364-Day Term Loan Agreement among Staples, Inc., Lenders, and Fleet National Bank as Agent (October 4, 2002)
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This agreement is between Staples, Inc., several lenders, and Fleet National Bank as the agent. It sets the terms for a 364-day term loan facility, including the amount, repayment schedule, interest rates, and conditions for prepayment. Staples, Inc. agrees to various financial and operational covenants, while the lenders commit to providing the loan under specified terms. The agreement also outlines representations, warranties, and events of default. The loan must be repaid within 364 days, with options for prepayment and conversion, and includes provisions for fees, indemnities, and compliance with laws.
EX-10.1 4 a2090748zex-10_1.txt EXIBIT 10.1 Exhibit 10.1 - ------------------------------------------------------------------------------- 364-DAY TERM LOAN AGREEMENT dated as of October 4, 2002 STAPLES, INC. THE LENDERS NAMED HEREIN, FLEET NATIONAL BANK, AS AGENT, WITH FLEET SECURITIES, INC. HAVING ACTED AS ARRANGER - ------------------------------------------------------------------------------- TABLE OF CONTENTS
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-v- EXHIBITS AND SCHEDULES Exhibit A Form of Conversion Request Exhibit B Form of Term Note Exhibit C Form of Guaranty Exhibit D Form of Compliance Certificate Exhibit E Form of Assignment and Acceptance Schedule 1 Lenders Schedule 2 Guarantors Schedule 4.3 Title to Properties, Leases Schedule 4.7 Litigation Schedule 4.9 Taxes Schedule 4.12 Pension Liabilities Schedule 4.14 Environmental Compliance Schedule 4.15(a) Subsidiaries Schedule 4.15(b) Joint Ventures and Partnerships Schedule 4.15(c) Equity Interests of 50% or Less Schedule 6.1 Existing Indebtedness Schedule 6.2 Existing Liens Schedule 6.3 Existing Investments 364-DAY TERM LOAN AGREEMENT This 364-DAY TERM LOAN AGREEMENT, dated as of October 4, 2002, is by and among (a) STAPLES, INC. (the "BORROWER"), a Delaware corporation having its principal place of business at 500 Staples Drive, Framingham, MA 01701, (b) FLEET NATIONAL BANK and the other lending institutions listed on SCHEDULE 1 attached hereto (the "LENDERS") and (c) FLEET NATIONAL BANK, as administrative agent (in such capacity, the "AGENT") for the Lenders. SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION. SECTION 1.1. DEFINITIONS. The following terms shall have the meanings set forth in this Section 1 or elsewhere in the provisions of this Credit Agreement referred to below: ACQUIRED BUSINESS. The Guilbert mail order office products business to be acquired by the Borrower in accordance with the terms of Purchase Agreement. ADJUSTMENT DATE. The date which is three (3) Business Days after a Compliance Certificate is delivered by the Borrower pursuant to Section 5.4(c) hereof. AFFILIATE. Any Person that would be considered to be an affiliate of a Person under Rule 144(a) of the Rules and Regulations of the Securities and Exchange Commission, as in effect on the Closing Date, if such Person were issuing securities. AGENT. As defined in the preamble hereto. AGENT FEES. See Section 3.1 hereof. AGENT'S HEAD OFFICE. The Agent's office located at 100 Federal Street, Boston, Massachusetts 02110, or at such other location as the Agent may designate from time to time. AGENT'S SPECIAL COUNSEL. Bingham McCutchen LLP or such other counsel as may be approved by the Agent. APPLICABLE MARGIN. The Applicable Margin shall be in effect for each period commencing on an Adjustment Date through the date immediately preceding the next Adjustment Date (each a "RATE ADJUSTMENT PERIOD") based on a determination of the Fixed Charge Coverage Ratio and the Senior Debt Rating. The Fixed Charge Coverage Ratio shall be determined as at the end of the fiscal period for which financial statements and a Compliance Certificate have most recently been delivered to the Agent pursuant to section 6.4 and the Senior Debt Rating shall be determined as of the last day of the preceding Rate Adjustment Period. The Applicable Margin shall be the applicable rate PER ANNUM, corresponding to the lower of the Levels set forth in the table below (with Level I being the lowest level and Level VI being the highest level) corresponding to the Fixed Charge -2- Coverage Ratio or the Senior Debt Rating, PROVIDED THAT if the Fixed Charge Coverage Ratio and Senior Debt Rating are more than one Level apart, the Applicable Margin shall be one Level below the higher of the two applicable Levels. In the event that the Senior Debt Ratings assigned by Moody's and S&P are not equivalent, the following criteria shall determine which Level shall be applicable to the Senior Debt Rating: (a) if the Senior Debt Ratings are one Level apart, the Level applicable to the Senior Debt Rating shall be the lower of the two Levels and (b) if the Senior Debt Ratings are more than one Level apart, the Level applicable to the Senior Debt Rating shall be one Level below the higher of the two Levels. For purposes of clarity, the parties hereto acknowledge that the Applicable Margin with respect to a Eurodollar Rate Loan shall be the rate per annum set forth in column D in the table below.
Notwithstanding the foregoing, (A) for the period commencing on the Closing Date through the date immediately preceding the first Adjustment Date, the Applicable Margin shall be that corresponding to Level III in the table above, and (B) if the Borrower fails to deliver any Compliance Certificate pursuant to section 5.4(c) hereof then, for the period commencing on the date such Compliance Certificate was due through the date immediately preceding the Adjustment Date that occurs immediately following the date on which such Compliance Certificate is delivered, the Applicable Margin shall be the Applicable Margin corresponding to Level VI above, and (C) on and after the date nine (9) months after the Closing Date, each Applicable Margin set forth above shall be increased by one-quarter of one percent (0.25%). -3- APPLICABLE PENSION LEGISLATION. At any time, any pension or retirement benefits legislation (be it national, federal, provincial, territorial or otherwise) then applicable to the Borrower or any of its Subsidiaries. APPROVED FUND. Any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. APPROVED LENDING GROUP. Any of (i) the lenders under the Revolving Credit Agreement, (ii) any other Lender approved in accordance with section 15 hereof, (iii) an Affiliate of any such lenders or (iv) an Approved Fund of any such lenders. ARRANGER. Fleet Securities, Inc., a Massachusetts corporation. ASSIGNMENT AND ACCEPTANCE. See section 15.1 hereof. BALANCE SHEET DATE. February 2, 2002. BASE RATE. The higher of (a) the annual rate of interest announced from time to time by Fleet at its office in Boston, Massachusetts, as its "prime rate" and (b) one-half of one percent (1/2%) per annum above the Federal Funds Effective Rate. For the purposes of this definition, "FEDERAL FUNDS EFFECTIVE RATE" shall mean for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, 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 on such transactions received by the Agent from three funds brokers of recognized standing selected by the Agent. Changes in the Base Rate resulting from any changes in Fleet's "prime rate" shall take place immediately without notice or demand of any kind. BASE RATE LOAN. The Term Loan when bearing interest calculated by reference to the Base Rate. BORROWER. As defined in the preamble hereto. BUSINESS DAY. Any day on which banking institutions in Boston, Massachusetts and New York, New York, are open for the transaction of banking business and, in the case of a Eurodollar Rate Loan, also a day which is a Eurodollar Business Day. -4- CAPITAL STOCK. With respect to any corporation, partnership, trust, unincorporated association, joint venture, limited liability company, or other legal or business entity, any and all shares, interests, participations or other equivalent (however designated) of capital stock of such entity, any and all limited or general partnership interests and equivalent ownership interests in such entity, any and all warrants and options to purchase any of the foregoing, and any securities convertible into any of the foregoing. CAPITALIZED LEASES. Leases under which the Borrower or any of its Subsidiaries is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP. CAPITAL MARKETS OFFERING. Any public or private debt offering, including any offering of convertible securities, by the Borrower or any of its Subsidiaries. CERCLA. The Comprehensive Environmental Response, Compensation and Liability Act of 1980. CLOSING DATE. The first date on which the conditions set forth in section 8.1 hereof have been satisfied, which shall be no later than October 31, 2002. CODE. The Internal Revenue Code of 1986. COMPLIANCE CERTIFICATE. See section 5.4(c) hereof. CONFIDENTIAL INFORMATION. All information relating to the Borrower or any of its Subsidiaries that is labeled by the Borrower or such Subsidiary as confidential at the time such information is supplied by the Borrower or such Subsidiary to a Lender, other than information which (a) is public knowledge or generally available to the public, or (b) is obtained by any of the Lenders, whether prior to or after disclosure to such Lender by the Borrower or any of its Subsidiaries, from a source other than the Borrower or any of its Subsidiaries, provided that such information is not known by such Lender to have been disclosed by any party in violation of a confidentiality agreement with the Borrower or any of its Subsidiaries, any other obligation of nondisclosure with respect to the Borrower or any of its Subsidiaries or any applicable statutory or regulatory limitation imposed on the disclosure of such information. CONSOLIDATED OR CONSOLIDATED. With reference to any term defined herein, shall mean that term as applied to the accounts of the Borrower and its Subsidiaries, consolidated in accordance with GAAP. CONSOLIDATED ADJUSTED FUNDED DEBT. With respect to the Borrower and its Subsidiaries, as at any date of determination, on a consolidated basis, the aggregate of (a) Consolidated Total Funded Debt as of such date PLUS (b) (i) Rental Expense for the period of twelve consecutive months then ended MULTIPLIED BY (ii) eight (8). -5- CONSOLIDATED EBIT. Consolidated net income (or deficit) of the Borrower and its Subsidiaries, after deducting all expenses and other proper charges other than interest expense, taxes and any noncash nonrecurring charges, and excluding (a) all extraordinary and nonrecurring items of income but not losses (except to the extent such extraordinary losses are offset by such extraordinary income) and (b) all income or loss from any corporation, partnership, limited liability company, joint venture or other entity in which the Borrower or any of its Subsidiaries holds not more than a fifty percent (50%) ownership interest, as determined in accordance with GAAP; PROVIDED that (i) there shall be excluded in calculating consolidated net income (or deficit) for purposes of this definition any noncash losses attributable to the use of a fair value methodology for recognition and measurement of impairment of goodwill not identified with impaired assets in accordance with Accounting Principles Board Opinion No. 142 and (ii) for purposes of calculating the Obligor Group Requirement, the Persons included in the calculation of Consolidated EBIT shall be as set forth in the definition of Obligor Group Requirement. CONSOLIDATED TOTAL ASSETS. All assets of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. CONSOLIDATED TOTAL FUNDED DEBT. With respect to the Borrower and its Subsidiaries, as at any date of determination, on a consolidated basis, the aggregate (without duplication) of (a) all outstanding Indebtedness of the Borrower and its Subsidiaries relating to or in respect of (i) the borrowing of money or the obtaining of credit, including the issuance of notes or bonds and standby letters of credit outstanding but excluding documentary letters of credit, (ii) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), (iii) any Synthetic Leases or any Capitalized Leases, and (iv) the Securitization, PLUS (b) all Indebtedness of the type referred to in clause (a) of another Person guaranteed by the Borrower or any of its Subsidiaries. CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate amount of interest required to be paid or accrued by the Borrower and its Subsidiaries during such period on all Indebtedness of the Borrower and its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in respect of Capitalized Leases and Synthetic Leases, and including facility fees, commitment fees, usage fees, agency fees, balance deficiency fees, and similar fees or expenses in connection with the borrowing of money, as determined in accordance with GAAP. CONTINGENT LIABILITIES. Any guaranties, endorsements, obligations to reimburse the issuer in respect of any letters of credit, agreements to purchase or provide funds for the payment of obligations of others, or other liabilities which would be classified as contingent in accordance with GAAP consistently applied, excluding, however, (a) product warranties given in the ordinary course of business, (b) endorsements of checks or other negotiable instruments for deposit or collection in the ordinary course of -6- business, and (c) reimbursement obligations in respect of documentary trade letters of credit. CONVERSION REQUEST. A notice given by the Borrower to the Agent in substantially the form of EXHIBIT A hereto of the Borrower's election to convert or continue an interest rate option in accordance with section 2.5 hereof. CREDIT AGREEMENT. This 364-Day Term Loan Agreement, including the Schedules and Exhibits hereto. DEFAULT. See section 9.1 hereof. DELINQUENT LENDER. See section 11.5.3 hereof. DISTRIBUTION. The declaration or payment of any dividend on or in respect of any shares of any class of Capital Stock of the Borrower, other than dividends payable solely in shares of common stock of the Borrower; the purchase, redemption, or other retirement of any shares of any class of Capital Stock of the Borrower, directly or indirectly through a Subsidiary of the Borrower or otherwise; the return of capital by the Borrower to its shareholders as such; or any other distribution on or in respect of any shares of any class of Capital Stock of the Borrower. DOLLARS or $. Dollars in lawful currency of the United States of America. DOMESTIC LENDING OFFICE. Initially, the office of each Lender designated as such in SCHEDULE 1 attached hereto; thereafter, such other office of such Lender, if any, located within the United States that will be making or maintaining a Base Rate Loan. DOMESTIC SUBSIDIARY. Any Subsidiary that is organized under the laws of the United States of America, any state or territory thereof or the District of Columbia. DRAWDOWN DATE. The date on which the Term Loan is made in accordance with the terms hereof (the "Initial Drawdown Date"), and any date on which the interest rate option with respect to the Term Loan is converted or continued in accordance with section 2.5 hereof. EC APPROVALS. See section 8.2.3 hereof. ELIGIBLE ASSIGNEE. Any of (a) a commercial bank or finance company organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $1,000,000,000; (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having a net worth of at least $100,000,000, calculated in accordance with generally accepted accounting principles; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of -7- any such country, and having total assets in excess of $1,000,000,000, or the central bank of any country which is a member of the OECD, PROVIDED, in each case, that such bank (i) is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD and (ii) has delivered to the Agent, on the date on which the Assignment and Acceptance to which such Eligible Assignee is a party becomes effective, the forms referred to in section 3.3.3 hereof; (d) a Lender or an Affiliate of a Lender; (e) Approved Fund and (f) other Person (other than a natural person), in each case, approved in accordance with section 15.1 hereof. EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of section 3(3) of ERISA maintained or contributed to by the Borrower, other than a Guaranteed Pension Plan or a Multiemployer Plan. ENVIRONMENTAL LAWS. Any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under the Resource Conservation and Recovery Act ("RCRA"), CERCLA, the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment. ENVIRONMENTAL NOTICE. Any notice to the Borrower or any of its Subsidiaries from any third party including, without limitation: any federal, state or local governmental authority, (a) that it has been identified by the United States Environmental Protection Agency as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (b) that any Hazardous Substances which it has generated, transported or disposed of has been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that the Borrower or any of its Subsidiaries conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; or (c) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding in connection with the release of Hazardous Substances. EQUITY ISSUANCE. The sale or issuance by the Borrower or any of its Subsidiaries of any of its Capital Stock excluding (i) such issuances as part of mergers or other acquisitions and (ii) any such sales or issuances between the Borrower and its Affiliates or to any employee of the Borrower or its Affiliates. ERISA. The Employee Retirement Income Security Act of 1974. ERISA AFFILIATE. Any Person which is treated as a single employer with the Borrower under section 414 of the Code. -8- ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed Pension Plan within the meaning of section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived. EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which any bank subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against "EUROCURRENCY LIABILITIES" (as that term is used in Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Rate. EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London or such other interbank market as may be selected by the Agent in its sole discretion acting in good faith. EURODOLLAR LENDING OFFICE. Initially, the office of each Lender designated as such in SCHEDULE 1 attached hereto; thereafter, such other office of such Lender, if any, that shall be making or maintaining a Eurodollar Rate Loan. EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar Rate Loan, the rate of interest equal to (a) the rate (rounded upwards to the nearest 1/16 of one percent) per annum at which the Reference Lender's Eurodollar Lending Office is offered Dollar deposits two (2) Eurodollar Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations of such Eurodollar Lending Office are customarily conducted, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Rate Loan to which such Interest Period applies, divided by (b) a number equal to 1.00 MINUS the Eurocurrency Reserve Rate. EURODOLLAR RATE LOAN. The Term Loan or the Term Loan Amount, as applicable, when bearing interest calculated by reference to the Eurodollar Rate. EVENT OF DEFAULT. See section 9.1 hereof. FACILITY FEE. See section 3.2 hereof. FEE LETTER. See section 3.1 hereof. FINANCIAL AFFILIATE. A Subsidiary of the bank holding company controlling any Lender, which Subsidiary is engaging in any of the activities permitted by section 4(e) of the Bank Holding Company Act of 1956 (12 U.S.C. section 1843). -9- FIXED CHARGE COVERAGE RATIO. See section 7.1 hereof. FLEET. Fleet National Bank, a national banking association, in its individual capacity. FUND. Any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. GAAP OR GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (a) When used in sections 6 and 7 hereof and in the calculation of the Obligor Group Requirement, whether directly or indirectly through reference to a capitalized term used therein, means (i) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent with such principles, the accounting practice of the Borrower reflected in its financial statements for the year ended on the Balance Sheet Date, and (b) when used in general, other than as provided above, means principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time, and (ii) consistently applied with past financial statements of the Borrower adopting the same principles, provided that in each case referred to in this definition of GAAP a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in GAAP) as to financial statements in which such principles have been properly applied. GUARANTEED PENSION PLAN. Any employee pension benefit plan within the meaning of section 3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan. GUARANTIES. The Guaranty by each Guarantor in favor of the Agent for the benefit of the Lenders and the Agent, dated as of the date hereof, and each additional guaranty executed by a Subsidiary acquired or formed after the date hereof. GUARANTORS. Those Subsidiaries of the Borrower listed on SCHEDULE 2 attached hereto, as such schedule may be modified from time to time in accordance with section 3.13 hereof. GUILBERT ACQUISITION. The purchase by the Borrower of certain assets substantially on the terms set forth in the Purchase Agreement. GUILBERT ACQUISITION CLOSING DATE: The date on which the conditions set forth in the Purchase Agreement have been satisfied or waived and the Guilbert Acquisition has occurred. -10- HAZARDOUS SUBSTANCES. Any hazardous waste, as defined by 42 U.S.C. section 6903(5), any hazardous substances as defined by 42 U.S.C. section 9601(14), any pollutant or contaminant as defined by 42 U.S.C. section 9601(33) and any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental Laws. INDEBTEDNESS. All obligations, contingent and otherwise, that in accordance with GAAP should be classified upon the obligor's balance sheet as liabilities, or to which reference should be made by footnotes thereto, including in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) all obligations in respect of interest rate protection arrangements and exchange rate protection arrangements; (d) all guarantees, endorsements and other contingent obligations whether direct or indirect in respect of indebtedness of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit; and (e) every obligation of such Person under any Synthetic Lease. INITIAL DRAWDOWN DATE. See definition of Drawdown Date. INTEREST PAYMENT DATE. (a) As to any Base Rate Loan, the last day of the calendar quarter which includes the Drawdown Date thereof and (b) as to any Eurodollar Rate Loan in respect of which the Interest Period is (i) 3 months or less, the last day of such Interest Period and (ii) more than 3 months, the date that is 3 months from the first day of such Interest Period, the last day of each 3 month period thereafter, and, in addition, the last day of such Interest Period. INTEREST PERIOD. (a)(i) for any Base Rate Loan, the last day of the calendar quarter; and (ii) for any Eurodollar Rate Loan, 1, 2, 3 or 6 months, and (b) thereafter, each period commencing on the last day of the next preceding Interest Period and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; PROVIDED that all of the foregoing provisions relating to Interest Periods are subject to the following: (A) if any Interest Period with respect to a Eurodollar Rate Loan would otherwise end on a day that is not a Eurodollar Business Day, that Interest Period shall be extended to the next succeeding Eurodollar Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Eurodollar Business Day; -11- (B) if any Interest Period with respect to a Base Rate Loan would end on a day that is not a Business Day, that Interest Period shall end on the next succeeding Business Day; (C) if the Borrower shall fail to give notice as provided in section 2.5 hereof, the Borrower shall be deemed to have requested a conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and the continuance of a Base Rate Loan as a Base Rate Loan on the last day of the then current Interest Period with respect thereto; (D) any Interest Period relating to any Eurodollar Rate Loan that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Eurodollar Business Day of a calendar month; and (E) any Interest Period that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. INVESTMENTS. All expenditures made and all liabilities incurred (contingently or otherwise) for the acquisition of stock or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, or in respect of any guaranties (or other commitments as described under Indebtedness), or obligations of, any Person. In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any Investment represented by a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding; (b) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (c) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution); (d) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (b) may be deducted when paid; and (e) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof. JOINDER AGREEMENTS. Joinder agreements in a form of acceptable to the Agent pursuant to which Subsidiaries of the Borrower become parties to and agree to be bound by the provisions of the Guaranty as a Guarantor. LENDER AFFILIATE. With respect to any Lender, (a) an Affiliate of such Lender or (b) any Approved Fund. LENDERS. As defined in the preamble hereto, which term shall include any other Person who becomes an assignee of any rights and obligations of a Lender pursuant to -12- section 16 hereof. Unless the context otherwise requires, the term "Lenders" includes the Agent in its capacity as lender of the Term Loan. LOAN DOCUMENTS. This Credit Agreement, the Term Notes, the Guaranties, the Fee Letter and any other documents delivered pursuant to this Credit Agreement. MARGIN REGULATIONS. See section 4.13 hereof. MATURITY DATE. The date 364 days after the Closing Date or such earlier date as the Term Loan is paid or payable in full, or in the event that the Borrower does not consummate the Guilbert Acquisition on or before December 31, 2002, then December 31, 2002. MEASUREMENT PERIOD. See section 7.1 hereof. MOODY'S. Moody's Investors Service, Inc. MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of section 3(37) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate. NET CASH CAPITAL MARKETS OFFERING PROCEEDS. With respect to any Capital Markets Offering, the excess of the gross cash proceeds received by such Person for Capital Markets Offering after deduction of all reasonable and customary transaction expenses (including, without limitation, underwriting discounts and commissions) actually incurred in connection with such an offering. NET CASH EQUITY ISSUANCE PROCEEDS. With respect to any Equity Issuance, the excess of the gross cash proceeds received by such Person for such Equity Issuance after deduction of all reasonable and customary transaction expenses (including, without limitation, underwriting discounts and commissions) actually incurred in connection with such a sale or other issuance. OBLIGATIONS. All indebtedness, obligations and liabilities of any of the Borrower and its Subsidiaries arising or incurred under this Credit Agreement or any of the other Loan Documents or in respect of the Term Loan or other instruments at any time evidencing any thereof, whether existing on the date of this Credit Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise. OBLIGOR GROUP. Collectively, the Borrower and the Guarantors (including any Subsidiary of the Borrower which as of any date of determination has become a Guarantor pursuant to the provisions of this Credit Agreement). -13- OBLIGOR GROUP REQUIREMENT. The requirement that, as of any date of determination, Consolidated EBIT of the Obligor Group for the Measurement Period most recently ended shall not be less than $275,000,000. PBGC. The Pension Benefit Guaranty Corporation created by section 4002 of ERISA and any successor entity or entities having similar responsibilities. PERMITTED LIENS. Liens, security interests and other encumbrances permitted under section 6.2 hereof. PERSON. Any individual, corporation, limited liability company, partnership, limited liability partnership, trust, unincorporated association, business, or other legal entity, and any government or any governmental agency or political subdivision thereof. PURCHASE AGREEMENT: The Sale and Purchase Agreement, dated as of August 21, 2002, by and among Guilbert, Reliable UK, VPC Systems and the Borrower. RATE ADJUSTMENT PERIOD. See definition of Applicable Margin. REAL ESTATE. All real property at any time owned or leased (as lessee or sublessee) by the Borrower or any of its Subsidiaries. RECORD. The grid attached to a Term Note, or the continuation of such grid, or any other similar record, including computer records, maintained by any Lender with respect to any Loan referred to in such Term Note. REFERENCE LENDER. Fleet. RENTAL EXPENSE. All obligations of the Borrower or any of its Subsidiaries under any rental agreements or leases of real property relating to retail stores, other than obligations in respect of Capitalized Leases and Synthetic Leases. REPLACEMENT LENDER. See section 3.12 hereof. REQUIRED LENDERS. As of any date, the Lenders holding more than fifty percent (50%) of the outstanding principal amount of the Term Loan on such date. REVOLVING CREDIT AGREEMENT. That certain Revolving Credit Agreement, dated as of June 21, 2002, among (a) the Borrower, (b) the lenders named therein, (c) Fleet, as administrative agent, (d) Citicorp USA, Inc. and Wachovia Bank, National Association, as co-syndication agents, and (e) HSBC Bank USA and JPMorgan Chase Bank, as co-documentation agents. S&P. Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. -14- SECURITIZATION. The securitization by the Borrower and certain of its Subsidiaries of up to $300,000,000 of third-party accounts receivable on the terms and conditions set forth in the (a) Receivables Purchase Agreement, dated as of October 27, 2000, among the Borrower, Lincolnshire Funding, LLC, Corporate Receivables Corporation, the financial institutions from time to time party thereto as Purchasers, and Citicorp North America, Inc., as Agent, and (b) Receivables Sale Agreement, dated as of October 27, 2000, among the Borrower, Quill Corporation, Staples Contract & Commercial, Inc. and Hackensack Funding, LLC, each as delivered to the Agent prior to the Closing Date and as in effect on the Closing Date, and in each case as amended with the consent of the Lenders, and any replacement or successor accounts receivable financing facility which contains terms and conditions which are substantially similar to the securitization described in clauses (a) and (b). SENIOR DEBT RATING. The rating issued by S&P or Moody's with respect to unsecured Indebtedness of the Borrower not maturing within twelve months, issued without third-party credit enhancement, and not subordinated by its term in right of payment to other Indebtedness of the Borrower. In the event that no such ratings are available on such unsecured Indebtedness of the Borrower, the Senior Debt Rating shall be the rating implied, in the reasonable discretion of the Agent, to such unsecured Indebtedness by reference to such other Indebtedness of the Borrower as shall be so rated. STOCKHOLDERS' EQUITY. As at any date of determination, the sum of (a) the capital accounts including common stock and preferred stock, but excluding treasury stock of the Borrower PLUS (b) the earned surplus and capital surplus of the Borrower (excluding adjustments to translate foreign assets and liabilities for changes in foreign exchange rates made in accordance with Financial Accounting Standards Board Statement No. 52), as determined in accordance with GAAP. SUBORDINATED DEBT. Unsecured Indebtedness of the Borrower or any of its Subsidiaries that is expressly subordinated and made junior to the payment and performance of the Obligations, and evidenced as such by a written instrument containing subordination provisions in form and substance approved by the Required Lenders in writing. SUBSIDIARY. Any corporation, association, trust, or other business entity of which the designated parent shall at any time own directly or indirectly through a Subsidiary or Subsidiaries at least a majority (by number of votes) of the outstanding Voting Stock and the accounts of which are consolidated with the Borrower in accordance with GAAP. SUBSTITUTED LENDER. See section 3.12 hereof. SYNTHETIC LEASE. Any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes. -15- TERM LOAN. The term loan made or to be made by the Lenders to the Borrower on the Closing Date in the principal amount of $325,000,000 pursuant to section 2.1. TERM LOAN AMOUNT. With respect to each Lender, such Lender's Term Loan Percentage MULTIPLIED BY the amount of the Term Loan, as the same may be reduced from time to time in accordance with the terms of this Credit Agreement. TERM LOAN PERCENTAGE. With respect to each Lender, the percentage set forth on SCHEDULE 1 attached hereto. TERM NOTE. See section 4.2. VOTING STOCK. Stock or similar interests, of any class or classes (however designated), the holders of which are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the corporation, association, trust or other business entity involved, whether or not the right so to vote exists by reason of the happening of a contingency. SECTION 1.2. RULES OF INTERPRETATION. (a) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Credit Agreement. (b) The singular includes the plural and the plural includes the singular. (c) A reference to any law includes any amendment or modification to such law. (d) A reference to any Person includes its permitted successors and permitted assigns. (e) Accounting terms not otherwise defined herein have the meanings assigned to them by generally accepted accounting principles applied on a consistent basis by the accounting entity to which they refer. (f) The words "INCLUDE", "INCLUDES" and "INCLUDING" are not limiting. (g) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts, have the meanings assigned to them therein, with the term "instrument" being that defined under Article 9 of the Uniform Commercial Code. -16- (h) Reference to a particular "section" refers to that section of this Credit Agreement unless otherwise indicated. (i) The words "HEREIN", "HEREOF", "HEREUNDER" and words of like import shall refer to this Credit Agreement as a whole and not to any particular section or subdivision of this Credit Agreement. (j) Unless otherwise expressly indicated, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each mean "to but excluding," and the word "through" means "to and including." (k) This Credit Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are, however, cumulative and are to be performed in accordance with the terms thereof. (l) This Credit Agreement and the other Loan Documents are the result of negotiation among, and have been reviewed by counsel to, among others, the Agent and the Borrower and are the product of discussions and negotiations among all parties. Accordingly, this Credit Agreement and the other Loan Documents are not intended to be construed against the Agent or any of the Lenders merely on account of the Agent's or any Lender's involvement in the preparation of such documents. SECTION 2. THE 364-DAY TERM LOAN FACILITY. SECTION 2.1. COMMITMENT TO LEND. (a) subject to the terms and conditions set forth in this Credit Agreement, each Lender agrees to lend to the Borrower on the Initial Drawdown Date the amount equal to its Term Loan Percentage of the principal amount of Three Hundred Twenty-Five Million Dollars ($325,000,000); (b) this Credit Agreement, and the obligations of the Lenders hereunder (including the obligation of the Lenders to lend the Term Loan to the Borrower), shall terminate, and the provisions of this Credit Agreement shall no longer have force or effect, if the Term Loan has not been advanced to the Borrower on or before December 31, 2002; and (c) the Agent's Special Counsel shall hold the Term Notes in escrow and (i) shall release such Term Notes to the Lenders on the Initial Drawdown Date or (ii) shall return such Term Notes to the Borrower upon the termination of this Credit Agreement and the obligations of the Lenders hereunder in accordance with this section 2.1. SECTION 2.2. THE TERM NOTES. The Term Loan shall be evidenced by separate promissory notes of the Borrower in substantially the form of EXHIBIT B hereto (each a "TERM NOTE"), dated the Closing Date (or such other date on which a Lender may become a party hereto in accordance with section 15 hereof) and completed with appropriate insertions. One Term Note shall be payable to the order of each Lender in a principal amount equal to such Lender's Term Loan Amount and representing the obligation of the Borrower to pay to such Lender such principal amount, plus interest accrued -17- thereon, as set forth below. The Borrower irrevocably authorizes each Lender to make or cause to be made a notation on such Lender's Term Note Record reflecting the original principal amount of such Lender's Term Loan Percentage of the Term Loan and, at or about the time of such Lender's receipt of any principal payment on such Lender's Term Note, an appropriate notation on such Lender's Term Note Record reflecting such payment. The aggregate unpaid amount set forth on such Lender's Term Note Record shall be PRIMA FACIE evidence of the principal amount thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording, any such amount on such Lender's Term Note Record shall not affect the obligations of the Borrower hereunder or under any Term Note to make payments of principal of and interest on any Term Note when due. SECTION 2.3. MATURITY AND OTHER REPAYMENTS OF TERM LOAN. 2.3.1. MATURITY. The Borrower promises to pay on the Maturity Date, and there shall become absolutely due and payable on the Maturity Date, all of the outstanding principal amount of the Term Loan on such date, together with any and all accrued and unpaid interest thereon. 2.3.2. OPTIONAL PREPAYMENTS OF TERM LOAN. The Borrower shall have the right, at its election, to prepay the Term Loan on or before the Maturity Date, as a whole or in part, at any time, subject to section 3.10, without penalty or premium. The Borrower shall give the Agent, prior written notice no later than 1:00 p.m., Boston time, three (3) Business Days' prior to any proposed prepayment pursuant to this section 2.3.2 of the Term Notes, and specifying the proposed date of prepayment and the principal amount to be prepaid. Each such partial prepayment of the Term Loan shall be in an integral multiple of $5,000,000, shall be accompanied by the payment of accrued interest on the principal prepaid to the date of prepayment. 2.3.3. MANDATORY PREPAYMENTS. The Borrower shall pay to the Agent for the respective accounts of the Lenders an amount equal to one hundred percent (100%) of (i) Net Cash Equity Issuance Proceeds or (ii) Net Cash Capital Markets Offering Proceeds other than $325,000,000 in debt offering proceeds described in the offering memorandum dated September 25, 2002, in each case, concurrently with the receipt thereof by the Borrower or any Subsidiary. 2.3.4. APPLICATION OF PAYMENTS. All payments made shall be allocated among the Lenders in proportion, as nearly as practicable, to the respective outstanding amounts of each Lender's Term Loan Percentage, with adjustments to the extent practicable to equalize any prior prepayments not exactly in proportion. No amounts repaid with respect to the Term Loan may be reborrowed. SECTION 2.4. INTEREST ON TERM LOAN. 2.4.1. INTEREST RATES. Except as otherwise provided in section 3.11: -18- (a) Each Base Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the Interest Period with respect thereto at the rate per annum equal to the Base Rate. (b) Each Eurodollar Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the Interest Period with respect thereto at the Eurodollar Rate determined for such Interest Period PLUS the Applicable Margin. The Borrower promises to pay interest in arrears on each Interest Payment Date. SECTION 2.5. CONVERSION OPTIONS. SECTION 2.5.1. CONVERSION OF THE TERM LOAN. The Borrower may elect from time to time to convert the interest rate with respect to the Term Loan, PROVIDED that (a) with respect to any such conversion of a Eurodollar Rate Loan to a Base Rate Loan, the Borrower shall give the Agent at least one (1) Business Day's prior written notice of such election; (b) with respect to any such conversion of a Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent at least three (3) Eurodollar Business Days' prior written notice of such election; (c) with respect to any such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such conversion shall only be made on the last day of the Interest Period with respect thereto; and (d) no Base Rate Loan may be converted into a Eurodollar Rate Loan when any Default or Event of Default has occurred and is continuing. Each Conversion Request relating to the conversion of the Term Loan to a Eurodollar Rate Loan shall be irrevocable by the Borrower. SECTION 2.5.2. CONTINUATION OF A EURODOLLAR RATE LOAN. Any Eurodollar Rate Loan may be continued as a Eurodollar Rate Loan upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in section 2.5.1 hereof; PROVIDED that no Eurodollar Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default of which officers of the Agent active upon the Borrower's account have actual knowledge. In the event that the Borrower fails to provide any such notice with respect to continuation of a Eurodollar Rate Loan as such, then such Eurodollar Rate shall be automatically converted to a Base Rate Loan on the last day of the Interest Period relating thereto. The Agent shall notify the Lenders and the Borrower promptly when any such automatic conversion contemplated by this section 2.5.2 is scheduled to occur. SECTION 3. CERTAIN GENERAL PROVISIONS; FEES. SECTION 3.1. CLOSING AND AGENT FEES. The Borrower shall pay (a) to the Agent for the accounts of the Lenders on the Closing Date a closing fee as set forth in that certain letter agreement, dated as of the September 18, 2002 (as such agreement may be amended and in effect from time to time, the "FEE LETTER") by and among the Borrower, the Agent and -19- the Arranger and (b) the fees (the "AGENT FEES") to the Agent and the Arranger in the amounts and at the times set forth in the Fee Letter. SECTION 3.2. FACILITY FEE During the period from the date 31 days after the Closing Date through but excluding the Initial Drawdown Date, the Borrower agrees to pay to the Agent for the accounts of the Lenders in accordance with their respective Term Loan Percentages a facility fee (the "FACILITY FEE"), which shall be calculated for each day at a per annum rate of 0.150% on the undrawn principal amount of the Term Loan. The Facility Fee shall be payable quarterly in arrears on the last day of each calendar quarter for the calendar quarter then ended commencing on the first such date following the date 31 days after the Closing Date, with a final payment on the Initial Drawdown Date or any earlier date that the obligation of the Lenders to lend the Term Loan to the Borrower shall terminate. SECTION 3.3. FUNDS FOR PAYMENTS. SECTION 3.3.1. PAYMENTS TO AGENT. All payments of principal, interest and any other fees or amounts due hereunder or under any of the other Loan Documents shall be made to the Agent, for the respective accounts of the Lenders and the Agent, at the Agent's Head Office or at such other location in the Boston, Massachusetts area that the Agent may from time to time designate, in each case in immediately available funds. SECTION 3.3.2. NO OFFSET, ETC. All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, other than (a) with respect to taxes based upon the Agent's or any Lender's net income, or (b) with respect to amounts owing to a Lender that (i) is not incorporated under the laws of the United States of America or a state thereof and (ii) has not delivered to the Agent the forms referred to in section 3.3.3 hereof, the Borrower will pay to the Agent, for the account of the Lenders or (as the case may be) the Agent, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Lenders or the Agent to receive the same net amount which the Lenders or the Agent would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Agent certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document. SECTION 3.3.3. WITHHOLDING. Each Lender and the Agent that is not a U.S. Person as defined in Section 7701(a)(30) of the Code for federal income tax purposes (a "NON- -20- U.S. LENDER") hereby agrees that, if and to the extent it is legally able to do so, it shall, on the date it becomes a Lender hereunder, deliver to the Borrower and the Agent such certificates, documents or other evidence, as and when required by the Code or Treasury Regulations issued pursuant thereto, including (a) in the case of a Non-U.S. Lender that is a "bank" for purposes of Section 881(c)(3)(A) of the Code, two (2) duly completed copies of Internal Revenue Service Form W-8BEN or Form W-8ECI and any other certificate or statement of exemption required by Treasury Regulations, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Lender or the Agent establishing that with respect to payments of principal, interest or fees hereunder it is (i) not subject to United States federal withholding tax under the Code because such payment is effectively connected with the conduct by such Lender or Agent of a trade or business in the United States or (ii) totally exempt from United States federal withholding tax under a provision of an applicable tax treaty and (b) in the case of a Non-U.S. Lender that is not a "bank" for purposes of Section 881(c)(3)(A) of the Code, a certificate in form and substance reasonably satisfactory to the Agent and the Borrower and to the effect that (i) such Non-U.S. Lender is not a "bank" for purposes of Section 881(c)(3)(A) of the Code, is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any governmental authority, any application made to a rating agency or qualification for any exemption from any tax, securities law or other legal requirements, (ii) is not a ten (10) percent shareholder for purposes of Section 881(c)(3)(B) of the Code and (iii) is not a controlled foreign corporation receiving interest from a related person for purposes of Section 881(c)(3)(C) of the Code, together with a properly completed Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms). Each Lender or the Agent agrees that it shall, promptly upon a change of its lending office or the selection of any additional lending office, to the extent the forms previously delivered by it pursuant to this section are no longer effective, and promptly upon the Borrower's or the Agent's reasonable request after the occurrence of any other event (including the passage of time) requiring the delivery of a Form W-8BEN, Form W-8ECI, Form W-8 or W-9 in addition to or in replacement of the forms previously delivered, deliver to the Borrower and the Agent, as applicable, if and to the extent it is properly entitled to do so, a properly completed and executed Form W-8BEN, Form W-8ECI, Form W-8 or W-9, as applicable (or any successor forms thereto). SECTION 3.4. COMPUTATIONS. All computations of interest on a Base Rate Loan and other fees shall be based on a 365-day or 366-day year, as applicable, and all computations of interest on a Eurodollar Rate Loan shall be based on a 360-day year, and, in each case, paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term "INTEREST PERIOD" with respect to a Eurodollar Rate Loan, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. SECTION 3.5. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the commencement of any Interest Period relating to any Eurodollar Rate Loan, the Agent -21- shall determine or be notified by the Required Lenders that adequate and reasonable methods do not exist for ascertaining the Eurodollar Rate that would otherwise determine the rate of interest to be applicable to any Eurodollar Rate Loan during any Interest Period, the Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower and the Lenders) to the Borrower and the Lenders. In such event (a) any Conversion Request with respect to a Eurodollar Rate Loan shall be automatically withdrawn and shall be deemed a request for a Base Rate Loan, (b) each Eurodollar Rate Loan will automatically, on the last day of the then current Interest Period relating thereto, become a Base Rate Loan, and (c) the obligations of the Lenders to make a Eurodollar Rate Loan shall be suspended until the Agent or the Required Lenders, as applicable, determine that the circumstances giving rise to such suspension no longer exist, whereupon the Agent or, as the case may be, the Agent upon the instruction of the Required Lenders, shall so notify the Borrower and the Lenders. SECTION 3.6. ILLEGALITY. Notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain a Eurodollar Rate Loan, such Lender shall forthwith give notice of such circumstances to the Borrower and the other Lenders and thereupon the commitment of such Lender to make or convert to a Eurodollar Rate Loan shall forthwith be suspended and such Lender's Term Loan Amount then outstanding as a Eurodollar Rate Loan, if any, shall be converted automatically to Base Rate Loan on the last day of each Interest Period applicable to such Eurodollar Rate Loan or within such earlier period as may be required by law. The Borrower hereby agrees promptly to pay the Agent for the account of such Lender, upon demand by such Lender, any additional amounts necessary to compensate such Lender for any costs incurred by such Lender in making any conversion in accordance with this section 3.6, including any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loan hereunder. SECTION 3.7. ADDITIONAL COSTS, ETC. If any change after the Closing Date to any present applicable law or if any future applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to any Lender or the Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall: (a) subject any Lender or the Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Credit Agreement, the other Loan Documents or the Term Loan (other than taxes based upon or measured by the income or profits of such Lender or the Agent), or (b) materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Lender of the principal of or the interest on the -22- Term Loan or any other amounts payable to any Lender or the Agent under this Credit Agreement or any of the other Loan Documents, or (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Credit Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, any Lender, or (d) impose on any Lender or the Agent any other conditions or requirements with respect to this Credit Agreement, the other Loan Documents or the Term Loan, and the result of any of the foregoing is: (i) to increase the cost to any Lender, of making, funding, issuing, renewing, extending or maintaining its Term Loan Amount, or (ii) to reduce the amount of principal, interest, or other amount payable to such Lender or the Agent hereunder, or (iii) to require such Lender or the Agent to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender or the Agent from the Borrower hereunder, then, in each such case and to the extent that the amount such additional cost, reduction, payment, foregone interest or other sum is not reflected in the Base Rate or the Eurodollar Rate, the Borrower will, upon demand made by such Lender or (as the case may be) the Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Lender or the Agent such additional amounts as will be sufficient to compensate such Lender or the Agent for such additional cost, reduction, payment or foregone interest or other sum (without duplication for recovery of such amounts under any other provision hereof), PROVIDED that the Borrower shall not be liable to any Lender or the Agent for costs incurred more than sixty (60) days prior to receipt by the Borrower of such demand for payment from such Lender or (as the case may be) the Agent unless such costs were incurred prior to such 60-day period solely as a result of such present or future applicable law being retroactive to a date which occurred prior to such 60-day period. SECTION 3.8. CAPITAL ADEQUACY. If after the Closing Date any Lender or the Agent determines that the adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by a court or governmental authority with appropriate -23- jurisdiction has the effect of reducing the return on such Lender's or the Agent's the Term Loan Amount to a level below that which such Lender or the Agent could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or the Agent's then existing policies with respect to capital adequacy and assuming full utilization of such entity's capital) by any amount deemed by such Lender or (as the case may be) the Agent to be material, then such Lender or the Agent may notify the Borrower of such fact. To the extent that the amount of such reduction in the return on capital is not reflected in the Base Rate or the Eurodollar Rate then the Borrower agrees to pay such Lender or (as the case may be) the Agent for the amount of such reduction in the return on capital as and when such reduction is determined upon presentation by such Lender or (as the case may be) the Agent of a certificate in accordance with section 3.9 hereof, PROVIDED that the Borrower shall not be liable to any Lender or the Agent for costs incurred more than sixty (60) days prior to receipt by the Borrower of the notice referred to in the immediately preceding sentence from such Lender or (as the case may be) the Agent. Each Lender shall allocate such cost increases among its customers in good faith and on an equitable basis. SECTION 3.9. CERTIFICATE. A certificate setting forth any additional amounts payable pursuant to sections 3.7 or 3.8 hereof and a brief explanation of such amounts which are due, submitted by any Lender or the Agent to the Borrower, shall be conclusive, absent manifest error, that such amounts are due and owing. If the Borrower is required to pay any additional amounts pursuant to sections 3.7 or 3.8 hereof with respect to any Lender, the Borrower may, following payment in full of the amount or amounts due set forth in such certificate, take the actions permitted by section 3.12 hereof to replace such Lender. SECTION 3.10. INDEMNITY. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from and against all redeployment costs or expenses that such Lender may reasonably sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or any interest on any Eurodollar Rate Loan as and when due and payable, including any such cost or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain its Eurodollar Rate Loan, (b) default by the Borrower in making a conversion after the Borrower has given (or is deemed to have given) a Conversion Request relating thereto in accordance with section 2.5 hereof, or (c) the making of any payment of a Eurodollar Rate Loan or the making of any conversion of any such Eurodollar Rate Loan to a Base Rate Loan on a day that is not the last day of the applicable Interest Period with respect thereto, including, without limitation, any payments made under sections 2.3.2, 2.3.3 or 3.12, including interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain the Eurodollar Rate Loan. SECTION 3.11. INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the extent permitted by applicable law) interest on the Term Loan and all other overdue amounts payable hereunder or under any of the other Loan Documents, if not repaid on or before the fifth calendar day following the day such payment was due, shall bear interest from the due date thereof, compounded monthly and payable on demand at any time from and after fifth calendar day following the day -24- such payment was due, at a rate per annum equal to two percent (2%) above the rate of interest then applicable thereto (or, if no rate of interest is then applicable there to, the Base Rate until such amount shall be paid in full (after as well as before judgment)). SECTION 3.12. REPLACEMENT OF INDIVIDUAL LENDERS. Upon the happening of any of the events set forth in sections 3.6, 3.7 or 3.8, the Borrower may (PROVIDED that at the time no Default or Event of Default exists or would result after giving effect to the Borrower's action) replace each affected Lender (a "SUBSTITUTED LENDER"), subject to the following conditions: (a) the Borrower shall have delivered to the Agent not less than ten (10) Business Days prior to the exercise of its rights under this section 3.12 a written commitment in form and substance satisfactory to the Agent and each of the Lenders from a banking institution (the "REPLACEMENT LENDER") reasonably acceptable to the Agent and each of the remaining Lenders (other than the Substituted Lender) in which such Replacement Lender agrees to become a "LENDER" under this Credit Agreement, having a Term Loan Amount in the amount of the Substituted Lender's Term Loan Amount; (b) the Borrower shall have given appropriate notice of any prepayment under this section 3.12 as required by section 3.7 and subject to all other provisions of this Credit Agreement; (c) the Substituted Lender shall have assigned, pursuant to section 15 hereof, the Term Loan Amount and other Obligations of such Substituted Lender to the Replacement Lender and such Replacement Lender shall have become a Lender under this Credit Agreement having a Term Loan Amount in the amount of such Substitute Lender's Term Loan Amount; and (d) the Borrower shall have paid all other Obligations owed to the Substituted Lender. SECTION 3.13. GUARANTIES. The payment and performance of the Obligations shall be guaranteed by each Guarantor pursuant to the Guaranties, each of which shall be in the form of EXHIBIT C hereto. The Borrower may cause additional Subsidiaries of the Borrower to become Guarantors hereunder (if such Subsidiaries become guarantors of the Revolving Credit Agreement) by causing such Subsidiary or Subsidiaries to agree to be bound by the provisions of the Guaranty, to execute and deliver a Joinder Agreement and to deliver such legal opinions and other documents and instruments as the Agent may request. The Agent and the Lenders hereby agree that they shall, upon the written request of the Borrower and at the cost and expense of the Borrower, release any Guarantor from its obligations to the Agent and the Lenders under the Guaranty to which such Guarantor is a party if, and only if, (a) no Default or Event of Default shall have occurred and be continuing on the date of such release, (b) the Borrower shall be in compliance with the Obligor Group Requirement after giving effect to such release, (c) the Borrower shall have delivered to the Agent and the Lenders on the date of such -25- release a certificate signed by an authorized officer of the Borrower and evidence satisfactory to the Agent and the Lenders showing compliance with the provisions of clauses (a) and (b) hereof and (d) such Guarantor has been released as a guarantor of the Revolving Credit Agreement. The Borrower shall deliver to the Lenders an updated SCHEDULE 2 upon the release or addition of any Guarantor as provided in this section 3.13. SECTION 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Lenders and the Agent as follows: SECTION 4.1. CORPORATE AUTHORITY. SECTION 4.1.1. INCORPORATION; GOOD STANDING. The Borrower and each Guarantor (a) is a corporation or, as the case may be, a Massachusetts Business Trust duly organized, validly existing and in good standing under the laws of its state of incorporation or organization, (b) has all requisite corporate or, as the case may be, trust power to own its property and conduct its business as now conducted and as presently contemplated, and (c) is in good standing as a foreign corporation and is duly authorized to do business in each jurisdiction where such qualification is necessary except where a failure to be so qualified would not have a materially adverse effect on the business, assets or financial condition of the Borrower. SECTION 4.1.2. AUTHORIZATION. The execution, delivery and performance of this Credit Agreement and the other Loan Documents by the Borrower and each Guarantor which is or is to become a party thereto, and the transactions contemplated hereby and thereby (a) are within the corporate or, as the case may be, trust authority of such Person, (b) have been duly authorized by all necessary corporate or, as the case may be, trust proceedings, (c) do not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Person is subject which would have a material adverse effect either individually or in the aggregate on the Borrower and its Subsidiaries taken as a whole or on the ability of such Person to fulfill its obligations under this Credit Agreement and the other Loan Documents to which it is a party, (d) do not conflict with or result in any breach or contravention of any judgment, order, writ, injunction, license or permit applicable to the Borrower or any Guarantor and (e) do not conflict with any provision of the corporate charter or bylaws or, as the case may be, the Agreement and Declaration of Trust of, or any agreement or other instrument binding upon, the Borrower or any Guarantor. SECTION 4.1.3. ENFORCEABILITY. The execution and delivery of this Credit Agreement and the other Loan Documents to which the Borrower or any Guarantor is or is to become a party will result in valid and legally binding obligations of such Person enforceable against it in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought. -26- SECTION 4.