AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT BARNES & NOBLE, INC.

 

<PAGE>

                                                                    Exhibit 10.1

 

                              AMENDED AND RESTATED

                    REVOLVING CREDIT AND TERM LOAN AGREEMENT

 

                              BARNES & NOBLE, INC.

 

                            Dated as of August 10, 2004

 

                                  -------------

 

                             BANK OF AMERICA, N.A.,

                             as Administrative Agent

 

                                ING CAPITAL LLC,

                      WACHOVIA BANK, NATIONAL ASSOCIATION,

                                 SUNTRUST BANK,

                               CITICORP USA, INC.

                           as Co-Documentation Agents

 

                                       AND

 

                THE LENDING INSTITUTIONS PARTY TO THIS AGREEMENT

 

                                       AND

 

                         BANC OF AMERICA SECURITIES LLC,

                    as Lead Arranger and Book Manager for the

                     Revolving Credit Loans and Term Loan A

 

<PAGE>

 

                                TABLE OF CONTENTS

 

<TABLE>

<CAPTION>

Section                                          Title                                          Page

-------                                           -----                                          ----

<S>          <C>                                                                                <C>

SECTION I - DEFINITIONS

 

1.1          Definitions................................................................          2

1.2          Terms of General Application...............................................         24

 

SECTION II - DESCRIPTION OF CREDIT

 

2            The Credit Facilities......................................................         25

2.1          The Loans..................................................................         25

2.2          Records; Notes.............................................................         28

2.3          Conversion; Continuation...................................................         29

2.4          Notice and Manner of Borrowing, Continuation or

            Conversion of Loans........................................................         29

2.5          Fees.......................................................................         30

2.5.1        Fee Letters................................................................         30

2.5.2        Commitment Fee.............................................................         30

2.5.3        Utilization Fee............................................................         31

2.6          Reduction of Total Revolving Credit Commitment.............................         31

2.7          Increases in Total Revolving Credit Commitment.............................         32

2.8          Duration of Interest Periods...............................................         32

2.9          Interest Rates and Payments of Interest....................................         33

2.10         Protective Provisions......................................................         35

2.10.1       Inability to Determine Adjusted LIBOR Rate.................................         35

2.10.2       Illegality.................................................................         36

2.10.3        Additional Costs, etc......................................................         36

2.10.4       Claims by Affected Banks;

            Borrowers' Right to Replace Banks..........................................         37

2.11         Capital Requirements.......................................................         38

2.12         Payments and Prepayments of the Loans......................................         38

2.13         Method of Payment; Withholding Tax Exemption...............................          41

2.14         Default Rate Interest, etc.................................................         43

2.15         Payments Not at End of Interest Period.....................................         44

2.16         Computation of Interest and Fees; Maximum Interest.........................         44

2.17         Letters of Credit..........................................................         45

2.18         Letter of Credit Fees......................................................         46

2.19         [Reserved].................................................................         46

2.20         Interdependence of Borrower Affiliated Group...............................         46

2.21         Interest Rate Protection Agreements........................................         47

</TABLE>

 

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<PAGE>

 

<TABLE>

<S>          <C>                                                                                 <C>

SECTION III - CONDITIONS OF LOANS

 

3.1          Conditions Precedent to Term Loan A and this Agreement.....................         47

3.1.1        Loan Documents.............................................................         47

3.1.2        Legality of Transactions...................................................          48

3.1.3        Representations and Warranties.............................................         48

3.1.4        Performance, Consents, No Defaults, Litigation, Etc........................         48

3.1.5        Bringdown Certificate Regarding Charter Documents..........................         48

3.1.6        Proof of Entity Action.....................................................         48

3.1.7        Incumbency Certificate.....................................................         49

3.1.8        Proceedings and Documents, Etc.............................................         49

3.1.9        Good Standing; Reports, Etc................................................         49

3.1.10       Fees.......................................................................         49

3.1.11       Legal Opinion..............................................................         49

3.1.12       Financial Condition........................................................         50

3.1.13       Security Documents; U.C.C. Search Reports;

            Insurance; Patents, Trademarks and Copyrights..............................         50

3.1.14       Solvency...................................................................         50

3.2          Conditions Precedent to all Loans and Letters of Credit....................         50

 

SECTION IV - REPRESENTATIONS AND WARRANTIES

 

4.1          Organization and Qualification.............................................         51

4.2          Entity Authority...........................................................         51

4.3          Valid Obligations..........................................................         52

4.4          Consents or Approvals......................................................         52

4.5          Title to Properties; Absence of Encumbrances...............................         52

4.6          Material Contracts.........................................................         53

4.7          Financial Statements.......................................................         53

4.8          Changes....................................................................         53

4.9          Defaults...................................................................         53

4.10         Taxes......................................................................         53

4.11         Litigation.................................................................         54

4.12         Subsidiaries...............................................................         54

4.13         Investment Company Act.....................................................         54

4.14         Compliance with ERISA......................................................         54

4.15         Environmental Matters......................................................         54

4.16         Disclosure.................................................................         54

4.17         Solvency...................................................................         55

4.18         Compliance with Statutes, etc..............................................         55

4.19         Capitalization.............................................................         55

4.20         Labor Relations............................................................         55

4.21         Certain Transactions.......................................................         56

4.22         Restrictions on the Borrower Affiliated Group..............................         56

4.23         Leases.....................................................................         56

</TABLE>

 

                                      -ii-

<PAGE>

 

<TABLE>

<S>          <C>                                                                                 <C>

4.24         Franchises, Patents, Copyrights, etc.......................................         57

4.25         Collateral.................................................................         57

 

SECTION V - AFFIRMATIVE COVENANTS

 

5.1          Financial Statements and other Reporting Requirements......................         57

5.2          Conduct of Business........................................................         59

5.3          Maintenance of Properties and Insurance....................................         61

5.4          Taxes......................................................................         62

5.5          Inspection by the Administrative Agent.....................................         62

5.6          Maintenance of Books and Records...........................................         62

5.7          Use of Proceeds............................................................         62

5.8          Pension Plans..............................................................         63

5.9          Fiscal Year................................................................         63

5.10         Further Assurances.........................................................         63

 

SECTION VI - NEGATIVE COVENANTS

 

6.1          Indebtedness...............................................................         64

6.2          Sale and Leaseback.........................................................         65

6.3          Encumbrances...............................................................         65

6.4          Merger; Consolidation; Sale or Lease of Assets;

            Acquisitions...............................................................         67

6.5          Minimum Fixed Charge Coverage Ratio........................................         68

6.6          Maximum Cash Flow Leverage Ratio...........................................         68

6.6A         Maximum Adjusted Cash Flow Leverage Ratio..................................         68

6.6B         Maximum Ratio of Consolidated Total Funded Debt to EBITDA..................          69

6.7          Maximum Total Funded Debt to Total Capitalization..........................         69

6.8          Maximum Capital Expenditures...............................................         69

6.9          Restricted Payments........................................................         69

6.10         Investments................................................................         69

6.11         ERISA......................................................................         69

6.12         Transactions with Affiliates...............................................         70

6.13         Loans......................................................................         70

6.14         Total Revolving Credit Commitment..........................................         70

6.15         No Amendments to Certain Documents; No New

            Agreements Requiring Breach of Loan Documents..............................         70

 

SECTION VII - DEFAULTS

 

7.1          Events of Default..........................................................         71

7.2          Remedies...................................................................         74

</TABLE>

 

                                     -iii-

<PAGE>

 

<TABLE>

<S>          <C>                                                                                  <C>

SECTION VIII - CONCERNING THE ADMINISTRATIVE

                                        AGENT AND THE BANKS

 

8.1          Appointment and Authorization..............................................         75

8.2          Administrative Agent and Affiliates........................................         75

8.3          Future Advances............................................................         75

8.4          Delinquent Bank............................................................         76

8.5          Payments...................................................................         77

8.6          Action by Administrative Agent.............................................         78

8.7          Notification of Defaults and Events of Default.............................         78

8.8          Consultation with Experts..................................................         78

8.9          Liability of Administrative Agent..........................................         78

8.10         Indemnification............................................................         79

8.11         Independent Credit Decision................................................         79

8.12         Successor Administrative Agent; Removal....................................         80

8.13         Other Agents...............................................................         81

 

SECTION IX - MISCELLANEOUS

 

9.1          Notices....................................................................         81

9.2          Expenses...................................................................         82

9.3          Indemnification............................................................         82

9.4          Set-Off....................................................................         83

9.5          Term of Agreement..........................................................         83

9.6          No Waivers.................................................................         83

9.7          Governing Law..............................................................         83

9.8          Amendments, Waivers, Etc...................................................         84

9.9          Binding Effect of Agreement................................................         85

9.10         Successors and Assigns.....................................................         85

9.11         Counterparts...............................................................         86

9.12         Partial Invalidity.........................................................         86

9.13         Captions...................................................................         87

9.14         Waiver of Jury Trial.......................................................         87

9.15         Waiver of Special Damages..................................................         87

9.16         Entire Agreement...........................................................         87

9.17         Replacement of Loan Documents, Etc.........................................         88

9.18         B&N as Administrative Agent for the

            Borrowers; Joint and Several Liability.....................................         88

9.19         Assignment to Bank of America, N.A.........................................         88

9.20         Existing Credit Agreement Superceded.......................................         88

</TABLE>

 

                                      -iv-

<PAGE>

 

                                    SCHEDULES

 

SCHEDULE 1 - Commitments and Commitment Percentages

 

SCHEDULE 2 - Additional Designated Co-Borrowers

 

SCHEDULE 3 - Additional Amendment Documents

 

                                    EXHIBITS

 

EXHIBIT A-1 Amended and Restated Revolving Credit Note

 

EXHIBIT A-2 Term Loan A Note

 

EXHIBIT B - Form of Notice of Borrowing or Conversion

 

EXHIBIT C - Indebtedness; Encumbrances

 

EXHIBIT D - Disclosure

 

EXHIBIT E - Form of Opinion of Counsel to Borrowers

 

EXHIBIT F - Form of Report of Chief Financial Officer

 

EXHIBIT G - Form of Assignment and Assumption

 

EXHIBIT H - Form of Subsidiary Guaranty

 

EXHIBIT I - Form of Pledge Agreement

 

EXHIBIT J - Omnibus Amendment

 

<PAGE>

 

                              AMENDED AND RESTATED

                    REVOLVING CREDIT AND TERM LOAN AGREEMENT

 

                           Dated as of August 10, 2004

 

      THIS AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is made

as of August 10, 2004, by and among Barnes & Noble, Inc., a Delaware corporation

having its principal place of business and chief executive office at 122 Fifth

Avenue, New York, NY 10011 ("B&N"), certain wholly-owned subsidiaries of B&N,

the lending institutions listed on Schedule 1 to this Agreement and the other

lending institutions which may become parties hereto pursuant to Section 9.10

(individually, a "Bank" and collectively, the "Banks"), Bank of America, N.A.,

as administrative agent for itself and each other Bank (in such capacity, the

"Administrative Agent"), ING Capital LLC, Wachovia Bank, National Association,

SunTrust Bank and Citicorp USA, Inc., as co-documentation agents, and Banc of

America Securities LLC, as lead arranger and book manager for the Revolving

Credit Loans and Term Loan A.

 

            WHEREAS, B&N, the Banks, certain other lenders (collectively, the

"Existing Lenders"), and Fleet National Bank ("Fleet") as administrative agent

are party to that certain Revolving Credit Agreement dated as of May 22, 2002

(as amended prior to the date hereof, the "Existing Credit Agreement");

 

      WHEREAS, FleetBoston Financial Corporation and Bank of America Corporation

have merged and Bank of America, N.A. desires to be administrative agent,

issuing bank and a bank under this Agreement by the assignment from Fleet, and

otherwise on the terms and conditions set forth herein, and the Banks hereby

consent to such assignment;

 

      WHEREAS, B&N, the Banks and the Administrative Agent desire to amend and

restate the Existing Credit Agreement as set forth herein (including, without

limitation, to include certain of B&N's wholly-owned subsidiaries as

co-borrowers hereunder and to make a new term loan to B&N and certain of its

subsidiaries on the date hereof);

 

      NOW, THEREFORE, in consideration of the mutual covenants and agreements

herein contained, the parties hereto hereby agree that the Existing Credit

Agreement shall be amended and restated effective as of the date first written

above, to read in its entirety as follows:

 

                                      J-1-

 

<PAGE>

 

                                     SECTION I

 

                                   DEFINITIONS

 

      1.1. Definitions.

 

      All capitalized terms used in this Agreement or in any other Loan Document

(as such terms are defined below), or in any certificate, report or other

document made or delivered pursuant to this Agreement (unless otherwise defined

therein), shall have the respective meanings assigned to them below:

 

      Account and/or Accounts Receivable. As defined in Section 9-102(a)(2) of

the Uniform Commercial Code as in effect from time to time in the State of New

York.

 

      Adjusted LIBOR Rate. For any Interest Period, a rate per annum as

determined on the basis of the offered rates for deposits in Dollars, for a

period of time comparable to such Interest Period which appears on the Telerate

page 3750 as of 11:00 a.m. (London time) on the day that is two Business Days

preceding the first day of such Interest Period; provided, however, if the rate

described above does not appear on the Telerate page 3750 on any applicable

interest determination date, LIBOR shall be the rate (rounded upwards, if

necessary, to the nearest one hundred thousandth of a percentage point)

determined on the basis of the offered rates for deposits in Dollars for a

period of time comparable to such Interest Period which are offered to the

Administrative Agent by four major banks in the London interbank market at

approximately 11:00 a.m. (London time), on the day that is two Business Days

preceding the first day of such Interest Period as selected by the

Administrative Agent. The principal London office of each of the four major

London banks will be requested to provide a quotation of its Dollar deposit

offered rate to the Administrative Agent. If at least two such quotations are

provided, the rate for that date will be the arithmetic mean of the quotations.

If fewer than two quotations are provided as requested, the rate for that date

will be determined on the basis of the rates quoted for loans in Dollars to

leading European banks for a period of time comparable to such Interest Period

offered by major banks in New York City at approximately 11:00 a.m. (New York

City time), on the day that is two Business Days preceding the first day of such

Interest Period. In the event that the Administrative Agent is unable to obtain

any such quotation as provided above, it will be deemed that the Adjusted LIBOR

Rate cannot be determined. The foregoing sentence shall not limit the ability of

the Administrative Agent and the Required Banks to otherwise determine that the

Adjusted LIBOR Rate cannot be determined pursuant to Section 2.10.1. In the

event that the Board of Governors of the Federal Reserve System shall impose a

Reserve Percentage with respect to LIBOR deposits of the Administrative Agent,

then for any period during which such Reserve Percentage shall apply, the

Adjusted LIBOR Rate shall be equal to the amount determined above divided by an

amount equal to one minus the Reserve Percentage.

 

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

Administrative Agent for the Banks under this Agreement and the other Loan

Documents, including

 

                                      J-2-

 

<PAGE>

 

(where the context so admits) any other Person or Persons succeeding to the

functions of the Administrative Agent pursuant to this Agreement and the other

Loan Documents.

 

      Affected Bank. Any Bank that has suffered a loss or otherwise has a claim

for compensation from the Borrowers or a right to be excused from performing an

obligation under any of Sections 2.10.2, 2.10.3, 2.11 or 2.13.

 

      Affiliate. With reference to any Person, (i) any director or officer of

that Person, (ii) any other Person controlling, controlled by or under direct or

indirect common control with that Person (and if that Person is an individual,

any member of the immediate family (including parents, siblings, spouse,

children, stepchildren, nephews, nieces and grandchildren) of such individual

and any trust whose principal beneficiary is such individual or one or more

members of such immediate family and any Person who is controlled by any such

member or trust), (iii) any other Person directly or indirectly holding 10% or

more of any class of the capital stock or other equity interests (including

options, warrants, convertible securities and similar rights) of that Person,

(iv) any other Person 10% or more of any class of whose capital stock or other

equity interests (including options, warrants, convertible securities and

similar rights) is held directly or indirectly by that Person, and (v) any other

Person that possesses, directly or indirectly, power to direct or cause the

direction of management or policies (whether through ownership of securities or

partnership or other ownership interests, by contract or otherwise) of that

Person.

 

      Affiliated Subsidiaries. Collectively, (i) GameStop Corp., GameStop, Inc.,

GameStop.com, inc., Sunrise Publications, Inc., Babbages Etc. LLC, Marketing

Control Services, Inc., GameStop Brands, Inc., GameStop of Texas (GP) LLC,

GameStop (LP), LLC, Gamesworld Group Limited (f/k/a GameStop Group Limited),

GameStop Texas LP, Calendar Club L.L.C. and iUniverse.com, Inc., (ii) each other

less than wholly-owned Subsidiary of B&N formed or acquired after the Closing

Date, and (iii) in the event that any Borrower acquires Barnes & Noble College

Booksellers, Inc. ("B&N College") after the Closing Date, B&N College, provided

that any Subsidiary set forth in the preceding clause (i) or (ii) shall no

longer be considered an Affiliated Subsidiary from and after the date upon which

it becomes a wholly-owned Subsidiary of B&N.

 

      Agreement. This Amended and Restated Revolving Credit and Term Loan

Agreement, as the same may be renewed, extended, modified, supplemented or

amended from time to time.

 

      Amendment Documents. Collectively, (i) this Agreement, (ii) the Omnibus

Amendment, (iii) any Notes requested by the Banks in connection with Term Loan A

or the Revolving Credit Loans, (iv) the Solvency Certificates dated as of the

Closing Date, (v) the Fee Letter dated as of July 1, 2004, (vi) the documents

and agreements listed on Schedule 3 attached hereto, and (vii) each of the other

documents, agreements, instruments, documents and certificates reasonably

required by the Administrative Agent in connection herewith (including, without

limitation, in connection with maintaining a

 

                                      J-3-

 

<PAGE>

 

perfected security interest in the Collateral), as any of the same may be

renewed, extended, modified, supplemented or amended from time to time.

 

      Anti-Terrorism Order. Executive Order No. 13,224 66 Fed Reg. 49,079 (2001)

issued by the President of the United States of America (Executive Order

Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten

to Commit, or Support Terrorism).

 

      Applicable Authority. Any competent court or any governmental or other

regulatory body or official charged with the administration or the

interpretation of any law, treaty, statute, rule or regulation.

 

      Applicable Base Rate Margin. The Applicable Base Rate Margin is set forth

in Section 2.9(c).

 

      Applicable LIBOR Margin. The Applicable LIBOR Margin is set forth in

Section 2.9(c).

 

      Arranger. Banc of America Securities LLC.

 

      Assignment and Assumption. See Section 9.10(ii).

 

      Availability. As at the date of determination, an amount equal to (a) the

Total Revolving Credit Commitment then in effect, minus (b) the aggregate

principal amount of all Revolving Credit Loans then outstanding, minus (c) the

aggregate amount of all Swingline Loans then outstanding, minus (d) the

aggregate Stated Amount of Letters of Credit outstanding, minus (e) the

aggregate amount of all unreimbursed draws under outstanding Letters of Credit

(unless included as Revolving Credit Loans under clause (b) above).

 

      Banks. Collectively, (i) Bank of America, N.A., and (ii) each of the other

Persons which may provide additional commitments and become a party to this

Agreement as a Bank hereunder, as shown on Schedule 1 as it may be updated by

the Administrative Agent from time to time.

 

      B&N. See preamble.

 

      B&N Guaranty. The Guaranty Agreement dated as of the date hereof and

executed and delivered by B&N to the Administrative Agent, for the ratable

benefit of the Banks and the Administrative Agent, which shall be substantially

in the form of Exhibit H hereto.

 

      B&N License. See Section 4.24.

 

      Base Rate. The greater of (a) the rate of interest publicly announced from

time to time by the Administrative Agent at its head office as its Base Rate,

and (b) the Federal

 

                                      J-4-

 

<PAGE>

 

Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if necessary,

to the next 1/16 of 1%).

 

      Base Rate Loan. Any Revolving Credit Loan or portion of the Term Loan A

bearing interest at a rate determined with reference to the Base Rate.

 

      Borrowers. Collectively, (i) B&N and (ii) each of the Designated

Co-Borrowers.

 

      Borrower Affiliated Group. Collectively, (i) B&N, (ii) each of the

Designated Co-Borrowers and (iii) each of the Subsidiaries of B&N in existence

from time to time other than the Affiliated Subsidiaries and the Inactive

Subsidiaries.

 

      Business Day. (i) For all purposes other than as covered by clause (ii)

below, any day other than a Saturday, Sunday or legal holiday on which banks in

Boston, Massachusetts and in New York, New York are open for the conduct of a

substantial part of their commercial banking business; and (ii) with respect to

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

interest on, LIBOR Loans, any day that is a Business Day described in clause (i)

and that is also a day on which trading takes place between banks in United

States dollar deposits in the London interbank market.

 

      Capital Expenditures. To the extent capitalized in accordance with GAAP,

any expenditure for fixed assets (both tangible and intangible), including

assets being constructed (whether or not completed), leasehold improvements,

capital leases under GAAP, installment purchases of machinery and equipment,

acquisitions of real estate and other similar expenditures including (i) in the

case of a purchase, the entire purchase price, whether or not paid during the

fiscal period in question, (ii) in the case of a Capitalized Lease, the

capitalized amount thereof (determined in accordance with GAAP) and (iii)

without duplication, expenditures in or from any construction-in-progress

account of any member of the Borrower Affiliated Group.

 

      Capitalized Lease. Any lease of real property by a member of the Borrower

Affiliated Group as lessee which is shown as a liability on the Consolidated

balance sheet of the Borrower in accordance with GAAP.

 

      Cash Flow Leverage Ratio. As of any date of calculation, for the

twelve-month period then ended, the ratio of (a) Consolidated Senior Funded Debt

on the last day of such period to (b) Consolidated EBITDA for such period.

 

      CERCLA. The Comprehensive Environmental Response, Compensation and

Liability Act of 1980, as the same may from time to time be supplemented or

amended and remain in effect.

 

      Change in Law. Any future applicable law or any change to any present

applicable law (which, in each case, includes treaties, statutes, rules and

regulations thereunder and the interpretation and application thereof by any

Applicable Authority), or any change in

 

                                      J-5-

 

<PAGE>

 

the interpretation or application of any present applicable law by any

Applicable Authority, and requests, directives, instructions and notices at any

time or from time to time hereafter made upon or otherwise issued to any Bank or

the Administrative Agent by any central bank or other fiscal, monetary or other

authority (whether or not having the force of law).

 

      Change of Control. The occurrence of any of the following: (i) any Person

or "group" (within the meaning of Section 13(d) of the Securities Exchange Act

of 1934, as amended) of Persons acting in concert as a partnership or other

group (other than Leonard Riggio, his spouse, lineal descendants and trusts for

the exclusive benefit of any such individuals or the executor or administrator

of the estate or legal representative of any such individuals or any entity

controlled by any of them) shall, as a result of a tender or exchange offer,

open market purchases, privately negotiated purchases or otherwise, have become,

after the date hereof, the "beneficial owner" (within the meaning of such term

under Rule 13d-3 under the Exchange Act) of securities of B&N representing 40%

or more of the combined voting power of the then outstanding securities of B&N

ordinarily (and apart from rights accruing under special circumstances) having

the right to vote in the election of directors; or (ii) during any period of 24

consecutive months, the board of directors of B&N shall cease to consist of a

majority of the individuals who constituted the board of directors as of the

first day of such 24-month period or who shall have become a member thereof

subsequent to the date hereof after having been nominated, or otherwise approved

in writing, by at least a majority of individuals who constituted the board of

directors of B&N as of the first day of such 24-month period or whose election

or nomination were so approved.

 

      Closing Date. August 10, 2004 or such other mutually agreeable date on

which all of the conditions set forth in Section 3.1 have been satisfied and the

Term Loan A is to be made hereunder.

 

      Code. The Internal Revenue Code of 1986 and the rules and regulations

thereunder, collectively, as the same may from time to time be supplemented or

amended and remain in effect.

 

      Collateral. Collectively, all of the agreements, instruments (including

promissory notes and the rights to payment thereunder), contracts, assets,

Accounts, Accounts Receivable, patents, trademarks, other Intellectual Property

Rights, capital stock (or other equity interests) and all of the income,

proceeds and products of any thereof, under or in respect of which the

Administrative Agent or any Bank or any of the nominees, agents or legal

representatives of the Administrative Agent or any Bank shall have at the

relevant time of reference to the term "Collateral," any rights or interest as

security for the payment or performance of all or any part of the Obligations.

 

      Commitment. At any time and with respect to any Bank, the amount set forth

for such Bank on Schedule 1 under the heading "Commitments," which amount

includes, without duplication, the aggregate of such Bank's (a) Revolving Credit

Commitment and (b) Term Loan A Commitment, as the case may be. Schedule 1 shall

be updated by the

 

                                      J-6-

 

<PAGE>

 

Administrative Agent from time to time to reflect any Commitment or portion

thereof which a Bank shall assume or relinquish upon an assignment pursuant to

Section 9.10(ii).

 

      Commitment Fee. See Section 2.5.

 

      Commitment Percentage. With respect to each Bank, the percentage set forth

on Schedule 1 hereto as such Bank's percentage of the aggregate Revolving Credit

Commitment and/or Term Loan A Commitment. Schedule 1 shall be updated by the

Administrative Agent from time to time to reflect any changes to the Commitment

Percentages.

 

      Consolidated. The term "Consolidated" shall have the meaning ascribed to

such term under GAAP, provided that, in relation to the Borrower Affiliated

Group, the Affiliated Subsidiaries shall be excluded from any Consolidated

financial tests, whether or not they would be Consolidated under GAAP.

 

      Consolidated Rent Expense. For any period, the aggregate rental expenses

payable by the Borrower Affiliated Group on a Consolidated basis for such period

(including percentage rent) under any operating Lease classified as such under

GAAP (including on a pro forma basis for the applicable period any such

operating Lease acquired by a member of the Borrower Affiliated Group in

connection with a Permitted Acquisition or a Qualified Investment described in

clause (viii) of the definition thereof) but not including any amount included

in the definition of "Consolidated Total Interest Expense."

 

      Consolidated Senior Funded Debt. As at any date of determination, on a

Consolidated basis for the Borrower Affiliated Group, and without duplication,

the sum of (i) the Loans outstanding on such date, plus (ii) the aggregate

amount of any other Indebtedness for borrowed money (including Capital Leases)

outstanding on such date (excluding the Senior Subordinated Debt), plus (iii)

the Stated Amount of all outstanding Letters of Credit, plus (iv) all Guaranties

of Indebtedness for borrowed money or Capital Leases of the Borrower Affiliated

Group outstanding on such date.

 

      Consolidated Tangible Net Worth. As at any date of determination,

Stockholders' Equity less any intangible assets, with intangible assets defined

as goodwill, patents, trademarks, tradenames, lease rights, capitalized

pre-opening costs, franchises, organization costs and property rights.

 

      Consolidated Total Funded Debt to Total Capitalization. At any date of

determination, the ratio of (i) Consolidated Total Funded Debt on such date, to

(ii) Total Capitalization on such date.

 

      Consolidated Total Funded Debt. As at any date of determination, on a

Consolidated basis for the Borrower Affiliated Group, and without duplication,

the sum of (i) the aggregate amount of Indebtedness for borrowed money

outstanding on such date (including, without limitation, the Loans outstanding

on such date), plus (ii) the

 

                                       J-7-

 

<PAGE>

 

Stated Amount of all outstanding Letters of Credit, plus (iii) all Guaranties of

Indebtedness for borrowed money or Capitalized Leases of the Borrower Affiliated

Group outstanding on such date.

 

      Consolidated Total Interest Expense. For any period, all interest and all

amortization of debt discount and expense (including commitment fees, letter of

credit fees, balance deficiency fees and similar expenses) on all Indebtedness

of the Borrower Affiliated Group on a Consolidated basis (including outstanding

letters of credit and including, in connection with any Permitted Acquisition or

any Qualified Investment described in clause (viii) of the definition thereof

which is financed, the Indebtedness incurred by a member of the Borrower

Affiliated Group on a pro forma basis for the applicable period), paid or

required to be paid, all as determined in accordance with GAAP, together with

all interest expense of the Borrower Affiliated Group on a Consolidated basis

under Synthetic Leases. Computations of interest on a pro forma basis for

Indebtedness having a variable interest rate shall be calculated at the rate in

effect on the date of any determination.

 

      Controlled Group. All trades or businesses (whether or not incorporated)

under common control that, together with B&N or any other member of the Borrower

Affiliated Group, are treated as a single employer under Section 414(b) or

414(c) of the Code or Section 400l of ERISA.

 

      Covered Taxes. See Section 2.13(a)

 

         Cumulative Excess Cash Flow. On any date of determination, the Excess

Cash Flow of the Borrower Affiliated Group for the period commencing on November

2, 2003 and ending on the last day of the most recently completed fiscal quarter

of the Borrower.

 

      Default. An event or condition that, but for the requirement that time

elapse or notice be given, or both, would constitute an Event of Default.

 

      Delinquent Bank. See Section 8.4.

 

      Designated Co-Borrowers. Each of (i) Barnes & Noble Booksellers, Inc.,

(ii) barnesandnoble.com llc, (iii) B. Dalton Bookseller, Inc., and (iv) each of

the other direct or indirect Subsidiaries of B&N which are listed on Schedule 2

attached hereto, as such Schedule 2 may be updated by the Administrative Agent

from time to time to reflect any additional Designated Co-Borrowers or, subject

to the provisions of Section 9.8, the release of any Designated Co-Borrower.

 

      Dollar or $. Dollars in lawful currency of the United States of America.

 

      Domestic Subsidiary. Any Subsidiary of B&N organized under the laws of any

jurisdiction of the United States of America.

 

                                      J-8-

 

<PAGE>

 

      EBITDA. In relation to the Borrower Affiliated Group on a Consolidated

basis for any period, an amount equal to (a) the net income of the Borrower

Affiliated Group on a Consolidated basis after deduction of all expenses, taxes

and other proper charges, determined in accordance with GAAP for such period,

but, in determining such Consolidated net income, any GAAP extraordinary gains

shall be excluded from such calculation, plus (b) the following to the extent

deducted in computing such Consolidated net income for such period: (i)

Consolidated Total Interest Expense for such period, (ii) Consolidated taxes on

income for such period, (iii) Consolidated depreciation for such period, (iv)

Consolidated amortization for such period, (v) extraordinary non-cash losses

and, without duplication, nonrecurring non-cash losses, in each case to the

extent such losses have not been and will not become cash losses in a later

fiscal period, (vi) Net Proceeds to the Borrower Affiliated Group during such

period upon exercise of any rights in respect of Equity Securities issued to

directors, officers or employees of any member of the Borrower Affiliated Group,

and (vii) in connection with any Permitted Acquisition or any Qualified

Investment described in clause (viii) of the definition thereof during such

period, the EBITDA of the acquired Person (so long as such Person is a member of

the Borrower Affiliated Group and is not an Affiliated Subsidiary) for such

period.

 

      EBITDAR. In relation to the Borrower Affiliated Group for any period, an

amount equal to EBITDA for such period, plus Consolidated Rent Expense for such

period.

 

      Eligible Assignee. Any of:

 

            (a) a commercial bank or other financial institution organized under

the laws of the United States, or any state thereof or the District of Columbia,

and having total assets in excess of $5,000,000,000;

 

             (b) a commercial bank organized under the laws of any other country

which is a member of the Organization for Economic Cooperation and Development

(the "OECD"), or a political subdivision of any such country, or the central

bank of any country which is a member of the OECD, and having total assets in

excess of $5,000,000,000 and a combined capital and surplus of at least

$1,000,000,000;

 

            (c) any Bank, any successor to any Bank, and any Affiliate of a

Bank, so long as any such successor or Affiliate meet the requirements of clause

(a) or (b) above; and

 

            (d) any other Person consented to in writing by the Administrative

Agent, the Issuing Bank and B&N;

 

            provided, in each case, that such bank (i) is acting through a

branch or agency located in the United States and (ii) has delivered to the

Administrative Agent, on the date on which the Assignment and Assumption to

which such Eligible Assignee is a party becomes effective, the forms referred to

in Section 2.13(b) hereof.

 

                                      J-9-

 

<PAGE>

 

      Encumbrances. See Section 6.3.

 

      Environmental Claims. All claims, however asserted, alleging potential

liability or responsibility for violation of any Environmental Laws or for

release of Hazardous Materials or injury to the environment.

 

      Environmental Laws. Any and all applicable foreign, federal, state and

local environmental, health or safety statutes, laws, regulations, ordinances,

policies and or common law (whether now existing or hereafter enacted or

promulgated), of all federal, state, local or other governmental authorities,

agencies, commissions, boards, bureaus or departments which may now or hereafter

have jurisdiction over the Borrower, any other member of the Borrower Affiliated

Group or any landlord under any real estate Lease under which the Borrower or

such other member of the Borrower Affiliated Group is a tenant, and all

applicable judicial and administrative and regulatory decrees, judgments and

orders, including common law rulings and determinations, relating to injury to,

or the protection of human health or the environment, including, without

limitation, all requirements pertaining to reporting, licensing, permitting,

investigation, remediation and removal of emissions, discharges, releases or

threatened releases of Hazardous Materials, chemical substances, pollutants or

contaminants whether solid, liquid or gaseous in nature, into the environment or

relating to the manufacture, processing, distribution, use, treatment, storage,

disposal, transport or handling of such Hazardous Materials, chemical

substances, pollutants or contaminants.

 

      ERISA. The Employee Retirement Income Security Act of 1974 and the rules

and regulations thereunder, collectively, as the same may from time to time be

supplemented or amended and remain in effect.

 

      Equity Securities. As to any Person, any shares of any class of Capital

Stock or other equity interests of such Person, voting or non-voting, or any

options, warrants or similar rights with respect to any such shares or other

equity interests.

 

      Event of Default. Any event described in Section 7.1.

 

      Excess Cash Flow. In relation to the Borrower Affiliated Group on a

Consolidated basis for any period, the EBITDA of the Borrower Affiliated Group

for such period, minus (i) Capital Expenditures paid in cash during such period,

(ii) cash taxes paid in such period, and (iii) Interest Expense paid in such

period.

 

      Executive Officer. Any of the Chief Executive Officer, President, any

Financial Officer and any other officer having substantially the same authority

and responsibility of any of the foregoing officers.

 

      Existing Credit Agreement. See Preamble.

 

      Fair Market Value. With respect to any Equity Security of Gamestop Corp.,

the price a seller of such Equity Security would have received for such Equity

Security if

 

                                     J-10-

 

<PAGE>

 

such seller sold the Equity Security at an equivalent price on a per security

basis to the price paid by a buyer in the most recent transaction completed and

contemplated by Section 2.12(c)(2), so long as such transaction was an arm's

length transaction between an informed and willing buyer under no compulsion to

buy and informed and willing seller under no compulsion to sell. In the event

the Fair Market Value cannot be determined in accordance with the previous

sentence, the Fair Market Value of such Equity Security shall be determined by

taking the arithmetic average of the reported last sales prices of such Equity

Security for the 20 consecutive trading days before the date of determination of

the Fair Market Value. The reported last sales price of such Equity Security for

each trading day shall be (i) the reported last sales price as reported on the

New York Stock Exchange or (ii) if the Equity Security is not listed on the New

York Stock Exchange at such time, in the principal consolidated or composite

transaction reporting system on the principal national securities exchange on

which the Equity Security is listed or admitted to trading.

 

      Federal Funds Effective Rate. For any day, a fluctuating interest rate per

annum equal to the weighted average of the rates on overnight federal funds

transactions with members of the Federal Reserve System arranged by federal

funds brokers, as published for such day (or, if such day is not a Business Day,

for the next preceding Business Day) by the Federal Reserve Bank of New York,

or, if such rate is not so published for any day that is a Business Day, the

average of the quotations for such day on such transactions received by the

Administrative Agent from three federal funds brokers of recognized standing

selected by the Administrative Agent.

 

      Fee Letters. Collectively, (i) the letter agreement dated as of the date

of the Existing Credit Agreement among Fleet National Bank, Fleet Securities,

Inc. and B&N, and (ii) the letter agreement dated as of July 1, 2004 among Bank

of America, N.A., Banc of America Securities LLC and B&N.

 

      Financial Officer. Any of the Treasurer, the Chief Financial Officer or

the Executive Vice President of Finance or Corporate Finance of B&N, acting

singly, on behalf of B&N and each other member of the Borrower Affiliated Group,

or such other financial officer of B&N designated from time to time in writing

by B&N and approved by the Administrative Agent in its discretion.

 

      Fixed Charge Coverage Ratio. As of any date of calculation, for the

twelve-month period then ended, the ratio of (a) an amount equal to EBITDAR for

such period, to (b) the sum of Consolidated Total Interest Expense plus

Consolidated Rent Expense for such period.

 

      Foreign Bank. See Section 2.13(b).

 

      Foreign Subsidiary. Any Subsidiary of B&N organized under the laws of a

jurisdiction outside the United States of America.

 

                                     J-11-

 

<PAGE>

 

      GAAP. Generally accepted accounting principles in the United States of

America, consistently applied.

 

      Guaranties. As applied to any Person, without duplication, all guarantees,

endorsements or other contingent or surety obligations with respect to

obligations of others whether or not reflected on such Person's Consolidated

balance sheet, including any obligation to furnish funds, directly or indirectly

(whether by virtue of partnership arrangements, by agreement to keep-well or

otherwise), through the purchase of goods, supplies or services, or by way of

stock purchase, capital contribution, advance or loan, or to enter into a

contract for any of the foregoing, for the purpose of payment of obligations of

any other Person, but excluding endorsements for collection or deposit in the

ordinary course of business.

 

      Hazardous Material. Any substance (i) the presence of which requires or

may hereafter require notification, investigation or remediation under any

Environmental Law; (ii) which is or becomes defined as a "hazardous waste" or

"hazardous material" or "hazardous substance" or "controlled industrial waste"

or "pollutant" or "contaminant" under any present or future Environmental Law or

amendments thereto including, without limitation, CERCLA, and any applicable

local statutes and the regulations promulgated thereunder; (iii) which is toxic,

explosive, corrosive, infectious, radioactive, carcinogenic, mutagenic or

otherwise hazardous and is or becomes regulated by any governmental authority,

agency, department, commission, board or instrumentality of any foreign country,

the United States, any state of the United States, or any political subdivision

thereof to the extent any of the foregoing has or had jurisdiction over the

Borrower or any other member of the Borrower Affiliated Group or any Real

Property leased by B&N or any other member of the Borrower Affiliated Group; or

(iv) without limitation, which contains gasoline, diesel fuel or other petroleum

products, asbestos, asbestos containing materials ("ACM"), polychlorinated

biphenyls ("PCB's") or radioactive material.

 

      Inactive Subsidiaries. Collectively, (i) West Egg Communications LLC, (ii)

B&N Sub Corp., (iii) B&N Member Corp., (iv) Vendamerica, Inc., (v) B&N General

Partner (Pennsylvania) Corp. I, (vi) B&N General Partner (Pennsylvania) Corp.

II, and (vii) Barnes & Noble Booksellers (Pennsylvania), L.P.

 

      Income Taxes. Any franchise taxes, net income taxes or any other taxes

imposed on the net income of any Bank or the Administrative Agent, including

branch profits tax, minimum tax and other taxes imposed in lieu of net income

tax.

 

      Increase. See Section 2.7.

 

      Increase Conditions. The satisfaction of each of the following:

 

            (a) The Borrowers first shall have offered the applicable Increase

to existing Banks, with each Bank having the right, but not the obligation, to

commit to at least its pro rata percentage of the proposed Increase and one or

more such Bank(s) shall have

 

                                     J-12-

 

<PAGE>

 

signed an instrument agreeing to such increased Commitment(s), and if no such

Bank or Banks commit to the full amount of the proposed Increase, the Borrowers

then shall have offered such Increase (or the remaining portion thereof) to a

third party financial institution or institutions acceptable to the

Administrative Agent and each such institution shall have signed a counterpart

signature page becoming a party to this Agreement and a "Bank" hereunder; and

 

            (b) no Default or Event of Default shall have occurred and be

continuing (both before and after giving effect to the Increase).

 

      Indebtedness. As applied to any Person (but without duplication), (i) all

obligations for borrowed money or other extensions of credit whether secured or

unsecured, absolute or contingent, including, without limitation, unmatured

reimbursement obligations with respect to letters of credit or Guaranties issued

for the account of or on behalf of such Person, and all obligations representing

the deferred purchase price of property, other than accounts payable arising,

and accrued expenses incurred, in the ordinary course of business, (ii) all

obligations evidenced by bonds, notes, debentures or other similar instruments,

(iii) all obligations secured by any mortgage, pledge, security interest or

other lien on property owned or acquired by such Person, whether or not the

obligations secured thereby shall have been assumed, (iv) all obligations

arising under Capitalized Leases and Synthetic Leases, (v) all Guaranties, (vi)

all obligations to redeem or repurchase capital stock or other equity of any

Person if such redemptions or repurchases are required to occur prior to the

Revolving Credit Maturity Date, and (vii) all obligations that are immediately

due and payable out of the proceeds of or production from property now or

hereafter owned or acquired by such Person.

 

      Initial Financial Statements. See Section 4.7.

 

      Insolvent or Insolvency. The occurrence of one or more of the following

events with respect to a Person: death; dissolution; termination of existence;

insolvency within the meaning of the United States Bankruptcy Code or other

foreign or domestic applicable statutes; such Person's inability to pay its

debts as they come due; appointment of a receiver of any part of the property

of, execution of a trust mortgage or an assignment for the benefit of creditors

by, or the entry of an order for relief or the filing of a petition in

bankruptcy or the commencement of any proceedings under any bankruptcy or

insolvency laws, or any laws relating to the relief of debtors, readjustment of

indebtedness or reorganization of debtors, or the offering as debtor of a plan

to creditors for composition or extension, except for an involuntary proceeding

as debtor commenced against such Person which is dismissed within 60 days after

the commencement thereof without the entry or an order for relief or the

appointment of a trustee.

 

      Intellectual Property Rights. See Section 4.24.

 

      Interest Period. With respect to each LIBOR Loan, the period commencing on

the date of the making or continuation of or conversion to such LIBOR Loan and

ending

 

                                      J-13-

 

<PAGE>

 

one week or one, two, three or six months thereafter, subject to availability,

as the Borrower may elect in the applicable Notice of Borrowing or Conversion;

provided that:

 

            (a) any Interest Period (other than an Interest Period determined

pursuant to clause (c) below) that would otherwise end on a day that is not a

Business Day shall be extended to the next succeeding Business Day unless such

Business Day falls in the next calendar month, in which case such Interest

Period shall end on the immediately preceding Business Day;

 

            (b) any Interest Period that begins on the last Business Day of a

calendar month (or on a day for which there is no numerically corresponding day

in the calendar month at the end of such Interest Period) shall, subject to

clause (c) below, end on the last Business Day in the appropriate subsequent

calendar month;

 

            (c) any Interest Period applicable to Revolving Credit Loans that

would otherwise end after the Revolving Credit Maturity Date shall end on said

Revolving Credit Maturity Date and any Interest Period applicable to any portion

of the Term Loan A that would otherwise end after the Term Loan A Maturity Date

shall end on said Term Loan A Maturity Date; and

 

             (d) notwithstanding clause (c) above, no Interest Period shall have

a duration of less than one week; and if any Interest Period would be for a

shorter period, such Loan shall not be available hereunder for such period.

 

      Interest Rate Protection Agreement. As applied to any Person, a swap, cap,

collar, or option agreement or similar arrangement between such Person and one

or more financial institutions providing for the transfer or mitigation of

interest rate or other risks either generally or under specific contingencies

(including, without limitation, any such agreement or arrangement existing with

any Bank prior to the Closing Date).

 

      Investment. As applied to any Person, (i) the purchase or acquisition of

any share of capital stock, partnership interest, limited liability company

membership interest, evidence of indebtedness or other equity security of any

other Person, (ii) any loan, advance or extension of credit to, or contribution

to the capital of (including in exchange for any Equity Securities), any other

Person (excluding any such loan, advance or extension of credit having a term

not exceeding 150 days representing the purchase price of inventory or supplies

sold by such Person in the ordinary course of business), (iii) any real estate

held for sale or investment, (iv) any commodities futures contracts held other

than in connection with bona fide hedging transactions, (v) any other investment

in any other Person, (vi) the making of any commitment or acquisition of any

option to perform any of the acts specified in clauses (i) through (v) of this

definition, and (vii) the entering into of any Interest Rate Protection

Agreement.

 

      Issuing Bank. Bank of America, N.A. or Fleet National Bank, as the case

may be, in their capacity as the issuer of Letters of Credit hereunder, together

with any such other

 

                                     J-14-

 

<PAGE>

 

Bank as may, with the written consent of B&N and the Administrative Agent,

become an Issuing Bank hereunder.

 

      L/C Availability. As of any date, an amount equal to (a) or (b) below,

whichever is less:

 

            (a) the Maximum L/C Sublimit minus the Stated Amount of all Letters

of Credit outstanding (including any requested Letters of Credit), minus the

aggregate amount of all unreimbursed draws under outstanding Letters of Credit;

or

 

            (b) the Total Revolving Credit Commitment minus the outstanding

principal amount of the Revolving Credit Loans then outstanding, minus the

outstanding principal amount of the Swingline Loans then outstanding, minus the

Stated Amount of all Letters of Credit outstanding (including any requested

Letters of Credit), minus the aggregate amount of all unreimbursed draws under

outstanding Letters of Credit.

 

      Leases or Lease. See Section 4.23.

 

      Letters of Credit. Letters of credit in the form customarily issued by the

Issuing Bank as standby Letters of Credit or documentary Letters of Credit, as

the case may be, issued or to be issued for the account of a Borrower by the

Issuing Bank, under the joint responsibilities of the Banks, upon the terms and

subject to the conditions contained in this Agreement.

 

      LIBOR Loan. Any Revolving Credit Loan or portion of the Term Loan A

bearing interest at a rate determined with reference to the Adjusted LIBOR Rate.

 

      Loan. A Revolving Credit Loan, Swingline Loan or Term Loan A made to B&N

or any other Borrower by any Bank pursuant to Section II of this Agreement, and

"Loans" means all such Revolving Credit Loans, Swingline Loans and Term Loan A,

collectively.

 

      Loan Account. The account or accounts on the books of the Administrative

Agent in which will be recorded Loans and advances (including issued and

outstanding Letters of Credit) made by the Banks to B&N or any other Borrower

pursuant to this Agreement, payments made on such Loans and other appropriate

debits and credits as provided by this Agreement.

 

      Loan Documents. Collectively, this Agreement (including, without

limitation, the Amendment Documents and the other agreements and other

instruments listed or described in Section III), the Notes, if any, the Letters

of Credit (and related documentation and agreements, including any letter of

credit application), the Security Agreements, the Patent and Trademark Security

Agreements, the Pledge Agreements, the B&N Guaranty, the Subsidiary Guaranty,

all other Subsidiary Security Documents and other Security Documents, the Fee

Letters and the Solvency Certificates, together with all agreements and other

instruments contemplated thereby (other than the Interest Rate

 

                                     J-15-

 

<PAGE>

 

Protection Agreements), all certificates delivered in connection therewith from

time to time and all schedules, exhibits and annexes thereto, as any of the

foregoing may from time to time be amended and in effect.

 

      Mandatory Prepayments. See Section 2.12(c).

 

      Material Adverse Effect. Any (a) material adverse change in the business,

operations, results of operations, assets, liabilities or condition (financial

or otherwise) of the Borrower Affiliated Group taken as a whole, (b) material

impairment of the ability of the Borrower Affiliated Group, taken as a whole, to

perform their obligations under the Loan Documents, or (c) material impairment

of the Administrative Agent's or the Banks' ability to enforce the Obligations.

 

      Maximum L/C Sublimit. $100,000,000.

 

      Net Proceeds. With respect to the sale, transfer or other disposition by

B&N or any other member of the Borrower Affiliated Group of any asset or group

of assets (other than inventory wholly in the ordinary course of business, but

including, without limitation, any sale (whether through a public offering,

private placement or otherwise) of Equity Securities to any Person not a member

of the Borrower Affiliated Group), means the amount of cash (freely convertible

into Dollars) received by B&N or such other member of the Borrower Affiliated

Group, from such sale or other disposition (including, without limitation, any

tax refund or tax benefit resulting from a loss on such sale or other

disposition as and when such tax benefit is realized), after (i) provision for

all income or other taxes of the Borrower Affiliated Group measured by or

resulting from such sale or other disposition, (ii) payment of all reasonable

third party brokerage commissions and other reasonable out-of-pocket fees and

expenses to third parties related to such sale or other disposition, and (iii)

deduction of appropriate amounts to be provided by B&N or such other member of

the Borrower Affiliated Group as a reserve, in accordance with GAAP, against any

liabilities associated with such sale, transfer or other disposition and

retained by B&N or such other member of the Borrower Affiliated Group after such

sale or other disposition.

 

      Notes. Collectively, the promissory notes, if any, delivered by the

Borrowers upon the request of any Banks or the Swingline Lender pursuant to

Section 2.2(d).

 

      Notice of Borrowing or Conversion. See Section 2.4(a).

 

      Obligations. Any and all obligations of the Borrower Affiliated Group to

the Administrative Agent, any Bank, or the Arranger under the Loan Documents of

every kind and description (including obligations in respect of Letters of

Credit, the Fee Letter and fees under each thereof), direct or indirect,

absolute or contingent, primary or secondary, due or to become due, now existing

or hereafter arising, regardless of how they arise or by what agreement or

instrument, if any, and including obligations to perform acts and refrain from

taking action as well as obligations to pay money. The Obligations shall also

include any obligations of any member of the Borrower Affiliated

 

                                     J-16-

 

<PAGE>

 

Group to any Bank in connection with any Interest Rate Protection Agreement and

treasury management or other cash management agreements entered into with a

Bank.

 

      Omnibus Amendment. The Omnibus Amendment dated as of the date hereof

amending certain of the Security Documents, attached hereto as Exhibit J.

 

      Participant. See Section 9.10(i).

 

      Patent and Trademark Security Agreements. (a) The Patent and Trademark

Security Agreements dated as of the date of the Existing Credit Agreement and

executed and delivered by B&N and each Domestic Subsidiary who is a member of

the Borrower Affiliated Group to the Administrative Agent for the ratable

benefit of the Banks, and (b) any other Patent and Trademark Security Agreements

dated after the date of the Existing Credit Agreement and executed and delivered

by a Domestic Subsidiary who is a member of the Borrower Affiliated Group to the

Administrative Agent, for the ratable benefit of the Banks and the

Administrative Agent.

 

      Patriot Act. Public Law 107-56 of the United States of America, United and

Strengthening America by Providing Appropriate Tools Required to Intercept and

Obstruct Terrorism (USA PATRIOT Act) Act of 2001.

 

      PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to

any or all of its functions under ERISA.

 

       PCB. See definition of Hazardous Material.

 

      Permitted Acquisition. Any acquisition by B&N or any other member of the

Borrower Affiliated Group that meets each of the following criteria: (i) the

capital stock (or other equity interests) or assets acquired in such acquisition

relates to a line of business similar or complementary to the business in which

the Borrower Affiliated Group is engaged on the Closing Date, (ii) the board of

directors and, if required by applicable law, the shareholders or the equivalent

thereof, of such other Person has approved such acquisition, it being the intent

that the acquisition be non-hostile in nature, (iii) in the case of a merger

between B&N and another Person, B&N shall be the surviving entity, or in the

case of a merger between another Person and a member of the Borrower Affiliated

Group (other than B&N), upon consummation of such merger, the surviving entity

shall be a direct or indirect Subsidiary of B&N, (iv) B&N shall provide the

Administrative Agent with written notice of each such acquisition as soon as

practicable, but in no event more than 5 days after the closing thereof and such

information relating thereto as the Administrative Agent may reasonably request

promptly after the request therefor, (v) no Default or Event of Default shall

exist, in each case both before and after giving effect to such acquisition,

(vi) the properties and assets acquired by B&N or other member of the Borrower

Affiliated Group in connection with such proposed acquisition shall be free from

all liens, charges and encumbrances whatsoever, other than Permitted

Encumbrances, (vii) as soon as practicable, but in no event more than 10

Business Days after the consummation of an acquisition (x) which results in a

new, direct or indirect wholly-owned Domestic Subsidiary of B&N, the

 

                                     J-17-

 

<PAGE>

 

Administrative Agent shall have a valid, perfected, first-priority security

interest in the Accounts Receivable and Intellectual Property Rights and related

assets of the Person being acquired (consistent with the security interests in

favor of the Administrative Agent on the Closing Date) by B&N or other member of

the Borrower Affiliated Group (subject to Permitted Encumbrances) and such

Domestic Subsidiary shall become a party to the Subsidiary Security Documents,

and (y) which is an acquisition of the Equity Securities in another Person, the

Administrative Agent shall have a valid, perfected, first-priority pledge of the

Equity Securities so acquired pursuant to a Pledge Agreement, provided that in

connection with acquisition of minority interests in any one or more Persons,

the Borrower Affiliated Group shall not be required to pledge the Equity

Securities of any such Person or Persons having total assets of less than

$25,000,000 in the aggregate, and (viii) the aggregate consideration (including

all cash and non-cash consideration and any assumption of Indebtedness, but

excluding any Equity Securities of B&N) for such acquisitions which do not

constitute Investments, together with all Investments made pursuant to clause

(viii) of the definition of Qualified Investments (but not any other provision

of such definition), from and after November 2, 2003, shall not exceed, when

made, the sum of $105,000,000 plus 50% of the Borrower Affiliated Group's

Cumulative Excess Cash Flow.

 

      Permitted Encumbrances. See Section 6.3.

 

      Person or person. An individual, a company, a corporation, an association,

a partnership, a joint venture, a limited liability company or partnership, an

unincorporated trade or business enterprise, a trust, an estate, or a government

(national, regional or local) or an agency, instrumentality or official thereof.

 

      Plan. At any time, an employee pension or other benefit plan that is

subject to Title IV of ERISA or subject to the minimum funding standards under

Section 412 of the Code and is either (i) maintained by B&N, any member of the

Borrower Affiliated Group or any member of the Controlled Group for employees of

B&N or any member of the Controlled Group or (ii) if such Plan is established or

maintained pursuant to a collective bargaining agreement or any other

arrangement under which more than one employer makes contributions and to which

B&N or any member of the Controlled Group is then making or accruing an

obligation to make contributions or has within the preceding five Plan years

made contributions.

 

      Pledge Agreements. (a) The Pledge Agreements dated as of the date of the

Existing Credit Agreement and executed and delivered by each of B&N and certain

of its Subsidiaries to the Administrative Agent, for the ratable benefit of the

Banks and the Administrative Agent, pursuant to which, without limitation, (i)

all of the issued and outstanding capital stock of all Subsidiaries (or, in the

case of Foreign Subsidiaries, 65%), other than Affiliated Subsidiaries, is

pledged to the Administrative Agent, and (ii) all of the issued and outstanding

capital stock of the Affiliated Subsidiaries and the capital stock or other

equity of minority-owned Persons, in each case which is directly owned by B&N or

any other member of the Borrower Affiliated Group, is pledged to the

Administrative Agent, (b) all Pledge Agreements to be delivered by B&N from time

to

 

                                      J-18-

 

<PAGE>

 

time in accordance with Section 5.2(d) and the definition of Permitted

Acquisitions, and (c) any other Pledge Agreements dated after the date of the

Existing Credit Agreement and executed and delivered by any Domestic Subsidiary

who is a member of the Borrower Affiliated Group to the Administrative Agent,

for the ratable benefit of the Banks and the Administrative Agent.

 

      Prohibited Transaction. A transaction prohibited by Section 4975 of the

Code or Section 406 of ERISA, for which no statutory or administrative exemption

applies.

 

      Qualified Investments. As applied to any member of the Borrower Affiliated

Group, investments in (i) notes, bonds or other obligations of the United States

of America or any agency thereof that as to principal and interest constitute

direct obligations of or are guaranteed by the United States of America, (ii)

certificates of deposit or other deposit instruments or accounts of banks or

trust companies organized under the laws of the United States or any state

thereof that have capital and surplus of at least $100,000,000, (iii) commercial

paper that is rated not less than prime-one or A-1 or their equivalents by

Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively,

or their successors, (iv) any repurchase agreement secured by any one or more of

the foregoing, (v) Investments in wholly-owned Subsidiaries (other than any

Affiliated Subsidiary); provided, however, that the aggregate amount of

Investments in Foreign Subsidiaries may not at any time exceed 10% of B&N's

Consolidated Tangible Net Worth determined as of the end of the most recently

completed fiscal quarter of B&N, (vi) loans permitted by Section 6.13, (vii) in

addition to all of the foregoing, from and after November 2, 2003, Investments

described in clause (i) of the definition of Investments in connection with

Permitted Acquisitions; provided, however, that the aggregate consideration

(including all cash and non-cash consideration and any assumption of

Indebtedness, but excluding any Equity Securities of B&N) for such Investments,

together with all such consideration paid in connection with Permitted

Acquisitions not constituting Investments, shall not exceed, when made, the sum

of $105,000,000 plus 50% of the Borrower Affiliated Group's Cumulative Excess

Cash Flow, (viii) Investments in Affiliated Subsidiaries and Investments in

other minority-owned Persons made prior to the date hereof and disclosed on

Exhibit D hereto, and (ix) Interest Rate Protection Agreements for an aggregate

notional amount not to exceed $300,000,000 at any time outstanding.

 

      Rate Period. The period beginning on the third Business Day following

delivery to the Administrative Agent of the annual or quarterly financial

statements required to be delivered pursuant to Section 5.1(a) or Section 5.1(b)

and ending on the second Business Day after the day on which the next such

quarterly (or annual, as applicable) financial statements are delivered to the

Administrative Agent.

 

      Real Property or Real Properties. Collectively, those parcels of land

together with the improvements now or hereafter located thereon which are owned

by any member of the Borrower Affiliated Group.

 

                                     J-19-

 

<PAGE>

 

      Reportable Event. With respect to any Plan, a reportable event as

described in Section 4043(c) of ERISA for which notice to the PBGC has not been

waived.

 

      Required Banks. Any two or more Banks whose aggregate Commitments

constitute more than 50% of the Total Commitment at the relevant time of

reference, or if the Commitments have been terminated, any two or more Banks

whose aggregate Loans and Letters of Credit outstanding constitute more than 50%

of the aggregate Loans and Letters of Credit outstanding at the relevant time of

reference.

 

      Reserve Percentage. For any Interest Period, the rate (expressed as a

decimal) applicable to the Administrative Agent during such Interest Period

under regulations issued from time to time by the Board of Governors of the

Federal Reserve System for determining the maximum reserve requirement

(including, without limitation, any basic, supplemental, emergency or marginal

reserve requirement) of the Administrative Agent with respect to "Eurocurrency

liabilities" as that term is defined under such regulations.

 

      Restricted Payment. (i) Any cash or property dividend, distribution or

payment, direct or indirect, by B&N or any of its Subsidiaries in respect of its

capital stock or other equity interests, to any Person who now holds, or who in

the future holds, an equity interest in B&N or any of its Subsidiaries, whether

evidenced by a security or not, other than regular compensation and bonuses paid

to employees of B&N and its Subsidiaries in the ordinary course of business and

consistent with past practices, and other than dividends payable solely in

shares of any class of capital stock (or other equity), (ii) any payment on

account of the purchase, redemption, retirement or other acquisition for value

of any capital stock of B&N or its Subsidiaries, or any other payment or

distribution made in respect thereof, either directly or indirectly, and (iii)

any management or similar fees paid or payable by B&N or any of its Subsidiaries

to any Person who now holds, or in the future holds, directly or indirectly, an

equity interest in B&N or any of its Subsidiaries, provided that the spin-off of

the stock of any Affiliated Subsidiary shall not be a Restricted Payment.

 

      Revolving Credit Commitment. At any time and with respect to any Bank, the

amount set forth for such Bank on Schedule 1 under the heading "Revolving Credit

Commitments," which amount includes, without duplication, the aggregate of (a)

the maximum amount of Revolving Credit Loans that such Bank shall be committed

to make to the Borrowers, (b) the maximum amount of Swingline Loans that such

Bank shall be committed to make, or to participate in, in favor of the

Borrowers, and (c) the maximum Stated Amount of Letters of Credit which such

Bank shall be committed to issue, or to participate in, in favor of the

Borrowers. Schedule 1 shall be updated by the Administrative Agent from time to

time to reflect any Revolving Credit Commitment or portion thereof which a Bank

shall assume or relinquish upon an assignment pursuant to Section 9.10(ii).

 

      Revolving Credit Loans. Collectively, the loans in the maximum aggregate

principal amount of the Total Revolving Credit Commitment in effect from time to

time

 

                                     J-20-

 

<PAGE>

 

made or to be made to the Borrowers by the Banks pursuant to this Agreement

(including Section 2.1(a) hereof) and subject to the limitations contained

herein.

 

      Revolving Credit Maturity Date. May 22, 2006, or such earlier date on

which the Loans become due and payable pursuant to Section 7.2.

 

      Security Agreements. (a) The Security Agreements dated as of the date of

the Existing Credit Agreement and executed and delivered by B&N and each

Domestic Subsidiary who is a member of the Borrower Affiliated Group to the

Administrative Agent, for the ratable benefit of the Banks and the

Administrative Agent, and (b) any other Security Agreements dated after the date

of the Existing Credit Agreement and executed and delivered by a Domestic

Subsidiary who is a member of the Borrower Affiliated Group to the

Administrative Agent, for the ratable benefit of the Banks and the

Administrative Agent.

 

      Security Documents. Collectively, (i) the Security Agreements, the Patent

and Trademark Security Agreements, the Pledge Agreements, the Omnibus Amendment,

the Subsidiary Guaranty and all other Subsidiary Security Documents, and (ii)

all other agreements, instruments or contracts by which any of the Obligations

shall be evidenced or under or in respect of which the Administrative Agent, any

Bank or any of their respective nominees, agents, or representatives shall have,

at such time, any rights or interests as security for the payment or performance

of all or any part of the Obligations.

 

      Solvency Certificates. Collectively, (i) the separate solvency

certificates dated as of the date of the Existing Credit Agreement and executed

and delivered by a Financial Officer of each member of the Borrower Affiliated

Group to the Administrative Agent, for the ratable benefit of the Banks and the

Administrative Agent, and (ii) the separate solvency certificates dated as of

the date hereof and executed and delivered by a Financial Officer of each member

of the Borrower Affiliated Group to the Administrative Agent, for the ratable

benefit of the Banks and the Administrative Agent.

 

      Stated Amount. With respect to each Letter of Credit outstanding at any

time, the maximum amount then available to be drawn thereunder (without regard

to whether any conditions to drawing could then be met).

 

       Stockholders' Equity. The amount reported as "stockholders' equity" on

B&N's Consolidated balance sheet and determined in accordance with GAAP

(exclusive of any amount reported as "stockholders' equity" relating to the

Affiliated Subsidiaries).

 

      Subordinated Debt. See Section 6.1(h).

 

      Subsidiary. With respect to B&N, any corporation, association, joint stock

company, business trust or other similar organization of which more than 50% of

the ordinary voting power for the election of a majority of the members of the

board of directors or other governing body of such entity is held or controlled

by B&N or a Subsidiary of B&N; or any other such organization the management of

which is directly

 

                                     J-21-

 

<PAGE>

 

or indirectly controlled by B&N or a Subsidiary of B&N through the exercise of

voting power or otherwise; or any joint venture, whether incorporated or not, in

which B&N has more than a 50% ownership interest.

 

      Subsidiary Guaranty. (a) The Subsidiary Guaranty dated as of the date of

the Existing Credit Agreement and executed and delivered by each Domestic

Subsidiary who is a member of the Borrower Affiliated Group to the

Administrative Agent, for the ratable benefit of the Banks and the

Administrative Agent, and (b) any other Subsidiary Guaranties dated after the

date of the Existing Credit Agreement and executed and delivered by a Domestic

Subsidiary who is a member of the Borrower Affiliated Group to the

Administrative Agent, for the ratable benefit of the Banks and the

Administrative Agent, each of which shall be in the form of Exhibit H hereto. In

the event that B&N forms or acquires any wholly-owned Foreign Subsidiary after

the date hereof, to the extent that no material adverse tax consequences would

result from such guaranty, such Foreign Subsidiary will also become a Subsidiary

Guarantor.

 

      Subsidiary Security Documents. Collectively, (a) with respect to each

Domestic Subsidiary who is a member of the Borrower Affiliated Group in

existence as of the date hereof, the Subsidiary Guaranty, the Security Agreement

executed by such Domestic Subsidiary, and the Patent and Trademark Security

Agreement executed by such Domestic Subsidiary, in each case executed and

delivered by such Domestic Subsidiaries in connection with the Closing or

pursuant to Section 5.11, (b) with respect to each Domestic Subsidiary who is a

member of the Borrower Affiliated Group formed after the date hereof, a

Subsidiary Guaranty, a Security Agreement, a Patent and Trademark Security

Agreement, each to be executed and delivered by such new Domestic Subsidiary and

each to be in substantially the form of the respective documents delivered by

existing Domestic Subsidiaries under the foregoing clause (a), and (c) each

Pledge Agreement required to be delivered by any Subsidiary of B&N pursuant to

the terms hereof.

 

      Swingline Commitment. The obligation of the Swingline Lender to make

Swingline Loans to the Borrowers in a maximum principal amount not exceeding at

any time the amount set forth opposite the Swingline Lender's name on Schedule 1

hereto. On the Closing Date, the Swingline Commitment shall be $50,000,000 and

shall not be less than that amount through the Revolving Credit Maturity Date or

earlier acceleration of the Obligations.

 

      Swingline Lender. Bank of America, N.A., in its capacity as swingline

lender hereunder, or any Eligible Assignee of Bank of America, N.A. who executes

an Assignment and Assumption assuming Bank of America, N.A.'s obligations as

Swingline Lender.

 

      Swingline Loans. Collectively, the loans in the maximum aggregate

principal amount of the Swingline Commitment made or to be made by the Swingline

Lender to the Borrowers pursuant to Section 2.1(b) of this Agreement and subject

to the limitations contained herein.

 

      Swingline Termination Date. The Revolving Credit Maturity Date.

 

                                     J-22-

 

<PAGE>

 

      Synthetic Lease. Any synthetic lease, tax retention operating lease,

off-balance sheet loan or similar off-balance sheet financing product where such

transaction is considered borrowed money Indebtedness for tax purposes but is

classified as an operating lease under GAAP.

 

      Term Loan A. The term loan in the original principal amount of

$245,000,000 made or to be made to the Borrowers on the Closing Date by the

Banks having a Term Loan A Commitment pursuant to Section 2.1(c) and subject to

the limitations contained herein.

 

      Term Loan A Commitment. In relation to any Bank, the maximum liability of

such Bank, as set forth on Schedule 1, to participate in making the Term Loan A

to the Borrowers upon the terms and subject to the conditions contained in this

Agreement. Schedule 1 shall be updated by the Administrative Agent from time to

time to reflect any Term Loan A Commitment or portion thereof which a Bank shall

assume or relinquish upon an assignment pursuant to Section 9.10(ii).

 

      Term Loan A Maturity Date. August 10, 2009, or such earlier date on

which the Loans become due and payable pursuant to Section 7.2

 

      Total Capitalization. As at any date of determination, an amount equal to

the sum of (i) Consolidated Total Funded Debt on such date, plus (ii)

Stockholders' Equity on such date.

 

      Total Commitment. As of any date, the sum of the then-current Commitments

of the Banks to make Revolving Credit Loans and the Term Loan A. As of the date

of this Agreement, the Total Commitment (including the Swingline Commitment) is

$745,000,000. After the date of this Agreement, the aggregate amount of the

Total Commitment may be increased to an amount not exceeding $845,000,000 in

accordance with the provisions of Section 2.7.

 

      Total Revolving Credit Commitment. As of any date, the sum of the

then-current Commitments of the Banks to make Revolving Credit Loans. As of the

date of this Agreement, the Total Revolving Credit Commitment (including the

Swingline Commitment) is $500,000,000. After the date of this Agreement, the

aggregate amount of the Total Revolving Credit Commitment may be increased to an

amount not exceeding $600,000,000 in accordance with the provisions of Section

2.7.

 

      Uniform Commercial Code. The Uniform Commercial Code as in effect from

time to time in any applicable jurisdiction.

 

      United States Bankruptcy Code. 11 U.S.C. Sections 101-1330.

 

      Utilization. For any day, the aggregate principal amount of all Revolving

Credit Loans and Swingline Loans outstanding on such day, but excluding

outstanding Letters of Credit.

 

                                     J-23-

 

<PAGE>

 

      Utilization Fee. The utilization fee payable by the Borrowers to the

Administrative Agent for the ratable accounts of the Banks pursuant to Section

2.5.3.

 

      1.2. Terms of General Application. For all purposes of this Agreement and

the other Loan Documents, except as otherwise expressly provided herein or

therein or unless the context otherwise requires:

 

            (a) references to any Person defined in this Agreement refer to such

Person and its successor in title and permitted assigns or, for natural persons,

such Person's successors, heirs, executors, administrators and other legal

representatives;

 

            (b) references to any agreement, instrument or document defined in

this Agreement refer to such document as originally executed, or if subsequently

varied, extended, renewed, modified, amended, restated or supplemented from time

to time, as so varied, extended, renewed, modified, amended, restated or

supplemented and in effect at the relevant time of reference thereto;

 

            (c) words importing the singular only shall include the plural and

vice versa, and the words importing the masculine gender shall include the

feminine gender and vice versa, and all references to dollars, $, U.S. Dollars

or United States Dollars, shall be to Dollars;

 

            (d) accounting terms not otherwise defined in this Agreement or any

of the other Loan Documents have the meanings assigned to them in accordance

with GAAP, on a basis consistent with the financial statements referred to in

Section 4.7 of this Agreement;

 

            (e) all financial statements and other financial information

provided by the Borrower and each other member of the Borrower Affiliated Group

to the Administrative Agent or any Bank shall be provided with reference to

Dollars;

 

            (f) this Agreement and the other Loan Documents are the result of

negotiation among, and have been reviewed by counsel to, among others, the

Borrower Affiliated Group and the Administrative Agent and are the product of

discussions and negotiations among all parties. Accordingly, this Agreement and

the other Loan Documents are not intended to be construed against the

Administrative Agent or any of the Banks merely on account of the Administrative

Agent's or any Bank's involvement in the preparation of such documents; and

 

            (g) all references to a time of day shall mean the time then

prevailing in New York, New York, unless otherwise indicated.

 

                                     J-24-

 

<PAGE>

 

                                    SECTION II

 

                              DESCRIPTION OF CREDIT

 

      2. The Credit Facilities.

 

      2.1. The Loans.

 

            (a) Revolving Credit Loans. Subject to the terms and conditions set

forth in this Agreement, each of the Banks having a Revolving Credit Commitment

severally agrees to lend to the Borrowers and the Borrowers may borrow (and may

repay and reborrow) from time to time between the Closing Date and the Revolving

Credit Maturity Date, such amounts as are requested by the Borrowers up to a

maximum aggregate principal amount outstanding (after giving effect to all

amounts requested and the payment or prepayment of outstanding Revolving Credit

Loans or unreimbursed draws on Letters of Credit with the proceeds of such

borrowing) at any one time equal to such Bank's Revolving Credit Commitment;

provided, however, that (without duplication) the maximum aggregate principal

amount of all Revolving Credit Loans outstanding (after giving effect to the

amounts requested and the payment or prepayment of outstanding Revolving Credit

Loans or unreimbursed draws on Letters of Credit with the proceeds of such

borrowing), plus the aggregate principal amount of all Swingline Loans

outstanding, plus the aggregate Stated Amount of Letters of Credit outstanding

at such time, plus the aggregate amount of all unreimbursed draws under

outstanding Letters of Credit, shall not at any time exceed the Total Revolving

Credit Commitment in effect at such time, and provided, further, that at the

time the Borrowers request a Revolving Credit Loan and after giving effect to

the making thereof, no Default or Event of Default has occurred and is

continuing.

 

      The Revolving Credit Loans (but not the Swingline Loans) shall be made pro

rata among the Banks having a Revolving Credit Commitment in accordance with the

Commitment Percentage of the Revolving Credit Commitment of each Bank. If the

aggregate principal amount of Revolving Credit Loans outstanding at any time,

plus the aggregate principal amount of Swingline Loans outstanding at such time,

plus the aggregate Stated Amount of Letters of Credit outstanding at such time,

plus the aggregate amount of any unreimbursed draws under outstanding Letters of

Credit shall at any time exceed the Total Revolving Credit Commitment in effect

at such time, the Borrowers shall immediately pay to the Administrative Agent

for the respective accounts of the Banks the amount of such excess. Any such

payment shall be applied first to outstanding Swingline Loans, and any remainder

shall be applied to outstanding Revolving Credit Loans. Failure to make such

payment on demand shall be an Event of Default hereunder.

 

            (b) Swingline Loans.

 

            (i) Availability. Subject to the terms and conditions of this

Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrowers

from time to time from the Closing Date through, but not including, the

Swingline Termination

 

                                     J-25-

 

<PAGE>

 

Date; provided, that the aggregate principal amount of all outstanding Swingline

Loans (after giving effect to any amount requested and the payment or prepayment

of outstanding Revolving Credit Loans or unreimbursed draws on Letters of Credit

with the proceeds of such borrowing) at any time, shall not exceed the lesser of

(x) the Total Revolving Credit Commitment in effect at such time less the sum of

(A) all outstanding Revolving Credit Loans at such time, (B) the aggregate

Stated Amount of Letters of Credit outstanding at such time, and (C) the

aggregate amount of all unreimbursed draws under outstanding Letters of Credit

at such time, and (y) the Swingline Commitment at such time, and provided

further that after the Swingline Lender has received written notice from any

Bank that a Default or Event of Default has occurred and stating that no new

Swingline Loans are to be made during the continuance of such Default or Event

of Default, the Swingline Lender shall not make any Swingline Loans until such

Default or Event of Default has been cured or waived in accordance with the

provisions of this Agreement. Swingline Loans hereunder may be used in

anticipation of borrowing Revolving Credit Loans and for other short-term

requirements and may be requested for a period of up to seven (7) days and shall

be repaid and may be reborrowed in accordance with the terms hereof. Each

Swingline Loan must be for an amount equal to at least $250,000. The Swingline

Lender shall initiate the transfer of funds representing the Swingline Loan to

the Borrowers by 4:00 p.m. on the Business Day of the requested borrowing, so

long as the Swingline Loan has been requested by the Borrowers no later than

3:00 p.m. on such Business Day.

 

            (ii) Repayment. The Borrowers hereby absolutely and unconditionally

jointly and severally promise to repay the outstanding principal amount of each

Swingline Loan on the earliest to occur of: (x) the eighth day after the date on

which such Swingline Loan was made, (y) the Swingline Termination Date or (z)

demand by the Swingline Lender.

 

             (iii) Refunding and Conversion of Swingline Loans to Revolving

Credit Loans.

 

                  (A) So long as the conditions of Section 3.2 (other than

Section 3.2(b)) have been met, on the maturity of each Swingline Loan (which

shall be no longer than seven (7) days after the making of such Swingline Loan),

the Borrowers shall be deemed to have requested on such date a Revolving Credit

Loan comprised solely of Base Rate Loans in the principal amount of such

Swingline Loan. Such refundings of the Swingline Loan through the funding of

such Revolving Credit Loans shall be made by the Banks having a Revolving Credit

Commitment in accordance with their respective Commitment Percentages applicable

to Revolving Credit Loans and shall thereafter be reflected as Revolving Credit

Loans of such Banks on the books and records of the Administrative Agent

(including the Loan Account).

 

                  (B) If an Event of Default has occurred and is continuing,

Swingline Loans shall be refunded by the Banks having a Revolving Credit

Commitment on demand by the Swingline Lender, in which case the Borrowers shall

be deemed to have requested on such date of demand a Revolving Credit Loan

comprised solely of

 

                                     J-26-

 

<PAGE>

 

Base Rate Loans in the principal amount of such Swingline Loan. Such refundings

of the Swingline Loan through the funding of such Revolving Credit Loans shall

be made by the Banks having a Revolving Credit Commitment in accordance with

their respective Commitment Percentages applicable to Revolving Credit Loans and

shall thereafter be reflected as Revolving Credit Loans of such Banks on the

books and records of the Administrative Agent (including the Loan Account). Each

Bank having a Revolving Credit Commitment shall fund its respective Commitment

Percentage of Revolving Credit Loans as required to repay Swingline Loans

outstanding to the Swingline Lender upon such demand by the Swingline Lender but

in no event later than 2:00 p.m. on the next succeeding Business Day after such

demand is made. No Bank's obligation to fund its respective Commitment

Percentage of the repayment of a Swingline Loan shall be affected by any other

such Bank's failure to fund its Commitment Percentage of such repayment, nor

shall any Bank's Commitment Percentage be increased as a result of any such

failure of any other such Bank to fund its Commitment Percentage. To the extent

any Bank having a Revolving Credit Commitment does not fund its respective

Commitment Percentage of any Revolving Credit Loan deemed to be made to the

Borrowers pursuant to this Section, such Bank shall be deemed a Delinquent Bank

and the Borrowers shall repay such amounts to the Swingline Lender in accordance

with the provisions of Section 8.3(c) as if such Loan were a Revolving Credit

Loan for which a Bank did not advance its share to the Administrative Agent.

 

                  (C) The Borrowers hereby authorize the Administrative Agent to

charge any account maintained with the Swingline Lender (up to the amount

available therein) in order to immediately pay the Swingline Lender the amount

of any Swingline Loans when due (x) to the extent amounts received from the

Banks having a Revolving Credit Commitment are not sufficient to repay in full

the outstanding Swingline Loans required to be refunded pursuant to Section

2.1(b)(iii)(B), and (y) to satisfy the Borrowers' obligations pursuant to clause

(D) below. If any portion of any such amount paid to the Swingline Lender shall

be recovered by or on behalf of the Borrowers from the Swingline Lender in

bankruptcy or otherwise, the loss of the amount so recovered shall be ratably

shared among all the Banks having a Revolving Credit Commitment.

 

                  (D) If at any time the Borrowers receive notice from the

Swingline Lender that the aggregate principal amount of all Revolving Credit

Loans outstanding, plus the aggregate principal amount of all Swingline Loans

outstanding (including the Swingline Loan for which demand for payment is then

made by the Swingline Lender pursuant to this subsection), plus the aggregate

Stated Amount of Letters of Credit outstanding at such time, plus the aggregate

of all unreimbursed draws under outstanding Letters of Credit, equals or exceeds

the Total Revolving Credit Commitment at such time, the Borrowers shall repay

the amount of such excess upon demand by the Swingline Lender, which payment

shall be applied first to the Swingline Loans and thereafter to the Revolving

Credit Loans outstanding.

