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Use these links to rapidly review the document CREDIT AGREEMENT between COLDWATER CREEK INC., and WELLS FARGO BANK, NATIONAL ASSOCIATION, Dated as of January 27, 2005 TABLE OF CONTENTS
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iii CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of January 27, 2005, is entered into by and between COLDWATER CREEK INC., a Delaware corporation (the " Borrower ") and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (" Lender ") and as L/C issuer (in such capacity, " L/C Issuer "). RECITALS A. The Borrower has requested that the Lender provide certain credit facilities to the Borrower. B. The Lender is willing to provide such credit facilities upon the terms and subject to the conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the above Recitals and the mutual covenants herein contained, the parties hereto hereby agree as follows: SECTION I. DEFINITIONS; INTERPRETATION. 1.01. Definitions. Unless otherwise indicated in this Agreement or any other Credit Document, each term set forth below, when used in this Agreement or any other Credit Document, shall have the respective meaning given to that term below or in the provision of this Agreement or other document, instrument or agreement referenced below. " Affiliate " shall mean, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially or as a trustee, guardian or other fiduciary, thirty percent (30%) or more of any class of Equity Securities of such Person, (b) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person or (c) each of such Person's officers, directors, joint venturers and partners; provided, however , that in no case shall the Lender be deemed to be an Affiliate of the Borrower or any of its Subsidiaries for purposes of this Agreement. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. " Agreement " shall mean this Credit Agreement. " Alternative Rate " shall mean the Prime Rate. Any change in the Alternative Rate resulting from a change in the Prime Rate shall become effective on the Business Day on which each such change in the Prime Rate occurs. " Applicable Margin " shall mean, with respect to each Revolving Loan (and with respect to the calculation of Letter of Credit fees pursuant to Section 2.02(i)), subject to Section 2.07(c) hereof, the per annum margin which is determined pursuant to the Pricing Grid and added to the Base Rate or LIBOR Rate, as the case may be, for such Revolving Loan. The Applicable Margin shall be determined as provided in the Pricing Grid and may change for each Fiscal Quarter and as provided in Section 2.07(c) . " Automatic Debit " shall have the meaning given to that term in Section 2.06(d) . " Base Rate " shall mean, with respect to any day for Base Rate Loans, including Sweep Loans, in any Revolving Loan Borrowing, a rate per annum equal to the quotient (rounded upward, if necessary, to the nearest 1 / 16 of one percent) of (a) the Daily LIBOR Rate divided by (b) one (1) minus the Reserve Requirement in effect from time to time. The Base Rate shall be adjusted automatically as to all Base Rate loans then outstanding as of the effective date of any change in either the Base Rate or the Reserve Requirement. " Base Rate Loan " shall mean, at any time, a Revolving Loan which then bears interest as provided in clause (i) of Section 2.01(c) . Base Rate Loans shall include Sweep Loans. " Borrower " shall mean Coldwater Creek, Inc., a Delaware corporation. " Borrowing " shall mean a Revolving Loan Borrowing, as the context may require. " Business Day " shall mean any day on which (a) commercial banks are not authorized or required to close in Boise, Idaho and (b) if such Business Day is related to a LIBOR Loan or a Base Rate Loan, dealings in Dollar deposits are carried out in the London interbank market. " Capital Adequacy Requirement " shall have the meaning given to that term in Section 2.11(d) . " Capital Asset " shall mean, with respect to any Person, any tangible fixed or capital asset owned or leased (in the case of a Capital Lease) by such Person, or any expense incurred by such Person that is required by GAAP to be reported as a non-current asset on such Person's balance sheet. " Capital Expenditures " shall mean, with respect to any Person and any period, all amounts expended by such Person during such period to acquire or to construct Capital Assets (including renewals, improvements and replacements) computed in accordance with GAAP (including all amounts paid or accrued on Capital Leases and other Indebtedness incurred or assumed to acquire Capital Assets). " Capital Leases " shall mean any and all lease obligations that, in accordance with GAAP, are required to be capitalized on the books of a lessee. " Cash Collateralize " shall mean to pledge and deposit with or deliver to the L/C Issuer, as collateral for the Obligations, cash or deposit account balances in an amount equal to the L/C Obligations pursuant to documentation in form and substance satisfactory to the L/C Issuer. Derivatives of such term shall have corresponding meaning. " Cash Investments " shall mean the following which is Borrower's investment policy, as of the Closing Date, except that items (c)(1) and (5) have been modified: (a) Liquidity 1. The portfolio average maturity will be 1.25 years or less with a maximum maturity of 24 months for any single obligation. 2. No more than 50% of the portfolio shall have maturities greater than 18 months and no more than 75% of the portfolio shall have maturities greater than 180 days. 3. For the purposes of the policy, maturity shall be defined as either the stated maturity, pre-refunded call date, auction or put date. (b) Diversification. No single issuer or guarantor (other than the United States Treasury and Federal Agencies) may represent more than 10% of the total value of holdings. (c) Credit Quality and Authorized Investments. 1. Bank checking accounts with commercial banks and savings institutions with a financial L.A.C.E. rating of B or better and certificates of deposits from commercial banks and saving institutions with a financial L.A.C.E. rating of A or better, provided that each such commercial bank and savings institution must have 2 capital, surplus, and undivided profits of not less than $1,000,000,000. Maximum maturity for certificates of deposit will be limited to one year. 2. All direct obligations of the U.S. Government and securities of federal agencies with maturities no longer than two years. 3. Commercial Paper purchased on the secondary market and having received the highest rating by at least two recognized ratings organizations (i.e., S&P, Moody's, or Fitch). 4. Money Market funds that restrict investments to short-term U.S. Treasury and Agency securities. 5. Repurchase agreements with major banks (those having capital, surplus, and undivided profits of not less than $1,000,000,000) and authorized dealers fully collateralized to at least 102% of market value by U.S. Government securities. 6. Long-term instruments (maturities of greater than one year must be obligations of U.S. Corporations/Issuers rated A-/A3, or better or the equivalent by two NRSROs. 7. Auction Rate Securities (ARS) with a rating of AAA, and an underlying rating of AA. 8. Taxable municipal securities with a credit quality rating of no lower than AAA and effective maturity of two years or less. " CEO " shall mean Lender's Commercial Electronic Office, an electronic banking services platform that Lender makes available to certain of its customers. Prior to using the CEO, Borrower shall execute all Trade Service Online Agreements and other agreements required by Lender for the use of the CEO. " Change of Law " shall have the meaning given to that term in Section 2.11(b) . " Closing Date " shall mean the date designated as such by the Borrower, which date shall be no earlier than the date on which all of the conditions set forth in Section 3.01 have been satisfied and no later than January 29, 2005. " Commercial Letter of Credit " means any documentary letter of credit issued by the Lender either under this Agreement (including the Existing Commercial Letters of Credit) or as originally issued, in either case as the same may be supplemented, modified, amended, extended, restated or supplanted. " Compliance Certificate " shall have the meaning given to that term in Section 5.01(a)(iii) . " Concentration Account " shall mean account number 5130000432 maintained with Lender or any successor account thereto and each investment account tied thereto. " Consolidated Tangible Net Worth " shall mean, as of any date of determination, the Net Worth of the Loan Parties, on a consolidated basis, on such date minus the sum of the aggregate of (i) all treasury stock and (ii) all Intangible Assets of the Loan Parties. " Contingent Obligation " shall mean, with respect to any Person, (a) any Guaranty Obligation of that Person; and (b) any direct or indirect obligation or liability, contingent or otherwise, of that Person (i) in respect of any Surety Instrument issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings or payments, (ii) as a partner or joint venturer in any partnership or Joint Venture or (iii) to purchase any materials, supplies or other property from, or to obtain the services of, another 3 Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other property is ever made or tendered, or such services are ever performed or tendered. The amount of any Contingent Obligation shall (subject, in the case of Guaranty Obligations, to the last sentence of the definition of "Guaranty Obligation") be deemed equal to the maximum reasonably anticipated liability in respect thereof. " Contractual Obligation " of any Person shall mean, any indenture, note, lease, loan