L/C Issuer’s
right to demand such compensation, provided that the Borrowers shall not
be required to compensate a Lender or an L/C Issuer pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or such L/C
Issuer, as the case may be, notifies the Borrowers of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or such L/C
Issuer’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).

(e)           Reserves on Eurodollar Rate Loans.  The Borrowers shall pay to each Lender, as
long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency liabilities”), additional interest on the
unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
the Borrowers shall have received at least 10 days’ prior notice (with a copy
to the Administrative Agents) of such additional interest from such
Lender.  If a Lender fails to give notice
10 days prior to the relevant Interest Payment Date, such additional interest
shall be due and payable 10 days from receipt of such notice.

 54
 

 

3.05        Compensation
for Losses.  Upon demand of any
Lender (with a copy to the applicable Administrative Agent) from time to time, the
applicable Borrower shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:

(a)           any continuation, conversion, payment
or prepayment of any Loan other than a Base Rate Loan on a day other than the
last day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise);

(b)           any failure by such Borrower (for a
reason other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by such Borrower; or

(c)           any assignment of a Eurodollar Rate
Loan on a day other than the last day of the Interest Period therefor as a
result of a request by such Borrower pursuant to Section 10.13;

including any loss of anticipated profits and any loss
or expense arising from the liquidation or reemployment of funds obtained by it
to maintain such Loan or from fees payable to terminate the deposits from which
such funds were obtained.  The applicable
Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

For purposes of calculating amounts payable by a
Borrower to the Lenders under this Section 3.05, each Lender shall
be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar
Rate for such Loan by a matching deposit or other borrowing in the London
interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

3.06        Mitigation
Obligations; Replacement of Lenders. 
(a) Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.04, or a Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.01, or if any Lender
gives a notice pursuant to Section 3.02, 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 3.01 or 3.04, as the case may
be, in the future, or eliminate the need for the notice pursuant to Section 3.02,
as applicable, and (ii) in each case, would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender.  The applicable Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
or if a Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01,
such Borrower may replace such Lender in accordance with Section 10.13.

 55
 

 

3.07        Survival.  All of the Borrowers’ obligations under this Article III
shall survive termination of the Aggregate Commitments
and repayment of all other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01        Conditions
of Initial Credit Extension.  The
obligation of the L/C Issuers and each Lender to make its initial Credit Extension hereunder
is subject to satisfaction of the following conditions precedent:

(a)           The Domestic Administrative Agent’s
receipt of the following, each of which shall be originals or telecopies
(followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the signing Loan Party, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance
satisfactory to the Domestic Administrative Agent:

(i)            executed counterparts of this
Agreement and the Guaranty, sufficient in number for distribution to the
Administrative Agents and the Borrowers;

(ii)           a Note executed by each Borrower in
favor of each Lender;

(iii)          a security agreement, in substantially
the form of Exhibit F (together with each other security agreement
and security agreement supplement delivered pursuant to Section 6.12,
in each case as amended, the “Security Agreement”), duly executed by each Loan
Party, together with:

(A)          Financing Statements in form
appropriate for filing under the Uniform Commercial Code of all jurisdictions
that the Domestic Administrative Agent may reasonably deem necessary or
desirable in order to perfect the Liens created under the Security Agreement,
covering the Collateral described in the Security Agreement,

(B)           completed requests for information,
dated on or before the date of the initial Credit Extension, including the
results of a recent search of all effective financing statements filed in the
jurisdiction of incorporation of each Loan Party that name any Loan Party as
debtor, together with copies of such other financing statements to the extent
reasonably requested by Domestic Administrative Agent,

(C)           evidence of the completion of all
other actions, recordings and filings of or with respect to the Security
Agreement that the Domestic Administrative Agent may reasonably deem necessary
or desirable in order to perfect the Liens created thereby, and

(D)          evidence that all other action that
the Domestic Administrative Agent may reasonably deem necessary or desirable in
order to

 56
 

 

perfect the Liens created
under the Security Agreement has been taken (including receipt of duly executed
payoff letters and UCC-3 termination statements);

(iv)          the Pledge Agreement, duly executed by
the Domestic Borrower and each Domestic Subsidiary that holds Equity Interests
in other Domestic Subsidiaries or in a first-tier Foreign Subsidiary, together
with: 

(A)          certificates, if any, representing the
pledged Equity Interests referred to therein accompanied by undated stock
powers executed in blank, and

(B)           Financing Statements in form
appropriate for filing under the Uniform Commercial Code of all jurisdictions
that the Domestic Administrative Agent may reasonably deem necessary or
desirable in order to perfect the Liens created under the Pledge Agreement,
covering the Collateral described in the Pledge Agreement; 

(v)           executed counterparts of the
Guaranty; 

(vi)          such certificates of resolutions or
other action, incumbency certificates and/or other certificates of the
secretary or a Responsible Officer of each Loan Party as the Administrative
Agents may reasonably require evidencing the identity, authority and capacity
of each Responsible Officer thereof authorized to act as a Responsible Officer
in connection with this Agreement and the other Loan Documents to which such
Loan Party is a party or is to be a party;

(vii)         such documents and certifications as
the Administrative Agents may reasonably require to evidence that each Loan
Party is duly organized or formed, and that each of the Borrowers and the
Guarantors is validly existing and in good standing in its jurisdiction of formation;

(viii)        favorable opinions of O’Melveny &
Myers LLP, Stikeman Elliott LLP, and the General Counsel to the Loan Parties,
addressed to the Domestic Administrative Agent and each Domestic Lender, as to
the matters set forth in Exhibit G and such other matters
concerning the Loan Parties and the Loan Documents as the Required Lenders may
reasonably request;

(ix)           a certificate of a Responsible
Officer of the Domestic Borrower either (A) stating that all consents, licenses
and approvals required in connection with the execution, delivery and
performance by each Loan Party and the validity against each Loan Party of the
Loan Documents to which it is a party have been obtained, and such consents,
licenses and approvals shall be in full force and effect, or (B) stating that
no such consents, licenses or approvals are so required;

(x)            a certificate signed by a
Responsible Officer of the Domestic Borrower certifying (A) that the conditions
specified in Sections 4.02(a) and (b) have been satisfied,
(B) that there has been no event or circumstance since the date of the Audited
Financial Statements that has had or would be reasonably expected to have,

 57
 

 

either individually or in
the aggregate, a Material Adverse Effect; and (C) a calculation of the Total
Adjusted Leverage Ratio as of the last day of the fiscal quarter of the
Domestic Borrower most recently ended prior to the Closing Date;

(xi)           certificates of insurance, naming the
Domestic Administrative Agent, on behalf of the Lenders, as an additional
insured or loss payee, as the case may be, under all insurance policies
maintained with respect to the assets and properties of the Loan Parties that
constitute Collateral;

(xii)          evidence that the Existing Credit
Agreement has been, or concurrently with the Closing Date is being, terminated
and all Liens securing obligations under the Existing Credit Agreement have
been, or concurrently with the Closing Date are being, released; and

(xiii)         such other assurances, certificates,
documents, consents or opinions as the Administrative Agents or the L/C Issuers
reasonably may require.

(b)           All fees required to be paid to the
Administrative Agents on or before the Closing Date shall have been paid.

(c)           Unless waived by the Administrative
Agents, the Domestic Borrower shall have paid all reasonable fees, charges and
disbursements of counsel to the Administrative Agents (directly to such counsel
if requested by the Administrative Agents) to the extent invoiced prior to or
on the Closing Date, plus such additional amounts of such reasonable fees,
charges and disbursements as shall constitute its reasonable estimate of such
fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude
a final settling of accounts between the Domestic Borrower and the
Administrative Agents).

Without limiting the generality of the provisions of Section 9.04,
for purposes of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Domestic Administrative Agent shall have
received notice from such Lender prior to the proposed Closing Date specifying
its objection thereto.

4.02        Conditions
to all Credit Extensions.  The
obligation of each Lender to honor any Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Loans to the other Type,
or a continuation of Eurodollar Rate Loans) is subject to the following
conditions precedent:

(a)           The representations and warranties of
the Domestic Borrower and each other Loan Party contained in Article V
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date, and except that for

 58
 

 

purposes of this Section 4.02, the
representations and warranties contained in Sections 5.05(a) and (b)
shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a)
and (b), respectively.

(b)           No Default shall exist and be
continuing, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.

(c)           The applicable Administrative Agent
and, if applicable, the applicable L/C Issuer shall have received a Request for
Credit Extension in accordance with the requirements hereof.

Each Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Loans to the other Type
or a continuation of Eurodollar Rate Loans) submitted by a Borrower shall be
deemed to be a representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable
Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Domestic Borrower represents and warrants to the
Administrative Agents and the Lenders that:

5.01        Existence,
Qualification and Power.  Each Loan
Party and each of its Subsidiaries (a) is duly organized or formed, validly existing and,
as applicable, in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and
all requisite governmental licenses, authorizations, consents and approvals to
(i) own or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party,
and (c) is duly qualified and is licensed and, as applicable, in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license; except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so would not reasonably be expected to have a Material
Adverse Effect.

5.02        Authorization;
No Contravention.  The execution,
delivery and performance by each Loan Party of each Loan Document to which such
Person is or is to be a party have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Person’s Organization Documents; (b)
conflict with or result in any material breach or contravention of, or the
creation of any Lien under (i) any material Contractual Obligation to which
such Person is a party or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law.

5.03        Governmental
Authorization; Other Consents.  No
approval, consent, exemption, authorization, or other action by any Governmental
Authority or any other Person is necessary or required in connection with (a)
the execution, delivery or performance by, or enforcement against, any Loan
Party of this Agreement or any other Loan Document, (b) the grant by any Loan
Party of the Liens granted by it pursuant to the Collateral Documents, or (c)
the perfection

 59
 

 

of the Liens created under the Collateral Documents
(including the first priority nature thereof), except such as have been
obtained.

5.04        Binding
Effect.  This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each
Loan Party that is party thereto.  This
Agreement constitutes, and each other Loan Document when so delivered will
constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against each Loan Party that is party thereto in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability.

5.05        Financial
Statements; No Material Adverse Effect; No Internal Control Event.  

(a)           The Audited Financial Statements (i)
were prepared in all material respects in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; (ii) fairly present in all material respects the financial condition
of the Domestic Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the Domestic Borrower and its
Subsidiaries as of the date thereof, including liabilities for Taxes, material
commitments and Indebtedness, in each case, to the extent required to be shown
thereon in accordance with GAAP.

(b)           The unaudited consolidated balance sheets
of the Domestic Borrower and its Subsidiaries dated July 1, 2006, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for the fiscal quarter ended on that date (i) were prepared in
all material respects in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present in all material respects the financial condition of the
Domestic Borrower and its Subsidiaries as of the date thereof and their results
of operations for the period covered thereby, subject, in the case of clauses
(i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments.  Schedule 7.02
sets forth all material indebtedness of the Domestic Borrower and its
consolidated Subsidiaries as of the Closing Date.

(c)           Since the date of the Audited
Financial Statements, there has been no event or circumstance, either
individually or in the aggregate, that has had or would reasonably be expected
to have a Material Adverse Effect.  

(d)           To the best knowledge of the Domestic
Borrower, no Internal Control Event exists or has occurred since the date of
the Audited Financial Statements that has resulted in or could reasonably be
expected to result in a Material Adverse Effect.

(e)           The consolidated forecasted balance
sheets, statements of income and cash flows of the Domestic Borrower and its
Subsidiaries delivered pursuant to Section 6.01(c) were prepared in
good faith on the basis of the assumptions stated therein, which assumptions
were believed to be reasonable in light of the conditions existing at the time
of delivery of such

 60
 

 

forecasts, it being understood that projections as to
future events are not to be viewed as facts and that actual results may differ
from the projections.

5.06        Litigation.  There are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of a Responsible
Officer of the Domestic Borrower, threatened, at law, in equity, in arbitration
or before any Governmental Authority, by or against the Domestic Borrower or
any of its Subsidiaries or against any of their properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
(b) except as specifically disclosed in  Schedule 5.06
(the “Disclosed Litigation”), either individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.

5.07        No
Default.  Neither any Loan Party nor
any Subsidiary thereof is in default under or with respect to, or a party to, any Contractual Obligation that would,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  No Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

5.08        Ownership
of Real Property; Liens.  (a) Each
Loan Party and each of its Subsidiaries has legal title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of
its business, except for such defects in title as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.  

(b)           As of the Closing Date, Schedule 7.01
sets forth a complete and accurate list of all Liens on the property or assets
(other than real property) of each Loan Party and all material Liens on the
property or assets (other than real property) of each of its Subsidiaries,
showing as of the date hereof the lienholder thereof and the property or assets
of such Loan Party or such Subsidiary subject thereto.  The property of each Loan Party and each of
its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

(c)           As of the Closing Date, Schedule 5.08(c)
sets forth a complete and accurate list of all real property owned in fee
simple by each Loan Party.  

(d)           As of the Closing Date, Schedule 5.08(d)
sets forth a complete and accurate list of all leases of real property under
which any Loan Party is the lessee.  To
the Domestic Borrower’s knowledge, each such lease is the legal, valid and
binding obligation of the lessor thereof, enforceable in accordance with its
terms.

(e)           As of the Closing Date, Schedule 7.03
sets forth a complete and accurate list of all Investments held by any Loan
Party or any Subsidiary of a Loan Party, exclusive of (i) Investments in other
Loan Parties or any Subsidiaries of Loan Parties and (ii) Investments in the
publicly traded Equity Interests of third parties.

5.09        Environmental
Compliance.  The Borrower has
reasonably concluded that, except as specifically disclosed in Schedule 5.09,
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

5.10        Insurance.  The properties of the Domestic Borrower and
its Subsidiaries are insured with financially sound and
reputable insurance companies not Affiliates of the Borrower,

 61
 

 

in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Domestic
Borrower or the applicable Subsidiary operates.

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

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

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

(c)           (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither the Domestic Borrower nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither the Domestic Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multiemployer Plan that has resulted or would reasonably be
expected to result in a Material Adverse Effect; and (v) neither the Domestic
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.

5.13        Subsidiaries;
Equity Interests; Loan Parties.  As
of the Closing Date, the Domestic Borrower has no Subsidiaries other than
those specifically disclosed in Part (a) of Schedule 5.13, and all
of the outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and non-assessable and are owned by a Loan Party in the
amounts specified on Part (a) of Schedule 5.13 free and clear of
all Liens except those created under the Collateral Documents.  As of the Closing Date, the Domestic Borrower
has no equity investments in any other

 62
 

 

corporation or entity other than (i) those
specifically disclosed in Part (b) of Schedule 5.13 and (ii)
Investments in the publicly traded Equity Interests of third parties.

5.14        Margin
Regulations; Investment Company Act; Public Utility Holding Company Act.  (a) The Domestic Borrower is not engaged and
will not engage, principally or as one of its important activities, in the
business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.

(b)           None of the Domestic Borrower, any
Person Controlling the Domestic Borrower, or any Subsidiary is or is required
to be registered as an “investment company” under the Investment Company Act of
1940.  

5.15        Disclosure.  The Domestic Borrower has disclosed to the
Administrative Agents and the Lenders all matters
known to it that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.  No written report, financial statement,
certificate or other written information furnished by or on behalf of any Loan
Party to the Administrative Agents or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Domestic Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time (it being understood that such projections are not to be viewed as facts
and that actual results may differ significantly from such projections).

5.16        Compliance
with Laws.  Each Loan Party and each
Subsidiary thereof is in compliance in all material respects with the requirements of all Laws
and all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

5.17        Intellectual
Property; Licenses, Etc.  Each Loan
Party and each of its Subsidiaries own, or possess the right to use, all of the material
trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other Person,
and as of the Closing Date, Schedule 5.17 sets forth a complete and
accurate list of all such IP Rights registered in the United States that are
owned by each Loan Party.  To the
knowledge of the Responsible Officers of the Domestic Borrower, no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by any Loan Party or
any of its Subsidiaries infringes upon any material rights held by any other
Person in a manner that would reasonably be expected to result in a Material
Adverse Effect.  Except as specifically disclosed
in Schedule 5.17, no claim or litigation regarding any of the
foregoing is

 63
 

 

pending or, to the knowledge of any Responsible
Officer of either Borrower, threatened, which, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding and not cash
collateralized or otherwise supported in a manner acceptable to the Domestic
Administrative Agent, the Domestic Borrower shall, and shall (except in the
case of the covenants set forth in Sections 6.01, 6.02, 6.03
and 6.11) cause each Subsidiary to:

6.01        Financial
Statements.  Deliver to the Domestic
Administrative Agent, in form and detail satisfactory to the Domestic Administrative Agent:

(a)           as soon as available, but in any
event within 90 days after the end of each fiscal year of the Domestic Borrower
(commencing with the fiscal year ended December 31, 2006), a consolidated
balance sheet of the Domestic Borrower and its Subsidiaries as at the end of
such fiscal year, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, together
with such other financial information as the SEC may from time to time require
to be included in a Form 10 K filing, all in reasonable detail and prepared in
accordance with GAAP, audited and accompanied by a report and opinion of a
Registered Public Accounting Firm, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and applicable
Securities Laws and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit or with respect to the absence of any material misstatement;

(b)           as soon as available, but in any
event within 50 days after the end of each of the first three fiscal quarters of
each fiscal year of the Domestic Borrower (commencing with the fiscal quarter
ended September 30, 2006), a consolidated balance sheet of the Domestic
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income or operations and cash flows for such
fiscal quarter and for the portion of such Domestic Borrower’s fiscal year then
ended, together with such other financial information as the SEC may from time
to time require to be included in a Form 10 Q filing, all in reasonable detail,
certified by a Responsible Officer of the Domestic Borrower as fairly
presenting the financial condition, results of operations and cash flows of
such Domestic Borrower and its Subsidiaries in accordance with GAAP, subject
only to normal year-end audit adjustments and the absence of footnotes; and

(c)           as soon as available, but in any
event not later than 60 days after the end of each fiscal year of the Domestic
Borrower, a three year business plan and budget of the Domestic Borrower and
its Subsidiaries on a consolidated basis, including forecasts prepared by
management of the Domestic Borrower, in form satisfactory to the Administrative
Agent and the Required Lenders, of consolidated balance sheets and statements
of income or operations and

 64
 

 

cash flows of the Domestic Borrower and its
Subsidiaries on a quarterly basis for the immediately following fiscal year and
on an annual basis for the two fiscal years thereafter.

As to any information contained in materials furnished
pursuant to Section 6.02(b), the Domestic Borrower shall not be
separately required to furnish such information under Section 6.01(a)
or (b) above, but the foregoing shall not be in derogation of the
obligation of the Domestic Borrower to furnish the information and materials
described in Sections 6.01(a) and (b) above at the times
specified therein.

6.02        Certificates;
Other Information.  Deliver to the
Domestic Administrative Agent, in form and detail satisfactory to the Domestic
Administrative Agent:

(a)           concurrently with the delivery of the
financial statements referred to in Sections 6.01(a) and (b),
a duly completed Compliance Certificate signed by a Responsible Officer of the
Domestic Borrower;

(b)           promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of the Domestic Borrower, and
copies of all annual, regular, periodic and special reports and registration
statements which the Domestic Borrower may file or be required to file with the
SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, or with
any national securities exchange, and in any case not otherwise required to be
delivered to the Domestic Administrative Agent pursuant hereto;

(c)           promptly after the furnishing
thereof, copies of any notice of default furnished to any holder of debt
securities of any Loan Party or of any of its Subsidiaries pursuant to the
terms of any indenture, loan or credit or similar agreement representing Indebtedness
in an aggregate outstanding amount in excess of the Threshold Amount and not
otherwise required to be furnished to the Domestic Administrative Agent
pursuant to Section 6.01 or any other clause of this Section 6.02;

(d)           promptly, and in any event within
five Business Days after receipt thereof by any Loan Party or any Subsidiary
thereof, copies of each notice or other correspondence received from the SEC
(or comparable agency in any applicable non-U.S. jurisdiction) concerning any
investigation or possible investigation or other inquiry by such agency
regarding financial or other operational results of any Loan Party or any
Subsidiary thereof (other than comment letters and related correspondence for
standard reviews, including but not limited to SEC reviews of annual reports);

(e)           promptly after the assertion or
occurrence thereof, notice of any action or proceeding against or of any
noncompliance by any Loan Party or any of its Subsidiaries with any
Environmental Law or Environmental Permit that would reasonably be expected to
have a Material Adverse Effect; and

(f)            promptly, such additional
information regarding the business, financial, legal or corporate affairs of
any Loan Party or any Subsidiary thereof, or compliance with the terms of the
Loan Documents, as either Administrative Agent or any Lender may from time to
time reasonably request.

