Second Amended and Restated Credit Agreement among Central Tractor Farm & Country, Inc., CT Holding, Inc., and Lenders

Contract Categories: Business Finance › Credit Agreements
Summary

This agreement, dated May 7, 1999, is a $320 million credit facility between Central Tractor Farm & Country, Inc. (to be renamed Quality Stores, Inc.) as the borrower, CT Holding, Inc. (to be renamed QSI Holdings, Inc.) as holding company, and a group of initial lenders, with Fleet National Bank as administrative agent. The agreement sets out the terms for loans, letters of credit, repayment, interest, fees, and covenants. It also details the conditions for borrowing, representations, warranties, and events of default, providing the framework for the borrower's access to credit.

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EX-10.1 2 0002.txt EXHIBIT 10.1 EXECUTION COPY $320,000,000 SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as of May 7, 1999 Among CENTRAL TRACTOR FARM & COUNTRY, INC. (to be renamed "Quality Stores, Inc.") as Borrower, CT HOLDING, INC., (to be renamed "QSI Holdings, Inc.") as Holding, and THE INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK NAMED HEREIN as Initial Lenders, Initial Issuing Bank and Swing Line Bank and FLEET NATIONAL BANK as Administrative Agent and NATIONSBANK, N.A. as Syndication Agent and DLJ CAPITAL FUNDING, INC. as Documentation Agent and U.S. BANK NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK and THE HUNTINGTON NATIONAL BANK as Co-Agents
T A B L E O F C O N T E N T S Section Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01. Certain Defined Terms.............................................................................2 1.02. Computation of Time Periods......................................................................28 1.03. Accounting Terms.................................................................................28 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES 2.01. The Advances.....................................................................................29 2.02. Making the Advances..............................................................................31 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit...............................33 2.04. Repayment of Advances............................................................................35 2.05. Termination or Reduction of the Commitments......................................................37 2.06. Prepayments......................................................................................38 2.07. Interest.........................................................................................40 2.08. Fees.............................................................................................41 2.09. Conversion of Advances...........................................................................42 2.10. Increased Costs, Etc.............................................................................43 2.11. Payments and Computations........................................................................44 2.12. Taxes............................................................................................46 2.13. Sharing of Payments, Etc.........................................................................48 2.14. Use of Proceeds..................................................................................48 2.15. Defaulting Lenders...............................................................................49 2.16. Removal of Lender................................................................................51 ARTICLE III CONDITIONS OF LENDING 3.01. Conditions Precedent to Effective Date...........................................................51 3.02. Conditions Precedent to Each Borrowing and Issuance..............................................56 3.03. Determinations Under Section 3.01................................................................57 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01. Representations and Warranties...................................................................57 ARTICLE V COVENANTS OF THE BORROWER 5.01. Affirmative Covenants............................................................................64 5.02. Negative Covenants...............................................................................68 5.03. Reporting Requirements...........................................................................75 5.04. Financial Covenants..............................................................................78 ARTICLE VI EVENTS OF DEFAULT 6.01. Events of Default................................................................................81 6.02. Actions in Respect of the Letters of Credit upon Default.........................................84 ARTICLE VII THE ADMINISTRATIVE AGENT 7.01. Authorization and Action.........................................................................85 7.02. Administrative Agent's Reliance, Etc.............................................................85 7.03. Fleet and Affiliates.............................................................................85 7.04. Lender Party Credit Decision.....................................................................86 7.05. Indemnification..................................................................................86 7.06. Successor Administrative Agents..................................................................87 ARTICLE VIII 8.01. Guaranty.........................................................................................88 8.02. Guaranty Absolute................................................................................89 8.03. Waivers and Acknowledgments......................................................................90 8.04. Subrogation......................................................................................90 8.05. Continuing Guarantee; Assignments................................................................91 ARTICLE IX MISCELLANEOUS 9.01. Amendments, Etc..................................................................................91 9.02. Notices, Etc.....................................................................................92 9.03. No Waiver; Remedies..............................................................................92 9.04. Costs and Expenses...............................................................................92 9.05. Right of Set-off.................................................................................94 9.06. Binding Effect...................................................................................94 9.07. Assignments and Participations...................................................................94 9.08. Execution in Counterparts........................................................................97 9.09. No Liability of the Issuing Bank.................................................................98 9.10. Confidentiality..................................................................................98 9.11. Jurisdiction, Etc................................................................................98 9.12. Governing Law....................................................................................99 9.13. Waiver of Jury Trial.............................................................................99
SCHEDULES Schedule I - Commitments and Applicable Lending Offices Schedule II - Disclosed Litigation Schedule III - Subsidiaries Schedule IV - Authorizations, Etc. Schedule V - Plans Schedule VI - Existing Debt Schedule VII - Owned Real Property Schedule VIII - Leased Real Property Schedule IX - Material Contracts Schedule X - Investments Schedule XI - Intellectual Property Schedule XII - Reserved Schedule XIII - Liens Schedule XIV - Surviving Debt Schedule XV - Environmental Disclosure Schedule XVI - Excluded Asset Acquisitions EXHIBITS Exhibit A-1 - Form of Tranche A Term Note Exhibit A-2 - Form of Tranche B Term Note Exhibit A-3 - Form of Revolving Credit Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Security Agreement Exhibit E - Form of Pledge Agreement Exhibit F - Form of Subsidiary Guaranty Exhibit G - Form of Solvency Certificate Exhibit H - Form of Opinion of Sullivan & Worcester Exhibit I - Form of Borrowing Base Certificate SECOND AMENDED AND RESTATED CREDIT AGREEMENT SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 7, 1999 among Central Tractor Farm & Country, Inc., a Delaware corporation (to be renamed, Quality Stores, Inc.) (the "Borrower"), CT Holding, Inc., a Delaware corporation (to be renamed QSI Holdings, Inc.) ("Holding"), the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the Initial Lenders (the "Initial Lenders"), the Initial Issuing Bank (as hereinafter defined), the Swing Line Bank (as hereinafter defined), Fleet National Bank ("Fleet"), as administrative agent (together with any successor appointed pursuant to Article VII, the "Administrative Agent") for the Lender Parties (as hereinafter defined), NationsBank, N.A., as syndication agent (the "Syndication Agent") for the Lender Parties, and DLJ Capital Funding, Inc., as documentation agent (the "Documentation Agent") for the Lender Parties. PRELIMINARY STATEMENTS: (1) The Borrower and Holding entered into an Amended and Restated Credit Agreement as of July 3, 1997 (as heretofore amended, modified, or otherwise supplemented, the "Existing Credit Agreement"), with the financial institutions and other institutional lenders party thereto (the "Existing Lenders"), Fleet, as administrative agent for the Existing Lenders, NationsBank, N.A., as syndication agent for the Existing Lenders and DLJ Capital Funding, Inc., as documentation agent for the Existing Lenders. (2) Pursuant to the Existing Credit Agreement, the Borrower requested that the Existing Lenders make advances to it, and issue letters of credit for its account, in an aggregate principal amount of up to $150,000,000, on the terms and conditions set forth therein. (3) The Borrower has entered into an agreement and plan of reorganization dated as of March 27, 1999 (as the same may be amended, modified or otherwise supplemented from time to time in accordance with the provisions of this Agreement, the "Merger Agreement") among Holding, the Borrower, Quality Stores, Inc., a Delaware corporation (the "Company"), and certain shareholders of the Company (the "Company Shareholders"), pursuant to which the Company will merge with and into the Borrower, with the Borrower being the surviving corporation (the "Merger"). (4) Immediately following the Merger, the Borrower will change its name to "Quality Stores, Inc.", and Holding will change its name to "QSI Holdings, Inc." (5) The Borrower has requested that the Initial Lenders hereunder enter into this Agreement to amend and restate the Existing Credit Agreement and to lend the Borrower and issue Letters of Credit (as defined herein) for the benefit of the Borrower from time to time in an aggregate principal amount of up to $320,000,000. The Initial Lenders hereunder have indicated their willingness to amend and restate the Existing Credit Agreement and to agree to lend such amounts on the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree that, subject to the satisfaction of the conditions set forth in Section 3.01, the Existing Credit Agreement is amended and restated in its entirety to read as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Accepting Lenders" has the meaning specified in Section 2.06(c). "Administrative Agent" has the meaning specified in the recital of parties to this Agreement. "Administrative Agent's Account" means the account of the Administrative Agent maintained by the Administrative Agent with Fleet at its office at One Federal Street, Boston, Massachusetts 02211, ABA No. 011 5000 10 Agency Services Wire Suspense, Account No. 1510352-03-156, Attention: Timothy J. Callahan. "Advance" means a Tranche A Term Advance, a Tranche B Term Advance, a Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agreement Value" means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent equal to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the "Master Agreement"), the amount, if any, that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party or Subsidiary was the sole "Affected Party", and (iii) the Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of Master Agreement); or (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party party to such Hedge Agreement determined by -2- the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination, or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement. "Applicable Lending Office" means, with respect to each Lender Party, such Lender Party's Domestic Lending Office in the case of a Prime Rate Advance and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. "Applicable Margin" means (x) during the period from the date hereof through October 31, 1999, (i) in respect of the Tranche A Term Facility and the Revolving Credit Facility, 1.50% per annum for Prime Rate Advances and 2.75% per annum for Eurodollar Rate Advances, and (ii) in respect of the Tranche B Term Facility, 2.00% per annum for Prime Rate Advances and 3.25% per annum for Eurodollar Rate Advances and (y) thereafter, a percentage per annum determined by reference to the Debt to EBITDA Ratio as set forth below:
Tranche A Term Facility/ Tranche B Term Facility Revolving Credit Facility ------------------------------------- ----------------------------------- Prime Rate Eurodollar Rate Prime Rate Eurodollar Rate Advances Advances Advances Advances -------- -------- -------- -------- Level I .375% 1.625% 1.75% 3.0% less than 2.5:1 Level II .625% 1.875% 1.75% 3.0% 2.5:1 or greater, but less than 3.0:1 Level III .875% 2.125% 2.0% 3.25% 3.0:1 or greater, but less than 3.5:1 Level IV 1.25% 2.5% 2.0% 3.25% 3.5:1 or greater, but less than 4.0:1 Level V 1.5% 2.75% 2.0% 3.25% 4.0:1 or greater
-3- The Applicable Margin for each Prime Rate Advance shall be determined by reference to the Debt to EBITDA Ratio in effect from time to time and the Applicable Margin for each Eurodollar Rate Advance shall be determined by reference to the ratio in effect on the first day of each Interest Period for such Advance; provided, however, that no change in the Applicable Margin shall be effective until three Business Days after the date on which the Administrative Agent receives financial statements pursuant to Section 5.03(b), (c) or (d) and a certificate of the chief financial officer of the Borrower demonstrating such Debt to EBITDA Ratio. "Applicable Percentage" means (x) during the period from the date hereof through October 31, 1999, 0.50% per annum and (y) thereafter, a percentage per annum determined by reference to the Debt to EBITDA Ratio as set forth below: Debt to EBITDA Ratio Applicable Percentage ------------------------------------------------------------- Level I less than 3.5:1 0.375% Level II 3.5:1 or greater 0.5% The Applicable Percentage shall be determined by reference to the Debt to EBITDA Ratio in effect from time to time; provided, however, that no change in the Applicable Percentage shall be effective until three Business Days after the date on which the Administrative Agent receives financial statements pursuant to Section 5.03(b), (c) or (d) and a certificate of the chief financial officer of the Borrower demonstrating such Debt to EBITDA Ratio. "Appropriate Lender" means, at any time, with respect to (a) any of the Tranche A Term Facility, the Tranche B Term Facility or Revolving Credit Facility, a Lender that has a Commitment with respect to such Facility at such time, (b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) if the other Revolving Credit Lenders have made Letter of Credit Advances pursuant to Section 2.03(c) that are outstanding at such time, each such other Revolving Credit Lender and (c) the Swing Line Facility, (i) the Swing Line Bank and (ii) if the other Revolving Credit Lenders have made Swing Line Advances pursuant to Section 2.02(b) that are outstanding at such time, each such other Revolving Credit Lender. -4- "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee, and accepted by the Administrative Agent, in accordance with Section 9.07 and in substantially the form of Exhibit C hereto. "Available Amount" of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing). "Borrower" has the meaning specified in the recital of parties to this Agreement. "Borrower's Account" means the account of the Borrower maintained by the Borrower with Fleet at its office at One Federal Street, Boston, Massachusetts 02110, ABA No. 011 000 138, Account No. 937 ###-###-####, Attention: Maria Vieira. "Borrowing" means a Tranche A Term Borrowing, a Tranche B Term Borrowing, a Revolving Credit Borrowing or a Swing Line Borrowing. "Borrowing Base Deficiency" means, at any time, the failure of (a) the Loan Value of the Eligible Collateral at such time to equal or exceed (b) the sum of (i) the aggregate principal amount of the Revolving Credit Advances, the Letter of Credit Advances and the Swing Line Advances outstanding at such time plus (ii) the aggregate Available Amount under all Letters of Credit outstanding at such time. "Borrowing Base Certificate" means a certificate in substantially the form of Exhibit J hereto, duly certified by the chief financial officer of the Borrower. "Business Day" means a day of the year on which banks are not required or authorized by law to close in Boston, Massachusetts or New York, New York and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capital Expenditures" means, for any Person for any period, the sum of (without duplication) (a) all expenditures made, directly or indirectly, by such Person or any of its Subsidiaries during such period for equipment, fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person or have a useful life of more than one year and all cash expenditures made during such period to acquire a Person that as a result of such acquisition becomes a wholly owned Subsidiary whose assets include equipment, fixed assets, real property or improvements to be reflected as additional property, plant or equipment plus (b) the aggregate principal amount of all Debt (including Obligations under Capitalized Leases) assumed or incurred in connection with any such expenditures. For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds or Net Cash Proceeds shall be included in Capital Expenditures only -5- to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such insurance proceeds or Net Cash Proceeds, as the case may be. For purposes of the Loan Documents, Capital Expenditures for any Person for any period shall exclude (x) all expenditures made, directly or indirectly, by such Person or any of its Subsidiaries during such period in connection with the asset acquisitions described on Schedule XVI hereto plus (y) the aggregate principal amount of all Debt (including Obligations under Capitalized Leases) assumed or incurred in connection with any such expenditures. "Capitalized Leases" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases. "Cash Collateral Account" has the meaning specified in the Security Agreement. "Cash Equivalents" means any of the following, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens other than Liens created under the Collateral Documents and having a maturity of not greater than 360 days from the date of acquisition thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c), is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1 billion, (c) commercial paper in an aggregate amount of no more than $2.5 million per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least "Prime-1" (or the then equivalent grade) by Moody's Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's Ratings Group, or (d) mutual funds which invest exclusively in those assets described in clauses (a)-(c) hereto. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency. "Childs Management Agreement" means the Management Agreement dated as of March 27, 1997 between the Borrower, Holding and J.W. Childs Associates, L.P., as the same may be amended, modified or otherwise supplemented from time to time in accordance with the provisions of this Agreement. "Collateral" means all "Collateral" referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Administrative Agent for the benefit of the Secured Parties. -6- "Collateral Documents" means the Security Agreement, the Pledge Agreement, the Mortgages and any other agreement that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Lender Parties. "Commitment" means a Tranche A Term Commitment, a Tranche B Term Commitment, a Revolving Credit Commitment or a Letter of Credit Commitment. "Company" has the meaning specified in the Preliminary Statements. "Company Shareholders" has the meaning specified in the Preliminary Statements. "Confidential Information" means information that any Loan Party or Affiliate thereof furnishes to the Administrative Agent or any Lender Party that is proprietary in nature, including financial information, projections, business plans and other information in a writing marked, labeled or otherwise identified as confidential, but does not include any such information that is or becomes generally available to the public other than as a result of a breach by the Administrative Agent or any Lender Party of its obligations hereunder or that is or becomes available to the Administrative Agent or such Lender Party from a source other than a Loan Party or Affiliate or advisor thereof. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Conversion", "Convert" and "Converted" each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.09 or 2.10. "Country General" means Country General, Inc., a Delaware corporation. "Current Assets" of any Person means all assets of such Person that would, in accordance with GAAP, be classified as current assets of a company conducting a business the same as or similar to that of such Person, after deducting adequate reserves in each case in which a reserve is proper in accordance with GAAP. "Current Liabilities" of any Person means all items (including taxes accrued as estimated, but excluding Debt) that in accordance with GAAP would be classified as current liabilities of such Person. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person's business), (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g) for the purposes of determining whether a Default has occurred under Section 6.01(e) only, all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other -7- ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, valued, in the case of Redeemable Preferred Stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) all Obligations of such Person in respect of Hedge Agreements, (i) all Debt of others referred to in clauses (a) through (h) above or clause (j) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (j) all Debt referred to in clauses (a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. "Debt for Borrowed Money" of any Person means all items of Debt that, in accordance with GAAP, would be classified as indebtedness on a Consolidated balance sheet of such Person (and excluding, in any event, Debt under Hedge Agreements). "Debt to EBITDA Ratio" means, for any fiscal month of Holding, a ratio of (A) Debt of Holding and its Subsidiaries (other than any Debt of Holding that bears interest on a payment-in-kind basis) as at the end of such fiscal month (provided, that the amount of Debt in respect of Revolving Credit Advances as at the end of such fiscal month shall be deemed to be the average aggregate amount of Revolving Credit Advances outstanding hereunder or under the Existing Credit Agreement during the last twelve months) less the sum of cash and Cash Equivalents held by Holding and its Subsidiaries as at the end of such fiscal month to (B) Consolidated EBITDA for the most recently completed twelve fiscal months of Holding and its Subsidiaries. "Declining Lenders" has the meaning specified in Section 2.06(c). "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Defaulted Advance" means, with respect to any Lender Party at any time, the portion of any Advance required to be made by such Lender Party to the Borrower pursuant to Section 2.01 or 2.02 at or prior to such time which has not been made by such Lender Party or by the Administrative Agent for the account of such Lender Party pursuant to Section 2.02(e) as of such time. In the event that a portion of a Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the remaining portion of such Defaulted Advance shall be considered a Defaulted Advance originally required to be made pursuant to Section 2.01 on the same date as the Defaulted Advance so deemed made in part. -8- "Defaulted Amount" means, with respect to any Lender Party at any time, any amount required to be paid by such Lender Party to the Administrative Agent or any other Lender Party hereunder or under any other Loan Document at or prior to such time which has not been so paid as of such time, including, without limitation, any amount required to be paid by such Lender Party to (a) the Swing Line Bank pursuant to Section 2.02(b) to purchase a portion of a Swing Line Advance made by the Swing Line Bank, (b) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a Letter of Credit Advance made by the Issuing Bank, (c) the Administrative Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for the amount of any Advance made by the Administrative Agent for the account of such Lender Party, (d) any other Lender Party pursuant to Section 2.13 to purchase any participation in Advances owing to such other Lender Party and (e) the Administrative Agent or the Issuing Bank pursuant to Section 7.05 to reimburse the Administrative Agent or the Issuing Bank for such Lender Party's ratable share of any amount required to be paid by the Lender Parties to the Administrative Agent or the Issuing Bank as provided therein. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder or under any other Loan Document on the same date as the Defaulted Amount so deemed paid in part. "Defaulting Lender" means, at any time, any Lender Party that, at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any action or be the subject of any action or proceeding of a type described in Section 6.01(f). "Disclosed Litigation" has the meaning specified in Section 3.01(j). "Documentation Agent" has the meaning specified in the recital of parties to this Agreement. "Domestic Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent. "EBITDA" means, for any period, the sum, determined on a Consolidated basis, of (a) net income (or net loss), (b) interest expense, (c) income tax expense, (d) depreciation expense, (e) amortization expense, (f) all extraordinary, unusual or non-recurring losses (and in any event including all write-offs resulting from SFAS 121 adjustments, and all non-cash losses, and including without limitation, costs associated with closing the Iowa facility, severance payments, stay bonuses, and other integration costs) deducted in determining such net income (or net loss) less all extraordinary, unusual or non-recurring gains added in determining the net income (or net loss) for such Period, (g) all expenses relating to the Merger (including without limitation, costs associated with closing the Iowa facility, severance payments, stay bonuses, and other integration costs) to the extent deducted from such net income (or net loss) for such Period, and (h) for the period ending July 31, 1999, $1,952,000, -9- and for the period ending October 31, 1999, $955,000 (in each case representing earnings and non-recurring expenses in connection with certain acquisitions made by the Borrower in 1998), in each case of Holding and its Subsidiaries (including, without limitation, for all calculations of EBITDA, the Company and its Subsidiaries), determined in accordance with GAAP for such period. "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (a) with respect to any Facility (other than the Letter of Credit Facility), (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow or of the Cayman Islands, or a political subdivision of any such country, and having total assets in excess of $500,000,000, so long as such bank is acting through a branch or agency located in the United States; (vi) the central bank of any country that is a member of the OECD; (vii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having total assets (i) in excess of $500,000,000 in the case of assignees under the Revolving Credit Facility, and (ii) in excess of $100,000,000 in all other cases; and (viii) any other Person approved by the Administrative Agent and the Borrower, such approval not to be unreasonably withheld or delayed, and (b) with respect to the Letter of Credit Facility, a Person that is an Eligible Assignee under subclause (iii) or (v) of clause (a) of this definition and is approved by the Administrative Agent and the Borrower, such approval not to be unreasonably withheld or delayed; provided, however, that neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition. "Eligible Collateral" means, collectively, Eligible Inventory and Eligible Receivables. "Eligible Inventory" means all Inventory of the Borrower and the Subsidiary Guarantors other than the following classes of Inventory: (a) Inventory consisting of "perishable agricultural commodities" within the meaning of the Perishable Agricultural Commodities Act of 1930, as amended, and the regulations thereunder, or on which a Lien has arisen or may arise in favor of agricultural producers under comparable state or local laws; -10- (b) Inventory that is obsolete, unusable or otherwise unavailable for sale; (c) Inventory with respect to which the representations and warranties set forth in Section 8 of the Security Agreement applicable to Inventory are not true and correct; (d) Inventory consisting of promotional, marketing, packaging or shipping materials and supplies; (e) Inventory that fails to meet all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such Inventory or its use or sale; (f) Inventory that is subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third party from whom the Borrower has received notice of a dispute in respect of any such agreement; (g) Inventory located outside the United States; (h) Inventory that is not in the possession of or under the sole control of the Borrower or a Subsidiary (other than Inventory in transit); (i) Inventory consisting of work in progress; and (j) Inventory in respect of which the Security Agreement, after giving effect to the related filings of financing statements that have then been made, if any, does not or has ceased to create a valid and perfected first priority lien or security interest in favor of the Lender Parties securing the Secured Obligations. "Eligible Receivables" means all Receivables of the Borrower and the Subsidiary Guarantors other than the following classes of Receivables: (a) Receivables that do not arise out of sales of goods or rendering of services in the ordinary course of the Borrower's business; (b) Receivables on terms other than those normal or customary in the Borrower's business; (c) Receivables owing from any Person that is an Affiliate of the Borrower; (d) Receivables more than 90 days past original invoice date or more than 60 days past the date due; (e) Receivables owing from any Person that (i) has disputed liability for any Receivable owing from such Person or (ii) has otherwise asserted any claim, demand or liability, whether by action, suit, counterclaim or otherwise; -11- (f) Receivables owing from any Person that shall take or be the subject of any action or proceeding of a type described in Section 6.01(f); (g) Receivables (i) owing from any Person that is also a supplier to or creditor of the Borrower or (ii) representing any manufacturer's or supplier's credits, discounts, incentive plans or similar arrangements entitling the Borrower to discounts on future purchase therefrom; (h) Receivables arising out of sales to account debtors outside the United States; (i) Receivables arising out of sales on a bill-and-hold, guaranteed sale, sale-or-return, sale on approval or consignment basis or subject to any right of return, set-off or charge-back out of the ordinary course of business; (j) Receivables owing from an account debtor that is an agency, department or instrumentality of the United States or any State thereof; and (k) Receivables in respect of which the Security Agreement, after giving effect to the related filings of financing statements that have then been made, if any, does not or has ceased to create a valid and perfected first priority lien or security interest in favor of the Lender Parties securing the Secured Obligations. "Employment Agreements" means each of the agreements, dated on or about May 7, 1999, among the Borrower, Holding, and each of David E. Enos, G. Dean Longnecker, James T. McKitrick, Denny Starr and John R. Pearson. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or legally binding and enforceable judicial or agency interpretation, policy or guidance that has the force and effect of law relating to pollution or protection of the environment, public or employee health and safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. -12- "Equity Investors" means J.W. Childs and its Affiliates and co-investors, Fenway Partners Capital Fund, L.P. and its Affiliates, Fleet Equity Partners and its Affiliates, and stockholders of Holding following the Merger that are parties to the Stockholders Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under common control with any Loan Party, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan; provided, however, that the occurrence of the event or condition described in Section 4042(a)(4) of ERISA shall be an ERISA Event only if the PBGC has notified any Loan Party or any ERISA Affiliate in writing that it intends to institute proceedings to terminate a Plan pursuant to such section or has threatened in writing to do so. "Eurocurrency Liabilities" has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent. -13- "Eurodollar Rate" means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate per annum (rounded upward, if necessary, to the nearest 1/32 of one percent) as determined on the basis of the offered rates for deposits in U.S. dollars, for a period of time comparable to such Interest Period which appears on the Telerate Page 3750 as of 11:00 A.M. (London time) two Business Days before the first day of such Interest Period, provided, however, that if the rate described above does not appear on the Telerate System on any applicable interest determination date, the Eurodollar Rate shall be the rate (rounded upward as described above, if necessary) for deposits in dollars for a period substantially equal to the interest period on the Reuters Page "LIBO" (or such other page as may replace the LIBO page on that service for the purpose of displaying such rates), as of 11:00 A.M. (London time) two Business Days before the first day of such Interest Period. If both the Telerate and Reuters system are unavailable, then the rate for that date will be determined on the basis of the offered rates for deposits in U.S. dollars for a period of time comparable to such Interest Period which are offered by four major banks in the London interbank market at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period as selected by the Administrative Agent. The principal London office of each of the four major London banks will be requested to provide a quotation of its U.S. dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for a period of time comparable to such Interest Period offered by major banks in New York City at approximately 11:00 A.M. (New York City time) two Business Days before the first day of such Interest Period. In the event that the Administrative Agent is unable to obtain any such quotation as provided above, it will be deemed that the Eurodollar Rate for such Interest Rate cannot be determined. In the event that the Board of Governors of the Federal Reserve System shall impose a Eurodollar Rate Reserve Percentage with respect to Eurocurrency Liabilities, the Eurodollar Rate for an Interest Period shall be equal to the amount determined above for such Interest Period divided by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. "Eurodollar Rate Advance" means an Advance that bears interest as provided in Section 2.07(a)(ii). "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in -14- New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Excess Cash Flow" means, for any period, the amount by which (a) the sum of (i) Consolidated net income (or loss) of Holding and its Subsidiaries for such period plus (ii) the aggregate amount of all non-cash charges deducted in arriving at such Consolidated net income (or loss) plus (iii) if there was a net increase in Consolidated Current Liabilities of Holding and its Subsidiaries during such period, the amount of such net increase plus (iv) if there was a net decrease in Consolidated Current Assets (excluding cash and Cash Equivalents) of Holding and its Subsidiaries during such period, the amount of such net decrease less (v) the aggregate amount of all non-cash credits included in arriving at such Consolidated net income (or loss) less (vi) if there was a net decrease in Consolidated Current Liabilities of Holding and its Subsidiaries during such period, the amount of such net decrease less (vii) if there was a net increase in Consolidated Current Assets (excluding cash and Cash Equivalents) of Holding and its Subsidiaries during such period, the amount of such net increase less (viii) the aggregate amount of cash paid by Holding and its Subsidiaries in respect of Capital Expenditures during such period or committed during such period to be paid in respect of Capital Expenditures (so long as such commitment is required to be funded on or prior to the date which is six months following the end of such period) less (ix) to the extent not otherwise excluded from the calculation of Excess Cash Flow for such period, an amount equal to the net gain, if any, attributable to the sale, lease, transfer or any disposition of property and assets of Holding and its Subsidiaries and included in determining the consolidated net income of Holding and its Subsidiaries for such period less (x) without duplication, the aggregate amount of all cash payments made by Holding and its Subsidiaries in respect of the permanent reduction of Debt (of the type referred to in clauses (a), (b), (c), (d), (e), (f) and (g) of the definition thereof) during such period exceeds (b) $4,000,000; provided, however, that the amount of Capital Expenditures deducted pursuant to clause (viii) shall not include any amounts deducted in the calculation of Excess Cash Flow in the prior period. "Existing Credit Agreement" has the meaning specified in the Preliminary Statements. "Existing Debt" means Debt of the Borrower, the Company and their respective Subsidiaries outstanding immediately before the date hereof. "Existing Lenders" has the meaning specified in the Preliminary Statements. "Extension of Credit" means a Borrowing or an issuance of a Letter of Credit hereunder. -15- "Extraordinary Receipt" means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including, without limitation, tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof) and indemnity payments in respect of loss or damage to equipment, fixed assets or real property; provided, however, that an Extraordinary Receipt shall not include (a) cash receipts received from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments in respect of loss or damage to equipment, fixed assets or real property are reinvested (or in respect of which expenditures were previously incurred) in the business of the Borrower and its Subsidiaries, so long as such reinvestment is made within 15 months after the receipt of such Extraordinary Receipts or (b) amounts received by any Person in respect of any third party claim against such Person and applied to pay (or to reimburse such Person for its prior payment of) such claim and the costs and expenses of such Person with respect thereto. "Facility" means the Tranche A Term Facility, the Tranche B Term Facility, the Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fenway Management Agreement" means the Consulting Agreement dated as of July 3, 1997 between the Borrower, Holding and Fenway Partners, Inc. as the same may be amended, modified or otherwise supplemented from time to time in accordance with the provisions of this Agreement. "Fiscal Year" means, for Holding and its Consolidated Subsidiaries, (i) the fiscal year ending in October 1998, (ii) the fiscal year ending in January 2000 and (iii) thereafter, each fiscal year ending in January or February of any calendar year. "Fixed Charge Coverage Ratio" means, at any date of determination, the ratio of (a) (i) Consolidated EBITDA for the most recently completed four fiscal quarters of Holding or its Subsidiaries less (ii) the amount of cash Capital Expenditures made by Holding and its Subsidiaries during such fiscal period less (iii) the amount of cash income taxes paid by Holding and its Subsidiaries during such four fiscal quarter period to (b) the sum of (i) cash interest payable on all Debt for Borrowed Money plus (ii) principal amounts of all Debt for Borrowed Money required to be repaid (in the case of Advances other than Advances under the Term Facilities, only to the extent accompanied -16- by a permanent reduction in the related Commitments), in the case of each item specified in this clause (b), by Holding and its Subsidiaries during such four fiscal quarters; provided, however, that if such four fiscal quarter period includes any or all of the fiscal quarters ending on July 31, 1999, October 31, 1999, or January 31, 2000, (x) the amount referred to in clause (b)(i) shall be the actual amount for the fiscal quarters ended after the Closing Date multiplied by a fraction the numerator of which is four and the denominator of which is the number of fiscal quarters that have elapsed since the Closing Date and (y) the amount referred to in clause (b)(ii) shall be $6,200,000. "GAAP" has the meaning specified in Section 1.03. "Guaranty" has the meaning specified in Section 8.01. "Hazardous Materials" means (a) petroleum or petroleum products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated or classified as hazardous or toxic, regulated under, any Environmental Law. "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements. "Hedge Bank" means any Lender Party or an Affiliate of a Lender Party in its capacity as a party to a Secured Hedge Agreement. "Holding" has the meaning specified in the recital of parties hereto. "Indemnified Party" has the meaning specified in Section 8.04(b). "Initial Issuing Bank" means Fleet. "Initial Lenders" has the meaning specified in the recital of parties to this Agreement. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Prime Rate Advance into such Eurodollar Rate Advance, and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months (or, to the extent permitted under Section 2.02(c), one week), as the Borrower may, upon notice received by the Administrative Agent not later than 11:00 A.M. (Boston, Massachusetts) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: -17- (a) the Borrower may not select any Interest Period with respect to any Eurodollar Rate Advance under a Facility that ends after any principal repayment installment date for such Facility unless, after giving effect to such selection, the aggregate principal amount of Prime Rate Advances and of Eurodollar Rate Advances having Interest Periods that end on or prior to such principal repayment installment date for such Facility shall be at least equal to the aggregate principal amount of Advances under such Facility due and payable on or prior to such date; (b) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration; (c) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and (d) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Inventory" means all Inventory referred to in Section 1(b) of the Security Agreement. "Investment" in any Person means any loan or advance to such Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (i) or (j) of the definition of "Debt" in respect of such Person. "Issuing Bank" means the Initial Issuing Bank and each Eligible Assignee to which the Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07. "J.W. Childs" means J.W. Childs Equity Partners, L.P. "L/C Cash Collateral Account" has the meaning specified in the Security Agreement. "L/C Related Documents" has the meaning specified in Section 2.04(e)(ii). -18- "Lender Party" means any Lender, the Issuing Bank or the Swing Line Bank. "Lenders" means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 9.07. "Letter of Credit" has the meaning specified in Section 2.01(e). "Letter of Credit Advance" means an advance made by the Issuing Bank or any Revolving Credit Lender pursuant to Section 2.03(c). "Letter of Credit Agreement" has the meaning specified in Section 2.03(a). "Letter of Credit Commitment" means, with respect to the Issuing Bank at any time, the amount set forth opposite the Issuing Bank's name on Schedule I hereto under the caption "Letter of Credit Commitment" or, if the Issuing Bank has entered into one or more Assignments and Acceptances, set forth for the Issuing Bank in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as the Issuing Bank's "Letter of Credit Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Letter of Credit Facility" means, at any time, an amount equal to the amount of the Issuing Bank's Letter of Credit Commitment at such time, as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Documents" means (a) for purposes of this Agreement and the Notes and any amendment or modification hereof or thereof and for all other purposes other than for purposes of the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Collateral Documents, (iv) each Letter of Credit Agreement and (v) the Subsidiary Guaranty and (b) for purposes of the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the Collateral Documents, (iv) each Letter of Credit Agreement, (v) each Secured Hedge Agreement, and (vi) the Subsidiary Guaranty, in each case as amended or otherwise modified from time to time. "Loan Parties" means the Borrower, Holding and each Subsidiary Guarantor. "Loan Value" means, with respect to (i) any Eligible Inventory, 65% of the value of such Eligible Inventory and (ii) any Eligible Receivable, 80% of the unpaid face amount of such Eligible Receivable. "Margin Stock" has the meaning specified in Regulation U. -19- "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower or Holding and their respective Subsidiaries, in each case taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower or Holding and their respective Subsidiaries, in each case taken as a whole, (b) the rights and remedies of the Administrative Agent or any Lender Party under any Loan Document or (c) the ability of the Loan Parties (taken as a whole) to perform their Obligations under the Loan Documents. "Material Contract" means, with respect to any Loan Party, each contract to which such Person is a party involving aggregate consideration payable to or by such Person of $10,000,000 or more in any year or otherwise material to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Loan Parties taken as a whole. "Merger" has the meaning specified in the Preliminary Statements. "Merger Agreement" has the meaning specified in the Preliminary Statements. "Mortgage" has the meaning specified in Section 5.01(n). "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Net Cash Proceeds" means, with respect to any sale, lease, transfer or other disposition of any asset or the sale or issuance of any Debt or capital stock or other ownership or profit interest, any securities convertible into or exchangeable for capital stock or other ownership or profit interest or any warrants, rights, options or other securities to acquire capital stock or other ownership or profit interest by any Person, or any Extraordinary Receipt received by or paid to or for the account of any Person, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by or on behalf of such Person in connection with such transaction after deducting therefrom only (without duplication) (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder's fees and other similar fees and commissions, in each case to the extent, but only to the extent, that the amounts so deducted are, actually paid (or required to be paid) to a Person that is not an Affiliate of such Person or any Loan Party or any Affiliate of any Loan -20- Party, (b) any Debt permitted by Section 5.02(b)(iv) and secured by assets being sold in such transaction that is required to be paid from such proceeds, and (c) income taxes that, as estimated by the Borrower in good faith, will be required to be paid by the Borrower and its Subsidiaries in cash as a result of, and within 15 months after, such sale or disposition, in each case specified in clauses (a), (b) and (c) to the extent, but only to the extent, that the amounts so deducted are properly attributable to such transaction or to the asset that is the subject thereof and (d) in the case of any lease that is a sublease, any rentals payable under the prime lease; provided, however, that Net Cash Proceeds from the sale, lease, transfer or other disposition of any asset shall not include any amount of cash proceeds reinvested in the business of the Borrower and its Subsidiaries, so long as such reinvestment is made within 15 months after the receipt of such Net Cash Proceeds. "Nonratable Assignment" means an assignment by a Lender Party pursuant to Section 9.07(a) of a portion of its rights and obligations under this Agreement, other than an assignment of a uniform, and not a varying, percentage of all of the rights and obligations of such Lender Party under and in respect of all of the Facilities (other than the Letter of Credit Facility and the Swing Line Facility). "Note" means a Tranche A Term Note, a Tranche B Term Note or a Revolving Credit Note. "Notice of Borrowing" has the meaning specified in Section 2.02(a). "Notice of Issuance" has the meaning specified in Section 2.03(a). "Notice of Renewal" has the meaning specified in Section 2.01(d). "Notice of Swing Line Borrowing" has the meaning specified in Section 2.02(b). "Notice of Termination" has the meaning specified in Section 2.01(d). "NPL" means the National Priorities List under CERCLA. "Obligation" means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(f). Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by any Loan Party under any Loan Document and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party. -21- "OECD" means the Organization for Economic Cooperation and Development. "Open Year" means a taxable year of any Loan Party or any of its Subsidiaries or Affiliates for which Federal income tax returns have been filed and for which the applicable statute of limitations for assessment or collection has not occurred by reason of extension or otherwise. "Other Taxes" has the meaning specified in Section 2.12(b). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Permanent Debt" means the $105,000,000 original principal amount of 10-N% Senior Notes due 2007 issued by the Borrower. "Permanent Debt Documents" means the agreements and instruments which govern the terms of the Permanent Debt, as the same may be amended, modified or otherwise supplemented from time to time in accordance with the provisions of this Agreement. "Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business, in each case (i) in existence less than 90 days from the date of creation thereof or (ii) being contested in good faith by the Borrower or any Subsidiary in appropriate proceedings (so long as the Borrower or such Subsidiary shall, in accordance with GAAP, have set aside on its books adequate reserves with respect thereto); (c) deposits or pledges made in the ordinary course of business (i) in connection with, or to secure payment of, workers' compensation, unemployment insurance, old age pensions or other social security, (ii) in connection with casualty insurance maintained in accordance with the provisions of any Loan Document, (iii) to secure the performance of bids, tenders or leases, (iv) to secure statutory obligations or surety or appeal bonds or (v) to secure indemnity, performance or other similar bonds in the ordinary course of business; (d) any interest or title of a lessor or sublessor and any restriction or encumbrance to which the interest or title of such lessor or sublessor may be subject that is incurred in the ordinary course of business and, either individually or when aggregated with all other Permitted Liens in effect on the date of determination, could not be reasonably expected to have a Material Adverse Affect; (e) Liens in favor of customs and revenue authorities arising as a matter of law or pursuant to a bond to secure payment of customs duties in connection with the importation of goods; (f) Liens arising out of judgments or awards that do not constitute events of default under Section 6.01(g) or (h), and (g) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes. -22- "Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Pledge Agreement" has the meaning specified in Section 3.01(n)(ix). "Preferred Stock" means, with respect to any corporation, capital stock issued by such corporation that is entitled to a preference or priority over any other capital stock issued by such corporation upon any distribution of such corporation's assets, whether by dividend or upon liquidation. "Prepayment Amount" has the meaning specified in Section 2.06(c). "Prepayment Date" has the meaning specified in Section 2.06(c). "Prime Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of: (a) the rate of interest announced publicly by Fleet in Boston, Massachusetts from time to time, as Fleet's prime rate; and (b) 1/2 of one percent per annum above the Federal Funds Rate. "Prime Rate Advance" means an Advance that bears interest as provided in Section 2.07(a)(i). "Pro Rata Share" of any amount means, with respect to any Revolving Credit Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Revolving Credit Commitment at such time and the denominator of which is the Revolving Credit Facility at such time. "Receipt Date" has the meaning specified in Section 2.06(c). "Receivables" means all Receivables referred to in Section 1(c) of the Security Agreement. "Redeemable" means, with respect to any capital stock or other ownership or profit interest, Debt or other right or Obligation, any such right or Obligation that (a) the issuer has undertaken to redeem on or prior to the Termination Date at a fixed or determinable date or dates, whether by operation of a sinking fund or otherwise, or upon the occurrence of a condition not solely within the control of the issuer or (b) is redeemable at the option of the holder (other than as provided in the Stockholders Agreement or an Employment Agreement); provided, however, that the term "Redeemable" shall not include any such right or Obligation that is redeemable solely by being exchanged for common stock of the issuer. -23- "Register" has the meaning specified in Section 9.07(d). "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Related Documents" means the Merger Agreement, the Stockholders Agreement, the Childs Management Agreement, the Fenway Management Agreement, the Employment Agreements and the Permanent Debt Documents. "Required Lenders" means at any time Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Advances outstanding at such time, (b) the aggregate Available Amount of all Letters of Credit outstanding at such time, (c) the aggregate unused Commitments under the Tranche A Term Facility at such time, (d) the aggregate unused Commitments under the Tranche B Term Facility, and (e) the aggregate Unused Revolving Credit Commitments at such time; provided, however, that if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Required Lenders at such time (A) the aggregate principal amount of the Advances owing to such Lender (in its capacity as a Lender) and outstanding at such time, (B) such Lender's Pro Rata Share of the aggregate Available Amount of all Letters of Credit issued by such Lender and outstanding at such time, (C) the unused Term Commitments of such Lender at such time and (D) the Unused Revolving Credit Commitment of such Lender at such time. For purposes of this definition, the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank and the Available Amount of each Letter of Credit shall be considered to be owed to the Lenders ratably in accordance with their respective Revolving Credit Commitments. "Responsible Officer" means any executive officer of any Loan Party or any of its Subsidiaries. "Revolving Credit Advance" has the meaning specified in Section 2.01(c). "Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by the Revolving Credit Lenders. "Revolving Credit Commitment" means, with respect to any Revolving Credit Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Revolving Credit Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Revolving Credit Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Revolving Credit Facility" means, at any time, the aggregate amount of the Lenders' Revolving Credit Commitments at such time. "Revolving Credit Lender" means any Lender that has a Revolving Credit Commitment. -24- "Revolving Credit Note" means a promissory note of the Borrower payable to the order of any Revolving Credit Lender, in substantially the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender. "Secured Hedge Agreements" means any Hedge Agreement required or permitted under Article V that is entered into by and between the Borrower and any Hedge Bank. "Secured Obligations" has the meaning specified in the Security Agreement. "Secured Parties" means the Administrative Agent, the Lender Parties, and the Hedge Banks. "Security Agreement" has the meaning specified in Section 3.01(n)(viii). "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Solvent" and "Solvency" mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Standby Letter of Credit" means any Letter of Credit issued under the Letter of Credit Facility, other than a Trade Letter of Credit. "Stockholders Agreement" means the QSI Holdings, Inc. Stockholders Agreement dated as of May 7, 1999 among Holding, the Persons listed as the "JWC Holders" on the signature pages thereof, the Persons listed as the "Other Holders" on the signature pages thereof, the Persons listed as the "Management Holders" on the signature pages thereof and the Persons listed as "Quality Holders" on the signature pages thereof, as the same may be amended, modified or otherwise supplemented from time to time in accordance with the provisions of this Agreement. -25- "Subordinated Debt" means any Debt of the Borrower that is subordinated to the Obligations of the Borrower under the Loan Documents on, and that otherwise contains, terms and conditions reasonably satisfactory to the Required Lenders. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Subsidiary Guarantor" means Country General and each other Subsidiary of the Borrower. "Subsidiary Guaranty" has the meaning set forth in Section 3.01(n)(x). "Surviving Debt" has the meaning set forth in Section 3.01(g). "Swing Line Advance" means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(d) or (b) any Revolving Credit Lender pursuant to Section 2.02(b). "Swing Line Bank" means Fleet. "Swing Line Borrowing" means a borrowing consisting of a Swing Line Advance made by the Swing Line Bank. "Swing Line Facility" has the meaning specified in Section 2.01(c). "Syndication Agent" has the meaning specified in the recital of parties to this Agreement. "Tax Certificate" has the meaning specified in Section 5.03(o). "Taxes" has the meaning specified in Section 2.12(a). "Term Facilities" means the Tranche A Term Facility and the Tranche B Term Facility. "Termination Date" means the earlier of April 30, 2006 and the date of termination in whole of the Tranche A Term Commitments, the Tranche B Term Commitments, the Letter of Credit Commitments and the Revolving Credit Commitments pursuant to Section 2.05 or 6.01. -26- "Trade Letter of Credit" means any Letter of Credit that is issued under the Letter of Credit Facility for the benefit of a supplier of Inventory to the Borrower or any of its Subsidiaries to effect payment for such Inventory. "Tranche A Term Advance" has the meaning specified in Section 2.01(a). "Tranche A Term Borrowing" means a borrowing consisting of simultaneous Tranche A Term Advances of the same Type made by the Tranche A Term Lenders. "Tranche A Term Commitment" means, with respect to any Tranche A Term Lender at any time, the amount set forth opposite such Lender's name on Schedule 1(a) hereto under the caption "Tranche A Term Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Tranche A Term Commitment," as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Tranche A Term Facility" means, at any time, the aggregate amount of the Tranche A Term Lenders' Tranche A Term Commitments at such time. "Tranche A Term Lender" means any Lender that has a Tranche A Term Commitment. "Tranche A Term Note" means a promissory note of the Borrower payable to the order of any Tranche A Term Lender, in substantially the form of Exhibit A-1 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from the Tranche A Term Advance made by such Lender. "Tranche A Termination Date" means the earlier of October 31, 2004 and the date of termination in whole of the Tranche A Term Commitments, the Letter of Credit Commitments and the Revolving Credit Commitments pursuant to Section 2.05 or 6.01. "Tranche B Term Advance" has the meaning specified in Section 2.01(b). "Tranche B Term Borrowing" means a borrowing consisting of simultaneous Tranche B Term Advances of the same type made by the Tranche B Term Lenders. "Tranche B Term Commitment" means, with respect to any Tranche B Term Lender at any time, the amount set forth opposite such Lender's name on Schedule 1(b) hereto under the caption "Tranche B Term Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Tranche B Term Commitment," as such amount may be reduced at or prior to such time pursuant to Section 2.05. "Tranche B Term Facility" means, at any time, the aggregate amount of the Tranche B Term Lenders' Tranche B Term Commitments at such time. -27- "Tranche B Term Lender" means any Lender that has a Tranche B Term Commitment. "Tranche B Term Note" means a promissory note of the Borrower payable to the order of any Tranche B Term Lender, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from the Tranche B Term Advance made by such Lender. "Transaction" means the Merger and the amendment and restatement of the Existing Credit Agreement. "Transaction Documents" means, collectively, the Loan Documents and the Related Documents. "Type" refers to the distinction between Advances bearing interest at the Prime Rate and Advances bearing interest at the Eurodollar Rate. "Unused Revolving Credit Commitment" means, with respect to any Revolving Credit Lender at any time, (a) such Lender's Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii) such Lender's Pro Rata Share of (A) the aggregate Available Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Bank pursuant to Section 2.03(c) and outstanding at such time and (C) the aggregate principal amount of all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(d) and outstanding at such time. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. "Welfare Plan" means a welfare plan, as defined in Section 3(1) of ERISA, that is maintained for employees of any Loan Party or in respect of which any Loan Party could have liability. "Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(f) ("GAAP"). -28- ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT SECTION 2.01. The Advances. (a) The Tranche A Term Advances. Each Tranche A Term Lender severally agrees, on the terms and conditions hereinafter set forth, to make a single advance (a "Tranche A Term Advance") to the Borrower on the date hereof in an amount not to exceed such Lender's Tranche A Term Commitment at such time. The Tranche A Term Borrowing shall consist of Tranche A Term Advances made simultaneously by the Tranche A Term Lenders ratably according to their Tranche A Term Commitments. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed. (b) The Tranche B Term Advances. Each Tranche B Term Lender severally agrees, on the term and conditions hereinafter set forth, to make a single advance (a "Tranche B Term Advance") to the Borrower on the date hereof in an amount not to exceed such Lender's Tranche B Term Commitment at such time. The Tranche B Term Borrowing shall consist of Tranche B Term Advances made simultaneously by the Tranche B Term Lenders ratably according to their Tranche B Team Commitments. Amounts borrowed under this Section 2.01(b) and repaid or prepaid may not be reborrowed. (c) The Revolving Credit Advances. Each Revolving Credit Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Revolving Credit Advance") to the Borrower from time to time on any Business Day during the period from the date hereof until the Tranche A Termination Date in an amount for each such Advance not to exceed such Lender's Unused Revolving Credit Commitment at such time; provided, however, that Revolving Credit Advances on the date hereof shall not exceed an aggregate principal amount equal to $70,000,000. Each Revolving Credit Borrowing shall be in an aggregate amount of $1,000,000 or an integral multiple of $250,000 in excess thereof (other than a Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Swing Line Advances or outstanding Letter of Credit Advances) and shall consist of Revolving Credit Advances made simultaneously by the Revolving Credit Lenders ratably according to their Revolving Credit Commitments. Within the limits of each Revolving Credit Lender's Unused Revolving Credit Commitment in effect from time to time, the Borrower may borrow under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(c). (d) The Swing Line Advances. The Borrower may request the Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and conditions hereinafter set forth, Swing Line Advances to the Borrower from time to time on any Business Day during the period from the date hereof until the Tranche A Termination Date (i) in an aggregate amount not to exceed at any time outstanding $10,000,000 (the "Swing Line Facility") and (ii) in an amount for each such Swing Line Borrowing not to exceed the aggregate of the Unused Revolving Credit Commitments of the Revolving Credit Lenders at such time. No Swing Line Advance shall be used for the purpose of funding the payment of principal of any other Swing Line Advance. Each Swing Line Borrowing shall be in -29- an amount of $250,000 or an integral multiple of $100,000 in excess thereof and shall be made as a Prime Rate Advance. Within the limits of the Swing Line Facility and within the limits referred to in clause (ii) above, the Borrower may borrow under this Section 2.01(d), repay pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d). (e) Letters of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (the "Letters of Credit") for the account of the Borrower from time to time on any Business Day during the period from the date hereof until 30 days before the Tranche A Termination Date (i) in an aggregate Available Amount for all Letters of Credit not to exceed at any time the Issuing Bank's Letter of Credit Commitment at such time and (ii) in an Available Amount for each such Letter of Credit not to exceed the Unused Revolving Credit Commitments of the Revolving Credit Lenders at such time. No Letter of Credit shall have an expiration date (including all rights of the Borrower or the beneficiary to require renewal) later than the earlier of 5 days before the Tranche A Termination Date and (A) in the case of a Standby Letter of Credit one year after the date of issuance thereof, but may by its terms be renewable annually upon notice (a "Notice of Renewal") given to the Issuing Bank and the Administrative Agent on or prior to any date for notice of renewal set forth in such Letter of Credit but in any event at least three Business Days prior to the date of the proposed renewal of such Standby Letter of Credit and upon fulfillment of the applicable conditions set forth in Article III unless the Issuing Bank has notified the Borrower (with a copy to the Administrative Agent) on or prior to the date for notice of termination set forth in such Letter of Credit but in any event at least 30 Business Days prior to the date of automatic renewal of its election not to renew such Standby Letter of Credit (a "Notice of Termination"); provided that the terms of each Standby Letter of Credit that is automatically renewable annually shall (x) require the Issuing Bank to give the beneficiary named in such Standby Letter of Credit notice of any Notice of Termination, (y) permit such beneficiary, upon receipt of such notice, to draw under such Standby Letter of Credit prior to the date such Standby Letter of Credit otherwise would have been automatically renewed and (z) not permit the expiration date (after giving effect to any renewal) of such Standby Letter of Credit in any event to be extended to a date later than 5 days before the Tranche A Termination Date. If either a Notice of Renewal is not given by the Borrower or a Notice of Termination is given by the Issuing Bank pursuant to the immediately preceding sentence, such Standby Letter of Credit shall expire on the date on which it otherwise would have been automatically renewed; provided, however, that even in the absence of receipt of a Notice of Renewal the Issuing Bank may in its discretion, unless instructed to the contrary by the Administrative Agent or the Borrower, deem that a Notice of Renewal had been timely delivered and in such case, a Notice of Renewal shall be deemed to have been so delivered for all purposes under this Agreement. Any "Letters of Credit" (as defined in the Existing Credit Agreement) that are issued and outstanding on the date hereof shall be deemed to be Letters of Credit hereunder. Within the limits of the Letter of Credit Facility, and subject to the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.01(e), repay any Letter of Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c) and request the issuance of additional Letters of Credit under this Section 2.01(e). -30- (f) All "Advances" under the Existing Credit Agreement shall be deemed to be Advances for all purposes hereunder. SECTION 2.02. Making the Advances. (a) Except as otherwise provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later than 12:00 Noon (Boston, Massachusetts time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or the first Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Prime Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Appropriate Lender prompt notice thereof by telecopier. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately in writing or telecopier, in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Facility under which such Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each Appropriate Lender shall, before 11:00 A.M. (Boston, Massachusetts time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent's Account, in same day funds, such Lender's ratable portion of such Borrowing in accordance with the respective Commitments under the applicable Facility of such Lender and the other Appropriate Lenders. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower's Account. (b) Each Swing Line Borrowing shall be made on notice, given not later than 12:00 Noon (Boston, Massachusetts time) on the date of the proposed Swing Line Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent. Each such notice of a Swing Line Borrowing (a "Notice of Swing Line Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier, specifying therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later than the seventh day after the requested date of such Borrowing). The Swing Line Bank will make the amount of the requested Swing Line Advance available to the Administrative Agent at the Administrative Agent's Account, in same day funds. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower's Account. Upon written demand by the Swing Line Bank, with a copy of such demand to the Administrative Agent, each other Revolving Credit Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other Revolving Credit Lender, such other Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of such demand, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Swing Line Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line Advance to be purchased by such Lender. The Borrower hereby agrees to each such sale and assignment. Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which demand therefor is made by the Swing Line Bank, provided that notice of such demand is given not later than 11:00 A.M. (Boston, Massachusetts time) on such -31- Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Swing Line Bank to any other Revolving Credit Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other Lender that the Swing Line Bank is the legal and beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent that any Revolving Credit Lender shall not have so made the amount of such Swing Line Advance available to the Administrative Agent, such Revolving Credit Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by such amount on such Business Day. (c) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may select Eurodollar Rate Advances having an initial Interest Period of one week for the initial Borrowing hereunder, and for the period from the Closing Date to the date that is the earlier of 30 days after the Closing Date and the date on which the Administrative Agent notifies the Borrower and the Lender Parties that the Facilities are fully syndicated, and, thereafter, the Borrower may select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is at least $1,000,000 or if the obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall not then be suspended pursuant to Section 2.09 or Section 2.10 and (ii) the Advances may not be outstanding as part of more than 20 separate Borrowings. (d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, if the Borrower fails to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III and the Advance to be made by such Lender as part of such Borrowing, as a result of such failure, is not made on such date, the Borrower will pay to the Administrative Agent for each Appropriate Lender an amount equal to the present value (calculated in accordance with this Section 2.02(d)) of interest for the Interest Period specified in such Notice of Borrowing on the amount of such Advance, at a rate per annum equal to the excess of (a) the Eurodollar Rate that would have been in effect for such Interest Period over (b) the Eurodollar Rate applicable on the date of determination to a deemed Interest Period ending on the last day of such Interest Period. The present value of such additional interest shall be calculated by discounting the amount of such interest for each day in the Interest Period specified in such Notice of Borrowing from such day to the date of such repayment or termination at an interest rate per annum equal to the interest rate determined pursuant to the preceding sentence, and by adding all such amounts for all such days during such period. The determination by the Administrative Agent of such amount of interest shall, in the absence of manifest error, be conclusive. -32- (e) Unless the Administrative Agent shall have received notice from an Appropriate Lender prior to the date of any Borrowing under a Facility under which such Lender has a Commitment that such Lender will not make available to the Administrative Agent such Lender's ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender's Advance as part of such Borrowing for all purposes. (f) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon notice, given not later than 12:00 Noon (Boston, Massachusetts time) on the third Business Day prior to the date of the proposed issuance of such Letter of Credit, by the Borrower to the Issuing Bank, which shall give to the Administrative Agent and each Revolving Credit Lender prompt notice thereof by telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be by telephone, confirmed immediately in writing or telecopier, specifying therein the requested (A) date of such issuance (which shall be a Business Day), (B) Available Amount of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name and address of the beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit as the Issuing Bank may specify to the Borrower for use in connection with such requested Letter of Credit (a "Letter of Credit Agreement"). All "Letters of Credit" under the Existing Credit Agreement shall be deemed to be Letters of Credit for all purposes under the Loan Documents. If (x) the requested form of such Letter of Credit is acceptable to the Issuing Bank in its sole discretion and (y) it has not received notice of objection to such issuance from Lenders holding at least a majority of the Revolving Credit Commitments, the Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower at its office referred to in Section 9.02 or as otherwise agreed with the Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern. (b) Letter of Credit Reports. The Issuing Bank shall furnish (A) to the Administrative Agent on the first Business Day of each week a written report summarizing issuance and expiration dates of Letters of Credit issued -33- during the previous week and drawings during such week under all Letters of Credit, (B) to each Revolving Credit Lender on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued during the preceding month and drawings during such month under all Letters of Credit and (C) to the Administrative Agent and each Lender on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit. (c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Bank of a Letter of Credit Advance, which shall be a Prime Rate Advance, in the amount of such draft. Upon written demand by the Issuing Bank, with a copy of such demand to the Administrative Agent, each Revolving Credit Lender shall purchase from the Issuing Bank, and the Issuing Bank shall sell and assign to each such Revolving Credit Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of the date of such purchase, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Issuing Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Letter of Credit Advance to be purchased by such Lender. Promptly after receipt thereof, the Administrative Agent shall transfer such funds to the Issuing Bank. The Borrower hereby agrees to each such sale and assignment. Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day on which demand therefor is made by the Issuing Bank, provided notice of such demand is given not later than 11:00 A.M. (Boston, Massachusetts time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Issuing Bank to any other Revolving Credit Lender of a portion of a Letter of Credit Advance, the Issuing Bank represents and warrants to such other Lender that the Issuing Bank is the legal and beneficial owner of such interest being assigned by it, free and clear of any liens, but makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the extent that any Revolving Credit Lender shall not have so made the amount of such Letter of Credit Advance available to the Administrative Agent, such Revolving Credit Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Issuing Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for its account or the account of the Issuing Bank, as applicable. If such Lender shall pay to the Administrative Agent such amount for the account of the Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by the Issuing Bank shall be reduced by such amount on such Business Day. (d) Failure to Make Letter of Credit Advances. The failure of any Lender to make the Letter of Credit Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Letter of Credit Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Letter of Credit Advance to be made by such other Lender on such date. -34- SECTION 2.04. Repayment of Advances. (a) Tranche A Term Advances. The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche A Term Lenders the aggregate outstanding principal amount of the Tranche A Term Advances on the following dates in the amounts indicated (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.06): Date Amount ---- ------ July 31, 1999 $1,875,000 October 31, 1999 $625,000 January 31, 2000 $1,875,000 April 30, 2000 $625,000 July 31, 2000 $7,500,000 October 31, 2000 $2,500,000 January 31, 2001 $7,500,000 April 30, 2001 $2,500,000 July 31, 2001 $7,500,000 October 31, 2001 $2,500,000 January 31, 2002 $7,500,000 April 30, 2002 $2,500,000 July 31, 2002 $7,500,000 October 31, 2002 $2,500,000 January 31, 2003 $7,500,000 April 30, 2003 $2,500,000 July 31, 2003 $7,500,000 October 31, 2003 $2,500,000 January 31, 2004 $7,500,000 April 30, 2004 $2,500,000 July 31, 2004 $11,250,000 October 31, 2004 $3,750,000 provided, however, that the final principal installment shall be repaid on the Tranche A Termination Date and in any event shall be in an amount equal to the aggregate principal amount of the Tranche A Term Advances outstanding on such date. (b) Tranche B Term Advances. The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche B Term Lenders the aggregate outstanding principal amount of the Tranche B Term Advances on the following dates in the amounts indicated (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.06): Date Amount ---- ------ July 31, 1999 $450,000 October 31, 1999 $150,000 January 31, 2000 $450,000 April 30, 2000 $150,000 -35- July 31, 2000 $450,000 October 31, 2000 $150,000 January 31, 2001 $450,000 April 30, 2001 $150,000 July 31, 2001 $450,000 October 31, 2001 $150,000 January 31, 2002 $450,000 April 30, 2002 $150,000 July 31, 2002 $450,000 October 31, 2002 $150,000 January 31, 2003 $450,000 April 30, 2003 $150,000 July 31, 2003 $450,000 October 31, 2003 $150,000 January 31, 2004 $450,000 April 30, 2004 $150,000 July 31, 2004 $450,000 October 31, 2004 $150,000 January 31, 2005 $28,350,000 April 30, 2005 $9,450,000 July 31, 2005 $28,350,000 October 31, 2005 $9,450,000 January 31, 2006 $28,350,000 April 30, 2006 $9,450,000 provided, however, that the final principal installment shall be repaid on the Termination Date and in any event shall be in an amount equal to the aggregate principal amount of the Term Advances outstanding on such date. (c) Revolving Credit Advances. The Borrower shall repay to the Administrative Agent for the ratable account of the Revolving Credit Lenders on the Tranche A Termination Date the aggregate outstanding principal amount of the Revolving Credit Advances then outstanding. (d) Swing Line Advances. The Borrower shall repay to the Administrative Agent for the account of the Swing Line Bank and each other Revolving Credit Lender that has made a Swing Line Advance the outstanding principal amount of each Swing Line Advance made by each of them on the earlier of the maturity date specified in the applicable Notice of Swing Line Borrowing (which maturity shall be no later than the seventh day after the requested date of such Borrowing) and the Tranche A Termination Date. (e) Letter of Credit Advances. (i) The Borrower shall repay to the Administrative Agent for the account of the Issuing Bank and each other Revolving Credit Lender that has made a Letter of Credit Advance on the earlier of demand and the Tranche A Termination Date the aggregate outstanding principal amount of the Letter of Credit Advances then outstanding. -36- (ii) The Obligations of the Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances: (A) any lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the "L/C Related Documents"); (B) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; (C) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction; (D) any statement or any other document presented under a 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; (E) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; (F) any exchange, release or non-perfection of any Collateral or other collateral, or any release or amendment or waiver of or consent to departure from the Guaranty or any other guarantee, for all or any of the Obligations of the Borrower in respect of the L/C Related Documents; or (G) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor (other than the gross negligence or willful misconduct of the Issuing Bank). SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional. The Borrower may, upon at least five Business Days' notice to the Administrative Agent, terminate in whole or reduce in part the unused portions of the Tranche A Term Commitments, the Tranche B Term Commitments and the Letter of Credit Facility and the Unused Revolving Credit Commitments; provided, however, that each partial reduction of a Facility (i) shall be in an aggregate amount of $1,000,000 or an integral multiple of $250,000 in excess thereof and (ii) shall be made ratably among the Appropriate Lenders in accordance with their Commitments with respect to such Facility. Each reduction of the unused portion of the Commitments under the Term Facilities pursuant to this subsection (a) shall be applied pro rata to each of the Term Facilities. -37- (b) Mandatory. (i) After the date of the Tranche A Term Borrowing, upon each repayment or prepayment of the Tranche A Term Advances, the aggregate Tranche A Term Commitments of the Tranche A Term Lenders shall be automatically and permanently reduced, on a pro rata basis, by an amount equal to the amount by which the aggregate Tranche A Term Commitments immediately prior to such reduction exceed the aggregate unpaid principal amount of the Tranche A Term Advances then outstanding. (ii) After the date of the Tranche B Term Borrowing, upon each repayment or prepayment of the Tranche B Term Advances, the aggregate Tranche B Term Commitments of the Tranche B Term Lenders shall be automatically and permanently reduced, on a pro rata basis, by an amount equal to the amount by which the aggregate Tranche B Term commitments immediately prior to such reduction exceed the aggregate unpaid principal amount of the Tranche B Term Advances then outstanding. (iii) The Letter of Credit Facility shall be permanently reduced from time to time on the date of each reduction in the Revolving Credit Facility by the amount, if any, by which the amount of the Letter of Credit Facility exceeds the Revolving Credit Facility after giving effect to such reduction of the Revolving Credit Facility. SECTION 2.06. Prepayments. (a) Optional. The Borrower may, upon at least one Business Day's notice in the case of Prime Rate Advances and three Business Days' notice in the case of Eurodollar Rate Advances, in each case to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided, however, that (x) each partial prepayment (other than in respect of a prepayment of the Swing Line Advances) shall be in an aggregate principal amount of $250,000 or an integral multiple of $250,000 in excess thereof, (y) each partial prepayment of Swing Line Advances shall be in an aggregate principal amount of $250,000 or an integral multiple of $100,000 in excess thereof and (z) if any prepayment of a Eurodollar Rate Advance is made on a date other than the last day of an Interest Period for such Advance the Borrower shall also pay any amounts owing pursuant to Section 9.04(c). In respect of each such optional prepayment of a Term Facility, 50% of the amount of such prepayment in respect of such Term Facility shall be applied to the installments of such Term Facility in direct order of maturity and the remaining 50% shall be applied to the installments of such Term Facility in inverse order of maturity. (b) Mandatory. (i) The Borrower shall, on the 15th day following each date on which the Borrower delivers the annual financial statements pursuant to Section 5.03(d) (commencing with January 2001), prepay an aggregate principal amount of the Advances comprising part of the same Borrowings in an amount equal to (x) if the Debt to EBITDA Ratio for the related Fiscal Year is less than 3:1, 50% of Excess Cash Flow for such Fiscal Year and (y) at all other times, 75% of Excess Cash Flow for such Fiscal Year. The Borrower shall also, on the sixth month anniversary of each Fiscal Year, prepay an aggregate principal amount of Advances comprising part of the same Borrowings in an amount equal to (x) if the Debt to EBITDA Ratio for the related Fiscal Year is less than 3:1, 50% and (y) at all other times, 75% of any Capital Expenditures deducted in the calculation of Excess Cash Flow for the preceding -38- Fiscal Year and not actually made on or prior to such sixth month anniversary. Each such prepayment shall be applied ratably to each of the Term Facilities; provided, however, that 50% of the amount of such prepayment in respect of a Term Facility shall be applied to the installments of such Term Facility in direct order of maturity and the remaining 50% shall be applied to the installments of such Term Facility in inverse order of maturity. Upon the payment in full of the Term Advances, there shall be no further mandatory prepayments pursuant to this Section 2.05(b)(i). (ii) The Borrower shall, on the third Business Day following the date of receipt of the Net Cash Proceeds by any Loan Party or any of its Subsidiaries from (A) the sale, lease, transfer or other disposition of any assets of any Loan Party or any of its Subsidiaries (other than any sale, lease, transfer or other disposition of assets pursuant to clause (i) of Section 5.02(e)), subject to the proviso to the definition of Net Cash Proceeds, (B) the incurrence or issuance by any Loan Party or any of its Subsidiaries of any Debt (other than Debt incurred or issued pursuant to Section 5.02(b)), (C) the sale or issuance after the Effective Date by any Loan Party or any of its Subsidiaries of any capital stock or other ownership or profit interest, any securities convertible into or exchangeable for capital stock or other ownership or profit interest or any warrants, rights or options to acquire capital stock or other ownership or profit interest (other than the sale or issuance of (w) capital stock (other than Redeemable capital stock) of Holding to any Equity Investor, (x) any capital stock or rights or options to acquire capital stock in Holding to officers, employees or directors of Holding or any Subsidiary thereof, (y) common stock of Holding as contemplated by the Merger Agreement and (z) capital stock by any wholly-owned Subsidiary of any Loan Party to such Loan Party) and (D) any Extraordinary Receipt received by or paid to or for the account of any Loan Party or any of its Subsidiaries and not otherwise included in clause (A), (B) or (C) above (subject to the proviso to the definition of Extraordinary Receipt), prepay an aggregate principal amount of the Advances comprising part of the same Borrowings equal to the amount of such Net Cash Proceeds. Each such prepayment shall be applied ratably to each of the Term Facilities; provided, however, that 50% of such amount of such prepayment in respect of a Term Facility shall be applied to the installments of such Term Facility in direct order of maturity and the remaining 50% shall be applied to the installments of such Term Facility in inverse order of maturity. Upon the payment in full of the Term Advances, there shall be no further mandatory prepayments pursuant to this Section 2.05(b)(ii). (iii) The Borrower shall, on each Business Day, prepay an aggregate principal amount of the Revolving Credit Advances comprising part of the same Borrowings, the Letter of Credit Advances and the Swing Line Advances equal to the amount by which (A) the sum of the aggregate principal amount of (x) the Revolving Credit Advances, (y) the Letter of Credit Advances and (z) the Swing Line Advances then outstanding plus the aggregate Available Amount of all Letters of Credit then outstanding exceeds (B) the lesser of the Revolving Credit Facility and the Loan Value of Eligible Collateral on such Business Day. (iv) The Borrower shall, on each Business Day, pay to the Administrative Agent for deposit in the L/C Cash Collateral Account an amount sufficient to cause the aggregate amount on deposit in the L/C Cash Collateral Account to equal the amount by which the aggregate Available Amount of all Letters of Credit then outstanding exceeds the Letter of Credit Facility on such Business Day. -39- (v) Prepayments of the Revolving Credit Facility made pursuant to clause (iii) above shall be first applied to prepay Letter of Credit Advances then outstanding until such Advances are paid in full, second applied to prepay Swing Line Advances then outstanding until such Advances are paid in full, third applied to prepay Revolving Credit Advances then outstanding comprising part of the same Borrowings until such Advances are paid in full and fourth deposited in the L/C Cash Collateral Account to cash collateralize 100% of the Available Amount of the Letters of Credit then outstanding. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the Issuing Bank or the Revolving Credit Lenders, as applicable. (vi) All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid. (c) Tranche B Term Opt-Out. Any Tranche B Term Lender, may, with the approval of the Borrower, elect not to accept any prepayment of the Tranche B Term Facility. Upon receipt by the Administrative Agent of any prepayment, the amount of the prepayment that is available to prepay the Tranche B Term Advances shall be deposited in the Cash Collateral Account (the "Prepayment Amount"), pending application of such amount on the Prepayment Date as set forth below and promptly after such receipt (the date of such receipt being the "Receipt Date"), the Administrative Agent shall give written notice to the Tranche B Term Lenders of the amount available to prepay the Tranche B Term Advances and the date on which such prepayment shall be made (the "Prepayment Date"), which date shall be 5 days after the Receipt Date. Any Lender declining such prepayment (a "Declining Lender") shall give written notice to the Administrative Agent by 11:00 A.M. (Boston, Massachusetts time) on the Business Day immediately preceding the Prepayment Date. On the Prepayment Date, an amount equal to that portion of the Prepayment Amount accepted by the Tranche B Term Lenders other than the Declining Lenders (such Lenders being the "Accepting Lenders") to prepay Tranche B Term Advances owing to such Accepting Lenders shall be withdrawn from the Cash Collateral Account and applied to prepay Tranche B Term Advances owing to such Accepting Lenders on a pro rata basis. Any amounts that would otherwise have been applied to prepay Advances under the Tranche B Term Facility owing to Declining Lenders shall instead be applied ratably to prepay the remaining Tranche A Term Advances as provided in Sections 2.06(a) or (b) as the case may be; provided further that upon prepayment in full of the Tranche A Term Advances, the remainder of any Prepayment Amount shall be applied ratably to prepay Tranche B Term Advances owing to Declining Lenders. SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (i) Prime Rate Advances. During such periods as such Advance is a Prime Rate Advance, a rate per annum equal at all times to the sum of (A) the Prime Rate in effect from time to time plus (B) the -40- Applicable Margin in effect from time to time, payable in arrears on the last day of each March, June, September and December during such periods and on the date such Prime Rate Advance shall be Converted or paid in full. (ii) Eurodollar Rate Advances. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance plus (B) the Applicable Margin in effect on the first day of such Interest Period, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b) Default Interest. Upon the occurrence and during the continuance of a Default under Section 6.01(a) or 6.01(f), the Borrower shall pay interest on (i) the unpaid principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid, in the case of interest, on the Type of Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii) above, and, in all other cases, on Prime Rate Advances pursuant to clause (a)(i) above. (c) Notice of Interest Rate. Promptly after receipt of a Notice of Borrowing pursuant to Section 2.02(a), the Administrative Agent shall give notice to the Borrower and each Appropriate Lender of the applicable interest rate determined by the Administrative Agent for purposes of clause (a)(i) or (ii). SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of the Lenders a commitment fee, from the date hereof in the case of each Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Tranche A Termination Date, payable in arrears on the last Business Day of each March, June, September and December, commencing June 30, 1999, and on the Tranche A Termination Date, at a rate equal to the Applicable Percentage per annum on the sum of the average daily Unused Revolving Credit Commitment of each Appropriate Lender plus such Lender's Pro Rata Share of the average daily outstanding Swing Line Advances during such quarter; provided, however, that no commitment fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. (b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the Administrative Agent for the account of each Revolving Credit Lender a commission, payable in arrears quarterly on the last Business Day of each March, June, September and December, commencing June 30, 1999, and on the earliest to occur of the full drawing expiration, termination or cancellation of any such Letter of Credit and on the Tranche A Termination Date, on such Lender's Pro -41- Rata Share of the average daily aggregate Available Amount during such quarter of (A) all Standby Letters of Credit outstanding from time to time at a rate per annum equal to the Applicable Margin in effect from time to time for Eurodollar Advances comprising a Revolving Credit Borrowing and (B) all Trade Letters of Credit outstanding from time to time at a rate per annum equal to the excess of (x) the Applicable Margin in effect from time to time for Eurodollar Advances comprising a Revolving Credit Borrowing over (y) 1.00%. (ii) The Borrower shall pay to the Issuing Bank, for its own account, such commissions, issuance fees, fronting fees, transfer fees and other fees and charges in connection with the issuance or administration of each Letter of Credit as the Borrower and the Issuing Bank shall agree. (c) Administrative Agent's Fees. The Borrower shall pay to the Administrative Agent for its own account such fees as may from time to time be agreed between the Borrower and the Administrative Agent. SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may on any Business Day (without the payment of any fee or premium), upon notice given to the Administrative Agent not later than 12:00 Noon (Boston, Massachusetts time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type comprising the same Borrowing into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Prime Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Prime Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c), no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(c) and each Conversion of Advances comprising part of the same Borrowing under any Facility shall be made ratably among the Appropriate Lenders in accordance with their Commitments under such Facility. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for such Advances. Each notice of Conversion shall be irrevocable and binding on the Borrower. (b) Mandatory. (i) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $1,000,000, such Advances shall automatically Convert at the end of the existing Interest Period into Prime Rate Advances. (ii) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Administrative Agent will forthwith so notify the Borrower and the Appropriate Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Prime Rate Advance. (iii) Upon the occurrence and during the continuance of any Event of Default, (x) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Prime Rate Advance and (y) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. -42- SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation after the date hereof or (ii) the compliance with any guideline or request issued or promulgated after the date hereof from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender Party of agreeing to make or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining Letters of Credit or of agreeing to make or of making or maintaining Letter of Credit Advances (excluding for purposes of this Section 2.10 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (ii) changes in the rate or basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, on or prior to the third Business Day following receipt by the Borrower of the certificate referred to below from such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party additional amounts sufficient to compensate such Lender Party for such increased cost; provided, however, that the Borrower shall not be responsible for costs under this Section 2.10(a) arising more than 90 days prior to receipt by the Borrower of the certificate from the affected Lender pursuant to this Section 2.10(a) with respect to such costs; provided further that a Lender Party claiming additional amounts under this Section 2.10(a) agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. A certificate as to the amount of such increased cost (together with a schedule setting forth in reasonable detail the calculation thereof), submitted to the Borrower by such Lender Party, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender Party determines that compliance with any law or regulation or any guideline or request issued or promulgated after the date hereof from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender Party or any corporation controlling such Lender Party and that the amount of such capital is increased by or based upon the existence of such Lender Party's commitment to lend or to issue Letters of Credit hereunder and other commitments of such type or the issuance or maintenance of the Letters of Credit (or similar contingent obligations), then, on or prior to the third Business Day following receipt by the Borrower of the certificate referred to below from such Lender Party (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender Party, from time to time as specified by such Lender Party, additional amounts sufficient to compensate such Lender Party in the light of such circumstances, to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of such Lender Party's commitment to lend or to issue Letters of Credit hereunder or to the issuance or maintenance of any Letters of Credit; provided, however, that, the Borrower shall not be responsible for costs under this Section 2.10(b) arising more than 90 days prior to receipt by the Borrower -43- of the certificate from the affected Lender pursuant to this Section 2.10(b) with respect to such costs. A certificate as to such amounts (together with a schedule setting forth in reasonable detail the calculation thereof) submitted to the Borrower by such Lender Party shall be conclusive and binding for all purposes, absent manifest error. (c) If, with respect to any Eurodollar Rate Advances under any Facility, Lenders owed at least a majority of the then aggregate unpaid principal amount thereof notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Lenders of making, funding or maintaining their Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate Advance under any Facility will automatically, on the last day of the then existing Interest Period therefor, Convert into a Prime Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lenders have determined that the circumstances causing such suspension no longer exist. (d) Notwithstanding any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation, in each case after the date hereof, shall make it unlawful, or, after the date hereof, any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder, then, on notice thereof and demand therefor by such Lender to the Borrower through the Administrative Agent, (i) each Eurodollar Rate Advance under each Facility under which such Lender has a Commitment will automatically, on the last day of the then existing Interest Period therefor, if permitted by applicable law, or otherwise upon such demand, Convert into a Prime Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lender has determined that the circumstances causing such suspension no longer exist; provided, however, that, before making any such demand, such Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Lender or its Eurodollar Lending Office to continue to perform its obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. SECTION 2.11. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.15), not later than 12:00 Noon (Boston, Massachusetts time) on the day when due in U.S. dollars to the Administrative Agent at the Administrative Agent's Account in same day funds. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, commitment fees or any other Obligation then payable hereunder and under the Notes to more than one Lender Party, to such Lender Parties for the account of their respective Applicable Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lender Parties and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender Party, to such Lender Party -44- for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date of such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) If the Administrative Agent receives funds for application to the Obligations under the Loan Documents under circumstances for which the Loan Documents do not specify the Advances or the Facility to which, or the manner in which, such funds are to be applied, the Administrative Agent may, but shall not be obligated to, elect to distribute such funds to each Lender Party ratably in accordance with such Lender Party's proportionate share of the principal amount of all outstanding Advances and the Available Amount of all Letters of Credit then outstanding, in repayment or prepayment of such of the outstanding Advances or other Obligations owed to such Lender Party, and for application to such principal installments, as the Administrative Agent shall direct. (c) The Borrower hereby authorizes each Lender Party, if and to the extent payment owed to such Lender Party is not made when due hereunder or, in the case of a Lender, under the Note held by such Lender, to charge from time to time against any or all of the Borrower's accounts with such Lender Party any amount so due. (d) All computations of interest, fees and Letter of Credit commissions shall be made by the Administrative Agent on the basis of a year of 365 days (360 days, with respect to Eurodollar Rate Advances), in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error. (e) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (f) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender Party hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each such Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent the Borrower shall not have so made such payment in full to -45- the Administrative Agent, each such Lender Party shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender Party together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Administrative Agent, at the Federal Funds Rate. SECTION 2.12. Taxes. (a) Any and all payments by the Borrower hereunder or under the Notes shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender Party and the Administrative Agent, taxes that are imposed on its overall net income by the United States and taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Lender Party or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender Party, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Lender Party's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender Party or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender Party or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrower shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower shall indemnify each Lender Party and the Administrative Agent for and hold it harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.12, imposed on or paid by such Lender Party or the Administrative Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender Party or the Administrative Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under the Notes by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower by a payor that is not a United States person, if the -46- Borrower determines that no Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as the case may be, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as requested in writing by the Borrower (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Administrative Agent and the Borrower with two original Internal Revenue Service forms 1001 or 4224, or (in the case of a Lender Party that has certified in writing to the Administrative Agent that it is not a "bank" as defined in Section 881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such Lender Party delivers a form W-8, a certificate representing that such Lender Party is not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes or, in the case of a Lender Party providing a form W-8, certifying that such Lender Party is a foreign corporation, partnership, estate or trust. If the forms provided by a Lender Party at the time such Lender Party first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender Party becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. (f) For any period with respect to which a Lender Party has failed to provide the Borrower with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender Party become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes. -47- (g) Any Lender Party claiming any additional amounts payable pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. (h) The Borrower shall not have an indemnification obligation under subsection (a) or (c) with respect to Taxes imposed by the United States as a result of a change in law occurring after the date hereof arising more than 90 days prior to receipt by the Borrower of notice from the affected Lender Party with respect to such change in law. SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) (a) on account of Obligations due and payable to such Lender Party hereunder and under the Notes 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 Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time or (b) on account of Obligations owing (but not due and payable) to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time obtained by all of the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such participations in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party's ratable share (according to the proportion of (i) the purchase price paid to such Lender Party to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party's ratable share (according to the proportion of (i) the amount of such other Lender Party's required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered. The Borrower agrees that any Lender Party so purchasing a participation from another Lender Party pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender Party were the direct creditor of the Borrower in the amount of such participation. SECTION 2.14. Use of Proceeds. The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely to finance the Merger and costs associated therewith, to pay transaction fees and expenses, to refinance certain Existing Debt, to repurchase shares of -48- common stock of Holding from certain members of management (to the extent permitted hereby) and for general corporate purposes of the Borrower and its Subsidiaries. SECTION 2.15. Defaulting Lenders. (a) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be required to make any payment hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then the Borrower may, so long as no Default (other than a Default which occurs directly as a result of a Lender being a Defaulting Lender) shall occur or be continuing at such time and to the fullest extent permitted by applicable law, set off and otherwise apply the Obligation of the Borrower to make such payment to or for the account of such Defaulting Lender against the obligation of such Defaulting Lender to make such Defaulted Advance. In the event that, on any date, the Borrower shall so set off and otherwise apply its obligation to make any such payment against the obligation of such Defaulting Lender to make any such Defaulted Advance on or prior to such date, the amount so set off and otherwise applied by the Borrower shall constitute for all purposes of this Agreement and the other Loan Documents an Advance by such Defaulting Lender made on the date under the Facility pursuant to which such Defaulted Advance was originally required to have been made pursuant to Section 2.01. Such Advance shall be a Prime Rate Advance and shall be considered, for all purposes of this Agreement, to comprise part of the Borrowing in connection with which such Defaulted Advance was originally required to have been made pursuant to Section 2.01, even if the other Advances comprising such Borrowing shall be Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant to this subsection (a). The Borrower shall notify the Administrative Agent at any time the Borrower exercises its right of set-off pursuant to this subsection (a) and shall set forth in such notice (A) the name of the Defaulting Lender and the Defaulted Advance required to be made by such Defaulting Lender and (B) the amount set off and otherwise applied in respect of such Defaulted Advance pursuant to this subsection (a). Any portion of such payment otherwise required to be made by the Borrower to or for the account of such Defaulting Lender which is paid by the Borrower, after giving effect to the amount set off and otherwise applied by the Borrower pursuant to this subsection (a), shall be applied by the Administrative Agent as specified in subsection (b) or (c) of this Section 2.15. (b) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to the Administrative Agent or any of the other Lender Parties and (iii) the Borrower shall make any payment hereunder or under any other Loan Document to the Administrative Agent for the account of such Defaulting Lender, then the Administrative Agent may, on its behalf or on behalf of such other Lender Parties and to the fullest extent permitted by applicable law, apply at such time the amount so paid by the Borrower to or for the account of such Defaulting Lender to the payment of each such Defaulted Amount to the extent required to pay such Defaulted Amount. In the event that the Administrative Agent shall so apply any such amount to the payment of any such Defaulted Amount on any date, the amount so applied by the Administrative Agent shall constitute for all purposes of this Agreement and the other Loan Documents payment, to such extent, -49- of such Defaulted Amount on such date. Any such amount so applied by the Administrative Agent shall be retained by the Administrative Agent or distributed by the Administrative Agent to such other Lender Parties, ratably in accordance with the respective portions of such Defaulted Amounts payable at such time to the Administrative Agent and such other Lender Parties and, if the amount of such payment made by the Borrower shall at such time be insufficient to pay all Defaulted Amounts owing at such time to the Administrative Agent and the other Lender Parties, in the following order of priority: (i) first, to the Administrative Agent for any Defaulted Amount then owing to the Administrative Agent; and (ii) second, to any other Lender Parties for any Defaulted Amounts then owing to such other Lender Parties, ratably in accordance with such respective Defaulted Amounts then owing to such other Lender Parties. Any portion of such amount paid by the Borrower for the account of such Defaulting Lender remaining, after giving effect to the amount applied by the Administrative Agent pursuant to this subsection (b), shall be applied by the Administrative Agent as specified in subsection (c) of this Section 2.15. (c) In the event that, at any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any other Lender Party shall be required to pay or distribute any amount hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then the Borrower or such other Lender Party shall pay such amount to the Administrative Agent to be held by the Administrative Agent, to the fullest extent permitted by applicable law, in escrow or the Administrative Agent shall, to the fullest extent permitted by applicable law, hold in escrow such amount otherwise held by it. Any funds held by the Administrative Agent in escrow under this subsection (c) shall be deposited by the Administrative Agent in an account with Fleet, in the name and under the control of the Administrative Agent, but subject to the provisions of this subsection (c). The terms applicable to such account, including the rate of interest payable with respect to the credit balance of such account from time to time, shall be Fleet's standard terms applicable to escrow accounts maintained with it. Any interest credited to such account from time to time shall be held by the Administrative Agent in escrow under, and applied by the Administrative Agent from time to time in accordance with the provisions of, this subsection (c). The Administrative Agent shall, to the fullest extent permitted by applicable law, apply all funds so held in escrow from time to time to the extent necessary to make any Advances required to be made by such Defaulting Lender and to pay any amount payable by such Defaulting Lender hereunder and under the other Loan Documents to the Administrative Agent or any other Lender Party, as and when such Advances or amounts are required to be made or paid and, if the amount so held in escrow shall at any time be insufficient to make and pay all such Advances and amounts required to be made or paid at such time, in the following order of priority: (i) first, to the Administrative Agent for any amount then due and payable by such Defaulting Lender to the Administrative Agent hereunder; (ii) second, to any other Lender Parties for any amount then due and payable by such Defaulting Lender to such other Lender Parties hereunder, ratably in accordance with such respective amounts then due and payable to such other Lender Parties; and -50- (iii) third, to the Borrower for any Advance then required to be made by such Defaulting Lender pursuant to a Commitment of such Defaulting Lender. In the event that any Lender Party that is a Defaulting Lender shall, at any time, cease to be a Defaulting Lender, any funds held by the Administrative Agent in escrow at such time with respect to such Lender Party shall be distributed by the Administrative Agent to such Lender Party and applied by such Lender Party to the Obligations owing to such Lender Party at such time under this Agreement and the other Loan Documents ratably in accordance with the respective amounts of such Obligations outstanding at such time. (d) The rights and remedies against a Defaulting Lender under this Section 2.15 are in addition to other rights and remedies that the Borrower may have against such Defaulting Lender with respect to any Defaulted Advance and that the Administrative Agent or any Lender Party may have against such Defaulting Lender with respect to any Defaulted Amount. SECTION 2.16. Removal of Lender. In the event that any Lender Party demands payment of costs or additional amounts pursuant to Section 2.10 or Section 2.12 or asserts, pursuant to Section 2.10(d) that it is unlawful for such Lender Party to make Eurodollar Rate Advances, then (subject to such Lender Party's right to rescind such demand or assertion within 10 days after the notice from the Borrower referred to below) the Borrower may, upon 20 days' prior written notice to such Lender Party and the Administrative Agent, elect to cause such Lender Party to assign its Advances and Commitments in full to an assignee institution selected by the Borrower that meets the criteria of an Eligible Assignee and is reasonably satisfactory to the Administrative Agent, so long as such Lender Party receives payment in full in cash of the outstanding principal amount of all Advances made by it and all accrued and unpaid interest thereon and all other amounts due and payable to such Lender Party as of the date of such assignment (including without limitation amounts owing pursuant to Section 2.10 or 2.3), and such assignee shall agree to accept such assignment and assume all obligations of such Lender Party hereunder, in accordance with Section 9.07. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. Conditions Precedent to Effective Date. Article II hereof shall be effective on and as of the date (the "Effective Date"), on which each of the following conditions precedent shall have been satisfied or duly waived: (a) The Merger Agreement shall be in full force and effect and the Merger shall be consummated immediately following the funding of the Advances in all material respects in accordance with the Merger Agreement, without any waiver or amendment not consented to by the Administrative Agent of any material term, provision or condition set forth therein, and in compliance with all applicable laws. (b) The aggregate amount of cash proceeds received by the Company Shareholders in connection with the Merger shall not exceed $111,600,000. -51- (c) The Lender Parties shall be satisfied that all Existing Debt, other than the Debt of the Borrower set forth on Schedule XIV (the "Surviving Debt"), has been (or will be, immediately following the Merger) prepaid, redeemed or defeased in full or otherwise satisfied and extinguished; the aggregate principal amount of Revolving Credit Advances outstanding after giving effect to all Borrowings on the Effective Date) shall not exceed $70,000,000. (d) Before giving effect to the Merger and the other transactions contemplated by this Agreement, there shall have occurred no material adverse change in the business condition (financial or otherwise), operations, performance, properties or prospects of (x) the Borrower and its Subsidiaries, taken as a whole, since October 31, 1998, and (y) the Company and its Subsidiaries, taken as a whole, since January 30, 1999. (e) There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) could reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), operations, performance, properties or prospects of (x) the Borrower and its Subsidiaries, taken as a whole, or (y) the Company and its Subsidiaries, taken as a whole, other than the matters described on Schedule II (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of the Merger, this Agreement, any Note, any other Loan Document, any Related Document or the consummation of the transactions contemplated hereby, and there shall have been no material adverse change in the status, or financial effect on the Borrower, Company or any of their respective Subsidiaries, of the Disclosed Litigation from that described on Schedule II. (f) All governmental and third party consents and approvals necessary in connection with the Transaction and the Facilities shall have been obtained (without the imposition of any conditions that are not acceptable to the Lender Parties) and shall remain in effect; all applicable waiting periods shall have expired without any adverse action being taken by any competent authority; and no law or regulation shall be applicable in the reasonable judgment of the Lender Parties that restrains, prevents or imposes materially adverse conditions upon the Transaction or the Facilities. (g) All of the information provided by or on behalf of the Borrower or by or on behalf of the Company to the Administrative Agent and the Lender Parties prior to their commitment in respect of the Facilities (the "Pre-Commitment Information") shall, taken as a whole, be true and correct in all material respects; and no additional information shall have come to the attention of the Administrative Agent or the Lender Parties that is inconsistent in any material adverse respect with the Pre-Commitment Information or that could reasonably be expected to have a Material Adverse Effect. (h) The Borrower shall have paid all accrued fees of the Administrative Agent. (i) The Administrative Agent shall have received on or before the Effective Date the following, each dated such day (unless otherwise specified), in form and substance satisfactory to the Lender Parties (unless otherwise specified) and (except for the Notes) in sufficient copies for each Lender Party: -52- (i) The Notes payable to the order of the Lenders. (ii) Certified copies of the resolutions of the Board of Directors of the Borrower and each other Loan Party approving the Merger, this Agreement, the Notes, each other Loan Document and each Related Document to which it is or is to be a party, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to the Merger, this Agreement, the Notes, each other Loan Document and each Related Document. (iii) A copy of the charter of the Borrower and each other Loan Party and each amendment thereto, certified (as of a date reasonably near the Effective Date) by the Secretary of State of the jurisdiction of its incorporation as being a true and correct copy thereof. (iv) A copy of a certificate of the Secretary of State of the jurisdiction of its incorporation, dated reasonably near the Effective Date, listing the charter of the Borrower and each other Loan Party and each amendment thereto on file in his office and certifying that (A) such amendments are the only amendments to the Borrower's or such other Loan Party's charter on file in his office, (B) the Borrower and each other Loan Party have paid all franchise taxes to the date of such certificate and (C) the Borrower and each other Loan Party are duly incorporated and in good standing under the laws of the State of the jurisdiction of its incorporation. (v) A copy of a certificate of the Secretary of State of each state where the Borrower and each other Loan Party has a place of business, dated reasonably near the Effective Date, stating that the Borrower is duly qualified and in good standing as a foreign corporation in such State and has filed all annual reports required to be filed to the date of such certificate; and (vi) A certificate of the Borrower and each other Loan Party, signed on behalf of the Borrower and such other Loan Party by its President or a Vice President and its Secretary or any Assistant Secretary, dated the Effective Date (the statements made in which certificate shall be true on and as of the Effective Date), certifying as to (A) the absence of any amendments to the charter of the Borrower or such other Loan Party since the date of the Secretary of State's certificate referred to in Section 3.01(j)(iii), (B) a true and correct copy of the bylaws of the Borrower and such other Loan Party as in effect on the Effective Date, (C) the due incorporation and good standing of the Borrower and such other Loan Party as a corporation organized under the laws of the -53- State of Delaware, and the absence of any proceeding for the dissolution or liquidation of the Borrower, the Company or such other Loan Party, (D) the truth of the representations and warranties contained in the Loan Documents as though made on and as of the Effective Date and (E) the absence of any event occurring and continuing, or resulting from the initial Borrowing occurring on the Effective Date, that constitutes a Default. (vii) A certificate of the Secretary or an Assistant Secretary of the Borrower and each other Loan Party certifying the names and true signatures of the officers of the Borrower and such other Loan Party authorized to sign this Agreement, the Notes, each other Loan Document and each Related Document to which they are or are to be parties and the other documents to be delivered hereunder and thereunder. (viii) An amended and restated security agreement in substantially the form of Exhibit D (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Security Agreement"), duly executed by the Borrower and each Subsidiary Guarantor, together with: (A) certificates representing the Pledged Shares referred to therein accompanied by undated stock powers executed in blank and instruments evidencing the Pledged Debt referred to therein indorsed in blank, (B) signed originals of proper financing statements, to be filed on or before the Effective Date under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement, covering the Collateral described in the Security Agreement, (C) completed requests for information, dated on or before the Effective Date, listing the financing statements referred to in clause (B) above and all other effective financing statements filed in the jurisdictions referred to in clause (B) above that name the Company as debtor, together with copies of such other financing statements, (D) evidence of the completion of all other recordings and filings of or with respect to the Security Agreement that the Administrative Agent may deem necessary or desirable in order to perfect and protect the Liens created thereby, (E) evidence of the insurance required by the terms of the Security Agreement, (F) copies of the Assigned Agreements referred to in the Security Agreement, and (G) evidence that all other action that the Administrative Agent may deem necessary or desirable -54- in order to perfect and protect the first priority liens and security interests created under the Security Agreement has been taken. (ix) An amended and restated pledge agreement in substantially the form of Exhibit E (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Pledge Agreement"), duly executed by Holding, together with (A) certificates representing the Pledged Shares referred to therein accompanied by undated stock powers executed in blank, (B) signed originals of proper financing statements, to be filed on or before the Effective Date under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interest created under the Pledge Agreement, covering the Collateral, described in the Pledge Agreement, (C) completed requests for information, dated on or before the Effective Date, listing the financing statements referred to in clause (B) above and all other effective financing statements field in the jurisdictions referred to in clause (B) above that name Holding as debtor, together with copies of such other financing statements, and (D) evidence that all other action that the Administrative Agent may deem necessary or desirable to perfect and protect the first priority liens and security interests created under the Pledge Agreement has been taken. (x) An amended and restated subsidiary guaranty in substantially the form of Exhibit F (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Subsidiary Guaranty"), duly executed by each Subsidiary Guarantor. (xi) Certified copies of each of the Related Documents in existence on such date, duly executed by the parties thereto and in form and substance satisfactory to the Lender Parties, together with all agreements, instruments and other documents delivered in connection therewith, in each case certified by a Responsible Officer. (xii) Certificates, in substantially the form of Exhibit G, attesting to the Solvency of each Loan Party after giving effect to the Merger and the other transactions contemplated hereby, from its chief financial officer. (xiii) Evidence of insurance naming the Administrative Agent as insured and loss payee with such responsible and reputable insurance companies or associations, and in such amounts and covering such risks, as is satisfactory to the Lender Parties, including, without limitation, business interruption insurance. -55- (xiv) Certified copies of each employment agreement and other compensation arrangement with each executive officer of any Loan Party or any of its Subsidiaries. (xv) Certified copies of all Material Contracts of each Loan Party and its Subsidiaries, in each case certified by a Responsible Officer, to the extent not previously furnished. (xvi) A Borrowing Base Certificate. (xvii) A favorable opinion of Sullivan & Worcester, counsel for the Borrower and Holding, in substantially the form of Exhibit H hereto and as to such other matter as any Lender Party through the Administrative Agent may reasonably request. (xviii) A favorable opinion of Shearman & Sterling, counsel for the Administrative Agent, in form and substance satisfactory to the Administrative Agent. SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance. The obligation of each Appropriate Lender to make an Advance (other than a Letter of Credit Advance made by the Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (including the initial Borrowing), and the obligation of the Issuing Bank to issue a Letter of Credit (including the initial issuance) or renew a Letter of Credit and the right of the Borrower to request a Swing Line Borrowing, shall be subject to the further conditions precedent that on the date of such Borrowing or issuance or renewal (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Swing Line Borrowing, Notice of Issuance or Notice of Renewal and the acceptance by the Borrower of the proceeds of such Borrowing or of such Letter of Credit or the renewal of such Letter of Credit shall constitute a representation and warranty by the Borrower that both on the date of such notice and on the date of such Borrowing or issuance or renewal such statements are true): (i) the representations and warranties contained in each Loan Document are correct on and as of such date, before and after giving effect to such Borrowing or issuance or renewal and to the application of the proceeds therefrom, as though made on and as of such date other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Borrowing or issuance or renewal, in which case as of such specific date; (ii) no event has occurred and is continuing, or would result from such Borrowing or issuance or renewal or from the application of the proceeds therefrom, that constitutes a Default; and (iii) for each Revolving Credit Advance or Swing Line Advance made by the Swing Line Bank or issuance or renewal of any Letter of Credit, the sum of the Loan Values of the Eligible Collateral exceeds the aggregate principal amount of the Revolving Credit Advances plus -56- Swing Line Advances plus Letter of Credit Advances to be outstanding plus the aggregate Available Amount of all Letters of Credit then outstanding after giving effect to such Advance or issuance or renewal, respectively; and (b) the Administrative Agent shall have received such other approvals, opinions or documents as any Appropriate Lender through the Administrative Agent may reasonably request. SECTION 3.03. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender Party 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 the Lender Parties unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender Party prior to the earlier of the initial Borrowing or the initial issuance of a Letter of Credit specifying its objection thereto and if such earlier event consists of a Borrowing, such Lender Party shall not have made available to the Administrative Agent such Lender Party's ratable portion of such Borrowing. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties. Each of Holding and the Borrower represents and warrants that, immediately following the Merger: (a) Each Loan Party (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed is not reasonably likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding capital stock of the Borrower has been validly issued, is fully paid and non-assessable and is owned by Holding, free and clear of all Liens, except those created under the Collateral Documents. (b) Set forth on Schedule III hereto is a complete and accurate list of all Subsidiaries of each Loan Party, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, the number of shares of each class of capital stock authorized, and the number outstanding, on the date hereof and the percentage of the outstanding shares of each such class owned (directly or indirectly) by such Loan Party and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding capital stock of all of such Subsidiaries has been validly issued, is fully paid and non-assessable and is owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Collateral Documents. Each such Subsidiary (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its -57- business requires it to so qualify or be licensed except where the failure to so qualify or be licensed is not reasonably likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (c) The execution, delivery and performance by each Loan Party of this Agreement, the Notes, each other Loan Document and each Related Document to which it is or is to be a party, and the consummation of the Merger and the other transactions contemplated hereby, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party's charter or bylaws, (ii) violate any law (including, without limitation, the Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties except as identified on Schedule IV or (iv) except for the Liens created under the Loan Documents and other Liens permitted hereunder, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which is reasonably likely to have a Material Adverse Effect. (d) As of the date hereof and hereafter, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (A) the due execution, delivery, recordation, filing or performance by any Loan Party of this Agreement, the Notes, any other Loan Document or any Related Document to which it is or is to be a party, or for the consummation of the Merger or the other transactions contemplated hereby, (B) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (C) the perfection or maintenance of the Liens created by the Collateral Documents (including the priority nature thereof required by the Collateral Documents) or (D) the exercise by the Administrative Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for (i) the authorizations, approvals, actions, notices and filings listed on Schedule IV, all of which have been duly obtained, taken, given or made and are in full force and effect, and (ii) any authorizations, approvals, actions, notices and filings which the failure to obtain, take, give or make would not, in the aggregate, be reasonably likely to have a Material Adverse Effect. All applicable -58- waiting periods in connection with the Merger and the other transactions contemplated hereby have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Merger or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. (e) This Agreement has been, and each of the Notes, each other Loan Document and each Related Document when delivered hereunder will have been, duly executed and delivered by each Loan Party thereto. This Agreement is, and each of the Notes, each other Loan Document and each Related Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in accordance with its terms. (f) (i) The Consolidated balance sheet of the Borrower and its Subsidiaries as at October 31, 1998, and the related Consolidated statement of income and Consolidated statement of cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Ernst & Young, LLP, independent public accountants, and the Consolidated balance sheet of the Borrower and its Subsidiaries as at January 30, 1999 and the related Consolidated statement of income and Consolidated statement of cash flows of the Borrower and its Subsidiaries for the three months then ended, duly certified by the chief financial officer of the Borrower, copies of which have been furnished to each Lender Party, fairly present, subject, in the case of such balance sheet as at January 30, 1999, and said statement of income and cash flows for the three months then ended, to year-end audit adjustments, the Consolidated financial condition of the Borrower and its Subsidiaries as at such date and the Consolidated results of the operations of the Borrower and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles applied on a consistent basis, and since October 31, 1998, there has been no Material Adverse Change in respect of the Borrower and its Subsidiaries, taken as a whole. (ii) The Consolidated balance sheet of the Company and its Subsidiaries as at January 30, 1999, and the related Consolidated statement of income and Consolidated statement of cash flows of the Company and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, copies of which have been furnished to each Lender Party, fairly present, subject, in the case of said balance sheet as at April 3, 1999, and said statement of income and cash flows for the two months then ended, to year-end audit adjustments, the Consolidated financial condition of the Company and its Subsidiaries as at such date and the Consolidated results of the operations of the Company and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles applied on a consistent basis, and since January 30, 1999, there has been no Material Adverse Change in respect of the Company and its Subsidiaries, taken as a whole. (g) The Consolidated forecasted balance sheets, income statements and cash flows statements of the Borrower and its Subsidiaries delivered, or to be delivered, to the Lender Parties pursuant to Section 3.01(h) or 5.03 were prepared in good faith on the -59- basis of the assumptions stated therein, which assumptions were fair in the light of conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower's reasonable estimate of its future financial performance (although the actual results during the periods covered by such forecasts may differ materially from the forecasted results). (h) None of the information, exhibits or reports (other than financial projections and pro forma financial information) furnished by any Loan Party to the Administrative Agent or any Lender Party in connection with the negotiation of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading. (i) There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries, including any Environmental Action, pending or threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of the Merger, this Agreement, any Note, any other Loan Document or any Related Document or the consummation of the transactions contemplated hereby, and there has been no adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule II. (j) No proceeds of any Advance or drawings under any Letter of Credit will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934. (k) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance or drawings under any Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. (l) Following application of the proceeds of each Advance or drawing under each Letter of Credit, not more than 25 percent of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 5.02(a) or 5.02(e) or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender Party or any Affiliate of any Lender Party relating to Debt and within the scope of Section 6.01(e) will be Margin Stock. (m) All Plans of the Borrower and its ERISA Affiliates are listed on Schedule V. No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan listed on Schedule V that has resulted in or is reasonably expected to result in a material liability of any Loan Party or any ERISA Affiliate. (n) As of the last annual actuarial valuation date, the funded current liability percentage, as defined in Section 302(d)(8) of ERISA, of each Plan exceeds 90% and there has been no material adverse change in the funding status of any such Plan since such date. -60- (o) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan listed on Schedule V, copies of which have been filed with the Internal Revenue Service and furnished to the Lender Parties, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (p) Neither any Loan Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan listed on Schedule V. (q) Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan listed on Schedule V that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA. (r) Except as set forth in the financial statements referred to in this Section 4.01 and in Section 5.03, the Loan Parties and their respective Subsidiaries have no material liability with respect to "expected post retirement benefit obligations" within the meaning of Statement of Financial Accounting Standards No. 106. (s) Neither the business nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that would be reasonably likely to have a Material Adverse Effect. (t) Except as disclosed in the Environmental Due Diligence Investigation, Country General Stores dated June 1997 prepared by O'Brien & Gere Engineers, Inc., or the Environmental Due Diligence Investigation: Quality Stores, Inc. dated April, 1999 by O'Brien & Gere Engineers, Inc., or as otherwise disclosed on Schedule XV, the operations and properties of each Loan Party and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without material ongoing obligations or costs, and no circumstances exist that would be reasonably likely to (i) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could reasonably be expected to have a Material Adverse Effect or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law that could reasonably be expected to have a Material Adverse Effect. (u) Except as disclosed in the Phase I Environmental Site Assessment Reports prepared by Dames & Moore for the properties at 3915 Delaware Avenue, Des Moines, Iowa and 650 Meridian Road, Youngstown, Ohio, dated November 15, 1996, in the Environmental Due Diligence -61- Investigation, Country General Stores dated June 1997 prepared by O'Brien & Gere Engineers, Inc., or as disclosed in the Environmental Due Diligence Investigation: Quality Stores, Inc. dated April, 1999 by O'Brien & Gere Engineers, Inc., or as otherwise disclosed on Schedule XV, none of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property other than any such properties that, in the aggregate, would not be reasonably likely to have a Material Adverse Effect; there are no and never have been any underground or aboveground storage tanks on any property currently owned or operated by any Loan Party or any of its Subsidiaries other than any such storage tanks that would not be reasonably likely to have a Material Adverse Effect; there are no and never have been any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently or, to the best knowledge of the Loan Parties and their Subsidiaries, formerly owned or operated by any Loan Party or any of its Subsidiaries in a manner that would be reasonably likely to have a Material Adverse Effect; there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries in a manner that would be reasonably likely to have a Material Adverse Effect; and Hazardous Materials have not been released, discharged or disposed of on any property currently or, to the best knowledge of the Loan Parties and their Subsidiaries, formerly owned or operated by any Loan Party or any of its Subsidiaries in a manner, quantity or concentration that would be reasonably likely to have a Material Adverse Effect. (v) Except for any such actions that could not, either individually or in the aggregate, be reasonably likely to have a Material Adverse Effect, and except as disclosed in the Environmental Due Diligence Investigation, Country General Stores dated June 1997 prepared by O'Brien & Gere Engineers, Inc., or the Environmental Due Diligence Investigation: Quality Stores, Inc. dated April, 1999 by O'Brien & Gere Engineers, Inc., or as otherwise disclosed on Schedule XV, neither any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any governmental or regulatory authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries. (w) Neither any Loan Party nor any of its Subsidiaries is a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or corporate restriction that would be reasonably likely to have a Material Adverse Effect. -62- (x) Upon the filing of UCC-1 financing statements in the appropriate offices and the taking of all action contemplated by the Loan Documents, the Security Agreement will create valid and perfected security interests in the Collateral having the priority set forth in such Collateral Documents, securing the payment of the Secured Obligations. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the liens and security interests created or permitted under the Loan Documents. (y) The Borrower has filed, has caused to be filed or has been included in all Federal tax returns and all material other tax returns (state, local and foreign) required to be filed and has paid all taxes shown thereon to be due, together with applicable interest and penalties, except for any such taxes, assessments, levies, fees and other charges, the amount, applicability or validity of which is being contested in good faith and by appropriate proceedings diligently conducted and with respect to which the Borrower has established appropriate and adequate reserves in accordance with GAAP. (z) The aggregate unpaid amount, as of the date hereof, of adjustments to the Federal income tax liability of the Borrower proposed by the Internal Revenue Service with respect to Open Years does not exceed $1,000,000. No issues have been raised by the Internal Revenue Service in respect of Open Years that, in the aggregate, would be reasonably likely to have a Material Adverse Effect. (aa) The aggregate unpaid amount, as of the date hereof, of adjustments to the state, local and foreign tax liability of the Borrower proposed by all state, local and foreign taxing authorities (other than amounts arising from adjustments to Federal income tax returns) does not exceed $1,000,000. No issues have been raised by such taxing authorities that, in the aggregate, would be reasonably likely to have a Material Adverse Effect. (bb) Neither any Loan Party nor any of its Subsidiaries is an "investment company", or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder. (cc) Each Loan Party is, individually and together with its Subsidiaries, Solvent. (dd) Set forth on Schedule VI hereto is a complete and accurate list of all Existing Debt that will be outstanding immediately following the Merger, showing the principal amount that will be outstanding thereunder at such time. (ee) Set forth on Schedule VII hereto is a complete and accurate list of all real property owned in fee by any Loan Party or any of its Subsidiaries immediately following the Merger, showing as of -63- such date the street address, county or other relevant jurisdiction, state, record owner and book and estimated fair value thereof. Each Loan Party or such Subsidiary has good, marketable and insurable fee simple title to such real property, free and clear of all Liens, other than Liens created or permitted by the Loan Documents. (ff) Set forth on Schedule VIII hereto is a complete and accurate list of all leases of real property under which any Loan Party or any of its Subsidiaries is the lessee immediately following the Merger, showing as of such date the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. To the best of the Borrower's knowledge, each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms. (gg) Set forth on Schedule IX hereto is a complete and accurate list of all Material Contracts of each Loan Party and its Subsidiaries immediately following the Merger, showing as of such date the parties, subject matter and term thereof. To the best of the Borrower's knowledge (with respect to parties other than the Loan Parties and their Subsidiaries), as of the date hereof each such Material Contract has been duly authorized, executed and delivered by all parties thereto, has not been amended or otherwise modified in a manner adverse to the interests of such Loan Party, is in full force and effect and is binding upon and enforceable against all parties thereto in accordance with its terms, and as of the date hereof there exists no default under any Material Contract by any party thereto. (hh) Set forth on Schedule X hereto is a complete and accurate list of all Investments held by any Loan Party or any of its Subsidiaries immediately following the Merger, showing as of such date the amount, obligor or issuer and maturity, if any, thereof. (ii) Set forth on Schedule XI hereto is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of each Loan Party or any of its Subsidiaries immediately following the Merger, showing the jurisdiction in which registered, the registration number, the date of registration and the expiration date. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each of Holding and the Borrower will: (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970. -64- (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property (other than Permitted Liens); provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained. (c) Compliance with Environmental Laws. Comply, and cause each of its Subsidiaries and use all reasonable efforts to 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 and cause each of its Subsidiaries to obtain and renew all material Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to 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, to the extent required by, and in accordance with, the requirements of applicable Environmental Laws; provided, however, that neither the 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 proper proceedings and appropriate reserves are being maintained with respect to such circumstances or to the extent that its failure to do so could not reasonably be expected to have a Material Adverse Effect. (d) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates. (e) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises; provided, however, that the Borrower and any Subsidiary may merge with or into any Person to the extent permitted by Section 5.02(d), provided further that neither the Borrower nor any of its Subsidiaries shall be required to preserve any right, permit, license, approval, privilege or franchise if the Board of Directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower, such Subsidiary or the Lender Parties. -65- (f) Visitation Rights. At any reasonable time and from time to time, permit the Administrative Agent or any of the Lender Parties or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants, provided that the Borrower shall have received prior notice of any such discussion with such independent certified public accountants and shall have the opportunity, at its option, to participate in such discussion. (g) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (h) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted. (i) Performance of Related Documents. Perform and observe all of the terms and provisions of each Related Document to be performed or observed by it, maintain each such Related Document in full force and effect, enforce such Related Document in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Related Document such demands and requests for information and reports or for action as the Borrower is entitled to make under such Related Document. (j) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates on terms that are fair and reasonable and no less favorable to the Borrower or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate, other than the performance of its obligations under the Management Agreement and the Fenway Management Agreement and Stockholders Agreement. (k) Cash Concentration Accounts. Maintain main cash concentration accounts with Fleet or one or more banks acceptable to the Administrative Agent that have accepted the assignment of such accounts to the Administrative Agent pursuant to the Security Agreement. (l) Termination of Financing Statements. Upon the request of the Administrative Agent, and at the expense of the Borrower, within 10 days after such request, furnish to the Administrative Agent proper termination statements on Form UCC-3 covering such financing statements as the Administrative Agent may reasonably request that were listed in the completed requests for information referred to in Sections 3.01(n)(viii)(C) and 3.01(n)(ix)(C). -66- (m) Deposit Accounts. Instruct each bank at which a deposit account is maintained to transfer to a main cash concentration account at the end of each Business Day, in same day funds, an amount equal to the credit balance of such deposit account. (n) Mortgages. On or prior to August 7, 1999, and at the expense of the Borrower, deliver to the Administrative Agent deeds of trust, trust deeds, mortgages, leasehold mortgages and leasehold deeds of trust in form and substance reasonably satisfactory to the Administrative Agent (as amended, supplemented or otherwise modified from time to time in accordance with their terms, the "Mortgages") and covering the properties that the Administrative Agent determines, in its reasonable judgment, to be necessary or desirable in connection with the Facilities (provided that, in no event, shall the book value of any such property be less than $1,500,000), duly executed by the Company, together with: (A) evidence that counterparts of the Mortgages have been duly recorded on or before August 7, 1999 in all filing or recording offices that the Administrative Agent may deem necessary or desirable in order to create a valid first and subsisting Lien on the property described therein in favor of the Lender Parties and that all filing and recording taxes and fees have been paid, (B) fully paid American Land Title Association Lender's Extended Coverage title insurance policies (the "Mortgage Policies") in form and substance, with endorsements and in amounts reasonably acceptable to the Administrative Agent, issued, coinsured and reinsured by title insurers, reasonably acceptable to the Administrative Agent, insuring the Mortgages to be valid first and subsisting Liens on the property described therein, free and clear of all defects (including, but not limited to, mechanics' and materialmen's Liens) and encumbrances, excepting only Permitted Encumbrances, and providing for such other affirmative insurance (including endorsements for future advances under the Loan Documents and for mechanics' and materialmen's Liens) and such coinsurance and direct access reinsurance as the Administrative Agent may reasonably deem necessary or desirable, (C) American Land Title Association form surveys; certified to the Administrative Agent and the issuer of the Mortgage Policies in a manner reasonably satisfactory to the Administrative Agent by a land surveyor duly registered and licensed in the States in which the property described in such surveys in located and reasonably acceptable to the Administrative Agent, showing all buildings and other improvements, any off-site improvements, the location of any easements, parking spaces, rights of way, building set-back lines and other dimensional regulations and the absence of encroachments, either by such improvements or on to such property, and other defects, other than encroachments and other defects reasonably acceptable to the Agent, -67- (D) the Assignments of Leases and Rents referred to in the Mortgages, duly executed by the Company, (E) such consents and agreements of lessors and other third parties, and such estoppel letters and other confirmations, as the Administrative Agent may reasonably deem necessary or desirable and as the Borrower shall be able to obtain (using all reasonable efforts), (F) evidence of the insurance required by the terms of the Mortgages, and (G) evidence that all other action that the Administrative Agent may reasonably deem necessary or desirable in order to create valid first and subsisting Liens on the property described in the Mortgages has been taken. (o) Landlord Consents. In the case of the Borrower and its Subsidiaries, use their reasonable efforts to deliver, on or prior to August 7, 1999, at the expense of the Borrower, to the Administrative Agent consents, in form and substance reasonably satisfactory to the Administrative Agent, from the landlord under each leasehold in respect of which the Administrative Agent determines, in its reasonable judgment, that such a consent is necessary or desirable in connection with the Facilities, which consents shall provide that the Administrative Agent has a right to repossess the Inventory located on such leasehold upon the occurrence and during the continuance of an Event of Default and such other rights as may be reasonably acceptable to the Administrative Agent. (p) Interest Rate Hedging. Enter into prior to October 30, 1999, interest rate Hedge Agreements with Persons acceptable to the Administrative Agent, covering a notional amount of not less than $65,000,000 and providing for such Persons to make payments thereunder for a period of no less than 2 years to the extent that interest rates exceed 7.0%. SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each of Holding and the Borrower will not, at any time: (a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement (other than any precautionary filings filed under ss. 9-408 of the Uniform Commercial Code of any jurisdiction) that names Holding, the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income (other than assignments for collection purposes and other assignments in the ordinary course of business), excluding, however, from the operation of the foregoing restrictions the following: -68- (i) Liens created under the Loan Documents; (ii) in the case of the Borrower and its Subsidiaries, Permitted Liens; (iii) Liens existing on the date hereof and described on Schedule XIII hereto; (iv) in the case of the Borrower and its Subsidiaries, purchase money Liens upon or in real property or equipment acquired or held by the Borrower or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of any such property or equipment to be subject to such Liens, or Liens existing on any such property or equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided, however, that no such Lien shall extend to or cover any property or equipment other than the property or equipment being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property or equipment not theretofore subject to the Lien being extended, renewed or replaced; and provided further that such Debt shall not otherwise be prohibited by the terms of the Loan Documents; and (v) in the case of the Borrower and its Subsidiaries, Liens arising in connection with Capitalized Leases permitted under Section 5.02(b)(v)(C), provided that no such Lien shall extend to or cover any Collateral or assets other than the assets subject to such Capitalized Leases. (b) Debt. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt other than: (i) In the case of the Borrower, Debt in respect of Hedge Agreements designed to hedge against fluctuations in interest rates incurred in the ordinary course of business and consistent with prudent business practice with the aggregate Agreement Value thereof not to exceed $2,500,000 at any time outstanding; (ii) in the case of Holding, (A) Debt under the Loan Documents, (B) Debt in an aggregate principal amount not to exceed $10,000,000 at any time issued pursuant to the Stockholders Agreement or an Employment Agreement provided that (w) such Debt is evidenced by a promissory note in substantially the form of Exhibit B to the Stockholders Agreement or otherwise subordinated in right of payment to the Obligations of Holding under the Loan Documents on terms and conditions reasonably satisfactory to the Lender Parties, (x) such Debt shall not bear interest on a cash basis prior to the Termination Date, (y) the final maturity of such Debt is after -69- the Termination Date and (z) amortization of such Debt is not required prior to the Termination Date, and (C) Debt under the 13% Subordinated Notes due May 31, 2009 issued by Holding; (iii) in the case of the Borrower and its Subsidiaries, the Permanent Debt in an aggregate principal amount not to exceed $105,000,000; (iv) Debt owed to the Borrower by any wholly-owned Subsidiary of the Borrower or Debt owed to a wholly-owned Subsidiary of the Borrower by the Borrower or any other wholly-owned Subsidiary of the Borrower; and (v) in the case of the Borrower and any of its Subsidiaries, (A) Debt under the Loan Documents, (B) Debt secured by Liens permitted by Section 5.02(a)(iv) not to exceed in the aggregate $10,000,000 at any time outstanding, (C) Capitalized Leases not to exceed in the aggregate $20,000,000 at any time outstanding, (D) unsecured Debt incurred in the ordinary course of business for the deferred purchase price of property or services, maturing within one year from the date created, and aggregating, on a Consolidated basis, not more than $7,500,000 at any one time outstanding, (E) indorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (F) Debt (other than Debt comprised of senior bank financing or other similar working capital financing) of any Person that becomes a Subsidiary of the Borrower after the date hereof in accordance with the terms of Section 5.02(f) that is existing at the time such Person becomes a Subsidiary of the Borrower (other than Debt incurred solely in contemplation of such Person becoming a Subsidiary of the Borrower), provided that the aggregate principal amount of any such Debt of a Person acquired in any Fiscal Year (together with the aggregate amount of Capital Expenditures made in such Fiscal Year) shall not exceed the amount set forth in Section 5.02(p) for such Fiscal Year. (G) other Debt in an aggregate principal amount not to exceed $7,500,000 at any time outstanding. (c) Lease Obligations. Create, incur, assume, extend, renew, modify or amend, or permit any of its Subsidiaries to create, incur, assume, extend, renew, modify or amend, any obligations as lessee (i) for the rental or hire of real or personal property in connection with any sale and leaseback transaction, or (ii) for the rental or hire of other real or personal property of any kind under leases or agreements -70- to lease (including Capitalized Leases) having an original term of one year or more that would cause the direct and contingent liabilities of the Borrower and its Subsidiaries, on a Consolidated basis, in respect of all such obligations to exceed, in the 12 month period following incurrence, assumption, extension, renewal, modification or amendment, 5.0% of Consolidated sales of the Borrower and its Subsidiaries for the 12 month period immediately prior thereto (giving pro forma effect to all acquisitions during such period). (d) Mergers, Etc. Merge into or consolidate with any Person or permit any Person to merge into it, or permit any of its Subsidiaries to do so, except that (i) the Company may merge with and into the Borrower, provided that the Borrower shall be the surviving corporation, and (ii) any Subsidiary of the Borrower may merge into or consolidate with the Borrower or any other Subsidiary of the Borrower, provided that, in the case of any such merger or consolidation, the Person formed by such merger or consolidation shall be the Borrower or a wholly owned Subsidiary of the Borrower, as the case may be; provided, however, that in each case, immediately after giving effect thereto, no event shall occur and be continuing that constitutes a Default. (e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except: (i) sales of Inventory by the Borrower and its Subsidiaries in the ordinary course of its business and sales or other disposals of obsolete, damaged or unmarketable inventory, (ii) sales or other disposals of obsolete, worn-out or surplus equipment or other assets in the ordinary course of business, (iii) in a transaction authorized by subsection (d) of this Section, (iv) sales of assets by the Borrower or any Subsidiary of the Borrower for cash and for fair value in an aggregate amount not to exceed $5,000,000 in any Fiscal Year, provided that the Borrower shall, to the extent required by Section 2.06(b)(ii), prepay the Advances pursuant to, and in the amount and order of priority set forth in, such Section 2.06(b)(ii), (v) sales or other transfers of assets from the Borrower or any of the Borrower's Subsidiaries to the Borrower or a wholly-owned domestic Subsidiary of the Borrower, provided that such wholly-owned domestic Subsidiary shall become an additional grantor pursuant to the terms of the Security Agreement and shall become a Subsidiary Guarantor pursuant to the terms of the Subsidiary Guaranty, (vi) leases or subleases of assets in the ordinary course of business by the Borrower or any of its Subsidiaries as lessor or sublessor, as the case may be, (vii) sales or other disposals of Cash Equivalents in the ordinary course of business, and -71- (viii) sales of assets by the Borrower or any Subsidiary of the Borrower for cash and for fair value in an aggregate amount not to exceed $10,000,000 in any Fiscal Year, provided that, within nine months following the date of such sale, the Borrower or such Subsidiary shall lease back such asset. (f) Investments in Other Persons. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person other than: (i) Investments by the Borrower and its Subsidiaries in their Subsidiaries outstanding on the date hereof and additional investments in wholly owned Subsidiaries in existence immediately after the Merger; (ii) Investments by the Borrower in Hedge Agreements permitted under Section 5.02(b)(i) or Section 5.02(b)(v)(A); (iii) (A) promissory notes issued to Holding representing the unpaid purchase price of capital stock of Holding issued to managers of Holding or its Subsidiaries, and secured by a perfected pledge of such capital stock, and (B) loans and advances to employees of the Borrower and its Subsidiaries in an aggregate principal amount not to exceed $1,500,000 at any time outstanding; (iv) Investments by the Borrower and its Subsidiaries in Cash Equivalents; (v) Investments consisting of intercompany Debt permitted under Section 5.02(b)(iv); (vi) Investments existing on the date hereof and described on Schedule X hereto; (vii) Investments in the capital stock of a Person that, as a result of such investment or purchase, becomes a wholly-owned Subsidiary of the Borrower, to the extent permitted by Section 5.02(p); provided that with respect to Investments made under this clause (vii): (1) any newly acquired or created Subsidiary of the Borrower or any of its Subsidiaries shall be a wholly-owned Subsidiary thereof, shall become an additional grantor pursuant to the terms of the Security Agreement and shall become an additional subsidiary guarantor pursuant to the terms of the Subsidiary Guaranty; (2) immediately before and after giving effect thereto, no Default shall have occurred and be continuing or would result therefrom; and (3) any business acquired or invested in pursuant to this clause (vii) shall be in the same line of business as the business of the Borrower or any of its Subsidiaries; (viii) in the case of the Borrower and its Subsidiaries, other Investments in an aggregate outstanding amount not to exceed $10,000,000. (ix) Investments by Holding in the capital stock of the Borrower; and -72- (x) in the case of Holding, Investments by Holding in its capital stock as a result of the transactions described in Section 5.02(b)(ii)(B). (g) Dividends, Etc. In the case of the Borrower, declare or pay any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its capital stock or any warrants, rights or options to acquire such capital stock, now or hereafter outstanding, return any capital to its stockholders as such, make any distribution of assets, capital stock, warrants, rights, options, obligations or securities to its stockholders as such or issue or sell any capital stock or any warrants, rights or options to acquire such capital stock (other than to Holding), or permit any of its Subsidiaries to do any of the foregoing or permit any of its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of the Borrower or any warrants, rights or options to acquire such capital stock or to issue or sell any capital stock or any warrants, rights or options to acquire such capital stock (other than to the Borrower), except that, so long as no Default shall have occurred and be continuing at the time of any action described in clauses (A) through (C) below or would result therefrom, (i) the Borrower may (A) declare and pay dividends and distributions payable only in common stock of the Borrower, (B) except to the extent the Net Cash Proceeds thereof are required to be applied to the prepayment of the Advances pursuant to Section 2.06(b), purchase, redeem, retire, defease or otherwise acquire shares of its capital stock with the proceeds received from the issue of new shares of its capital stock with equal or inferior voting powers, designations, preferences and rights, and (C) declare and pay cash dividends to Holding solely to make payments required to be made by Holding under the Stockholders Agreement and the Employment Agreements (and promissory notes issued pursuant thereto), to repurchase shares of common stock of Holdings from certain members of management and to permit Holding to pay its current obligations in the ordinary course of business, provided, that the aggregate payments made pursuant to this clause (C) shall not exceed (x) $5,000,000 in Fiscal Year 2000 and (y) thereafter, the sum of $7,500,000 plus any amount permitted to be paid pursuant to clause (x) and not so used and (ii) any Subsidiary of the Borrower may (A) declare and pay cash dividends to the Borrower and (B) declare and pay cash dividends to any other wholly-owned Subsidiary of the Borrower of which it is a Subsidiary. (h) Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof. (i) Charter Amendments. Amend, or permit any of its Subsidiaries to amend, its certificate of incorporation or bylaws, unless such amendment would not have a Material Adverse Effect and does not adversely affect the rights and remedies of the Administrative Agent or any Lender Party under any Loan Document or any Related Document. (j) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in (i) accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles or (ii) Fiscal Year. -73- (k) Prepayments, Etc. of Debt. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Debt, other than the prepayment of (i) the Advances in accordance with the terms of this Agreement or (ii) any Capitalized Leases or Debt of the type described in Section 5.02(b)(v)(B), or amend, modify or change in any manner any term or condition of the Permanent Debt Documents that would impair the value of the interest or rights of the Loan Parties thereunder or that would impair the rights or interests of the Administrative Agent or any Lender Party, or permit any of its Subsidiaries to do any of the foregoing other than to prepay any Debt payable to the Borrower. (l) Amendment, Etc. of Related Documents. Cancel or terminate any Related Document or consent to or accept any cancellation or termination thereof, amend, modify or change in any manner any term or condition of any such Related Document or give any consent, waiver or approval thereunder, waive any default under or any breach of any term or condition of any such Related Document, agree in any manner to any other amendment, modification or change of any term or condition of any such Related Document or take any other action in connection with any such Related Document that could, in any such case, reasonably be expected to have a Material Adverse Effect or that would materially adverse effect the rights or interests of the Administrative Agent or any Lender Party, or permit any of its Subsidiaries to do any of the foregoing. (m) Negative Pledge. Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets other than (i) in favor of the Secured Parties or (ii) any prohibition or condition contained in the Permanent Debt Documents or (iii) any Debt that is permitted to be secured hereunder (including Capital Leases). (n) Partnerships, Etc. Become a general partner in any general or limited partnership, or permit any of its Subsidiaries to do so, other than any Subsidiary the sole assets of which consist of its interest in such partnership. (o) Speculative Transactions. Engage, or permit any of its Subsidiaries to engage, in any transaction involving commodity options or futures contracts or any similar speculative transactions (including, without limitation, take-or-pay contracts), except for Hedge Agreements required under Section 5.01(p). (p) Capital Expenditures. In the case of the Borrower, make, or permit any of its Subsidiaries to make, any Capital Expenditures (excluding the lease of any asset sold in accordance with Section 5.02(e)(viii)) that would cause the aggregate of all such Capital Expenditures made by the Borrower and its Subsidiaries in any period set forth below (together with the aggregate amount of Debt incurred during such period pursuant to Section 5.02(b)(v)(F)) to exceed the amount set forth below for such period: -74- Fiscal Year Ending In Amount --------------------- ------ 2000 $30,000,000 2001 $30,000,000 2002 $35,000,000 2003 $35,000,000 2004 $38,000,000 2005 $40,000,000 2006 $41,000,000 ; provided, however, that if, in any Fiscal Year specified above, the amount of Capital Expenditures set forth above for such period exceeds the amount of Capital Expenditures actually made by the Borrower and its Subsidiaries in such Fiscal Year, the Borrower and its Subsidiaries shall be entitled to make additional Capital Expenditures in the next Fiscal Year up to the amount of such excess. SECTION 5.03. Reporting Requirements. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the Borrower will furnish to the Lender Parties: (a) Default Notice. As soon as possible and in any event within two Business Days after a Responsible Officer of a Loan Party knows, or has reason to know, of the occurrence of a Default or any event, development or occurrence reasonably likely to have a Material Adverse Effect continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto. (b) Monthly Financials. As soon as available and in any event within 30 days after the end of each month (other than any month which is the last month of a fiscal quarter), a Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such month and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous month and ending with the end of such month and a Consolidated statements of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such month, setting forth in each case in comparative form the corresponding figures for the corresponding month of the preceding Fiscal Year, all in reasonable detail and duly certified by the chief financial officer of the Borrower. (c) Quarterly Financials. As soon as available and in any event within 45 days after the end of each of the first three quarters of each Fiscal Year, a Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period of the preceding Fiscal Year, all in reasonable detail and duly certified -75- (subject to year-end audit adjustments) by the chief financial officer of the Borrower as having been prepared in accordance with GAAP, together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower has taken and proposes to take with respect thereto and (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the Borrower in determining compliance with the covenants contained in Sections 5.04(a) through (d), provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP. (d) Annual Financials. As soon as available and in any event within 90 days after the end of each Fiscal Year, a copy of the annual audit report for such year for the Borrower and its Subsidiaries, including therein a Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal Year and a Consolidated statement of income and a Consolidated statement of cash flows of the Borrower and its Subsidiaries for such Fiscal Year, in each case accompanied by an unqualified opinion of Ernst & Young, LLP or Deloitte Touche LLP or other independent public accountants of nationally recognized standing, together with (i) a certificate of such accounting firm to the Lender Parties stating that in the course of the regular audit of the business of the Borrower and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing under Section 5.02(p) or Section 5.04, or if, in the opinion of such accounting firm, such a Default has occurred and is continuing, a statement as to the nature thereof, (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the Borrower in determining, as of the end of such Fiscal Year, compliance with the covenants contained in Sections 5.04(a) through (d), provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP and (iii) a certificate of the chief financial officer of the Borrower stating that no Default has occurred and is continuing or, if a default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower has taken and proposes to take with respect thereto. (e) Annual Forecasts. As soon as available and in any event no later than 30 days after the end of each Fiscal Year, forecasts prepared by management of the Borrower, in form reasonably satisfactory to the Administrative Agent, of balance sheets, income statements and cash flow statements on a monthly basis for the Fiscal Year following such Fiscal Year then ended. (f) ERISA Events and ERISA Reports. Promptly and in any event within 10 days after any Loan Party or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred that has resulted or is reasonably expected to result in a Material Adverse Effect, a statement of the chief financial officer of the Borrower describing -76- such ERISA Event and the action, if any, that such Loan Party or such ERISA Affiliate has taken and proposes to take with respect thereto and on the date any records, documents or other information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and information. (g) Plan Terminations. Promptly and in any event within two Business Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan. (h) Actuarial Reports. Promptly upon the request therefor by any Lender Party, a copy of the annual actuarial valuation report for any Plan. (i) Multiemployer Plan Notices. Promptly and in any event within five Business Days after receipt thereof by any Loan Party or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning (i) the imposition of Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan or (iii) the amount of liability incurred, or that may be incurred, by such Loan Party or any ERISA Affiliate in connection with any event described in clause (i) or (ii); provided, however, that such copies must be provided only if such imposition of Withdrawal Liability, reorganization or termination has resulted or is reasonably expected to result in a Material Adverse Affect, or otherwise upon the request of any Lender Party (through the Administrative Agent). (j) Litigation. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the type described in Section 4.01(i), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party or any of its Subsidiaries of the Disclosed Litigation from that described on Schedule II which could reasonably be expected to have a Material Adverse Effect. (k) Securities Reports. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that Holding sends to its stockholders generally, and copies of all regular, periodic and special reports, and all registration statements, that any Loan Party or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or with any national securities exchange. (l) Agreement Notices. Promptly upon receipt thereof, copies of all notices, requests and other documents received by any Loan Party or any of its Subsidiaries under or pursuant to any Related Document or indenture, loan or credit or similar agreement relating to Debt in an aggregate principal amount in excess of $2,500,000 regarding or related to any breach or default by any party thereto or any other event that could materially impair the value of the interests or the rights of any Loan Party or otherwise have a Material Adverse Effect and copies of -77- any amendment, modification or waiver of any provision of any Related Agreement or Material Contract or indenture, loan or credit or similar agreement and, from time to time upon request by the Administrative Agent, such information and reports regarding the Related Documents and the Material Contracts as the Administrative Agent may reasonably request. (m) Environmental Conditions. Promptly after the assertion or occurrence thereof, notice of any Environmental Action against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that (i) could reasonably be expected to have a Material Adverse Effect or (ii) cause any property described in the Mortgages to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law that could reasonably be expected to have a Material Adverse Effect. (n) Real Property. As soon as available and in any event within 90 days after the end of each Fiscal Year, a report supplementing Schedules 4.01(gg) and 4.01(hh) hereto, including an identification of all real and leased property (with a fair market value of at least $1,500,000) disposed of by the Borrower or any of its Subsidiaries during such Fiscal Year, a list and description (including the street address, county or other relevant jurisdiction, state, record owner, book value thereof, and in the case of leases of property, lessor, lessee, expiration date and annual rental cost thereof) of all real property (with a fair market value of at least $1,500,000) acquired or leased during such Fiscal Year and a description of such other changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete. (o) Insurance. As soon as available and in any event within 90 days after the end of each Fiscal Year, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for the Borrower and its Subsidiaries and containing such additional information as the Administrative Agent may reasonably specify. (p) Borrowing Base Certificate. As soon as available and in any event within 15 days after the end of each month, a Borrowing Base Certificate, as at the end of the previous month, certified by the chief financial officer of the Borrower. (q) Plan Schedule. As soon as practicable and in any event within 10 days after the Borrower or one of its ERISA Affiliates becomes a party to a Plan, an updated Schedule V listing all Plans of the Borrower and its ERISA Affiliates. (r) Other Information. Such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Loan Party or any of its Subsidiaries as the Administrative Agent may from time to time reasonably request. SECTION 5.04. Financial Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, Holding will: (a) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal quarter of Holding a Fixed Charge Coverage Ratio for the most -78- recently completed four fiscal quarters of Holding and its Subsidiaries of not less than the amount set forth below for such period. Four Fiscal Quarters Ending Closest To Ratio -------------------------------------- ----- July 31, 1999 1.05 October 31, 1999 1.05 January 31, 2000 1.05 April 30, 2000 1.05 July 31, 2000 1.05 October 31, 2000 1.05 January 31, 2001 1.05 April 30, 2001 1.05 July 31, 2001 1.05 October 31, 2001 1.05 January 31, 2002 1.10 April 30, 2002 1.10 July 31, 2002 1.10 October 31, 2002 1.10 January 31, 2003 1.10 April 30, 2003 1.10 July 31, 2003 1.10 October 31, 2003 1.10 January 31, 2004 1.10 April 30, 2004 1.10 July 31, 2004 1.10 October 31, 2004 1.10 January 31, 2005 1.00 April 30, 2005 1.00 July 31, 2005 1.00 October 31, 2005 1.00 January 31, 2006 1.00 April 30, 2006 1.00 (b) Interest Coverage Ratio. Maintain at the end of each fiscal quarter of Holding a ratio of Consolidated EBITDA for the most recently completed four fiscal quarters of Holding and its Subsidiaries to cash interest payable on all Debt of the Borrower and its Subsidiaries during such four fiscal quarter period of not less than the ratio set forth below for such fiscal quarter: Four Fiscal Quarters Ending Closest To Ratio -------------------------------------- ----- July 31, 1999 2.00 October 31, 1999 2.00 January 31, 2000 2.00 April 30, 2000 2.00 July 31, 2000 2.25 October 31, 2000 2.50 -79- January 31, 2001 2.50 April 30, 2001 2.50 July 31, 2001 2.50 October 31, 2001 2.75 January 31, 2002 2.75 April 30, 2002 2.75 July 31, 2002 2.75 October 31, 2002 3.00 January 31, 2003 3.00 April 30, 2003 3.00 July 31, 2003 3.00 October 31, 2003 3.25 January 31, 2004 3.25 April 30, 2004 3.25 July 31, 2004 3.25 October 31, 2004 3.25 January 31, 2005 3.25 April 30, 2005 3.25 July 31, 2005 3.25 October 31, 2005 3.25 January 31, 2006 3.25 April 30, 2006 3.25 ; provided, however, that for each fiscal quarter of Holding ending closest to July 31, 1999, October 31, 1999, January 31, 2000 and April 30, 2000, cash interest payable for such four fiscal quarter period shall be the actual cash interest payable during such period since the date of the consummation of the Merger multiplied by a fraction the numerator of which is twelve and the denominator of which is the number of fiscal months that have elapsed since such date. (c) Debt to EBITDA Ratio. Maintain at the end of each fiscal quarter of Holding a Debt to EBITDA Ratio of Holding and its Subsidiaries of not more than the ratio set forth below for each period set forth below. Four Fiscal Quarters Ending Closest To Ratio -------------------------------------- ----- July 31, 1999 5.00 October 31, 1999 4.75 January 31, 2000 4.75 April 30, 2000 4.75 July 31, 2000 4.25 October 31, 2000 4.00 January 31, 2001 4.00 April 30, 2001 4.00 -80- July 31, 2001 3.75 October 31, 2001 3.50 January 31, 2002 3.50 April 30, 2002 3.50 July 31, 2002 3.50 October 31, 2002 3.00 January 31, 2003 3.00 April 30, 2003 3.00 July 31, 2003 3.00 October 31, 2003 3.00 January 31, 2004 3.00 April 30, 2004 3.00 July 31, 2004 3.00 October 31, 2004 3.00 January 31, 2005 3.00 April 30, 2005 3.00 July 31, 2005 3.00 October 31, 2005 3.00 January 31, 2006 3.00 April 30, 2006 3.00 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) (i) the Borrower shall fail to pay any principal of any Advance when the same shall become due and payable or (ii) the Borrower shall fail to pay any interest on any Advance, or any Loan Party shall fail to make any other payment under any Loan Document, in each case under this clause (ii) within three Business Days after the same becomes due and payable; or (b) any representation or warranty made by any Loan Party (or any of its officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or (c) (i) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in Section 2.14, 5.01(f), 5.02 or 5.04 or (ii) any Loan Party shall fail to maintain its corporate existence or to perform or observe any term, covenant or agreement contained in Section 5.03(a), (b), (c) or (d) if such failure shall remain unremedied for 10 days; or (d) any Loan Party shall fail to perform any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 30 days after the earlier of the date on which (A) a Responsible Officer of the Borrower becomes aware of such failure or (B) written notice thereof shall have been given to the Borrower by the Administrative Agent or the Required Lenders; or -81- (e) any Loan Party or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt that is outstanding in a principal or notional amount of at least $5,000,000 either individually or in the aggregate (but excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or otherwise to cause, or to permit the holder thereof to cause, such Debt to mature; or any such Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (f) any Loan Party or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or (g) any judgment or order for the payment of money in excess of $5,000,000 shall be rendered against any Loan Party or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment, order or payment shall be disregarded for the purposes of this paragraph (g) to the extent that (A) the amount of such judgment, order or payment is covered by a valid and binding policy of insurance -82- between the defendant and the insurer covering payment thereof and (B) such insurer has been notified, and, in the case of such judgment, order or payment, has not disputed the claim made for payment, or the amount of such judgment or order or payment; or (h) any non-monetary judgment or order shall be rendered against any Loan Party or any of its Subsidiaries that can be reasonably expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (i) any Loan Document, or any material provision thereof, after delivery thereof pursuant to Section 3.01 or 5.01(l), shall for any reason (other than pursuant to the provisions thereof) cease to be valid and binding on or enforceable against any Loan Party party to it, or any such Loan Party shall so state in writing; or (j) any Collateral Document after delivery thereof pursuant to Section 3.01 or 5.01(p) shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected lien on and security interest in the Collateral purported to be covered thereby with the priority required thereunder; or (k) J.W. Childs and its Affiliates and co-investors shall cease to have beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of Holding representing 25% or more of the combined voting power of all Voting Stock of Holding so long as J.W. Childs and its Affiliates and co-investors shall have voting control of the Board of Directors of Holding; or (l) any ERISA Event shall have occurred with respect to a Plan and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of the Loan Parties and the ERISA Affiliates related to such ERISA Event) exceeds $5,000,000; or (m) any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $5,000,000 or requires payments exceeding $1,000,000 per annum; or (n) any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, and as a result of such reorganization or termination the aggregate annual contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years of such Multiemployer Plans immediately preceding the plan year in which such reorganization or termination occurs by an amount exceeding $5,000,000; or -83- (o) any Borrowing Base Deficiency shall occur and be continuing for more than five Business Days; then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Appropriate Lender to make Advances (other than Letter of Credit Advances by the Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (x) the obligation of each Lender to make Advances (other than Letter of Credit Advances by the Issuing Bank or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of Credits shall automatically be terminated and (y) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If any Event of Default shall have occurred and be continuing, the Administrative Agent may, or shall at the request of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such demand the Borrower will, pay to the Administrative Agent on behalf of the Lender Parties in same day funds at the Administrative Agent's office designated in such demand, for deposit in the L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding. If at any time the Administrative Agent determines that any funds held in the L/C Cash Collateral Account are subject to any right or claim of any Person other than the Administrative Agent and the Lender Parties or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. -84- ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01. Authorization and Action. Each Lender Party (in its capacities as a Lender, the Swing Line Bank (if applicable) and the Issuing Bank (if applicable) hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; provided, however, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender Party prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (a) may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (b) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram or telecopy) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Fleet and Affiliates. With respect to its Commitments, the Advances made by it and the Notes issued to it, Fleet shall have the same rights and powers under the Loan Documents as any other Lender Party and may exercise the same as though it were not the Administrative Agent; and the term "Lender Party" or "Lenders Parties" shall, unless otherwise expressly indicated, include Fleet in its individual capacity. Fleet and its affiliates may accept deposits from, lend money to, act as trustee under -85- indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries and any Person who may do business with or own securities of any Loan Party or any such Subsidiary, all as if Fleet were not the Administrative Agent and without any duty to account therefor to the Lender Parties. SECTION 7.04. Lender Party Credit Decision. Each Lender Party acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender Party 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 this Agreement. SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender Party agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower. For purposes of this Section 7.05(a), the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to the sum of (a) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lender Parties, (b) their respective Pro Rata Shares of the aggregate Available Amount of all Letters of Credit outstanding at such time, (c) the aggregate unused portion of their respective Term Commitments at such time and (d) their respective Unused Revolving Credit Commitments at such time; provided, that the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank shall be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments. In the event that any Defaulted Advance shall be owing by any Defaulting Lender at any time, such Lender Party's Commitment with respect to the Facility under which such Defaulted Advance was required to have been made shall be considered to be unused for purposes of this Section 7.05(a) to the extent of the amount of such Defaulted Advance. The failure of any Lender Party to reimburse the Administrative Agent promptly upon demand for its ratable share of any amount required to be paid by the Lender Party to the Administrative Agent as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse the Administrative Agent for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse the Administrative Agent for such other Lender Party's ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 7.05(a) shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. -86- (b) Each Lender Party severally agrees to indemnify the Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Issuing Bank in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Issuing Bank under the Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Issuing Bank's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender Party agrees to reimburse the Issuing Bank promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.04, to the extent that the Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower. For purposes of this Section 7.05(b), the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to the sum of (a) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lender Parties, (b) their respective Pro Rata Shares of the aggregate Available Amount of all Letters of Credit outstanding at such time, (c) the aggregate unused portion of their respective Term Commitments at such time plus (d) their respective Unused Working Revolving Credit Commitments at such time; provided that the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank shall be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments. In the event that any Defaulted Advance shall be owing by any Defaulting Lender at any time, such Lender Party's Commitment with respect to the Facility under which such Defaulted Advance was required to have been made shall be considered to be unused for purposes of this Section 7.05(b) to the extent of the amount of such Defaulted Advance. The failure of any Lender Party to reimburse the Issuing Bank promptly upon demand for its ratable share of any amount required to be paid by the Lender Parties to the Issuing Bank as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse the Issuing Bank for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse the Issuing Bank for such other Lender Party's ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained in this Section 7.05(b) shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. SECTION 7.06. Successor Administrative Agents. The Administrative Agent may resign as to any or all of the Facilities at any time by giving written notice thereof to the Lender Parties and the Borrower and may be removed as to all of the Facilities at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Administrative Agent as to such of the Facilities as to which the Administrative Agent has resigned or been removed. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation or the -87- Required Lenders' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lender Parties, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent as to all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under the Loan Documents. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent as to less than all of the Facilities and upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent as to such Facilities, other than with respect to funds transfers and other similar aspects of the administration of Borrowings under such Facilities, issuances of Letters of Credit (notwithstanding any resignation as Administrative Agent with respect to the Letter of Credit Facility) and payments by the Borrower in respect of such Facilities, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement as to such Facilities, other than as aforesaid. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent as to all of the Facilities, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent as to any Facilities under this Agreement. ARTICLE VIII GUARANTY SECTION 8.01. Guaranty. Holding unconditionally and irrevocably guarantees (the undertaking by Holding under this Article VIII being the "Guaranty") the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of each other Loan Party now or hereafter existing under the Loan Documents, whether for principal, interest, fees, commissions, expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Administrative Agent or any other Lender Party in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, Holding's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to the Administrative Agent or any other 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 such other Loan Party. -88- SECTION 8.02. Guaranty Absolute. Holding 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 Agent or any other Secured Party with respect thereto. The Obligations of Holding under this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents, and a separate action or actions may be brought and prosecuted against Holding to enforce this Guaranty, irrespective of whether any action is brought against any other Loan Party or whether any other Loan Party is joined in any such action or actions. The liability of Holding under this Guaranty shall be absolute, unconditional and irrevocable irrespective of, and Holding hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any and all of the following: (a) any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto; (b) 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 Obligations of any Loan Party under the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document (including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise); (c) any taking, exchange, release or nonperfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the Guaranteed Obligations; (d) any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents, or any other property and assets of any other Loan Party or any of its Subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of any other Loan Party or any of its Subsidiaries; (f) any failure of the Administrative Agent or any Lender Party to disclose to any Loan Party any information relating to the financial condition, operations, properties or prospects of any other Loan Party now or hereafter known to the Administrative Agent or such Lender Party, as the case may be; or (g) any other circumstance (including, without limitation, any statute of limitations or any existence of or reliance on any representation by the Administrative Agent or any Lender Party) that might otherwise constitute a defense available to, or a discharge of, Holding, any other Loan Party or any other guarantor or surety. -89- This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Administrative Agent or any Lender Party or by any other Person upon the insolvency, bankruptcy or reorganization of any other Loan Party or otherwise, all as though such payment had not been made. SECTION 8.03. Waivers and Acknowledgments. (a) Holding hereby unconditionally and irrevocably 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 Agent or any Lender Party protect, secure, perfect or insure any Lien or any property or assets subject thereto or exhaust any right or take any action against any other Loan Party or any other Person or any Collateral. (b) Holding hereby unconditionally and irrevocably waives any duty on the part of the Administrative Agent or any other Lender Party to disclose to Holding any matter, fact or thing relating to the business, operation or condition of any other Loan Party or any of its Subsidiaries or its property and assets now or hereafter known by the Administrative Agent or such Lender Party. (c) Holding hereby unconditionally 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. (d) Holding 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 8.03 are knowingly made in contemplation of such benefits. SECTION 8.04. Subrogation. Holding hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or may hereafter acquire against any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of its Obligations under this Guaranty or under 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 Agent or any Lender against such other Loan Party or any other insider guarantor or any Collateral, 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 such other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim, remedy or right, until such time as all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all of the Letters of Credit shall have expired, terminated or been cancelled and the Commitments shall have expired or terminated. If any amount shall be paid to Holding in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of all of the Guaranteed Obligations and all other amounts payable under this Guaranty, (b) the full drawing, termination, expiration or cancellation of all Letters of Credit and, (c) the Termination Date, such amount shall be held in trust for the benefit of the Administrative Agent and the other Lender Parties and shall forthwith be paid to the -90- Administrative Agent to be credited and applied to the Guaranteed Obligations and all 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) Holding shall pay to the Administrative Agent all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, (iii) all of the Letters of Credit shall have expired, terminated or been cancelled, and (iv) the Termination Date shall have occurred, the Administrative Agent and the Lender Parties will, at Holding's request and expense, execute and deliver to Holding appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer of subrogation to Holding of an interest in the Guaranteed Obligations resulting from the payment made by Holding. SECTION 8.05. Continuing Guarantee; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of all of the Guaranteed Obligations and all other amounts payable under this Guaranty, (ii) the full drawing, termination, expiration or cancellation of all Letters of Credit, and (iii) the Termination Date, (b) be binding upon Holding and its successors and assigns and (c) inure to the benefit of, and be enforceable by, the Administrative Agent and the Lender Parties and their respective successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitment or Commitments, the Advances owing to it and the 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 under this Article VIII or otherwise, in each case as provided in Section 9.07. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by 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; provided, however, that (a) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders (other than any Lender Party that is, at such time, a Defaulting Lender), do any of the following at any time: (i) change the number of Lenders or the percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of the Advances or (z) the aggregate Available Amount of outstanding Letters of Credit that, in each case, shall be required for the Lenders or any of them to take any action hereunder, (ii) reduce or limit the obligations of Holding under Section 8.01 or otherwise limit Holding's liability with respect to the Obligations owing to the Administrative Agent and the Lender Parties, (iii) release all or substantially all of the Collateral in any transaction or series of related -91- transactions, and (iv) amend this Section 9.01 and (b) no amendment, waiver or consent shall, unless in writing and signed by the Required Lenders and each Lender that has a Commitment under the Term Facilities or Revolving Credit Facility if directly affected by such amendment, waiver or consent, (i) increase the Commitments of such Lender or subject such Lender to any additional obligations, (ii) reduce the principal of, or interest on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender, (iii) postpone any date fixed for any payment of principal of, or interest on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender or (iv) change the order of application of any prepayment set forth in Section 2.06 in any manner that materially affects such Lender; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or the Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Bank, as the case may be, under this Agreement; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. SECTION 9.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopy communication) and mailed, telecopied or delivered, if to the Borrower, at its address at 3915 Delaware Avenue, Des Moines, Iowa 50313, Attention: Dean Longnecker; if to any Initial Lender or the Initial Issuing Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender Party, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender Party; and if to the Administrative Agent, at its address at One Federal Street, Boston, MA 02110, Attention: Steve Curran; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed or telecopied, be effective when deposited in the mails or transmitted by telecopier, respectively, except that notices and communications to the Administrative Agent pursuant to Article II, III or VII shall not be effective until received by the Administrative Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender Party or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right 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 9.04. Costs and Expenses. (a) The Borrower agrees to pay on demand (i) all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, duplication, appraisal, search, filing and recording fees and expenses and (B) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto, with respect to advising the Administrative Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar -92- proceeding involving creditors' rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of the Administrative Agent and the Lender Parties in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, any bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent and each Lender Party with respect thereto). (b) The Borrower agrees to indemnify and hold harmless the Administrative Agent, the Syndication Agent, the Documentation Agent, each Lender Party and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby, including, without limitation, any acquisition or proposed acquisition (including, without limitation, the Merger and any of the other transactions contemplated hereby) by Holding, the Equity Investors or any of their respective Subsidiaries or Affiliates of all or any portion of the stock or substantially all the assets of the Company or any of its Subsidiaries or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower also agrees not to assert any claim against the Administrative Agent, the Syndication Agent, the Documentation Agent, any Lender Party or any of their Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender Party other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, the Borrower shall pay to the Administrative Agent for each Appropriate Lender an amount equal to the present value (calculated in accordance with this Section 9.04(c)) of interest for the remaining portion of the relevant Interest Period on the amount of such Advance, at a rate per annum equal to the excess of (a) the existing Eurodollar Rate applicable to such Advance over (b) the Eurodollar Rate then applicable to a deemed Interest Period ending on the last day of such Interest Period. The present value of such -93- additional interest shall be calculated by discounting the amount of such interest for each day in the remaining portion of such Interest Period from such date of payment or Conversion at a rate per annum equal to the interest rate determined pursuant to the preceding sentence, and by adding all such amounts for all such days during such period. The determination by the Administrative Agent of such amount of interest shall, in the absence of manifest error, be conclusive. (d) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Administrative Agent or any Lender Party, in its sole discretion. (e) Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents. SECTION 9.05. 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 6.01 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender Party and each of its respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise 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 or such Affiliate to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing under this Agreement and the Note or Notes (if any) held by such Lender Party, irrespective of whether such Lender Party shall have made any demand under this Agreement or such Note or Notes and although such obligations may be unmatured. Each Lender Party agrees promptly to notify the Borrower 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 application. The rights of each Lender Party and its respective Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its respective Affiliates may have. SECTION 9.06. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, the Administrative Agent, the Syndication Agent and the Documentation Agent and when the Administrative Agent shall have been notified by each Initial Lender and the Initial Issuing Bank that such Initial Lender and the Initial Issuing Bank has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender Party and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender Parties. SECTION 9.07. Assignments and Participations. (a) Each Lender may and, if demanded by the Borrower (following a demand to such Lender pursuant to Section 2.16), will, assign to one or more Eligible Assignees all or a -94- portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of one or more Facilities, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an Affiliate of a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower pursuant to this Section 9.07(a) shall be arranged by the Borrower after consultation with the Administrative Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to this Section 9.07(a) unless and until such Lender shall have received one or more payments from either the Borrower or one or more Eligible Assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement, and (vi) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3500.00. (b) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's or Issuing Bank's rights and obligations under this Agreement, such Lender or Issuing Bank shall cease to be a party hereto). (c) By executing and delivering an Assignment and Acceptance, the Lender Party assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; (ii) such -95- assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any other Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender Party or any other Lender Party 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 this Agreement; (v) such assignee confirms that it is an Eligible Assignee (or the Agent and Borrower shall have consented to such assignment); (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender or Issuing Bank, as the case may be. (d) The Administrative Agent, acting for this purpose (but only for this purpose) as the agent of the Borrower, shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lender Parties and the Commitment under each Facility of, and principal amount of the Advances owing under each Facility to, each Lender Party from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lender Parties shall treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender Party at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. In the case of any assignment by a Lender, within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under a Facility pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder under such Facility, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1, A-2 or A-3 hereto, as the case may be. -96- (f) The Issuing Bank may assign to an Eligible Assignee all of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; provided, however, that (i) each such assignment shall be to an Eligible Assignee and (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3500.00. (g) Each Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it); provided, however, that (i) such Lender Party's obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. (h) Any Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender Party by or on behalf of the Borrower; provided, however, that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender Party. (i) Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time pledge or create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it), but no such pledge or grant of a security interest shall relieve a Lender of its Obligations hereunder. SECTION 9.08. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. -97- SECTION 9.09. No Liability of the Issuing Bank. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower to the extent caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank 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. SECTION 9.10. Confidentiality. Neither the Administrative Agent nor any Lender Party shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to the Administrative Agent's or such Lender Party's Affiliates and their officers, directors, employees, investors, agents and advisors and to actual or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process and (c) as requested or required by any state, federal or foreign authority or examiner regulating any Lender. SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by 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 shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the -98- other Loan Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. SECTION 9.12. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 9.13. Waiver of Jury Trial. Each of the Borrower, the Administrative Agent, the Syndication Agent, the Documentation Agent and the Lender Parties irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the Advances or the actions of the Administrative Agent, the Syndication Agent, the Documentation Agent or any Lender Party in the negotiation, administration, performance or enforcement thereof. -99- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. CENTRAL TRACTOR FARM & COUNTRY, INC. By: /s/ Adam Suttin Title: Vice President CT HOLDING, INC. By: /s/ Adam Suttin Title: Vice President FLEET NATIONAL BANK, as Administrative Agent By: /s/ John A. Skrobe Title: Vice President NATIONSBANK, N.A., as Syndication Agent By: /s/ Johns Ellington Title: Vice President DLJ CAPITAL FUNDING, INC., as Documentation Agent By: /s/ Dana F. Klein Title: Vice President -100- FIRST UNION NATIONAL BANK, as Co-Agent By: /s/ Jorge A. Gonzalez Title: Senior Vice President THE HUNTINGTON NATIONAL BANK, as Co-Agent By: /s/ John Norkus Title: Asst. Vice President U.S. BANK NATIONAL ASSOCIATION, as Co-Agent By: /s/ Elliot Jaffee Title: Vice President -101- Initial Issuing Bank FLEET NATIONAL BANK By: /s/ John A. Skrobe Title: Vice President Initial Lenders FLEET NATIONAL BANK By: /s/ John A. Skrobe Title: Vice President NATIONSBANK, N.A. By: /s/ Johns Ellington Title: Vice President DLJ CAPITAL FUNDING, INC. By: /s/ Dana F. Klein Title: Vice President -102- FIRST UNION NATIONAL BANK By: /s/ Jorge A. Gonzalez Title: Senior Vice President THE HUNTINGTON NATIONAL BANK By: /s/ John Norkus Title: Asst. Vice President U.S. BANK NATIONAL ASSOCIATION By: /s/ Elliot Jaffee Title: Vice President HELLER FINANCIAL, INC. By: /s/ Sheila C. Weimer Title: Vice President HARRIS TRUST AND SAVINGS BANK By: /s/ Christopher Fisher Title: Vice President COMERICA BANK By: /s/ Robert Porterfield Title: Vice President -103- NATIONAL CITY BANK By: /s/ Wilmer J. Jacobs Title: Officer STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY By: /s/ Brian W. Good Title: Vice President and Portfolio Manager Stein Roe & Farnham Incorporated, as Advisor to the Stein Roe Floating Rate Limited Liability Company KEY CORPORATE CAPITAL INC. By: /s/ Alexander Strazella Title: Vice president UNION BANK OF CALIFORNIA, N.A. By: /s/ J. William Bloore Title: Vice President FIRSTAR BANK, NATIONAL ASSOCIATION By: /s/ Thomas Gibbons Title: Vice President -104- EXECUTION COPY AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT As of March 31, 2000 AMENDMENT NO. 1 (this "Amendment") to the Credit Agreement (as defined herein) among Quality Stores, Inc., a Delaware corporation (formerly known as "Central Tractor Farm & Country, Inc.") (the "Borrower"), QSI Holdings, Inc., a Delaware corporation (formerly known as "CT Holding, Inc.") ("Holding"), certain of the banks, financial institutions and other institutional lenders listed on the signature pages hereof, and Fleet National Bank ("Fleet"), as administrative agent (the "Administrative Agent") for the Lender Parties (as defined in the Credit Agreement). PRELIMINARY STATEMENTS (1) The Borrower, Holding, the Initial Lenders, the Initial Issuing Bank, the Swing Line Bank and the Agents have entered into a Second Amended and Restated Credit Agreement dated as of May 7, 1999 (the "Credit Agreement"). Capitalized terms defined in the Credit Agreement and not otherwise defined in this Amendment are used herein as therein defined. (2) The Borrower has requested that the Revolving Credit Facility be increased by $60,000,000 (the "Increase Amount") from $100,000,000.00 to $160,000,000.00. (3) The Lenders set forth on Schedule I hereto (the "Amendment Lenders") are willing, on the terms and conditions stated below, to commit to make, or increase their commitment to make (as applicable), Revolving Credit Advances in the aggregate amount of the Increase Amount. (4) The Borrower and the Lenders have agreed to amend the Credit Agreement as hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: SECTION 1. Amendments of Certain Provisions of the Credit Agreement. The Credit Agreement is, upon the Amendment Effective Date (as hereinafter defined), hereby amended as follows: -2- (a) Section 1.01 of the Credit Agreement is hereby amended as follows: (i) The definition of "Applicable Margin" set forth therein is hereby amended by amending the table therein in full to read as follows:
Tranche A Term Facility/ Tranche B Term Facility Revolving Credit Facility ----------------------------------- ------------------------------------ Prime Rate Eurodollar Rate Prime Rate Eurodollar Rate Advances Advances Advances Advances -------- -------- -------- -------- Level I .625% 1.875% 2.0% 3.25% less than 2.5:1 Level II .875% 2.125% 2.0% 3.25% 2.5:1 or greater, but less than 3.0:1 Level III 1.125% 2.375% 2.25% 3.50% 3.0:1 or greater, but less than 3.5:1 Level IV 1.50% 2.75% 2.25% 3.50% 3.5:1 or greater, but less than 4.0:1 Level V 1.75% 3.0% 2.25% 3.50% 4.0:1 or greater
(ii) The definition of "Fixed Charge Coverage Ratio" set forth therein is hereby amended by inserting, before the period at the end thereof, the following proviso: "provided, further, however, that for purposes of determining the amount referred to in clause (a)(ii) herein, Capital Expenditures made by Holding and its Subsidiaries during each four-quarter period ending at the end of each fiscal quarter, beginning with the fiscal quarter period ending on April 30, 2000 and ending with the fiscal quarter period ending on July 31, 2002, shall be deemed to be $18,000,000". -3- (iii) The definition of "Lenders" set forth therein is hereby amended in full to read as follows: " Lenders" means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 9.07, or any amendment hereto. (b) The table set forth in Section 5.02(p) of the Credit Agreement is hereby amended by deleting the second line thereof and substituting therefor the following: "2001 $43,500,000". (c) Section 5.04 of the Credit Agreement is hereby amended as follows: (i) The table set forth in Section 5.04(b) is amended in full to read as follows: Four Fiscal Quarters Ending Closest To Ratio - -------------------------------------- ---------- July 31, 1999 2.00 October 31, 1999 2.00 January 31, 2000 2.00 April 30, 2000 2.00 July 31, 2000 2.20 October 31, 2000 2.25 January 31, 2001 2.25 April 30, 2001 2.25 July 31, 2001 2.50 October 31, 2001 2.50 January 31, 2002 2.75 April 30, 2002 2.75 July 31, 2002 2.75 October 31, 2002 3.00 January 31, 2003 3.00 April 30, 2003 3.00 July 31, 2003 3.00 October 31, 2003 3.25 January 31, 2004 3.25 April 30, 2004 3.25 July 31, 2004 3.25 -4- October 31, 2004 3.25 January 31, 2005 3.25 April 30, 2005 3.25 July 31, 2005 3.25 October 31, 2005 3.25 January 31, 2006 3.25 April 30, 2006 3.25 (ii) The table set forth in Section 5.04(c) is amended in full to read as follows: Four Fiscal Quarters Ending Closest To Ratio - -------------------------------------- ---------- July 31, 1999 5.00 October 31, 1999 4.75 January 31, 2000 4.75 April 30, 2000 5.25 July 31, 2000 4.75 October 31, 2000 4.50 January 31, 2001 4.35 April 30, 2001 4.25 July 31, 2001 4.15 October 31, 2001 4.00 January 31, 2002 3.75 April 30, 2002 3.75 July 31, 2002 3.50 October 31, 2002 3.00 January 31, 2003 3.00 April 30, 2003 3.00 July 31, 2003 3.00 October 31, 2003 3.00 January 31, 2004 3.00 April 30, 2004 3.00 July 31, 2004 3.00 October 31, 2004 3.00 January 31, 2005 3.00 April 30, 2005 3.00 July 31, 2005 3.00 October 31, 2005 3.00 January 31, 2006 3.00 -5- April 30, 2006 3.00 (c) Section 5.04 of the Credit Agreement is hereby amended to add after subsection (c) thereof the following new subsection (d): "(d) Revolver Paydown. Maintain outstanding, for any period of 30 consecutive calendar days, Revolving Credit Advances of not more than the amount set forth below for each corresponding period set forth below: Period Amount - ------- ---------- June 15, 2000 - August 15, 2000 $125,000,000 December 15, 2000 - February 15, 2001 $105,000,000 June 15, 2001 - August 15, 2001 $115,000,000 December 15, 2001 - February 15, 2002 $95,000,000 June 15, 2002 - August 15, 2002 $105,000,000 December 15, 2002 - February 15, 2003 $85,000,000 June 15, 2003 - August 15, 2003 $100,000,000 December 15, 2003 - February 15, 2004 $80,000,000 June 15, 2004 - August 15, 2004 $100,000,000". (d) Schedule I to the Credit Agreement is hereby amended in full to read as set forth on Exhibit A hereto. SECTION 3. Conditions of Effectiveness of this Amendment. This Amendment shall become effective as of the date first above written on the Business Day when, and only when, the following conditions shall have been satisfied (such date being the "Amendment Effective Date"). (a) The Administrative Agent shall have received Revolving Credit Notes payable to the order of the Amendment Lenders (the "Additional Revolving Credit Notes") in an amount equal to each such Amendment Lender's Revolving Credit Commitment (after giving effect to this Amendment), (ii) counterparts of this Amendment executed by the Borrower, Holding, the Required Lenders and each of the Amendment Lenders or, as to any of the Lender Parties, advice satisfactory to the Administrative Agent that such Lender Party has executed this Amendment and (iii) the Consent dated as of the date hereof (a copy of which is attached hereto), executed by each of the Loan Parties. (b) All of the consents, approvals and authorizations of, and notices and filings to or with, and other actions by, any governmental or regulatory authority or any other Person necessary in connection with any aspect of the Transactions, the Related -6- Documents, any of the Loan Documents or any of the other transactions contemplated thereby shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Lenders party hereto) and shall remain in full force and effect; all applicable waiting periods shall have expired without any action being taken by any competent authority; and no law, rule or regulation shall be applicable in the reasonable judgment of any of the Lenders party hereto that restrains, prevents or imposes materially adverse conditions upon any aspect of the Transactions, the Related Documents, or any of the Loan Documents or any of the other transactions contemplated thereby. (c) Before giving effect to this Amendment, there shall have occurred no Material Adverse Change since January 31, 2000. (d) The representations and warranties contained in each of the Loan Documents (including, without limitation, in Section 4 of this Amendment) shall be correct in all material respects on and as of the Amendment Effective Date, before and after giving effect to the additional Revolving Credit Borrowing contemplated hereby and the application of proceeds therefrom, as though made on and as of such date (other than any such representations or warranties that, by their terms, refer to a specific date other than the Amendment Effective Date, in which case as of such specific date). (e) No event shall have occurred and be continuing, or shall result from any Revolving Credit Borrowing or the application of the proceeds therefrom, that would constitute a Default. (f) All of the accrued fees and expenses of the Administrative Agent and the Lender Parties (including, without limitation, all such fees described in Section 3(h) hereto, and the accrued fees and expenses of counsel for the Administrative Agent) shall have been paid in full. (g) The Administrative Agent shall have received on or before the Amendment Effective Date the following, each dated such date (unless otherwise specified), in form and substance satisfactory to the Lenders party hereto (unless otherwise specified) and in sufficient copies for each Lender Party: (i) Certified copies of the resolutions of the Board of Directors of the Borrower and each other Loan Party approving this Amendment, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to this Amendment. (ii) A certificate of each of the Borrower and Holding, signed on behalf of the Borrower and Holding (as guarantor under the Credit Agreement), respectively, by its President or a Vice President and its Secretary or any Assistant -7- Secretary, dated the Amendment Effective Date (the statements made in which certificate shall be true on and as of the Amendment Effective Date), certifying as to (A) the absence of any amendments to the charter of such Person since the date of the Secretary of State's certificate referred to in Section 3.01(i)(iv) of the Credit Agreement, or any steps taken by the board of directors or the shareholders of such Person to effect or authorize any further amendment, supplement or other modification thereto; (B) the accuracy and completeness of the bylaws of such Person as in effect on the date on which the resolutions of the board of directors (or persons performing similar functions) of such Person referred to in clause (ii) of this Section 3(g) were adopted and on the Amendment Effective Date (a copy of which, if different from the bylaws of such Person delivered to the Lender Parties on the Effective Date of the Credit Agreement, shall be attached to such certificate); (C) the due incorporation and good standing of such Person as a corporation organized under the laws of the jurisdiction of its incorporation, and each other jurisdiction where such Person has a place of business, and the absence of any proceeding (either pending or contemplated) for the dissolution, liquidation or other termination of the existence of such Person or any of its Subsidiaries; (D) the accuracy in all material respects of the representations and warranties made by such Person in the Loan Documents (including, without limitation, Section 4 of this Amendment) to which it is or is to be a party as though made on and as of the Amendment Effective Date, before and after giving effect to this Amendment and to the application of proceeds from the Revolving Credit Facility, as though made on and as of such date (other than any such representations or warranties that, by their terms, refer to a specific date other than the Amendment Effective Date, in which case as of such specific date); and (E) the absence of any event occurring and continuing, or resulting from the Revolving Credit Borrowing contemplated hereby or the application of proceeds therefrom, that would constitute a Default. (iii) A certificate of the Secretary or an Assistant Secretary of each of the Borrower and Holding certifying the names and true signatures of the officers of the Borrower or Holding authorized to sign this Amendment, the Additional Revolving Credit Notes and the other documents to be delivered hereunder and thereunder. (iv) Such financial, business and other information regarding the Borrower and Holding and their respective property, assets and businesses as the Administrative Agent or the Lender Parties shall have requested, including, without limitation, (A) information as to possible contingent liabilities, tax matters, environmental matters, obligations under Plans, Multiemployer Plans and Welfare Plans, collective bargaining agreements and other arrangements with employees -8- and (B) a pro forma Consolidated financial statements of Holding and its Subsidiaries. (v) Certificates, in form and substance reasonably satisfactory to the Lenders party hereto, attesting to the Solvency of Holding and the Borrower, in each case individually and together with its Subsidiaries, taken as a whole, from the chief financial officer (or person performing similar functions) of each of Holding and the Borrower. (vi) A duly executed Notice of Borrowing. (vii) A favorable opinion of Sullivan & Worcester, counsel for the Borrower and Holding, in form and substance reasonably satisfactory to the Administrative Agent. (viii) Such other opinions, certificates, documents and information as the Administrative Agent or any of the Lenders party hereto through the Administrative Agent may reasonably request. (h) The Administrative Agent shall have received from the Borrower, on or before the Amendment Effective Date, the following: (i) an amendment fee equal to 0.25% of the Commitment of each Lender party hereto; and (ii) payment in full of all amounts outstanding under the Credit Agreement dated as of March 6, 2000 between the Borrower and Fleet National Bank, as lender thereunder. (i) The Administrative Agent shall have received evidence that neither the Credit Agreement (as amended hereby), nor the Advances contemplated therein will contravene any provision of any of the Permanent Debt Documents, including without limitation Section 4.14 of the Indenture dated as of March 27, 1997 (the "Indenture"). The effectiveness of this Amendment is further conditioned upon the accuracy of all of the factual matters described herein. This Amendment is further subject to the provisions of Section 9.01 of the Credit Agreement. SECTION 4. Representations and Warranties. Each of Holding and the Borrower hereby represents and warrants as follows: -9- (a) The execution, delivery and performance by each Loan Party of any of this Amendment, the Additional Revolving Credit Notes and the Consent, in each case to which it is or is to be a party, and the consummation of the transactions contemplated hereby and thereby, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party's charter or bylaws, (ii) violate any law (including, without limitation, the Securities Exchange Act of 1934), rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award applicable to such Loan Party, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture (including without limitation the Indenture), mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties other than as specified in the Credit Agreement, or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which is reasonably expected to have a Material Adverse Effect. (b) Other than those that have already been obtained and as set forth in Schedule IV to the Credit Agreement and are in full force and effect, or as would not reasonably be expected to have a Material Adverse Effect, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required to be obtained by the Loan Parties for (i) the due execution, delivery, recordation, filing or performance by any Loan Party of any of this Amendment, the Additional Revolving Credit Notes and the Consent to which it is or is to be a party, (ii) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created by the Collateral Documents (including the first priority nature thereof subject only to the Liens and security interests permitted in the Loan Documents) or (iv) the exercise by the Agent or any Lender Party of its rights under this Amendment, the Additional Revolving Credit Notes, the Consent or the remedies in respect of the Collateral pursuant to the Collateral Documents. (c) This Amendment has been, and the Additional Revolving Credit Notes and the Consent, when delivered hereunder will have been, duly executed and delivered by each Loan Party thereto. This Amendment is, and the Additional Revolving Credit Notes and the Consent, when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in accordance with its -10- terms except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or limiting creditors' rights or by equitable principles generally. (d) There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) is reasonably expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Amendment, the Additional Revolving Credit Notes or the Consent or the consummation of the transactions contemplated hereby. SECTION 5. Reference to and Effect on the Loan Documents. (a) On and after the Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended and otherwise modified hereby. (b) The Credit Agreement, the Notes and each of the other Loan Documents, except to the extent of the amendments and other modifications specifically provided above, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under and in respect of the Loan Documents, as amended and otherwise modified by this Amendment. (c) Each of the Amendment Lenders (if any) which was not a Lender prior to the effectiveness of this Amendment, shall be deemed to be a Lender and a Revolving Credit Lender under the Credit Agreement. (d) Each of the Revolving Credit Advances outstanding at the time of the effectiveness of this Amendment (the "Existing Advances") shall be re-distributed among the Revolving Credit Lenders subsequent to the effectiveness of this Amendment (the "Post-Amendment Revolving Credit Lenders"), ratably according to each such Post-Amendment Revolving Credit Lender's Revolving Credit Commitment (after giving effect to this Amendment). (e) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender Party or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. -11- SECTION 6. Costs and Expenses. The Borrower hereby agrees to pay, upon demand, all costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in connection with the preparation, execution, delivery, administration, syndication, modification and amendment of this Amendment and the other documents, instruments and agreements to be delivered hereunder, all in accordance with the terms of Section 9.04 of the Credit Agreement. SECTION 7. Execution in Counterparts. This Amendment 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 Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment. SECTION 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. -12- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. QUALITY STORES, INC. (FORMERLY KNOWN AS CENTRAL TRACTOR FARM & COUNTRY, INC.) By: /s/ Denny L. Starr Title: Senior Vice President and CFO QSI HOLDINGS, INC. (FORMERLY KNOWN AS CT HOLDING, INC.) By: /s/ Denny L. Starr Title: Senior Vice President and CFO FLEET NATIONAL BANK, as Administrative Agent By: /s/ Stephen M. Curran Title: Vice President BANK OF AMERICA, N.A., as Syndication Agent By: /s/ David H. Strickland Title: Principal Initial Issuing Bank FLEET NATIONAL BANK By: /s/ Stephen M. Curran Title: Vice President Initial Lenders FLEET NATIONAL BANK By: /s/ Stephen M. Curran Title: Vice President BANK OF AMERICAN, N.A. By: /s/ David H. Strickland Title: Principal LENDERS FLEET NATIONAL BANK By: /s/ Stephen M. Curran Title: Vice President -13- BANK OF AMERICA, N.A. By: /s/ David H. Strickland Title: Principal FIRST UNION NATIONAL BANK By: /s/ Susan T. Vitale Title: Assistant Vice President THE HUNTINGTON NATIONAL BANK By: /s/ M. W. De Loeb Title: Vice President U.S. BANK NATIONAL ASSOCIATION By: /s/ Elliot Jaffee Title: Senior Vice President HELLER FINANCIAL, INC. By: /s/ Sheila C. Weimer Title: Vice President HARRIS TRUST AND SAVINGS BANK By: /s/ Christopher Fisher Title: Vice President COMERICA BANK By: /s/ Robert Porterfield Vice President STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY By: /s/ James R. Fellows Title: Vice President Stein Roe & Farnham Incorporated, as Advisor to the Stein Roe Floating Rate Limited Liability Company KEY CORPORATE CAPITAL INC. By: /s/ Alexander Strazella Title: Vice President UNION BANK OF CALIFORNIA, N.A. By: /s/ J. William Bloore Title: Vice President -14- NATIONAL CITY BANK By: /s/ Wilmer J. Jacobs Title: Assistant Vice President FIRSTAR BANK, NATIONAL ASSOCIATION By: /s/ Thomas D. Gibbons Title: Senior Vice President STEIN ROE & FARNHAM CLO 1 LIMITED by Stein Roe & Farnham Incorporated, as Portfolio Manager By: /s/ James R. Fellows Title: Vice President BHP (USA) CAPITAL CORPORATION By: /s/ Dana L. McDougall Title: Vice President By: /s/ Richard Cameron Title: Associate THE FUJI BANK, LIMITED By: /s/ James Fayan Title: Senior Vice President and Senior Team Leader STATE STREET BANK AND TRUST COMPANY, as Trustee for GNERAL MOTORS EMPLOYEES GLOBAL GROUP PENSION TRUST By: /s/ Adam Antonik Title: Assistant Secretary STATE STREET BANK AND TRUST COMPANY, as Trustee for GNERAL MOTORS WELFARE BENEFIT TRUST By: /s/ Adam Antonik Title: Assistant Secretary SEQUILS - PILGRIM I, LTD. By: Pilgrim Investment, Inc. as its investment manager By: /s/ Elizabeth O. MacLean Title: Vice President -15- PERSEUS CDO I, LIMITED By: Massachusetts Mutual Life Insurance as Collateral Manager By: /s/ Steven J. Katz Title: SENIOR DEBT PORTFOLIO By: Boston Management and Research as Investment Advisor By: /s/ Payson F. Swaffield Title: Vice President SAAR HOLDING CDO, LIMITED By: Massachusetts Mutual Life Insurance as Collateral Manager By: /s/ Steven J. Katz Title: KZH CYPRESSTREE - 1 LLC By: /s/ Virginia Conway Title: Authorized Agent ML CBO IV (CAYMAN) LIMITED By: /s/ Mark K. Okeda, CFA Title: Executive Vice President Highland Capital Management L.P. BALANCE HIGH YIELD FUND II, LTD. By: BHF (USA) Capital Corporation, as its attorney-in-fact By: /s/ Dana L. McDougall Title: Vice President By: /s/ Richard Cameron Title: Associate CYPRESSTREE INSTITUTIONAL FUND, LLC By: CypressTree Investment Management Company, as Portfolio Manager By: /s/ Jeffery W. Heuer Title: Principal NORTH AMERICAN SENIOR FLOATING RATE FUND By: CypressTree Investment Management Company, as Portfolio Manager By: /s/ Jeffery W. Heuer Title: Principal -16- Sankaty Advisors, Inc. as Collateral Manager for GREAT POINT CLO 1999-1 LTD. By: /s/ Diane J. Exter Title: Executive Vice President Portfolio Manager Sankaty Advisors, Inc. as Collateral Manager for BRANT POINT CLO 1999-1 LTD. By: /s/ Diane J. Exter Title: Executive Vice President Portfolio Manager MONUMENT CAPITAL LTD., as Assignee By: Alliance Capital Management L.P., as Investment Manager By: Alliance Capital Management Corporation, as General Partner By: /s/ Svenker M. M. Johannson Title: Vice President KZH WATERSIDE LLC By: /s/ Virginia Conway Title: Authorized Agent ELC CAYMAN LTD. 1999 - III By: /s/ Joseph H. Tower Title: Senior Vice President PILGRIM CLO 1999-1, LTD. By: Pilgrim Investment, Inc. as its investment manager By: /s/ Elizabeth O. MacLean Title: Vice President GLENEAGLES TRADING LLC By: /s/ Kelly C. Walker Title: Vice President CONSENT Reference is made to (a) Amendment No. 1 to the Credit Agreement dated as of May 7, 1999 (the "Credit Agreement") among Quality Stores, Inc., a Delaware corporation (formerly known as "Central Tractor Farm & Country, Inc.") (the "Borrower"), QSI Holdings, Inc., a Delaware corporation (formerly known as "CT Holding, Inc.") ("Holding"), the banks, financial institutions and other institutional lenders listed on the signature pages thereof, and Fleet National Bank ("Fleet"), as administrative agent (the "Administrative Agent") for the Lender Parties (as defined in the Credit Agreement) and (b) the other Loan Documents referred to therein. Capitalized terms defined in the Credit Agreement and not otherwise defined in this Consent are used herein as therein defined. Each of the undersigned, in its capacity as (a) a Grantor under the Security Agreement, (b) a Pledgor under the Pledge Agreement, and/or (c) a Subsidiary Guarantor under the Subsidiary Guaranty, as the case may be, hereby consents to the execution and delivery of the Amendment and the performance of the Amendment and agrees that: (A) each of the Security Agreement, the Pledge Agreement and the Subsidiary Guaranty to which it is a party is, and shall continue to be, in full force and effect and is hereby in all respects ratified and confirmed on the Amendment Effective Date, except that, on and after the Amendment Effective Date, each reference to "the Credit Agreement", "thereunder", "thereof", "therein" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended and otherwise modified by the Amendment; and (B) as of the Amendment Effective Date, the Security Agreement and the Pledge Agreement to which it is a party and all of the Collateral of such Person described therein, and the Subsidiary Guaranty and the guaranty provided thereunder, do, and shall continue to, secure the payment of all of the Secured Obligations. This Consent shall be governed by, and construed in accordance with, the laws of the State of New York. Delivery of an executed counterpart of a signature page of this Consent by telecopier shall be effective as the delivery of a manually executed counterpart of this Consent. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. QUALITY STORES, INC. (FORMERLY KNOWN AS CENTRAL TRACTOR FARM & COUNTRY, INC.) By: /s/ James McKitrick Title: QSI HOLDINGS, INC. (FORMERLY KNOWN AS CT HOLDING, INC.) By: /s/ James McKitrick Title: COUNTRY GENERAL, INC. By: /s/ James McKitrick Title: QUALITY FARM & FLEET, INC. By: /s/ James McKitrick Title: QUALITY INVESTMENTS, INC. By: /s/ James McKitrick Title: QSI TRANSPORTATION, INC. By: /s/ James McKitrick Title: VISION TRANSPORTATION, INC. By: /s/ James McKitrick Title: