BRIDGE CREDIT AGREEMENT

 

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                                                                  EXHIBIT 99.1

 

                                  $400,000,000

 

                             BRIDGE CREDIT AGREEMENT

 

                            dated as of July 5, 2005,

 

                                   by and among

 

                                   BELK, INC.,

                and the Subsidiaries of Belk, Inc. party hereto,

                                  as Borrowers

 

                             BANK OF AMERICA, N.A.,

                       WACHOVIA BANK, NATIONAL ASSOCIATION

                    and the other Lenders referred to herein,

 

                                       and

 

                             BANK OF AMERICA, N.A.,

                             as Administrative Agent

 

                         BANC OF AMERICA SECURITIES LLC

                                       and

                          WACHOVIA CAPITAL MARKETS, LLC

                             as Joint Lead Arrangers

 

                         BANC OF AMERICA SECURITIES LLC

                              as Sole Book Manager

 

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                               TABLE OF CONTENTS

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ARTICLE I   DEFINITIONS .........................................................................         1

        Section 1.1         Definitions .........................................................         1

        Section 1.2         General .............................................................        15

        Section 1.3         Other Definitions and Provisions ....................................        15

 

ARTICLE II TERM LOAN ...........................................................................         15

        Section 2.1         Term Loan ...........................................................        15

        Section 2.2         Intentionally Omitted ...............................................        16

        Section 2.3         Procedure for Making of Term Loan ...................................        16

        Section 2.4         Repayment of Loans ..................................................        16

        Section 2.5         Notes ...............................................................        18

        Section 2.6         Mandatory Permanent Reduction of the Term Loan Commitments ..........        18

        Section 2.7         Termination of Credit Facility ......................................        18

 

ARTICLE III INTENTIONALLY OMITTED ..............................................................        20

 

ARTICLE IV GENERAL LOAN PROVISIONS .............................................................        20

         Section 4.1        Interest ............................................................        20

         Section 4.2        Notice and Manner of Conversion or Continuation of Loans ............        23

         Section 4.3        Continuation Fee ....................................................        23

          Section 4.4        Manner of Payment ...................................................        23

         Section 4.5        Crediting of Payments and Proceeds ..................................        24

         Section 4.6        Adjustments .........................................................        24

         Section 4.7        Nature of Obligations of Lenders Regarding Extensions of Credit;

                           Assumption by the Administrative Agent ..............................        25

         Section 4.8        Changed Circumstances ...............................................        25

         Section 4.9        Indemnity ...........................................................        27

         Section 4.10       Capital Requirements ................................................        28

         Section 4.11       Taxes ...............................................................        28

 

ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING .........................................        30

         Section 5.1        Closing .............................................................        30

         Section 5.2        Conditions to Closing ...............................................        30

         Section 5.3.       Conditions to All Extensions of Credit ..............................        31

 

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWERS .....................................        31

         Section 6.1        Representations and Warranties ......................................        31

         Section 6.2        Survival of Representations and Warranties, Etc......................        40

 

ARTICLE VII FINANCIAL INFORMATION AND NOTICES ..................................................        40

          Section 7.1        Financial Statements and Projections ................................        40

         Section 7.2        Officer's Compliance Certificate ....................................        41

         Section 7.3        Accountants' Certificate ............................................        41

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        Section 7.4        Other Reports ........................................................        41

        Section 7.5        Notice of Litigation and Other Matters ...............................        42

        Section 7.6        Accuracy of Information ..............................................        43

 

ARTICLE VIII AFFIRMATIVE COVENANTS .............................................................        43

        Section 8.1        Preservation of Corporate Existence and Related Matters ..............        43

        Section 8.2        Maintenance of Property ..............................................        43

        Section 8.3        Insurance ............................................................        43

        Section 8 4        Accounting Methods and Financial Records .............................        44

        Section 8.5        Payment and Performance of Obligations ...............................        44

        Section 8.6        Compliance With Laws and Approvals ...................................        44

        Section 8.7        Environmental Laws ...................................................        44

        Section 8.8        Compliance with ERISA ................................................        45

        Section 8.9        Compliance With Agreements ...........................................        45

        Section 8.10       Visits and Inspections ...............................................        45

        Section 8.11       Additional Subsidiaries ..............................................        45

        Section 8.12       Use of Proceeds ......................................................        45

 

ARTICLE IX FINANCIAL COVENANTS .................................................................        46

        Section 9.1        Leverage Ratio .......................................................        46

        Section 9.2        Fixed Charge Coverage Ratio ..........................................        46

        Section 9.3        Modifications to Financial Covenants Following an Amendment of

                           the Existing Credit Agreement ........................................        46

 

ARTICLE X NEGATIVE COVENANTS ...................................................................        47

         Section 10.1      Limitations on Debt ..................................................        47

         Section 10.2      Limitations on Liens .................................................        48

         Section 10.3      Limitations on Loans, Advances, Investments and Acquisitions .........        49

         Section 10.4      Limitations on Mergers and Liquidation ...............................        51

         Section 10.5      Limitations on Sale of Assets ........................................        52

         Section 10.6      Limitations on Dividends and Distributions ...........................        52

         Section 10.7      Limitations on Exchange and Issuance of Capital Stock ................        53

         Section 10.8      Transactions with Affiliates .........................................        53

         Section 10.9      Certain Accounting Changes; Organizational Documents .................        53

         Section 10.10     Amendments; Payments and Prepayments of Subordinated Debt ............        53

         Section 10.11     Restrictive Agreements ...............................................        54

         Section 10.12     Nature of Business ...................................................        54

         Section 10.13     Prepayment of Other Indebtedness, Etc.................................        54

 

ARTICLE XI DEFAULT AND REMEDIES ................................................................        55

         Section 11.1      Events of Default ....................................................         55

         Section 11.2      Remedies .............................................................        57

         Section 11.3      Rights and Remedies Cumulative; Non-Waiver; etc.......................        58

 

ARTICLE XII THE ADMINISTRATIVE AGENT ...........................................................        58

         Section 12.1      Appointment ..........................................................        58

         Section 12.2      Delegation of Duties .................................................        59

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        Section 12.3        Exculpatory Provisions ..............................................         59

        Section 12.4        Reliance by the Administrative Agent ................................        59

        Section 12.5        Notice of Default ...................................................        60

        Section 12.6        Non-Reliance on the Administrative Agent and Other Lenders ..........        60

        Section 12.7        Indemnification .....................................................        61

        Section 12.8        The Administrative Agent in Its Individual Capacity .................        61

        Section 12.9        Resignation of the Administrative Agent; Successor

                           Administrative Agent ................................................        61

        Section 12.10       Other Agents ........................................................        62

 

ARTICLE XIIII MISCELLANEOUS ....................................................................        62

        Section 13.1        Notices .............................................................        62

        Section 13.2        Expenses; Indemnity .................................................        63

        Section 13.3        Set-off .............................................................        64

        Section 13.4        Governing Law .......................................................        65

        Section 13.5        Jurisdiction and Venue ..............................................        65

        Section 13.6        Reversal of Payments ................................................        65

        Section 13.7        Injunctive Relief; Punitive Damages .................................        66

        Section 13.8        Accounting Matters ..................................................        66

        Section 13.9        Successors and Assigns; Participations ..............................        66

        Section 13.10       Amendments, Waivers and Consents ....................................        70

        Section 13.11       Performance of Duties ...............................................        71

        Section 13.12       All Powers Coupled with Interest ....................................        71

        Section 13.13       Survival of Indemnities .............................................        71

        Section 13.14       Titles and Captions .................................................        71

        Section 13.15       Severability of Provisions ..........................................        71

        Section 13.16       Counterparts ........................................................        71

        Section 13.17       Term of Agreement ...................................................        72

        Section 13.18       Advice of Counsel ...................................................        72

        Section 13.19       No Strict Construction ..............................................        72

        Section 13.20       Inconsistencies with Other Documents; Independent Effect of

                           Covenants ...........................................................        72

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EXHIBITS

 

Exhibit A          -         Form of Note

Exhibit B          -         Form of Notice of Borrowing

Exhibit C          -         Form of Notice of Account Designation

Exhibit D          -         Form of Notice of Repayment

Exhibit E          -         Form of Notice of Conversion/Continuation

Exhibit F          -         Form of Officer's Compliance Certificate

Exhibit G          -         Form of Assignment and Acceptance

 

SCHEDULES

 

Schedule 2.1                Commitments and Applicable Percentages

Schedule 6.1(a)    -         Jurisdictions of Organization and Qualification

Schedule 6.l(b)    -         Subsidiaries and Capitalization

Schedule 6.l(f)    -         Ongoing Tax Audits

Schedule 6.l(i)    -         ERISA Plans

Schedule 6.1(l)    -         Material Contracts

Schedule 6.1(m)    -         Labor and Collective Bargaining Agreements

Schedule 6.l(t)    -         Debt and Guaranty Obligations

Schedule 6.l(u)    -         Litigation

Schedule 8.3       -         Insurance

Schedule 10.2      -         Existing Liens

Schedule 10.3      -         Existing Investments

Schedule 10.8      -         Transactions with Affiliates

Schedule 13.9      -         Assignment Fee

 

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                                                                   EXECUTION COPY

 

      BRIDGE CREDIT AGREEMENT, dated as of the 5th day of July, 2005, by and

among BELK, INC., a Delaware corporation (the "Company"), the Subsidiaries of

the Company listed on the signature pages hereto and each additional Subsidiary

of the Company which hereafter becomes a Borrower pursuant to Section 8.11

(collectively, the "Subsidiary Borrowers" and together with the Company, the

"Borrowers"), BANK OF AMERICA, N.A., WACHOVIA BANK, NATIONAL ASSOCIATION, and

such other lenders who are or may become a party to this Agreement, as Lenders,

and BANK OF AMERICA, N.A., in its capacity as administrative agent for the

Lenders (the "Administrative Agent").

 

                              STATEMENT OF PURPOSE

 

       The Borrowers have requested, and, subject to the terms and conditions

hereof, the Lenders have agreed, to extend certain credit facilities to the

Borrowers.

 

      NOW, THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged by the parties hereto, such parties

hereby agree as follows:

 

                                    ARTICLE I

 

                                   DEFINITIONS

 

      Section 1.1 Definitions.

 

      The following terms when used in this Agreement shall have the meanings

assigned to them below:

 

      "Acquired Assets" means, the assets used in the operation of the retail

department stores operating under the nameplates McRae's and Proffitt's, as more

fully described by the defined term "Assets" in the Purchase Agreement.

 

      "Add-On Term Loan" means that certain term loan facility to be documented

under the Existing Credit Agreement pursuant to an amendment thereto or

restatement thereof, the Net Cash Proceeds of which, together with the Net Cash

Proceeds of the Senior Notes and/or other similar financings or capital raising,

are expected to be sufficient to repay the Term Loan and all other Obligations

hereunder in full.

 

      "Additional Debt" means, with respect to any Borrower or any Subsidiary

and to the extent not included as a liability on the consolidated balance sheet

of such Borrower or Subsidiary, in accordance with GAAP, any monetary obligation

(including, without limitation, all outstanding payment, recourse, repurchase,

hold harmless, indemnity or similar obligations) with respect to any Synthetic

Lease transaction, tax retention or off-balance sheet lease transaction, asset

securitization transaction (including any accounts receivable purchase facility)

or any other monetary obligation arising with respect to any other transaction

which does not appear on the balance sheet of such Borrower or Subsidiary, but

which (i) upon the insolvency or bankruptcy of such Borrower or Subsidiary would

be characterized as debt of such Borrower or Subsidiary or (ii) is the

functional equivalent of or takes the place of borrowing.

 

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      "Adjusted Debt" means the sum of (i) Funded Debt and (ii) the product of

(x) Rental Expense and (y) eight (8).

 

      "Administrative Agent" means Bank of America, N.A., in its capacity as

Administrative Agent hereunder, and any successor thereto appointed pursuant to

Section 12.9.

 

      "Administrative Agent's Office" means the office of the Administrative

Agent specified in or determined in accordance with the provisions of Section

13.1(c).

 

      "Affiliate" means, with respect to any Person, any other Person (other

than a Borrower or a Subsidiary of a Borrower) which directly or indirectly

through one or more intermediaries, controls, or is controlled by, or is under

common control with, such first Person or any of its Subsidiaries. The term

"control" means (a) the power to vote five percent (5%) or more of the

securities or other equity interests of a Person having ordinary voting power,

or (b) the possession, directly or indirectly, of any other power to direct or

cause the direction of the management and policies of a Person, whether through

ownership of voting securities, by contract or otherwise.

 

      "Agreement" means this Bridge Credit Agreement, as amended, restated,

supplemented or otherwise modified from time to time.

 

      "Applicable Law" means all applicable provisions of constitutions, laws,

statutes, ordinances, rules, treaties, regulations, permits, licenses,

approvals, interpretations and orders of courts or Governmental Authorities and

all orders and decrees of all courts and arbitrators.

 

      "Approved Fund" means any Fund that is administered or managed by (a) a

Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an

entity that administers or manages a Lender.

 

      "Applicable Margin" shall have the meaning assigned thereto in Section

4.1(c).

 

      "Assignment and Acceptance" shall have the meaning assigned thereto in

Section 13.9.

 

      "Base Rate" means for any day a fluctuating rate per annum equal to the

higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest

in effect for such day as publicly announced from time to time by Bank of

America as its "prime rate." The "prime rate" is a rate set by Bank of America

based upon various factors including Bank of America's costs and desired return,

general economic conditions and other factors, and is used as a reference point

for pricing some loans, which may be priced at, above, or below such announced

rate. Any change in such rate announced by Bank of America shall take effect at

the opening of business on the day specified in the public announcement of such

change.

 

      "Base Rate Loan" means any Loan bearing interest at a rate based upon the

Base Rate as provided in Section 4.1(a).

 

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      "Benefited Lender" shall have the meaning assigned thereto in Section 4.6.

 

      "Borrowers" shall have the meaning assigned thereto in the preamble

hereof.

 

      "Business Day" means (a) for all purposes other than as set forth in

clause (b) below, any day other than a Saturday, Sunday or legal holiday on

which banks in Charlotte, North Carolina and New York, New York, are open for

the conduct of their commercial banking business, and (b) with respect to all

notices and determinations in connection with, and payments of principal and

interest on, any LIBOR Rate Loan, any day that is a Business Day described in

clause (a) and that is also a day for trading by and between banks in Dollar

deposits in the London interbank market.

 

      "Calculation Date" shall have the meaning assigned thereto in Section

4.1(c).

 

      "Capital Asset" means, with respect to the Borrowers and their

Subsidiaries, any asset that should, in accordance with GAAP, be classified and

accounted for as a capital asset on a Consolidated balance sheet of the

Borrowers and their Subsidiaries.

 

      "Capital Lease" means any lease of any property by any of the Borrowers or

any of their Subsidiaries, as lessee, that should, in accordance with GAAP, be

classified and accounted for as a capital lease on a Consolidated balance sheet

of the Borrowers and their Subsidiaries.

 

      "Cash Equivalents" shall have the meaning assigned thereto in Section

10.3(b).

 

      "Change in Control" shall have the meaning assigned thereto in Section

11.1(h).

 

      "Closing Date" means the date of this Agreement or such later Business Day

upon which each condition described in Section 5.2 shall be satisfied or waived

in all respects in a manner acceptable to the Administrative Agent, in its sole

discretion.

 

      "Code" means the Internal Revenue Code of 1986, and the rules and

regulations thereunder, each as amended or modified from time to time.

 

       "Company" shall have the meaning assigned thereto in the preamble hereof.

 

      "Consolidated" means, when used with reference to financial statements or

financial statement items of the Borrowers and their Subsidiaries, such

statements or items on a consolidated basis in accordance with applicable

principles of consolidation under GAAP.

 

      "Credit Facility" means the credit facility established hereunder.

 

      "Debt" means, with respect to the Borrowers and their Subsidiaries at any

date and without duplication, the sum of the following calculated in accordance

with GAAP: (a) all Funded Debt, (b) all Additional Debt, (c) all obligations to

pay the deferred purchase price of property or services of any such Person

(including, without limitation, all obligations under non-competition

agreements), except trade payables arising in the ordinary course of business

not

 

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more than ninety (90) days past due, (d) all Debt of any other Person secured by

a Lien on any asset of any such Person, (e) all Guaranty Obligations of any such

Person, (f) all obligations, contingent or otherwise, of any such Person

relative to the face amount of letters of credit, whether or not drawn, and

banker's acceptances issued for the account of any such Person, (g) all

obligations of any such Person to redeem, repurchase, exchange, defease or

otherwise make payments in respect of capital stock or other securities or

partnership interests of such Person and (h) all net payment obligations

incurred by any such Person pursuant to Hedging Agreements.

 

      "Debt Issuance" means the issuance by the Company or any Subsidiary of any

Debt or Additional Debt other than Debt and Additional Debt permitted under

Section 10.1(a)-(m).

 

      "Default" means any of the events specified in Section 11.1 which with the

passage of time, the giving of notice or any other condition, would constitute

an Event of Default.

 

      "Disposition" or "Dispose" means the sale, transfer, license, lease or

other disposition (including any Sale and Leaseback Transaction) of any property

by the Borrowers or any of their Subsidiaries (including the capital stock of

any Subsidiary), including any sale, assignment, transfer or other disposal,

with or without recourse, of any notes or accounts receivable or any rights and

claims associated therewith, but excluding (a) the sale, lease, license,

transfer or other disposition of property in the ordinary course of business of

the Borrowers and their Subsidiaries (other than sales of government contracts

that are required by law or by any government agency to be sold as a result of

an organizational conflict of interest), (b) the sale, lease, license, transfer

or other disposition of machinery and equipment no longer used or useful in the

conduct of business of the Borrowers and their Subsidiaries, (c) any sale,

lease, license, transfer or other disposition of property by any Borrower or any

Subsidiary of any Borrower, and (d) any sale, transfer or other disposition of

Cash Equivalents.

 

      "Dollars" or "$" means, unless otherwise qualified, dollars in lawful

currency of the United States.

 

      "EBITDA" means, for any period, the sum of the following determined on a

Consolidated basis, without duplication, for the Borrowers and their

Subsidiaries in accordance with GAAP: (a) Net Income for such period plus (b)

the sum of the following to the extent deducted in determining Net Income: (i)

income and franchise taxes, (ii) Interest Expense, and (iii) amortization,

depreciation, and other non-cash charges, including those related to the closing

of store locations less (c) interest income and any extraordinary gains.

 

      "EBITDAR" means, for any period, the sum of the following determined on a

Consolidated basis, without duplication, for the Borrowers and their

Subsidiaries in accordance with GAAP: (a) EBITDA for such period plus (b) Rental

Expense.

 

      "Eligible Assignee" means, (a) a Lender; (b) an Affiliate of a Lender; (c)

an Approved Fund; and (d) any other Person (other than a natural person)

approved by (i) the Administrative Agent, and (ii) unless an Event of Default

has occurred and is continuing, the Company (each such approval not to be

unreasonably withheld or delayed); provided that notwithstanding the

 

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foregoing, "Eligible Assignee" shall not include a Borrower or any of such

Borrower's Affiliates or Subsidiaries.

 

      "Employee Benefit Plan" means any employee benefit plan within the meaning

of Section 3(3) of ERISA which (a) is maintained for employees of any Borrower

or any ERISA Affiliate or (b) has at any time within the preceding six (6) years

been maintained for the employees of any Borrower or any current or former ERISA

Affiliate.

 

      "Environmental Claims" means any and all administrative, regulatory or

judicial actions, suits, demands, demand letters, claims, liens, accusations,

allegations, notices of noncompliance or violation, investigations (other than

internal reports prepared by any Person in the ordinary course of business and

not in response to any third party action or request of any kind) or proceedings

relating in any way to any actual or alleged violation of or liability under any

Environmental Law or relating to any permit issued, or any approval given, under

any such Environmental Law, including, without limitation, any and all claims by

Governmental Authorities for enforcement, cleanup, removal, response, remedial

or other actions or damages, contribution, indemnification cost recovery,

compensation or injunctive relief resulting from Hazardous Materials or arising

from alleged injury or threat of injury to human health or the environment.

 

      "Environmental Laws" means any and all federal, foreign, state, provincial

and local laws, statutes, ordinances, rules, regulations, permits, licenses,

approvals, interpretations and orders of courts or Governmental Authorities,

relating to the protection of human health or the environment, including, but

not limited to, requirements pertaining to the manufacture, processing,

distribution, use, treatment, storage, disposal, transportation, handling,

reporting, licensing, permitting, investigation or remediation of Hazardous

Materials.

 

      "Equity Issuance" means any issuance by the Borrowers or any Subsidiary to

any Person of shares of its capital stock, other than (a) any issuance of shares

of its capital stock pursuant to the exercise of options, warrants or other

purchase rights under any stock incentive plan, stock option plan, stock

purchase plan, stock grant plan or other equity-based compensation plan or

arrangement, (b) any issuance of shares of its capital stock pursuant to the

conversion of any debt securities to equity or the conversion of any class

equity securities to any other class of equity securities, (c) any issuance of

options or warrants relating to its capital stock, (d) any issuance by the

Borrowers of shares of their capital stock as consideration for an acquisition

permitted under Section 10.3 and (e) any issuance by a Subsidiary of shares of

its capital stock to the Borrowers or any Subsidiary. The term "Equity Issuance"

shall not be deemed to include any Disposition and vice versa.

 

      "ERISA" means the Employee Retirement Income Security Act of 1974, and the

rules and regulations thereunder, each as amended, or modified from time to

time.

 

      "ERISA Affiliate" means any Person who together with any Borrower is

treated as a single employer within the meaning of Section 414(b), (c), (m) or

(o) of the Code or Section 4001(b) of ERISA.

 

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      "Escrow Letter" means that certain Escrow Letter, dated as of April 27,

2005, addressed to Moore & Van Allen, PLLC from the Borrowers and the Lenders.

 

      "Eurodollar Base Rate" has the meaning specified in the definition of

LIBOR Rate.

 

      "Eurodollar Reserve Percentage" means, for any day during any Interest

Period, the reserve percentage (expressed as a decimal, carried out to five

decimal places) in effect on such day, whether or not applicable to any Lender,

under regulations issued from time to time by the FRB for determining the

maximum reserve requirement (including any emergency, supplemental or other

marginal reserve requirement) with respect to Eurocurrency funding (currently

referred to as "Eurocurrency liabilities"). The LIBOR Rate for each outstanding

LIBOR Rate Loan shall be adjusted automatically as of the effective date of any

change in the Eurodollar Reserve Percentage.

 

      "Event of Default" means any of the events specified in Section 11.1,

provided that any requirement for passage of time, giving of notice, or any

other condition, has been satisfied.

 

      "Existing Credit Agreement" means the Credit Agreement, dated as of

October 28, 2004 (as amended, restated or otherwise modified from time to time

prior to the date hereof), among the Borrowers and the lenders party thereto.

 

      "Extension of Credit" means, as to any Lender at any time, the making of

its portion of the Term Loan.

 

      "FDIC" means the Federal Deposit Insurance Corporation, or any successor

thereto.

 

      "Federal Funds Rate" means, for any day, the rate per annum equal to the

weighted average of the rates on overnight Federal funds transactions with

members of the Federal Reserve System arranged by Federal funds brokers on such

day, as published by the Federal Reserve Bank of New York on the Business Day

next succeeding such day; provided that (a) if such day is not a Business Day,

the Federal Funds Rate for such day shall be such rate on such transactions on

the next preceding Business Day as so published on the next succeeding Business

Day, and (b) if no such rate is so published on such next succeeding Business

Day, the Federal Funds Rate for such day shall be the average rate (rounded

upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of

America on such day on such transactions as determined by the Administrative

Agent.

 

      "Fiscal Year" means the fiscal year of the Borrowers and their

Subsidiaries ending on the Saturday closest to January 31 (whether such Saturday

occurs in January or February).

 

      "Fixed Charges" means, for any period, the sum of the following determined

on a Consolidated basis, without duplication, for the Borrowers and their

Subsidiaries in accordance with GAAP: (a) Interest Expense, (b) Rental Expense

and (c) cash dividends and distributions (excluding repurchases of the Company's

stock permitted pursuant to Section 10.6(d)).

 

                                       6

 

<PAGE>

 

      "Fixed Charge Coverage Ratio" means, as of the end of any fiscal quarter

of the Borrowers, the ratio of (a) EBITDAR for the period of four (4)

consecutive fiscal quarters ending on or immediately prior to such date to (b)

Fixed Charges for the period of four (4) consecutive fiscal quarters ending on

or immediately prior to such date.

 

      "FRB" means the Board of Governors of the Federal Reserve System of the

United States.

 

      "Fund" means any Person (other than a natural person) that is (or will be)

engaged in making, purchasing, holding or otherwise investing in commercial

loans and similar extensions of credit in the ordinary course of its business.

 

      "Funded Debt" means all liabilities, obligations and indebtedness of the

Borrowers for borrowed money including, but not limited to, obligations

evidenced by bonds, debentures, notes or other similar instruments and all

obligations under Capital Leases.

 

      "GAAP" means generally accepted accounting principles, as recognized by

the American Institute of Certified Public Accountants and the Financial

Accounting Standards Board, consistently applied and maintained on a consistent

basis for the Borrowers and their Subsidiaries throughout the period indicated

and (subject to Section 13.8) consistent with the prior financial practice of

the Borrowers and their Subsidiaries.

 

      "Governmental Approvals" means all authorizations, consents, approvals,

licenses and exemptions of, registrations and filings with, and reports to, all

Governmental Authorities.

 

      "Governmental Authority" means any nation, province, state or political

subdivision thereof, and any government or any Person exercising executive,

legislative, regulatory or administrative functions of or pertaining to

government, and any corporation or other entity owned or controlled, through

stock or capital ownership or otherwise, by any of the foregoing.

 

      "Guaranty Obligation" means, with respect to the Borrowers and their

Subsidiaries, without duplication, any obligation, contingent or otherwise, of

any such Person pursuant to which such Person has directly or indirectly

guaranteed any Debt or other obligation of any other Person and, without

limiting the generality of the foregoing, any obligation, direct or indirect,

contingent or otherwise, of any such Person (a) to purchase or pay (or advance

or supply funds for the purchase or payment of) such Debt or other obligation

(whether arising by virtue of partnership arrangements, by agreement to keep

well, to purchase assets, goods, securities or services, to take-or-pay, or to

maintain financial statement condition or otherwise) or (b) entered into for the

purpose of assuring in any other manner the obligee of such Debt or other

obligation of the payment thereof or to protect such obligee against loss in

respect thereof (in whole or in part); provided, that the term Guaranty

Obligation shall not include endorsements for collection or deposit in the

ordinary course of business.

 

      "Hazardous Materials" means any substances or materials (a) which are or

become defined as hazardous wastes, hazardous substances, pollutants,

contaminants, chemical substances or mixtures or toxic substances under any

Environmental Law, (b) which are toxic,

 

                                       7

 

<PAGE>

 

explosive, corrosive, flammable, infectious, radioactive, carcinogenic,

mutagenic or otherwise harmful to human health or the environment and are or

become regulated by any Governmental Authority, (c) the presence of which

require investigation or remediation under any Environmental Law or common law,

(d) the discharge or emission or release of which requires a permit or license

under any Environmental Law or other Governmental Approval, (e) which are deemed

to constitute a nuisance or a trespass which pose a health or safety hazard to

Persons or neighboring properties, (f) which consist of underground or

aboveground storage tanks, whether empty, filled or partially filled with any

substance, or (g) which contain, without limitation, asbestos, polychlorinated

biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum

derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic

gas.

 

      "Hedging Agreement" means any agreement with respect to any Interest Rate

Contract, agreement, commodity swap, forward foreign exchange agreement,

currency swap agreement, cross-currency rate swap agreement, currency option

agreement or other agreement or arrangement designed to alter the risks of any

Person arising from fluctuations in rates, currency values or commodity prices,

all as amended, restated, supplemented or otherwise modified from time to time.

 

      "Interest Expense" means, with respect to the Borrowers and their

Subsidiaries for any period, the gross interest expense (including, without

limitation, interest expense attributable to Capital Leases and all net payment

obligations pursuant to Hedging Agreements) of the Borrowers and their

Subsidiaries, all determined for such period on a Consolidated basis, without

duplication, in accordance with GAAP.

 

      "Interest Period" shall have the meaning assigned thereto in Section

4.1(b).

 

      "Interest Rate Contract" means any interest rate swap agreement, interest

rate cap agreement, interest rate floor agreement, interest rate collar

agreement, interest rate option or any other agreement regarding the hedging of

interest rate risk exposure executed in connection with hedging the interest

rate exposure of any Person and any confirming letter executed pursuant to such

agreement, all as amended, restated, supplemented or otherwise modified from

time to time.

 

      "Joinder Agreement" means, collectively, each joinder agreement in form

and substance acceptable to the Administrative Agent executed in favor of the

Administrative Agent for the ratable benefit of itself and the Lenders.

 

      "Lender" means each Person executing this Agreement as a Lender set forth

on the signature pages hereto, each Person that hereafter becomes a party to

this Agreement as a Lender pursuant to Section 13.9.

 

      "Lending Office" means, with respect to any Lender, the office of such

Lender maintaining such Lender's Extensions of Credit.

 

      "Leverage Ratio" shall have the meaning assigned thereto in Section 9.1.

 

                                        8

 

<PAGE>

 

      "LIBOR Rate" means for any Interest Period with respect to any LIBOR Rate

Loan, a rate per annum determined by the Administrative Agent pursuant to the

following formula:

 

     LIBOR Rate = Eurodollar Base Rate / 1.00 - Eurodollar Reserve Percentage

 

      Where,

 

            "Eurodollar Base Rate" means, for such Interest Period, the rate per

      annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"),

      as published by Reuters (or other commercially available source providing

      quotations of BBA LIBOR as designated by the Administrative Agent from

      time to time) at approximately 11:00 a.m., London time, two Business Days

      prior to the commencement of such Interest Period, for Dollar deposits

      (for delivery on the first day of such Interest Period) with a term

      equivalent to such Interest Period. If such rate is not available at such

      time for any reason, then the "Eurodollar Base Rate" for such Interest

      Period shall be the rate per annum determined by the Administrative Agent

      to be the rate at which deposits in Dollars for delivery on the first day

      of such Interest Period in same day funds in the approximate amount of the

      LIBOR Rate Loan being made, continued or converted by Bank of America and

      with a term equivalent to such Interest Period would be offered by Bank of

      America's London Branch to major banks in the London interbank eurodollar

      market at their request at approximately 11:00 a.m. (London time) two

      Business Days prior to the commencement of such Interest Period.

 

      "LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the

LIBOR Rate as provided in Section 4.1(a).

 

      "Lien" means, with respect to any asset, any mortgage, leasehold mortgage,

lien, pledge, charge, security interest, hypothecation or encumbrance of any

kind in respect of such asset. For the purposes of this Agreement, a Person

shall be deemed to own subject to a Lien any asset which it has acquired or

holds subject to the interest of a vendor or lessor under any conditional sale

agreement, Capital Lease or other title retention agreement relating to such

asset.

 

      "Loan Documents" means, collectively, this Agreement, the Notes, each

Joinder Agreement and each other document, instrument, certificate and agreement

executed and delivered by the Borrowers or any of their Subsidiaries in

connection with any of the foregoing or otherwise referred to herein or

contemplated hereby (excluding any Hedging Agreement), all as may be amended,

restated, supplemented or otherwise modified from time to time.

 

      "Loans" and "Loan" means the Term Loan or any component thereof.

 

      "Material Adverse Effect" means a material adverse effect on (a) the

properties, business, prospects, operations or condition (financial or

otherwise) of (i) a Borrower or any of its Subsidiaries or (ii) the Acquired

Assets, or (b) the ability of a Borrower or any of its Subsidiaries to perform

its obligations under the Loan Documents or Material Contracts, in each case to

which it is a party.

 

                                       9

 

<PAGE>

 

      "Material Contract" means (a) any contract or other agreement, written or

oral, of any Borrower or any of its Subsidiaries involving monetary liability of

or to any such Person in an amount in excess of $10,000,000 per annum, or (b)

any other contract or agreement, written or oral, of any Borrower or any of its

Subsidiaries the failure to comply with which could reasonably be expected to

have a Material Adverse Effect.

 

      "Multiemployer Plan" means a "multiemployer plan" as defined in Section

4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or

is accruing an obligation to make, or has accrued an obligation to make

contributions within the preceding six (6) years.

 

      "Net Cash Proceeds" means the aggregate cash or Cash Equivalents proceeds

received by the Company or any Subsidiary in respect of any Disposition, Equity

Issuance or Debt Issuance, net of (a) direct costs, fees and expenses incurred

in connection therewith (including, without limitation, legal, accounting and

investment banking fees and expenses, and sales commissions), (b) taxes paid or

payable as a result thereof and (c) in the case of any Disposition, the amount

necessary to retire any Debt secured by a Lien permitted by Section 10.2 on the

related property; it being understood that "Net Cash Proceeds" shall include,

without limitation, any cash or Cash Equivalents received upon the sale or other

disposition of any consideration that is not cash or Cash Equivalents received

by the Company or any Subsidiary in any Disposition, Equity Issuance or Debt

Issuance.

 

      "Net Income" means, with respect to the Borrowers and their Subsidiaries,

for any period of determination, the net income (or loss) of the Borrowers and

their Subsidiaries for such period, determined on a Consolidated basis in

accordance with GAAP; provided that there shall be excluded from Net Income (a)

the net income (or loss) of any Person (other than a Subsidiary which shall be

subject to clause (c) below), in which any Borrower or any of its Subsidiaries

has a joint interest with a third party, except to the extent such net income is

actually paid to such Borrower or any of its Subsidiaries by dividend or other

distribution during such period, (b) the net income (or loss) of any Person

accrued prior to the date it becomes a Subsidiary of such Person or is merged

into or consolidated with such Person or any of its Subsidiaries or that

Person's assets are acquired by such Person or any of its Subsidiaries except to

the extent included pursuant to the foregoing clause (a), (c) the net income (if

positive) of any Subsidiary to the extent that the declaration or payment of

dividends or similar distributions by such Subsidiary to any Borrower or any of

its Subsidiaries of such net income (i) is not at the time permitted by

operation of the terms of its charter or any agreement, instrument, judgment,

decree, order, statute rule or governmental regulation applicable to such

Subsidiary or (ii) would be subject to any taxes payable on such dividends or

distributions.

 

      "Net Worth" means the amount of assets shown on the Consolidated balance

sheet of the Borrowers and their Subsidiaries (including any items which would

be treated as intangibles under GAAP, including, but not limited to capitalized

interest, debt discount and expense, goodwill, patents, trademarks, copyrights,

licenses and franchises), less all liabilities of the Borrowers and their

Subsidiaries, all computed in accordance with GAAP, applied on a consistent

basis (such calculation shall exclude any non-cash increase or decrease to the

Prepaid Pension Asset account, as required by GAAP).

 

                                        10

 

<PAGE>

 

      "Notes" means the Notes made by the Borrowers payable to the order of each

Lender, substantially in the form of Exhibit A hereto, evidencing the Term Loan,

and any amendments, supplements and modifications thereto, any substitutes

therefor, and any replacements, restatements, renewals or extensions thereof, in

whole or in part; "Note" means any of such Notes.

 

      "Notice of Account Designation" shall have the meaning assigned thereto in

Section 2.3(b).

 

      "Notice of Borrowing" shall have the meaning assigned thereto in Section

2.3(a).

 

      "Notice of Conversion/Continuation" shall have the meaning assigned

thereto in Section 4.2.

 

      "Notice of Repayment" shall have the meaning assigned thereto in Section

2.4(c).

 

      "Obligations" means, in each case, whether now in existence or hereafter

arising: (a) the principal of and interest on (including interest accruing after

the filing of any bankruptcy or similar petition) the Loans, (b) all existing or

future payment and other obligations owing by any Borrower under any Hedging

Agreement (which such Hedging Agreement is permitted hereunder) with any Person

that is a Lender hereunder at the time such Hedging Agreement is executed (all

such obligations with respect to any such Hedging Agreement, "Hedging

Obligations") and (c) all other fees and commissions (including attorneys'

fees), charges, indebtedness, loans, liabilities, financial accommodations,

obligations, covenants and duties owing by any Borrower or any of its

Subsidiaries to the Lenders or the Administrative Agent, in each case under or

in respect of this Agreement, any Note or any of the other Loan Documents of

every kind, nature and description, direct or indirect, absolute or contingent,

due or to become due, contractual or tortious, liquidated or unliquidated, and

whether or not evidenced by any note.

 

      "Officer's Compliance Certificate" shall have the meaning assigned thereto

in Section 7.2.

 

      "Operating Lease" shall mean, as to any Person as determined in accordance

with GAAP, any lease of property (whether real, personal or mixed) by such

Person as lessee which is not a Capital Lease.

 

      "Other Taxes" shall have the meaning assigned thereto in Section 4.11(b).

 

      "PBGC" means the Pension Benefit Guaranty Corporation or any successor

agency.

 

      "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer

Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of

the Code and which (a) is maintained for the employees of any Borrower or any

ERISA Affiliates or (b) has at any time

 

                                       11

 

<PAGE>

 

within the preceding six (6) years been maintained for the employees of any

Borrower or any of its current or former ERISA Affiliates.

 

       "Permitted Credit Card Receivables Acquisition" means the acquisition by

the Company or a Subsidiary of a pool of credit card receivables relating to the

Acquired Assets that Saks Incorporated sold to HSBC (formerly Household) in

2003; provided that (a) the aggregate value of such credit card receivables

shall not exceed $250 million, (b) the premium paid by the Company or such

Subsidiary in connection with such acquisition shall not exceed 20% and (c) the

initial acquisition of, and ongoing financing for, such pool of receivables is

provided through an increase to the Receivables Purchase Facility or any new

receivables financing program similar to the Receivables Purchase Facility, it

being understood that the premium for such acquisition may be funded through

cash on hand, borrowings under the Existing Credit Agreement or other sources of

liquidity permitted hereunder.

 

      "Person" means an individual, corporation, limited liability company,

partnership, association, trust, business trust, joint venture, joint stock

company, pool, syndicate, sole proprietorship, unincorporated organization,

Governmental Authority or any other form of entity or group thereof.

 

      "Prepaid Pension Asset" as of any date of determination, means the fair

value of the Pension Plans' assets plus unrecognized gains/losses, prior service

costs, and any unrecognized net obligation or asset from transitions in excess

of the projected benefit obligations, all determined in accordance with

Financial Accounting Standard No. 87-"Employer's Accounting for Pensions.

 

      "Purchase Agreement" means that certain Asset Purchase Agreement

(including all schedules and exhibits thereto) between Saks Incorporated and the

Company dated on or about April 28, 2005.

 

      "Receivables Purchase Facility" means the Amended and Restated Note

Purchase Agreement dated March 31, 2005 among the Company, The Belk Center,

Inc., YC SUSI TRUST and Bank of America, N.A., as amended.

 

      "Register" shall have the meaning assigned thereto in Section 13.9(d).

 

      "Required Lenders" means, at any date, any combination of Lenders whose

Term Loan Commitments constitute more than fifty percent (50%) of the aggregate

principal amount of the Term Loan Commitments (or, if the Credit Facility has

been terminated pursuant to Section 11.2, any combination of Lenders holding

more than fifty percent (50%) of the aggregate outstanding Extensions of Credit;

provided that (a) if there are only two Lenders (counting, for these purposes,

affiliated Lenders as a single Lender) hereunder as of such date, Required

Lenders shall mean both such Lenders and (b) if there are more than two (2) but

less than six (6) Lenders (counting, for these purposes, affiliated Lenders as a

single Lender) hereunder as of such date, Required Lenders shall mean any

combination of Lenders whose Term Loan Commitments constitute more than

seventy-five percent (75%) of the aggregate principal amount of the Term Loan

Commitments (or, if the Credit Facility has been terminated pursuant to Section

11.2, any combination of

 

                                       12

 

<PAGE>

 

Lenders holding more than seventy-five percent (75%) of the aggregate

outstanding Extensions of Credit.

 

      "Rental Expense" means payments made pursuant to all obligations of the

Borrowers and their Subsidiaries under leases of real property or personal

property, whether now existing or hereafter entered into.

 

      "Responsible Officer" means any of the following: the chief executive

officer or chief financial officer of a Borrower or any other officer of a

Borrower reasonably acceptable to the Administrative Agent.

 

      "Sale and Leaseback Transaction" means, with respect to the Borrowers or

any Subsidiary, any arrangement, directly or indirectly, with any Person whereby

the Borrowers or such Subsidiary shall sell or transfer any property, real or

personal, used or useful in its business, whether now owned or hereafter

acquired, and thereafter rent or lease such property or other property that it

intends to use for substantially the same purpose or purposes as the property

being sold or transferred.

 

      "Senior Notes" means the unsecured senior notes to be issued in a private

placement by the Borrowers, the Net Cash Proceeds of which, together with the

Net Cash Proceeds of the Add-On Term Loan and/or other similar financings or

capital raising, are expected to be sufficient to repay the Term Loan and all

other Obligations hereunder in full.

 

      "Series 1998 Revenue Bonds" means the Belk, Inc. Taxable Variable Rate

Demand Revenue Bonds, Series 1998, issued by Belk, Inc.

 

      "Solvent" means, as to any Borrower and its Subsidiaries on a particular

date, that any such Person (a) has capital sufficient to carry on its business

and transactions and all business and transactions in which it is about to

engage and is able to pay its debts as they mature, (b) owns property having a

value, both at fair valuation and at present fair saleable value, greater than

the amount required to pay its probable liabilities (including contingencies),

and (c) does not believe that it will incur debts or liabilities beyond its

ability to pay such debts or liabilities as they mature.

 

      "Subordinated Debt" means the collective reference to any Debt of any

Borrower or any Subsidiary subordinated in right and time of payment to the

Obligations and containing such other terms and conditions, in each case as are

satisfactory to the Required Lenders.

 

      "Subsidiary" means as to any Person, any corporation, partnership, limited

liability company or other entity of which more than fifty percent (50%) of the

outstanding capital stock or other ownership interests having ordinary voting

power to elect a majority of the board of directors or other managers of such

corporation, partnership, limited liability company or other entity is at the

time owned by or the management is otherwise controlled by such Person

(irrespective of whether, at the time, capital stock or other ownership

interests of any other class or classes of such corporation, partnership,

limited liability company or other entity shall have or might have voting power

by reason of the happening of any contingency). Unless otherwise

 

                                       13

<PAGE>

 

qualified references to "Subsidiary" or "Subsidiaries" herein shall refer to

those of the Borrowers.

 

      "Subsidiary Borrowers" shall have the meaning assigned thereto in the

preamble hereof.

 

      "Synthetic Lease" means any synthetic lease, tax retention operating

lease, off-balance sheet loan or similar off-balance sheet financing product

where such transaction is considered borrowed money indebtedness for tax

purposes but is classified as an Operating Lease in accordance with GAAP.

 

      "Taxes" shall have the meaning assigned thereto in Section 4.11 (a).

 

       "Term Loan" has the meaning specified in Section 2.1.

 

      "Term Loan Commitment" means, as to each Lender, its obligation to make

its portion of the Term Loan to the Borrowers pursuant to Section 2.1 in the

principal amount set forth opposite such Lender's name on Schedule 2.1; provided

that, at any time after the funding of the Term Loan, the "Term Loan Commitment"

of any Lender shall be the outstanding principal amount of the Term Loan held by

such Lender. The aggregate principal amount of the Term Loan Commitments of all

of the Lenders as in effect on the Closing Date is FOUR HUNDRED MILLION DOLLARS

($400,000,000).

 

      "Term Loan Commitment Percentage" means, as to any Lender at any time, the

ratio of (a) the amount of the Term Loan Commitment of such Lender to (b) the

aggregate amount of the Term Loan Commitments of all Lenders.

 

      "Termination Date" means the earliest of the dates referred to in Section

2.7.

 

      "Termination Event" means except for any such event or condition that

could not reasonably be expected to have a Material Adverse Effect: (a) a

"Reportable Event" described in Section 4043 of ERISA for which the notice

requirement has not been waived by the PBGC, or (b) the withdrawal of any

Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which

it was a "substantial employer" as defined in Section 4001 (a)(2) of ERISA, or

(c) the termination of a Pension Plan, the filing of a notice of intent to

terminate a Pension Plan or the treatment of a Pension Plan amendment as a

termination, under Section 4041 of ERISA, if the plan assets are not sufficient

to pay all plan liabilities or (d) the institution of proceedings to terminate,

or the appointment of a trustee with respect to, any Pension Plan by the PBGC,

or (e) any other event or condition which would constitute grounds under Section

4042(a) of ERISA for the termination of, or the appointment of a trustee to

administer, any Pension Plan, or (f) the imposition of a Lien pursuant to

Section 412 of the Code or Section 302 of ERISA, or (g) the partial or complete

withdrawal of any Borrower of any ERISA Affiliate from a Multiemployer Plan if

withdrawal liability is asserted by such Plan, or (h) any event or condition

which results in the reorganization or insolvency of a Multiemployer Plan under

Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in

the termination of a Multiemployer Plan under Section 4041A of ERISA or the

institution by PBGC of proceedings to terminate a Multiemployer Plan under

Section 4042 of ERISA.

 

                                       14

<PAGE>

 

      "Transaction" means the acquisition by the Company of the Acquired Assets

pursuant to and in accordance with the terms of the Purchase Agreement.

 

      "Transaction Documents" means the Purchase Agreement and all other

documents, agreements and instruments delivered in connection therewith (in each

case including schedules and exhibits thereto).

 

      "United States" means the United States of America.

 

      "Wholly-Owned" means, with respect to a Subsidiary, that all of the shares

of capital stock or other ownership interests of such Subsidiary are, directly

or indirectly, owned or controlled by any Borrower and/or one or more of its

Wholly-Owned Subsidiaries (except for directors' qualifying shares or other

shares required by Applicable Law to be owned by a Person other than such

Borrower).

 

      Section 1.2 General.

 

      Unless otherwise specified, a reference in this Agreement to a particular

article, section, subsection, Schedule or Exhibit is a reference to that

article, section, subsection, Schedule or Exhibit of this Agreement. Wherever

from the context it appears appropriate, each term stated in either the singular

or plural shall include the singular and plural, and pronouns stated in the

masculine, feminine or neuter gender shall include the masculine, the feminine

and the neuter. Any reference herein to "Eastern time" shall refer to the

applicable time of day in Charlotte, North Carolina.

 

      Section 1.3 Other Definitions and Provisions.

 

            (a) Use of Capitalized Terms. Unless otherwise defined therein, all

      capitalized terms defined in this Agreement shall have the defined

      meanings when used in this Agreement, the Notes and the other Loan

      Documents or any certificate, report or other document made or delivered

      pursuant to this Agreement.

 

            (b) Miscellaneous. The words "hereof ", "herein" and "hereunder" and

      words of similar import when used in this Agreement shall refer to this

      Agreement as a whole and not to any particular provision of this

      Agreement.

 

                                   ARTICLE II

 

                                    TERM LOAN

 

      Section 2.1 Term Loan.

 

      Subject to the terms and conditions set forth herein, each Lender

severally agrees to make its portion of a term loan (the "Term Loan") to the

Borrowers in Dollars in a single advance on

 

                                       15

<PAGE>

 

the Closing Date in an amount not to exceed such Lender's Term Loan Commitment.

Amounts repaid on the Term Loan may not be reborrowed. The Term Loan may consist

of Base Rate Loans or LIBOR Rate Loans, as further provided herein, provided,

however, all Loans made on the Closing Date shall be made as Base Rate Loans.

 

      Section 2.2 Intentionally Omitted.

 

      Section 2.3 Procedure for Making of Term Loan.

 

            (a) Request for Term Loan. The Borrowers shall give the

      Administrative Agent irrevocable prior written notice substantially in the

      form attached hereto as Exhibit B (a "Notice of Borrowing") not later than

      11:00 a.m. (Eastern time) on the Closing Date of its intention to borrow

      the Term Loan, specifying (A) the date of such borrowing, which shall be a

      Business Day and (B) the amount of such borrowing, which shall be in a

      whole multiple of $1,000,000. A Notice of Borrowing received after 11:00

      a.m. (Eastern time) shall be deemed received on the next Business Day. The

      Administrative Agent shall promptly notify the Lenders of such Notice of

      Borrowing.

 

            (b) Disbursement of Term Loan. Not later than 2:00 p.m. (Eastern

      time) on the Closing Date, (i) each Lender will make available to the

      Administrative Agent, for the account of the Borrowers, at the office of

      the Administrative Agent in funds immediately available to the

      Administrative Agent, such Lender's Term Loan Commitment Percentage of the

      Term Loan. The Borrowers hereby irrevocably authorize the Administrative

      Agent to disburse the proceeds of each borrowing requested pursuant to

      this Section 2.3 in immediately available funds by crediting or wiring

      such proceeds to the deposit account of the Company identified in the

      notice substantially in the form of Exhibit C hereto (a "Notice of Account

      Designation") delivered by the Borrowers to the Administrative Agent or as

      may be otherwise agreed upon by the Borrowers and the Administrative

      Agent. Subject to Section 4.7 hereof, the Administrative Agent shall not

      be obligated to disburse the portion of the proceeds of the Term Loan to

      the extent that any Lender has not made available to the Administrative

      Agent its Term Loan Commitment Percentage of the Term Loan.

 

      Section 2.4 Repayment of Loans.

 

            (a) Repayment on Termination Date. The Borrowers hereby agree to

      repay the outstanding principal amount of the Term Loan in full on the

      Termination Date, together with all accrued but unpaid interest thereon.

 

            (b) Mandatory Repayments.

 

                  (i) Dispositions and Involuntary Dispositions. The Borrowers

            shall immediately prepay the Loans as hereafter provided in an

            aggregate amount equal to 100% of the Net Cash Proceeds of each

            Disposition (but not in excess of the amount necessary to prepay the

            Loans in full) to the extent the aggregate amount of such Net Cash

            Proceeds shall exceed $5,000,000 in connection with any one

 

                                       16

<PAGE>

 

            Disposition or series of related Dispositions. Such prepayment shall

            be applied as set forth in clause (iv) below.

 

                  (ii) Debt Issuances. Immediately upon receipt by the Company

            or any Subsidiary of the Net Cash Proceeds of any Debt Issuance, the

            Borrowers shall prepay the Loans as hereafter provided in an

            aggregate amount equal to 100% of such Net Cash Proceeds (but not in

            excess of the amount necessary to prepay the Loans in full), such

            prepayment to be applied as set forth in clause (iv) below.

 

                  (iii) Equity Issuances. Immediately upon the receipt by the

            Company or any Subsidiary of the Net Cash Proceeds of any Equity

            Issuance, the Borrowers shall prepay the Loans in an aggregate

            amount equal to 100% of such Net Cash Proceeds (but not in excess of

            the amount necessary to prepay the Loans in full), such prepayment

            to be applied as set forth in clause (iv) below.

 

                  (iv) Application of Payments. Prepayments shall be applied

            first to Base Rate Loans and then to LIBOR Rate Loans in direct

            order of Interest Period maturities. All prepayments under this

            Section 2.4(b) shall be subject to Section 4.9, but otherwise

            without premium or penalty, and shall be accompanied by interest on

             the principal amount prepaid through the date of prepayment.

 

            (c) Optional Repayments. The Borrowers may at any time and from time

      to time repay the Loans, in whole or in part, upon at least three (3)

      Business Days' irrevocable notice to the Administrative Agent with respect

      to LIBOR Rate Loans and one (1) Business Day irrevocable notice with

      respect to Base Rate Loans, substantially in the form attached hereto as

      Exhibit D (a "Notice of Repayment") specifying the date and amount of

      repayment and whether the repayment is of LIBOR Rate Loans, Base Rate

      Loans or a combination thereof, and, if of a combination thereof, the

      amount allocable to each. Upon receipt of such notice, the Administrative

       Agent shall promptly notify each Lender. If any such notice is given, the

      amount specified in such notice shall be due and payable on the date set

      forth in such notice. Partial repayments shall be in an aggregate amount

      of $3,000,000 or a whole multiple of $1,000,000 in excess thereof with

      respect to Base Rate Loans, and $5,000,000 or a whole multiple of

      $1,000,000 in excess thereof with respect to LIBOR Rate Loans. Each such

      repayment shall be accompanied by any amount required to be paid pursuant

      to Section 4.9 hereof.

 

            (d) Limitation on Repayment of LIBOR Rate Loans. The Borrowers may

      not repay any LIBOR Rate Loan on any day other than on the last day of the

      Interest Period applicable thereto unless such repayment is accompanied by

      any amount required to be paid pursuant to Section 4.9 hereof.

 

            (e) Hedging Agreements. No repayment or prepayment pursuant to this

      Section 2.4 shall affect any Borrower's obligations under any Hedging

      Agreement.

 

                                       17

<PAGE>

 

      Section 2.5 Notes.

 

      Except as otherwise provided in Section 13.9 (a)-(e), at the request of a

Lender, such Lender's Term Loan Commitment and the obligation of the Borrowers

to repay such Term Loan shall be evidenced by a separate Note executed by the

Borrowers payable to the order of such Lender.

 

      Section 2.6 Mandatory Permanent Reduction of the Term Loan Commitments.

 

      To the extent the Company or any Subsidiary receives Net Cash Proceeds

from a Disposition, Debt Issuance or Equity Issuance prior to the funding of the

Term Loan, the aggregate principal amount of the Term Loan Commitments shall be

permanently reduced Dollar for Dollar on the date of such receipt by the amount

of such Net Cash Proceeds that would otherwise be required to prepay the Loans

pursuant to Section 2.4(b). The amount of each partial permanent reduction shall

permanently reduce the Lenders' Term Loan Commitments to make the Term Loan pro

rata in accordance with their respective Term Loan Commitment Percentages.

 

      Section 2.7 Termination of Credit Facility.

 

      The Credit Facility shall terminate on the earliest of the date that is

364 days following the Closing Date, (b) the date the aggregate principal amount

of the Term Loan Commitments shall be permanently reduced to zero pursuant to

Section 2.6, (c) the date the Transaction has been consummated without use of

the Credit Facility and (d) the date of termination pursuant to Section 11.2(a).

 

      Section 2.8 Intentionally Omitted.

 

      Section 2.9 Joint and Several Liability of Borrowers.

 

      (a) Each of the Borrowers is accepting joint and several liability

hereunder in consideration of the financial accommodation to be provided by the

Lenders under this Agreement, for the mutual benefit, directly and indirectly,

of each of the Borrowers and in consideration of the undertakings of each of the

Borrowers to accept joint and several liability for the obligations of each of

them.

 

      (b) Each of the Borrowers jointly and severally hereby irrevocably and

unconditionally accepts, not merely as a surety but also as a co-debtor, joint

and several liability with the other Borrowers with respect to the payment and

performance of all of the Obligations arising under this Agreement and the other

Loan Documents, it being the intention of the parties hereto that all the

Obligations shall be the joint and several obligations of each of the Borrowers

without preferences or distinction among them.

 

      (c) If and to the extent that any of the Borrowers shall fail to make any

payment with respect to any of the Obligations as and when due or to perform any

of the Obligations in accordance with the terms thereof, then in each such

event, the other Borrowers will make such payment with respect to, or perform,

such Obligation.

 

                                       18

<PAGE>

 

      (d) The obligations of each Borrower under the provisions of this Section

2.9 constitute full recourse obligations of such Borrower, enforceable against

it to the full extent of its properties and assets.

 

      (e) Except as otherwise expressly provided herein, to the extent permitted

by Applicable Law, each Borrower (in its capacity as a joint and several obligor

in respect of the obligations of the other Borrowers) hereby waives notice of

acceptance of its joint and several liability, notice of occurrence of any

Default or Event of Default (except to the extent notice is expressly required

to be given pursuant to the terms of this Agreement), or of any demand for any

payment under this Agreement, notice of any action at any time taken or omitted

by the Administrative Agent or the Lenders under or in respect of any of the

obligations hereunder, any requirement of diligence and, generally, all demands,

notices and other formalities of every kind in connection with this Agreement.

Each Borrower hereby assents to, and waives notice of, any extension or

postponement of the time for the payment of any of the Obligations, the

acceptance of any partial payment thereon, any waiver, consent or other action

or acquiescence by the Administrative Agent or the Lenders at any time or times

in respect of any default by the other Borrowers in the performance or

satisfaction of any term, covenant, condition or provision of this Agreement,

any and all other indulgences whatsoever by the Administrative Agent or the

Lenders in respect of any of the obligations hereunder, and the taking,

addition, substitution or release, in whole or in part, at any time or times, of

any security for any of such obligations or the addition, substitution or

release, in whole or in part, of the other Borrowers. Without limiting the

generality of the foregoing, each Borrower (in its capacity as a joint and

several obligor in respect of the obligations of the other Borrowers) assents to

any other action or delay in acting or any failure to act on the part of the

Administrative Agent or the Lenders, including, without limitation, any failure

strictly or diligently to assert any right or to pursue any remedy or to comply

fully with applicable laws or regulations thereunder which might, but for the

provisions of this Section 2.9, afford grounds for terminating, discharging or

relieving such Borrower, in whole or in part, from any of its obligations under

this Section 2.9, it being the intention of each Borrower that, so long as any

of the Obligations hereunder remain unsatisfied, the obligations of such

Borrower under this Section 2.9 shall not be discharged except by performance

and then only to the extent of such performance. The obligations of each

Borrower under this Section 2.9 shall not be diminished or rendered

unenforceable by any winding up, reorganization, arrangement, liquidation,

reconstruction or similar proceeding with respect to any Borrower or a Lender.

The joint and several liability of the Borrowers hereunder shall continue in

full force and effect notwithstanding any absorption, merger, amalgamation or

any other change whatsoever in the name, membership, constitution or place of

formation of any Borrower or any of the Lenders.

 

      (f) The provisions of this Section 2.9 are made for the benefit of the

Lenders and their successors and assigns, and may be enforced by them from time

to time against any of the Borrowers as often as occasion therefor may arise and

without requirement on the part of the Lenders first to marshal any of its

claims or to exercise any of its rights against the other Borrowers or to

exhaust any remedies available to it against the other Borrowers or to resort to

any other source or means of obtaining payment of any of the Obligations

hereunder or to elect any other remedy. The provisions of this Section 2.9 shall

remain in effect until all the

 

                                        19

<PAGE>

 

Obligations shall have been paid in full or otherwise fully satisfied. If at any

time, any payment, or any part thereof, made in respect of any of the

Obligations is rescinded or must otherwise be restored or returned by the

Lenders upon the insolvency, bankruptcy or reorganization of any of the

Borrowers, or otherwise, the provisions of this Section 2.9 will forthwith be

reinstated and in effect as though such payment had not been made.

 

      (g) Notwithstanding any provision to the contrary contained herein or in

any of the other Loan Documents, to the extent the obligations of any Borrower

shall be adjudicated to be invalid or unenforceable for any reason (including,

without limitation, because of any applicable state or federal law relating to

fraudulent conveyances or transfers) then the obligations of such Borrower

hereunder shall be limited to the maximum amount that is permissible under

applicable law (whether federal or state and including, without limitation, the

Bankruptcy Code of the United States).

 

      Section 2.10 Appointment of the Company.

 

      Each of the Borrowers hereby appoints the Company to act as its agent for

all purposes under this Agreement (including, without limitation, with respect

to all matters related to the borrowing and repayment of Loans) and agrees that

(a) the Company may execute such documents on behalf of the other Borrowers as

the Company deems appropriate in its sole discretion and the Borrowers shall be

obligated by all of the terms of any such document executed on its behalf, (b)

any notice or communication delivered by the Administrative Agent or the Lender

to the Company shall be deemed delivered to the Borrowers and (c) the

Administrative Agent or the Lenders may accept, and be permitted to rely on, any

document, instrument or agreement executed by the Company on behalf of the

Borrowers.

 

                                   ARTICLE III

 

                             INTENTIONALLY OMITTED.

 

                                   ARTICLE IV

 

                              GENERAL LOAN PROVISIONS

 

      Section 4.1 Interest.

 

            (a) Interest Rate Options. Subject to the provisions of this Section

      4.1, at the election of the Borrowers, Loans shall bear interest at (A)

      the Base Rate plus the Applicable Margin or (B) the LIBOR Rate plus the

      Applicable Margin (provided that the LIBOR Rate shall not be available

      until three (3) Business Days after the Closing Date). The Borrowers shall

      select the rate of interest and Interest Period, if any, applicable to any

      Loan at the time a Notice of Borrowing is given or at the time a Notice of

      Conversion/Continuation is given pursuant to Section 4.2. Any Loan or any

      portion

 

                                        20

<PAGE>

 

      thereof as to which the Borrowers have not duly specified an interest rate

      as provided herein shall be deemed a Base Rate Loan.

 

            (b) Interest Periods. In connection with each LIBOR Rate Loan, the

      Borrowers, by giving notice at the times described in Section 4.1 (a),

      shall elect an interest period (each, an "Interest Period") to be

      applicable to such Loan, which Interest Period shall be a period of one

      (1), two (2), three (3) or six (6) months with respect to each LIBOR Rate

      Loan; provided that:

 

                  (i) the Interest Period shall commence on the date of advance

            of or conversion to any LIBOR Rate Loan and, in the case of

            immediately successive Interest Periods, each successive Interest

            Period shall commence on the date on which the immediately preceding

            Interest Period expires;

 

                  (ii) if any Interest Period would otherwise expire on a day

            that is not a Business Day, such Interest Period shall expire on the

            next succeeding Business Day; provided, that if any Interest Period

            with respect to a LIBOR Rate Loan would otherwise expire on a day

            that is not a Business Day but is a day of the month after which no

            further Business Day occurs in such month, such Interest Period

            shall expire on the immediately preceding Business Day;

 

                  (iii) any Interest Period with respect to a LIBOR Rate Loan

            that begins on the last Business Day of a calendar month (or on a

            day for which there is no numerically corresponding day in the

            calendar month at the end of such Interest Period) shall end on the

            last Business Day of the relevant calendar month at the end of such

            Interest Period;

 

                  (iv) no Interest Period shall extend beyond the Termination

            Date; and

 

                  (v) there shall be no more than ten (10) Interest Periods in

            effect at any time.

 

            (c) Applicable Margin. The Applicable Margin provided for in Section

      4.1 (a) with respect to any Loan (the "Applicable Margin") shall be based

      upon the table set forth below and shall be determined and adjusted

      quarterly on the date (each a "Calculation Date") ten (10) Business Days

      after the date by which the Borrowers are required to provide an Officer's

      Compliance Certificate for the most recently ended fiscal quarter of the

      Borrowers; provided, however, that (a) the initial Applicable Margin shall

      be based on Pricing Level II (as shown below) and shall remain at Pricing

      Level II until the first Calculation Date occurring after the Closing Date

      and, thereafter the Pricing Level shall be determined by reference to the

      Leverage Ratio as of the last day of the most recently ended fiscal

      quarter of the Borrowers preceding the applicable Calculation Date, and

      (b) if the Borrowers fail to provide the Officer's Compliance Certificate

      as required by Section 7.2 for the most recently ended fiscal quarter of

      the Borrowers preceding the applicable Calculation Date, the Applicable

      Margin from such Calculation Date shall be based on Pricing Level I (as

      shown below) until such time as an appropriate

 

                                       21

<PAGE>

 

      Officer's Compliance Certificate is provided, at which time the Pricing

      Level shall be determined by reference to the Leverage Ratio as of the

      last day of the most recently ended fiscal quarter of the Borrowers

      preceding such Calculation Date. The Applicable Margin shall be effective

      from one Calculation Date until the next Calculation Date. Any adjustment

      in the Applicable Margin shall be applicable to all Extensions of Credit

      then existing or subsequently made or issued.

 

<TABLE>

<CAPTION>

PRICING LEVEL           LEVERAGE RATIO                LIBOR RATE LOANS         BASE RATE LOANS

-------------           --------------                ----------------         ---------------

<S>                  <C>                              <C>                      <C>

      I              Greater than or equal to               1.000%                   0%

                     3.00 to 1.00

 

     II              Greater than or equal to               0.750%                   0%

                    2.25 to 1.00, but less than

                    3. 00 to 1.00

 

     III             Less    than    2.25   to                 0.625%                   0%

                    1.00

</TABLE>

 

            (d) Default Rate. Subject to Section 11.3, at the discretion of the

      Administrative Agent or as directed by the Required Lenders, upon the

      occurrence and during the continuance of an Event of Default, (i) the

      Borrowers shall no longer have the option to request LIBOR Rate Loans,

      (ii) all outstanding LIBOR Rate Loans shall bear interest at a rate per

      annum of two percent (2%) in excess of the rate then applicable to LIBOR

      Rate Loans until the end of the applicable Interest Period and thereafter

      at a rate equal to two percent (2%) in excess of the rate then applicable

      to Base Rate Loans, and (iii) all outstanding Base Rate Loans and other

       Obligations arising hereunder or under any other Loan Document shall bear

      interest at a rate per annum equal to two percent (2%) in excess of the

      rate then applicable to Base Rate Loans or such other Obligations arising

      hereunder or under any other Loan Document. Interest shall continue to

      accrue on the Notes after the filing by or against any Borrower of any

      petition seeking any relief in bankruptcy or under any act or law

      pertaining to insolvency or debtor relief, whether state, federal or

      foreign.

 

            (e) Interest Payment and Computation. Interest on each Base Rate

      Loan shall be payable in arrears on the last Business Day of each calendar

      quarter commencing with the first such day to occur after the Closing

      Date; and interest on each LIBOR Rate Loan shall be payable on the last

      day of each Interest Period applicable thereto or, in the case of any

      LIBOR Rate Loan having an Interest Period of six (6) months, every three

       (3) months. Interest on LIBOR Rate Loans and all fees payable hereunder

      shall be computed on the basis of a 360-day year and assessed for the

      actual number of days elapsed and interest on Base Rate Loans shall be

      computed on the basis of a 365/66-day year and assessed for the actual

      number of days elapsed.

 

            (f) Maximum Rate. In no contingency or event whatsoever shall the

      aggregate of all amounts deemed interest hereunder or under any of the

      Notes charged or collected pursuant to the terms of this Agreement or

      pursuant to any of the Notes exceed the highest rate permissible under any

      Applicable Law which a court of competent jurisdiction shall, in a final

      determination, deem applicable hereto. In the event that such a court

      determines that the Lenders have charged or received interest hereunder in

      excess of the highest applicable rate, the rate in effect hereunder shall

      automatically be reduced

 

                                        22

<PAGE>

 

      to the maximum rate permitted by Applicable Law and the Lenders shall at

      the Administrative Agent's option (i) promptly refund to the Borrowers any

      interest received by the Lenders in excess of the maximum lawful rate or

      (ii) apply such excess to the principal balance of the Obligations on a

      pro rata basis. It is the intent hereof that the Borrowers not pay or

      contract to pay, and that neither the Administrative Agent nor any Lender

      receive or contract to receive, directly or indirectly in any manner

      whatsoever, interest in excess of that which may be paid by the Borrowers

      under Applicable Law.

 

      Section 4.2 Notice and Manner of Conversion or Continuation of Loans.

 

      Provided that no Default or Event of Default has occurred and is then

continuing, the Borrowers shall have the option to (a) convert at any time

following the third Business Day after the Closing Date all or any portion of

any outstanding Base Rate Loans in a principal amount equal to $5,000,000 or any

whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans

and (b) upon the expiration of any Interest Period, (i) convert all or any part

of its outstanding LIBOR Rate Loans in a principal amount equal to $3,000,000 or

a whole multiple of $1,000,000 in excess thereof into Base Rate Loans or (ii)

continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrowers

desire to convert or continue Loans as provided above, the Borrowers shall give

the Administrative Agent irrevocable prior written notice in the form attached

as Exhibit E (a "Notice of Conversion/Continuation") not later than 11:00 a.m.

(Eastern time) three (3) Business Days before the day on which a proposed

conversion or continuation of such Loan is to be effective specifying (A) the

Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to

be converted or continued, the last day of the Interest Period therefor, (B) the

effective date of such conversion or continuation (which shall be a Business

Day), (C) the principal amount of such Loans to be converted or continued, and

(D) the Interest Period to be applicable to such converted or continued LIBOR

Rate Loan. The Administrative Agent shall promptly notify the Lenders of such

Notice of Conversion/Continuation.

 

      Section 4.3 Continuation Fee.

 

      The Borrowers shall on the 180th day following the Closing Date pay to the

Administrative Agent, for the account of the Lenders, on a pro-rata basis based

upon their respective Term Loan Commitment Percentages, a non-refundable

continuation fee equal to 0.150% of the aggregate principal amount of Loans

outstanding on such date.

 

      Section 4.4 Manner of Payment.

 

      Each payment by the Borrowers on account of the principal of or interest

on the Loans or of any fee, commission or other amounts payable to the Lenders

under this Agreement or any Note shall be made not later than 1:00 p.m. (Eastern

time) on the date specified for payment under this Agreement to the

Administrative Agent at the Administrative Agent's Office for the account of the

Lenders pro rata in accordance with their respective Term Loan Commitment, in

Dollars, in immediately available funds and shall be made without any set-off,

counterclaim or deduction whatsoever. Any payment received after such time but

before 2:00 p.m. (Eastern time) on such day shall be deemed a payment on such

date for the purposes of Section 11.1, but

 

                                       23

<PAGE>

 

for all other purposes shall be deemed to have been made on the next succeeding

Business Day. Any payment received after 2:00 p.m. (Eastern time) shall be

deemed to have been made on the next succeeding Business Day for all purposes.

Upon receipt by the Administrative Agent of each such payment, the

Administrative Agent shall distribute to each Lender at its address for notices

set forth herein its pro rata share of such payment in accordance with such

Lender's Term Loan Commitment, with respect to Extensions of Credit and shall

wire advice of the amount of such credit to each Lender. Each payment to the

Administrative Agent of Administrative Agent's fees or expenses shall be made

for the account of the Administrative Agent and any amount payable to any Lender

under Sections 4.3, 4.8, 4.9, 4.10, 4.11 or 13.2 shall be paid to the

Administrative Agent for the account of the applicable Lender. Subject to

Section 4.1(b)(ii) if any payment under this Agreement or any Note shall be

specified to be made upon a day which is not a Business Day, it shall be made on

the next succeeding day which is a Business Day and such extension of time shall

in such case be included in computing any interest if payable along with such

payment.

 

      Section 4.5 Crediting of Payments and Proceeds.

 

       In the event that the Borrowers shall fail to pay any of the Obligations

when due and the Obligations have been accelerated pursuant to Section 11.2, all

payments received by the Lenders upon the Notes and the other Obligations and

all net proceeds from the enforcement of the Obligations shall be applied: (a)

first to all expenses then due and payable by the Borrowers hereunder and under

the other Loan Documents, (b) then to all indemnity obligations then due and

payable by the Borrowers hereunder and under the other Loan Documents, (c) then

to all Administrative Agent's fees then due and payable, (d) then to all other

fees then due and payable, (e) then to accrued and unpaid interest on the Term

Loans, (e) then to the principal amount of the Term Loans and any Hedging

Obligations (including any termination payments and any accrued and unpaid

interest thereon) pro rata in accordance with all such amounts due.

 

      Section 4.6 Adjustments.

 

      If any Lender (a "Benefited Lender") shall at any time receive any payment

of all or part of the Obligations owing to it, or interest thereon, or if any

Lender shall at any time receive any collateral in respect to the Obligations

owing to it (whether voluntarily or involuntarily, by set-off or otherwise)

(other than pursuant to Sections 4.8, 4.9, 4.10, 4.11 or 13.2 hereof) in a

greater proportion than any such payment to and collateral received by any other

Lender, if any, in respect of the similar Obligations owing to such other

Lender, or interest thereon, such Benefited Lender shall purchase for cash from

the other Lenders such portion of each such other Lender's Extensions of Credit,

or shall provide such other Lenders with the benefits of any such collateral, or

the proceeds thereof, as shall be necessary to cause such Benefited Lender to

share the excess payment or benefits of such collateral or proceeds ratably with

each of the Lenders; provided, that if all or any portion of such excess payment

or benefits is thereafter recovered from such Benefited Lender, such purchase

shall be rescinded, and the purchase price and benefits returned to the extent

of such recovery, but without interest. The Borrowers agree that each Lender so

purchasing a portion of another Lender's Extensions of Credit may exercise all

rights of payment (including, without limitation, rights of set-off) with

respect to such portion as fully as if such Lender were the direct holder of

such portion.

 

                                       24

<PAGE>

 

      Section 4.7 Nature of Obligations of Lenders Regarding Extensions of

      Credit; Assumption by the Administrative Agent.

 

      The obligations of the Lenders under this Agreement to make the Loans are

several and are not joint or joint and several. Unless the Administrative Agent

shall have received notice from a Lender prior to the proposed borrowing date

that such Lender will not make available to the Administrative Agent such

Lender's ratable portion of the amount to be borrowed on such date (which notice

shall not release such Lender of its obligations hereunder), the Administrative

Agent may assume that such Lender has made such portion available to the

Administrative Agent on the proposed borrowing date in accordance with Sections

2.3(b) and the Administrative Agent may, in reliance upon such assumption, make

available to the Borrowers on such date a corresponding amount. If such amount

is made available to the Administrative Agent on a date after such borrowing

date, such Lender shall pay to the Administrative Agent on demand an amount,

until paid, equal to the product of (a) the amount not made available by such

Lender in accordance with the terms hereof, times (b) the daily average Federal

Funds Rate during such period as determined by the Administrative Agent, times

(c) a fraction the numerator of which is the number of days that elapse from and

including such borrowing date to the date on which such amount not made

available by such Lender in accordance with the terms hereof shall have become

immediately available to the Administrative Agent and the denominator of which

is 360. A certificate of the Administrative Agent with respect to any amounts

owing under this Section 4.7 shall be conclusive, absent manifest error. If such

Lender's Term Loan Commitment Percentage of such borrowing is not made available

to the Administrative Agent by such Lender within three (3) Business Days after

such borrowing date, the Administrative Agent shall be entitled to recover such

amount made available by the Administrative Agent with interest thereon at the

rate per annum applicable to Base Rate Loans hereunder, on demand, from the

Borrowers. The failure of any Lender to make available its Term Loan Commitment

Percentage of any Loan requested by the Borrowers shall not relieve it or any

other Lender of its obligation, if any, hereunder to make its Term Loan

Commitment Percentage of such Loan available on the borrowing date, but no

Lender shall be responsible for the failure of any other Lender to make its Term

Loan Commitment Percentage of such Loan available on the borrowing date.

Notwithstanding anything set forth herein to the contrary, any Lender that fails

to make available its Term Loan Commitment Percentage of any Loan shall not (a)

have any voting or consent rights under or with respect to any Loan Document or

(b) constitute a "Lender" (or be included in the calculation of Required Lenders

hereunder) for any voting or consent rights under or with respect to any Loan

Document.

 

      Section 4.8 Changed Circumstances.

 

            (a) Circumstances Affecting LIBOR Rate Availability. If with respect

      to any Interest Period the Administrative Agent or any Lender (after

      consultation with the Administrative Agent) shall determine that, by

      reason of circumstances affecting the foreign exchange and interbank

      markets generally, deposits in eurodollars, in the applicable amounts are

      not being quoted or offered for such Interest Period in a manner necessary

      to determine the applicable LIBOR Rate, then the Administrative Agent

      shall forthwith give notice thereof to the Company. Thereafter, until the

      Administrative Agent

 

                                       25

<PAGE>

 

      notifies the Company that such circumstances no longer exist, the

      obligation of the Lenders to make LIBOR Rate Loans and the right of the

      Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate Loan

      shall be suspended, and the Borrowers shall repay in full (or cause to be

      repaid in full) the then outstanding principal amount of each such LIBOR

      Rate Loan together with accrued interest thereon, on the last day of the

      then current Interest Period applicable to such LIBOR Rate Loan or convert

      the then outstanding principal amount of each such LIBOR Rate Loan to a

      Base Rate Loan as of the last day of such Interest Period.

 

            (b) Laws Affecting LIBOR Rate Availability. If, after the date

      hereof, the introduction of, or any change in, any Applicable Law or any

      change in the interpretation or administration thereof by any Governmental

      Authority, central bank or comparable agency charged with the

      interpretation or administration thereof, or compliance by any of the

      Lenders (or any of their respective Lending Offices) with any request or

      directive (whether or not having the force of law) of any such

      Governmental Authority, central bank or comparable agency, shall make it

      unlawful or impossible for any of the Lenders (or any of their respective

      Lending Offices) to honor its obligations hereunder to make or maintain

      any LIBOR Rate Loan, such Lender shall promptly give notice thereof to the

      Administrative Agent and the Administrative Agent shall promptly give

      notice to the Company and the other Lenders. Thereafter, until the

      Administrative Agent notifies the Company that such circumstances no

      longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans

      and the right of the Borrowers to convert any Loan or continue any Loan as

      a LIBOR Rate Loan shall be suspended and thereafter the Borrowers may

      select only Base Rate Loans hereunder, and (ii) if any of the Lenders may

      not lawfully continue to maintain a LIBOR Rate Loan to the end of the then

      current Interest Period applicable thereto as a LIBOR Rate Loan, the

      applicable LIBOR Rate Loan shall immediately be converted to a Base Rate

      Loan for the remainder of such Interest Period.