 65
 

 

Documents required to be delivered pursuant to Section 6.01(a)
or (b) or Section 6.02(b) (to the extent any such documents
are included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (1) on which the Domestic Borrower posts such documents, or provides a
link thereto on the Domestic Borrower’s website on the Internet at the website
address listed on Schedule 10.02, (2) on which such documents are
posted on a publicly available website maintained by or on behalf of the SEC
for access to documents filed in the EDGAR database (the “EDGAR Website”),
or (3) on which such documents are posted on the Domestic Borrower’s behalf on
an Internet or intranet website, if any, to which each Lender and the Domestic
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Domestic Administrative Agent); provided that
(i) the Domestic Borrower shall deliver paper copies of such documents to the
Domestic Administrative Agent, for delivery by the Domestic Administrative
Agent to any Lender that requests the Domestic Borrower to deliver such paper
copies, until a request to cease delivering paper copies is given by the
Domestic Administrative Agent (or by such Lender to the Domestic Administrative
Agent) and (ii) except with respect to documents posted on the EDGAR Website,
the Domestic Borrower shall notify the Domestic Administrative Agent (by
telecopier or electronic mail) of the posting of any such documents and, if
requested by the Domestic Administrative Agent, provide to the Domestic
Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. 
Notwithstanding anything contained herein, in every instance the
Domestic Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(a) to the Domestic Administrative
Agent.  Except for such Compliance
Certificates, the Domestic Administrative Agent shall have no obligation to
request the delivery or to maintain copies of the documents referred to above,
and in any event shall have no responsibility to monitor compliance by the
Domestic Borrower with any such request for delivery, and each Lender shall be
solely responsible for requesting delivery to it or maintaining its copies of
such documents.

If additional financial institutions shall be added as
Lenders under this Agreement, the Borrowers hereby acknowledge that (a) the
Domestic Administrative Agent and Canadian Administrative Agent will make
available to the Lenders and the L/C Issuers materials and/or information
provided by or on behalf of the Borrowers hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”) and (b) certain of the
Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Borrowers or their
securities) (each, a “Public Lender”). 
The Borrowers hereby agree that they will use commercially reasonable
efforts to identify that portion of the Borrower Materials that may be distributed
to the Public Lenders and that (w) all such Borrower Materials shall be clearly
and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized
the Administrative Agents, the L/C Issuers and the Lenders to treat such
Borrower Materials as not containing any material non-public information
(although it may be sensitive and proprietary) with respect to the Borrowers or
their securities for purposes of United States Federal and state securities
laws (provided, however, that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in Section 10.07);
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor”; and (z) the
Administrative Agents shall be entitled to treat any Borrower Materials that
are not marked

 66
 

 

“PUBLIC” as being
suitable only for posting on a portion of the Platform not designated “Public
Investor.”  Notwithstanding the
foregoing, (i) the Borrowers shall be under no Obligation to mark any Borrower
Materials “PUBLIC” and (ii) for purposes hereof, all Borrower Materials made
available through the EDGAR database or a successor database shall be deemed to
be “PUBLIC” and may be treated as such by the Administrative Agents regardless
of whether they have been marked “PUBLIC”.

6.03        Notices.  Promptly notify the Domestic Administrative
Agent:

(a)           of the occurrence of any Default;

(b)           of any matter that has resulted or
would reasonably be expected to result in a Material Adverse Effect, including
the following types of events to the extent any such event would reasonably be
expected to result in a Material Adverse Effect:  (i) breach or non-performance of, or any
default under, a Contractual Obligation of any Loan Party or any Subsidiary
thereof; (ii) any dispute, litigation, investigation, proceeding or suspension
between any Loan Party or any Subsidiary thereof and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting any Loan Party or any Subsidiary thereof,
including pursuant to any applicable Environmental Laws;

(c)           of the occurrence of any ERISA Event;

(d)           of any material change in accounting
policies or financial reporting practices by any Loan Party or any Subsidiary
thereof; and

(e)           of the determination by the
Registered Public Accounting Firm providing the opinion required under Section 6.01(a)
(in connection with its preparation of such opinion) or the Domestic Borrower’s
determination at any time of the occurrence or existence of any Internal
Control Event.

Each notice pursuant to Section 6.03 shall
be accompanied by a statement of a Responsible Officer of the Domestic Borrower
setting forth details of the occurrence referred to therein and stating what
action the Domestic Borrower has taken and proposes to take with respect
thereto.  Each notice pursuant to Section 6.03(a)
shall describe with particularity any and all provisions of this Agreement and
any other Loan Document that have been breached.

6.04        Payment
of Obligations.  Pay and discharge as
or before the same shall become due and payable, all its (i) tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
the Domestic Borrower or such Subsidiary and (ii) other claims and Indebtedness
if nonpayment thereof would reasonably be expected to have a Material Adverse
Effect.

6.05        Preservation
of Existence, Etc.  (a)  Preserve, renew and maintain in full force
and effect its legal existence and
good standing under the Laws of the jurisdiction of its organization except in
a transaction permitted by Section 7.04 or 7.05, except that
the existence or good standing of any Subsidiary shall not be required to be
maintained to the extent the maintenance thereof is no longer desirable in the
conduct of the business of the Borrowers and their

 67
 

 

Subsidiaries, or failure to do so would not reasonably
be expected to have a Material Adverse Effect; (b) take all reasonable action
to maintain all rights, privileges, permits, licenses and franchises necessary
or desirable in the normal conduct of its business, except to the extent that
failure to do so would not reasonably be expected to have a Material Adverse
Effect; and (c) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which would reasonably
be expected to have a Material Adverse Effect.

6.06        Maintenance
of Properties.  (a) Maintain,
preserve and protect all of its material properties and equipment necessary in the operation of its
business in working order and condition, ordinary wear and tear excepted; and
(b) make all necessary repairs thereto and renewals and replacements thereof,
except in each case where the failure to do so would not reasonably be expected
to have a Material Adverse Effect.

6.07        Maintenance
of Insurance.  Maintain with
financially sound and reputable insurance companies not Affiliates of the Domestic Borrower,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

6.08        Compliance
with Laws.  Comply in all material
respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable
to it or to its business or property, except in such instances in which (a)
such requirement of Law or order, writ, injunction or decree is being contested
in good faith by appropriate proceedings diligently conducted; or (b) the
failure to comply therewith would not reasonably be expected to have a Material
Adverse Effect.

6.09        Books
and Records.  Maintain proper books
of record and account, in which full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets
and business of the Domestic Borrower or such Subsidiary, as the case may be.

6.10        Inspection
Rights.  Permit representatives and
independent contractors of the Administrative Agents and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at such reasonable times during normal business hours and as often as may be
reasonably requested, upon reasonable advance notice to (and, if desired by the
Domestic Borrower, in the presence and with the participation of) the Domestic
Borrower; provided, however, that (i) unless an Event of Default
then exists and is continuing, the Loan Parties shall only be responsible for
the costs and expenses of the Administrative Agents in connection with up to
one such visit and inspection per year, and (ii) when an Event of Default
exists the Administrative Agents or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Domestic Borrower at any time during normal business hours and
without advance notice.

6.11        Use
of Proceeds.  Use the proceeds of the
Credit Extensions (i) to refinance existing Indebtedness of the Domestic Borrower and its Subsidiaries and (ii)
for working capital,

 68
 

 

Capital Expenditures and other general corporate
purposes, including acquisitions, dividends and stock repurchases in conformity
with all provisions of this Agreement.

6.12        Covenant
to Guarantee Obligations and Give Security. 
(a) Upon the formation or acquisition of any new direct or indirect
Subsidiary (other than any Foreign Subsidiary or a Subsidiary that is held
directly or indirectly by a Foreign Subsidiary) by any Loan Party, then the
Domestic Borrower shall, at the Domestic Borrower’s expense:

(i)            within 45 days after such formation
or acquisition, cause such Subsidiary, and cause each direct and indirect
parent of such Subsidiary (if it has not already done so), to duly execute and
deliver to the Domestic Administrative Agent a guaranty or guaranty supplement,
in form and substance reasonably satisfactory to the Domestic Administrative
Agent, guaranteeing the other Loan Parties’ obligations under the Loan
Documents,

(ii)           within 45 days after such formation
or acquisition, furnish to the Domestic Administrative Agent such information
regarding the real and personal properties of such Subsidiary as would have
been required under the Loan Documents had such Subsidiary existed as of the
Closing Date,

(iii)          within 45 days after such formation or
acquisition, cause such Subsidiary and each direct and indirect parent of such
Subsidiary (if it has not already done so) to duly execute and deliver Security
Agreement Supplements and amendments to the Pledge Agreement to the Domestic
Administrative Agent and other security and pledge agreements, as specified by
and in form and substance reasonably satisfactory to the Domestic Administrative
Agent (including delivery of all pledged Equity Interests in and of such
Subsidiary, and other instruments of the type specified in Section 4.01(a)(iv)),
securing payment of all the Obligations of such Subsidiary or such parent, as
the case may be, under the Loan Documents,

(iv)          within 45 days after such formation or
acquisition, cause such Subsidiary and each direct and indirect parent of such
Subsidiary (if it has not already done so) to take whatever action reasonably
requested by Domestic Administrative Agent (including the preparation of
Uniform Commercial Code financing statements) that may be necessary or
advisable in the reasonable opinion of the Domestic Administrative Agent to
assist the Domestic Administrative Agent (or in any representative of the
Domestic Administrative Agent designated by it) in obtaining valid and
subsisting Liens on the properties purported to be subject to the Security
Agreement Supplements and security and pledge agreements delivered pursuant to
this Section 6.12, and

(v)           within 60 days after such formation
or acquisition, deliver to the Domestic Administrative Agent, upon the request
of the Domestic Administrative Agent in its sole discretion, a signed copy of a
favorable opinion, addressed to the Domestic Administrative Agent and the other
Secured Parties, of counsel for the Loan Parties acceptable to the Domestic
Administrative Agent as to such matters relating to such Subsidiary as the
Domestic Administrative Agent may reasonably request.

 69

 

(b)           Upon
the acquisition of any item of personal property with the fair market value in
excess of $2,000,000 individually by any Loan Party, if such property, in the
judgment of the Domestic Administrative Agent, shall not already be subject to
a perfected security interest in favor of the Domestic Administrative Agent for
the benefit of the Secured Parties as required pursuant to the Loan Documents,
then the Domestic Borrower shall, at the Domestic Borrower’s expense:

(i)            within
45 days after such acquisition, furnish to the Administrative Agent a
description of the property so acquired in detail reasonably satisfactory to
the Administrative Agent that would have been required under the Loan Documents
had such property been owned as of the Closing Date,

(ii)           within
45 days after such acquisition, cause the applicable Loan Party to duly execute
and deliver Security Agreement Supplements to the Domestic Administrative Agent
and other security and pledge agreements, as specified by and in form and
substance reasonably satisfactory to the Domestic Administrative Agent,
securing payment of all the Obligations of the applicable Loan Party under the
Loan Documents and constituting Liens on all such properties, and

(iii)          within
45 days after such acquisition, cause the applicable Loan Party to take
whatever action reasonably requested by the Domestic Administrative Agent
(including the preparation of Uniform Commercial Code financing statements)
that may be necessary or advisable in the reasonable opinion of the Domestic
Administrative Agent to assist the Domestic Administrative Agent (or in any
representative of the Domestic Administrative Agent designated by it) in
obtaining valid and subsisting Liens on such property.

(c)           Upon
the request of the Domestic Administrative Agent following the occurrence and
during the continuance of a Default, the Domestic Borrower shall, at the
Domestic Borrower’s expense:

(i)            within
30 days after such request, furnish to the Domestic Administrative Agent a
description of the material real and personal properties of the Loan Parties
and their respective Subsidiaries in detail reasonably satisfactory to the
Domestic Administrative Agent,

(ii)           within
30 days after such request, duly execute and deliver, and cause each Subsidiary
(other than any Foreign Subsidiary or a Subsidiary that is held directly or
indirectly by a Foreign Subsidiary) of the Domestic Borrower (if it has not
already done so) to duly execute and deliver Security Agreement Supplements to
the Domestic Administrative Agent and other security and pledge agreements, as
specified by and in form and substance reasonably satisfactory to the Domestic
Administrative Agent (including delivery of all pledged Equity Interests in and
of such Subsidiary, and other instruments of the type specified in Section
4.01(a)(iv)), securing payment of all the Obligations of such Subsidiary
under the Loan Documents and constituting Liens on all such properties,

 70
 

 

(iii)          within
30 days after such request, take, and cause each Subsidiary (other than any
Foreign Subsidiary or a Subsidiary that is held directly or indirectly by a
Foreign Subsidiary) of the Domestic Borrower to take, whatever action requested
by the Domestic Administrative Agent (including the filing of Uniform
Commercial Code financing statements) that may be necessary or advisable in the
reasonable opinion of the Domestic Administrative Agent to vest in the Domestic
Administrative Agent (or in any representative of the Domestic Administrative
Agent designated by it) valid and subsisting Liens on the properties purported
to be subject to the Security Agreement Supplements and security and pledge
agreements delivered pursuant to this Section 6.12, and

(iv)          within
60 days after such request, deliver to the Domestic Administrative Agent, upon
the request of the Domestic Administrative Agent in its sole discretion, a
signed copy of a favorable opinion, addressed to the Domestic Administrative
Agent and the other Secured Parties, of counsel for the Loan Parties acceptable
to the Domestic Administrative Agent as to the matters contained in clauses
(ii) and (iii) above, and as to such other matters as the Domestic
Administrative Agent may reasonably request.

(d)           At
any time upon request of the Domestic Administrative Agent, promptly execute
and deliver any and all further instruments and documents and take all such
other action as the Domestic Administrative Agent may reasonably deem necessary
or desirable in obtaining the full benefits of, or (as applicable) in
perfecting and preserving the Liens of, such guaranties, Security Agreement
Supplements and other security and pledge agreements.

Notwithstanding anything to the contrary in this
Agreement or any other Loan Document, (i) not more than 65% of the Equity
Interests of a first-tier Foreign Subsidiary shall be required to be pledged
pursuant to any of the Loan Documents, (ii) in no event shall any Foreign
Subsidiary, any direct or indirect Subsidiary of a Foreign Subsidiary, or any
of Guess? Royalty Finance LLC, Guess? Licensing, Inc., Guess? IP GP LLC, Guess?
IP LP LLC or Guess? IP Holder L.P. or any other Subsidiary formed for a similar
purpose in connection with a permitted refinancing of the Senior Notes be
required to become a Guarantor, nor shall any security interest be required to
be granted with respect to any assets of (including Equity Interests) of any
such Person pursuant to the Loan Documents, and (iii) assets (including Equity
Interests) shall be excluded from the requirements of this Section 6.12
to the extent the Domestic Administrative Agent reasonably determines that the
cost of obtaining or perfecting a security interest in such assets is excessive
in relation to the benefit expected to be afforded to the Lenders thereby.

6.13        Compliance
with Environmental Laws.  Comply, and
cause all lessees and other Persons operating or occupying its properties to
comply, in all material respects, with all applicable Environmental Laws and
Environmental Permits; obtain and renew all Environmental Permits necessary for
its operations and properties; and conduct any investigation, study, sampling
and testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws; provided,
however, that neither the Domestic Borrower nor any of its Subsidiaries
shall be required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in good
faith and by

 71
 

 

proper proceedings and appropriate reserves are being
maintained with respect to such circumstances in accordance with GAAP.

6.14        Further
Assurances.  Promptly upon reasonable
request by the Domestic Administrative Agent, or any Lender through the Domestic Administrative
Agent, (a) correct any material defect or error that may be discovered in any
Loan Document or in the execution, acknowledgment, filing or recordation
thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register any and all such further acts, deeds,
certificates, assurances and other instruments as the Domestic Administrative
Agent, or any Lender through the Domestic Administrative Agent, may reasonably
require from time to time in order to (i) carry out more effectively the
purposes of the Loan Documents, (ii) to the fullest extent permitted by
applicable law, subject any Loan Party’s or any of its Subsidiaries’ personal
property to the Liens now or hereafter intended to be covered by any of the
Collateral Documents, (iii) perfect and maintain the validity, effectiveness
and priority of any of the Collateral Documents and any of the Liens intended
to be created thereunder and (iv) assure, convey, grant, assign, transfer,
preserve, protect and confirm more effectively unto the Secured Parties the
rights granted or now or hereafter intended to be granted to the Secured
Parties under any Loan Document or under any other instrument executed in
connection with any Loan Document to which any Loan Party or any of its
Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do
so.

6.15        Compliance
with Terms of Leaseholds.  Make all
payments and otherwise perform all obligations in respect of all leases of real
property to which either Borrower or any of their Subsidiaries is a party, keep
such leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or cancelled,
notify the Domestic Administrative Agent of any default by any party with
respect to any leases that are material to the business of either Borrower or
any of their Subsidiaries and cooperate with the Domestic Administrative Agent
in all respects to cure any such default, and cause each of its Subsidiaries to
do so, except, in any case, where the failure to do so, either individually or
in the aggregate, could not be reasonably likely to have a Material Adverse
Effect.

6.16        Cash
Collateral Accounts.  To the extent
cash collateral is required to be maintained in any of the Lenders’ or Agents’ possession under the terms
of any Loan Document, maintain, and cause each of the other Loan Parties to
maintain, all Cash Collateral Accounts with respect thereto with Bank of
America or another commercial bank located in the United States, which has
accepted the assignment of such accounts to the Domestic Administrative Agent
for the benefit of the Secured Parties pursuant to the terms of the Security
Agreement.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding and not cash
collateralized or otherwise supported in a manner acceptable to the Domestic Administrative
Agent, the Domestic Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly:

 72
 

 

7.01        Liens.  Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, or sign or file or suffer to exist under the
Uniform Commercial Code of any jurisdiction a financing statement that names
the Domestic Borrower or any of its Subsidiaries as debtor, or assign any
accounts or other right to receive income, other than the following:

(a)           Liens
pursuant to any Loan Document;

(b)           Liens
existing on the Closing Date and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that, except with respect to
Liens on accounts receivable of Foreign Subsidiaries as described on Schedule 7.01,
(i) the property covered thereby is not changed, (ii) the amount secured or
benefited thereby is not increased except as permitted by Section 7.02,
(iii) the direct or any contingent obligor with respect thereto is not changed,
and (iv) any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 7.02(e);

(c)           Liens
for Taxes not yet due or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with
GAAP;

(d)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business;

(e)           pledges
or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation,
other than any Lien imposed by ERISA;

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

(g)           easements,
rights-of-way, restrictions and other similar encumbrances affecting real
property which, in the aggregate, do not materially detract from the value of
the property of such Person or materially interfere with the ordinary conduct
of the business of the applicable Person;

(h)           Liens
securing judgments for the payment of money not constituting an Event of
Default under Section 8.01(h);

(i)            Liens
securing Indebtedness permitted under Section 7.02(g)(ii); provided
that (i) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired on the date of acquisition;

(j)            Liens
securing obligations permitted under Sections 7.02(a)(ii), (iii)
and (iv), and 7.02(j) and (k);

(k)           Liens
securing Indebtedness permitted under Section 7.02(b);

 73
 

 

(l)            mortgages
on real property, so long as recourse thereunder is limited to the property
subject to such Mortgage;

(m)          any
interest or title of a licensee or licensor under any license entered into by
the Domestic Borrower or any of its Subsidiaries in the ordinary course of
business; and

(n)           other
Liens securing Indebtedness outstanding in an aggregate principal amount not to
exceed $10,000,000; provided that no such Lien shall extend to or cover
(i) any Collateral or (ii) to the extent such Lien covers Collateral, any
property other than the property financed by such Indebtedness.

