Exhibit 10.2

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DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Dated as of October 4, 2015
among
AMERICAN APPAREL (USA), LLC,
as Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,
as a Borrower and as Borrower Representative,
AMERICAN APPAREL RETAIL, INC.,
AMERICAN APPAREL DYEING & FINISHING, INC.,
KCL KNITTING, LLC,
as Debtors and Debtors-in-Possession under Chapter 11 of the Bankruptcy Code,
as the other Borrowers Party Hereto,
the Other Credit Parties Party Hereto,
the Lenders Party Hereto,
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Administrative Agent

 

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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING
TERMS..........................................................2
1.01
Defined
Terms.........................................................................................................2

1.02
Other Interpretive
Provisions................................................................................24

1.03
Accounting
Terms.................................................................................................25

1.04
Rounding...............................................................................................................25

1.05
Times of
Day.........................................................................................................25

1.06
Certain Currency
Translations..............................................................................25

ARTICLE II THE COMMITMENTS AND CREDIT
EXTENSIONS........................................26
2.01
Commitments to Lend;
Loan................................................................................26

2.02
Borrowings and Continuations of
Loans..............................................................26

2.03
[Intentionally
Omitted].........................................................................................28

2.04
[Intentionally
Omitted].........................................................................................28

2.05
Mandatory
Prepayments.......................................................................................28

2.06
Voluntary Prepayments; Termination or Reduction of
Commitments..................29

2.07
Repayment of
Loans.............................................................................................29

2.08
Interest..................................................................................................................30

2.09
Fees.......................................................................................................................30

2.10
Computation of Interest and
Fees.......................................................................................................................30

2.11
Evidence of
Debt..................................................................................................30

2.12
Payments Generally; Administrative Agent’s
Clawback......................................31

2.13
Sharing of Payments by
Lenders..........................................................................32

2.14
Collateral and Guarantees; Joint and Several
Liabilities......................................32

2.15
Defaulting
Lenders...............................................................................................34

2.16
Loan
Account........................................................................................................34

2.17
Borrower
Representative......................................................................................35

2.18
Conversion of Loans to Exit Facility;
Implementation........................................35

ARTICLE III TAXES, YIELD PROTECTION AND
ILLEGALITY...........................................36
3.01
Taxes.....................................................................................................................36

3.02
Illegality................................................................................................................40

3.03
Inability to Determine
Rates.................................................................................40

3.04
Increased
Costs.....................................................................................................40

3.05
Compensation for
Losses......................................................................................41

3.06
Mitigation Obligations; Replacement of
Lenders.................................................42

3.07
Survival.................................................................................................................42

ARTICLE IV CONDITIONS
PRECEDENT.................................................................................42
4.01
Conditions to Effectiveness of the
Commitments................................................42

4.02
Conditions to Closing Date and Initial Credit
Extension.....................................42

4.03
Conditions to each Credit Extension and each Withdrawal
Date.........................45

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ARTICLE V REPRESENTATIONS AND
WARRANTIES..........................................................46
5.01
Corporate Authority,
Etc.......................................................................................46

5.02
Financial Statements;
Projections.........................................................................47

5.03
[Intentionally
Omitted].........................................................................................48

5.04
No Material Adverse
Change................................................................................48

5.05
Ownership of Property;
Liens...............................................................................48

5.06
Franchises, Patents, Copyrights,
etc.....................................................................48

5.07
Litigation...............................................................................................................48

5.08
No
Default.............................................................................................................49

5.09
Compliance with
Laws.........................................................................................49

5.10
Tax
Status..............................................................................................................49

5.11
Insurance...............................................................................................................49

5.12
Holding Company and Investment Company
Acts...............................................49

5.13
ERISA
Compliance...............................................................................................49

5.14
Regulations U and
X.............................................................................................50

5.15
True Copies of Governing
Documents.................................................................50

5.16
Fiscal
Year.............................................................................................................50

5.17
Subsidiaries,
etc....................................................................................................50

5.18
Environmental
Compliance..................................................................................50

5.19
Bank
Accounts......................................................................................................50

5.20
Labor
Contracts.....................................................................................................51

5.21
Disclosure.............................................................................................................51

5.22
OFAC....................................................................................................................51

5.23
Other Debt
Documents.........................................................................................51

5.24
Approved
Budget..................................................................................................51

ARTICLE VI AFFIRMATIVE
COVENANTS.............................................................................51
6.01
Intentionally
Omitted............................................................................................51

6.02
Maintenance of Office; Certain
Changes..............................................................51

6.03
Records and
Accounts...........................................................................................52

6.04
Financial Statements, Certificates and
Information..............................................52

6.05
Notices..................................................................................................................55

6.06
Legal Existence; Maintenance of
Properties........................................................57

6.07
Insurance...............................................................................................................57

6.08
Taxes.....................................................................................................................57

6.09
Compliance with Laws, Contracts, Licenses, Permits; Leaseholds and Payment of
Obligations
Generally...........................................................................................58

6.10
Physical
Inventories..............................................................................................58

6.11
Use of
Proceeds....................................................................................................59

6.12
Covenant to Guarantee Obligations and Give
Security........................................59

6.13
Further
Assurances................................................................................................61

6.14
Inspections; Collateral Reports; Appraisals,
etc...................................................61

6.15
Bank
Accounts......................................................................................................62

6.16
Chapter 11
Cases...................................................................................................63

6.17
Post-Closing
Obligations......................................................................................63

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ARTICLE VII NEGATIVE
COVENANTS..................................................................................63
7.01
Investments...........................................................................................................63

7.02
Restrictions on
Indebtedness................................................................................65

7.03
Restrictions on
Liens............................................................................................66

7.04
Restricted Payments;
Prepayments.......................................................................68

7.05
Merger, Consolidation and Disposition of
Assets.................................................68

7.06
Sale and
Leaseback...............................................................................................69

7.07
Accounting Changes; Change of Fiscal
Year........................................................69

7.08
Transactions with
Affiliates..................................................................................69

7.09
No Speculative
Transactions.................................................................................70

7.10
Change in Terms of Governing Documents; Material
Agreements......................70

7.11
Change in Nature of
Business...............................................................................70

7.12
Margin
Regulations...............................................................................................70

7.13
Financial
Covenant...............................................................................................70

7.14
Maximum Capital
Expenditures...........................................................................71

7.15
Contingent Obligations under Approved
Budget.................................................71

7.16
Sanctions...............................................................................................................71

7.17
Consignments........................................................................................................71

7.18
Chapter 11 Claims; Adequate
Protection..............................................................71

7.19
Chapter 11
Orders.................................................................................................71