 

                  (E) Each Bank having a Revolving Credit Commitment

acknowledges and agrees that its obligation to refund Swingline Loans with

Revolving Credit Loans in accordance with the terms of this Section 2.1(b) is

absolute and

 

                                     J-27-

 

<PAGE>

 

unconditional and shall not be affected by any circumstance whatsoever,

including, in any event, non-satisfaction of the conditions set forth in Section

2.1(a) or Article III. Further, each Bank having a Revolving Credit Commitment

agrees and acknowledges that if, prior to the refunding of any outstanding

Swingline Loans pursuant to this Section 2.1(b), one of the events described in

Section 7.1(f) or (g) shall have occurred, each such Bank will, on the date the

applicable Revolving Credit Loan would have been made pursuant to Section

2.1(b)(iii) hereof, purchase an undivided participating interest in the

Swingline Loan to be refunded in an amount equal to its Commitment Percentage

(applicable to Revolving Credit Loans) of the aggregate amount of such Swingline

Loan. Each Bank having a Revolving Credit Commitment will immediately transfer

to the Swingline Lender, in immediately available funds, the amount of its

participation. Whenever, at any time after the Swingline Lender has received

from any Bank having a Revolving Credit Commitment such Bank's participating

interest in a Swingline Loan, the Swingline Lender receives any payment on

account thereof, the Swingline Lender will distribute to such Bank its

participating interest in such amount (appropriately adjusted, in the case of

interest payments, to reflect the period of time during which such Bank's

participating interest was outstanding and funded).

 

                  (F) Each Bank's Commitment Percentage applicable to any

Swingline Loan shall be identical to its Commitment Percentage applicable to

Revolving Credit Loans, if any.

 

            (c) Term Loan A. Subject to the terms and conditions set forth in

this Agreement, each of the Banks having a Term Loan A Commitment severally

agrees to lend to the Borrowers on the Closing Date, and the Borrowers agree to

borrow on such date and repay in accordance with Section 2.12, an amount equal

to such Bank's Term Loan A Commitment.

 

            (d) Loan Account. The Administrative Agent shall enter Loans and

advances made by the Banks to the Borrowers pursuant to this Agreement

(including, without limitation, on account of any Letters of Credit) as debits

in the Loan Account. The Administrative Agent shall also record in the Loan

Account all payments made by the Borrowers on account of the Loans and may also

record therein, in accordance with customary accounting practices, other debits

and credits, including customary banking charges and all interest, fees, charges

and expenses chargeable to the Borrowers under this Agreement. The debit balance

of the Loan Account shall reflect the amount of the Borrowers' Obligations

hereunder and shall be considered correct absent manifest error.

 

      2.2. Records; Notes.

 

            (a) Banks' Records. Each Bank will note (manually or electronically)

on its records with respect to each Loan made by it (i) the date and amount of

such Loan, (ii) whether such Loan is a Revolving Credit Loan, a Swingline Loan

or a portion of Term Loan A, (iii) the interest rate and Interest Period, if

any, applicable to such Loan, and (iv) each payment and prepayment of the

principal thereof.

 

                                     J-28-

 

<PAGE>

 

            (b) Administrative Agent's Records. The Administrative Agent shall

keep records regarding the Loans, the Letters of Credit and this Agreement in

accordance with its customary procedures for agented credits.

 

            (c) Prima Facie Evidence. The entries made in the records maintained

pursuant to subsections (a) and (b) above shall, to the extent not prohibited by

applicable law, be prima facie evidence of the existence and amount of the

obligations of the Banks and the Borrowers recorded therein; provided, however,

that the failure of the Administrative Agent or any Bank, as the case may be, to

make any notation on its records shall not affect the Borrowers' obligations in

respect of the Loans, the Letters of Credit or this Agreement.

 

            (d) Notes. Upon the request of any Bank (including the Swingline

Lender) to the Administrative Agent and B&N, the Borrowers agree, at their

expense, to execute and deliver to the Administrative Agent for the account of

such Bank one or more promissory notes evidencing the Loan or Loans of such Bank

to the Borrower, in substantially the form of Exhibit A-1 or Exhibit A-2, as

applicable, attached hereto.

 

      2.3. Conversion; Continuation. Provided that no Default or Event of

Default shall have occurred and be continuing, and subject to and in accordance

with the provisions of Section 2.4(a), (x) the Borrowers may convert all or any

part (in an amount equal to at least $5,000,000 and additional increments of

$1,000,000) of any outstanding Loan (other than Swingline Loans) into a Loan of

the other type provided for in this Agreement in the same aggregate principal

amount, on any Business Day (provided, that, in the case of a conversion of a

LIBOR Loan on a day other than the last day of the Interest Period applicable to

such LIBOR Loan, the Borrower pay any amounts due under Section 2.15) and (y)

the Borrowers may continue a LIBOR Loan as a LIBOR Loan on the last day of the

Interest Period applicable to such LIBOR Loan. The Borrower shall give the

Administrative Agent and the Banks prior notice of each such conversion or

continuation (which notice shall be effective upon receipt) in accordance with

Section 2.4. All such conversions and continuations shall be made pro rata in

accordance with each Bank's Commitment Percentage applicable to the type of Loan

being converted or continued.

 

      2.4. Notice and Manner of Borrowing, Continuation or Conversion of Loans.

 

            (a) Whenever the Borrowers desire to obtain or continue a Loan

hereunder or convert an outstanding Loan into a Loan of the other type provided

for in this Agreement, the Borrowers shall notify the Administrative Agent

(which notice shall be irrevocable) by telecopy or telephone (i) with respect to

Base Rate Loans, received no later than 1:00 p.m. on the date on which the

requested Loan is to be made or continued as or converted to a Base Rate Loan,

(ii) with respect to Swingline Loans, received no later than 3:00 p.m. on the

day on which a Swingline Loan is to be made, and (iii) with respect to LIBOR

Loans, received no later than 1:00 p.m. on the date that is three (3) Business

Days before the day on which the requested Loan is to be made or continued as or

converted to a LIBOR Loan, provided that no more than 10 LIBOR Loans may be

 

                                     J-29-

 

<PAGE>

 

outstanding at any one time. Such notice by the Borrowers shall specify (i) the

effective date and amount of each Loan to be obtained, continued or converted

(or portion thereof to be continued or converted, as the case may be), subject

to the limitations set forth in Section 2.1, (ii) the interest rate option to be

applicable thereto, and (iii) the duration of the applicable Interest Period, if

any (subject to the provisions of the definition of Interest Period and Section

2.9). Each LIBOR Loan must be for an amount equal to at least $5,000,000 and in

additional increments of $1,000,000. Each such notification by telephone

pursuant to Section 2.3 or this Section 2.4(a) (a "Notice of Borrowing or

Conversion") shall be immediately followed by a written confirmation thereof by

the Borrowers in substantially the form of Exhibit B hereto, provided that if

such written confirmation differs in any material respect from the action taken

by the Administrative Agent, the records of the Administrative Agent shall be

conclusive absent manifest error.

 

            (b) Subject to the terms and conditions hereof, (i) each Bank shall

make available to the Administrative Agent, in immediately available funds, no

later than 2:00 p.m. on the date upon which any Base Rate Loan or LIBOR Loan is

to be made, such Bank's Commitment Percentage, if any, of the requested Loan,

and (ii) the Swingline Lender shall make available to the Administrative Agent,

in immediately available funds, no later than 4:00 p.m. on the date on which any

Swingline Loan is to be made, the amount of such Swingline Loan to be made on

such date. The Administrative Agent shall, in turn, make each Loan on the

effective date specified therefor by crediting the amount of such Loan to the

Borrowers' demand deposit account with the Administrative Agent. In no event

shall the Administrative Agent (in its capacity as Administrative Agent) have

any obligation to make any funding or shall any Bank be obligated to fund more

than its Commitment Percentage, if any, of the requested Base Rate Loan or LIBOR

Loan. Revolving Credit Loans to be made for the purpose of refunding Swingline

Loans shall be made by the Banks having a Revolving Credit Commitment as

provided in Section 2.1(b).

 

      2.5. Fees.

 

      2.5.1. Fee Letters. The Borrowers shall pay to the Administrative Agent

fees in the amounts and at the times outlined in the Fee Letters.

 

      2.5.2. Commitment Fee. The Borrowers shall pay to the Administrative Agent

for the accounts of the Banks having a Revolving Credit Commitment in accordance

with their respective Commitment Percentages of the Total Revolving Credit

Commitment a commitment fee (the "Commitment Fee") computed at a rate per annum

on the average daily aggregate amount, during each calendar quarter or portion

thereof, of the unborrowed portion of the Total Revolving Credit Commitment in

effect at such time, which rate shall be not less than, for each Rate Period,

the percentage determined by reference to the Fixed Charge Coverage Ratio for

the most recent four fiscal quarter period of the Borrower Affiliated Group, as

set forth in the table below (provided that if the Borrowers have failed for

more than 5 days to deliver the financial statements and compliance certificate

required to be delivered pursuant to Sections 5.1(b) and 5.1(c), respectively,

the Commitment Fee in effect at the applicable time of reference shall

 

                                     J-30-

 

<PAGE>

 

automatically be increased by .25% until such financial statements and

compliance certificate are delivered):

 

<TABLE>

<CAPTION>

                          Fixed Charge Coverage Ratio                  Commitment Fee

                          ---------------------------                  --------------

<S>                  <C>                                                <C>

  Level I.            equal to or less than 1.65 to 1.00                      0.500%

 

Level II.            greater than 1.65 to 1.00 and equal to or               0.375%

                    less than 1.80 to 1.00

 

Level III.           greater than 1.80 to 1.00 and equal to or               0.250%

                     less than 2.50 to 1.00

 

Level IV.            greater than 2.50 to 1.00                               0.200%

</TABLE>

 

Commitment fees shall be payable quarterly in arrears on the last Business Day

of each fiscal quarter beginning on October 30, 2004 (with the first such

payment being calculated for the entire fiscal quarter in which the Closing Date

occurs but without duplication of any commitment fee to be paid under the

Existing Credit Agreement) and on the Revolving Credit Maturity Date. For

purposes of calculating the Commitment Fee, outstanding Revolving Credit Loans,

outstanding Swingline Loans, outstanding Letters of Credit and unreimbursed

draws under Letters of Credit shall be included, without duplication, in

determining the borrowed portion of the Total Revolving Credit Commitment.

 

      2.5.3. Utilization Fee. For each day on which Utilization is (i) greater

than or equal to 33% of the Total Revolving Credit Commitment as in effect on

such day, but less than 66% of the Total Revolving Credit Commitment as in

effect on such day, there shall be a utilization fee (the "Utilization Fee")

payable to the Administrative Agent for the ratable account of the Banks having

a Revolving Credit Commitment, on the aggregate amount of all Revolving Credit

Loans and Swingline Loans outstanding on such day, which Utilization Fee will be

computed for each such day at the rate of 0.125% per annum, and (ii) greater

than or equal to 66% of the Total Revolving Credit Commitment as in effect on

such day, there shall be a Utilization Fee payable to the Administrative Agent

for the ratable account of the Banks having a Revolving Credit Commitment, on

the aggregate amount of all Revolving Credit Loans and Swingline Loans

outstanding on such day, which Utilization Fee will be computed for each such

day at the rate of 0.250% per annum. The Utilization Fee shall be payable

quarterly in arrears on the last Business Day of each fiscal quarter beginning

on October 30, 2004 and on the Revolving Credit Maturity Date (with the first

such payment being calculated for the entire fiscal quarter in which the Closing

Date occurs but without duplication of any utilization fee to be paid under the

Existing Credit Agreement).

 

      2.6. Reduction of Total Revolving Credit Commitment. The Borrowers may

from time to time by written notice delivered to the Administrative Agent at

least one Business Day prior to the date of the requested reduction, reduce by a

minimum amount

 

                                     J-31-

 

<PAGE>

 

of $5,000,000, and in additional increments of $1,000,000, any unborrowed

portion of the Total Revolving Credit Commitment. No reduction of the Total

Revolving Credit Commitment shall be subject to reinstatement.

 

      2.7. Increases in Total Revolving Credit Commitment. The Borrowers, with

the consent of the Administrative Agent and each Bank whose Revolving Credit

Commitment will be increasing, shall have the right to cause the Total Revolving

Credit Commitment to increase by an amount not at any time exceeding

$100,000,000 (the "Increase"), in which event the Administrative Agent will

amend Schedule 1 to reflect the increased Revolving Credit Commitment of each

Bank that has agreed in writing to an increase and to add any third party

financial institution that may have become a party to, and a "Bank" under, this

Agreement in connection with the Increase; provided, however, that it shall be a

condition precedent to the effectiveness of the Increase that the Increase

Conditions shall have been satisfied. In the event that the Increase results in

any change to the Commitment Percentages applicable to Revolving Credit Loans of

any Banks, then on the effective date of such Increase in the Total Revolving

Credit Commitment (i) any new Bank, and any existing Bank whose Revolving Credit

Commitment has increased, shall pay to the Administrative Agent such amounts as

are necessary to fund its new or increased Commitment Percentages of all

existing Revolving Credit Loans, (ii) the Administrative Agent will use the

proceeds thereof to pay to all Banks whose Commitment Percentage is decreasing

such amounts as are necessary so that each such Bank's participation in existing

Revolving Credit Loans will be equal to its adjusted Commitment Percentage

applicable to such Loans, and (iii) if the effective date of such Increase in

the Total Revolving Credit Commitment occurs on a date other than the last day

of an Interest Period applicable to any outstanding LIBOR Loan, the Borrowers

will be responsible for any amounts payable pursuant to Section 2.15 on account

of the payments made pursuant to clause (ii) above.