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by the Borrower and the Guarantors of this Credit Agreement and the other Loan Documents to which the Borrower or any Guarantor is or is to become a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing with, any governmental agency or authority other than those already obtained. SECTION 4.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 4.3 hereto, the Borrower and its Subsidiaries own all of the assets reflected in the consolidated balance sheet of the Borrower as at the Balance Sheet Date or acquired since that date (except property and assets sold or otherwise disposed of in the ordinary course of business since that date), subject to no rights of others, including any mortgages, leases, conditional sales agreements, title retention agreements, liens or other encumbrances except Permitted Liens. SECTION 4.4. FINANCIAL STATEMENTS; FISCAL YEAR. (a) There has been furnished to each of the Lenders an audited consolidated balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date, and consolidated statements of income and cash flow of the Borrower and its Subsidiaries for the fiscal year then ended, certified by Ernst & Young LLP. Such balance sheet and statements of income and cash flows have been prepared in accordance with GAAP and fairly present the financial condition of the Borrower and its Subsidiaries as at the close of business on the date thereof and the results of operations for the fiscal year then ended. There are no contingent liabilities of the Borrower or any of its Subsidiaries as of such date involving material amounts, known to the officers of the Borrower, which were not disclosed in such balance sheet and the notes related thereto. (b) There has been furnished to each of the Lenders an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as at August 3, 2002, and unaudited consolidated statements of income and cash flow of the Borrower and its Subsidiaries for the fiscal quarter then ended. Such balance sheet and statements of income and cash flows have been prepared in accordance with GAAP and fairly present the financial condition of the Borrower and its Subsidiaries as at the close of business on the date thereof and the results of operations for the fiscal quarter then ended (subject to year-end adjustments). There are no contingent liabilities of the Borrower or any of its Subsidiaries as of such date involving material amounts, known to the officers of the Borrower, which were not disclosed in such balance sheet and the notes related thereto. (c) The Borrower has a fiscal year which is the 52/53 week period ending on the Saturday closest to January 31st of each year. SECTION 4.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date there has occurred no change in the operations, business, properties, assets or financial condition of the Borrower and its Subsidiaries as shown on or reflected in the consolidated balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date, or the consolidated statements of income and cash flows for the fiscal year then ended, other than changes in the ordinary course of business that have not had any materially adverse effect either -27- individually or in the aggregate on the business, assets or financial condition of the Borrower and its Subsidiaries taken as a whole. Since the Balance Sheet Date, the Borrower has not made any Distributions except Distributions made in compliance with section 6.4 hereof. SECTION 4.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and each of its Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of its business substantially as now conducted without known conflict with any rights of others. SECTION 4.7. LITIGATION. Except as set forth in SCHEDULE 4.7 hereto, there are no actions, suits, proceedings or investigations of any kind pending or, to the best of the Borrower's knowledge, threatened against the Borrower or any of its Subsidiaries before any court, tribunal or administrative agency or board that, if adversely determined, might, either in any case or in the aggregate, materially adversely affect the properties, assets, financial condition or business of the Borrower and its Subsidiaries taken as a whole, or materially impair the right of the Borrower and each of its Subsidiaries to carry on business substantially as now conducted by it, or result in any substantial liability not adequately covered by insurance, or for which adequate reserves are not maintained on the consolidated balance sheet of the Borrower and its Subsidiaries or which question the validity of this Credit Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto. SECTION 4.8. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower nor any of its Subsidiaries is in violation of any provision of its charter documents, bylaws (or equivalent constitutive documents), or any agreement or instrument to which it may be subject or by which it or any of its properties may be bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that could result in the imposition of substantial penalties or materially and adversely affect the financial condition, properties or business of the Borrower and its Subsidiaries taken as a whole. SECTION 4.9. TAX STATUS. The Borrower and each of its Subsidiaries (a) has made or filed all applicable federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (b) has paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings and (c) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. Except as set forth on SCHEDULE 4.9 attached hereto, there are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Borrower know of no basis for any such claim. SECTION 4.10. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and is continuing. -28- SECTION 4.11. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower nor any of its Subsidiaries is a "HOLDING COMPANY", or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY", or an "AFFILIATE" of a "HOLDING COMPANY", as such terms are defined in the Public Utility Holding Company Act of 1935; nor is such Person an "INVESTMENT COMPANY", or a "PRINCIPAL UNDERWRITER" of an "INVESTMENT COMPANY", or a company controlled by an "INVESTMENT COMPANY", as such terms are defined in the Investment Company Act of 1940. SECTION 4.12. EMPLOYEE BENEFIT PLANS. SECTION 4.12.1. IN GENERAL. Each Employee Benefit Plan has been maintained and operated in compliance in all material respects with the provisions of ERISA, all Applicable Pension Legislation, and, to the extent applicable, the Code, including but not limited to the provisions thereunder respecting the bonding of fiduciaries and other persons handling plan funds as required by section 412 of ERISA. No prohibited transaction has occurred that would result in material liability for the Borrower or any of its Subsidiaries. SECTION 4.12.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan which is an employee welfare benefit plan within the meaning of section 3(1) or section 3(2)(B) of ERISA provides benefit coverage subsequent to termination except as required by Title I, Subtitle B, Part 6 of ERISA or applicable state law. The Borrower may terminate each such Plan at any time (or at any time subsequent to the expiration of any applicable bargaining agreement) in the discretion of the Borrower without liability to any Person other than for claims arising or benefits accruing prior to termination. SECTION 4.12.3. GUARANTEED PENSION PLANS. Each contribution required to be made to a Guaranteed Pension Plan, whether required to be made to avoid the incurrence of an accumulated funding deficiency, the notice or lien provisions of section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an accumulated funding deficiency or extension of amortization periods has been received with respect to any Guaranteed Pension Plan, and neither the Borrower nor any ERISA Affiliate is obligated to or has posted security in connection with an amendment to a Guaranteed Pension Plan pursuant to section 307 of ERISA or section 401(a)(29) of the Code. No liability to the PBGC (other than required insurance premiums, all of which have been paid) has been incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan and there has not been any ERISA Reportable Event, or any other event or condition which presents a material risk of termination of any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which in each case occurred within twelve months of the date of this representation), and on the actuarial methods and assumptions employed for that valuation, except as set forth on SCHEDULE 4.12 attached hereto, the aggregate benefit liabilities of all such Guaranteed Pension Plans within the meaning of section 4001 of ERISA did not exceed the aggregate value of the assets of all such Guaranteed Pension Plans, disregarding for this purpose the benefit liabilities and assets of any Guaranteed Pension Plan with assets in excess of benefit liabilities. -29- SECTION 4.12.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any ERISA Affiliate has incurred any material liability (including secondary liability) to any Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan under section 4201 of ERISA or as a result of a sale of assets described in section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has been notified that any Multiemployer Plan is in reorganization or insolvent under and within the meaning of section 4241 or section 4245 of ERISA or is at risk of entering reorganization or becoming insolvent, or that any Multiemployer Plan intends to terminate or has been terminated under section 4041A of ERISA. SECTION 4.13. REGULATIONS U AND X, ETC. The proceeds of the Term Loan shall be used for the purposes described in section 5.12 hereof. No portion of the Term Loan is to be used for the purpose of purchasing or carrying any "MARGIN SECURITY" or "MARGIN STOCK" (as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224 (the "MARGIN REGULATIONs")) in violation of the Margin Regulations. SECTION 4.14. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all reasonably necessary steps to investigate the past and present condition and usage of the Real Estate and the operations conducted thereon and, based upon such diligent investigation, has determined that: (a) none of the Borrower, its Subsidiaries nor any operator of the Real Estate or any operations thereon is in violation, or alleged violation, of any Environmental Laws, which violation would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries taken as a whole; (b) neither the Borrower nor any of its Subsidiaries has received any Environmental Notice during the last five (5) years that has the potential to materially affect the assets, liabilities, financial condition or operations of the Borrower and its Subsidiaries taken as a whole, except as set forth on SCHEDULE 4.14 hereto; (c) except as set forth on SCHEDULE 4.14 attached hereto: (i) no portion of the Real Estate has been used for the handling, processing, storage or disposal of Hazardous Substances; and no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Real Estate; in each case except in accordance with applicable Environmental Laws the noncompliance with which would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole; (ii) in the course of any activities conducted by the Borrower or operators of its properties, no Hazardous Substances have been generated or are being used on the Real Estate except in accordance with applicable Environmental Laws the noncompliance with which would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole; (iii) there have been no releases or threatened releases of Hazardous Substances on, upon, into or from the properties of the Borrower or any of its -30- Subsidiaries, which releases would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole; (iv) to the best of the Borrower's knowledge, there have been no releases on, upon, from or into any real property in the vicinity of any of the Real Estate which, through soil or groundwater contamination, may have come to be located on the Real Estate and which would have a material adverse effect on the Borrower and its Subsidiaries, taken as a whole; and (v) in addition, any Hazardous Substances that have been generated on any of the Real Estate have, to the best of the Borrower's knowledge, been transported offsite only as required under and in compliance with applicable Environmental Laws. SECTION 4.15. SUBSIDIARIES, ETC. As of the Closing Date, other than those Subsidiaries of the Borrower described on SCHEDULE 4.15(a) attached hereto, the Borrower has no other Subsidiaries. As of the Closing Date, except as set forth on SCHEDULE 4.15(b) attached hereto, neither the Borrower nor any Subsidiary of the Borrower is engaged in any joint venture or partnership with any other Person. As of the Closing Date, except as set forth on SCHEDULE 4.15(c) attached hereto, neither the Borrower nor any Subsidiary of the Borrower owns or has acquired an equity interest of fifty percent (50%) or less in any other Person. The Borrower hereby agrees to deliver to the Lenders an updated SCHEDULE 4.15(a), SCHEDULE 4.15(b) or SCHEDULE 4.15(c), as applicable, upon the acquisition or formation by the Borrower of any Subsidiary, the formation of any joint venture or partnership by the Borrower or any of its Subsidiaries with any other Person or the acquisition by the Borrower or any of its Subsidiaries of an equity interest of fifty percent (50%) or less in any other Person, in each case in accordance with the provisions of this Credit Agreement. SECTION 4.16. PURCHASE AGREEMENT. The Borrower has furnished to the Agent true, complete and correct copies of the Purchase Agreement (excluding schedules, exhibits and annexes thereto) as of the date hereof. SECTION 4.17. PERMITTED DEBT. The incurrence of the Indebtedness hereunder, including without limitation, the Obligations, will be permitted by the terms of all other Indebtedness as of the date of such incurrence. SECTION 5. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants and agrees that, so long as the Term Loan or any other Obligation is outstanding: SECTION 5.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Term Loan, the Agent Fees, all other fees and other amounts provided for in this Credit Agreement and the other Loan Documents to which the Borrower is a party, all in accordance with the terms of this Credit Agreement and such other Loan Documents. SECTION 5.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief executive office in Framingham, Massachusetts, or at such other place in the United States of America as the Borrower shall designate upon written notice to the Agent, where -31- notices, presentations and demands to or upon the Borrower in respect of the Loan Documents to which the Borrower is a party may be given or made. SECTION 5.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each of its Subsidiaries to keep, true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP and (b) maintain adequate accounts and reserves for all taxes, depreciation, depletion, obsolescence and amortization of its properties and the properties of its Subsidiaries, contingencies, and other reserves. SECTION 5.