ARTICLE VIII EVENTS OF DEFAULT AND
REMEDIES........................................................71
8.01
Events of
Default..................................................................................................71

8.02
Remedies Upon Event of
Default.........................................................................75

8.03
Application of
Funds............................................................................................76

ARTICLE IX ADMINISTRATIVE
AGENT.................................................................................77
9.01
Appointment and
Authority..................................................................................77

9.02
Rights as a
Lender.................................................................................................77

9.03
Exculpatory
Provisions.........................................................................................78

9.04
Reliance by Administrative
Agent........................................................................79

9.05
Delegation of
Duties.............................................................................................79

9.06
Resignation of Administrative
Agent....................................................................79

9.07
Non-Reliance........................................................................................................80

9.08
Administrative Agent May File Proofs of
Claim..................................................80

9.09
Collateral and Guarantee Matters; Credit
Bidding...............................................80

ARTICLE X SECURITY AND ADMINISTRATIVE
PRIORITY................................................81
10.01
Prepetition ABL
Obligations.................................................................................81

10.02
Acknowledgment of Security
Interests.................................................................81

10.03
Binding Effect of
Documents...............................................................................82

10.05
Priority and Liens Applicable to Credit
Parties....................................................82

10.04 Collateral; Grant of Lien and Security Interest
....................................................82
10.06
Administrative
Priority.........................................................................................83

10.07
Grants, Rights and
Remedies................................................................................83

10.08
No Filings
Required..............................................................................................83

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10.09
Survival.................................................................................................................83

ARTICLE XI MISCELLANEOUS84
11.01
Amendments,
Etc.................................................................................................84

11.02
Notices; Effectiveness; Electronic
Communication.............................................86

11.03
No Waiver; Cumulative
Remedies........................................................................87

11.04
Expenses; Indemnity; Damage
Waiver.................................................................88

11.05
Payments Set
Aside...............................................................................................89

11.06
Successors and
Assigns.........................................................................................90

11.07
Treatment of Certain Information;
Confidentiality...............................................93

11.08
Right of
Setoff......................................................................................................94

11.09
Interest Rate
Limitation........................................................................................94

11.10
Counterparts; Integration;
Effectiveness...............................................................95

11.11
Survival of Representations and
Warranties.........................................................95

11.12
Severability...........................................................................................................95

11.13
Replacement of
Lenders.......................................................................................95

11.14
Governing Law; Jurisdiction;
Etc.........................................................................96

11.15
USA PATRIOT Act
Notice...................................................................................97

11.16
ENTIRE
AGREEMENT.......................................................................................97

11.17
No Advisory or Fiduciary
Responsibility.............................................................97

11.18
Standstill...............................................................................................................97

SCHEDULES
Schedule 1.01    Prepetition Existing Letters of Credit
Schedule 1.02    Disqualified Assignees
Schedule 2.01    Commitments and Applicable Percentages
Schedule 5.07    Litigation
Schedule 5.17    Subsidiaries
Schedule 5.18    Environmental Compliance
Schedule 5.20    Labor Contracts
Schedule 6.17    Post-Closing Obligations
Schedule 7.01    Existing Investments
Schedule 7.02    Existing Indebtedness
Schedule 7.03    Existing Liens
Schedule 7.06    Sale-Leasebacks
Schedule 7.08    Transactions with Affiliates
Schedule 7.13    Financial Covenants
Schedule 11.02    Administrative Agent’s Office; Certain Addresses for Notices

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EXHIBITS
Exhibit A    Form of Borrowing Request Notice
Exhibit B    Form of Notice of Withdrawal
Exhibit C    Form of Interim Order
Exhibit D    Form of Compliance Certificate
Exhibit E    Form of Assignment and Assumption
Exhibit F    Initial Approved Budget
Exhibit G    Form of U.S. Tax Compliance Certificates
Exhibit H    Exit Term Sheet
Exhibit I    Form of Notice of Continuation

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DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this “Agreement”) is entered into as
of October 4, 2015, among:
(a)
AMERICAN APPAREL (USA), LLC, a California limited liability company, as debtor
and debtor-in-possession (“AA USA”), as a Borrower (as defined below) and as the
Borrower Representative (as defined in Section 2.17) for the other Borrowers
party hereto;

(b)
AMERICAN APPAREL RETAIL, INC., a California corporation, as debtor and
debtor-in-possession (“AA Retail”), AMERICAN APPAREL DYEING & FINISHING, INC., a
California corporation, as debtor and debtor-in-possession (“AA Dyeing &
Finishing”), and KCL KNITTING, LLC, a California limited liability company, as
debtor and debtor-in-possession (“KCL Knitting” and together with AA USA, AA
Retail and AA Dyeing & Finishing, each individually, a “Borrower” and
collectively, the “Borrowers”);

(c)
the other Credit Parties party hereto;

(d)
each Lender from time to time party hereto; and

(e)
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Administrative Agent

RECITALS
WHEREAS, on October 5, 2015, (the “Petition Date”), the Borrowers and the other
Credit Parties commenced voluntary cases (the “Chapter 11 Cases”) under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”), and the Borrowers and the other
Credit Parties have continued to operate their businesses and manage their
properties as debtors-in-possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code.
WHEREAS, the Borrowers and the other Credit Parties have requested and the
Lenders have agreed to provide a secured super-priority debtor-in-possession
term loan facility to the Borrowers (the “DIP Facility”), the proceeds of which
will be used to repay on the Closing Date an amount equal to, and used to
refinance, all amounts due and owing under that certain Prepetition ABL Facility
as of the date of repayment of the Prepetition ABL Facility, to pay related
transaction costs, fees and expenses with respect to the DIP Facility and fund
working capital and certain permitted administrative expenses of the Borrowers
during the pendency of the Chapter 11 Cases in accordance with the Approved
Budget.
WHEREAS, the Guarantors have agreed to guarantee the obligations of the Borrower
hereunder and the Borrower and the Guarantors have agreed to secure their
respective Obligations by granting to Administrative Agent, for the benefit of
Secured Parties, a lien on substantially all of their respective assets, in
accordance with the priorities provided in the DIP Order.
NOW THEREFORE: for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, such parties hereto
agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS
1.01    Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