7.02        Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:

(a)           obligations
(contingent or otherwise) existing or arising under (i) any Swap Contract, provided
that such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated with
fluctuations in interest rates, prices of commodities or foreign exchange
rates, (ii) obligations existing or arising under any Secured Hedge Agreements,
(iii) obligations existing or arising under any Secured Cash Management
Agreements and (iv) obligations existing or arising under any Secured Foreign
Exchange Agreements;

(b)           Indebtedness
evidenced by the Senior Notes and any refinancings, refundings, renewals or
extensions thereof consisting of Indebtedness of the same type on similar terms
(except as to maturity date, interest rates and the like); provided that
(i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension to an aggregate principal amount
of more than $75,000,000 (plus an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing) and (ii) the direct or any contingent obligor
with respect thereto is not changed as a result of or in connection with such
refinancing, refunding, renewal or extension to include any Loan Party, unless
such refinancing, refunding, renewal or extension includes only unsecured
Indebtedness;

(c)           Indebtedness
otherwise permitted under Section 7.03;

(d)           Indebtedness
under the Loan Documents;

(e)           Capital
Leases, letters of credit and guaranties related to such letters of credit
outstanding on the Closing Date and listed on Schedule 7.02 and as
to Capital Leases only, any refinancings, refundings, renewals or extensions
thereof; provided that the amount of such Capital Leases is not
increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder and the direct or any contingent obligor with respect thereto is not
changed, as a result of or in connection with such refinancing, refunding,
renewal or extension;

(f)            Guarantees
of the Borrower or any Subsidiary in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any wholly owned Subsidiary;

 74
 

 

(g)           (i) unsecured
Indebtedness and (ii) other Indebtedness, which may be secured to the extent
such security interest is permitted under Section 7.01; provided,
however, that the aggregate amount of all such Indebtedness permitted
under this clause (g) at any one time outstanding shall not exceed $35,000,000;

(h)           Indebtedness
in respect of surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;

(i)            guaranties
of operating leases by the Domestic Borrower to, or for the benefit of, its
Domestic Subsidiaries in the ordinary course of the Domestic Borrower’s
business;

(j)            Indebtedness
of the Domestic Borrower consisting of a Capital Lease or Synthetic Lease (or
Indebtedness related thereto) in connection with the acquisition of an
aircraft, in an aggregate amount not to exceed $20,000,000; and

(k)           other
Indebtedness of Foreign Subsidiaries in an aggregate amount not to exceed
$50,000,000.

7.03        Investments.  Make or hold any Investments, except:

(a)           Investments
held by the Domestic Borrower and its Subsidiaries in the form of Cash
Equivalents;

(b)           advances
to officers, directors and employees of the Domestic Borrower and Subsidiaries
in an aggregate amount not to exceed $3,000,000 at any time outstanding, for
travel, entertainment, relocation and analogous ordinary business purposes or
for the purchase of Equity Interests of the Domestic Borrower by such officers,
directors and employees not prohibited by Section 7.06;

(c)           (i)
Investments by the Domestic Borrower and its Subsidiaries in each other or any
of their respective Subsidiaries, and (ii) Investments in minority Equity
Interests held by the Domestic Borrower and its Subsidiaries in Persons
organized under the laws of any jurisdiction other than a political subdivision
of the United States in an aggregate amount not to exceed $50,000,000;

(d)           Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;

(e)           Guarantees
permitted by Section 7.02;

(f)            Investments
existing on the Closing Date and set forth on Schedule 7.03;

(g)           Investments
by the Domestic Borrower in Swap Contracts, Secured Cash Management Agreements
and Secured Foreign Exchange Agreements permitted under Section 7.02(a);

 75
 

 

(h)           the
purchase or other acquisition of all of the Equity Interests in, or all or a
substantial part of the property of, any Person, or of any business unit of a
Person, that, upon the consummation thereof, will be wholly-owned directly by
the Domestic Borrower or one or more of its wholly-owned Subsidiaries
(including as a result of a merger or consolidation); provided that,
with respect to each purchase or other acquisition made pursuant to this Section 7.03(h):

(i)            any
such newly-created or acquired Subsidiary shall comply with the requirements of
Section 6.12;

(ii)           after
giving effect to such acquisition, the Domestic Borrower shall be in compliance
with Section 7.07;

(iii)          such
purchase or other acquisition shall not include or result in any contingent
liabilities that would reasonably be expected to result in a Material Adverse
Effect (as determined in good faith by the board of directors (or the persons
performing similar functions) of the Domestic Borrower or such Subsidiary if
the board of directors is otherwise approving such transaction and, in each
other case, by a Responsible Officer);

(iv)          the
total cash and noncash consideration (including the fair market value of all
Equity Interests issued or transferred to the sellers thereof, all indemnities,
earnouts and other contingent payment obligations to, and the aggregate amounts
paid or to be paid under noncompete, consulting and other affiliated agreements
with, the sellers thereof, all write-downs of property and reserves for
liabilities with respect thereto and all assumptions of debt, liabilities and
other obligations in connection therewith) paid by or on behalf of the Domestic
Borrower and its Subsidiaries for any such purchase or other acquisition, when
aggregated with the total cash and noncash consideration paid by or on behalf
of the Domestic Borrower and its Subsidiaries for all other purchases and other
acquisitions made by the Domestic Borrower and its Subsidiaries pursuant to
this Section 7.03(h), shall not exceed $150,000,000 from and after
the Closing Date and the total cash consideration paid by or on behalf of the
Domestic Borrower and its Subsidiaries for any such purchase or other
acquisition, when aggregated with the total cash consideration paid by or on
behalf of the Domestic Borrower and its Subsidiaries for all other purchases
and other acquisitions made pursuant to this Section 7.03(h), shall
not exceed $125,000,000 from and after the Closing Date;

(v)           the
Domestic Borrower shall have delivered to the Domestic Administrative Agent, at
least three Business Days prior to the date on which any such purchase or other
acquisition is to be consummated, a certificate of a Responsible Officer, in
form and substance reasonably satisfactory to the Domestic Administrative Agent
and the Required Lenders, certifying that all of the requirements set forth in
this Section 7.03(h) have been satisfied or will be satisfied on or
prior to the consummation of such purchase or other acquisition;

(i)            the
endorsement of instruments for collection or deposit in the ordinary course of
business;

 76
 

 

(j)            investments
in respect to any publicly traded securities, which public securities are
traded in a nationally recognized stock exchange association, and which
investment shall not, when taken together with investments in public securities
by the other Loan Parties, exceed $4,000,000 in the aggregate at any one time
(valued at original cost) plus the amount of proceeds from the sale of such
publicly traded securities;

(k)           stock
or obligations issued to any Borrower by any Person (or the representative of
such Person) in respect of Indebtedness of such Person owing to such Borrower
in connection with the insolvency, bankruptcy, receivership or reorganization
of such Person or a composition or readjustment of the debts of such Person; provided,
that the original of any such stock or instrument evidencing such obligations
shall be promptly delivered to the Domestic Administrative Agent for the
benefit of the Lenders, upon the Domestic Administrative Agent’s request,
together with such stock power, assignment or endorsement by Borrowers as the Domestic
Administrative Agent may request; and

(l)            other
Investments by the Domestic Borrower and its Subsidiaries in Persons organized
under the laws of a political subdivision of the United States, in an amount
not exceeding $35,000,000 in the aggregate from and after the Closing Date.

7.04        Fundamental
Changes.  Merge, dissolve, liquidate,
consolidate with or into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

(a)           any
Domestic Subsidiary may merge with (i) the Domestic Borrower, provided
that the Domestic Borrower shall be the continuing or surviving Person, or (ii)
any one or more other Domestic Subsidiaries, provided that when any
wholly-owned Domestic Subsidiary is merging with another Domestic Subsidiary,
such wholly-owned Subsidiary shall be the continuing or surviving Person;

(b)           any
Canadian Subsidiary may merge with (i) the Canadian Borrower, provided
that the Canadian Borrower shall be the continuing or surviving Person, or (ii)
any one or more other Canadian Subsidiaries, provided that when any
wholly-owned Canadian Subsidiary is merging with another Canadian Subsidiary,
such wholly-owned Subsidiary shall be the continuing or surviving Person;

(c)           any
Loan Party may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to a Borrower or to another Loan Party provided
that if the seller in such a transaction is a wholly-owned Subsidiary, then the
purchaser must also be a wholly-owned Subsidiary, and provided, further,
that no Guarantor that is a Domestic Subsidiary may sell all or substantially
all of its assets (upon voluntary liquidations or otherwise) to a Canadian
Subsidiary or Foreign Subsidiary;

(d)           any
Subsidiary that is not a Loan Party may Dispose of all or substantially all its
assets (including any Disposition that is in the nature of a liquidation) to,
or may merge with, (i) another Subsidiary that is not a Loan Party or (ii) a
Loan Party, provided that such Loan Party is the surviving entity in any
such merger;

 77
 

 

(e)           in
connection with any acquisition permitted under Section 7.03, any
Subsidiary of the Domestic Borrower may merge into or consolidate with any
other Person or permit any other Person to merge into or consolidate with it; provided
that (i) the Person surviving such merger shall be a wholly-owned Subsidiary of
the Domestic Borrower and (ii) in the case of any such merger to which any Loan
Party (other than the Domestic Borrower) is a party, such Loan Party is the
surviving Person; and

(f)            the
Foreign Subsidiary Restructuring may be consummated in accordance with the
definition thereof.

7.05        Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

(a)           Dispositions
of obsolete, surplus or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business;

(b)           Dispositions
of inventory in the ordinary course of business;

(c)           Dispositions
of equipment or real property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or (ii)
the proceeds of such Disposition are reasonably promptly applied to the
purchase price of such replacement property;

(d)           Dispositions
of property by any Subsidiary to a Borrower or to a wholly-owned Subsidiary;
provided that if the transferor of such property is a Guarantor, the transferee
thereof must either be a Borrower or a Guarantor;

(e)           Dispositions
permitted by Section 7.04;

(f)            licensing
by any Borrower of any of its intellectual property, in the ordinary course of
its business; provided that such licenses are granted for fair market
value in the reasonable judgment of the Domestic Borrower;

(g)           sales
of Cash Equivalents, as provided under Section 7.03(a);

(h)           sales
of any publicly traded securities owned by any Loan Party, to the extent such
ownership was permitted under Section 7.03(j);

(i)            transfers
of assets to the extent required by the terms of the documents related to the
Senior Notes;

(j)            a
Disposition consisting of a sale-leaseback transaction in connection with the
acquisition of an aircraft; provided that the aggregate amount thereof,
together with the amount of any Indebtedness pursuant to Section 7.02(j),
shall not exceed $20,000,000;

(k)           transfers
by the Domestic Borrower and its Subsidiaries of any intellectual property to
the Domestic Borrower or any of its Subsidiaries;

 78
 

 

(l)            Dispositions
of artwork with an aggregate net book value of not more than $6,000,000; and

(m)          Dispositions
by the Domestic Borrower and its Subsidiaries not otherwise permitted under
this Section 7.05; provided that (i) at the time of such
Disposition, no Default shall exist or would result from such Disposition and
(ii) the aggregate book value of all property Disposed of in reliance on this
clause (f) from and after the Closing Date shall not exceed $35,000,000;

provided, however, that any
Disposition pursuant to Section 7.05(a) through Section 7.05(i)
shall be for fair market value.

7.06        Restricted
Payments.  Declare or make, directly
or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do
so, or issue or sell any Equity Interests or accept any capital contributions,
except that, so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:

(a)           each
Subsidiary may make Restricted Payments to the Borrowers, any Subsidiaries of
the Domestic Borrower that are Guarantors and any other Person that owns a
direct Equity Interest in such Subsidiary, ratably according to their
respective holdings of the type of Equity Interest in respect of which such
Restricted Payment is being made;

(b)           the
Borrowers and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person;

(c)           the
Domestic Borrower may make Restricted Payments so long as immediately after
giving effect thereto it shall be in pro forma compliance with the covenant set
forth in Section 7.11(b);

(d)           the
Domestic Borrower may issue and sell its Equity Interests; provided,
that such sale of Equity Interests does not result in any Change of Control;
and

(e)           the
Domestic Borrower may declare and make dividend payments and may repurchase any
of its issued and outstanding Equity Interests, so long as immediately after
giving effect thereto the aggregate amount of unrestricted cash and Cash
Equivalents held by the Borrowers is at least $50,000,000.

7.07        Change
in Nature of Business.  Engage in any
material line of business substantially different from those lines of business conducted by the
Domestic Borrower and its Subsidiaries on the date hereof or any business
reasonably related or ancillary, complimentary, or incidental thereto.

7.08        Transactions
with Affiliates.  Enter into any
transaction of any kind with any Affiliate of the Domestic Borrower, whether or not in the
ordinary course of business, other than (i) transactions that in the reasonable
judgment of the Domestic Borrower are on fair and reasonable terms
substantially as favorable to such Borrower or such Subsidiary as would be
obtainable by such Borrower or such Subsidiary at the time in a comparable arm’s
length

 79
 

 

transaction with a Person other than an Affiliate,
(ii) transactions with Affiliates in existence on the Closing Date and any
extensions thereof on the terms substantially similar or at least equally
favorable to the Borrowers and set forth on Schedule 7.08, (iii)
leases of real property from Affiliates of the Domestic Borrower, the terms of
which are approved by the board of directors of the relevant Borrower or
Subsidiary, (iv) transactions relating to any shareholders agreement to which
the Domestic Borrower is a party from time to time, (v) payments of reasonable
compensation to officers, employees and directors for services rendered in the
ordinary course of business, (vi) payments of expenses or the making of loans
and advances to officers, employees and directors for business purposes
consistent with past practice, including but not limited to indemnification
permitted under the Borrower’s organizational documents, relocation, stock
option exercises, travel or otherwise, (vii) the Foreign Subsidiary
Restructuring, and (viii) transactions among any Borrower and any of its direct
or indirect parents or Subsidiaries not involving any other Affiliate.

7.09        Burdensome
Agreements.  Enter into or permit to
exist any Contractual Obligation (other than this Agreement or any other Loan Document),
except for those agreements set forth on Schedule 7.09, that (a)
limits the ability (i) of any Subsidiary to make Restricted Payments to the Domestic
Borrower or any Guarantor or to otherwise transfer property to or invest in the
Domestic Borrower or any Guarantor (other than customary restrictions in
connection with agreements to make Dispositions permitted under this Agreement,
and agreements in existence at the time any Subsidiary becomes a Subsidiary of
the Domestic Borrower, so long as such agreement was not entered into solely in
contemplation of such Person becoming a Subsidiary of the Domestic Borrower),
(ii) of any Domestic Subsidiary to Guarantee the Indebtedness of the Borrowers
or (iii) of the Domestic Borrower or any Subsidiary to create, incur, assume or
suffer to exist Liens on property of such Person; provided, however,
that this clause (iii) shall not prohibit any negative pledge incurred or
provided in favor of any holder of Indebtedness permitted under Section 7.02(g)(ii)
solely to the extent any such negative pledge relates to the property financed
by or the subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person.

7.10        Use
of Proceeds.  Use the proceeds of any
Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase
or carry margin stock (within the meaning of Regulation U of the FRB) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund indebtedness originally incurred for such purpose.

7.11        Financial
Covenants.

(a)           Total
Adjusted Leverage Ratio.  Permit the
Total Adjusted Leverage Ratio for the four fiscal quarter period ending as of
the last day of any fiscal quarter during any period of the Domestic Borrower
and its Subsidiaries set forth below to be greater than the ratio set forth
below opposite such period:

 80
 

 

 

	
  Four Fiscal Quarters Ending

  	
   

  	
  Maximum Total

  Adjusted Leverage Ratio

  
	
  Closing Date through the last day of the first
  fiscal quarter of fiscal year 2009

  	
   

  	
   

  4.50 to 1.00

  
	
  The second fiscal quarter of fiscal year 2009 and
  each fiscal quarter thereafter

  	
   

  	
   

  4.25 to 1.00

  

 

(b)           Consolidated
Fixed Charge Coverage Ratio.  Permit
the Consolidated Fixed Charge Coverage Ratio for the four fiscal quarter period
ending as of the last day of any fiscal quarter of the Domestic Borrower and
its Subsidiaries to be less than the ratio set forth below opposite such fiscal
quarter:

	
  Four Fiscal Quarters Ending

  	
   

  	
  Minimum Fixed 

  Charge Coverage Ratio

  
	
  Closing Date through the last day of the first
  fiscal quarter of fiscal year 2009

  	
   

  	
   

  1.10 to 1.00

  
	
  The second fiscal quarter of fiscal year 2009 and
  each fiscal quarter thereafter

  	
   

  	
   

  1.20 to 1.00

  

 

7.12        Amendments
of Organization Documents.  Amend any
of its Organization Documents in any manner that is materially adverse to
the Lenders, except for (i) changes in its fiscal year and (ii) changes to
Organization Documents of any Subsidiary that is not a Loan Party.

7.13        Accounting
Changes.  Make any change in
accounting policies or reporting practices, except as required or permitted by GAAP or except for changes in
fiscal year.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01        Events
of Default.  Any of the following
shall constitute an Event of Default:

(a)           Non-Payment.  Any Borrower or any other Loan Party fails to
(i) pay when and as required to be paid herein, any amount of principal of any
Loan or any L/C Obligation or deposit any funds as Cash Collateral in respect
of L/C Obligations, or (ii) pay within three days after the same becomes due,
any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or
(iii) pay within five days after the same becomes due, any other amount payable
hereunder or under any other Loan Document; or

(b)           Specific
Covenants.  The Domestic Borrower
fails to perform or observe any term, covenant or agreement contained in any of
Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11
or 6.12 or Article VII; or

(c)           Other
Defaults.  Any Loan Party fails to
perform or observe any other covenant or agreement (not specified in Section 8.01(a)
or (b) above) contained in any Loan Document on its part to be performed
or observed and such failure continues for 30 days after becoming aware of such
failure; or

 81
 

 

(d)           Representations
and Warranties.  Any representation,
warranty, certification or statement of fact made or deemed made by or on
behalf of the Domestic Borrower or any other Loan Party herein, in any other
Loan Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading in any material respect when made or deemed
made; or

(e)           Cross-Default.  (i) Any Loan Party or any Subsidiary thereof
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than the Threshold Amount,
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or
a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which a Loan Party or any
Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract)
or (B) any Termination Event (as so defined) under such Swap Contract as to
which a Loan Party or any Subsidiary thereof is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by such Loan
Party or such Subsidiary as a result thereof is greater than the Threshold
Amount; or

(f)            Insolvency
Proceedings, Etc.  Any Loan Party or
any Subsidiary thereof institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or

(g)           Inability
to Pay Debts; Attachment.  (i) Any
Loan Party or any Subsidiary thereof becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due, or (ii) any
writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within 30 days after its issue or
levy; or

 82
 

 

(h)           Judgments.  There is entered against any Loan Party or
any Subsidiary thereof (i) one or more final judgments or orders for the
payment of money in an aggregate amount (as to all such judgments and orders
within any twelve-month period) exceeding the Threshold Amount (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage), or (ii) any one or more non-monetary final judgments
that have, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B)
there is a period of 15 consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i)            ERISA.  (i) An ERISA Event occurs with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of the Threshold Amount, or (ii) the Domestic Borrower or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of the
Threshold Amount; or

(j)            Invalidity
of Loan Documents.  Any material
provision of any Loan Document, at any time after its execution and delivery
and for any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party contests in any manner the validity or enforceability
of any material provision of any Loan Document; or any Person (other than a
Loan Party) contests in any manner the validity or enforceability of any Loan
Document and such action would reasonably be expected to have a Material
Adverse Effect; or any Loan Party denies that it has any or further liability
or obligation under any material provision of any Loan Document or purports to
revoke, terminate or rescind any material provision of any Loan Document; or

(k)           Change
of Control.  There occurs any Change
of Control; or

(l)            Collateral
Documents.  Any Collateral Document
after delivery thereof pursuant to Section 4.01 or 6.12
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid and perfected first-priority Lien (subject to Liens permitted by Section 7.01)
on any material portion of the Collateral purported to be covered thereby.

8.02        Remedies
upon Event of Default.  If any Event
of Default occurs and is continuing, the Administrative Agents shall, at the request of,
or may, with the consent of, the Required Lenders, take any or all of the
following actions:

(a)           declare
the commitment of each Lender to make Loans and any obligation of each L/C
Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

(b)           declare
the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers;

 83
 

 

(c)           require
that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal
to the then Outstanding Amount thereof); and

(d)           exercise
on behalf of themselves, the Lenders and the L/C Issuers all rights and
remedies available to them, the Lenders and the L/C Issuers under the Loan
Documents;

provided, however, that upon
the occurrence of an entry of an order for relief with respect to a Borrower
under any Debtor Relief Laws, the obligation of each Lender to make Loans and
any obligation of each L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, and the obligation of the Borrowers to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case
without further act of the Administrative Agents or any Lender.

8.03        Application
of Funds.  After the exercise of
remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any
amounts received on account of the Obligations shall be applied by the
Administrative Agents in the following order:

First, to payment of that portion of
the Obligations constituting fees, indemnities, expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative
Agents and amounts payable under Article III) payable to the
Administrative Agents in their capacity as such;

Second, to payment of that portion
of the Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit Fees) payable to the Lenders and the
L/C Issuers (including fees, charges and disbursements of counsel to the
respective Lenders and the L/C Issuers and amounts payable under Article III,
ratably among them in proportion to the respective amounts described in this
clause Second payable to them;

Third, to payment of that portion of
the Obligations constituting accrued and unpaid Letter of Credit Fees and
interest on the Loans, L/C Borrowings and other Obligations, ratably among the
Lenders and the L/C Issuers in proportion to the respective amounts described
in this clause Third payable to them;

Fourth, to payment of that portion
of the Obligations constituting unpaid principal of the Loans, L/C Borrowings
and amounts owing under Secured Hedge Agreements, Secured Cash Management
Agreements and Secured Foreign Exchange Agreements, ratably among the Lenders,
the L/C Issuers, the Hedge Banks, the Cash Management Banks and the Lenders
party to the Secured Foreign Exchange Agreements in proportion to the
respective amounts described in this clause Fourth held by them;

Fifth, to the Administrative Agents
for the account of the L/C Issuers, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

 84
 

 

Last, the balance, if any, after all
of the Obligations have been indefeasibly paid in full, to the Borrowers or as
otherwise required by Law.

Subject to Section 2.03(c), amounts used
to Cash Collateralize the aggregate undrawn amount of Letters of Credit
pursuant to clause Fifth above shall be applied to satisfy drawings
under such Letters of Credit as they occur. If any amount remains on deposit as
Cash Collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Obligations, if
any, in the order set forth above.

ARTICLE IX

ADMINISTRATIVE AGENTS

9.01        Appointment
and Authority.  (a) Each of the
Domestic Lenders and the Domestic L/C Issuer hereby irrevocably appoints Bank of America
to act on its behalf as the Domestic Administrative Agent hereunder and under
the other Loan Documents and authorizes the Domestic Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Domestic Administrative Agent by the terms hereof or thereof, together with
such actions and powers as are reasonably incidental thereto. Each of the
Canadian Lenders and the Canadian L/C Issuer hereby irrevocably appoints Bank
of America Canada to act on its behalf as the Canadian Administrative Agent
hereunder and under the other Loan Documents and authorizes the Canadian
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Canadian Administrative 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 Lenders and the L/C Issuers, and the
Borrowers shall not have rights as a third party beneficiary of any of such
provisions.

(b)           The
Domestic Administrative Agent shall also act as the “collateral agent”
under the Loan Documents, and each of the Lenders (in its capacities as a
Lender, potential Hedge Bank and potential Cash Management Bank) and the L/C
Issuers hereby irrevocably appoints and authorizes the Domestic Administrative
Agent to act as the agent of such Lender and the L/C Issuers for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Obligations, together with such powers
and discretion as are reasonably incidental thereto. In this connection, the
Domestic Administrative Agent, as “collateral agent” and any co-agents,
sub-agents and attorneys-in-fact appointed by the Domestic Administrative Agent
pursuant to Section 9.05 for purposes of holding or enforcing any
Lien on the Collateral (or any portion thereof) granted under the Collateral
Documents, or for exercising any rights and remedies thereunder at the
direction of the Domestic Administrative Agent), shall be entitled to the
benefits of all provisions of this Article IX and Article X
(including Section 10.04(c), as though such co-agents, sub-agents
and attorneys-in-fact were the “collateral agent” under the Loan Documents) as
if set forth in full herein with respect thereto.

9.02        Rights
as a Lender.  Each Person serving as
an Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any
other Lender and may exercise the same as though it were not an Administrative
Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires,

 85
 

 

include the Person serving as an Administrative Agent
hereunder in its individual capacity. Such Person and its Affiliates may accept
deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Borrowers or any Subsidiary or other Affiliate thereof as if such Person were
not an Administrative Agent hereunder and without any duty to account therefor
to the Lenders.

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

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

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

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

No Administrative Agent shall be liable for any action
taken or not taken by it (i) with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as such Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01
and 8.02) or (ii) in the absence of its own gross negligence or willful
misconduct. No Administrative Agent shall be deemed to have knowledge of any
Default unless and until notice describing such Default is given to such
Administrative Agent by a Borrower, a Lender or an L/C Issuer.

No Administrative 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 the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, 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 Administrative Agent.

 86
 

 

9.04        Reliance
by Administrative Agent. Each Administrative Agent shall be entitled to
rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (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 Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to have been made by the
proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or an L/C Issuer, each Administrative Agent may
presume that such condition is satisfactory to such Lender or L/C Issuer unless
such Administrative Agent shall have received notice to the contrary from such
Lender or L/C Issuer prior to the making of such Loan or the issuance of such
Letter of Credit. Each Administrative Agent may consult with legal counsel (who
may be counsel for the Borrowers), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

9.05        Delegation
of Duties.  Each Administrative Agent
may perform any and all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by such
Administrative Agent. Each Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of each
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

9.06        Resignation
of Administrative Agent.  Either
Administrative Agent may at any time give notice of its resignation to the Lenders,
the L/C Issuers and the Borrowers. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, subject, so long as no
Event of Default then exists and is continuing, to the approval of the Domestic
Borrower or Canadian Borrower, as applicable, (such consent not to be
unreasonably withheld) to appoint a successor, which shall be a bank with an office
in the United States, or an Affiliate of any such bank with an office in the
United States (in respect of the replacement of the Domestic Administrative
Agent) or which shall be a bank with an office in Canada or an Affiliate of any
such bank with an office in Canada (in respect of the replacement of the
Canadian Administrative Agent). 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 Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuers, appoint a successor Administrative Agent
reasonably acceptable to the Borrowers and meeting the qualifications set forth
above; provided that if such Administrative Agent shall notify the
Borrowers and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (a) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by such
Administrative Agent on behalf of the Lenders or the L/C Issuers under any of the
Loan Documents, the retiring Administrative Agent shall continue

 87
 

 

to hold such collateral security until such time as a
successor Administrative Agent is appointed) and (b) all payments,
communications and determinations provided to be made by, to or through such
Administrative Agent shall instead be made by or to each Lender and L/C Issuer
directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this Section). The fees payable by the Borrowers
to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrowers and such successor.
After the retiring Administrative Agent’s resignation hereunder and under the
other Loan Documents, the provisions of this Article and Section 10.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.

Any resignation by Bank of America or Bank of America
Canada as Administrative Agent pursuant to this Section shall also constitute
its resignation as an L/C Issuer. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (i) such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring L/C Issuer, (ii) the retiring L/C Issuer shall be discharged from
all of its duties and obligations hereunder or under the other Loan Documents,
and (iii) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

9.07        Non-Reliance
on Administrative Agents and Other Lenders. 
Each Lender and L/C Issuer acknowledges that it has, independently
and without reliance upon either Administrative Agent or any other Lender or
any of their Related Parties and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender and L/C
Issuer also acknowledges that it will, independently and without reliance upon
either Administrative Agent or any other Lender or any of their Related Parties
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

9.08        Administrative
Agents May File Proofs of Claim.  In
case of the pendency of any proceeding under any Debtor Relief Law or any
other judicial proceeding relative to any Loan Party, the Administrative Agents
(irrespective of whether the principal of any Loan or L/C Obligation shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agents shall have made any demand on
the Borrowers) shall be entitled and empowered, by intervention in such
proceeding or otherwise

 88
 

 

(a)           to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the L/C Issuers and
the Administrative Agents (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuers and the
Administrative Agents and their respective agents and counsel and all other
amounts due the Lenders, the L/C Issuers and the Administrative Agents under Sections 2.03(i)
and (j), 2.09 and 10.04) allowed in such judicial
proceeding; and

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

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and L/C Issuer to make such
payments to the Administrative Agents and, if the Administrative Agents shall
consent to the making of such payments directly to the Lenders and L/C Issuers,
to pay to the Administrative Agents any amount due for the reasonable
compensation, expenses, disbursements and advances of the Administrative Agents
and its agents and counsel, and any other amounts due the Administrative Agents
under Sections 2.09 and 10.04.

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

9.09        Collateral
and Guaranty Matters.  The Lenders
and the L/C Issuers irrevocably authorize the Domestic Administrative Agent, at its
option and in its discretion,

(a)           to
release any Lien on any property granted to or held by the Domestic
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations) and the expiration or termination of all
Letters of Credit, (ii) that is sold or transferred, or to be sold or
transferred, as part of or in connection with any sale or transfer permitted
hereunder or under any other Loan Document, or (iii)  if approved, authorized or ratified in
writing in accordance with Section 10.01;

(b)           to
release any Guarantor from its obligations under the Guaranty if such Person
ceases to be a Subsidiary as a result of a transaction permitted hereunder; and

(c)           to
subordinate any Lien on any property granted to or held by the Administrative
Agent under any Loan Document to the holder of any Lien on such property that
is permitted by Section 7.01(g)(ii).

Upon request by the Domestic Administrative Agent at
any time, the Required Lenders will confirm in writing such Administrative
Agent’s authority to release or subordinate its interest in particular types or
items of property, or to release any Guarantor from its obligations under the
Guaranty pursuant to this Section 9.09.  In each case as specified in this Section 9.09,

 89
 

 

the Domestic
Administrative Agent will, at the Borrowers’ expense, execute and deliver to
the applicable Loan Party such documents as such Loan Party may reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted under the Collateral Documents or to subordinate
its interest in such item, or to release such Guarantor from its obligations
under the Guaranty, in each case in accordance with the terms of the Loan
Documents and this Section 9.09.

ARTICLE X

MISCELLANEOUS

10.01      Amendments,
Etc.  No amendment or waiver of any
provision of this Agreement or any other Loan Document,
and no consent to any departure by a Borrower or any other Loan Party
therefrom, shall be effective unless in writing signed by the Required Lenders
and the Borrowers or the applicable Loan Party, as the case may be, and
acknowledged by the applicable Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such
amendment, waiver or consent shall:

(a)           extend
or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of
such Lender;

(b)           postpone
any date fixed by this Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under such other Loan Document without the written consent of each
Lender entitled to such payment;

(c)           reduce
the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01)
any fees or other amounts payable hereunder or under any other Loan Document
without the written consent of each Lender entitled to such amount; provided,
however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrowers to pay interest or Letter of Credit Fees at the
Default Rate or (ii) to amend any financial covenant hereunder (or any defined
term used therein) even if the effect of such amendment would be to reduce the
rate of interest on any Loan or L/C Borrowing or to reduce any fee payable
hereunder;

(d)           change
Section 8.03 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender;

(e)           change
(i) any provision of this Section 10.01 or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender;

(f)            release
all or substantially all of the Collateral in any transaction or series of
related transactions, without the written consent of each Lender; or

 90
 

 

(g)           release
all or substantially all of the value of the Guaranty, without the written
consent of each Lender;

and provided, further, that (i) no
amendment, waiver or consent shall, unless in writing and signed by the
applicable L/C Issuer in addition to the Lenders required above, affect the
rights or duties of the such L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
applicable Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the such Administrative Agent under this
Agreement or any other Loan Document; and (iii) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto.  Notwithstanding anything
to the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

If any Lender does not consent to a proposed
amendment, waiver, consent or release with respect to any Loan Document that
requires the consent of each Lender and that has been approved by the Required
Lenders, the Domestic Borrower may replace such non-consenting Lender in
accordance with Section 10.13; provided that such amendment,
waiver, consent or release can be effected as a result of the assignment
contemplated by such Section (together with all other such assignments required
by the Domestic Borrower to be made pursuant to this paragraph).

10.02      Notices;
Effectiveness; Electronic Communications. 
(a) Notices Generally. 
Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (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, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

(i)            if
to the Borrowers, the Administrative Agents or the L/C Issuers, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and

(ii)           if
to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified 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 through electronic communications to the extent provided in
subsection (b) below shall be effective as provided in such subsection (b).

(b)           Electronic
Communications.  Notices and other
communications to the Lenders and the L/C Issuers hereunder may be delivered or
furnished by electronic

 91
 

 

communication (including e-mail and Internet or
intranet websites) as set forth in Section 6.02 or pursuant to
other procedures approved by the Domestic Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or L/C Issuer
pursuant to Article II if such Lender or L/C Issuer, as applicable,
has notified the Domestic Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication.  The Domestic Administrative Agent or either
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may
be limited to particular notices or communications.

Unless the Administrative Agents otherwise prescribe,
(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 (1) upon posting on the EDGAR Website or (2) 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)           The
Platform.  THE PLATFORM IS PROVIDED “AS
IS” AND “AS AVAILABLE.”  THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING 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 PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM.  In no event
shall the Administrative Agents or any of their Related Parties (collectively,
the “Agent Parties”) have any liability to the Borrowers, any Lender,
the L/C Issuers or any other Person for losses, claims, damages, liabilities or
expenses of any kind (whether in tort, contract or otherwise) arising out of the
Borrowers’ or the Administrative Agents’ transmission of Borrower Materials
through the Internet, except to the extent that such losses, claims, damages,
liabilities or expenses are determined by a court of competent jurisdiction by
a final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Agent Party; provided, however,
that in no event shall any Agent Party have any liability to the Borrowers, any
Lender, the L/C Issuers or any other Person for indirect, special, incidental,
consequential or punitive damages (as opposed to direct or actual damages).

(d)           Change
of Address, Etc.  Each of the
Borrowers, the Administrative Agents and the L/C Issuers may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the other parties hereto.  Each Lender may change its address,
telecopier or telephone number for notices and other communications

 92
 

 

hereunder by notice to the Borrowers, the
Administrative Agents and the L/C Issuers. 
In addition, each Lender agrees to notify the Administrative Agents from
time to time to ensure that each Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.

(e)           Reliance
by Administrative Agents, L/C Issuers and Lenders.  The Administrative Agents, the L/C Issuers
and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices) purportedly given by or on behalf of a
Borrower even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. 
The Borrowers shall indemnify the Administrative Agents, the L/C
Issuers, each Lender and the Related Parties of each of them from all losses,
costs, expenses and liabilities resulting from the reasonable reliance by such
Person on each notice purportedly given by or on behalf of a Borrower.  All telephonic notices to and other
telephonic communications with an Administrative Agent may be recorded by such
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

10.03      No
Waiver; Cumulative Remedies.  No
failure by any Lender, L/C Issuer or Administrative Agent to exercise, and no delay by any such
Person in exercising, any right, remedy, power or privilege hereunder or under
any other Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.  The rights,
remedies, powers and privileges herein provided, and provided under each other
Loan Document, are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.

10.04      Expenses;
Indemnity; Damage Waiver.  (a) Costs
and Expenses.  Each Borrower jointly
and severally agrees to pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agents
and their Affiliates (including the reasonable fees, charges and disbursements
of counsel for the Administrative Agents), in connection with the syndication
of the credit facilities provided for herein, the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby
shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by
the L/C Issuers in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out of pocket expenses incurred by the Administrative Agents, any
Lender or the L/C Issuers (including the reasonable fees, charges and
disbursements of any counsel for the Administrative Agents, any Lender or the
L/C Issuers) and shall pay all reasonable fees and time charges for attorneys
who may be employees of the Administrative Agents, any Lender or the L/C
Issuers, in connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in connection with 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.

 93
 

 

(b)           Indemnification
by the Borrowers.  The Borrowers
jointly and severally agree to indemnify the Administrative Agents (and any
sub-agent thereof), each Lender and the L/C Issuers, 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 reasonable fees,
charges and disbursements of counsel for the Indemnitees, provided that
all Indemnitees shall use a single counsel in each appropriate jurisdiction,
except in the case of a bona fide conflict of interest where additional counsel
may be retained), incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by a Borrower 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, or, in the case of an Administrative Agent (and
any sub-agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or
the use or proposed use of the proceeds therefrom (including any refusal by an
L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by a
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to a Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by a Borrower or any other Loan Party or any of
such Borrower’s or such Loan Party’s directors, shareholders or creditors, 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, willful misconduct or bad
faith of such Indemnitee or (y) result from a claim brought by a Borrower 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 such
Borrower 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.

(c)           Reimbursement
by Lenders.  To the extent that the
Borrowers for any reason fail to indefeasibly pay any amount required under
subsection (a) or (b) of this Section to be paid by them to the Administrative
Agents (or any sub-agent thereof), the L/C Issuers or any Related Party of any
of the foregoing, each Lender severally agrees to pay to the Administrative
Agents (or any such sub-agent), the L/C Issuers or such Related Party, as the
case may be, such Lender’s Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against such Administrative Agent (or any such
sub-agent) or such L/C Issuer in its capacity as such, or against any Related
Party of any of the foregoing acting for such Administrative Agent (or any such
sub-agent) or L/C Issuer in connection with such capacity.  The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.12(d).

 94

 

(d)           Waiver
of Consequential Damages, Etc.  To
the fullest extent permitted by applicable law, each Borrower shall not assert,
and 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 subsection (b)
above shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed to such unintended
recipients by such Indemnitee 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 other than
for direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

(e)           Payments.  All amounts due under this Section shall be
payable not later than fifteen Business Days after demand therefor.

(f)            Survival.  The agreements in this Section shall survive
the resignation of any Administrative Agent and any L/C Issuer, the replacement
of any Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all the other Obligations.

10.05      Payments
Set Aside.  To the extent that any
payment by or on behalf of a Borrower is made to any Administrative Agent, any L/C Issuer or any
Lender, or any Administrative Agent, L/C Issuer or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by any
Administrative Agent, any L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and each L/C Issuer severally agrees to pay to the applicable Administrative
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by such Administrative Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the L/C
Issuers under clause (b) of the preceding sentence shall survive the payment in
full of the Obligations and the termination of this Agreement.

10.06      Successors
and Assigns.  (a) Successors and
Assigns Generally.  The provisions of
this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby, except that neither Borrower may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Domestic Administrative Agent and each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an assignee in accordance with the provisions of Section 10.06(b),
(ii) by way of participation in accordance with the provisions of Section 10.06(d),
or (iii) by way of pledge or assignment of a security interest subject to the

 95
 

 

restrictions of Section 10.06(f) (and any
other attempted assignment or transfer by any party hereto shall be null and
void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agents, the L/C Issuers and the Lenders) 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 assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its
Commitment(s) and the Loans (including for purposes of this Section 10.06(b),
participations in L/C Obligations) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

(i)            Minimum
Amounts.

(A)          in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment under any Facility and the Loans at the time owing to it
under such Facility or in the case of an assignment to a Lender, an Affiliate
of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B)           in
any case not described in subsection (b)(i)(A) of this Section, the aggregate
amount of the Commitment (which for this purpose includes Loans outstanding
thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent or, if “Trade
Date” is specified in the Assignment and Assumption, as of the Trade Date,
shall not be less than $5,000,000, unless each of the applicable Administrative
Agent and, so long as no Event of Default has occurred and is continuing, the
applicable Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met;

(ii)           Proportionate
Amounts.  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 Loans
or the Commitment assigned, except that this clause (ii) shall not prohibit any
Lender from assigning all or a portion of its rights and obligations among
separate Facilities on a non-pro rata basis;

 96
 

 

(iii)          Required
Consents.  No consent shall be
required for any assignment except to the extent required by subsection
(b)(i)(B) of this Section and, in addition:

(A)          the
consent of a Borrower (such consent not to be unreasonably withheld or delayed)
shall be required unless (1) an Event of Default has occurred and is continuing
at the time of such assignment or (2) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund;

(B)           the
consent of applicable Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of any
Commitment if such assignment is to a Person that is not a Lender with a
Commitment in respect of the applicable Facility, an Affiliate of such Lender
or an Approved Fund with respect to such Lender; and

(C)           the
consent of the applicable L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters
of Credit (whether or not then outstanding).

(iv)          Assignment
and Assumption.  The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee in the amount,
if any, required as set forth in Schedule 10.06 as well as all
ancillary documents, including any Tax forms, required under Section 3.01;
provided, however, that the applicable Administrative Agent may,
in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment.  The
assignee, if it shall not be a Lender, shall deliver to the applicable
Administrative Agent an Administrative Questionnaire.

(v)           No
Assignment to Borrower.  No such
assignment shall be made to a Borrower or any of a Borrower’s Affiliates or
Subsidiaries.

(vi)          No
Assignment to Natural Persons.  No
such assignment shall be made to a natural person.

(vii)         Canadian
Loan.  No such assignment of a
Canadian Loan or Commitment shall be made to any Person other than a financial
institution that, upon the effectiveness of such assignment, will be a “Canadian
Lender” as set forth in the definition thereof.