agreement, security, deed of trust, mortgage, security agreement, guaranty, instrument, contract, agreement or other form of contractual obligation or undertaking to which such Person is a party or by which such Person or any of its property is bound. " Credit Documents " shall mean and include this Agreement, the Note, each Guaranty, the Letters of Credit, all other documents, instruments and agreements delivered to Lender pursuant to Section 3.01 and all other documents, instruments and agreements delivered by any Loan Party to Lender in connection with this Agreement, the Letters of Credit or any other Credit Document on or after the date of this Agreement. " Credit Event " shall mean the making of any Loan (including Sweep Loans); the making of an L/C Credit Extension; the conversion of any Loan into a LIBOR Loan; or the selection of a new Interest Period for any LIBOR Loan. " Current Assets " shall mean, as at any date of determination, the current assets of the Loan Parties on such date (determined on a consolidated basis without duplication in accordance with GAAP) plus, to the extent the inventory is not included in current assets, the amount of the Commercial Letters of Credit issued for the purchase of such inventory. " Current Liabilities " shall mean, as at any date of determination, without duplication, the current liabilities of the Loan Parties on such date (determined on a consolidated basis without duplication in accordance with GAAP) and, in any event, all Loans outstanding on such date and all Letters of Credit issued as of such date. " Current Ratio " shall mean, as at any date of determination, the ratio of (a) Current Assets on such date to (b) Current Liabilities on such date. " Daily LIBOR Rate " shall mean a fluctuating interest rate per annum for its Dollar deposits most recently announced within Lender as its Inter-Bank Market Offered Rate for the delivery of funds on a Business Day for a one (1) day period in an amount approximately equal to the principal amount of the applicable Base Rate Loan. Borrower understands and agrees that: (i) this rate is used for the purpose of calculating effective interest rates for loans making reference thereto; (ii) Lender may base its Inter-Bank Market Offered Rate upon such offers or other market indicators in the Inter-Bank Market as Lender, in its discretion, deems appropriate including, but not limited to, the rate offered for Dollar deposits on the London interbank market; and (iii) this rate is evidenced by the recording thereof after its announcement within Lender. " Debtor Relief Laws " shall mean the Bankruptcy Code of the United States of America, and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws or Governmental Rules from time to time in effect affecting the rights of creditors generally. " Default " shall mean an Event of Default or any event or circumstance not yet constituting an Event of Default which, with the giving of any notice or the lapse of any period of time or both, would become an Event of Default. 4 " Default Rate " shall have the meaning given to that term in Section 2.07(c) . " Distributions " shall mean dividends (in property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of any shares of any class of stock of any Loan Party or of any warrants, options or other rights to acquire the same (or to make any payments to any Person, such as "phantom stock" payments, where the amount is calculated with reference to the fair market or equity value of any Loan Party). Cash and/or stock dividends are not included in the definition of Distributions. " Dollars " and " $ " shall mean the lawful currency of the United States of America and, in relation to any payment under this Agreement, same day or immediately available funds. " EBITDA " means, with respect to any fiscal period, without duplication, the sum of (a) Net Income for that period, plus (b) any extraordinary loss, minus (c) any extraordinary gain, plus (d) Interest Expense for that period, plus (e) the aggregate amount of federal and state taxes on or measured by income for that period (whether or not payable during that period), plus (f) depreciation and amortization expense for that period, plus (g) all other non-cash expenses (less non-cash gains) for that period, in each case as determined in accordance with GAAP, consistently applied and, in the case of items (b), (c), (d), (e), (f) , and (g) , to the extent deducted in determining such Net Income for that period. " EBITDAR " means, with respect to any fiscal period, EBITDA plus Rental Expense. " Effective Amount " shall mean (a) with respect to Revolving Loans, including Sweep Loans, on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Loans, including Sweep Loans, occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date. " Employee Benefit Plan " shall mean any employee benefit plan within the meaning of section 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Multiemployer Plan. " Environmental Damages " shall mean all claims, judgments, damages, losses, penalties, liabilities (including strict liability), costs and expenses, including costs of investigation, remediation, defense, settlement and reasonable attorneys' fees and consultants' fees, that are incurred at any time as a result of the existence of any Hazardous Materials upon, about or beneath any real property owned by the Loan Parties or any of their Subsidiaries or migrating or threatening to migrate to or from any such real property, or arising from any investigation, proceeding or remediation of any location at which the Loan Parties, any of their Subsidiaries or any predecessors are alleged to have directly or indirectly disposed of Hazardous Materials or arising in any manner whatsoever out of any violation of Environmental Laws. " Environmental Laws " shall mean the Clean Air Act, 42 U.S.C. Section 7401 et seq .; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq .; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq .; the Comprehensive Environment Response, Compensation and Liability Act of 1980 (including the Superfund Amendments and Reauthorization Act of 1986, "CERCLA"), 42 U.S.C. Section 9601 et seq .; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq .; the Occupational Safety and Health Act, 29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know 5 Act of 1986, 42 U.S.C. Section 11001 et seq .; the Mine Safety and Health Act of 1977, 30 U.S.C. Section 801 et seq .; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq .; and all other Governmental Rules relating to environmental, health, safety and land use matters, including all Governmental Rules pertaining to the reporting, licensing, permitting, transportation, storage, disposal, investigation or remediation of emissions, discharges, releases or threatened releases of Hazardous Materials into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of Hazardous Materials. " Equity Securities " of any Person shall mean (a) all common stock, preferred stock, participations, shares, partnership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing. " ERISA " shall mean the Employee Retirement Income Security Act of 1974. " ERISA Affiliate " shall mean any Person that is treated as a single employer with the Borrower under section 414 of the IRC. " ERISA Event " shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under section 4062(e) of ERISA which could reasonably be expected to give rise to any liability with respect to such withdrawal; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan or Multiemployer Plan amendment as a termination under sections 4041 or 4041A of ERISA, or the commencement of proceedings to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. " Event of Default " shall have the meaning given to that term in Section 6.01 . " Evergreen Letter of Credit " shall have the meaning given to that term in Section 2.02(b)(iii) . " Exchange Act " means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. " Existing Credit Facility " shall mean that certain Credit Agreement among the Borrower, the banks named therein and Wells Fargo Bank, National Association, dated as of March 5, 2003, as the same has been amended, modified or supplemented from time to time. " Existing Commercial Letters of Credit " shall mean the Commercial Letters of Credit described on Schedule II . " Federal Reserve Board " shall mean the Board of Governors of the Federal Reserve System. " Financial Statements " shall mean, with respect to any accounting period for any Person, statements of income, retained earnings, shareholders' equity or partners' capital and cash flows of such Person for such period, and a balance sheet of such Person as of the end of such 6 period, setting forth in each case in comparative form figures for the corresponding period in the preceding Fiscal Year if such period is less than a full Fiscal Year or, if such period is a full Fiscal Year, corresponding figures from the preceding annual audited financial statements, all prepared in reasonable detail and in accordance with GAAP. " Fiscal Quarter " means any fiscal quarter of Borrower and its Subsidiaries. " Fiscal Year " means the fiscal year of Borrower and its Subsidiaries ending on the Saturday closest to each January 31. " Fitch " shall mean Fitch Investor Service L.P. " Foreign Plan " shall mean any employee benefit plan maintained by the Loan Parties or any of their Subsidiaries which is mandated or governed by any Governmental Rule of any Governmental Authority other than the United States of America. " GAAP " shall mean generally accepted accounting principles and practices as in effect in the United States of America from time to time, consistently applied. " Governmental Authority " shall mean any domestic or foreign