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“AA Canadian Subsidiaries” means, collectively, American Apparel Canada Retail,
Inc., a company organized under the federal laws of Canada, American Apparel
Canada Wholesale, Inc., a company organized under the federal laws of Canada,
and any other direct or indirect Subsidiary of Holdings formed or acquired after
the Closing Date and organized under the laws of Canada.
“AA Dyeing & Finishing” has the meaning specified in the introductory paragraph
hereto.
“AA Retail” has the meaning specified in the introductory paragraph hereto.
“AA UK Subsidiaries” means, collectively, American Apparel (Carnaby) Limited, a
company organized under the laws of England and Wales, and American Apparel (UK)
Limited, a company organized under the laws of England and Wales and any other
direct or indirect Subsidiary of Holdings formed or acquired after the Closing
Date and organized under the laws of England and Wales.
“AA USA” has the meaning specified in the introductory paragraph hereto.
“Acquisition” means any transaction or series of related transactions resulting
in the (a) acquisition of all or substantially all of the assets or business of
any Person, or of any business unit, line of business or division of any Person
or assets constituting a business unit, line of business or division of any
other Person, (b) acquisition of in excess of 50% of the Capital Stock of any
Person or otherwise causing a person to become a Subsidiary of the acquiring
Person, or (c) merger, consolidation, amalgamation or other combination, whereby
a Person becomes a Subsidiary of the acquiring Person.
“Act” has the meaning specified in Section 11.15.
“Administrative Agent” means Wilmington Trust, National Association, acting as
administrative agent for the Secured Parties, or any successor administrative
agent appointed in accordance with this Agreement.
“Administrative Agent’s Letter Agreement” means the fee letter, dated as of
October 4, 2015, by and between the Borrower Representative and the
Administrative Agent.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 11.02, or such other address or
account as the Administrative Agent may from time to time notify the Borrowers
and/or the Lenders.
“Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Administrative Agent.
“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
“Affiliated Lender” shall mean, at any time, any Lender that is (i) Standard
General or an Affiliate of Standard General (including Standard General Master
Fund L.P. and P Standard General Ltd.), provided that each of Standard General
and its Affiliates will cease to be an Affiliated Lender at such time as such
Persons cease (A) to have or otherwise control the voting power over more than
5.0% of the equity securities of Holdings entitled to vote for members of the
board of directors or equivalent governing body on a fully diluted basis, (B) to
have or otherwise control the right to designate or appoint any member of the
board of directors or equivalent governing body on a fully diluted basis and (C)
to have or otherwise control the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of Holdings
and its Subsidiaries, whether through the ability to exercise voting power, by
contract or otherwise, and (ii) any other Affiliate of any Credit Party (other
than any Credit Party or any of their respective Subsidiaries) at such time.

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“Agency Account Agreement” means any deposit account control agreement, lockbox
control agreement, blocked account agreement or other similar agreement entered
into by a Credit Party, the Administrative Agent and the applicable financial
institution, in form and substance reasonably satisfactory to the Administrative
Agent.
“Agreement” has the meaning specified in the introductory paragraph hereto.
“Applicable Percentage” means with respect to any Lender at any time, as
applicable, (i) with respect to such Lender’s Commitment, the percentage
(carried out to the ninth decimal place) of the aggregate principal amount of
all Commitments represented by such Lender’s Commitment at such time and (ii)
with respect to such Lender’s Loans, the percentage (carried out to the ninth
decimal place) of the aggregate outstanding principal amount of all Loans
represented by such Lender’s Loans at such time. The initial Applicable
Percentage of each Lender with respect to its Commitment as of the date hereof
is set forth opposite the name of such Lender on Schedule 2.01. For each Lender
that becomes a party hereto pursuant to an Assignment and Assumption, the
initial Applicable Percentage of such Lender shall be set forth in such
Assignment and Assumption Agreement.
“Applicable Rate” means (a) with respect to Loans that are Base Rate Loans,
6.00% per annum, and (b) with respect to Loans that are Eurodollar Rate Loans,
7.00% per annum.
“Appraiser” means an appraisal firm reasonably acceptable to the Administrative
Agent.
“Approved Budget” means the aggregate, without duplication, of all items that
are set forth in the Initial Approved Budget and any Supplemental Approved
Budget.
 
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
“Approved Plan of Reorganization” shall mean a plan of reorganization filed by
the Credit Parties with the Bankruptcy Court that is acceptable in form and
substance satisfactory to the Administrative Agent and the Required Lenders and
a disclosure statement filed by the Credit Parties with the Bankruptcy Court
that is acceptable in form and substance reasonably satisfactory to the
Administrative Agent and the Required Lenders.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of Exhibit E or any other form approved by the
Administrative Agent.
“Attributable Indebtedness” means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP (subject to Section 1.03(b)), and (b) in respect of any Synthetic
Lease Obligation, the capitalized amount of the remaining lease payments under
the relevant lease that would appear on a balance sheet of such Person prepared
as of such date in accordance with GAAP (subject to Section 1.03(b)) if such
lease were accounted for as a capital lease.
“Audited Financial Statements” means the audited consolidated balance sheet of
Holdings and its Subsidiaries for the fiscal year ended December 31, 2014, and
the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Credit Parties, including the
notes thereto.
“Avoidance Actions” means all causes of action arising under Sections 542, 544,
545, 547, 548, 549, 550, 551, 553(b) or 724(a) of the Bankruptcy Code and any
proceeds therefrom.
“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy,” as applicable to the Chapter 11 Cases, now and hereafter in effect
or any successors to such statute.

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“Bankruptcy Court” shall have the meaning assigned to such term in the recitals
hereto; provided that “Bankruptcy Court” shall also mean any other court having
competent jurisdiction over the Chapter 11 Cases.
“Base Rate” means, for any day, a per annum rate equal to the higher of (a) the
Prime Rate for such day and (b) the Eurodollar Rate for a 30-day interest period
as determined on such day plus 1.00%. Any change in the Base Rate due to a
change in any of the foregoing shall take effect at the opening of business on
the day specified in the public announcement of such change.
“Base Rate Loan” means any Loan that bears interest based on the Base Rate.
“Board of Directors” means, with respect to any Person, (i) in the case of any
corporation, the board of directors of such Person or any authorized committee
thereof, (ii) in the case of any limited liability company, the board of
managers of such Person or any authorized committee thereof, (iii) in the case
of any partnership, the Board of Directors of the general partner of such Person
or any authorized committee thereof and (iv) in any other case, the functional
equivalent of the foregoing.
“Borrower” and “Borrowers” have the meaning specified in the introductory
paragraph hereto.
“Borrower Materials” means information, reports, financial statements and other
materials delivered by the Borrowers hereunder, as well as other reports and
information provided by the Administrative Agent to the Lenders.
“Borrower Representative” means AA USA in its capacity as borrower agent
pursuant to Section 2.17.
“Borrowing” means a borrowing of Loans simultaneously by each of the Lenders
pursuant to Section 2.01 and Section 2.02.
“Borrowing Request Notice” means a notice of a Borrowing, which, if in writing,
shall be substantially in the form of Exhibit A.
“Breakage Costs” has the meaning specified in Section 3.05.
“Budget Period” means each week period set forth in the Budget.
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to the calculation of the Eurodollar Rate, means any such day
that is a London Banking Day; provided that, for purposes of the definition of
“Defaulting Lender,” Section 2.01 and Section 2.02 only, “Business Day” shall
exclude any other day on which commercial banks are authorized to close under
the Laws of, or are in fact closed in, Canada.
“Capital Expenditures” means, with respect to any Person, all expenditures (by
the expenditure of cash or the incurrence of Indebtedness) by such Person during
any measuring period for any fixed or capital assets or improvements or for
replacements, substitutions or additions thereto that are required to be
capitalized and shown on the balance sheet of such Person in accordance with
GAAP; provided that Capital Expenditures for any Person shall not include
(i) expenditures that are accounted for as capital expenditures by such Person
and that actually are paid for, or reimbursed to such Person, by a Person other
than any Subsidiary or Affiliate of such Person (including landlords) during
such measuring period; (ii) the purchase price of equipment or other fixed
assets that are purchased substantially contemporaneously (and in any event
within the same Fiscal Month) with the trade-in or sale of existing equipment or
other fixed assets or with insurance proceeds received for the equipment or
fixed assets being replaced to the extent that the gross amount of such purchase
price is reduced or funded by such insurance proceeds or sale proceeds or the
credit being granted by the seller of such equipment or fixed assets being
acquired at such time, as applicable; provided that such purchase price shall
not be deemed to be less than $0; and (iii) any portion of the purchase price of
an Acquisition which is allocated to property, plant or equipment acquired as
part of such Acquisition or required to be capitalized and shown on the balance
sheet of any Credit Party or Subsidiary. For the avoidance of doubt, Capital

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Expenditures, as used and measured in Section 7.14, exclude any such
expenditures by a Subsidiary of a Credit Party that is not a Credit Party.
“Capital One” means Capital One, N.A., a national banking association, and its
successors and assigns.
“Capital One Control Agreement” means the Deposit Account Control Agreement
dated as of April 4, 2013, among Capital One, National Association, as clearing
bank, certain Credit Parties thereto, Wilmington Trust, National Association, in
its capacity as administrative agent for the secured parties (as
successor-in-interest to Capital One Business Credit Corp.) and U.S. Bank
National Association, in its capacity as collateral agent for the noteholders.
The Capital One Control Agreement is an Agency Account Agreement for all
purposes of the Loan Documents.

“Capital One Direction” has the meaning specified in Section 4.02(k).
“Capital Stock” means any and all shares, limited liability company interests,
partnership interests, other interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation), any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person, but
excluding from all of the foregoing any debt securities convertible into Capital
Stock, whether or not such debt securities include any right of participation
with Capital Stock, and any and all warrants, rights or options to purchase any
of the foregoing.
“Capitalized Leases” means leases under which any Credit Party is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP (subject to Section 1.03(b)) and the amount of Indebtedness
represented by such obligations shall be the Attributable Indebtedness in
respect thereof.
“CapOne Agreement” means that certain Assignment and Assumption, dated as of
August 17, 2015, by and among Capital One Business Credit Corp., Bank of
Montreal, Chicago Branch and the Lenders party thereto, as in effect on the
Petition Date.
“Carve-Out” has the meaning specified in the DIP Order.
“Cash Equivalents” means any of the following types of Investments, to the
extent owned by a Credit Party or a Subsidiary thereof:
(a)    marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof maturing within one year from the
date of acquisition thereof;
(b)    commercial paper maturing no more than 270 days from the date of creation
thereof and having the highest or next highest rating obtainable from either
Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. determined at
the time of investment;
(c)    certificates of deposit, banker’s acceptances and time deposits maturing
no more than 180 days from the date of creation thereof issued or guaranteed by,
or placed with, and demand deposit and money market deposit accounts issued or
offered by, (i) any Lender or (ii) any commercial bank, that at the time of
investment, (x) has combined capital, surplus and undivided profits of not less
than $500,000,000, (y) a senior unsecured rating of “A” or better by a
nationally recognized rating agency and (z) is organized under the laws of the
United States of America, any state thereof or is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States or any state thereof; and
(d)    money market mutual funds that invest solely in one or more of the
investments described in clauses (a) through (c) above.
“Cash Management Orders” has the meaning specified in Section 4.02(c).

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“Casualty Event” means, with respect to any property (including any interest in
property) of any Credit Party, any loss of, damage to, or condemnation or other
taking of, such property for which any Credit Party receives insurance proceeds,
proceeds of a condemnation award or other compensation.
“CERCLA” has the meaning specified in the definition of “Environmental Laws”.
“CFC” means a “controlled foreign corporation” within the meaning of
Section 957(a) of the Code.
“Change in Law” means the occurrence, after the date of this Agreement (or with
respect to any Lender, if later, the date on which such Lender becomes a
Lender), of any of the following: (a) the adoption or taking effect of any law,
rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation, implementation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, rule, guideline or directive (whether or not having the force of law)
by any Governmental Authority; provided that notwithstanding anything herein to
the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines or directives thereunder or issued in
connection therewith and (y) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.
“Change of Control” means an event or series of events by which:
(a)    any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan of such person or its subsidiaries, and any person or entity acting
in its capacity as trustee, agent or other fiduciary or administrator of any
such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934), except that a person or group shall
be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time (such right, an “option right”), directly or
indirectly, of 35% or more of the equity securities of Holdings entitled to vote
for members of the board of directors or equivalent governing body of Holdings
on a fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right); provided
that notwithstanding the foregoing, no Change of Control shall be deemed to
occur as a result of or in connection with (x) the equity securities of Holdings
owned by Standard General and its Affiliates, or (y) any voting agreements
between any Permitted Holders and any of Standard General or any of its
Affiliates, in each case of clause (x) or (y), so long as Standard General and
its Affiliates do not beneficially own in excess of 49% of the equity securities
of Holdings entitled to vote for members of the board of directors; or
(b)    Holdings shall cease to directly own and control legally and beneficially
(i) 100% of the Capital Stock of AA USA (free and clear of all Liens other than
Liens in favor of the Administrative Agent granted under the Security Documents,
the Prepetition ABL Liens and the Prepetition Senior Notes Liens), (ii) 100% of
the Capital Stock of each of the AA Canadian Subsidiaries (free and clear of all
Liens other than (x) Liens in favor of the Administrative Agent granted under
the Security Documents and (y) the Prepetition ABL Liens and the Prepetition
Senior Notes Liens and (iii) 100% of the Capital Stock of any of its
Subsidiaries acquired or formed after the date hereof and directly held by
Holdings (other than directors’ qualifying shares and other similar equity
interest holdings of Foreign Subsidiaries required to be held by local Persons
in accordance with applicable law), in the case of clause (b)(iii), free and
clear of all Liens other than Liens in favor of the Administrative Agent granted
under the Security Documents, the Prepetition ABL Liens and the Prepetition
Senior Notes Liens); or
(c)    any Borrower or any Subsidiary of any Borrower shall cease to directly
own and control, individually or collectively with any other Subsidiary (or
Subsidiaries) of any Borrower, legally and beneficially 100% of the Capital
Stock of each of its Subsidiaries in existence on the date hereof or acquired or
formed after the date hereof to the extent directly held by such Borrower or
such Subsidiary (other than directors’ qualifying shares and other similar
equity interest holdings of Foreign Subsidiaries required to be held by local
Persons in accordance with applicable law), free

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and clear of all Liens other than Liens in favor of the Administrative Agent
granted under the Security Documents, the Prepetition ABL Liens and the
Prepetition Senior Notes Liens; or
(d)    at any time, a majority of the seats (other than vacant seats) on the
Board of Directors of the Borrowers shall be occupied by persons who were not on
the Board of Directors on the Closing Date; or
(e)    any change that is not reasonably acceptable to the Required Lenders
shall have occurred in the Specified Senior Management of any Borrower.
For purposes of this definition, notwithstanding anything to the contrary set
forth above, a Person shall not be deemed to have beneficial ownership of
Capital Stock subject to a stock purchase agreement, merger agreement or similar
agreement until the consummation of the transactions contemplated by such
agreement and, until the consummation of such transactions, a Change of Control
will be deemed not to have occurred with respect to any such stock purchase
agreement, merger agreement or similar agreement.
“Chapter 11 Cases” shall have the meaning assigned to such term in the recitals
hereto.
“Chapter 11 Orders” means, collectively, the DIP Order and the Cash Management
Order.
“Claim” shall have the meaning assigned to such term in Section 101(5) of the
Bankruptcy Code.
“Closing Date” means the first date all conditions in Section 4.02 have been
satisfied or waived.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means (i) all of the assets, property, rights and interests of the
Credit Parties that are or are intended to be subject to the Liens created by or
pursuant to the Security Documents and (ii) the “DIP Collateral” referred to in
the DIP Order, it being understood that “Collateral” shall include all such “DIP
Collateral” irrespective of whether any such property was excluded pursuant to
the Prepetition ABL Documents.
“Commitment” means, as to each Lender, its obligation to make Loans to the
Borrowers pursuant to Section 2.01(a) in an aggregate principal amount at any
one time outstanding not to exceed the amount set forth opposite such Lender’s
name on Schedule 2.01(a) or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement. The aggregate
amount of the Commitments as of the Closing Date is $30,000,000.
“Commitment Fees” shall have the meaning assigned to such term in the Lender’s
Letter Agreement.
“Committee of Lead Lenders” means the ad hoc committee of Prepetition ABL
Lenders and Prepetition Senior Notes Lenders (as such group is constituted from
time to time), represented by Milbank, Tweed, Hadley & McCloy LLP and one local
counsel, and its financial advisor Ducera Partners LLC.
“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.
“Concentration Accounts” has the meaning specified in Section 6.15(a).
“Confirmation Order” means an order of the Bankruptcy Court, in form and
substance reasonably acceptable to the Required Lenders (and with respect to any
provisions that affect the rights and duties of the Administrative Agent, the
Administrative Agent), confirming the Approved Plan of Reorganization.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

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“Consolidated” or “consolidated” means, with reference to any term defined
herein, shall mean that term as applied to the accounts of the Credit Parties,
consolidated in accordance with GAAP.
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
“Credit Card Agreements” shall mean all agreements or notices, each in form and
substance reasonably satisfactory to the Required Lenders, now or hereafter
entered into by Borrowers with any credit card issuer or any credit card
processor, as the same may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced; provided that, any such credit card
agreement or notice shall provide, among other things, that each such credit
card processor shall transfer all proceeds due with respect to credit card
charges for sales (net of expenses and chargebacks of the credit card issuer or
processor) by Borrowers received by it (or other amounts payable by such credit
card processor) into a designated Concentration Account in accordance with
Section 6.15 subject to an Agency Account Agreement on a daily basis.
“Credit Card Receivables” shall mean, collectively, all present and future
“accounts” (as such term is defined in the UCC) or amounts owing to any Borrower
from (a) a credit card or debit card issuer or credit card or debit card
processor arising from sales of inventory to a Borrower’s customers who have
purchased such inventory using a credit, charge or debit card, (b) any credit
card or debit card issuer or credit card or debit card processor in connection
with the sale or transfer of “accounts” (as such term is defined in the UCC) or
amounts due that arise from the sale of inventory or rendition of services to a
Borrower’s customers who have purchased such inventory or services using a
credit, charge card or a debit card and (c) all amounts at any time due or to
become due from any credit card or debit card issuer or credit card or debit
card processor under the Credit Card Agreements or otherwise.
“Credit Extension” means each Borrowing.
“Credit Parties” means the Borrowers, Holdings, Fresh Air and the other
Guarantors.
“Cumulative Period” has the meaning specified in Section 6.04(o).
“Debtor” shall have the meaning assigned to the term in the recitals hereto.
“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium
(by way of voluntary arrangement, scheme or arrangement or otherwise),
rearrangement, receivership, insolvency, reorganization, or similar debtor
relief Laws of the United States, Canada, England and Wales or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.
“Default Rate” means when used with respect to Obligations, an interest rate or
rate equal to the interest rate or rate otherwise applicable thereto plus 2% per
annum.
“Defaulting Lender” means, subject to Section 2.15(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two Business Days of
the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrowers in writing that such failure
is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied, or (ii) pay to the

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Administrative Agent or any Lender any other amount required to be paid by it
hereunder within two Business Days of the date when due, (b) has notified the
Borrowers or the Administrative Agent in writing that it does not intend to
comply with its funding obligations hereunder, or has made a public statement to
that effect (unless such writing or public statement relates to such Lender’s
obligation to fund Loans hereunder and states that such position is based on
such Lender’s determination that a condition precedent to funding (which
condition precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) cannot be satisfied), (c) has
failed, within three Business Days after written request by the Administrative
Agent, to confirm in writing to the Administrative Agent that it will comply
with its prospective funding obligations hereunder (provided that such Lender
shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt
of such written confirmation by the Administrative Agent), or (d) has, or has a
direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or assets, including the Federal Deposit Insurance Corporation or any
other state or federal or foreign regulatory authority acting in such a
capacity; provided that a Lender shall not be a Defaulting Lender solely by
virtue of the ownership or acquisition of any Capital Stock in that Lender or
any direct or indirect parent company thereof by a Governmental Authority so
long as such ownership interest does not result in or provide such Lender with
immunity from the jurisdiction of courts within the United States or from the
enforcement of judgments or writs of attachment on its assets or permit such
Lender (or such Governmental Authority) to reject, repudiate, disavow or
disaffirm any contracts or agreements made with such Lender. Any determination
by the Administrative Agent that a Lender is a Defaulting Lender under any one
or more of clauses (a) through (d) above shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to Section 2.15(b)) upon delivery of written notice of such
determination to the Borrowers and each other Lender.
“Designated Jurisdiction” means any country or territory to the extent that such
country or territory itself is the subject of any Sanction.
“DIP Facility” shall have the meaning assigned to the term in the recitals
hereto.
“DIP Funding Account” means the trust account established by the Administrative
Agent in which the proceeds of the Loans shall be deposited and held as provided
herein.
“DIP Order” means, collectively, the Interim Order and the Final Order.
“Disqualified Capital Stock” means that portion of any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof, in each case on or prior to the Maturity Date, for cash or is
convertible into or exchangeable for, in each case at the option of the holder
thereof, debt or debt securities of Holdings or its Subsidiaries, at any time
prior to the Maturity Date; provided, however, that (a) only the portion of
Capital Stock which so matures or is mandatorily redeemable, is so convertible
or exchangeable or is so redeemable at the option of the holder thereof prior to
such date will be deemed to be Disqualified Capital Stock and (ii) any Capital
Stock that would constitute Disqualified Capital Stock solely because the
holders thereof have the right to require Holdings to repurchase such Capital
Stock upon the occurrence of a change of control or asset sale (howsoever
defined or referred to) shall not constitute Disqualified Capital Stock if the
terms of such Capital Stock provide that Holdings may not repurchase or redeem
any such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 7.04; provided, however, that if such Capital
Stock is issued to any plan for the benefit of employees of Holdings or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Capital Stock solely because it may be required to be
repurchased by Holdings or its Subsidiaries in order to satisfy applicable
statutory or regulatory obligations.
“Dollar” and “$” mean lawful money of the United States.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

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“Electronic Medium” means the electronic medium through which notices and other
communications are sent (including e-mail) pursuant to procedures approved by
the Administrative Agent and otherwise in accordance with Section 11.02(b).
“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 11.06(b)(iii) and (v) (subject to such consents, if any,
as may be required under Section 11.06(b)(iii)). Notwithstanding anything herein
to the contrary, “Eligible Assignee” shall not include (i) any Credit Party or
Affiliate of a Credit Party (other than an Affiliated Lender, subject to Section
11.06(g)), (ii) Dov Charney, (iii) the spouse or a family member, estate or heir
of Dov Charney, (iv) any trust, corporation, partnership or other entity
Controlled (or, in the case of a trust, holding a 50% or more beneficial
interest) by Dov Charney and/or such other Persons referred to in clause (iii)
above or any combination thereof or any Affiliate thereof, or (v) those Persons
set forth in Schedule 1.02.
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems and including without limitation, those arising under the Resource
Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended (“CERCLA”) and the
Superfund Amendments and Reauthorization Act of 1986 (“SARA”).
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Borrower, any other Credit Party or any of
their respective Subsidiaries directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with any Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (g) the determination that any Pension Plan is
considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of
ERISA; or (h) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
any Borrower or any ERISA Affiliate.
“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar
Rate Loan, the per annum rate of interest determined by the Administrative Agent
at approximately 11:00 a.m. (London time) two London Banking Days prior to
commencement of such Interest Period, for a term comparable to such Interest
Period, equal to (a) the rate for Dollar deposits as reported on Reuters screen
LIBOR01 Page (or any successor thereto or similar source determined by the
Administrative Agent from time to time, “LIBOR01”); or (b) if LIBOR01 is not
available for any reason, the interest rate determined by the Administrative
Agent to be the arithmetic mean of the rates at which Dollar deposits in the
approximate amount of the Eurodollar Rate Loan are offered by the principal
London office of major

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banks in the London interbank Eurodollar market selected by the Administrative
Agent; provided that, if fewer than two quotations are provided by the
Administrative Agent by such major banks as requested, the Eurodollar Rate shall
be the arithmetic mean of the rates quoted to the Administrative Agent by major
banks in New York City, selected by the Administrative Agent, at
approximately 11:00 a.m. (New York City time) for loans in Dollars to leading
European banks for a term comparable to such Interest Period commencing on the
first day of such Interest Period and in an amount equal to the principal amount
of the requested Borrowing.
“Eurodollar Rate Loan” means each Loan that bears interest based on the
Eurodollar Rate having a common length and commencement of Interest Period.
“Event of Default” has the meaning specified in Section 8.01.
“Excluded Accounts” means any (a) deposit account or securities account
specially and exclusively used in the ordinary course of business for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of any Credit Party’s salaried employees, which accounts are funded only in the
ordinary course of business and not in excess of any amounts necessary to
fulfill payroll obligations that are then currently owing, (b) pension fund
accounts, 401(k) accounts and trust accounts, (c) Local Accounts so long as the
Credit Parties are in compliance with Section 6.15(a) or (d) other deposit
accounts, securities accounts and commodities accounts having a balance of less
than $300,000 at all times in the aggregate for all such accounts.
“Excluded Debt Incurrence” means the incurrence or any issuance by any Credit
Party or any of its Subsidiaries of any Indebtedness permitted by Section 7.02.
“Excluded Equity Issuance” means a sale or issuance of any Capital Stock by
(a) any Credit Party or any of its Subsidiaries to a Credit Party, (b) any
Subsidiary that is not a Credit Party to any other Subsidiary that is not a
Credit Party and (c) any Credit Party or any of its Subsidiaries to its present
or former directors, officers or employees pursuant to a stock option plan,
stock purchase plan or other employee benefits plan in effect from time to time,
in each case, approved in good faith by the board of directors (or equivalent
governing body) of such Credit Party or such Subsidiary.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its Lending Office located in, the
jurisdiction imposing such Taxes (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender or any other
Recipient of a payment hereunder, U.S. federal withholding Taxes imposed on
amounts payable to or for the account of such Recipient on the date such
Recipient becomes a party to this Agreement or to or for the account of a Lender
with respect to an applicable interest in a Loan or Commitment pursuant to a law
in effect on the date on which (i) such Lender acquires such interest in the
Loan or Commitment (other than pursuant to an assignment request by the any
Borrower under Section 3.06) or (ii) such Lender changes its Lending Office,
except in each case to the extent that, pursuant to Section 3.01(a)(ii),
such amounts with respect to such Taxes were payable either to such Lender’s
assignor immediately before such Lender became a party hereto or to such Lender
immediately before it changed its Lending Office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal
withholding Taxes imposed pursuant to FATCA.
“Existing Primed Secured Facilities” shall have the meaning set forth in Section
10.05(b).