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will deliver to the Agent (and the Agent will promptly, after receipt thereof, deliver to the Lenders): (a) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such year, and the related consolidated statement of income and consolidated statement of cash flow for such year, each setting forth in comparative form the figures for the previous fiscal year and all such consolidated statements to be in reasonable detail, prepared in accordance with GAAP, and certified without qualification by Ernst & Young LLP or by other independent certified public accountants reasonably satisfactory to the Agent; (b) as soon as practicable, but in any event not later than forty-five (45) days after the end of each of the first three fiscal quarters of the Borrower, copies of the unaudited consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such quarter, and the related consolidated statement of income and consolidated statement of cash flow for the portion of the Borrower's fiscal year then elapsed, all in reasonable detail and prepared in accordance with GAAP, together with a certification by the chief financial officer or the treasurer of the Borrower that to the best of the Borrower's knowledge, the information contained in such financial statements fairly presents the financial position of the Borrower and its Subsidiaries on the date thereof (subject to year-end adjustments); (c) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, a statement certified by the chief financial officer or the treasurer of the Borrower in substantially the form of EXHIBIT D attached hereto (a "COMPLIANCE CERTIFICATE") and setting forth in reasonable detail computations evidencing compliance with the covenants contained in section 7 hereof, a calculation of the Obligor Group Requirement and (if applicable) reconciliations to reflect changes in GAAP since the Balance Sheet Date; (d) from time to time such other financial data and information as the Agent or any Lender may reasonably request; and -32- (e) (i) promptly upon becoming aware of the occurrence of any actual or claimed "EVENT OF TERMINATION" under and as defined in any of the documents relating to the Securitization, notice thereof, which notice shall describe such Event of Termination and indicate what steps the Borrower and its Subsidiaries are taking to remedy the same and (ii) promptly upon request therefor, such other information with respect to the Securitization as the Agent shall reasonably request. All Confidential Information concerning the Borrower supplied by the Borrower to the Lenders pursuant to the terms hereof will be held in confidence by the Lenders and the Lenders shall not disclose such Confidential Information except as permitted by section 23 of this Credit Agreement. SECTION 5.5. NOTICES. The Borrower will promptly notify the Agent for the benefit of the Lenders in writing of the occurrence of any Default or Event of Default. The Borrower will promptly give notice to the Agent for the benefit of the Lenders (a) of any material violation of any Environmental Law that the Borrower or any of its Subsidiaries reports in writing or is reportable by such Person in writing (or for which any written report supplemental to any oral report is made) to any federal, state or local environmental agency and (b) upon becoming aware thereof, of any inquiry, proceeding, investigation, or other action, including a notice from any agency of potential environmental liability, or any federal, state or local environmental agency or board, that has the potential to materially affect the assets, liabilities, financial conditions or operations of the Borrower. The Borrower will give notice to the Agent for the benefit of the Lenders in writing within fifteen (15) days of becoming aware of any litigation or proceedings threatened in writing or any pending litigation and proceedings affecting the Borrower or any of its Subsidiaries or to which the Borrower or any of its Subsidiaries is or becomes a party involving an uninsured claim against the Borrower or any of its Subsidiaries that could reasonably be expected to have a materially adverse effect on the Borrower and its Subsidiaries taken as a whole and stating the nature and status of such litigation or proceedings. The Borrower will, and will cause each of its Subsidiaries to, give notice to the Agent for the benefit of the Lenders, in writing, in form and detail satisfactory to the Agent, within ten (10) days of any judgment not covered by insurance, final or otherwise, against the Borrower or any of its Subsidiaries in an amount in excess of $1,000,000. SECTION 5.6. LEGAL EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence, rights and franchises and those of its Subsidiaries and will not, and will not cause or permit any of the Guarantors to, convert to a limited liability company or a limited liability partnership unless simultaneously with such conversion the Borrower or such Guarantor shall have executed and delivered to the Agent all documentation which the Agent reasonably determines is necessary to continue the Borrower's or such Guarantor's obligations in respect of this Credit Agreement or the Guaranty, as applicable. It (a) will cause all of its properties and those of its Subsidiaries used or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary -33- equipment, (b) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, and (c) will, and will cause each of its Subsidiaries to, continue to engage primarily in the businesses now conducted by them and in related businesses; PROVIDED that nothing in this section 5.6 shall prevent the Borrower from discontinuing the operation and maintenance of any of its properties or any of those of its Subsidiaries if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its or their business and does not in the aggregate materially adversely affect the business of the Borrower and its Subsidiaries on a consolidated basis. SECTION 5.7. INSURANCE. The Borrower will, and will cause each of its Subsidiaries to, maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with the general practices of businesses engaged in similar activities in similar geographic areas and in amounts, containing such terms, in such forms and for such periods as may be reasonable and prudent. At the request of the Agent, the Borrower shall deliver from time to time a summary schedule indicating all insurance then in force with respect to the Borrower and its Subsidiaries. SECTION 5.8. TAXES. The Borrower will, and will cause each of its Subsidiaries to, duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments and other governmental charges imposed upon it and its real properties, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid might by law become a lien or charge upon any of its property; PROVIDED that any such tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or such Subsidiary shall have set aside on its books adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrower and each Subsidiary of the Borrower will pay all such taxes, assessments, charges, levies or claims forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor or shall have obtained such bonding as may be required to release such lien. SECTION 5.9. INSPECTION OF PROPERTIES AND BOOKS, ETC. The Borrower shall permit the Lenders, through the Agent or any of the Lenders' other designated representatives, no more frequently than once each calendar year, or more frequently as determined by the Lenders upon the occurrence and during the continuance of an Event of Default, to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, and each such inspection, if no Event of Default has occurred and is continuing, shall be at the Lenders' expense. The Borrower shall also permit the Lenders, through the Agent or any of the Lenders' other designated representatives, to examine the books of account of the Borrower and its Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with, and to be advised as to the same by, its and their officers, all at such reasonable -34- times and intervals as the Agent or any Lender may reasonably request. The Borrower authorizes the Agent and, if accompanied by the Agent, the Lenders to communicate directly with the Borrower's independent certified public accountants and authorizes such accountants to disclose to the Agent and the Lenders any and all financial statements and other supporting financial documents and schedules with respect to the business, financial condition and other affairs of the Borrower or any of its Subsidiaries. SECTION 5.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower will, and will cause each of its Subsidiaries to, comply with (a) the applicable laws and regulations wherever its business is conducted, including all Environmental Laws, (b) the provisions of its charter documents and by-laws (or equivalent constitutive documents), (c) all agreements and instruments by which it or any of its properties may be bound and (d) all applicable decrees, orders, and judgments, in each case if noncompliance with which would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole, or on the ability of the Borrower or any of the Guarantors to fulfill its obligations under this Credit Agreement or any of the other Loan Documents to which such Person is a party. If any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Borrower may fulfill any of its obligations hereunder or any of the other Loan Documents to which the Borrower is a party, the Borrower will, or (as the case may be) will cause such Subsidiary to, immediately take or cause to be taken all reasonable steps within the power of the Borrower or such Subsidiary to obtain such authorization, consent, approval, permit or license and furnish the Agent and the Lenders with evidence thereof. SECTION 5.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) promptly upon request of the Agent, furnish to the Agent a copy of the most recent actuarial statement required to be submitted under section 103(d) of ERISA and Annual Report, Form 5500, with all required attachments, in respect of each Guaranteed Pension Plan and (b) promptly upon receipt or dispatch, furnish to the Agent any notice, report or demand sent or received in respect of a Guaranteed Pension Plan under sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under sections 4041A, 4202, 4219, 4242, or 4245 of ERISA. SECTION 5.12. USE OF PROCEEDS. The Borrower will use the proceeds of the Term Loan to finance, in part, the Guilbert Acquisition. SECTION 5.13. LICENSES AND PERMITS. The Borrower will maintain and renew any and all licenses or permits now held or hereafter acquired by the Borrower or any of its Subsidiaries unless the loss, suspension, revocation or failure to renew any such licenses or permits would not have a material adverse effect on the business or financial condition of the Borrower and such Subsidiary. SECTION 5.14. CLOSING OF ACQUISITION. The Borrower shall consummate the Guilbert Acquisition substantially in accordance with the terms of the Purchase Agreement no -35- later than December 31, 2002. The Borrower shall give the Agent prompt written notice thereof. SECTION 5.15. PRO FORMA COMPLIANCE CERTIFICATE. The Borrower shall deliver to the Lenders a Compliance Certificate, dated as of the Guilbert Acquisition Closing Date, and based on financial statements prepared on a PRO FORMA basis which include the Obligations and any other financing arrangements made by the Borrower in connection with the Guilbert Acquisition and all interest, fees and expenses related thereto. SECTION 5.16. FURTHER ASSURANCES. The Borrower will, and will cause each of the Guarantors to, cooperate with the Lenders and the Agent and execute such further instruments and documents as the Lenders or the Agent shall reasonably request to carry out to their satisfaction the transactions contemplated by this Credit Agreement and the other Loan Documents. SECTION 6. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants and agrees that, so long as the Term Loan or any other Obligation is outstanding: SECTION 6.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume, guarantee or become or remain liable, contingently or otherwise, with respect to Indebtedness other than: (a) Indebtedness to the Lenders and the Agent arising under any of the Loan Documents; (b) current liabilities of the Borrower or such Subsidiary incurred in the ordinary course of business not incurred through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services; (c) Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of section 5.8 hereof; (d) Indebtedness in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Borrower or such Subsidiary shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review; (e) endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business; -36- (f) Indebtedness in respect of documentary letters of credit issued in the ordinary course of business; (g) Indebtedness of the Borrower in respect of interest rate protection arrangements and exchange rate protection arrangements; (h) Indebtedness existing on the Closing Date and listed and described on SCHEDULE 6.1 hereto or any refinancing thereof on substantially similar terms as the Indebtedness being refinanced; (i) Subordinated Debt; (j) obligations under Capitalized Leases; (k) Indebtedness incurred by the Borrower and its Subsidiaries under the Securitization; (l) Indebtedness in respect of intercompany loans, guaranties and, so long as no Default or Event of Default shall have occurred and be continuing at the time such Indebtedness is incurred, other Investments and contingent obligations to make Investments, (i) from the Borrower to any of its Subsidiaries or of any of its Subsidiaries' obligations or (ii) between Subsidiaries of the Borrower or of any of the Borrower's Subsidiaries' obligations, or (iii) from any Subsidiary of the Borrower to the Borrower or of any of the Borrower's obligations; (m) Indebtedness incurred in connection with the acquisition after the Closing Date of any real or personal property by the Borrower or any Subsidiary of the Borrower as contemplated by section 6.2(ix) hereof; (n) Indebtedness secured by a lien on Real Estate of the Borrower or its Subsidiaries; PROVIDED that the aggregate amount of Indebtedness permitted pursuant to this section 6.1(n) shall not, at any time, exceed the fair market value of the Real Estate securing such Indebtedness; (o) other Indebtedness of the Borrower and its Subsidiaries (whether or not such Subsidiaries are Guarantors), PROVIDED that (i) with respect to Indebtedness incurred by the Borrower or a Guarantor, such Indebtedness contains covenants that are no more restrictive on the Borrower or such Guarantor than the covenants contained in this Credit Agreement and (ii) immediately after such incurrence of Indebtedness, and after giving effect thereto on a PRO FORMA basis, no Default or Event of Default shall then exist; (p) Indebtedness consisting of Investments permitted under section 6.3(m) hereof; and -37- (q) Indebtedness payable at the election of the Borrower by the issuance of the Borrower's capital stock. Notwithstanding the foregoing, at no time shall the aggregate amount of Indebtedness of the Borrower and its Subsidiaries consisting of guaranties and other Contingent Liabilities (excluding (i) Indebtedness permitted pursuant to section 6.1 to the extent such Indebtedness (or if such Indebtedness is a Contingent Liability of the Borrower and/or its Subsidiaries, the underlying Indebtedness relating to such Contingent Liability) is included in the calculation of Consolidated Total Funded Debt) and (ii) obligations in respect of documentary letters of credit) exceed, in the aggregate, 15% of the Stockholders' Equity of the Borrower at such time. For purposes of this Section, the amount of Contingent Liabilities in respect of interest rate protection arrangements and exchange rate protection arrangements permitted under section 6.1(g) at any time shall be the net liability of the Borrower and its Subsidiaries under such arrangements at such time, calculated on a basis satisfactory to the Agent in accordance with accepted practice. SECTION 6.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit any of its Subsidiaries to, (a) create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, charge, restriction or other security interest of any kind upon any of its property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of such property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement; (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand against it that if unpaid might by law or upon bankruptcy or insolvency under the laws of the United States of America or any state thereof, or otherwise, be given any priority whatsoever over its general creditors; or (e) sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse; PROVIDED that the Borrower and any Subsidiary of the Borrower may create or incur or suffer to be created or incurred or to exist: (i) liens in favor of the Borrower on all or part of the assets of Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of the Borrower to the Borrower; (ii) liens to secure taxes, assessments and other government charges and liens to secure claims for labor, material or supplies, in each case in respect of obligations not overdue or which are being contested in good faith and by appropriate proceedings and for which the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto; -38- (iii) deposits or pledges made in connection with, or to secure payment of, worker's compensation, unemployment insurance, old age pensions or other social security obligations; (iv) liens in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Borrower or such Subsidiary is at the time in good faith prosecuting an appeal and in respect of which a stay of execution shall have been obtained pending such appeal or shall have obtained an unsecured bond sufficient to release such lien; (v) liens of carriers, warehousemen, mechanics and materialmen, and other like liens, in respect of obligations not overdue or, if such obligations are overdue, being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary shall have set aside on its books adequate reserves with respect thereto, PROVIDED that no proceeding to foreclose any such lien shall have been commenced; (vi) encumbrances on Real Estate consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord's or lessor's liens under Capitalized Leases to which the Borrower or a Subsidiary of the Borrower is a party, and other minor liens or encumbrances none of which in the opinion of the Borrower interferes materially with the use of the property affected in the ordinary conduct of the business of the Borrower and its Subsidiaries, which defects do not individually or in the aggregate have a materially adverse effect on the business of the Borrower individually or of the Borrower and its Subsidiaries on a consolidated basis; (vii) liens existing on the Closing Date and listed on SCHEDULE 6.2 attached hereto or liens on the same assets in connection with the refinancing of such existing liens; (viii) liens arising in the ordinary course of business of the Borrower or a Subsidiary of the Borrower none of which in the opinion of the Borrower interferes materially with the use of the property affected in the ordinary course of business of the Borrower and its Subsidiaries and which do not, individually or in the aggregate, have a materially adverse effect on the business of the Borrower or such Subsidiary individually or of the Borrower and its Subsidiaries on a consolidated basis; (ix) purchase money security interests in or purchase money mortgages on real or personal property acquired after the Closing Date to secure purchase money Indebtedness of the type permitted by section 6.1(m) hereof, incurred in connection with the acquisition of such property, which security interests or mortgages cover only the real or personal property so acquired; -39- (x) liens on accounts receivable of the Borrower and/or its Subsidiaries that are the subject of and secure the Securitization; (xi) liens securing other permitted Indebtedness that does not exceed $25,000,000 in the aggregate; (xii) liens in respect of the interests of lessors under Capitalized Leases; and (xiii) liens on Real Estate securing Indebtedness permitted under section 6.1(n) hereof. SECTION 6.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, make or permit to exist or to remain outstanding any Investment except Investments in: (a) marketable direct or guaranteed obligations of the United States of America; (b) demand deposits, certificates of deposit, bankers acceptances and time deposits of (i) United States or Canadian banks having total assets in excess of $1,000,000,000 or (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of such country, and having total assets in excess of $1,000,000,000, PROVIDED that such bank is acting through a branch or agency located in the country in which its is organized or another country which is a member of the OECD; (c) (i) securities commonly known as "commercial paper" denominated in Dollars which at the time of purchase have been rated and the ratings for which are not less than "P 1" if rated by Moody's, and not less than "A 1" if rated by S&P; and (ii) securities commonly known as "short-term bank notes" issued by any Lender denominated in Dollars which at the time of purchase have been rated and the ratings for which are not less than "P 2" if rated by Moody's, and not less than "A 2" if rated by S&P; (d) Investments existing on the Closing Date and listed on SCHEDULE 6.3 attached hereto; (e) Investments with respect to Indebtedness permitted by section 6.1(k) hereof so long as such entities remain Subsidiaries of the Borrower; (f) taxable or tax-exempt securities which at the time of purchase have been rated and the ratings for which are not less than A 3 if rated by Moody's, and not less than A- if rated by S&P; -40- (g) Investments consisting of loans and advances to employees of the Borrower or any Subsidiary of the Borrower, not exceeding $10,000,000 in the aggregate at any one time outstanding; (h) options to invest in or to lease real property to be used in the operations of the Borrower or any Subsidiary of the Borrower; (i) guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions effected in the ordinary course of business; (j) (i) the Borrower's or any Subsidiary's guaranty of the Indebtedness of any Subsidiary or the Borrower, and (ii) any other Investments by the Borrower or any Subsidiary in any Subsidiary or the Borrower; (k) Investments by the Borrower or any Subsidiary of the Borrower to acquire a more than fifty percent (50%) equity interest in any Person, PROVIDED that such acquisition is permitted under section 6.6 hereof; (l) Investments by the Borrower or any Subsidiary of the Borrower to acquire up to a fifty percent (50%) equity interest in another Person, PROVIDED that (i) such Person is in the same line of business as the Borrower or such Subsidiary, as applicable, (ii) the aggregate amount of (A) such Investments in such Person and (B) existing Investments made by the Borrower or any Subsidiary pursuant to this section 6.3(l) shall at no time exceed 65% of the Stockholders' Equity of the Borrower, and (iii) the consideration for such interest shall be the exchange by the Borrower or such Subsidiary as applicable, of a certain number of shares of its common stock for equity securities of the other Person and/or the payment in cash in an aggregate cash amount for any such Investment not to exceed $50,000,000; and (m) Investments consisting of Distributions permitted by section 6.4. SECTION 6.4. DISTRIBUTIONS. The Borrower will not declare any dividend or make any Distribution if any Default or Event of Default has occurred and is continuing or would result after giving effect to such Distribution. SECTION 6.5. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA Affiliate will: (a) engage in any "PROHIBITED TRANSACTION" within the meaning of section 406 of ERISA or section 4975 of the Code which could result in a material liability for the Borrower or any of its Subsidiaries; or (b) permit any Guaranteed Pension Plan to incur an "ACCUMULATED FUNDING DEFICIENCY", as such term is defined in section 302 of ERISA, whether or not such deficiency is or may be waived; or (c) fail to contribute to any Guaranteed Pension Plan to an extent which, or terminate any Guaranteed Pension Plan in a manner which, could result in the imposition of a lien or encumbrance on the assets of the Borrower or any of its Subsidiaries pursuant to section 302(f) or section 4068 of ERISA; or (d) amend any Guaranteed Pension Plan in circumstances requiring the posting of security pursuant to section 307 of ERISA or section 401(a)(29) of the Code; or (e) permit or take any action which would result in -41- the aggregate benefit liabilities (with the meaning of section 4001 of ERISA) of all Guaranteed Pension Plans exceeding the value of the aggregate assets of such Plans, disregarding for this purpose the benefit liabilities and assets of any such Plan with assets in excess of benefit liabilities. SECTION 6.6. MERGER AND CONSOLIDATION; ACQUISITIONS. The Borrower will not, and will not permit any of its Subsidiaries to, merge or consolidate with any other Person; enter into any stock or asset acquisitions (other than the acquisition of assets in the ordinary course of such Person's business and other than the acquisition of stock permitted under section 6.3(j) or section 6.3(l) hereof), enter into any joint venture or partnerships (except to the extent permitted under section 6.3 hereof); or enter into any new lines of business or otherwise change the conduct of the Borrower's or such Subsidiary's business as presently conducted other than (a) the merger or consolidation of one or more Subsidiaries of the Borrower with and into the Borrower, PROVIDED that the Borrower is the surviving entity, (b) the merger or consolidation of two or more Subsidiaries of the Borrower, PROVIDED that, if one of the Subsidiaries is a Guarantor, that the Guarantor is the surviving entity, or (c) the acquisition (whether of stock or assets or by means of a merger) of a more than fifty percent (50%) equity interest in any other Person, PROVIDED that (i) immediately after such acquisition, and after giving effect thereto on a PRO FORMA basis, no Default or Event of Default shall then exist, (ii) if required by applicable law, the board of directors and the shareholders or the equivalent, of such other Person has approved such acquisition, (iii) such other Person is in the business of selling office services, products and/or supplies, and (iv) if the Borrower or a Guarantor and such other Person merge, the Borrower or such Guarantor is the surviving entity. SECTION 6.7. DISPOSITION OF ASSETS AND SALE-LEASEBACK TRANSACTIONS. The Borrower will not, and will not permit any of its Subsidiaries to, dispose of or sell assets other than: (a) the disposition of assets in the ordinary course of business; (b) sale-leaseback transactions and other dispositions of assets that do not have a materially adverse effect on the business, assets or financial condition of the Borrower or any of its Subsidiaries, PROVIDED that (i) the aggregate net book value of the assets to be sold PLUS the net book value of all other assets of the Borrower and its Subsidiaries sold under this clause (b) during the period of time from the Closing Date through the date of such sale does not, at the time of such sale, exceed 25% of the Consolidated Total Assets of the Borrower and its Subsidiaries and (ii) such assets are sold in an arm's length transaction for fair market value (after giving effect to all tax benefits, if any, associated with such sale); and (c) the sale of accounts receivable of the Borrower and/or its Subsidiaries pursuant to the Securitization. SECTION 6.8. SUBORDINATED DEBT. The Borrower will not effect or permit any change in or amendment to any document or instrument pertaining to the subordination, -42- covenants, events of default, terms of payment or required prepayments of any Subordinated Debt, give any notice of redemption or prepayment or offer to repurchase under any such document or instrument or, directly or indirectly, make any payment of principal of or interest on or in redemption, retirement or repurchase of any Subordinated Debt, except that (a) the Borrower may make regularly scheduled payments when required by the terms of the Subordinated Debt, and (b) the Borrower may refinance all or a portion of the Subordinated Debt so long as such refinancing Subordinated Debt (i) has a maturity that is no earlier than the Subordinated Debt being refinanced and (ii) is subordinated to the Obligations on terms at least as favorable to the Agent and the Lenders, in the opinion of the Agent and the Required Lenders, as the Subordinated Debt being refinanced. SECTION 7. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and agrees that, so long as the Term Loan or any other Obligation is outstanding: SECTION 7.1. FIXED CHARGE COVERAGE RATIO. As at the end of each fiscal quarter of the Borrower, the Borrower will not permit the ratio (the "FIXED CHARGE COVERAGE RATIO") of (a) the sum of (i) Consolidated EBIT for the period of the four consecutive fiscal quarters (the "MEASUREMENT PERIOD") ending on such date PLUS (ii) the Rental Expense for such Measurement Period, to (b) the sum of (i) the Consolidated Total Interest Expense for such Measurement Period PLUS (ii) the Rental Expense for such Measurement Period, to be less than 1.50 to 1. SECTION 7.2. ADJUSTED FUNDED DEBT TO TOTAL CAPITALIZATION RATIO. As at the end of each fiscal quarter of the Borrower, the Borrower will not permit the ratio of (a) Consolidated Adjusted Funded Debt as at such date to (b) the sum of (i) Consolidated Adjusted Funded Debt as at such date PLUS (ii) Stockholders' Equity as of such date, to be greater than 0.75 to 1. SECTION 8. CONDITIONS PRECEDENT. SECTION 8.1. CLOSING CONDITIONS. Subject to the conditions set forth in section 8.2 hereof, the obligations of the Lenders to advance the Term Loan shall be subject to the satisfaction of the following conditions precedent on or prior to the Closing Date: SECTION 8.1.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to each of the Lenders. The Agent shall have received a fully executed copy of each such document. SECTION 8.1.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have received from the Borrower and each of the Guarantors a copy, certified by a duly authorized officer of such Person to be true and complete on the Closing Date, of each of (a) its charter or other incorporation documents (or the equivalent constitutive -43- documents) as in effect on such date of certification, and (b) its by-laws or the equivalent constitutive documents as in effect on such date. SECTION 8.1.3. CORPORATE ACTION. All corporate (or other) action necessary for the valid execution, delivery and performance by the Borrower and each of the Guarantors of this Credit Agreement and the other Loan Documents to which it is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to the Lenders shall have been provided to the Agent. SECTION 8.1.4. INCUMBENCY CERTIFICATE. The Agent shall have received from the Borrower and each of the Guarantors an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of the Borrower and each Guarantor, as applicable, and giving the name and bearing a specimen signature of each individual who shall be authorized: (a) to sign, in the name and to the benefit of each of the Borrower and the Guarantors, each of the Loan Documents; (b) with respect to the Borrower, to make Conversion Requests, and (c) to give notices and to take other action on its behalf under the Loan Documents. SECTION 8.1.5. OPINION OF COUNSEL. The Agent shall have received favorable legal opinions addressed to the Lenders and the Agent, dated as of the Closing Date, in form and substance satisfactory to the Lenders and the Agent, from (a) Jack A. VanWoerkom, Esq., general counsel to the Borrower and the Guarantors and (b) Hale & Dorr LLP, special counsel to the Borrower and the Guarantors. SECTION 8.1.6. PAYMENT OF FEES. The Borrower shall have paid to the Agent and the Arranger, as appropriate, the Agent Fees, the Closing Fee and all other fees and expenses (including without limitation all reasonable legal fees and disbursements of the Agent's Special Counsel) required to be paid by it on or prior to the Closing Date. SECTION 8.1.7. COMPLIANCE CERTIFICATE. The Borrower shall have delivered to the Lenders a Compliance Certificate, dated as of the Closing Date, and based on the financial statements of the Borrower for the fiscal quarter ended in August 3, 2002. SECTION 8.1.8. UCC SEARCH RESULTS. The Agent shall have received the results of UCC searches (and the equivalent thereof in all applicable foreign jurisdictions), indicating no Liens other than Permitted Liens and otherwise in form and substance satisfactory to the Agent. SECTION 8.1.9. CERTIFICATE OF INSURANCE. The Agent shall have received a certificate of insurance from an independent insurance broker dated as of the Closing Date, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise describing the insurance of the Borrower and its Subsidiaries. SECTION 8.1.10. NO MATERIAL ADVERSE CHANGE. The Agent shall be satisfied that there shall have occurred no material adverse change in the business, operations, assets, properties or condition of the Borrower or its Subsidiaries, since the Balance Sheet Date. -44- SECTION 8.1.11. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the representations and warranties of any of the Borrower and its Subsidiaries contained in this Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Credit Agreement shall be true as of the date as of which they were made and shall also be true at and as of the time of the making of the Term Loan, with the same effect as if made at and as of that time (except to the extent of changes resulting from transactions contemplated or permitted by this Credit Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and to the extent that such representations and warranties relate expressly to an earlier date) and no Default or Event of Default shall have occurred and be continuing. SECTION 8.1.12. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or regulations thereunder or interpretations thereof that in the reasonable opinion of any Lender would make it illegal for such Lender to make the Term Loan. SECTION 8.1.13. GOVERNMENTAL REGULATION. Each Lender shall have received such statements in substance and form reasonably satisfactory to such Lender as such Lender shall require for the purpose of compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System. SECTION 8.1.14. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the transactions contemplated by this Credit Agreement, the other Loan Documents and all other documents incident thereto shall be reasonably satisfactory in substance and in form to the Lenders and to the Agent and the Agent's Special Counsel, and the Lenders, the Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Agent may reasonably request. SECTION 8.2. CONDITIONS TO FUNDING. The obligations of the Lenders to advance the Term Loan shall also be subject to the satisfaction of the following conditions precedent on or prior to the Initial Drawdown Date: SECTION 8.2.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the representations and warranties of any of the Borrower and its Subsidiaries contained in this Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Credit Agreement shall be true as of the date as of which they were made and shall also be true at and as of the time of the making of the Term Loan, with the same effect as if made at and as of that time (except to the extent of changes resulting from transactions contemplated or permitted by this Credit Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and to the extent that such representations and warranties relate expressly to an earlier date) and no Default or Event of Default shall have occurred and be continuing. -45- SECTION 8.2.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or regulations thereunder or interpretations thereof that in the reasonable opinion of any Lender would make it illegal for such Lender to make the Term Loan. SECTION 8.2.3. EUROPEAN COMMISSION APPROVAL. The European Commission shall have granted all necessary approvals (the "EC Approvals") with respect to the Guilbert Acquisition substantially in accordance with the terms of the Purchase Agreement. The Borrower shall have delivered to the Agent satisfactory evidence thereof, certified as true and correct by a duly authorized officer of the Borrower. SECTION 8.2.4. COMPLIANCE CERTIFICATE. The Borrower shall have delivered to the Lenders a Compliance Certificate, dated as of the Initial Drawdown Date, and based on financial statements prepared on a PRO FORMA basis which include the Obligations and any other financing arrangements made by the Borrower in connection with the Guilbert Acquisition and all interest, fees and expenses related thereto. SECTION 8.2.5. DEADLINE FOR INITIAL DRAWDOWN. The Borrower shall have (i) satisfied the conditions precedent set forth in this section 8.2 and (ii) requested that the Lenders advance the Term Loan on or before the earlier of (x) fifteen (15) days after receiving the EC Approvals in accordance with section 8.2.3 or (y) December 31, 2002; and provided further that the Guilbert Acquisition shall occur no later than December 31, 2002. SECTION 9. EVENTS OF DEFAULT; ACCELERATION; ETC. SECTION 9.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events ("EVENTS OF DEFAULT" or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, "DEFAULTS") shall occur and be continuing: (a) the Borrower shall fail to pay any principal of the Term Loan when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment; (b) the Borrower or any Guarantor shall fail to pay any interest on the Term Loan, the Agent Fees, other fees or other sums due hereunder or under any of the other Loan Documents, within five (5) Business Days of the date when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment; (c) the Borrower (i) shall fail to comply with any of its covenants contained in sections 5.4, 5.5, 5.10, 6 or 7 hereof, or (ii) shall fail to comply with its covenant contained in section 5.6 hereof and such failure shall continue for thirty (30) days; (d) the Borrower or any of its Subsidiaries shall fail to perform any term, covenant or agreement contained herein or in any of the other Loan Documents (other than those specified elsewhere in this section 9.1) for thirty (30) days after written notice of such failure has been given to the Borrower by the Agent; -46- (e) any material representation or warranty of the Borrower or any of its Subsidiaries in this Credit Agreement or any of the other Loan Documents or in any other document or instrument delivered pursuant to or in connection with this Credit Agreement shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated; (f) the Borrower or any of its Subsidiaries shall fail to pay at maturity, or within any applicable period of grace, any obligation for borrowed money or credit received or in respect of any Capitalized Leases or any obligations with respect to interest rate protection arrangements or exchange rate protection arrangements which, in the aggregate, represents Indebtedness (calculated, with respect to interest rate protection arrangements and exchange rate protection arrangements based on the notional principal amount thereof) of $25,000,000 or more, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing borrowed money or credit received or in respect of any Capitalized Leases or evidencing any interest rate protection arrangement or exchange rate protection arrangement which in the aggregate represents Indebtedness (calculated, with respect to interest rate protection arrangements and exchange rate protection arrangements based on the notional principal amount thereof) of $25,000,000 or more, and for such period of time as would permit (assuming the giving of appropriate notice if required) the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof; (g) the Borrower or any of its Subsidiaries shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Borrower or any of its Subsidiaries or of any substantial part of the assets of the Borrower or any of its Subsidiaries or shall commence any case or other proceeding relating to the Borrower or any of its Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against the Borrower or any of its Subsidiaries and shall not have been dismissed within sixty (60) days, or the Borrower or any of its Subsidiaries shall indicate its approval thereof, consent thereto or acquiescence therein; (h) a decree or order is entered appointing any such trustee, custodian, liquidator or receiver or adjudicating the Borrower or any of its Subsidiaries bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of the Borrower or any Subsidiary of the Borrower in an involuntary case under federal bankruptcy laws as now or hereafter constituted; (i) there shall remain in force, undischarged, unsatisfied and unstayed, for more than sixty (60) days, whether or not consecutive, any final judgment -47- against the Borrower or any of its Subsidiaries that, with other outstanding final judgments, undischarged, against the Borrower or any of its Subsidiaries exceeds in the aggregate $10,000,000; (j) with respect to any Guaranteed Pension Plan, an ERISA Reportable Event, or a failure to make a required installment or other payment (within the meaning of section 302(f)(1) of ERISA), shall have occurred and the Required Lenders shall have determined in their reasonable discretion that such event reasonably could be expected to result in liability of the Borrower or any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $10,000,000 and such event in the circumstances occurring reasonably could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC, for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan or for the imposition of a Lien in favor of such Guaranteed Pension Plan; or a trustee shall have been appointed by the United States District Court to administer such Plan; or the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan; (k) the holders of all or any part of the Subordinated Debt shall accelerate the maturity of all or any part of the Subordinated Debt or the Subordinated Debt shall be prepaid, redeemed or repurchased in whole or in part, or an offer to prepay, redeem or repurchase the Subordinated Debt in whole or in part shall have been made, in each case in violation of the