national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Comptroller of the Currency, any central bank or any comparable authority. " Governmental Authorization " shall mean any permit, license, registration, approval, finding of suitability, authorization, plan, directive, order, consent, exemption, waiver, consent order or consent decree of or from, or notice to, action by or filing with, any Governmental Authority. " Governmental Charges " shall mean, with respect to any Person, all levies, assessments, fees, claims or other charges imposed by any Governmental Authority upon such Person or any of its property or otherwise payable by such Person. " Governmental Rule " shall mean any law, rule, regulation, ordinance, order, code interpretation, judgment, decree, directive, Governmental Authorization guidelines, policy or similar form of decision of any Governmental Authority. " Guarantors " shall mean, collectively, each now-existing or hereafter-acquired or created Subsidiary of the Borrower. " Guaranty " shall mean, collectively, each Guaranty Agreement executed by a Guarantor and delivered by the Borrower pursuant to Sections 3.01(a)(iii) and 5.01(i) . " Guaranty Obligation " shall mean, with respect to any Person, any direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, letter of credit or other obligation (the "primary obligations") of another Person (the "primary obligor"), including any obligation of that Person, whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, or (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, or (c) to purchase property, securities or services primarily for the purpose of assuring the beneficiary of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the holder of any such primary obligation against loss 7 in respect thereof. The amount of any Guaranty Obligation shall be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum liability in respect thereof. " Hazardous Materials " shall mean all pollutants, contaminants and other materials, substances and wastes which are hazardous, toxic, caustic, harmful or dangerous to human health or the environment, including petroleum and petroleum products and byproducts, radioactive materials, asbestos, polychlorinated biphenyls and all materials, substances and wastes which are classified or regulated as "hazardous," "toxic" or similar descriptions under any Environmental Law. " Honor Date " shall have the meaning given to that term in Section 2.02(c)(i) . " HSBC " shall mean The Hongkong and Shanghai Banking Corporation Limited. " HSBC Letters of Credit " shall mean Letters of Credit issued by HSBC for the account of Borrower in which Lender (or Trade Bank) has obtained a participation interest. " ICC " shall have the meaning given to that term in Section 2.02(h) . " Indebtedness " of any Person shall mean, without duplication: (a) All obligations of such Person evidenced by notes, bonds, debentures or other similar instruments and all other obligations of such Person for borrowed money irrespective of whether such obligations are subordinated to the Revolving Loans (including obligations to repurchase receivables and other assets sold with recourse); (b) All obligations of such Person for the deferred purchase price of property or services (including obligations under letters of credit and other credit facilities which secure or finance such purchase price); (c) All obligations of such Person under conditional sale or other title retention agreements with respect to property acquired by such Person (to the extent of the value of such property if the rights and remedies of the seller or the Lender under such agreement in the event of default are limited solely to repossession or sale of such property); (d) All obligations of such Person as lessee under or with respect to Capital Leases; (e) All Synthetic Lease Obligations of such Person; (f) All obligations of such Person, contingent or otherwise, under or with respect to Surety Instruments; (g) All net obligations of such Person, contingent or otherwise, under or with respect to any Swap Agreement; (h) All Guaranty Obligations of such Person with respect to the obligations of other Persons of the types described in clauses (a) - (g) above and all other Contingent Obligations of such Person; and (i) All obligations of other Persons of the types described in clauses (a) - (h) above to the extent secured by (or for which any holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien in any property (including accounts and contract rights) of such Person, even though such Person has not assumed or become liable for the payment of such obligations. 8 " Intangible Assets " shall mean assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trade marks, patents, unamortized deferred charges, unamortized debt discount and capitalized research and development costs. " Interest Expense " shall mean, for any period, the sum, for the Loan Parties (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest, fees, charges and related expenses payable during such period to any Person in connection with Indebtedness or the deferred purchase price of assets that is treated as interest in accordance with GAAP, (b) the portion of rent actually paid during such period under Capital Leases that should be treated as interest in accordance with GAAP, (c) the Synthetic Lease Interest Component for such period and (d) the net amounts payable (or minus the net amounts receivable) under any Swap Agreements accrued during such period (whether or not actually paid or received during such period). " Interest Period " shall mean, with respect to any LIBOR Loan, the time periods selected by the Borrower pursuant to Section 2.01(b) or Section 2.01(d) which commences on the first day of such Loan or the effective date of any conversion and ends on the last day of such time period, and thereafter, each subsequent time period selected by the Borrower pursuant to Section 2.01(e) which commences on the last day of the immediately preceding time period and ends on the last day of that time period. " Investment " of any Person shall mean any loan or advance of funds by such Person to any other Person (other than advances to employees of such Person for moving and travel expenses, drawing accounts and similar expenditures in the ordinary course of business), any purchase or other acquisition of any Equity Securities or Indebtedness of any other Person, any capital contribution by such Person to or any other investment by such Person in any other Person (including any Guaranty Obligations of such Person and any indebtedness of such Person of the type described in clause (h) of the definition of "Indebtedness" on behalf of any other Person). " IRC " shall mean the Internal Revenue Code of 1986. " Joint Venture " means a corporation, partnership, joint venture or other legal arrangement (whether created pursuant to contract or conducted through a separate legal entity) now or hereafter formed by the Loan Parties or any of their Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person. " L.A.C.E. " shall mean LACE Financial Corp. " L/C Borrowing " shall mean an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Loan Borrowing. " L/C Credit Extension " shall mean, with respect to any Letter of Credit, the issuance thereof, the amendment thereof, the extension of the expiry date thereof, or the increase of the amount thereof. " L/C Issuer " shall mean: (i) Lender (or Trade Bank) in its capacity as issuer of Letters of Credit hereunder; (ii) as applicable, HSBC in its capacity as issuer of HSBC Letters of Credit; or (iii) any successor issuer of Letters of Credit hereunder. " L/C Obligations " shall mean, as at any date of determination, the aggregate undrawn face amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. 9 " Lender " shall mean Wells Fargo Bank, National Association and shall include it acting as the L/C Issuer (unless the context otherwise requires). " Letter of Credit " shall mean any letter of credit issued hereunder and shall include the Existing Commercial Letters of Credit. A Letter of Credit may be a Commercial Letter of Credit or a Standby Letter of Credit. " Letter of Credit Application " shall mean an application and agreement (including any master letter of credit agreement) for the issuance or amendment of a letter of credit in the form from time to time in use by the L/C Issuer. The Letter of Credit Application may be in the form of a written application and agreement or may be submitted by Borrower using the CEO and following the procedures and standards Lender and/or L/C Issuer may from time to time establish for the use of the CEO. " Letter of Credit Expiration Date " shall mean the day that is thirty days prior to the Revolving Loan Maturity Date (or, if such day is not a Business Day, the next preceding Business Day). " Leverage Ratio " means, as at any date of determination, for the twelve month period ending on such date, the ratio of (i) the sum of Total Funded Debt plus four times the Rental Expenses before any reduction for amortization of tenant improvements to (ii) EBITDAR for such period. " LIBOR Loan " shall mean, at any time, a Revolving Loan which then bears interest as provided in clause (ii) of Section 2.01(c) . " LIBOR Rate " shall mean, with respect to any Interest Period for the LIBOR Loans in any Revolving Loan Borrowing consisting of LIBOR Loans, a rate per annum equal to the quotient (rounded upward if necessary to the nearest 1 / 16 of one percent) of (a) the rate per annum for Dollar deposits quoted by Lender as of 10:00 a.m. on each Business Day as the Inter-Bank Market Offered Rate for the applicable Interest Period divided by (b) one (1) minus the Reserve Requirement for such Loans in effect from time to time, with the understanding that such rate is the rate quoted by Lender for the purpose of calculating effective rates of interest for the loans making reference thereto, for the delivery of funds on such Business Day for a period of time equal to the applicable Interest Period and in an amount approximately equal to the principal amount of the applicable LIBOR Loan. Borrower understands and agrees that Lender may base its quotation on the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Lender in its discretion deems appropriate including, but not limited to, the rate offered for Dollar deposits on the London interbank market and that the rate is evidenced by the recording thereof after its announcement within Lender " Lien " shall mean, with respect to any property, any security interest, mortgage, pledge, lien, charge or other encumbrance in, of or on such property or the income therefrom including the interest of a vendor or lessor under a conditional sale agreement, Capital Lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction. " Loan " shall mean a Revolving Loan, including a Sweep Loan. " Loan Account " shall have the meaning given to that term in Section 2.08(a) . " Loan Parties " shall mean, collectively, the Borrower and the Guarantors. 