“Exit Conversion” shall have the meaning set forth in Section 2.18(a).

“Exit Credit Agreement” shall have the meaning set forth in Section 2.18(b)(i).

“Exit Fee” means 1%, payable upon any reduction of the DIP Facility and any
payments, prepayments or repayments of Loans whatsoever (whether voluntary or
mandatory, and including as a result of acceleration), other than in connection
with (i) any mandatory prepayment under Section 2.05(b) or (ii) the conversion
to exit facility financing upon the consummation of the Approved Plan of
Reorganization pursuant to Section 2.18.

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“Exit Term Sheet” means the term sheet attached hereto as Exhibit H.
“Extraordinary Receipt” means any cash received by or paid to or for the account
of any Credit Party not in the ordinary course of business, including, tax
refunds, pension plan reversions, proceeds of insurance, condemnation awards
(and payments in lieu thereof), indemnity payments (including, without
limitation, in connection with any acquisition) and any purchase price
adjustments (including, without limitation, in connection with any acquisition);
provided, however, that an Extraordinary Receipt shall not include cash receipts
from proceeds of insurance, or condemnation awards (or payments in lieu thereof)
to the extent that such proceeds or awards or payments arose as a result of a
Casualty Event and are applied to prepay the Obligations in accordance with of
Section 2.07(c).
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any intergovernmental
agreements entered into in connection therewith, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any current or future regulations
or official interpretations of the foregoing.
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to major
financial institutions reasonably acceptable to the Administrative Agent on such
day on such transactions as determined by the Administrative Agent.
“Final Loan” means a Loan made on the Final Loan Date.

“Final Loan Date” means the date on which the Final Loans are made, which date
shall be not later than three Business Days after the Final Order Entry Date.

“Final Order” means the final order of the Bankruptcy Court with respect to the
Credit Parties, in form and substance satisfactory to the Required Lenders in
their sole discretion (and with respect to any provisions that affect the rights
and duties of the Administrative Agent, the Administrative Agent), as the same
may be amended, modified or supplemented from time to time with the express
written joinder or consent of the Required Lenders (and with respect to
amendments, modifications or supplements that affect the rights or duties of the
Administrative Agent, the Administrative Agent).
“Final Order Entry Date” means the date on which the Final Order shall have been
entered on the docket of the Bankruptcy Court.
“Financial Officer” means, with respect to any Person, its chief financial
officer, treasurer, controller or assistant controller or other officer
reasonably acceptable to the Administrative Agent.
“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall
generally end on the last day of each calendar month in accordance with the
fiscal accounting calendar of the Borrowers.
“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally end on the last day of each March, June, September or December
of such Fiscal Year in accordance with the fiscal accounting calendar of the
Borrowers.
“Fiscal Year” means any period of twelve consecutive months ending on
December 31 of any calendar year.

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“Foreign Lender” means any Lender that is organized under the Laws of a
jurisdiction other than that in which any Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Plan” means any employee benefit plan or arrangement (a) maintained or
contributed to by any Credit Party or Subsidiary that is not subject to the laws
of the United States; or (b) mandated by a government other than the United
States for employees of any Credit Party or Subsidiary.
“Foreign Subsidiary” means (a) any Subsidiary that is not a Domestic Subsidiary
and any Subsidiary of such Subsidiary and (b) any Subsidiary substantially all
the assets of which are CFCs.
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
“Fresh Air” means Fresh Air Freight, Inc., a California corporation.
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
“Governing Documents” means, with respect to any Person, its certificate or
articles of incorporation, certificate of change of name (if any), certificate
of formation, or, as the case may be, certificate of limited partnership, its
by-laws, memorandum and articles of association, operating agreement or, as the
case may be, partnership agreement or other constitutive documents and all
shareholder agreements, voting trusts and similar arrangements applicable to any
of its Capital Stock.
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

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“Guarantees” means, collectively, (a) the Guaranty dated as of the Closing Date
among the Guarantors (other than the Borrowers) in favor of the Administrative
Agent and (b) any other guaranty in form and substance reasonably satisfactory
to the Administrative Agent and executed by any Guarantor in favor of the
Administrative Agent and the other Secured Parties in respect of the
Obligations.
“Guarantors” means Holdings, the Borrowers, Fresh Air, each other Person party
to any of the Guarantees as a guarantor thereunder and each other Person, if
any, that executes a guaranty or other similar agreement in favor of the
Administrative Agent in connection with the transactions contemplated by this
Agreement and the other Loan Document; provided that no Foreign Subsidiary shall
be required to be a Guarantor.
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
“Holdings” means American Apparel, Inc., a Delaware corporation.
“Incremental Exit Loan” has the meaning specified in the Exit Term Sheet.
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
(a)    all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
(b)    all direct or contingent obligations of such Person arising under letters
of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;
(c)    net obligations of such Person under any Swap Contract;
(d)    all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business consistently with past practices);
(e)    indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
(f)    Capitalized Leases and Synthetic Lease Obligations;
(g)    all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any; and
(h)    all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person or unless such Person expressly does not have
liability for such obligations of a joint venture. The amount of any net
obligation under any Swap Contract on any date shall be deemed to be the Swap
Termination Value thereof as of such date. The amount of any Capitalized Lease
or Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date. The “maximum fixed
repurchase price” of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required

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to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value shall be determined reasonably and in good faith by the board of
directors of the issuer of such Disqualified Capital Stock.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payments hereunder or any other Loan Documents and (b) to
the extent not otherwise described in clause (a) herein, Other Taxes.
“Indemnitees” has the meaning specified in Section 11.04(b).
“Information” has the meaning specified in Section 11.07.
“Initial Approved Budget” has the meaning specified in Section 4.02(i).

“Insolvency Proceeding” means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case in clauses (a) and (b) above, undertaken under U.S.
federal, state or foreign law, including the Bankruptcy Code.
“Intercompany Note” means, collectively, (a) that certain Intercompany Note
dated April 4, 2013, among the Credit Parties, as payors, and the Credit
Parties, as payees, subject to the terms of a Subordination Agreement, (b) that
certain Intercompany Note dated April 4, 2013, among certain Foreign
Subsidiaries of the Credit Parties, as payors, and the Credit Parties, as
payees, and (c) any other intercompany note among any of the Credit Parties, as
payors or payees, on the one hand, and their Subsidiaries, on the other hand,
entered into after the date hereof.
“Interest Payment Date” means, as to any Loan, (a) the first day of each month,
(b) the date of any prepayment with respect to the principal amount of Loans
being prepaid, and (c) the Maturity Date.
“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or continued as a Eurodollar
Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by the Borrower Representative in the applicable Borrowing Request
Notice.
“Interim Loan” means a Loan made on the Closing Date. 