provisions of this Credit Agreement; (l) if any of the Loan Documents shall be canceled, terminated, revoked or rescinded, in each case otherwise than in accordance with the terms thereof or with the express prior written agreement, consent or approval of the Lenders, or any action at law, suit or in equity or other legal proceeding to cancel, revoke or rescind any of the Loan Documents shall be commenced by or on behalf of the Borrower or any of its Subsidiaries party thereto or any of their respective stockholders, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof; or (m) a "CHANGE IN CONTROL" shall have occurred (which for the purposes of this subsection (m) shall mean the occurrence of any of the following events): (i) the acquisition by any Person (including any syndicate or group deemed to be a "PERSON" under Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended) of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of Capital Stock of the Borrower entitling such Person to exercise 50% or more of the total voting power of all shares of Capital Stock of the Borrower entitled to vote generally in the elections of directors (any shares of voting stock of which such person or group is the -48- beneficial owner that are not then outstanding being deemed outstanding for purposes of calculating such percentage); (ii) any consolidation of the Borrower with, or merger of the Borrower into, any other Person, any merger of another Person into the Borrower, or any sale or transfer of all or substantially all of the assets of the Borrower to another Person (other than a transfer of assets to one or more Guarantors or a merger (A) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Capital Stock of the Borrower or (B) which is effected solely to change the jurisdiction of incorporation of the Borrower); or (iii) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Borrower was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower then in office; (n) any of (i) the Borrower or any of its Subsidiaries shall fail to make any payment under the Securitization when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), and any such failure shall continue after the applicable grace period, if any, specified in the documents relating to the Securitization, or (ii) the "TERMINATION DATE" (under and as defined in the Receivables Purchase Agreement, dated as of October 27, 2000, among the Borrower, Lincolnshire Funding, LLC, Corporate Receivables Corporation, the financial institutions from time to time party thereto as Purchasers, and Citicorp North America, Inc., as Agent or any replacement agreement therefor entered into as permitted by this Credit Agreement) shall have been declared to have occurred pursuant to Section 7.01 of such Receivables Purchase Agreement or any replacement agreement therefor entered into as permitted by this Credit Agreement, or (iii) any "EVENT OF TERMINATION" (under and as defined in any of the documents relating to the Securitization or any replacement agreement therefor entered into as permitted by the Credit Agreement) shall occur and continue after the applicable grace period, if any, specified in such documents if either, pursuant to such documents, (A) the existence of such Event of Termination would cause the Termination Date to occur or (B) the existence of such Event of Termination would permit the Purchaser under such documents to declare the Termination Date to have occurred and such Event of Termination continues unremedied or unwaived for a period of more than ninety (90) days after the date that the Agent gives notice to the Borrower of such Event of Termination; or (q) the Borrower and its Subsidiaries at any time shall not be in compliance with the Obligor Group Requirement and such failure continues for twenty (20) days -49- following the date on which a Compliance Certificate is to be delivered by the Borrower pursuant to section 6.4(c) hereof; then, and in any such event, so long as the same may be continuing, the Agent may, and upon the request of the Required Lenders shall, by notice in writing to the Borrower declare all amounts owing with respect to this Credit Agreement and the other Loan Documents, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; PROVIDED that in the event of any Event of Default specified in section 9.1(g) or 9.1(h) hereof, all such amounts shall become immediately due and payable automatically and without any requirement of notice from the Agent or any Lender. SECTION 9.2. REMEDIES. In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the Lenders shall have accelerated the maturity of the Term Loan pursuant to section 9.1 hereof, each Lender, if owed any amount with respect to the Term Loan and upon the consent of the Majority Lenders, may proceed to protect and enforce its rights by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Credit Agreement and the other Loan Documents or any instrument pursuant to which the Obligations to such Lender are evidenced, including as permitted by applicable law the obtaining of the EX PARTE appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of such Lender. No remedy herein conferred upon any Lender or the Agent or the holder of any Term Note is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. SECTION 10. SETOFF. Regardless of the adequacy of any collateral, during the continuance of any Event of Default, any deposits or other sums credited by or due from any of the Lenders to the Borrower and any securities or other property of the Borrower in the possession of such Lender may be applied to or set off by such Lender against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to such Lender. Each of the Lenders agrees with each other Lender that (a) if an amount to be set off is to be applied to Indebtedness of the Borrower to such Lender, other than Indebtedness evidenced by the Term Notes held by such Lender, such amount shall be applied ratably to such other Indebtedness (except that no amounts shall be applied to documentary letters of credit) and to the Indebtedness evidenced by all such Term Notes held by such Lender, and (b) if such Lender shall receive from the Borrower, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Term Notes held by such Lender by proceedings against the Borrower at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply -50- to the payment of the Term Notes held by such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Term Notes held by, all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, PRO TANTO assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Term Notes held by it, its proportionate payment as contemplated by this Credit Agreement; PROVIDED that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. SECTION 11. THE AGENT. SECTION 11.1. AUTHORIZATION. (a) The Agent is authorized to take such action on behalf of each of the Lenders and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Agent, together with such powers as are reasonably incident thereto, PROVIDED that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Agent. (b) The relationship between the Agent and the Lenders is and shall be that of an independent contractor. The use of the term "AGENT" herein is for convenience only and is used to describe, as a form of convention, the independent contractual relationship between the Agent and each of the Lenders. Nothing contained in this Credit Agreement or any of the other Loan Documents shall be construed to create an agency, trust or other fiduciary relationship between the Agent and any of the Lenders. (c) As an independent contractor empowered by the Lenders to exercise certain rights and perform certain duties and responsibilities hereunder and under the other Loan Documents, the Agent is nevertheless a "REPRESENTATIVE" of the Lenders, as that term is defined in Article 1 of the Uniform Commercial Code, for purposes of actions for the benefit of the Lenders with respect to all collateral security and guaranties contemplated by the Loan Documents. Such actions include the designation of the Agent as "SECURED PARTY", "MORTGAGEE", "LIENHOLDER" or the like on all financing statements, motor vehicle titles and other documents and instruments, whether recorded or otherwise, relating to the attachment, perfection, priority or enforcement of any security interests, mortgages, liens or deeds of trust in collateral security intended to secure the payment or performance of any of the Obligations, all for the benefit of the Lenders and the Agent. SECTION 11.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Credit Agreement and the other Loan Documents. The Agent may utilize the services of -51- such Persons as the Agent in its sole discretion may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by the Borrower. SECTION 11.3. NO LIABILITY. Neither the Agent nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent or employee thereof, shall be liable to the Lenders for any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Agent or such other Person, as the case may be, may be liable for losses due to its willful misconduct or gross negligence. SECTION 11.4. NO REPRESENTATIONS. SECTION 11.4.1. GENERAL. The Agent shall not be responsible for the execution or validity or enforceability of this Credit Agreement, any of the other Loan Documents or any instrument at any time constituting, or intended to constitute, collateral security for the Term Notes, or for the value of any such collateral security or for the validity, enforceability or collectability of any such amounts owing with respect to the Term Notes, or for any recitals or statements, warranties or representations made herein or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of the Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or in any instrument at any time constituting, or intended to constitute, collateral security for the Term Notes or to inspect any of the properties, books or records of the Borrower or any of its Subsidiaries. The Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by the Borrower or any holder of any of the Term Notes shall have been duly authorized or is true, accurate and complete. The Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Lenders, with respect to the creditworthiness or financial conditions of the Borrower or any of its Subsidiaries. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Credit Agreement. SECTION 11.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining compliance with the conditions set forth in section 8, each Lender that has executed this Credit Agreement shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document and matter either sent, or made available, by the Agent or the Arranger to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender, unless an officer of the Agent or the Arranger active upon the Borrower's account shall have received notice from such Lender prior to the Closing Date specifying such Lender's objection thereto and such objection shall not have been withdrawn by notice to the Agent or the Arranger to such effect on or prior to the Closing Date. -52- SECTION 11.5. PAYMENTS. SECTION 11.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the Agent hereunder or any of the other Loan Documents for the account of any Lender shall constitute a payment to such Lender. The Agent agrees promptly to distribute to each Lender such Lender's PRO RATA share of payments received by the Agent for the account of the Lenders except as otherwise expressly provided herein or in any of the other Loan Documents. SECTION 11.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the distribution of any amount received by it in such capacity hereunder, under the Term Notes or under any of the other Loan Documents might involve it in liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court. SECTION 11.5.3. DELINQUENT LENDERS. Notwithstanding anything to the contrary contained in this Credit Agreement or any of the other Loan Documents, any Lender that fails to comply with the provisions of section 10 hereof with respect to making dispositions and arrangements with the other Lenders, where such Lender's share of any payment received, whether by setoff or otherwise, is in excess of its PRO RATA share of such payments due and payable to all of the Lenders, in each case as, when and to the full extent required by the provisions of this Credit Agreement, shall be deemed delinquent (a "DELINQUENT LENDER") and shall be deemed a Delinquent Lender until such time as such delinquency is satisfied. A Delinquent Lender shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of the outstanding principal, interest, fees or otherwise, to the remaining nondelinquent Lenders for application to, and reduction of, their respective PRO RATA shares of the outstanding Obligations. The Delinquent Lender hereby authorizes the Agent to distribute such payments to the nondelinquent Lenders in proportion to their respective PRO RATA shares of the outstanding Obligations. A Delinquent Lender shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to the outstanding Obligations of the nondelinquent Lenders, the Lenders' respective PRO RATA shares of the outstanding Obligations have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency. SECTION 11.6. HOLDERS OF TERM NOTES. The Agent may deem and treat the payee of any Term Note as the absolute owner or purchaser thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee or transferee. SECTION 11.7. INDEMNITY. The Lenders ratably agree hereby to indemnify and hold harmless the Agent from and against any and all claims, actions and suits (whether -53- groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Agent has not been reimbursed by the Borrower as required by section 13 hereof), and liabilities of every nature and character arising out of or related to this Credit Agreement or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Agent's actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Agent's willful misconduct or gross negligence. SECTION 11.8. AGENT AS LENDER; ETC. In its individual capacity, Fleet shall have the same obligations and the same rights, powers and privileges in respect to its Term Loan Amount, and as the holder of any of the Term Notes, as it would have were it not also the Agent. SECTION 11.9. RESIGNATION. The Agent may resign at any time by giving sixty (60) days' prior written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent. Unless a Default or Event of Default shall have occurred and be continuing, such successor Agent shall be reasonably acceptable to the Borrower. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent reasonably acceptable to the Borrower, which shall be a financial institution having a rating of not less than A or its equivalent by S&P. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation, the provisions of this Credit Agreement and the other Loan Documents shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. SECTION 11.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Lender hereby agrees that, upon learning of the existence of a Default or an Event of Default, it shall promptly notify the Agent thereof. The Agent hereby agrees that upon receipt of any notice under this section 11.10 it shall promptly notify the other Lenders and the Borrower of the existence of such Default or Event of Default. SECTION 12. EXPENSES. The Borrower agrees to pay (a) the Agent's reasonable costs of producing and reproducing this Credit Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any taxes (including any interest and penalties in respect thereto) payable by the Agent or any of the Lenders (other than taxes based upon the Agent's or any Lender's net income or taxes not payable by the Borrower pursuant to the provisions of this Credit Agreement) on the transactions contemplated by this Credit Agreement (the Borrower hereby agreeing to indemnify the Agent and each Lender with respect thereto), (c) the reasonable fees, expenses and disbursements of the Agent's Special Counsel or any local counsel to the Agent incurred in connection -54- with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, each closing hereunder, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (d) the reasonable fees, expenses and disbursements of the Agent incurred by the Agent in connection with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, including all insurance premiums and surveyor, engineering and appraisal charges, (e) all reasonable out-of-pocket expenses (including, without limitation, reasonable attorneys' fees (including the allocated costs of in-house counsel) and costs and reasonable accounting, appraisal, investment banking and similar professional fees and charges) incurred by the Agent or any Lender in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Borrower or any of its Subsidiaries or the administration thereof after the occurrence of an Event of Default and (ii) any other litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any Lender's or the Agent's relationship with the Borrower or any of its Subsidiaries (other than any litigation, proceeding or dispute referred to in section 13 hereof) but only if such Lender or the Agent is the prevailing party in such litigation, proceeding or dispute, and (f) all reasonable fees, expenses and disbursements of the Agent incurred in connection with UCC searches. The Borrower shall not pay the fees, expenses and disbursements incurred by any Lender other than the Agent in connection with the review and preparation of this Credit Agreement, the other Loan Documents and the other agreements and instruments mentioned herein. The covenants of this section 12 shall survive payment or satisfaction of all other Obligations. SECTION 13. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the Agent, the Arranger, the Lenders and their respective affiliates, officers, directors and employees from and against any and all claims, actions and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of this Credit Agreement or any of the other Loan Documents or the transactions contemplated hereby including, without limitation, (a) any actual or proposed use by the Borrower or any of its Subsidiaries of the proceeds of the Term Loan, (b) the Borrower or any of its Subsidiaries entering into or performing this Credit Agreement or any of the other Loan Documents or (c) with respect to the Borrower and its Subsidiaries and their respective properties and assets, the violation of any Environmental Law, the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to, claims with respect to wrongful death, personal injury or damage to property), in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding, but excluding liabilities, losses, damages or expenses which are determined by a court of competent jurisdiction by final order to result from the gross negligence or willful misconduct of the Person seeking indemnification hereunder. In litigation, or the preparation therefor, the Lenders, the -55- Arranger and the Agent shall be entitled to select their own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of the Borrower under this section 13 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The covenants contained in this section 13 shall survive payment or satisfaction in full of all other Obligations. SECTION 14. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein, in the Term Notes, in any of the other Loan Documents or in any documents or other papers delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto shall be deemed to have been relied upon by the Lenders and the Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of the Term Loan, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Credit Agreement or the Term Notes or the other Loan Documents remains outstanding, and for such further time as may be otherwise expressly specified in this Credit Agreement. All statements contained in any certificate or other paper delivered to any Lender or the Agent at any time by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Subsidiary hereunder. SECTION 15. ASSIGNMENT AND PARTICIPATION. SECTION 15.1. CONDITIONS TO ASSIGNMENT BY LENDERS. Except as provided herein, each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Credit Agreement (including all or a portion of its Term Loan Amount at the time owing to it and the Term Notes held by it); PROVIDED that (a) except in the case of an assignment by a Lender to (i) the financial institution acquiring such Lender in conjunction with the sale or merger of such Lender or (ii) any member of the Approved Lending Group, each of the Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower, shall have given its prior written consent to such assignment, which consent, in each case, will not be unreasonably withheld, (b) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Lender's rights and obligations under this Credit Agreement, (c) each assignment shall be in an amount that is a minimum of $5,000,000 or an integral multiple of $500,000 in excess thereof, unless such assignment is to a Lender or a Lender Affiliate of the assigning Lender, in which case there shall be no such minimum amount, or is an assignment of the entire remaining amount of the assigning Lender's Term Loan Amount owing to it, and (d) the parties to such assignment shall execute and deliver to the Agent, for recording in the Register (as hereinafter defined), an Assignment and Acceptance, substantially in the form of EXHIBIT E attached hereto (an "ASSIGNMENT AND ACCEPTANCE"), together with any Term Notes subject to such assignment. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee -56- thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder, and (y) the assigning Lender shall, to the extent provided in such assignment and upon payment to the Agent of the registration fee referred to in section 15.3 hereof, be released from its obligations under this Credit Agreement. SECTION 15.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By executing and delivering an Assignment and Acceptance, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, the assigning Lender makes no representation or warranty, express or implied, and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or the attachment, perfection or priority of any security interest or mortgage; (b) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations of any of their obligations under this Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) such assignee confirms that it has received a copy of this Credit Agreement, together with copies of the most recent financial statements referred to in sections 4.4 and 5.4 hereof 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; (d) such assignee will, independently and without reliance upon the assigning Lender, the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Credit Agreement; (e) such assignee represents and warrants that it is an Eligible Assignee; (f) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Credit Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (g) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Credit Agreement are required to be performed by it as a Lender; and (h) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance. SECTION 15.3. REGISTER. The Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register or similar list (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Term Loan Percentages, and the Term Loan Amounts owing to the Lenders from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the -57- Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Credit Agreement. The Register shall be available for inspection by the Borrower and the Lenders at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation, other than with respect to assignments by any Lender to (a) any Lender Affiliate of such Lender, (b) any of the twelve (12) Federal Reserve Banks as provided in section 15.7 hereof or (c) any other Lender hereunder, the assigning Lender agrees to pay to the Agent a registration fee in the sum of $3,500. SECTION 15.4. NEW TERM NOTES. Upon its receipt of an Assignment and Acceptance executed by the parties to such assignment, together with each Term Note subject to such assignment, the Agent shall (a) record the information contained therein in the Register, and (b) give prompt notice thereof to the Borrower and the Lenders (other than the assigning Lender). Within five (5) Business Days after receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent, in exchange for each surrendered Term Note, a new Term Note to the order of such Eligible Assignee in an amount equal to the amount assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and, if the assigning Lender has retained some portion of its obligations hereunder, a new Term Note to the order of the assigning Lender in an amount equal to the amount retained by it hereunder. Such new Term Notes shall provide that they are replacements for the surrendered Term Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Term Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be substantially the form of the assigned Term Notes. The surrendered Term Notes shall be canceled and returned to the Borrower. SECTION 15.5. PARTICIPATIONS. Each Lender may sell participations to one or more banks or other entities in all or a portion of such Lender's rights and obligations under this Credit Agreement and the other Loan Documents; PROVIDED that (a) each such participation shall be in an amount of not less than $5,000,000, (b) any such sale or participation shall not affect the rights and duties of the selling Lender hereunder to the Borrower and (c) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments or modifications of the Loan Documents shall be the rights to approve waivers, amendments or modifications that would (i) reduce the principal of or the interest rate on the Term Loan, (ii) extend the term or increase the Term Loan Amount of such Lender as it relates to such participant, (iv) extend any regularly scheduled payment date for principal or interest or (v) release any collateral for the Obligations. SECTION 15.6. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any assignee Lender is an Affiliate of the Borrower, then any such assignee Lender shall have no right to vote as a Lender hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or other modifications to any of the Loan Documents or for purposes of making requests to the Agent pursuant to section 9.1 hereof, and the determination of the Required Lenders shall for all purposes of this Credit Agreement and the other Loan Documents be made without -58- regard to such assignee Lender's interest in the Term Loan. If any Lender sells a participating interest in the Term Loan to a participant, and such participant is the Borrower or an Affiliate of the Borrower, then such transferor Lender shall promptly notify the Agent of the sale of such participation. A transferor Lender shall have no right to vote as a Lender hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or modifications to any of the Loan Documents or for purposes of making requests to the Agent pursuant to section 9.1 hereof to the extent that such participation is beneficially owned by the Borrower or any Affiliate of the Borrower, and the determination of the Required Lenders shall for all purposes of this Credit Agreement and the other Loan Documents be made without regard to the interest of such transferor Lender in the Term Loan to the extent of such participation. SECTION 15.7. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Lender shall retain its rights to be indemnified pursuant to section 13 hereof with respect to any claims or actions arising prior to the date of such assignment. If any assignee Lender is not incorporated under the laws of the United States of America or any state thereof, it shall, prior to the date on which it becomes a Lender hereunder, deliver to the Borrower and the Agent certification as to its exemption from deduction or withholding of any United States federal income taxes. Anything contained in this section 15 to the contrary notwithstanding, any Lender may at any time pledge all or any portion of its interest and rights under this Credit Agreement (including all or any portion of its Term Notes) to any of the twelve Federal Reserve Banks organized under section 4 of the Federal Reserve Act, 12 U.S.C. section 341, may at any time assign all or any portion of its interest and rights under this Credit Agreement (including all or any portion of its Term Notes) to any Lender Affiliate of such Lender (provided that such assignment to such Affiliate does not impose any additional tax liabilities on the Borrower) and with respect to any Lender that is a Fund, to any Lender or any trustee for, or any other representative of, holders of obligations owed or securities issued by such Fund as security for such obligations or securities or any institutional custodian for such Fund or for such Lender, in each case without payment to the Agent of the registration fee as provided in section 15.3 hereof. No such pledge or assignment or the enforcement thereof shall release the pledgor or assignor Lender from its obligations hereunder or under any of the other Loan Documents, provide any voting rights hereunder to the secured party thereof, substitute any such secured party for such Lender as a party hereto or affect any rights or obligations of the Borrower or Agent hereunder. SECTION 15.8. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer any of its rights or obligations under any of the Loan Documents without the prior written consent of each of the Lenders. SECTION 16. NOTICES, ETC. Except as otherwise expressly provided in this Credit Agreement, all notices and other communications made or required by this Credit Agreement or the Term Notes shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by telegraph, -59- telecopy, facsimile or telex and confirmed by delivery via courier or postal service, addressed as follows: (a) if to the Borrower, at 500 Staples Drive, Framingham, MA 01701, Attention: Mr. William Swanson, or at such other address for notice as the Borrower shall last have furnished in writing to the Person giving the notice, with a copy to Jack A. VanWoerkom, Esq., Senior Vice President and General Counsel, Staples, Inc., 500 Staples Drive, Framingham, MA 01701; (b) if to the Agent, at 100 Federal Street, Boston, Massachusetts 02110, USA, Attention: Linda E. C. Alto, Director, or such other address for notice as the Agent shall last have furnished in writing to the Person giving the notice; and (c) if to any Lender, at such Lender's address set forth on SCHEDULE 1 hereto, or such other address for notice as such Lender shall have last furnished in writing to the Person giving the notice. Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of the receipt thereof by such officer and (ii) if sent by registered or certified first-class mail return receipt requested, postage prepaid, on the third Business Day following the mailing thereof. SECTION 17. GOVERNING LAW. THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING IN SUCH STATE AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 16 HEREOF. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. SECTION 18. HEADINGS. The captions in this Credit Agreement are for convenience of reference only and shall not define or limit the provisions hereof. -60- SECTION 19. COUNTERPARTS. This Credit Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Credit Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. Delivery by facsimile by any of the parties hereto of an executed counterpart hereof or of any amendment or waiver hereto shall be as effective as an original executed counterpart hereof or of such amendment or waiver and shall be considered a representation that an original executed counterpart hereof or such amendment or waiver, as the case may be, will be delivered. SECTION 20. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Credit Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in section 22 hereof. SECTION 21. WAIVER OF JURY TRIAL. The Borrower hereby waives its right to a jury trial with respect to any action or claim arising out of any dispute in connection with this Credit Agreement or any of the other Loan Documents, any rights or obligations hereunder or thereunder or the performance of which rights and obligations. Except as prohibited by law, the Borrower hereby waives any right it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The Borrower (a) certifies that no representative, agent or attorney of any Lender or the Agent has represented, expressly or otherwise, that such Lender or the Agent would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that the Agent and the Lenders have been induced to enter into this Credit Agreement, the other Loan Documents to which it is a party by, among other things, the waivers and certifications contained herein. SECTION 22. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval required or permitted by this Credit Agreement to be given by the Lenders may be given, and any term of this Credit Agreement, the other Loan Documents or any other instrument related hereto or mentioned herein may be amended, and the performance or observance by the Borrower or any of its Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Borrower and the written consent of the Required Lenders. Notwithstanding the foregoing, the rate of interest on the Term Notes may not -61- be reduced or forgiven, the term of the Term Notes may not be extended, and the regularly scheduled payment date for principal or interest on the Term Notes may not be postponed or extended, in each case without the written consent of the Borrower and the written consent of each Lender directly affected thereby; the principal amount of the Term Loan may not be forgiven without the written consent of each Lender directly affected thereby; this section 22 may not be changed without the written consent of the Borrower and the written consent of all of the Lenders; the definition of Required Lenders may not be amended without the written consent of all of the Lenders; the Agent may not release any guaranty for the Obligations (except as provided in section 3.13 hereof) without the written consent of all the Lenders; the amount of the Agent Fees payable for the account of the Agent, and section 11 hereof may not be amended without the written consent of the Agent. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances. SECTION 23. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. SECTION 23.1. CONFIDENTIALITY. Each of the Lenders and the Agent agrees, on behalf of itself and each of its affiliates, directors, officers, employees and representatives, to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of the same nature and in accordance with safe and sound banking practices, any Confidential Information supplied to it by the Borrower or any of its Subsidiaries pursuant to this Credit Agreement, PROVIDED that nothing herein shall limit the disclosure of any such information (a) after such information shall have become public other than through a violation of this section 23 or becomes available to any of the Lenders or the Agent on a nonconfidential basis from a source other than the Borrower or any of its Subsidiaries, (b) to the extent required by statute, rule, regulation or judicial process, (c) to counsel for any of the Lenders or the Agent, (d) to bank examiners, any other regulatory authority having jurisdiction over any Lender or the Agent (to the extent required by such Lender by law or subpoena, but only to the extent permitted by applicable laws and regulations, including those applying to classified materials), or to auditors or accountants (provided such auditor or accountant has agreed to be bound by this section 23), (e) to the Agent, any Lender or, any Financial Affiliate (provided such Financial Affiliate has agreed in a writing enforceable by the Borrower to be bound by this section 23), (f) in connection with any litigation to which any one or more of the Lenders, the Agent or any Financial Affiliate is a party, or in connection with the enforcement of rights or remedies hereunder or under any other Loan Document, (g) to a Lender Affiliate or a Subsidiary or affiliate of any Agent who has agreed in a writing enforceable by the Borrower to be bound by this section 23, (h) to any assignee or participant (or prospective assignee or participant) or any actual or prospective counterparty (or its advisors) to any swap or derivative transactions referenced to credit or other risks or events arising under this Credit Agreement or any other Loan Document so long as such assignee, participant or counterparty, as the case -62- may be, agrees in a writing enforceable by the Borrower to be bound by the provisions of this section 23 or (i) with the consent of the Borrower. SECTION 23.2. PRIOR NOTIFICATION. Unless specifically prohibited by applicable law or court order, each of the Lenders and the Agent shall, prior to disclosure thereof, notify the Borrower of any request for disclosure of any such non-public information by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) or pursuant to legal process including, without limitation, any disclosure under section 23.1(b), (d) or (f). In addition to, and without limiting the foregoing, each of the Lenders and the Agent shall permit the Borrower to intervene in any relevant proceedings to protect its interests in the non-public information and shall provide reasonable cooperation to the Borrower, at the Borrower's expense, in seeking to obtain such protection. Each of the Lenders and the Agent further agrees that if the Borrower is not successful in precluding the court or other legal body from requiring the disclosure of the non-public information, such Lender or the Agent, as the case may be, will furnish only that portion of the non-public information which it in good faith reasonably considers to be legally required and, at the request and expense of the Borrower, will exercise all reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the non-public information. SECTION 23.3. OTHER. In no event shall any Lender or the Agent be obligated or required to return any materials furnished to it or any Financial Affiliate by the Borrower or any of its Subsidiaries. The obligations of each Lender under this section 23 shall supersede and replace the obligations of such Lender under any confidentiality letter in respect of this financing signed and delivered by such Lender to the Borrower prior to the date hereof and shall be binding upon any assignee of, or purchaser of any participation in, any interest in the Term Loan. SECTION 24. SEVERABILITY. The provisions of this Credit Agreement are severable and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Credit Agreement in any jurisdiction. [SIGNATURE PAGES FOLLOW] IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement as a sealed instrument as of the date first set forth above. STAPLES, INC. By: /s/ William Swanson -------------------------------- Name: William Swanson Title: Sr. VP, Finance & Treasurer FLEET NATIONAL BANK, individually and as Agent By: /s/ Linda E. Alto --------------------------------- Name: Linda E. Alto Title: Director CITICORP USA, INC. By: /s/ Robert A. Snell ---------------------------------- Name: Robert A. Snell Title: Vice President WACHOVIA BANK, NATIONAL ASSOCIATION By: /s/ Martha M. Winters ---------------------------------- Name: Martha M. Winters Title: Vice President HSBC BANK USA By: /s/ Anne Sevewicz ---------------------------------- Name: Anne Sevewicz Title: Sr. Vice President JPMORGAN CHASE BANK By: /s/ Teri Streusand ---------------------------------- Name: Teri Streusand Title: Vice President BANK ONE, NA (Main Office Chicago) By: /s/ Vincent R. Henchek ---------------------------------- Name: Vincent R. Henchek Title: Director