Subject to acceptance and recording thereof by the
applicable Administrative Agent pursuant to subsection (c) of this Section, and
upon satisfaction of the conditions set forth above, from and after the
effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and

 97
 

 

obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 3.01, 3.04, 3.05
and 10.04 with respect to facts and circumstances occurring prior to the
effective date of such assignment).  Upon
request, the applicable Borrower (at its expense) shall execute and deliver a
Note to the assignee Lender.  Any
assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 10.06(d).  No assignee shall be entitled to receive any
greater benefit pursuant to this Agreement (including but not limited to Sections 3.01,
3.04, 3.05 and 10.04 hereof) than the Lender assignor
would have been entitled to receive with respect to the rights transferred.

(c)           Register.  Each Administrative Agent, acting solely for
this purpose as an agent of the applicable Borrower, shall maintain at the
Administrative Agent’s Office 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
L/C Obligations 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 and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrowers and any Lender, 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 or the Administrative Agents, sell
participations to any Person (other than a natural person or a Borrower or any
of a Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in
all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations) 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, the Lenders and the L/C Issuers shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification described in the first
proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section,
each Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Section 10.06(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.13
as though it were a Lender.

(e)           Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Section 3.01
or 3.04 than the applicable Lender would have

 98
 

 

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 applicable Borrower’s prior written
consent.  A Participant shall not be
entitled to the benefits of Section 3.01 unless the Borrowers are
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrowers, to comply with Section 3.01(e)
as though it were a Lender.

(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 (including under its Note, if any) 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.

(g)           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 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.

(h)           Resignation
as L/C Issuer after Assignment. 
Notwithstanding anything to the contrary contained herein, if at any
time Bank of America or Bank of America Canada assigns all of its Revolving
Credit Commitments and Committed Loans pursuant to Section 10.06(b),
it may, upon 30 days’ notice to the Borrowers and the Lenders, resign as L/C
Issuer.  In the event of any such
resignation as L/C Issuer, the Borrowers shall be entitled to appoint from
among the Lenders a successor L/C Issuer hereunder; provided, however,
that no failure by the Borrowers to appoint any such successor shall affect the
resignation of Bank of America or Bank of America Canada as L/C Issuer.  If Bank of America or Bank of America Canada
resigns as L/C Issuer, it shall retain all the rights, powers, privileges and
duties of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.03(c)).  Upon the appointment of a successor L/C
Issuer, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer, and (b) the
successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to Bank of America or Bank of America Canada,
as appropriate, to effectively assume the obligations of such party with
respect to such Letters of Credit.

10.07      Treatment
of Certain Information; Confidentiality. 
Each of the Administrative Agents, the Lenders and the L/C Issuers agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives in connection with this Agreement and the Loans
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such

 99
 

 

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 laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with
the exercise of any remedies 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, to (1)
any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (2)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to a Borrower and its obligations, (g) with the
consent of a Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to any Administrative Agent, any Lender, any L/C Issuer 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 any Loan Party or any Subsidiary thereof
relating to any Loan Party or any Subsidiary thereof or their respective
businesses, other than any such information that is publicly available on the
EDGAR Website or that is available to any Administrative Agent, any Lender or
any L/C Issuer on a nonconfidential basis prior to disclosure by any Loan Party
or any Subsidiary thereof.  Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

Each of the Administrative Agents, the Lenders and the
L/C Issuers acknowledge that (a) the Information may include material
non-public information concerning the Borrowers or a Subsidiary, as the case
may be, (b) it has developed compliance procedures regarding the use of
material non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including Federal and state
securities Laws.

10.08      Right
of Setoff.  If an Event of Default
shall have occurred and be continuing, each Lender, each L/C Issuer and each of their respective Affiliates is
hereby authorized at any time and from time to time, after obtaining the prior
written consent of the Domestic Administrative Agent, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by
such Lender, such L/C Issuer or any such Affiliate to or for the credit or the
account of a Borrower or any other Loan Party against any and all of the
obligations of either Borrower or such Loan Party now or hereafter existing
under this Agreement or any other Loan Document to such Lender or L/C Issuer,
irrespective of whether or not such Lender or L/C Issuer shall have made any
demand under this Agreement or any other Loan Document and although such
obligations of such Borrower or such Loan Party may be contingent or unmatured
or are owed to a branch or office of such Lender or L/C Issuer different from
the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Lender,
each L/C Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of

 100
 

 

setoff) that such Lender, such L/C Issuer or their
respective Affiliates may have.  Each
Lender and each L/C Issuer 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.

10.09      Interest
Rate Limitation.  Notwithstanding
anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”).  If an Administrative Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the applicable Borrower.  In determining whether the interest
contracted for, charged, or received by an Administrative Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

10.10      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 constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. 
Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agents
and when the Administrative Agents 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 telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

10.11      Survival
of Representations and Warranties. 
All representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been
or will be relied upon by the Administrative Agents and each Lender, regardless
of any investigation made by the Administrative Agents or any Lender or on
their behalf and notwithstanding that the Administrative Agents or any Lender
may have had notice or knowledge of any Default at the time of any Credit
Extension, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding.

10.12      Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity
and enforceability of the remaining provisions of this Agreement and the other
Loan Documents shall not be affected or impaired thereby and (b) the parties
shall endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions.  The

 101
 

 

invalidity of a provision in a particular jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

10.13      Replacement
of Lenders.  If any Lender requests
compensation under Section 3.04, or if a Borrower is required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 3.01, if any Lender is a Defaulting Lender or if any
other circumstance exists hereunder that gives a Borrower the right to replace a
Lender as a party hereto, then such Borrower may, at its sole expense and
effort, upon notice to such Lender and the applicable Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by, Section 10.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

(a)           such
Borrower shall have paid to the applicable Administrative Agent the assignment
fee specified in Section 10.06(b)(iv);

(b)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or such Borrower (in the case of all other amounts);

(c)           in
the case of any such assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments
thereafter; and

(d)           such
assignment does not conflict with applicable Laws.

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

10.14      GOVERNING
LAW; JURISDICTION; ETC.  (a) GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

(b)           SUBMISSION
TO JURISDICTION.  EACH BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA SITTING IN
LOS ANGELES COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE CENTRAL
DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE

 102
 

 

HEARD AND DETERMINED IN SUCH CALIFORNIA STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY
ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST A BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)           WAIVER
OF VENUE.  EACH BORROWER IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

(d)           SERVICE
OF PROCESS.  EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 10.02.  NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW

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

10.16      No
Advisory or Fiduciary Responsibility. 
In connection with all aspects of each transaction contemplated hereby, the Borrowers and
the Loan Parties each acknowledge and agree, and acknowledge their respective
Affiliates’ understanding, that: (i) the credit facilities provided for hereunder
and any related arranging or other services in connection therewith

 103
 

 

(including in connection with any amendment, waiver or
other modification hereof or of any other Loan Document) are an arm’s-length
commercial transaction between the Borrowers and their respective Affiliates,
on the one hand, and the Administrative Agents, on the other hand, and each of
the Borrowers is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, each Administrative Agent is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary, for the
Borrowers or any of their respective Affiliates, stockholders, creditors or
employees or any other Person; (iii) neither Administrative Agent has assumed
or will assume an advisory, agency or fiduciary responsibility in favor of
either Borrower with respect to any of the transactions contemplated hereby or
the process leading thereto, including with respect to any amendment, waiver or
other modification hereof or of any other Loan Document (irrespective of
whether either Administrative Agent has advised or is currently advising either
Borrower or any of its Affiliates on other matters) and neither Administrative
Agent has any obligation to the Borrowers or any of their respective Affiliates
with respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; (iv) the
Administrative Agents and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Borrowers and their Affiliates and neither Administrative Agent has any
obligation to disclose any of such interests by virtue of any advisory, agency
or fiduciary relationship; and (v) the Administrative Agents have not provided
and will not provide any legal, accounting, regulatory or Tax advice with
respect to any of the transactions contemplated hereby (including any
amendment, waiver or other modification hereof or of any other Loan Document)
and each Borrower has consulted its own legal, accounting, regulatory and Tax
advisors to the extent it has deemed appropriate.  Each Borrower hereby waives and releases, to
the fullest extent permitted by law, any claims that it may have against the
Administrative Agent with respect to any breach or alleged breach of agency or
fiduciary duty.

10.17      USA
PATRIOT Act Notice.  Each Lender that
is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not
on behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies each Loan Party, which information includes
the name and address of each Loan Party and other information that will allow
such Lender or the Domestic Administrative Agent, as applicable, to identify
each Loan Party in accordance with the Act.

10.18      California
Judicial Reference.  If any action or
proceeding is filed in a court of the State of California by or against any party hereto in
connection with any of the transactions contemplated by this Agreement or any
other Loan Document, the court shall, and is hereby directed to, make a general
reference pursuant to California Code of Civil Procedure Section 638 to a
referee (who shall be a single active or retired judge) to hear and determine
all of the issues in such action or proceeding (whether of fact or of law) and
to report a statement of decision, provided that at the option of any
party to such proceeding, any such issues pertaining to a “provisional remedy”
as defined in California Code of Civil Procedure Section 1281.8 shall be heard
and determined by the court.

 104

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.

	
  

  	
  GUESS ?, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Carlos Alberini

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
					

 

 S-1
 

 

 

	
  

  	
  GUESS? CANADA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Carlos Alberini

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  Chief Operating Officer

  
					

 

 S-2
 

 

 

	
  

  	
  BANK OF AMERICA, N.A., as Domestic

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Mathew Koenig

  	
   

  
	
   

  	
  Name:

  	
  Matthew Koenig

  
	
   

  	
  Title:

  	
  Senior Vice President 

  
					

 

 S-3
 

 

 

	
  

  	
  BANK OF AMERICA, N.A., acting through its

  Canada Branch, as Canada Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Medina Sales De Andrade

  	
   

  
	
   

  	
  Name:

  	
  Medina Sales De Andrade

  
	
   

  	
  Title:

  	
  Assistant Vice President

  
					

 

 S-4
 

 

 

	
  

  	
  BANK OF AMERICA, N.A., as a Domestic Lender

  and L/C Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Mathew Koenig

  	
   

  
	
   

  	
  Name:

  	
  Matthew Koenig

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

 S-5
 

 

 

	
  

  	
  BANK OF AMERICA, N.A., acting through its

  Canada Branch, as a Canadian Lender and Canadian

  L/C Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Medina Sales De Andrade

  	
   

  
	
   

  	
  Name:

  	
  Medina Sales De Andrade

  
	
   

  	
  Title:

  	
  Assistant Vice President

  
					

 

 S-6

 

 

EXHIBIT A

FORM
OF COMMITTED LOAN NOTICE

Date:                      ,
            

To:          [Bank of
America, N.A., as Domestic Administrative Agent]

[Bank of America, N.A.,
acting through its Canada Branch, as Canadian Administrative Agent]

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement,
dated as of September 19, 2006 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among Guess?,
Inc., a Delaware corporation (the “Domestic Borrower”), Guess? Canada
Corporation, a Canadian corporation and wholly-owned subsidiary of the Domestic
Borrower (together with the Domestic Borrower, collectively, the “Borrowers”
and individually, a “Borrower”), each lender from time to time party
thereto, Bank of America, N.A., as Domestic Administrative Agent and Domestic
L/C Issuer, and Bank of America, N.A., acting through its Canada Branch, as
Canadian Administrative Agent and Canadian L/C Issuer.

The undersigned hereby requests (select one):

	
  o

  	
   

  	
  A Borrowing of
  [Domestic] [Canadian] Committed Loans

  	
   

  	
  o

  	
   

  	
  A conversion or continuation of [Domestic]
  [Canadian] Loans

  

 

1.             On
                                                                                                    
(a Business Day).

2.             In
the amount of $                                                                              .

3.             Comprised
of                                                                   .

[Type of Committed Loan requested: 

Base Rate Loan or Eurodollar Rate Loan]

If conversion, of                        
Loans to                   
Loans.

4.             For
Eurodollar Rate Loans:  with an Interest
Period of             
months.

The Committed Borrowing, if any, requested herein
complies with clause (i) of the provisos to the first sentence of Sections
2.01(a) and (b) of the Agreement.

	
  

  	
  [GUESS?, INC.]

  
	
   

  	
  [GUESS?
  CANADA CORPORATION]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

 A-1

 

EXHIBIT B

FORM
OF NOTE

September 19, 2006

FOR VALUE RECEIVED, the undersigned (the “Borrower”)
hereby promises to pay to                                   
or registered assigns (the “Lender”), in accordance with the provisions
of the Agreement (as hereinafter defined), the principal amount of each Loan
from time to time made by the Lender to the Borrower under that certain Credit
Agreement, dated as of even date herewith (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among the
Borrower, [Guess?, Inc./Guess? Canada Corporation], the Lenders from time to
time party thereto, Bank of America, N.A., as Domestic Administrative Agent and
Domestic L/C Issuer and Bank of America, N.A., acting through its Canada
Branch, as Canadian Administrative Agent and Canadian L/C Issuer.

The Borrower promises to pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such principal
amount is paid in full, at such interest rates and at such times as provided in
the Agreement.  All payments of principal
and interest shall be made to the [Domestic/Canadian] Administrative Agent for
the account of the Lender in [Canadian] Dollars in immediately available funds
at the [Domestic/Canadian] Administrative Agent’s Office or at such other place
as should be designated in writing for such purpose in accordance with the
terms of the Agreement.  If any amount is
not paid in full when due hereunder, such unpaid amount shall bear interest, to
be paid upon demand, from the due date thereof until the date of actual payment
(and before as well as after judgment) computed at the per annum rate set forth
in the Agreement.

This Note is one of the Notes referred to in the
Agreement, is entitled to the benefits thereof and may be prepaid in whole or
in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of
the Guaranty and is secured by the Collateral. 
Upon the occurrence and continuation of one or more of the Events of
Default specified in the Agreement, all amounts then remaining unpaid on this
Note may become, or may be declared to be, immediately due and payable all as
provided in the Agreement.  Loans made by
the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business. The Lender may
also attach schedules to this Note and endorse thereon the date, amount and
maturity of its Loans and payments with respect thereto.

The Borrower, for itself, its successors and assigns,
hereby waives diligence, presentment, protest and demand and notice of protest,
demand, dishonor and non-payment of this Note.

The terms of this Note are subject to amendment only
in the manner provided in the Agreement. 
This Note is subject to restrictions on transfer or assignment as
provided in the Agreement.

 B-1
 

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

	
  

  	
  [GUESS?,
  INC.]

  
	
   

  	
  [GUESS?
  CANADA CORPORATION]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 B-2
 

 

LOANS AND PAYMENTS WITH
RESPECT THERETO

	
  Date

  	
   

  	
  Type of

  Loan Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest

  Paid This

  Date

  	
   

  	
  Outstanding

  Principal

  Balance

  This Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 B-3

 

EXHIBIT C

FORM
OF COMPLIANCE CERTIFICATE

Financial Statement Date:                 ,
          

To:          Bank of
America, N.A., as Domestic Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement,
dated as of September 19, 2006 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among Guess?, Inc., a Delaware corporation (the “Domestic
Borrower”), Guess? Canada Corporation, a Canadian corporation and
wholly-owned subsidiary of the Domestic Borrower (together with the Domestic
Borrower, collectively, the “Borrowers” and individually, a “Borrower”),
each lender from time to time party thereto (collectively, the “Lenders”
and individually, a “Lender”), Bank of America, N.A., as Domestic
Administrative Agent and Domestic L/C Issuer, and Bank of America, N.A., acting
through its Canada Branch, as Canadian Administrative Agent and Canadian L/C
Issuer.

The undersigned Responsible Officer hereby certifies
as of the date hereof that he/she is the                                                       
of the Domestic Borrower, and that, as such, he/she is authorized to execute
and deliver this Certificate to the Domestic Administrative Agent on the behalf
of the Domestic Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1.             [Attached
hereto as Schedule 1] [Posted on the website of the Domestic Borrower]
are the year-end audited financial statements required by Section 6.01(a)
of the Agreement for the fiscal year of the Domestic Borrower ended as of the
above date, together with the report and opinion of an independent certified
public accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1.             [Attached
hereto as Schedule 1] [Posted on the website of the Domestic Borrower]
are the unaudited financial statements required by Section 6.01(b) of
the Agreement for the fiscal quarter of the Domestic Borrower ended as of the
above date.  Such financial statements
fairly present the financial condition, results of operations and cash flows of
the Domestic Borrower and its Subsidiaries in accordance with GAAP as at such date
and for such period, subject only to normal year-end audit adjustments and the
absence of footnotes.

2.             The
undersigned has reviewed and is familiar with the terms of the Agreement and
has made, or has caused to be made under his/her supervision, a review in
reasonable detail of the transactions and condition (financial or otherwise) of
the Domestic Borrower during the accounting period covered by the attached
financial statements.

 C-1
 

 

3.             A
review of the activities of the Borrowers during such fiscal period has been
made under the supervision of the undersigned with a view to determining
whether during such fiscal period the Borrowers performed and observed all
their respective Obligations under the Loan Documents, and

[select one:]

[to the best knowledge of the undersigned during
such fiscal period, the Borrowers performed and observed each covenant and
condition of the Loan Documents applicable to them, and no Default has occurred
and is continuing.]

—or—

[the following covenants or conditions have not
been performed or observed and the following is a list of each such Default and
its nature and status:]

4.             The
financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this
Certificate.

[Use following paragraph 5 for annual
deliveries of the Certificate]

5.             Attached
hereto as Schedule 3 is a supplement to Schedule [II]/[IV]
([locations at which Goods are kept]/[Intellectual Property]) to the Security
Agreement.

IN WITNESS WHEREOF, the undersigned
has executed this Certificate as 

of                                      ,
                          .

	
  

  	
  GUESS?,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 C-2
 

 

For the Quarter/Year ended                              (“Statement
Date”)(1)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

I.              Section
7.11(a) – Total Adjusted Leverage Ratio.

	
  

  	
  A.

  	
  The sum of

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Consolidated Funded Indebtedness as of the Statement
  Date, and

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Eight times the real property rental expense of the
  Domestic Borrower and its Subsidiaries for the most recently completed period
  of four fiscal quarters

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Line I.A.1 plus Line I.A.2

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  EBITDAR for four consecutive fiscal quarters ending
  on above date (“Subject Period”):

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Consolidated Net Income (including income recognized
  from deferred revenues on payments by licensees) for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Consolidated Interest Charges for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Provision for income taxes for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Depreciation expenses for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Amortization expenses (including stock-based
  award expense amortizations) for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Real property rental expense for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  Customary fees, costs and expenses incurred in
  connection with any equity or debt offering, Investments or Indebtedness
  permitted by the Agreement or in connection with the consummation of
  acquisitions permitted pursuant to Section 7.03(h) for Subject Period:

  	
  $

  

 

(1)   In the event the Domestic Borrower changes
its fiscal year or fiscal quarter end dates, all calculations of financial
covenants set forth in this Schedule 2 will be performed using such new dates
as if the prior fiscal quarters had ended on such new dates.

 C-3
 

 

 

	
  

  	
   

  	
  8.

  	
  Restructuring charges or reserves (including,
  without limitation, non-cash retention, severance, systems establishment
  costs, excess pension charges, contract termination costs including future
  lease commitments, and costs to consolidate facilities and relocate
  employees) for Subject Period (not to exceed $50,000,000 in the aggregate
  through the Maturity Date):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.

  	
  Other non-recurring expenses (excluding losses
  generated from barter transactions) during Subject Period reducing such
  Consolidated Net Income which do not represent a cash item in the Subject
  Period or any future period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.

  	
  Federal, state, local and foreign income Tax credits
  (to the extent included in calculating such Consolidated Net Income) for
  Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11.

  	
  All non-recurring non-cash items (excluding gains
  generated from barter transactions) increasing Consolidated Net Income for
  Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  12.

  	
  EBITDAR (Lines I.B.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9
  — 10 — 11):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Total Adjusted Leverage Ratio (Line I.A.3  ̧
  Line I.B.12):

  	
                          to
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maximum permitted:

  	
   

  

 

	
  Four Fiscal Quarters Ending

  	
   

  	
  Maximum Total

  Adjusted

  Leverage Ratio

  	
   

  
	
  Closing Date
  through the last day of the first fiscal quarter of fiscal year 2009

  	
   

  	
  4.50
  to 1.00

  	
   

  
	
  The second fiscal
  quarter of fiscal year 2009 and each fiscal quarter thereafter

  	
   

  	
  4.25 to 1.00

  	
   

  

 

II.            Section
7.11(b) – Consolidated Fixed Charge Coverage Ratio.

	
   

  	
  A.

  	
  1.