 

      2.8. Duration of Interest Periods.

 

            (a) Subject to the provisions of the definition of "Interest

Period," the duration of each Interest Period applicable to a LIBOR Loan shall

be as specified in the applicable Notice of Borrowing or Conversion. The

Borrowers shall have the option to elect a subsequent Interest Period to be

applicable to such Loan by giving notice of such election to the Administrative

Agent received no later than 10:00 a.m. on the date that is 3 Business Days

before the end of the then applicable Interest Period if such Loan is to be

continued as or converted to a LIBOR Loan.

 

            (b) If the Administrative Agent does not receive a notice of

election of duration of an Interest Period for a LIBOR Loan pursuant to

subsection (a) above within the applicable time limits specified therein, or if,

when such notice must be given, an Event of Default exists, the Borrowers shall

be deemed to have elected to convert such Loan in whole into a Base Rate Loan on

the last day of the then current Interest Period with respect thereto.

 

                                     J-32-

 

<PAGE>

 

            (c) Notwithstanding the foregoing, the Borrowers may not select an

Interest Period that would end, but for the provisions of the definition of

Interest Period, after the Revolving Credit Maturity Date or the Term Loan

Maturity Date, as applicable.

 

      2.9. Interest Rates and Payments of Interest.

 

             (a)    (i) Each Revolving Credit Loan or portion of Term Loan A which

is a Base Rate Loan shall bear interest on the outstanding principal amount

thereof at a rate per annum equal to the Base Rate plus the Applicable Base Rate

Margin, which rate shall change contemporaneously with any change in the Base

Rate. Such interest shall be payable on the last Business Day of any fiscal

quarter in which a Base Rate Loan is outstanding hereunder, and when such Loan

is due (whether at maturity, by reason of acceleration or otherwise).

 

                  (ii) Each Swingline Loan shall bear interest at a fixed rate

quoted to the Borrower by the Swingline Lender in its discretion, provided that

such quoted rate shall not exceed the Base Rate in effect on the day of

quotation. Interest on Swingline Loans shall be payable, and the Borrowers

hereby absolutely and unconditionally jointly and severally promise to pay such

interest, when such Swingline Loan is due and payable, or when such Swingline

Loan is actually paid, if earlier.

 

            (b) Each Revolving Credit Loan or portion of Term Loan A which is a

LIBOR Loan shall bear interest on the outstanding principal amount thereof, for

each Interest Period applicable thereto, at a rate per annum equal to the

Adjusted LIBOR Rate plus the Applicable LIBOR Margin. Such interest (including

any adjustments made in the Administrative Agent's discretion consistent with

the definition of Adjusted LIBOR Rate to take into consideration any change in

the Reserve Percentage) shall be payable for such Interest Period (i) on the

earlier of the last day of such Interest Period and, if such Interest Period is

longer than three months, at quarterly intervals after the first day of such

Interest Period and (ii) when such LIBOR Loan is due (whether at maturity, by

reason of acceleration or otherwise).

 

            (c) (x) For purposes of this Section 2.9 but subject to Section

2.5.3, with reference to Revolving Credit Loans, (i) the "Applicable Base Rate

Margin" shall be not less than, for each Rate Period, the percentage determined

by reference to the Fixed Charge Coverage Ratio for the most recent four fiscal

quarter period of the Borrower Affiliated Group, as set forth in Table 1 below,

and (ii) the "Applicable LIBOR Margin" shall be equal to, for each Rate Period,

the percentage determined by reference to the Fixed Charge Coverage Ratio for

the most recent four fiscal quarter period of the Borrower Affiliated Group, as

set forth in Table 1 below:

 

                                     J-33-

 

<PAGE>

 

                                     Table 1

 

                             Revolving Credit Loans

 

<TABLE>

<CAPTION>

                                                        Applicable        Applicable

                      Fixed Charge Coverage                Base Rate          LIBOR

                              Ratio                        Margin            Margin

                      ---------------------              ----------        ----------

<S>                 <C>                                   <C>               <C>

Level I.            equal to or less than 1.65 to            0.25%            1.875%

                   1.00

 

Level II.           greater than 1.65 to 1.00 and            0.00%            1.625%

                   equal to or less than 1.80 to

                   1.00

 

Level III.          greater than 1.80 to 1.00 and            0.00%            1.375%

                   equal to or less than 2.15 to

                   1.00

 

Level IV.           greater than 2.15 to 1.00 and            0.00%             1.125%

                   equal to or less than 2.50 to

                   1.00

 

Level V.            greater than 2.50 to 1.00                0.00%            0.875%

</TABLE>

 

            (y) For purposes of this Section 2.9, with reference to the Term

Loan A, (i) the "Applicable Base Rate Margin" shall be 0.00%, and (ii) the

"Applicable LIBOR Margin" shall be equal to (A) not less than 1.375% from the

Closing Date through the second Business Day after the date of the

Administrative Agent's receipt and satisfactory review of the financial

statements and compliance certificate required to be delivered pursuant to

Sections 5.1(b) and 5.1(c), respectively, for the fiscal quarter of the Borrower

Affiliated Group ending October 30, 2004 (provided that it could be more than

1.375% based upon the financial statements received by the Administrative Agent

for the fiscal quarter of the Borrower ending July 31, 2004), and (B)

thereafter, for each Rate Period, the percentage determined by reference to the

Fixed Charge Coverage Ratio for the most recent four fiscal quarter period of

the Borrower Affiliated Group, as set forth in Table 2 below:

 

                                     Table 2

 

                                   Term Loan A

 

<TABLE>

<CAPTION>

                                                         Applicable

                      Fixed Charge Coverage                LIBOR

                               Ratio                       Margin

                      ---------------------              ----------

<S>                  <C>                                    <C>

Level I.            equal to or less than 2.15 to           1.500%

                   1.00

</TABLE>

 

                                     J-34-

 

<PAGE>

 

<TABLE>

<S>                 <C>                                      <C>

Level II.           greater than 2.15 to 1.00 and           1.375%

                   equal to or less than 2.50 to

                   1.00

 

Level III.          greater than 2.50 to 1.00               1.250%

</TABLE>

 

For purposes of determining the Applicable Base Rate Margin and the Applicable

LIBOR Margin, the Fixed Charge Coverage Ratio will be tested quarterly,

commencing with the fiscal quarter of the Borrower Affiliated Group ending

October 30, 2004, based on the financial statements and compliance certificate

required to be delivered pursuant to Sections 5.1(b) and 5.1(c), respectively.

For purposes of determining the interest rate for any Rate Period hereunder, any

interest rate change shall be effective two Business Days after the date on

which the financial statements and compliance certificate required to be

delivered pursuant to Sections 5.1(b) and 5.1(c), respectively, is delivered to

the Administrative Agent, together with a notice to the Administrative Agent

(which shall be verified by the Administrative Agent) specifying any change in

the Applicable Base Rate Margin and the Applicable LIBOR Margin, and if the

Borrowers have failed for more than 5 days to deliver the financial statements

and compliance certificate required to be delivered pursuant to Sections 5.1(b)

and 5.1(c), respectively, the Applicable Base Rate Margin and the Applicable

LIBOR Margin in effect at the applicable time of reference shall automatically

be increased by .25% until such financial statements and compliance certificate

are delivered. The Borrowers absolutely and unconditionally jointly and

severally promise to pay all such interest referenced to in this Section 2.9 to

the Administrative Agent for the ratable benefit of the applicable Banks as and

when such interest is due.

 

      2.10. Protective Provisions.

 

      2.10.1. Inability to Determine Adjusted LIBOR Rate. In the event, prior to

the commencement of any Interest Period relating to any LIBOR Loan, the

Administrative Agent shall determine in its good faith judgment or be notified

by the Required Banks that adequate and reasonable methods do not exist for

ascertaining the Adjusted LIBOR Rate that would otherwise determine the rate of

interest to be applicable to any LIBOR Loan during such Interest Period, the

Administrative Agent shall forthwith give notice of such determination (which

shall be conclusive and binding on the Borrowers and the Banks) to the Borrowers

and the Banks. In such event (a) any Notice of Borrowing or Conversion with

respect to LIBOR Loans shall be automatically withdrawn and shall be deemed a

request for Base Rate Loans, (b) each LIBOR Loan will automatically, on the last

day of the then current Interest Period relating thereto, become a Base Rate

Loan, and (c) the obligations of the Banks to make LIBOR Loans shall be

suspended until the Administrative Agent or the Required Banks, as applicable,

determine that the circumstances giving rise to such suspension no longer exist,

whereupon the

 

                                     J-35-

 

<PAGE>

 

Administrative Agent or, as the case may be, the Administrative Agent upon the

instruction of the Required Banks, shall so notify the Borrowers and the Banks.

 

      2.10.2. Illegality. Notwithstanding any other provisions herein, if any

Change in Law shall make it unlawful for any Bank to make or maintain LIBOR

Loans, such Bank shall forthwith give notice of such circumstances to the

Borrowers and the other Banks and thereupon the commitment of such Bank to make

or continue LIBOR Loans or convert Base Rate Loans to LIBOR Loans shall

forthwith be suspended and such Bank's LIBOR Loans then outstanding as LIBOR

Loans, if any, shall be converted automatically to Base Rate Loans on the last

day of each Interest Period applicable to such LIBOR Loans or within such

earlier period as may be required by law. The Borrowers hereby agree promptly to

pay the Administrative Agent for the account of such Bank, upon demand by such

Bank, any additional amounts as such Bank may in good faith determine to be

necessary to compensate such Bank for any costs incurred by such Bank in making

any conversion in accordance with this Section 2.10.2, including any interest or

fees payable by such Bank to lenders of funds obtained by it in order to make or

maintain its LIBOR Loans hereunder.

 

      2.10.3. Additional Costs, etc. After the Closing Date, if any Change in

Law shall:

 

            (a) subject any Bank or the Administrative Agent to any tax, levy,

impost, duty, charge, fee, deduction or withholding of any nature with respect

to this Agreement, the other Loan Documents, such Bank's Commitment or Loans

(other than Covered Taxes and Income Taxes); or

 

            (b) materially change the basis of taxation (except for changes in

Income Taxes of such Bank or the Administrative Agent) of payments to any Bank

of the principal of or the interest on any Loans or any other amounts payable to

any Bank or the Administrative Agent under this Agreement or any of the other

Loan Documents; or

 

            (c) without duplication of any amount required to be paid pursuant

to Section 2.11, impose or increase or render applicable (other than to the

extent specifically provided for elsewhere in this Agreement) any special

deposit, reserve, assessment, liquidity or other similar requirements (whether

or not having the force of law) against assets held by, or deposits in or for

the account of, or loans by, or letters of credit issued by, or commitments of

an office of any Bank; or

 

            (d) impose on any Bank or the Administrative Agent any other

conditions or requirements with respect to this Agreement, the other Loan

Documents, the Loans, such Bank's Commitment, or any class of Loans or

commitments of which any of the Loans or such Bank's Commitment forms a part;

 

and the result of any of the foregoing is:

 

                                     J-36-

<PAGE>

 

                  (i)    in the good faith determination of an Affected Bank, to

      materially increase the cost to such Bank of making, funding, issuing,

      renewing, extending or maintaining any of the LIBOR Loans or such Bank's

      Commitment; or

 

                  (ii)   to reduce the amount of principal, interest, or other

      amount payable to such Bank or the Administrative Agent hereunder on

      account of such Bank's Commitment or any of the LIBOR Loans; or

 

                  (iii) to require such Bank or the Administrative Agent to make

      any payment or to forego any interest or other sum payable hereunder in

      relation to LIBOR Loans, the amount of which payment or foregone interest

      or other sum is calculated by reference to the gross amount of any sum

      receivable or deemed received by such Bank or the Administrative Agent

      from the Borrowers hereunder,

 

then, in each such case and to the extent that the amount of such additional

cost, reduction, payment, foregone interest or other sum is not reflected in the

Adjusted LIBOR Rate, the Borrowers will, upon demand made by such Bank (with a

copy to the Administrative Agent) or (as the case may be) the Administrative

Agent at any time and from time to time and as often as the occasion therefor

may arise, pay to such Bank or the Administrative Agent such additional amounts

as will be sufficient to compensate such Bank or the Administrative Agent for

such additional cost, reduction, payment or foregone interest or other sum

(without duplication for recovery of such amounts under any other provision

hereof), provided, however, that the Borrowers shall not be liable to any Bank

or the Administrative Agent for costs incurred more than 90 days prior to the

receipt by the Borrowers of such demand for payment from such Bank or (as the

case may be) the Administrative Agent unless such costs were incurred prior to

such 90-day period as a result of such Change in Law being retroactive to a date

which