10 " Margin Stock " shall have the meaning given to that term in Regulation U issued by the Federal Reserve Board. " Material Adverse Effect " shall mean any event or circumstance that has or could reasonably be expected to have a material adverse effect on (a) the business, operations, condition (financial or otherwise), prospects, liabilities or capitalization of the Borrower or of the Loan Parties, taken as a whole; (b) the ability of the Borrower to pay or perform the Obligations in accordance with the terms of this Agreement and the other Credit Documents or the ability of any Guarantor to pay any portion of its obligations in accordance with the terms of its Guaranty; (c) the rights and remedies of Lender under this Agreement, the other Credit Documents or any related document, instrument or agreement or (d) the validity or enforceability of any of the Credit Documents. " Material Agreements " shall mean, collectively, the Articles of Incorporation and Bylaws of the Loan Parties. " Maturity " or " maturity " shall mean, with respect to any Loan, interest, fee or other amount payable by the Borrower under this Agreement or the other Credit Documents, the date such Loan, interest, fee or other amount becomes due, whether upon the stated maturity or due date, upon acceleration or otherwise. " Moody's " shall mean Moody's Investor Service, Inc. " Multiemployer Plan " shall mean any multiemployer plan within the meaning of section 3(37) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate. " Negative Pledge " shall mean any covenant binding on the Borrower or any Guarantor that prohibits the creation of Liens on any of its assets or property. " Net Income " shall mean with respect to any fiscal period, the net income of the Loan Parties determined in accordance with GAAP, consistently applied. " Net Proceeds " shall mean: (a) [Intentionally omitted]; (b) With respect to any sale or issuance of any Indebtedness, the aggregate consideration received by such Person from such sale or issuance less the sum of the actual amount of the reasonable fees and commissions payable to Persons other than such Person or any Affiliate of such Person, the reasonable legal expenses and the other reasonable costs and expenses directly related to such sale or issuance that are to be paid by such Person; and (c) With respect to any issuance of Equity Securities by any Person, the aggregate consideration received by such Person from such issuance less the sum of the actual amount of the reasonable fees and commissions payable to Persons other than the Borrower or any Affiliate of the Borrower and the other reasonable costs and expenses (including reasonable legal expenses) directly related to such issuance that are to be paid by any Person; provided , however , that for the purpose of this clause (c), an issuance of Equity Securities shall not include any capital contribution from any Person in the form of Equity Securities or any issuance or sale of Equity Securities by any Subsidiary of the Borrower to the Borrower or any of its Subsidiaries. " Net Worth " shall mean, as at any date of determination, stockholders' equity of the Loan Parties on such date (determined on a consolidated basis without duplication in accordance with GAAP). 11 " Nonrenewal Notice Date " shall have the meaning given to that term in Section 2.02(b)(iii) . " Note " shall mean the Revolving Loan Note. " Notice of Borrowing " shall mean, as applicable: (a) a Notice of LIBOR Loan Borrowing; (b) Borrower's use of the CEO to request a Base Rate Loan, a LIBOR Loan or an L/C Credit Extension; or (c) Borrower's written or telephonic request for a Base Rate Loan. " Notice of LIBOR Loan Borrowing " shall have the meaning given to that term in Section 2.01(b) . " Notice of Revolving Loan Conversion " shall have the meaning given to that term in Section 2.01(d) . " Notice of Revolving Loan Interest Period Selection " shall have the meaning given to that term in Section 2.01(e) . " NRSRO " shall mean a nationally recognized statistical rating organization. " Obligations " shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Borrower to the Lender of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising pursuant to the terms of this Agreement or any of the other Credit Documents, including all Revolving Loans, Letters of Credit, interest (including interest that accrues after the commencement of any bankruptcy or other insolvency proceeding by or against the Borrower), fees, charges, expenses, attorneys' fees and accountants' fees chargeable to and payable by the Borrower hereunder and thereunder. " PBGC " shall mean the Pension Benefit Guaranty Corporation. " Permitted Indebtedness " shall have the meaning given to that term in Section 5.02(a) . " Permitted Liens " shall have the meaning given to that term in Section 5.02(b) . " Pension Plan " shall mean any "employee pension benefit plan" (as such term is defined in section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. " Person " shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, an unincorporated association, a limited liability company, a Joint Venture, a trust or other entity or a Governmental Authority. 12 " Pricing Grid " shall mean: Pricing Grid
From the Closing Date through and including March 31, 2005, the Applicable Margin and Unused Commitment Fee shall be those set forth in Tier 2. From and after April 1, 2005, any increase or decrease in the Applicable Margin resulting from a change in the Leverage Ratio shall become effective as of the first day of the month after the Compliance Certificate has been timely delivered pursuant to Section 5.01(a) hereof; provided , however , that if the Compliance Certificate is not timely delivered for a Fiscal Quarter in accordance with such Section, then Tier 4 shall apply as of the first day of the month after it was due. " Prime Rate " shall mean the per annum rate at any time the rate of interest most recently announced within Lender as its Prime Rate, with the understanding that Lender's Prime Rate is one of its base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement within Lender. " Rental Expense " means, for any period, the sum of (a) all rental payments under real property leases (including base rent, percentage rent, common area payments and real estate taxes) less amortization of tenant improvements for such period plus (b) all rent payments under equipment operating leases for such period. " Reportable Event " shall have the meaning given to that term in ERISA and applicable regulations thereunder. " Requirement of Law " applicable to any Person shall mean (a) the Articles or Certificate of Incorporation and By-laws, Partnership Agreement or other organizational or governing documents of such Person, (b) any Governmental Rule applicable to such Person, (c) any Governmental Authorization granted by any Governmental Authority to or for the benefit of such Person or (d) any judgment, decision or determination of any Governmental Authority or arbitrator, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. " Reserve Requirement " shall mean, with respect to any day in an Interest Period for a LIBOR Loan, or on any day with respect to a Base Rate Loan, the aggregate of the maximum of the reserve requirement rates (expressed as a decimal) in effect on such day for eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of the Federal Reserve Board) maintained by a member bank of the Federal Reserve System. As used herein, the term "Reserve Requirement" shall include any basic, supplemental or emergency reserve requirements imposed on the Lender by any Governmental Authority. 