  	
  EBITDAR for the Subject Period (Line I.B.12 above):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Federal, state, local and foreign income taxes paid
  in cash for the Subject Period:

  	
  $

  

 

 C-4
 

 

 

	
  

  	
   

  	
  3.

  	
  Maintenance Capital Expenditures for the Subject
  Period (but in no event less than $10,000,000):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Lines II.A.1 – 2 – 3:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  The sum of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Consolidated Interest Charges for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  All regularly scheduled and/or contractual principal
  payments or redemptions of debt for Subject Period (excluding debt
  refinanced):

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Real property rental expense for Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Restricted Payments (exclusive of those permitted
  under Section 7.06(e)) for the Subject Period:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Lines II.B.1 + 2 + 3 + 4:

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Consolidated Fixed Charge Coverage Ratio (Line
  II.A.4  ̧
  Line II.B.5):

  	
   

  	
  to 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum required:

  	
   

  

 

	
  Four Fiscal Quarters Ending

  	
   

  	
  Minimum

  Consolidated

  Fixed Charge

  Coverage Ratio

  	
   

  
	
  Closing Date
  through the last day of the first fiscal quarter of fiscal year 2009

  	
   

  	
  1.10
  to 1.00

  	
   

  
	
  The second fiscal
  quarter of fiscal year 2009 and each fiscal quarter thereafter

  	
   

  	
  1.20 to 1.00

  	
   

  

 

III.           Calculation
of Basket Usage.

	
  

  	
  A.

  	
  Indebtedness – Section 7.02

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Debt permitted under 7.02(g)

  	
   

  
	
   

  	
   

  	
   

  	
  (not to exceed $35,000,000):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Aircraft lease not to exceed $20,000,000):

  	
  $

  

 

 C-5
 

 

 

	
  

  	
   

  	
  (iii)

  	
  Foreign Subsidiary debt

  
	
   

  	
   

  	
   

  	
  (not to exceed $50,000,000):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Investments – Section 7.03

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Minority Equity Interests in foreign Persons

  
	
   

  	
   

  	
   

  	
  (not to exceed $50,000,000):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Acquisitions under Section 7.03(h):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

  	
  Cash consideration

  
	
   

  	
   

  	
   

  	
   

  	
  (not to exceed $125,000,000):

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

  	
  Total consideration

  
	
   

  	
   

  	
   

  	
   

  	
  (not to exceed $150,000,000):

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  Investments in publicly traded securities (not to
  exceed $4,000,000 plus the amount of proceeds from the sale of such
  securities):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  Investments in domestic Persons (not to exceed
  $35,000,000):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 C-6

 

EXHIBIT D

ASSIGNMENT
AND ASSUMPTION

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

For an agreed consideration, the Assignor hereby
irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the [Domestic/Canadian] Administrative Agent
as contemplated below (i) all of the Assignor’s rights and obligations as a
Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the respective facilities identified below (including,
without limitation, the Letters of Credit included in such facilities) and (ii)
to the extent permitted to be assigned under applicable law, all claims, suits,
causes of action and any other right of the Assignor (in its capacity as a
Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including, but not limited to,
contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and
assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as, the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

(i)                                     Assignor:                                                                                            

(ii)                                  Assignee:                                                                                            
[and is an Affiliate/Approved Fund of [identify Lender](2)]

(iii)                               Borrowers:             Guess?,
Inc. and Guess? Canada Corporation

(2)           Select
as applicable

 D-1
 

 

(iv)                              Domestic
Administrative Agent:  Bank of
America, N.A., as the domestic administrative agent under the Credit Agreement.

(v)                                 Canadian
Administrative Agent:  Bank of
America, N.A., acting through its Canada Branch.

(vi)                              Credit
Agreement:  Credit Agreement, dated
as of September 19, 2006, among Guess?, Inc., a Delaware corporation (the “Domestic
Borrower”), Guess? Canada Corporation, a Canadian corporation and
wholly-owned subsidiary of the Domestic Borrower (together with the Domestic
Borrower, collectively, the “Borrowers” and individually, a “Borrower”),
each lender from time to time party thereto (collectively, the “Lenders”
and individually, a “Lender”), Bank of America, N.A., as Domestic
Administrative Agent and Domestic L/C Issuer, and Bank of America, N.A., acting
through its Canada Branch, as Canadian Administrative Agent and Canadian L/C
Issuer.

(vii)                           Assigned
Interest:

	
  Facility Assigned

  	
   

  	
  Aggregate

  Amount of

  Commitment 

  for all Lenders*

  	
   

  	
  Amount of

  Commitment

  Assigned*

  	
   

  	
  Percentage

  Assigned of

  Commitment(3)

  	
   

  	
  CUSIP Number

  	
   

  
	
  Domestic
  Facility

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
  Canadian
  Facility

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

(viii)                        [Trade
Date:                                                           ](4)

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

*    Amount
to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date.

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

(4)  To be completed if
the Assignor and the Assignee intend that the minimum assignment amount is to
be determined as of the Trade Date.

 D-2
 

 

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

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME OF
  ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME OF
  ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  [Consented to
  and] Accepted:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA,
  N.A., as Domestic

  	
   

  
	
    Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  [OR]

  	
   

  
	
   

  	
   

  
	
  [Consented to
  and] Accepted:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA,
  N.A.,

  	
   

  
	
    acting through its Canada branch, as

  	
   

  
	
    Canadian Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  [Consented to]:

  	
   

  
	
   

  	
   

  
	
  GUESS?, INC.,

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 D-3
 

 

 

	
  [OR]

  	
   

  
	
   

  	
   

  
	
  [Consented to]:

  	
   

  
	
   

  	
   

  
	
  GUESS? CANADA
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 D-4
 

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

GUESS?, INC. and GUESS? CANADA CORPORATION CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.             Representations
and Warranties.

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

1.2.          Assignee.  The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all requirements of an Eligible Assignee under the
Credit Agreement (subject to receipt of such consents as may be required under
the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it is sophisticated with respect to decisions to acquire
assets of the type represented by the Assigned Interest and either it, or the
person exercising discretion in making its decision to acquire the Assigned
Interest, is experienced in acquiring assets of such type, (v) it has received
a copy of the Credit Agreement, and has received or has been accorded the
opportunity to receive copies of the most recent financial statements delivered
pursuant to Section 6.01 thereof, as applicable, and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest, (vi) it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest, on the basis of which it has made such analysis and decision
independently and without reliance on the Administrative Agent or any other
Lender, and (vii) if it is a Foreign Lender, attached hereto is any
documentation required to be delivered by it pursuant to the terms of the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other

 D-5
 

 

Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

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

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

 D-6

 

 

EXHIBIT E

GUARANTY

GUARANTY dated as of September 19, 2006 (the “Guaranty”) made
by Guess?, Inc., a Delaware corporation (the “Domestic Borrower”),
Guess? Retail, Inc., a Delaware corporation, Guess? Value LLC, a Virginia
limited liability company, Guess? Bermuda Holdings, LLC, a Delaware limited
liability company and Guess.com, Inc., a Delaware corporation (together with any future Domestic Subsidiary
(as defined in the Credit Agreement referred to below), if any, that becomes a
party to this Guaranty, a “Guarantor” and collectively, the “Guarantors”)
in favor of each of the Administrative Agents (as hereinafter defined) and the
Lender Parties (as defined below).

PRELIMINARY
STATEMENTS:

(1)           The Domestic Borrower, Guess? Canada
Corporation, a Canadian corporation and wholly-owned subsidiary of the Domestic
Borrower (the “Canadian Borrower” and together with the Domestic
Borrower, collectively the “Borrowers”), various lenders (the “Lenders”),
Bank of America, N.A., as domestic administrative agent for certain of the
lenders (in such capacity, the “Domestic Administrative Agent”) and Bank
of America, N.A., acting through its Canada Branch, as Canadian administrative
agent for certain of the Lenders (in such capacity, the “Canadian
Administrative Agent” and together with the Domestic Administrative Agent,
the “Administrative Agents”) have entered into a Credit Agreement dated
as of the date hereof (said Agreement, as it may hereafter be amended or
otherwise modified from time to time, being the “Credit Agreement”;
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement), pursuant to which the
Lenders have, among other things, and subject to the terms and conditions set
forth in the Credit Agreement, agreed to make Loans and Letters of Credit
available to the Borrowers.

(2)           It is a condition precedent to the making of
Loans and the issuance of Letters of Credit by the L/C Issuers under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty.

(3)           The Guarantors have duly authorized the
execution, delivery and performance of this Guaranty.

(4)           Each Guarantor hereby confirms that it will
derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Loans and to issue Letters of Credit under the Credit
Agreement for the benefit of the Borrowers from time to time, each Guarantor
hereby agrees as follows:

Section
1.  Guaranty: Limitation of Liability.

(a)           Subject
to the final sentence of this subsection, each of the Guarantors hereby jointly
and severally unconditionally and irrevocably, as primary obligor and not
merely as

 E-1
 

 

surety, guarantees the full and prompt payment when
due, whether by acceleration or otherwise, and at all times thereafter, of (a)
all obligations of the Borrowers howsoever created, arising or evidenced,
whether director or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, which arise out of or in connection with the
Credit Agreement or any other Loan Document, as the same may be amended, modified,
extended or renewed from time to time, (b) all obligations of the Borrowers to
any Lender Party (as defined below) under any Swap Contract and (c) all costs
and expenses paid or incurred by the Administrative Agents or any Lender Party
in enforcing this Guaranty or any other applicable Loan Document against such
Guarantor (all such obligations being herein collectively called the “Guaranteed
Obligations”).  As used herein, “Lender
Party” means each Lender and any Affiliate of such Lender which is a party
to a Swap Contract with either of the Borrowers.  Without limiting the generality of the
foregoing, each Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by either of
the Borrowers to the Administrative Agents or any Lender Party under the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Borrowers.  It is understood and
agreed that the Domestic Borrower is executing this Guaranty to evidence its
guaranty of the obligations of the Canadian Borrower to the Lender Parties; it
is not guarantying its own primary obligations to the Lender Parties.

(b)           This
Guaranty constitutes a guaranty by each Guarantor of payment when due and not
of collection, and each Guarantor specifically agrees that it shall not be
necessary or required that the Administrative Agents or any Lender exercise any
right, assert any claim or demand or enforce any remedy whatsoever against the
Borrowers (or any other Person) before or as a condition to the obligations of
such Guarantor hereunder.

(c)           Any
term or provision of this Guaranty or any other Loan Document to the contrary
notwithstanding, the aggregate maximum amount of the Guaranteed Obligations for
which each Guarantor (other than the Domestic Borrower) shall be liable shall
not exceed the maximum amount for which such Guarantor can be liable without
rendering this Guaranty or any other Loan Document as it relates to such
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer.  The obligations of
the Domestic Borrower hereunder shall be unlimited.

Section 2.  Guaranty Absolute.  Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agents or any Lender Party with respect thereto.  The Obligations of each Guarantor under this
Guaranty are independent of the Guaranteed Obligations or any other Obligations
of any other Loan Party under the Loan Documents, and a separate action or actions
may be brought and prosecuted against any Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Borrowers or any
other Loan Party or whether the Borrowers or any other Loan Party is joined in
any such action or actions.  The creation
or existence from time to time of additional Guaranteed Obligations to the
Administrative Agents or the Lender Parties or any of them is authorized,
without notice to any Guarantor, and shall in no way impair the rights of the
Administrative Agents or the Lender Parties or the obligations of any Guarantor
under this Guaranty, including the Guaranty hereunder of such additional
Guaranteed Obligations.  The liability of
each Guarantor under this

 E-2
 

 

Guaranty shall be irrevocable, absolute and
unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following to the fullest extent permitted by applicable law:

(a)           any
lack of validity, legality or enforceability of the Credit Agreement or any
Loan Document;

(b)           the
failure of the Administrative Agents or any Lender:

(i)            to
assert any claim or demand or to enforce any right or remedy against the
Borrowers or any other Person (including any other guarantor) under the
provisions of the Credit Agreement, any other Loan Document or otherwise, or

(ii)           to
exercise any right or remedy against any other guarantor of, or collateral
securing, any Guaranteed Obligations;

(c)           any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other extension, compromise or
renewal of any Guaranteed Obligation;

(d)           any
reduction, limitation, impairment or termination of any Guaranteed Obligations
for any reason, including any claim of waiver, release, surrender, alteration
or compromise, and shall not be subject to (and such Guarantor hereby waives
any right to or claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, any Guaranteed Obligations;

(e)           any
amendment to, rescission, waiver, or other modification of, or any consent to
departure from, any of the terms of the Credit Agreement or any other Loan
Document;

(f)            (i)
any addition, exchange, release, surrender or non-perfection of any
collateral or (ii) any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty held by the Administrative Agents
or any Lender, securing or supporting any of the Guaranteed Obligations;

(g)           any
other circumstance which might otherwise constitute a defense available to, or
a legal or equitable discharge of, any Guarantor, the Borrowers, any surety or
any other guarantor; or

(h)           any
failure of the Administrative Agents or any Lender Party to disclose to the
Borrowers or each Guarantor any information relating to the financial
condition, operations, properties or prospects of any other Loan Party now or
in the future known to the Administrative Agents or any Lender Party (each
Guarantor waiving any duty on the part of the Administrative Agents or the
Lender Parties to disclose such information).

This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment (in whole or in
part) of any of the Guaranteed Obligations is rescinded or must otherwise be
returned by the Administrative Agents or any Lender Party or any other Person

 E-3
 

 

upon the insolvency, bankruptcy or reorganization of
the Borrowers or any other Loan Party or otherwise, all as though such payment
had not been made.

Section
3.  Waivers and Acknowledgments.

(a)           Each
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this
Guaranty and any requirement that the Administrative Agents or any Lender Party
protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Borrowers or any other Person (including any Guarantor) or entity or any
collateral securing any Guaranteed Obligations.

(b)           Each
Guarantor hereby irrevocably waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future (it being
understood and agreed that if, notwithstanding the foregoing, any such revocation
shall occur or be attempted, such revocation shall not in any event reduce or
otherwise affect any Guarantor’s liability with respect to Guaranteed
Obligations arising prior to receipt by the Administrative Agents and the
Lender Parties of written notice of such revocation or attempted revocation).

(c)           Each
Guarantor hereby waives to the fullest extent permitted by applicable law:
(i) any rights to assert against the Administrative Agents and the Lender
Parties any defense (legal or equitable), set-off, counterclaim, or claim which
such Guarantor may now or at any time hereafter have against Borrowers or any
other party liable to the Administrative Agents and the Lender Parties;
(ii) any defense, set-off, counterclaim, or claim, of any kind or nature,
arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guaranteed Obligations or any
security therefor; (iii) any defense arising by reason of any claim or
defense based upon an election of remedies by the Administrative Agents or the
Lender Parties; (iv) any act which shall defer or delay the operation of
any statute of limitations applicable to the Guaranteed Obligations shall
similarly operate to defer or delay the operation of such statute of
limitations applicable to such Guarantor’s liability hereunder; and
(v) any defense or benefit that may be derived from or afforded by law
which limits the liability of or exonerates guaranties or sureties or requires
the Administrative Agents or the Lender Parties to exhaust remedies against the
Borrowers prior to commencing any action or foreclosure against such Guarantor
or its properties including, without limitation, the benefits of Sections 2787
through 2855, inclusive, and Sections 2899 and 3433 of the California Civil
Code and any successor provisions to such Sections, or any similar provisions
under United States or Canadian law.

(d)           Each
Guarantor agrees that if all or a portion of the Obligations or this Guaranty
is at any time secured by a deed of trust or mortgage covering interests in
real property, the Administrative Agents and the Lender Parties, in their sole
discretion, without notice or demand and without affecting the liability of
such Guarantor under this Guaranty, may foreclose pursuant to the terms of the
Credit Agreement or otherwise the deed of trust or mortgage and the interests
in real property secured thereby by non-judicial sale.  Each Guarantor understands that the exercise
by the Administrative Agents or the Lender Parties of certain rights and
remedies contained in the Credit Agreement and any such deed of trust or
mortgage may affect or

 E-4
 

 

eliminate such Guarantor’s right of subrogation
against Borrowers and that such Guarantor may therefore incur a partially or
totally non-reimbursable liability hereunder. 
Nevertheless, each Guarantor hereby authorizes and empowers the
Administrative Agents or the Lender Parties to exercise, in their sole
discretion, any rights and remedies, or any combination thereof, which may then
be available, since it is the intent and purpose of such Guarantor that the
obligations hereunder shall be absolute, independent and unconditional under
any and all circumstances. 
Notwithstanding any foreclosure of the lien of any deed of trust or
security agreement with respect to any or all of any real or personal property
secured thereby, whether by the exercise of the power of sale contained
therein, by an action for judicial foreclosure or by an acceptance of a deed in
lieu of foreclosure, each Guarantor shall remain bound under this Guaranty
including its obligation to pay any deficiency following a non-judicial
foreclosure to the fullest extent permitted by applicable law.

(e)           Each
Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and
that the waivers set forth in this Section 3 are knowingly made in
contemplation of such benefits.

Section 4.  Subrogation.  Each Guarantor agrees that it will not
exercise any rights that it may now or hereafter acquire against the Borrowers
or any other Person that arise from the existence, payment, performance or
enforcement of such Guarantor’s obligations under this Guaranty or any other
Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agents or any Lender
Party against the Borrowers or any other Person or any collateral which the
Administrative Agents or any Lender Party now has or hereafter acquires,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Borrowers or any Person, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Commitments shall have expired or terminated.  If any amount shall be paid to any Guarantor
in violation of the preceding sentence at any time prior to the later of (i)
the payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and (ii) the Maturity Date, such amount shall be
held in trust for the benefit of the Administrative Agents and the Lender
Parties and shall forthwith be paid to the Administrative Agents to be credited
and applied to the Guaranteed Obligations and any other amounts payable under
this Guaranty whether matured or unmatured, in accordance with the terms of the
Loan Documents, or to be held as collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising.  If (i) a Guarantor shall make payment to the
Administrative Agents or any Lender Party of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall be paid in full in cash and (iii) the
Maturity Date shall have occurred, the Administrative Agents and the Lender
Parties shall, at such Guarantor’s request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation
to such Guarantor of an interest in the Guaranteed Obligations resulting from
such payment by such Guarantor.

 E-5
 

 

Section 5.  Payments Free and Clear of Taxes, Etc.

(a)           Any
and all payments made by any Guarantor hereunder to or for the account of the
Administrative Agents or any Lender Party shall be made, in accordance with and
subject to Section 3.01 of the Credit Agreement, free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes, provided
that if such Guarantor shall be required by applicable law to deduct or
withhold 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 or withholdings (including deductions applicable to
additional sums payable under this Section) the applicable Administrative Agent
or Lender Party, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made, (ii) the
applicable Guarantor shall make such deductions or withholdings and (iii) the
applicable Guarantor shall timely pay the full amount deducted or withheld to
the relevant Governmental Authority in accordance with applicable law.

(b)           Without
limiting the provisions of subsection (a) above, the Guarantors shall timely
pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

(c)           Each
Guarantor will indemnify the Administrative Agents and each Lender Party,
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 such
Administrative Agent or Lender Party, 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 the applicable Guarantor by a Lender Party
(with a copy to the applicable Administrative Agent), or by an Administrative
Agent on its own behalf or on behalf of a Lender Party, shall be conclusive
absent manifest error.

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

(e)           Any
Lender Party that is entitled to an exemption from or reduction of withholding
Tax under the law of the jurisdiction in which a Guarantor is resident for Tax
purposes, or any treaty to which such jurisdiction is a party, with respect to
payments hereunder or under any other Loan Document shall, if requested by a
Guarantor or the applicable Administrative Agent, deliver to such Guarantor
(with a copy to the applicable Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by such Guarantor or such
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by a
Guarantor or the applicable Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by such
Guarantor or such Administrative Agent as will

 E-6
 

 

enable such Guarantor or such Administrative Agent to
determine whether or not such Lender Party is subject to backup withholding or
information reporting requirements.

(f)            If
an Administrative Agent or any Lender Party determines, in its good faith
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by a Guarantor or with respect to which a
Guarantor has paid additional amounts pursuant to this Section, it shall pay to
such Guarantor an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by such Guarantor under
this Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out of pocket expenses of such Administrative Agent or such
Lender Party, 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 such Guarantor, upon the request of such Administrative Agent or such
Lender Party, agrees to repay the amount paid over to such Guarantor (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Administrative Agent or such Lender Party if such
Administrative Agent or such Lender Party is required to repay such refund to
such Governmental Authority.  This
subsection shall not be construed to require any Administrative Agent or any
Lender Party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to any Guarantor.