 

            (c) Increased Costs. If, after the date hereof, the introduction of,

      or any change in, any Applicable Law, or in the interpretation or

      administration thereof by any Governmental Authority, central bank or

      comparable agency charged with the interpretation or administration

      thereof, or compliance by any of the Lenders (or any of their respective

      Lending Offices) with any request or directive (whether or not having the

      force of law) of such Governmental Authority, central bank or comparable

       agency:

 

                  (i) shall (except as provided in Section 4.11(e)) subject any

            of the Lenders (or any of their respective Lending Offices) to any

            tax, duty or other charge with respect to any Note or shall change

             the basis of taxation of payments to any of the Lenders (or any of

            their respective Lending Offices) of the principal of or interest on

            any Note or any other amounts due under this Agreement in respect

            thereof (except for changes in the rate of franchise tax or tax on

            the overall net income of any of the Lenders or any of their

            respective Lending Offices imposed by the jurisdiction in which such

            Lender is organized or is or should be qualified to do business or

            such Lending Office is located); provided that the Borrowers shall

            not be obligated to pay any amounts pursuant to this

 

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            Section 4.8(c)(i) to the extent that such amounts are duplicative of

            any amounts paid by the Borrowers pursuant to Section 4.11; or

 

                  (ii) shall impose, modify or deem applicable any reserve

            (including, without limitation, any reserve imposed by the Board of

            Governors of the Federal Reserve System), special deposit, insurance

            or capital or similar requirement against assets of, deposits with

            or for the account of, or credit extended by any of the Lenders (or

            any of their respective Lending Offices) or shall impose on any of

            the Lenders (or any of their respective Lending Offices) or the

            foreign exchange and interbank markets any other condition affecting

             any Note; and the result of any of the foregoing events described in

            clause (i) or (ii) above is to increase the costs to any of the

            Lenders of maintaining any LIBOR Rate Loan or to reduce the yield or

            amount of any sum received or receivable by any of the Lenders under

            this Agreement or under the Notes in respect of a LIBOR Rate Loan,

            then such Lender shall promptly notify the Administrative Agent, and

            the Administrative Agent shall promptly notify the Company of such

            fact and demand compensation therefor and, within fifteen (15) days

            after such notice by the Administrative Agent, the Borrowers shall

            pay to such Lender such additional amount or amounts as will

            compensate such Lender or Lenders for such increased cost or

            reduction. The Administrative Agent will promptly notify the Company

            of any event of which it has knowledge which will entitle such

            Lender to compensation pursuant to this Section 4.8(c); provided,

            that the Administrative Agent shall incur no liability whatsoever to

            the Lenders or the Borrowers in the event it fails to do so. The

            amount of such compensation shall be determined, in the applicable

            Lender's sole discretion, based upon the assumption that such Lender

            funded its Term Loan Commitment Percentage of the LIBOR Rate Loans

            in the London interbank market and using any reasonable attribution

            or averaging methods which such Lender deems appropriate and

            practical. A certificate of such Lender setting forth the basis for

            determining such amount or amounts necessary to compensate such

            Lender shall be forwarded to the Company through the Administrative

            Agent and shall be conclusively presumed to be correct save for

            manifest error.

 

      Section 4.9 Indemnity.

 

      The Borrowers hereby indemnify each of the Lenders against any loss or

expense which may arise or be attributable to each Lender's obtaining,

liquidating or employing deposits or other funds acquired to effect, fund or

maintain any LIBOR Rate Loan (a) as a consequence of any failure by the

Borrowers to make any payment when due of any amount due hereunder in connection

with a LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow,

continue or convert on a date specified therefor in a Notice of Borrowing or

Notice of Conversion/Continuation or (c) due to any payment, prepayment or

conversion of any LIBOR Rate Loan on a date other than the last day of the

Interest Period therefor. The amount of such loss or expense shall be

determined, in the applicable Lender's sole discretion, based upon the

assumption that such Lender funded its Term Loan Commitment Percentage of the

LIBOR Rate Loans in the London interbank market and using any reasonable

attribution or averaging methods which such Lender deems appropriate and

practical. A certificate of such Lender

 

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setting forth the basis for determining such amount or amounts necessary to

compensate such Lender shall be forwarded to the Company through the

Administrative Agent and shall be conclusively presumed to be correct save for

manifest error.

 

      Section 4.10 Capital Requirements.

 

      If either (a) the introduction of, or any change in, or in the

interpretation of, any Applicable Law or (b) compliance with any guideline or

request from any central bank or comparable agency or other Governmental

Authority (whether or not having the force of law), has or would have the effect

of reducing the rate of return on the capital of, or has affected or would

affect the amount of capital required to be maintained by, any Lender or any

corporation controlling such Lender as a consequence of, or with reference to

the Term Loan Commitments and other commitments of this type, below the rate

which such Lender or such other corporation could have achieved but for such

introduction, change or compliance, then within five (5) Business Days after

written demand by any such Lender, the Borrowers shall pay to such Lender from

time to time as specified by such Lender additional amounts sufficient to

compensate such Lender or other corporation for such reduction. A certificate as

to such amounts submitted to the Company and the Administrative Agent by such

Lender, shall, in the absence of manifest error, be presumed to be correct and

binding for all purposes.

 

      Section 4.11 Taxes.

 

            (a) Payments Free and Clear. Except as otherwise provided in Section

      4.11(e), any and all payments by any Borrower hereunder or under the Notes

      shall be made free and clear of and without deduction for any and all

      present or future taxes, levies, imposts, deductions, charges or

      withholding, and all liabilities with respect thereto excluding, (i) in

      the case of each Lender and the Administrative Agent, income and franchise

      taxes imposed by the jurisdiction under the laws of which such Lender or

      the Administrative Agent (as the case may be) is organized or is or should

      be qualified to do business or any political subdivision thereof and (ii)

      in the case of each Lender, income and franchise taxes imposed by the

      jurisdiction of such Lender's Lending Office or any political subdivision

      thereof (all such non-excluded taxes, levies, imposts, deductions,

      charges, withholdings and liabilities being hereinafter referred to as

      "Taxes"). If the Borrowers shall be required by law to deduct or withhold

      any Taxes from or in respect of any sum payable hereunder or under any

      Note to any Lender or the Administrative Agent, (A) except as otherwise

       provided in Section 4.11(e), the sum payable shall be increased as may be

      necessary so that after making all required deductions or withholdings

      (including deductions or withholdings applicable to additional sums

      payable under this Section 4.11) such Lender or the Administrative Agent

      (as the case may be) receives an amount equal to the amount such party

      would have received had no such deductions or withholdings been made, (B)

      the Borrowers shall make such deductions or withholdings, (C) the

      Borrowers shall pay the full amount deducted to the relevant taxing

      authority or other authority in accordance with Applicable Law, and (D)

      the Borrowers shall deliver to the Administrative Agent and such Lender

       evidence of such payment to the relevant taxing authority or other

      Governmental Authority in the manner provided in Section 4.11(d).

 

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            (b) Stamp and Other Taxes. In addition, the Borrowers shall pay any

      present or future stamp, registration, recordation or documentary taxes or

      any other similar fees or charges or excise or property taxes, levies of

      the United States or any state or political subdivision thereof or any

       applicable foreign jurisdiction which arise from any payment made

      hereunder or from the execution, delivery or registration of, or otherwise

      with respect to, this Agreement, the Loans, or the other Loan Documents,

      or the perfection of any rights or security interest in respect thereof

      (hereinafter referred to as "Other Taxes").

 

            (c) Indemnity. Except as otherwise provided in Section 4.11(e), the

      Borrowers shall indemnify each Lender and the Administrative Agent for the

      full amount of Taxes and Other Taxes (including, without limitation, any

      Taxes and Other Taxes imposed by any jurisdiction on amounts payable under

      this Section 4.11) paid by such Lender or the Administrative Agent (as the

      case may be) and any liability (including penalties, interest and

      expenses) arising therefrom or with respect thereto, whether or not such

      Taxes or Other Taxes were correctly or legally asserted. Such

      indemnification shall be made within thirty (30) days from the date such

      Lender or the Administrative Agent (as the case may be) makes written

      demand therefor.

 

            (d) Evidence of Payment. Within thirty (30) days after the date of

      any payment of Taxes or Other Taxes, the Borrowers shall furnish to the

      Administrative Agent and the applicable Lender, at its address referred to

      in Section 13.1, the original or a certified copy of a receipt evidencing

      payment thereof or other evidence of payment satisfactory to the

      Administrative Agent.

 

            (e) Delivery of Tax Forms. To the extent required by Applicable Law

      to reduce or eliminate withholding or payment of taxes, each Lender and

      the Administrative Agent shall deliver to the Company, with a copy to the

      Administrative Agent, on the Closing Date or concurrently with the

      delivery of the relevant Assignment and Acceptance, as applicable, (i) two

      United States Internal Revenue Service Forms W-9, Forms W-8ECI or Forms

      W-8BEN, as applicable (or successor forms) properly completed and

      certifying in each case that such Lender is entitled to a complete

      exemption from withholding or deduction for or on account of any United

      States federal income taxes, and (ii) an Internal Revenue Service Form

      W-8BEN or W-8ECI or successor applicable form, as the case may be, to

      establish an exemption from United States backup withholding taxes. Each

      such Lender further agrees to deliver to the Company, with a copy to the

      Administrative Agent, as applicable, two Form W-9, Form W-8BEN or W-8ECI,

      or successor applicable forms or manner of certification, as the case may

      be, on or before the date that any such form expires or becomes obsolete

      or after the occurrence of any event requiring a change in the most recent

      form previously delivered by it to the Company, certifying in the case of

      a Form W-9, Form W-8BEN or W-8ECI (or successor forms) that such Lender is

      entitled to receive payments under this Agreement without deduction or

      withholding of any United States federal income taxes (unless in any such

      case an event (including without limitation any change in treaty, law or

      regulation) has occurred prior to the date on which any such delivery

      would otherwise be required which renders such forms inapplicable or the

      exemption to which such forms

 

                                       29

<PAGE>

 

      relate unavailable and such Lender notifies the Company and the

      Administrative Agent that it is not entitled to receive payments without

      deduction or withholding of United States federal income taxes) and, in

      the case of a Form W-9, Form W-8BEN or W-8ECI, establishing an exemption

      from United States backup withholding tax. Notwithstanding anything in any

      Loan Document to the contrary, the Borrowers shall not be required to pay

      additional amounts to any Lender or the Administrative Agent under Section

      4.11 or Section 4.8(c), (i) if such Lender or the Administrative Agent

      fails to comply with the requirements of this Section 4.11(e), other than

      to the extent that such failure is due to a change in law occurring after

      the date on which such Lender or the Administrative Agent became a party

      to this Agreement or (ii) that are the result of such Lender's or the

      Administrative Agent's gross negligence or willful misconduct, as

      applicable.

 

            (f) Survival. Without prejudice to the survival of any other

      agreement of any Borrower hereunder, the agreements and obligations of the

      Borrowers contained in this Section 4.11 shall survive the payment in full

      of the Obligations and the termination of the Term Loan Commit