13 " Responsible Officer " shall mean the chief executive officer, president, chief financial officer, vice president of finance, treasurer, assistant treasurer or controller of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. " Revolving Loan " shall have the meaning given to that term in Section 2.01(a) and shall include Sweep Loans. " Revolving Loan Borrowing " shall mean a borrowing by the Borrower consisting of the Revolving Loans made by the Lender on the same date and of the same Type. " Revolving Loan Maturity Date " shall mean the earlier to occur of (i) January 31, 2008, and (ii) the date on which the Total Commitment or Lender's other obligations have been terminated pursuant to Section 6.02 hereof. " Revolving Loan Note " shall have the meaning given to that term in Section 2.08(b) . " S&P " shall mean Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc. " Sale and Leaseback " means, with respect to any Person, the sale of property owned by that Person (the " Seller ") to another Person (the " Buyer "), together with the substantially concurrent leasing of such property by the Buyer to the Seller. " Solvent " shall mean, with respect to any Person on any date, that on such date (a) the fair value of the property of such Person is greater than the fair value of the liabilities (including contingent, subordinated, matured and unliquidated liabilities) of such Person, (b) the present fair saleable value of the assets of such Person is greater than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature and (d) such Person is not engaged in or about to engage in business or transactions for which such Person's property would constitute an unreasonably small capital. " Standby Letter of Credit " means any of the standby letters of credit issued by the L/C Issuer under this Agreement, either as originally issued or as the same may be supplemented, modified, amended, extended, restated or supplanted. " Store Operating Data " shall mean material information concerning the operations of each store, provided by store location, which information shall include, in any event, gross sales by each store, sales returns to each store, costs of goods sold by each store, operating margin of each store and direct costs of each store. " Subsidiary " of any Person shall mean (a) any corporation of which more than 50% of the issued and outstanding Equity Securities having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries, (b) any partnership, Joint Venture, limited liability company or other association of which more than 50% of the equity interest having the power to vote, direct or control the management of such partnership, Joint Venture or other association is at the time owned and controlled by such Person, by such Person and one or more of the other Subsidiaries or by one or more of such Person's other Subsidiaries or (c) any other Person 14 included in the Financial Statements of such Person on a consolidated basis. Unless otherwise indicated in this Agreement, "Subsidiary" shall mean a Subsidiary of the Loan Parties. " Surety Instruments " shall mean all letters of credit (including standby and commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments. " Swap Agreement " means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement. " Sweep Loan " shall have the meaning given to that term in Section 2.03 . " Synthetic Lease " shall mean each arrangement, however described, under which the obligor accounts for its interest in the property covered thereby under GAAP as lessee of a lease which is not a capital lease and accounts for its interest in the property covered thereby for Federal income tax purposes as the owner. " Synthetic Lease Interest Component " shall mean, with respect to any Person for any period, the portion of rent paid or payable (without duplication) for such period under Synthetic Leases of such Person that would be treated as interest in accordance with Financial Accounting Standards Board Statement No. 13 if such Synthetic Leases were treated as capital leases under GAAP. " Synthetic Lease Obligation " shall mean, as to any Person with respect to any Synthetic Lease at any time of determination, the amount of the liability of such Person in respect of such Synthetic Lease that would (if such lease was required to be classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP) be required to be capitalized on the balance sheet of such Person at such time. " Synthetic Lease Principal Component " shall mean, with respect to any Person for any period, the portion of rent (exclusive of the Synthetic Lease Interest Component) paid or payable (without duplication) for such period under Synthetic Leases of such Person that would be treated as principal in accordance with Financial Accounting Standards Board Statement No. 13 if such Synthetic Leases were treated as capital leases under GAAP. " Taxes " shall have the meaning given to such term in Section 2.12(a) . " Total Commitment " shall mean, at any time, Forty Million Dollars ($40,000,000), or, if such amount is reduced pursuant to Section 2.04 , the amount to which so reduced and in effect at such time. " Total Funded Debt " shall mean all Indebtedness of the Loan Parties on a consolidated basis. " Trade Bank " shall mean Wells Fargo HSBC Trade Bank, National Association. " Type " shall mean, with respect to any Loan or Borrowing at any time, the classification of such Loan or Borrowing by the type of interest rate it then bears, whether an interest rate based upon the Base Rate or the LIBOR Rate. In the event Borrower does not designate the type of interest rate for a Borrowing, it shall be a Base Rate Loan and all Sweep Loans shall be Base Rate Loans. 15 " UCP " has the meaning set forth in Section 2.02(h) . " Unreimbursed Amount " has the meaning set forth in Section 2.02(c)(i) . " Unused Commitment Fee Percentage " shall mean the per annum percentage which is used to calculate the Unused Commitment Fee. The Unused Commitment Fee Percentage shall be determined as provided in the Pricing Grid and may change for each Fiscal Quarter. " Unused Commitment Fee Period " shall have the meaning given to that term in Section 2.05(b) . " Unused Commitment Fees " shall have the meaning given to that term in Section 2.05(b) . " Wells Fargo " shall have the meaning given to that term in clause (3) of the introductory paragraph hereof. 1.02. GAAP. Unless otherwise indicated in this Agreement or any other Credit Document, all accounting terms used in this Agreement or any other Credit Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way limit the foregoing. If GAAP changes during the term of this Agreement such that any covenants contained herein would then be calculated in a different manner or with different components, other than changes in GAAP that require items to be included in the definition of Indebtedness that were not so required before such change, the Borrower and the Lender agree to negotiate in good faith to amend this Agreement in such respects as are necessary to conform those covenants as criteria for evaluating the Borrower's financial condition to substantially the same criteria as were effective prior to such change in GAAP; provided , however , that, until the Borrower and Lender so amend this Agreement, all such covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change. 1.03. Headings. The table of contents, captions and section headings appearing in this Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 1.04. Plural Terms. All terms defined in this Agreement or any other Credit Document in the singular form shall have comparable meanings when used in the plural form and vice versa. 1.05. Time. All references in this Agreement and each of the other Credit Documents to a time of day shall mean Boise, Idaho time, unless otherwise indicated. 1.06. Governing Law. Unless otherwise expressly provided in any Credit Document, this Agreement and each of the other Credit Documents shall be governed by and construed in accordance with the laws of the State of Idaho without reference to conflicts of law rules. The scope of the foregoing governing law provision is intended to be all-encompassing of any and all disputes that may be brought in any court or any mediation or arbitration proceeding and that relate to the subject matter of the Credit Documents, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. 1.07. Construction. This Agreement is the result of negotiations among, and has been reviewed by, the Borrower, the Lender, and their respective counsel. Accordingly, this Agreement shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against the Borrower or the Lender. 1.08. Entire Agreement. This Agreement and each of the other Credit Documents, taken together, constitute and contain the entire agreement of the Borrower and the Lender 16 relating to the subject matter hereof and thereof and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof and thereof (including the commitment letter dated as of January 4, 2005, between the Borrower and the Lender. 1.09. Calculation of Interest and Fees. All calculations of interest and fees under this Agreement and the other Credit Documents for any period (a) shall include the first day of such period and exclude the last day of such period and (b) shall be calculated on the basis of a year of 360 days for actual days elapsed. (a) References in this Agreement to "Recitals," "Sections," "Paragraphs," "Exhibits" and "Schedules" are to recitals, sections, paragraphs, exhibits and schedules herein and hereto unless otherwise indicated. (b) References in this Agreement or any other Credit Document to any document, instrument or agreement (i) shall include all exhibits, schedules and other attachments thereto, (ii) shall include all documents, instruments or agreements issued or executed in replacement thereof if such replacement is permitted hereby, and (iii) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time if such amendment, modification or supplement is permitted hereby. (c) References in this Agreement or any other Credit Document to any Governmental Rule (i) shall include any successor Governmental Rule, (ii) shall include all rules and regulations promulgated under such Governmental Rule (or any successor Governmental Rule), and (iii) shall mean such Governmental Rule (or successor Governmental Rule) and such rules and regulations, as amended, modified, codified or reenacted from time to time and in effect at any given time. (d) References in this Agreement or any other Credit Document to any Person in a particular capacity (i) shall include any successors to and permitted assigns of such Person in that capacity and (ii) shall exclude such Person individually or in any other capacity. 