(g)           If
a Guarantor determines in good faith that a reasonable basis exists for
contesting a Tax or Other Tax with respect to which such Guarantor has paid an
additional amount under this Section, the relevant Administrative Agent or
Lender Party, as applicable, shall cooperate with such Guarantor (but shall
have no obligation to disclose any confidential information, unless
arrangements satisfactory to the relevant Lender Party have been made to
preserve the confidential nature of such information) in challenging such Tax
or Other Tax at the Guarantor’s expense if requested by such Guarantor (it
being understood and agreed that none of the Administrative Agents or any
Lender Party shall have any obligation to contest, or any responsibility for
contesting, any Tax), and any cost incurred by the relevant Administrative
Agent or Lender Party in connection with its cooperation shall be borne by the
relevant Guarantor.

Section 6.  Representations and Warranties.  Each Guarantor hereby represents and warrants
that such Guarantor has, independently and without reliance upon the
Administrative Agents or any Lender Party and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty, and such Guarantor has established
adequate means of obtaining from any other Loan Parties on a continuing basis
information pertaining to, and is now and on a continuing basis will be
completely familiar with, the financial condition, operations, properties and
prospects of such other Loan Parties.

Section 7.  Affirmative Covenants.  Each Guarantor covenants and agrees that, so
long as any part of the Guaranteed Obligations shall remain unpaid, any Letter
of Credit shall be outstanding or any Lender Party shall have any Commitment,
if, under the terms of the Credit Agreement, the Borrowers are required to
cause such Guarantor or any of such Guarantor’s Subsidiaries to take, or to
refrain from taking, any action, or to comply with any requirements,
obligations, limitations or restrictions contained therein, in each case
whether individually or

 E-7
 

 

together with any other Loan Parties, such Guarantor
shall, and shall cause any such Subsidiaries to, take or refrain from taking
(as the case may be) any such action and comply with all such requirements,
obligations, limitations and restrictions and not take any action that would
create an Event of Default.

Section 8.  Amendments, Etc.  No amendment or waiver of any provision of
this Guaranty and no consent to any departure by any Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agents and the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.  Anything contained
herein to the contrary notwithstanding, any amendment to this Guaranty pursuant
to the form attached hereto shall be effective upon execution by the party
thereto and acceptance thereof by the Administrative Agents, in each case
without further consent by or notice to the Required Lenders or any of the Loan
Parties.

Section 9.  Notices, Etc.  All notices and other communications provided
for hereunder shall be in writing (including by facsimile communication).  All such written notices shall be mailed,
faxed or delivered to the address, facsimile number or electronic mail address
specified, in the case of any Guarantor, on the signature pages hereto and in
the case of the Administrative Agents or any Lender Party, in the Credit
Agreement, or to such other address, facsimile number, electronic mail address
or telephone number as shall be designated by such party in a notice to the
other parties.  All such notices and
other communications shall be deemed to be given or made upon the earlier to
occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the
relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail, when delivered.  In no event shall
a voicemail message be effective as a notice, communication or confirmation
hereunder.

Section 10.  No Waiver; Remedies.  No failure on the part of the Administrative
Agents or any Lender Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

Section 11.  Right of Set-off.  Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or
the granting of the consent specified by Section 8.02 of the Credit
Agreement to authorize the Administrative Agents to declare the Note or Notes
due and payable pursuant to the provisions of said Section 8.02, each
Lender Party is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender Party to or for the credit
or the account of any Guarantor against any and all of the Obligations of such
Guarantor now or hereafter existing under this Guaranty, whether or not such
Lender Party shall have made any demand under this Guaranty and although such
Obligations may be unmatured.  Each
Lender Party agrees promptly to notify each Guarantor after any such set-off
and application; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and

 E-8
 

 

application. 
The rights of each Lender Party under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that such Lender Party may have.

Section 12.  Indemnification.  Without limitation on any other obligations
of any Guarantor or remedies of the Lender Parties under this Guaranty, each
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Administrative Agents and each Lender Party from and
against, and shall pay on demand, any and all losses, liabilities, damages, costs,
expenses and charges (including the reasonable fees and disbursements of the
Administrative Agents’ or such Lender Party’s legal counsel) suffered or
incurred by the Administrative Agents or such Lender Party as a result of any
failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of the Borrowers enforceable against the Borrowers in accordance
with their terms, except that the enforceability of this Guaranty may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).

Section 13.  Continuing Guaranty; Assignments under the
Credit Agreement.  This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until
the payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and the termination of the Commitments, (b) be
binding upon each Guarantor, its successors and assigns and (c) inure to
the benefit of and be enforceable by the Administrative Agents and the Lender
Parties and their successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), any Lender Party may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise,
in each case as and to the extent provided in Section 10.06 of the Credit
Agreement.

If all of the stock of a Guarantor or any of its
successors in interest under this Guaranty shall be sold or otherwise disposed
of (including by merger or consolidation) in a sale or other disposition not
prohibited by the Credit Agreement or otherwise consented to by the Required
Lenders, such Guarantor or such successor in interest, as the case may be, may
request, and the Administrative Agents shall, upon such request, execute and
deliver documents or instruments necessary to evidence the release and
discharge such Guarantor from Guaranty.

Section
14.  Governing Law; Jurisdiction;
Waiver of Jury Trial, Etc.

(a)           THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF CALIFORNIA WITHOUT REFERENCE TO CONFLICTS OF LAW PRINCIPLES.

(b)           ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN LOS
ANGELES OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF SUCH STATE, AND BY

 E-9
 

 

EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GUARANTOR, THE ADMINISTRATIVE AGENTS AND EACH LENDER PARTY CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS.  EACH GUARANTOR, EACH
ADMINISTRATIVE AGENT AND EACH LENDER PARTY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR
OTHER DOCUMENT RELATED THERETO.  EACH
GUARANTOR, THE CANADIAN ADMINISTRATIVE AGENT AND EACH LENDER PARTY WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

(c)           EACH
PARTY TO THIS GUARANTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS GUARANTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(d)           Section
captions used in this Guaranty are for convenience of reference only, and shall
not affect the construction of this Guaranty.

(e)           Any
provision of this Guaranty which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

(f)            This
Guaranty, taken together with all of the other Loan Documents and all
certificates and other documents delivered by the Borrowers and the Guarantors
to the Administrative Agents or the Lender Parties, embodies the entire
agreement and supersedes all prior agreements, written and oral, relating to
the subject matter hereof.

(g)           This
Guaranty may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.  Delivery of an executed
counterpart of a signature page to this Guaranty by facsimile shall be as
effective as delivery of a manually executed counterpart of this Guaranty.

 E-10
 

 

(h)           If
any action or proceeding is filed in a court of the State of California by or
against any party hereto in connection with any of the transactions contemplated
by this Guaranty or any other Loan Document, the court shall, and is hereby
directed to, make a general reference pursuant to California Code of Civil
Procedure Section 638 to a referee (who shall be a single active or retired
judge) to hear and determine all of the issues in such action or proceeding
(whether of fact or of law) and to report a statement of decision, provided
that at the option of any party to such proceeding, any such issues pertaining
to a “provisional remedy” as defined in California Code of Civil Procedure
Section 1281.8 shall be heard and determined by the court.

 E-11
 

 

IN WITNESS WHEREOF, the
undersigned have caused this Guaranty to be duly executed and delivered by its
officers thereunto duly authorized as of the date first above written.

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  GUESS?, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1444 South Alameda Street

  
	
   

  	
   

  	
  Los Angeles, CA 90021

  
					

 E-12
 

 

 

	
  

  	
  GUESS? BERMUDA
  HOLDINGS, LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1444 South Alameda Street

  
	
   

  	
   

  	
  Los Angeles, CA
  90021

  
					

 

 E-13
 

 

 

	
  

  	
  GUESS.COM, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1444 South Alameda Street

  
	
   

  	
   

  	
  Los Angeles, CA
  90021

  
					

 

 E-14
 

 

 

	
  

  	
  GUESS? RETAIL,
  INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1444 South Alameda Street

  
	
   

  	
   

  	
  Los Angeles, CA
  90021

  
					

 

 E-15
 

 

 

	
  

  	
  GUESS? VALUE,
  LLC,

  
	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1444 South Alameda Street

  
	
   

  	
   

  	
  Los Angeles, CA
  90021

  
					

 

 E-16
 

 

 

AMENDMENT TO
GUARANTY

This Amendment to Guaranty (this “Amendment”), dated as of          ,
    , relates to the Guaranty dated as of September 19,
2006 (as amended to date, the “Guaranty”), from Guess?, Inc., a Delaware
corporation (the “Domestic Borrower”) and certain Domestic Subsidiaries
of the Domestic Borrower (collectively, the “Guarantors”) in favor of
the Lender Parties (as defined in the Guaranty) and BANK OF AMERICA, as
Domestic Administrative Agent (“Domestic Administrative Agent”), and
BANK OF AMERICA, N.A., acting through its Canada Branch, as Canadian
Administrative Agent (the “Canadian Administrative Agent” and together
with the Domestic Administrative Agent, the “Administrative Agents”).

In compliance with Section 6.12 of the Credit Agreement dated as of
September 19, 2006 (as amended from time to time, the “Credit Agreement”)
among the Domestic Borrower, Guess? Canada Corporation, a Canadian corporation
(the “Canadian Borrower”), the Domestic Administrative Agent, the
Canadian Administrative Agent, and the Lenders party thereto, the undersigned
Domestic Subsidiary (the “Additional Guarantor”) hereby agrees as
follows (capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement):

1.             Amendment.  The Guaranty is hereby amended to add as a
party, and more specifically, as a Guarantor, thereunder, the Additional
Guarantor.

2.             Representations
and Warranties.  The Additional
Guarantor represents and warrants to the Administrative Agents and the Lender
Parties that each of the representations and warranties of a Guarantor
contained in the Guaranty is hereby made by the Additional Guarantor as of the
date hereof and is true and correct, in all material respects, as to the
Additional Guarantor as of the date hereof.

3.             Additional
Guarantor as Guarantor.  The
Additional Guarantor assumes all of the obligations and liabilities of a
Guarantor under the Guaranty, agrees to be bound thereby as if the Additional
Guarantor were an original party to the Guaranty and shall be a Guarantor for
all purposes under the Loan Documents.

4.             Effectiveness.  This Amendment shall become effective as of
the date hereof upon acceptance by the Domestic Administrative Agent (notice of
which is hereby waived by the Additional Guarantor).

 E-17
 

 

5.             Governing
Law.  This Amendment shall be
governed by, and construed in accordance with, the laws of the State of
California.

	
   

  	
  [ADDITIONAL GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
   

  
	
   

  	
  Accepted and
  Agreed to

  
	
   

  	
  this        
  day of                        ,
  20    :

  
	
   

  	
  BANK OF AMERICA,
  N.A.,

  
	
   

  	
  as Domestic
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Matthew Koenig

  
	
   

  	
  Title:

  	
  Senior Vice President

  
								

 

 E-18

 

EXHIBIT F

SECURITY AGREEMENT

THIS SECURITY
AGREEMENT (this “Agreement”) dated as of September 19, 2006 is among
Guess ?, Inc., a Delaware corporation (the “Domestic Borrower”), each
Domestic Subsidiary (as defined in the Credit Agreement referred to below) of
the Domestic Borrower listed on the signature pages hereof, each other person
or entity which from time to time becomes a party hereto (collectively,
including the Domestic Borrower, the “Grantors” and individually each a “Grantor”)
and Bank of America, N.A., as Domestic Administrative Agent (in such capacity,
the “Domestic Administrative Agent”) for the Lenders (as defined below).

W  I  T  N  E  S  S
E  T  H:

WHEREAS, the Domestic Borrower, Guess? Canada
Corporation, a Canadian corporation and wholly-owned subsidiary of the Domestic
Borrower (the “Canadian Borrower” and together with the Domestic
Borrower, collectively the “Borrowers”), various financial institutions
(the “Lenders”), the Domestic Administrative Agent and Bank of America,
N.A., acting through its Canada Branch, as Canadian administrative agent for
certain of the Lenders (in such capacity, the “Canadian Administrative Agent”
and together with the Domestic Administrative Agent, the “Administrative
Agents”) have entered into that certain Credit Agreement dated as of the
date hereof (as amended, restated or otherwise modified from time to time, the “Credit
Agreement”) pursuant to which the Lenders have, among other things, and
subject to the terms and conditions set forth in the Credit Agreement, agreed
to make Loans and Letters of Credit available to the Borrowers;

WHEREAS, certain Domestic Subsidiaries have guaranteed
all of the obligations of the Borrowers under or in connection with the Credit
Agreement and certain other obligations pursuant to a Guaranty dated as of even
date herewith (the “Guaranty”);

WHEREAS, pursuant to the Guaranty, the Domestic
Borrower has guaranteed all of the obligations of the Canadian Borrower under
or in connection with the Credit Agreement and certain other obligations;

WHEREAS, each Grantor will benefit from the making of
loans and the issuance of letters of credit and acceptances pursuant to the
Credit Agreement; and

WHEREAS, the obligations of the Borrowers under the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement) and the obligation of the Domestic Borrower and each other Grantor
under the Guaranty are to be secured pursuant to this Agreement;

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

 F-1
 

 

Section 15.  Definitions.  When used herein (a) the terms Account,
Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claim,
Commodity Account, Commodity Contract, Deposit Account, Document, Equipment,
Fixture, General Intangibles, Goods, Instrument, Inventory, Investment
Property, Proceeds, Security, Securities Account, Security Entitlement and
Uncertificated Security have the meanings assigned to such terms in the UCC;
(b) capitalized terms used but not defined have the meanings assigned to
such terms in the Credit Agreement and (c) the following terms have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):

“Administrative Agents” is defined in the
recitals.

“Agreement” is defined in the introductory
paragraph.

“Assignee Deposit Account” is defined in Section
4 hereof.

“Borrowers” is defined in the recitals.

“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close
under the laws of, or are in fact closed in, the state where the Administrative
Agent’s office is located.

“Canadian Administrative Agent” is defined in
the recitals.

“Canadian Borrower” is defined in the recitals.

“Collateral” means, with respect to any
Grantor, all property and rights of such Grantor in which a security interest
is granted hereunder.

“Computer Hardware and Software” means, with
respect to any Grantor, (i) all computer and other electronic data
processing hardware, whether now or hereafter owned, licensed or leased by such
Grantor, including, without limitation, all integrated computer systems,
central processing units, memory units, display terminals, printers, features,
computer elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers, accessories
and all peripheral devices and other related computer hardware; (ii) all
software programs, whether now or hereafter owned, licensed or leased by such
Grantor, designed for use on the computers and electronic data processing
hardware described in clause (i) above, including, without
limitation, all operating system software, utilities and application programs
in whatsoever form (source code and object code in magnetic tape, disk or hard
copy format or any other listings whatsoever); (iii) all firmware
associated therewith, whether now or hereafter owned, licensed or leased by
such Grantor; and (iv) all documentation for such hardware, software and
firmware described in the preceding clauses (i), (ii) and (iii),
whether now or hereafter owned, licensed or leased by such Grantor, including,
without limitation, flow charts, logic diagrams, manuals, specifications,
training materials, charts and pseudo codes.

“Costs and Expenses” means, with respect to any
Grantor, all reasonable costs and expenses (including reasonable attorneys’
fees and legal expenses) incurred by the Domestic Administrative Agent in
connection with (i) the execution, delivery and performance of this 

 F-2
 

 

Agreement by such
Grantor, (ii) protecting, preserving or maintaining any Collateral of such
Grantor, (iii) collecting the Liabilities of such Grantor and (iv)
enforcing any rights of the Domestic Administrative Agent hereunder in respect
of the Collateral of such Grantor.

“Credit Agreement” is defined in the recitals.

“Default” means the occurrence and continuance
of any of the following events: (i) any Event of Default or (ii) any warranty
of any Grantor herein is untrue or misleading in any material respect and, as a
result thereof, the Domestic Administrative Agent’s security interest in any
material portion of the Collateral (of all Grantors taken as a whole) is not
perfected or the Domestic Administrative Agent’s rights and remedies with
respect to any material portion of the Collateral of all Grantors (taken as a
whole) is materially impaired or otherwise materially adversely affected.

“Domestic Administrative Agent” is defined in
the introductory paragraph.

“Domestic Borrower” is defined in the
introductory paragraph.

“Grantor” is defined in the introductory
paragraph.

“Guaranty” is defined in the recitals.

“Intellectual Property” means all past, present
and future: trade secrets and other proprietary information; trademarks,
service marks, business  names, designs,
logos, indicia, and/or other source and/or business identifiers and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including, without limitation, copyrights for
computer programs) and copyright registrations or applications for
registrations which have heretofore been or may hereafter be issued throughout
the world and all tangible property embodying the copyrights; unpatented
inventions (whether or not patentable); patent applications and patents;
industrial designs, industrial design applications and registered industrial
designs, license agreements related to any of the foregoing set forth in this
definition and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, source codes, object codes and
other physical manifestations, embodiments or incorporations of any of the
foregoing set forth in this definition; the right to sue for all past, present
and future infringements of any of the foregoing set forth in this definition;
and all common law and other rights throughout the world in and to all of the
foregoing.

“Lender Party” means each Lender and any
affiliate of such Lender which is party to a Swap Contract with the Borrower.

“Lenders” is defined in the recitals.

“Liabilities” means (a) as to the Domestic
Borrower, all obligations of the Domestic Borrower to the Domestic
Administrative Agent or any Lender Party, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, which arise out of or in connection with any
of the Loan Documents (including, without limitation, with respect to Letters
of Credit), as the same may be amended, 

 F-3
 

 

modified, extended or
renewed from time to time, and all obligations of the Domestic Borrower to any
Lender Party under any Swap Contract, (b) with respect to each Grantor
other than the Domestic Borrower, all obligations of such Grantor under the
Guaranty or any other Collateral Document, and (c) with respect to each
Grantor, all Costs and Expenses payable by such Grantor.

“Non-Tangible Collateral” means, with respect
to any Grantor, collectively, such Grantor’s Accounts  and General Intangibles.

“Permitted Liens” is defined in Section 3
hereof.

“UCC” means the Uniform Commercial Code as in
effect in the State of California on the date of this Agreement, as the same
may be amended from time to time.

Section 16.  Grant of Security Interest.  As security for the payment of all
Liabilities, each Grantor hereby assigns to the Domestic Administrative Agent
for the benefit of the Lender Parties, and grants to the Domestic
Administrative Agent for the benefit of the Lender Parties a continuing
security interest in, the following, whether now or hereafter existing or
acquired:

All of such Grantor’s:

(i)            Accounts;

(ii)           Chattel Paper;

(iii)          Commercial Tort Claims;

(iv)          Computer Hardware and Software and all
rights with respect thereto, including, without limitation, any and all
licenses, options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement rights, renewal rights
and indemnifications, and any substitutions, replacements, additions or model
conversions of any of the foregoing;

(v)           Deposit Accounts;

(vi)          Documents;

(vii)         General Intangibles;

(viii)        Goods (including, without limitation,
all its Equipment, Fixtures and Inventory), together with all accessions,
additions, attachments, improvements, substitutions and replacements thereto
and therefor;

(ix)           Instruments;

(x)            Intellectual Property;

(xi)           Investment Property;

 F-4
 

 

(xii)          Letter-of-Credit Rights and letters of
credit (as such term is defined in the UCC;

(xiii)         money (as such term is defined in the
UCC) of every jurisdiction whatsoever;

(xiv)        to the extent not included in the
foregoing, other personal property of any kind or description;

(xv)         to the extent not included in the
foregoing, all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing, embodying,
incorporating or referring to any of the foregoing, all claims and/or insurance
proceeds arising out of the loss, nonconformity or any interference with the
use of, or any defects or infringements of rights in, or damage to, any of the
foregoing; and

(xvi)        all proceeds, products, offspring,
rents, issues, profits and returns of and from, and all distributions on and
rights arising out of, any of the foregoing.

Notwithstanding anything herein to the contrary, in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a security interest in (i) any of such Grantor’s rights or interests in
any license, contract or agreement to which such Grantor is a party or any of
its rights or interests thereunder to the extent, but only to the extent, that
such a grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under
any license, contract or agreement to which such Grantor is a party (other than
to the extent that any such term would be rendered ineffective pursuant to the
Uniform Commercial Code, as it exists on the date of this Agreement or as it
may hereafter be amended, in the State of California (the “UCC”) or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect, or (ii) any real property leasehold.

Section 17.  Warranties.  Each Grantor warrants that:  (i) such Grantor shall take no action to
cause or permit any financing statement (other than any which may have been
filed on behalf of the Domestic Administrative Agent or in connection with
Permitted Liens (as defined below)) covering any of the Collateral to be on
file in any public office; (ii) such Grantor is and will be the lawful owner of
its interest in all Collateral, free of all Liens whatsoever, other than the
security interest hereunder and Liens expressly permitted by the Credit
Agreement (“Permitted Liens”), with full corporate power and authority
to execute this Agreement and perform such Grantor’s obligations hereunder, and
to subject the Collateral to the security interest hereunder; (iii) such
Grantor’s true legal name as registered in the jurisdiction in which such
Grantor is organized or incorporated, state of incorporation or organization,
organizational identification number as designed by the state of its
incorporation or organization, federal employee identification number, chief
executive office, and principal place of business are as set forth on Schedule I
hereto (as supplemented by the Grantor from time to time) (and such Grantor has
not maintained its chief executive office and principal place of business at
any other location 

 F-5
 

 

at any time after June 30, 2001), except to the
extent that Grantor has given the Domestic Administrative Agent notice of any
change as contemplated by Section 6 of this Agreement; (iv) each other
location where such Grantor maintains a place of business or locates Goods with
a value in excess of $250,000 is set forth on Schedule II hereto, as of
the most recent date of delivery of a supplement to such Schedule (as
supplemented by the Grantor from time to time but no less frequently than
annually); (v) except as disclosed on Schedule III, such Grantor is
not known as of the date of this Agreement and during the five years preceding
the date hereof has not previously been known by any trade name;
(vi) except as disclosed on Schedule III, during the five years
preceding the date hereof such Grantor has not been known by any legal name
different from the one set forth on the signature page of this Agreement nor
has such Grantor been the subject of any merger or other corporate
reorganization; and (vii) Schedule IV, as of the most recent
date of delivery of a supplement to such Schedule (as supplemented by the
Grantor from time to time but no less frequently than annually) hereto contains
a complete listing of all of such Grantor’s Intellectual Property which has
been registered under any United States federal registration statute.

Section 18.  Collections, etc.  Until such time during the existence of a
Default as the Domestic Administrative Agent shall notify such Grantor of the
revocation of such power and authority, each Grantor (a) will, at its own
expense, endeavor to collect, consistent with past practice, all amounts due
under any of the Non-Tangible Collateral, including the taking of such action
with respect to such collection as such Grantor may deem advisable in the
exercise of its business judgment , and (b) may grant, in the ordinary course
of business, to any party obligated on any of the Non-Tangible Collateral, any
rebate, refund or allowance to which such party may be lawfully entitled, and
may accept, in connection therewith, the return of Goods, the sale or lease of
which shall have given rise to such Non-Tangible Collateral.  The Domestic Administrative Agent, however,
may, at any time that a Default exists, whether before or after any revocation
of such power and authority or the maturity of any of the Liabilities, notify
any parties obligated on any of the Non-Tangible Collateral to make payment to
the Domestic Administrative Agent of any amounts due or to become due
thereunder and enforce collection of any of the Non-Tangible Collateral by suit
or otherwise and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder or evidenced thereby.  Upon request of the Domestic Administrative
Agent during the existence of a Default, each Grantor will, at its own expense,
notify any parties obligated on any of the Non-Tangible Collateral to make
payment to the Domestic Administrative Agent of any amounts due or to become
due thereunder.

Upon request by
the Domestic Administrative Agent during the existence of a Default,
(i) each Grantor will forthwith, upon receipt, transmit and deliver to the
Domestic Administrative Agent, in the form received, all cash, checks, drafts
and other instruments or writings for the payment of money (properly endorsed,
where required, so that such items may be collected by the Domestic
Administrative Agent) which may be received by such Grantor at any time in full
or partial payment or otherwise as proceeds of any of the Collateral, and
(ii) except as the Domestic Administrative Agent may otherwise consent in
writing, any such items which may be so received by any Grantor during the
existence of a Default will not be commingled with any other of its funds or
property, but will be held separate and apart from its own funds or property
and upon express trust for the Domestic Administrative Agent until delivery is
made to the 

 F-6
 

 

Domestic Administrative Agent. 
Each Grantor will comply with the terms and conditions of any consent
given by the Domestic Administrative Agent pursuant to the foregoing sentence.

During the
existence of a Default, (i) all items or amounts which are delivered by
any Grantor to the Domestic Administrative Agent on account of partial or full
payment or otherwise as proceeds of any of the Collateral shall be deposited to
the credit of a deposit account (each an “Assignee Deposit Account”)
under which the Domestic Administrative Agent is the depositary bank of such
Grantor, as security for payment of the Liabilities, and (ii) no Grantor
shall have any right to withdraw any funds deposited in the applicable Assignee
Deposit Account.  The Domestic
Administrative Agent may, from time to time, in its discretion, and shall upon
request of the applicable Grantor made not more than once in any week, apply
all or any of the then balance, representing collected funds, in the Assignee
Deposit Account, toward payment of the Liabilities, whether or not then due, in
such order of application as the Domestic Administrative Agent may determine,
and the Domestic Administrative Agent may, from time to time, in its
discretion, release all or any of such balance to the applicable Grantor.

During the
existence of a Default, the Domestic Administrative Agent is authorized to
endorse, in the name of the applicable Grantor, any item, howsoever received by
the Domestic Administrative Agent, representing any payment on or other
proceeds of any of the Collateral.

From and after the date
that is 90 days after the date hereof, no Grantor shall maintain any Deposit
Account or deposit any items or amounts in any Deposit Account, except: (i)
Deposit Accounts maintained with Domestic Administrative Agent, (ii) local
Deposit Accounts maintained by each respective Grantor in order to fund such
Grantor’s ordinary course of business operations, (iii) other Deposit
Accounts of the Grantors for which account control agreements with the Domestic
Administrative Agent are in effect or that are swept into concentration
accounts for which account control agreements with the Domestic Administrative
Agent are in place, (iv) Deposit Accounts with an aggregate amount on
deposit not to exceed $1,000,000, and (v) as otherwise permitted by the Credit
Agreement.

Section 19.  Certificates, Schedules and Reports.  Each Grantor will from time to time deliver
to the Domestic Administrative Agent such schedules, certificates and reports
respecting all or any of the Collateral at the time subject to the security
interest hereunder, and the items or amounts received by such Grantor in full
or partial payment of any of the Collateral, as the Domestic Administrative
Agent may reasonably request.  Any such
schedule, certificate or report shall be executed by a duly authorized officer
of such Grantor and shall be in such form and detail as the Domestic
Administrative Agent may reasonably specify. 
Each Grantor shall immediately notify the Domestic Administrative Agent
of the occurrence of any event causing any loss or depreciation in the value of
its Inventory or other Goods which is material to the Domestic Borrower and its
Subsidiaries taken as a whole, and such notice shall specify the amount of such
loss or depreciation.

Section 20.  Agreements of the Grantors.  Each Grantor (a) will, upon request of the
Domestic Administrative Agent, execute such financing statements and other
documents (and pay the cost of filing or recording the same in all public
offices reasonably deemed appropriate by the Domestic Administrative Agent) and
do such other acts and things (including, without limitation, delivery to the
Domestic Administrative Agent of any Instruments or Certificated 

 F-7
 

 

Securities which constitute Collateral), all as the
Domestic Administrative Agent may from time to time reasonably request, to
establish and maintain a valid perfected security interest in the Collateral
(free of all other liens, claims and rights of third parties whatsoever, other
than Permitted Liens) to secure the payment of the Liabilities; (b) hereby
authorizes the Domestic Administrative Agent to file financing statements
describing the collateral as “all property” or words of similar import, and to
file other documents without its signature (to the extent allowed by applicable
law); (c) on and as of the date of delivery of each supplement to Schedule
II hereto, will have all its Inventory, Equipment and all other Goods, in
each case with a value in excess of $250,000, at, and will not have any place
of business or any such Goods at any location other than its address(es) shown
on Schedules I and II hereto as so supplemented; (d) shall not
change its state of organization or incorporation or its name, identity or
organizational structure such that any financing statement filed to perfect the
Domestic Administrative Agent interests under this Agreement would become
seriously misleading, unless the Grantor shall have given the Domestic
Administrative Agent not less than 10 days’ prior notice of such change
(provided that this Section 6(d) shall not be deemed authorize any
change or transaction prohibited under the Credit Agreement); (e) will furnish
the Domestic Administrative Agent such information concerning such Grantor, the
Collateral and the Account Debtors as the Domestic Administrative Agent may
from time to time reasonably request; (f) will, upon request of the Domestic
Administrative Agent, stamp on its records concerning the Collateral and add on
all Chattel Paper constituting a portion of the Collateral, a notation, in form
satisfactory to the Domestic Administrative Agent, of the security interest of
the Domestic Administrative Agent hereunder; (g) except as permitted by the
Credit Agreement, will not sell, lease, assign or create or permit to exist any
lien on or security interest in any Collateral other than Permitted Liens and
liens and security interests in favor of the Domestic Administrative Agent; (h)
will at all times keep all its Inventory and other Goods insured as required by
Section 6.07 of the Credit Agreement, and cause all such insurance
policies for loss or damage to provide that loss thereunder shall be payable to
the Domestic Administrative Agent as its interest may appear (it being
understood that (A) so long as no Default shall be existing, the Domestic
Administrative Agent shall deliver any proceeds of such insurance which may be
received by it to such Grantor and (B) whenever a Default shall be existing,
the Domestic Administrative Agent may apply any proceeds of such insurance
which may be received by it toward payment of the Liabilities, whether or not
due, in such order of application as the Domestic Administrative Agent may determine)
and such policies or certificates thereof shall, if the Domestic Administrative
Agent so requests, be deposited with or furnished to the Domestic
Administrative Agent; (i) will, upon request of the Domestic Administrative
Agent, (1) cause to be noted on the applicable certificate, in the event any
material item of its Equipment is covered by a certificate of title, the
security interest of the Domestic Administrative Agent in the Equipment covered
thereby and (2) deliver all such certificates to the Domestic Administrative
Agent or its designees; (j) will take all steps reasonably necessary to
protect, preserve and maintain all of its rights in all material portions of
the Collateral; (k) except as permitted by the Credit Agreement, will keep all
of the tangible Collateral, Deposit Accounts and Investment Property in the
continental United States; and (l) will reimburse the Domestic
Administrative Agent for all expenses, including reasonable attorneys’ fees and
legal expenses, incurred by the Domestic Administrative Agent in seeking to
collect or enforce any rights in respect of such Grantor’s Collateral.

Any expenses
incurred in protecting, preserving and maintaining any Collateral shall be
borne by the applicable Grantor. 
Whenever a Default shall be existing, the Domestic 

 F-8
 

 

Administrative Agent shall have the right to bring suit to enforce any
or all of the Intellectual Property or licenses thereunder, in which event the
applicable Grantor shall at the request of the Domestic Administrative Agent do
any and all lawful acts and execute any and all proper documents required by
the Domestic Administrative Agent in aid of such enforcement and such Grantor
shall promptly, upon demand, reimburse and indemnify the Domestic
Administrative Agent for all reasonable costs and expenses incurred by the
Domestic Administrative Agent in the exercise of its rights under this Section 6,
except to the extent any of the foregoing result from the gross negligence or
willful misconduct of the Domestic Administrative Agent.  Notwithstanding the foregoing, except as set
forth in Section 8, the Domestic Administrative Agent shall have no
obligations or liabilities regarding the Collateral or any thereof by reason
of, or arising out of, this Agreement.

Section
21.  Default.  Whenever a Default shall be existing, the
Domestic Administrative Agent may exercise from time to time any and all rights
and remedies available to it under applicable law, in addition to those
described in this section below.

(a)           Each Grantor agrees, in case of
Default, (i) to assemble, at its expense, all its Inventory and other Goods
(other than Fixtures) at a convenient place or places acceptable to the
Domestic Administrative Agent, and (ii) at the Domestic Administrative Agent’s
request, to execute all such documents and do all such other things which may
be necessary or desirable in order to enable the Domestic Administrative Agent
or its nominee to be registered as owner of the Intellectual Property with any
competent registration authority.

(b)           Notice of the intended disposition
of  the Collateral  may be given by first-class mail,
hand-delivery (through a delivery service or otherwise), facsimile or E-mail,
and shall be deemed to have been “sent” upon deposit in the U.S. Mails with
adequate postage properly affixed, upon delivery to an express delivery service
or upon the electronic submission through telephonic or Internet services, as
applicable.  Each Grantor hereby agrees
and acknowledges that (i) with respect to collateral that is: (A) perishable or
threatens to decline speedily in value, or (B) is of a type customarily sold on
a recognized market (including but not limited to, Investment Property), no
notice of disposition need be given; and (ii) with respect to Collateral not
described in clause (i) above, notification sent after default and ten
days before any proposed disposition provides notice within a reasonable time
before disposition.

(c)           Each Grantor hereby agrees and
acknowledges that a commercially reasonable disposition of Inventory, Equipment,
Computer Hardware and Software, or Intellectual Property may be by lease or
license of, in addition to the sale of, such Collateral.  Each Grantor further agrees and acknowledges
that and that a disposition: (i) made in the usual manner on any recognized
market, or (ii) a disposition at the price current in any recognized market at
the time of disposition, or (iii) a disposition in conformity with reasonable
commercial practices among dealers in the type of property subject to the
disposition; shall be deemed commercially reasonable.

(d)           Any cash proceeds of any disposition
by the Domestic Administrative Agent of any of the Collateral  shall be applied by the Domestic
Administrative Agent to payment of expenses in connection with the Collateral,
including reasonable attorneys’ fees and legal expenses, and  thereafter to the payment of any and all of
the Liabilities in the order of 

 F-9
 

 

application set forth in Section 8.03 of the Credit
Agreement, and thereafter any surplus will be paid to the Grantor.  The Domestic Administrative Agent need not
apply or pay over for application noncash proceeds of collection and
enforcement unless: (i) the failure to do so would be commercially unreasonable
and (ii) the affected Grantor has provided the Domestic Administrative Agent
with a written demand to apply or pay over such noncash proceeds on such basis.

Section 22.  General.  The Domestic Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral in its possession if it treats such Collateral with the same
care it affords its own property or if it takes such action for that purpose as
any applicable Grantor requests in writing, but failure of the Domestic
Administrative Agent to comply with any such request shall not, of itself, be
deemed a failure to exercise reasonable care, and no failure of the Domestic
Administrative Agent to preserve or protect any rights with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by any Grantor, shall be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.

All notices and
requests hereunder shall be in writing (including facsimile transmission) and
shall be sent (i) if to the Domestic Administrative Agent, to its address shown
on Schedule 10.02 to the Credit Agreement or such other address as it may, by
written notice to the Domestic Borrower, have designated as its address for
such purpose, and (ii) if to any Grantor, to its address shown on Schedule I
hereto or to such other address as such Grantor may, by written notice to the
Administrative Agent, have designated as its address for such purpose.  Notices sent by facsimile transmission shall
be deemed to have been given when sent; notices sent by mail shall be deemed to
have been given five Business Days after the date when sent by registered or
certified mail, postage prepaid; and notices sent by hand delivery or overnight
courier shall be deemed to have been given when received.

No delay on the
part of the Domestic Administrative Agent in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Domestic Administrative Agent of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy.

This Agreement
shall remain in full force and effect until all Liabilities have been paid in
full and all Commitments have terminated. 
If at any time all or any part of any payment theretofore applied by the
Domestic Administrative Agent or any Lender Party to any of the Liabilities is
or must be rescinded or returned by the Domestic Administrative Agent or such
Lender Party for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of any Grantor), such Liabilities
shall, for the purposes of this Agreement, to the extent that such payment is
or must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Domestic Administrative Agent or such
Lender Party, and this Agreement shall continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as though such
application by the Domestic Administrative Agent or such Lender Party had not
been made.

Upon the payment
in full of all Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, the
security 

 F-10
 

 

interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantors.  Upon any such termination the Domestic
Administrative Agent will, at Grantor’s expense, execute and deliver to
Grantors such documents as Grantors shall reasonably request to evidence such
termination.  In addition, upon the
proposed sale, transfer or other disposition of any Collateral by Grantors in
compliance with the Credit Agreement for which such Grantor desires to obtain a
security interest release from the Domestic Administrative Agent, such Grantor
shall deliver an Officer’s Certificate (x) stating that the Collateral subject
to such disposition is being sold, transferred or otherwise disposed of in
compliance with the terms of the Credit Agreement and (y) specifying the
Collateral being sold, transferred or otherwise disposed of in the proposed
transaction.  Upon the receipt of such
Officer’s Certificate, the Domestic Administrative Agent shall, at Grantor’s
expense, execute and deliver such releases of its security interest in such
Collateral which is to be so sold, transferred or disposed of, as may be
reasonably requested by such Grantor.

This Agreement and
all other Loan Documents shall be deemed to be contracts made in Los Angeles,
California, and shall be governed by and construed in accordance with and
governed by the internal laws of the State of California (except to the extent
that pursuant to California law, the perfection, the effect of perfection or
nonperfection, or the priority of the security interest granted hereunder may
be determined in accordance with the laws of a different jurisdiction).  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

The rights and
privileges of the Domestic Administrative Agent hereunder shall inure to the
benefit of its successors.

This Agreement may
be executed in any number of counterparts and by the different parties hereto
on separate counterparts, and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
Agreement.  At any time after the date of
this Agreement, one or more additional persons or entities may become parties
hereto by executing and delivering to the Domestic Administrative Agent a
counterpart of this Agreement (including supplements to the Schedules
hereto).  Immediately upon such execution
and delivery (and without any further action), each such additional person or
entity will become a party to, and will be bound by all the terms of, this
Agreement.

ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN LOS ANGELES OR OF
THE UNITED STATES FOR THE CENTRAL DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE DOMESTIC BORROWER, EACH GRANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER PARTY CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  THE DOMESTIC BORROWER, EACH GRANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER PARTY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR 

 F-11
 

 

BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.  THE DOMESTIC BORROWER, EACH GRANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER PARTY WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

If any action or
proceeding is filed in a court of the State of California by or against any
party hereto in connection with any of the transactions contemplated by this
Agreement or any other Loan Document, the court shall, and is hereby directed
to, make a general reference pursuant to California Code of Civil Procedure
Section 638 to a referee (who shall be a single active or retired judge) to
hear and determine all of the issues in such action or proceeding (whether of
fact or of law) and to report a statement of decision, provided that at
the option of any party to such proceeding, any such issues pertaining to a “provisional
remedy” as defined in California Code of Civil Procedure Section 1281.8 shall
be heard and determined by the court.

 F-12
 

 

IN WITNESS WHEREOF, this Agreement has been duly
executed as of the day and year first above written.

	
   

  	
  GUESS ?, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
				

 

 F-13
 

 

 

	
  

  	
  GUESS? BERMUDA
  HOLDINGS, LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
				

 

 F-14
 

 

 

	
  

  	
  GUESS.COM, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
				

 

 F-15
 

 

 

	
  

  	
  GUESS? RETAIL,
  INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
				

 

 F-16
 

 

 

	
  

  	
  GUESS? VALUE,
  LLC,

  
	
   

  	
  a Virginia
  limited liability corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Carlos Alberini

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
				

 

 F-17
 

 

 

	
  

  	
  BANK OF AMERICA,
  N.A.,

  
	
   

  	
  as
  Administrative Agent for the Lenders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Matthew Koenig

  
	
   

  	
  Title:

  	
  Senior Vice President

  
				

 

 F-18
 

 

SCHEDULE I

TO SECURITY AGREEMENT

Grantor’s federal
employment identification number:

Grantor’s state
identification number:

Grantor’s state of
incorporation/organization:

Grantor’s true and
correct name as registered in its 

state of incorporation/organization:

Grantor’s chief executive
office:

Grantor’s principal place of business:

 F-19
 

 

SCHEDULE II

TO SECURITY AGREEMENT

ADDRESSES OF ALL LOCATIONS AT WHICH GOODS ARE KEPT

 F-20
 

 

SCHEDULE III

TO SECURITY AGREEMENT

TRADE NAMES

 F-21
 

 

SCHEDULE IV

TO SECURITY AGREEMENT

LIST OF INTELLECTUAL PROPERTY

 F-22

 

EXHIBIT G

OPINION
MATTERS

The matters contained in the following Sections of the
Credit Agreement should be covered by the legal opinion:

·                                          Section
5.01(a), (b) and (c)

·                                          Section
5.02

·                                          Section
5.03

·                                          Section
5.04

·                                          Section
5.06

·                                          Section
5.14(b)

 G-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]