1.11. Other Interpretive Provisions. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement or any other Credit Document shall refer to this Agreement or such other Credit Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Credit Document, as the case may be. The words "include" and "including" and words of similar import when used in this Agreement or any other Credit Document shall not be construed to be limiting or exclusive. In the event of any inconsistency between the terms of this Agreement and the terms of any other Credit Document, the terms of this Agreement shall govern. 1.12. Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this Agreement and rounding the result up or down to the nearest number (with a round-up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement. 17 SECTION II. CREDIT FACILITIES. 2.01. Revolving Loan Facility. (a) Revolving Loan Availability. On the terms and subject to the conditions of this Agreement, Lender agrees to advance to the Borrower from time to time during the period from the Closing Date up to, but not including, the Revolving Loan Maturity Date such loans in Dollars as the Borrower may request under this Section 2.01 or which are made under Section 2.03 (individually, a " Revolving Loan "); provided , however , that the sum of (i) the Effective Amount of all Revolving Loans made by Lender at any time outstanding and (ii) the Effective Amount of all L/C Obligations at such time outstanding shall not exceed the Total Commitment at such time. Except as otherwise provided herein, the Borrower may borrow, repay and reborrow Revolving Loans until the Revolving Loan Maturity Date. (b) Revolving Loan Borrowing Procedure. (i) Base Rate Loans. Except for Sweep Loans (as provided in Section 2.03 hereof), Borrower shall request Base Rate Loans not later than 1:00 p.m. on a Business Day upon written or, at the sole discretion of Lender, telephonic instructions received by Lender from any Person purporting to be a Responsible Officer of Borrower or purporting to be such other Person as Borrower may from time to time designate as having authority to request Base Rate Loans in writing to Lender. Borrower may also request Base Rate Loans by using the CEO and following such procedures and standards as Lender shall from time to time establish for the use of the CEO. Upon receipt of such instructions or request, the fulfillment of the conditions set forth in Section 3.02 and Borrower's compliance with Section 2.01(a) , Lender shall make a Base Rate Loan to Borrower by crediting the amount thereof to the Concentration Account. Borrower agrees that Lender is permitting telephonic and CEO requests for Base Rate Loans at Borrower's request and Lender shall have no liability in acting upon a telephonic or CEO request that it believes has been made by an authorized Person. (ii) LIBOR Loans. Borrower shall request a LIBOR Loan by either: (A) using the CEO and following such procedures and standards as Lender shall from time to time establish for the use of the CEO or (B) delivering a written notice in the form of Exhibit A, appropriately completed (a "Notice of LIBOR Loan Borrowing"). Irrespective of whether the request for a LIBOR Loan is made by either using the CEO or a Notice of LIBOR Loan Borrowing, Borrow shall specify: (A) The principal amount of the requested Revolving Loan Borrowing, which shall be in the amount of $1,000,000 or an integral multiple of $500,000 in excess thereof. (B) That the requested Revolving Loan Borrowing will be a LIBOR Loan; (C) The initial Interest Periods selected by the Borrower for such LIBOR Loans in accordance with Section 2.01(e) ; (D) The date of the requested LIBOR Loan, which shall be a Business Day; and (E) Each Notice of LIBOR Loan Borrowing shall be signed by a Responsible Officer of Borrower. 18 provided , however , that all Loans made during the period commencing on the date of this Agreement and ending three (3) Business Days thereafter shall consist solely of Base Rate Loans. The Borrower shall make a request for a LIBOR Loan by using the CEO or, as applicable, a Notice of LIBOR Loan to Lender not later than 9:00 a.m. at least three (3) Business Days before the date of the requested LIBOR Loan. Each Notice of LIBOR Loan Borrowing shall be delivered to Lender by facsimile or by e-mail by a Responsible Officer of the Borrower or by any other Person as Borrower may designate in writing from time to time to Lender's facsimile number or e-mail address and during the hours specified in Section 8.01 ; provided , however , that in the case of delivery by email, the Borrower shall promptly, and in any event within twenty-four hours after such email delivery, deliver to Lender a facsimile of such Notice of LIBOR Loan Borrowing executed by the Responsible Officer of the Borrower who sent the e-mail Notice of LIBOR Loan Borrowing; provided , however , Borrower's failure to deliver a facsimile of such notice of Revolving Loan Borrowing shall not effect the validity, enforceability, conclusiveness or binding effect on Borrower of the e-mail notification. Each request for a LIBOR Loan made either by using the CEO or by delivering a Notice of LIBOR Loan Borrowing to Lender shall be irrevocable. Upon receipt of a request for a LIBOR Loan either through the use of the CEO or the delivery of a Notice of LIBOR Loan Borrowing, the fulfillment of the conditions set forth in Section 3.02 and Borrower's compliance with Section 2.01(a) , Lender shall make the LIBOR Loan to Borrower by crediting the amount thereof to the Concentration Account. Borrower agrees that Lender is permitting CEO requests for LIBOR Loans at Borrower's request and Lender shall have no liability in acting upon a CEO request that it believes has been made by an authorized Person. (c) Revolving Loan Interest Rates. Subject to Section 2.07(c) , the Borrower shall pay interest on the unpaid principal amount of each Revolving Loan from the date of such Revolving Loan until paid in full, at one of the following rates per annum : (i) During such periods as such Revolving Loan is a Base Rate Loan (and Base Rate Loans include Sweep Loans), at a rate per annum equal to the Base Rate plus the Applicable Margin therefor, such rate to change from time to time as the Applicable Margin or Base Rate shall change; provided , however , in the event Lender provides Borrower a notice(s) pursuant to Sections 2.11(a) and/or 2.11(b) and Lender reasonably determines that the Base Rate plus the Applicable Margin should not be used as the interest rate for Base Rate Loans, then, in that event, the interest on the unpaid principal balance of a Base Rate Loan shall be at a rate per annum equal to the Alternative Rate, as such rate may change from time to time; and (ii) During such periods as such Revolving Loan is a LIBOR Loan, at a rate per annum equal at all times during each Interest Period for such LIBOR Loan to the LIBOR Rate for such Interest Period plus the Applicable Margin therefor, such rate to change from time to time during such Interest Period as the Applicable Margin shall change. All Revolving Loans in each Revolving Loan Borrowing shall, at any given time prior to maturity, bear interest at one, and only one, of the above rates. The number of Revolving Loan Borrowings consisting of LIBOR Loans shall not exceed six (6) at any time. (d) Conversion of Revolving Loans. Subject to Section 2.13 , the Borrower may convert any Revolving Loan Borrowing from one Type of Revolving Loan Borrowing to 19 the other Type; provided , however , that no Base Rate Loan may be converted into a LIBOR Loan after the occurrence and during the continuance of an Event of Default and provided , further , that any conversion of a LIBOR Loan on any day other than the last day of the Interest Period therefor shall be subject to the payments required under Section 2.13 . The Borrower shall request such a conversion by an irrevocable written notice to Lender in the form of Exhibit B , appropriately completed (a " Notice of Revolving Loan Conversion "), which specifies, among other things: (i) The Revolving Loan Borrowing which is to be converted; (ii) The Type of Revolving Loan Borrowing into which such Revolving Loan Borrowing is to be converted; (iii) If such Revolving Loan Borrowing is to be converted into a Revolving Loan Borrowing consisting of LIBOR Loans, the initial Interest Period selected by the Borrower for such LIBOR Loans in accordance with Section 2.01(e) ; and (iv) The date of the requested conversion, which shall be a Business Day. The Borrower shall give each Notice of Revolving Loan Conversion to Lender not later than 9:00 a.m. at least three (3) Business Days before the date of the requested conversion. Each Notice of Revolving Loan Conversion shall be delivered to Lender by facsimile or by e-mail by a Responsible Officer of the Borrower or by any other Person as Borrower may designate in writing from time to time to Lender's facsimile number or e-mail address and during the hours specified in Section 8.01 ; provided , however , that in the case of delivery by email, the Borrower shall promptly, and in any event within twenty-four hours after such email delivery, deliver to Lender a facsimile of such Notice of Revolving Loan Conversion executed by the Responsible Officer of the Borrower who sent the email Notice of Revolving Loan Conversion; provided , further , that Borrower's failure to deliver a facsimile of such Notice of Revolving Loan Conversion shall not affect the validity, enforceability, conclusiveness, or binding affect on Borrower of the e-mail notification. (e) LIBOR Loan Interest Periods. (i) The initial and each subsequent Interest Period selected by the Borrower for a Revolving Loan Borrowing consisting of LIBOR Loans shall be one (1), two (2), three (3) or six (6) months; provided , however , that (A) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such next Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (B) any Interest Period which 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 a calendar month; and (C) no Interest Period shall end after the Revolving Loan Maturity Date. (ii) The Borrower shall notify Lender by an irrevocable written notice in the form of Exhibit C , appropriately completed (a " Notice of Revolving Loan Interest Period Selection "), not later than 9:00 a.m. at least three (3) Business Days prior to the last day of each Interest Period for a Revolving Loan Borrowing consisting of LIBOR Loans of the Interest Period selected by the Borrower for the next succeeding Interest Period for such LIBOR Loans; provided , however , that no LIBOR Loan shall be continued for an additional Interest Period after the occurrence and during the continuance of an Event of Default. Each Notice of Revolving Loan 20 Interest Period Selection shall be delivered by facsimile or by email by a Responsible Officer of the Borrower to Lender to the facsimile number or email address and during the hours specified in Section 8.01 ; provided , however , that in the case of delivery by email, the Borrower shall promptly, and in any event within twenty-four hours after such email delivery, deliver to Lender a facsimile of such Notice of Revolving Loan Interest Period Selection executed by the Responsible Officer of the Borrower who sent the email Notice of Revolving Loan Interest Period Selection; provided , however , Borrower's failure to deliver a facsimile of such Notice of Revolving Loan Interest Period Selection shall not affect the validity, enforceability, conclusiveness, or binding affect on Borrower of the e-mail notification. If (A) the Borrower fails to notify Lender of the next Interest Period for a Revolving Loan Borrowing consisting of LIBOR Loans in accordance with this Section 2.01(e) or (B) an Event of Default has occurred and is continuing on the last date of an Interest Period for any LIBOR Loan, such LIBOR Loan(s) shall automatically convert to Base Rate Loan(s) on the last day of the current Interest Period therefor. (f) Scheduled Revolving Loan Payments. The Borrower shall repay the principal amount of all then-outstanding Revolving Loans on the Revolving Loan Maturity Date. The Borrower shall pay accrued interest on the unpaid principal amount of each Revolving Loan in arrears (i) in the case of a Base Rate Loan, on the last Business Day of each April, July, October, and January (ii) in the case of a LIBOR Loan, on the last day of each Interest Period applicable to such Revolving Loan (and, if the Interest Period for such LIBOR Loan is six (6) months, on the date that falls three (3) months after the beginning of such Interest Period); and (iii) in the case of all Revolving Loans, upon prepayment (to the extent thereof) and at maturity. All interest that is not paid when due shall be due upon demand. (g) Purpose. The Borrower shall use the proceeds of the Revolving Loans (i) to refinance certain existing Indebtedness of the Borrower, (ii) to pay fees and expenses incurred by the Borrower in connection with the transactions contemplated hereby, (iii) to provide for working capital and other general corporate purposes of the Borrower and its Subsidiaries, (iv) to make Capital Expenditures and (v) to make future acquisitions as permitted hereunder. (a) The Letter of Credit Commitment. (i) On the terms and subject to the conditions set forth herein, the L/C Issuer agrees (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit in Dollars for the account of the Borrower, and to amend or, in the case of Standby Letters of Credit, renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to ho nor drafts under the Letters of Credit; provided that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit if as of the date of such L/C Credit Extension, and after giving effect thereto, the sum of (A) the Effective Amount of all Revolving Loans at any time outstanding and (B) the Effective Amount of all L/C Obligations at such time outstanding exceeds or would exceed the Total Commitment at such time. Within the foregoing limits, and on the terms and subject to the conditions hereof, the Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and 21 reimbursed. All Existing Commercial Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof. (ii) Notwithstanding the L/C Issuer's agreements in Section 2.02(a)(i) , the L/C Issuer need not issue any Letter of Credit if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Requirement of Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it; (B) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless either (I) the Lender has approved such expiry date or (II) the Borrower has Cash Collateralized the Obligations in an amount equal to one hundred five percent (105%) of the then Effective Amount of such requested Letter of Credit, provided , however , that in any event, no Letter of Credit shall be issued or renewed if the expiry date of such Letter of Credit would occur more than two hundred forty (240) days after the Letter of Credit Expiration Date. (C) the issuance of such Letter of Credit would violate the terms or conditions of any Letter of Credit Application entered into by the L/C Issuer and the Borrower; (D) such Letter of Credit is in a face amount less than $100,000 in the case of a Standby Letter of Credit or denominated in a currency other than Dollars; (E) such Letter of Credit is in violation of the UCP or other applicable law; or (F) the expiry date of such Letter of Credit would occur (I) more than two hundred ten (210) days after it is issued for Commercial Letters of Credit and (II) more than three hundred sixty five (365) days after it is issued for Standby Letters of Credit. (iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. (b) Procedures for Issuance and Amendment of Letters of Credit; Evergreen Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer in the form of a Letter of Credit Application, appropriately completed and, when the CEO is not used, signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be 22 received by the L/C Issuer not later than 9:00 a.m., at least two (2) Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which date shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which date shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Borrower acknowledges that Lender and/or L/C Issuer are permitting Letter of Credit Applications to be submitted through the use of the CEO at Borrower's request and Lender and/or L/C Issuer shall have no liability in acting upon a CEO request that it believes has been made by an authorized Person. (ii) Upon receipt of any Letter of Credit Application and the L/C Issuer's confirmation that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. (iii) If the Borrower so requests in any applicable Letter of Credit Application for a Standby Letter of Credit, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Standby Letter of Credit that has automatic renewal provisions (each, an " Evergreen Letter of Credit "); provided that any such Evergreen Letter of Credit must permit the L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the " Nonrenewal Notice Date ") in each such twelvemonth period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such renewal; provided , however , that the L/C Issuer may, in its sole discretion, not permit any such renewal if, among other reasons, (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof, or (B) one or more of the applicable conditions specified in Section 3.02 is not then satisfied. (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower a true and complete copy of such Letter of Credit or amendment. (c) Drawings and Reimbursements. (i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the Borrower of the amount to be paid by the L/C Issuer as a result of such drawing 23 and the date on which payment is to be made by the L/C Issuer to the beneficiary of such Letter of Credit in respect of such drawing; provided , however , that in the case of Commercial Letters of Credit, subsequent notification by routine methods shall be deemed sufficient notice. Not later than 9:00 a.m., on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an " Honor Date ") (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion), the Borrower shall reimburse the L/C Issuer in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the L/C Issuer by such time (the " Unreimbursed Amount "), the Borrower shall be deemed to have requested a Revolving Loan Borrowing of Base Rate Loans to be disbursed to the L/C Issuer on the Honor Date in an amount equal to the Unreimbursed Amount, but subject to the amount of the unutilized portion of the Total Commitment and the conditions set forth in Section 3.02 . Any notice given by the L/C Issuer pursuant to this Section 2.02(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (ii) [Intentionally omitted.] (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Loan Borrowing because the conditions set forth in Section 3.02 cannot be satisfied or for any other reason, the L/C Borrowing resulting from the honoring of a drawing under a Letter of Credit that is not so refinanced shall be due and payable on demand (together with interest) and shall bear interest at the rate applicable to Revolving Loans upon the occurrence and during the continuance of an Event of Default. (d) [Intentionally omitted.] (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit, and to repay each L/C Borrowing and each drawing under a Letter of Credit that is refinanced by a Borrowing of Revolving Loans, shall be absolute, unconditional and irrevocable, and shall be paid in accordance with the terms of the Letter of Credit Application, including the commercial letter of credit agreements, standby letter of credit agreements, and continuing letters of credit agreements between Borrower and Lender, Trade Bank, or HSBC, as such agreements may be amended, modified, and replaced. (f) Role of L/C Issuer. The Borrower agrees that, in paying any drawing under a Letter of Credit, the L/C Issuer's responsibilities and the limitation of the L/C Issuer's liability shall be as set forth in the Letter of Credit Applications, including the commercial letter of credit agreements, standby letter of credit agreements and continuing letters of credit agreements between Borrower and Lender, Trade Bank or HSBC, as such agreements may be amended, modified, and replaced. (g) Cash Collateral. Upon the request of Lender, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the Obligations in an amount equal to one hundred five percent (105%) of the then Effective Amount of the L/C Obligations. (h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement 24 applicable to an Existing Commercial Letter of Credit), (i) the rules of the " International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each Standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits (the " UCP "), as most recently published by the International Chamber of Commerce (the " ICC ") at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998 regarding the European single currency (euro)) shall apply to each Commercial Letter of Credit. (i) Letter of Credit Fees. The Borrower agrees to pay the following Letter of Credit fees which, once paid, are non-refundable: (i) With respect to each Commercial Letter of Credit, such amounts as L/C Issuer and Borrower may agree. (ii) With respect to each Standby Letter of Credit to Lender, a Standby Letter of Credit fee for each such Standby Letter of Credit equal to the Applicable Margin for LIBOR Loans times the actual daily maximum amount available to be drawn under each such Standby Letter of Credit times a fraction, the numerator of which is the number of days from the date of issuance to the date of expiry of such Standby Letter of Credit and the denominator of which is three hundred sixty (360). Such fee for each Standby Letter of Credit shall be due and payable in advance on the date of issuance of each such Standby Letter of Credit, and, in the case of any Evergreen Letter of Credit, on the date of renewal of each such Evergreen Letter of Credit, unless otherwise agreed to in writing by the Borrower and the L/C Issuer. Each such fee, once paid, shall be non-refundable. If there is any change in the Applicable Margin for LIBOR Loans during any quarter, the Applicable Margin used for the calculation of the Letter of Credit Fee shall be the Applicable Margin on the date such fee is due. (j) [Intentionally omitted.] (k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control. (l) Trade Bank or HSBC as L/C Issuer. The parties hereto acknowledge and agree that, at its option, the L/C Issuer may arrange for Letters of Credit to be issued by Trade Bank as agent for Lender or for HSBC Letters of Credit to be issued. All parties hereto understand and agree that, as applicable, to the extent any Letters of Credit are issued by Trade Bank as agent for Lender or any HSBC Letters of Credit are issued, (i) Trade Bank is agent only to Lender and not to the Borrower and has no obligations to the Borrower and HSBC has no obligations to the Borrower, (ii) the Letters of Credit issued by Trade Bank and the HSBC Letters of Credit will be deemed Letters of Credit issued by the L/C Issuer for all purposes hereunder and (iii) any of the obligations performed or rights exercised pursuant to or in connection with the issuance of any Letter of Credit by Trade Bank or by HSBC pursuant to or in connection with the issuance of any HSBC Letters of Credit shall be deemed obligations performed or rights exercised by Lender as L/C Issuer. To the extent that the L/C Issuer is required to provide any notices to, or take any other actions for the benefit of, the Lender hereunder, with respect to any Letter of Credit issued by Trade Bank, no such notice or action shall be required. 25 2.03. Sweep Loans. Lender, in its sole and absolute discretion, may make Base Rate Loans to the Borrower each day in an amount equal to the excess, if any, of the Dollar amount of all debits clearing all bank accounts settled through the Concentration Account on such day less the Dollar amount of collected funds in the Concentration Account on such day (each such loan is a " Sweep Loan." ). All Sweep Loans shall be Base Rate Loans. The existence of an excess amount of clearing checks shall be deemed to be a request by the Borrower for a Sweep Loan and no notice is required for a Sweep Loan. All Sweep Loans shall bear interest at the rate set forth in Sections 2.01(c)(i) and 2.07(c) and shall be payable as provided in Sections 2.01(f) , 2.06(c) , and 2.06(d) . The availability of Sweep Loans is discretionary on the part of Lender and Lender may terminate the availability of Sweep Loans at any time. 2.04. Commitment Reductions, Etc. (a) Optional Reduction or Cancellation of Commitments. The Borrower may, upon five (5) Business Days written notice to Lender, permanently reduce the Total Commitment by the amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof or cancel the Total Commitment in its entirety; provided , however , that the Borrower may not: (i) reduce the Total Commitment prior to the Revolving Loan Maturity Date, if, after giving effect to such reduction, the Effective Amount of all Revolving Loans and L/C Obligations then outstanding would exceed the proposed reduced Total Commitment; and (ii) cancel the Total Commitment prior to the Revolving Loan Maturity Date if, after giving effect to such cancellation, any Revolving Loan or L/C Obligation would then remain outstanding. (b) Mandatory Reduction or Termination of Commitments. The Total Commitment shall be automatically reduced to zero on the Revolving Loan Maturity Date. (c) Effect of Commitment Reductions. From the effective date of any reduction of the Total Commitment, the Unused Commitment Fees payable pursuant to Section 2.05(b) shall be computed on the basis of the Total Commitment as so reduced. Once reduced or cancelled, the Total Commitment may not be increased or reinstated without the prior written consent of Lender. (a) Commitment Fee. Borrower shall pay Lender a Commitment Fee in the amount of $80,000.00, which fee shall be payable in full on the Closing Date and shall not be subject to reduction or be refundable under any and all circumstances. (b) Unused Commitment Fees. The Borrower shall pay to Lender fees (collectively, the " Unused Commitment Fees ") equal to (i) the Total Commitment minus : (A) the average daily outstanding and unpaid principal balance of the Loans during the Unused Commitment Fee Period; and (B) the average daily aggregate undrawn face amount of all outstanding Letters of Credit during the Unused Commitment Fee Period, multiplied by (ii) the Unused Commitment Fee Percentage. The Borrower shall pay the Unused Commitment Fees quarterly in arrears on the last day of each January, April, July and October (commencing April 30, 2005) and on the Revolving Loan Maturity Date (or if the Total Commitment is cancelled or terminated on a date prior to the Revolving Loan Maturity Date, on such prior date). Each Unused Commitment Fee, once paid, is non-refundable. As used herein, the term " Unused Commitment Fee Period " shall mean the period beginning on the first day of the most recently concluded quarter and ending on the last day of the most recently concluded quarter. 26 (a) Terms of All Prepayments. Upon the prepayment of any Loan (whether such prepayment is an optional prepayment under Section 2.06(b) , a mandatory prepayment required by Section 2.06(c) or a mandatory prepayment required by any other provision of this Agreement or the other Credit Documents, including a prepayment upon acceleration), the Borrower shall pay to Lender (i) all accrued interest and fees to the date of such prepayment on the amount prepaid and (ii) if such prepayment is the prepayment of a LIBOR Loan on a day other than the last day of an Interest Period for such LIBOR Loan, all amounts payable to such Lender pursuant to Section 2.13 . (b) Optional Prepayments. Except as provided in 2.06(d), at its option Borrower may, in the case of Base Rate Loans, prepay such Loans in part or in whole or, in the case of LIBOR Loans, upon three (3) Business Days' notice to Lender, prepay such Loans in any Borrowing in part, in a minimum principal amount of $3,000,000 or an integral multiple of $500,000 in excess thereof, or in whole. Each such notice shall specify the date and amount of such prepayment, provided that if such prepayment is on any day other than the last day of the Interest Period applicable to such LIBOR Loan, the Borrower shall be subject to the payments required by Section 2.13 . If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. If no Default or Event of Default has occurred and is continuing, all prepayments under this Section 2.06(b) which are applied to reduce the principal amount of the Loans shall be applied to the Loans as directed by the Borrower. If the Borrower fails to direct the application of any such principal prepayments or if a Default has occurred and is continuing, such principal prepayments shall be applied first, to the payment of Revolving Loans and then to Cash Collateralize the Obligation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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