“Interim Order” means the order of the Bankruptcy Court with respect to the
Credit Parties, substantially in the form of Exhibit C hereto, as the same may
be amended, modified or supplemented from time to time with the express written
joinder or consent of the Required Lenders (and with respect to amendments,
modifications or supplements that affect the rights or duties of the
Administrative Agent, the Administrative Agent).
“Interim Order Entry Date” means the date on which the Interim Order shall have
been entered on the docket of the Bankruptcy Court.
“Investment” means, all expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of Capital Stock, assets that
constitute a business unit or Indebtedness of, or for loans, advances or capital
contributions to, or in respect of any Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or interest in, another Person
(including, without limitation, any Acquisition). In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be deducted in respect of each such Investment all cash returns, cash
dividends and cash distributions received with respect thereto; and (c) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value, write-downs or write-offs with respect thereof.
“IP Security Agreement” means, collectively, (i) the Intellectual Property
Security Agreement made by each Credit Party party thereto in favor of the
Administrative Agent, on behalf of itself and the other Secured Parties and

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(ii) each other intellectual property security agreement, patent security
agreement, trademark security agreement and copyright security agreement
required to be delivered pursuant to Section 6.12 in form and substance
reasonably satisfactory to the Administrative Agent.
“IRS” means the United States Internal Revenue Service.
“Laws” means, collectively, all international, foreign, Federal, state,
provincial and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.
“Lender Letter Agreement” means the fee letter, dated as of October 4, 2015, by
and between the Borrower Representative and the Lenders.
“Lenders” means each Lender with a Commitment, or following the termination of
the Commitments, which has Loans outstanding and any other Person who becomes an
assignee of the rights and obligations of a Lender pursuant to terms of this
Agreement.
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrowers and the
Administrative Agent.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement for security, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever (including
any conditional sale or other title retention agreement, any easement, right of
way or other encumbrance on title to real property, and any financing lease
having substantially the same economic effect as any of the foregoing) and the
filing of or agreement to authorize, any financing statement under the UCC or
comparable law of any jurisdiction (other than precautionary filing of UCC
financing statements with respect to obligations that do not constitute
Indebtedness).
“Lion Credit Agreement” means that certain Credit Agreement dated as of May 22,
2013, among Holdings, the other Credit Parties party thereto as facility
guarantors, Lion/Hollywood L.L.C., as the initial lender, and the other lenders
from time to time party thereto.
“Lion Debt” means all Indebtedness and all other obligations incurred by any
Credit Party or any of its Subsidiaries under the Lion Debt Documents.
“Lion Debt Documents” means the Lion Credit Agreement and any other related
material documents or instruments from time to time executed in favor of
Lion/Hollywood L.L.C. and its successors and assigns.
“Lion Facility” means that facility created by the Lion Credit Agreement.
“Loan” means an extension of credit by a Lender to any Borrower under Article II
in the form of a Loan (including the Loans made and deemed made under Section
2.01(b)).
“Loan Account” has the meaning specified in Section 2.16(a).
“Loan Documents” means this Agreement, the Chapter 11 Orders, each Security
Document, the Administrative Agent’s Letter Agreement, the Lender Letter
Agreement, each Subordination Agreement, and each other agreement or instrument
delivered by any Credit Party in connection with any Loan Document, whether or
not specifically mentioned herein or therein.
“Local Accounts” has the meaning specified in Section 6.15.

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“London Banking Day” means any day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign currency
deposits) in London, England.
“Master Operating Account” means each deposit account of the Credit Parties
maintained at Capital One, National Association and specified as a “Master
Operating Account” in the Capital One Control Agreement.
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect on, the operations, business, assets, properties, liabilities
(actual or contingent) or condition (financial or otherwise) of the Credit
Parties, taken as a whole (excluding (i) any matters publicly disclosed prior to
the filing of the Chapter 11 Cases, (ii) any matters disclosed in the schedules
hereto, (iii) any matters disclosed in any first day pleadings or declarations,
and (iv) the effect of filing the Chapter 11 Cases, the events and conditions
related and/or leading up thereto and the effects thereof and any action
required to be taken under the Loan Documents or under the Chapter 11 Orders);
(b) a material impairment of the rights and remedies of the Administrative Agent
or any Lender under any Loan Document, or of the ability of the Credit Parties,
taken as a whole, to pay any Obligations under the Loan Documents, when due; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Credit Party of any Loan Documents to which it is a
party.
“Material Agreements” means each of the (i) Prepetition ABL Documents, (ii)
Prepetition Senior Notes Documents, (iii) the Lion Debt Documents, (iv) the SG
Debt Documents and (v) any lease entered into by any Credit Party for (a) its
chief executive office or (b) any warehouse, any distribution center, any plant,
any shipping center, or any other single location, in each case, containing
inventory with a book value representing 10% or more of the aggregate book value
of all inventory of the Credit Parties.
“Maturity Date” means the date that is the earliest of:
(a)    April 5, 2016;
(b)    the date the Bankruptcy Court orders the conversions of the bankruptcy
case of any of the Credit Parties to a Chapter 7 liquidation or the dismissal of
any of the Chapter 11 Cases;
(c)    the acceleration of the Loans and the termination of all Commitments
under the DIP Facility pursuant to Section 8.02;
(e)    the sale of all or substantially all of the Credit Parties’ assets; and
(f)    the consummation of the Approved Plan of Reorganization for the Credit
Parties.
“Maximum Rate” has the meaning specified in Section 11.09.
“Mortgages” means each mortgage or deed of trust with respect to each fee
interest of each Credit Party in Real Estate executed and delivered to the
Administrative Agent after the Closing Date pursuant to Section 6.12 hereof, in
each case, in form and substance reasonably satisfactory to the Administrative
Agent.
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including any Borrower or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.
“Net Cash Proceeds” means, with respect to any event or transaction described in
Sections 2.05(b) through (e), (a) the cash proceeds received in respect of such
event or transaction, including (i) any cash received in respect of any non-cash
proceeds (including, without limitation, the monetization of notes receivables),
but only as and when

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received or (ii) in the case of a Casualty Event, insurance proceeds, proceeds
of a condemnation award or other compensation payments, in each case net of
(b) the sum of (x) all reasonable fees and out-of-pocket expenses (including
appraisals, and brokerage, legal, advisory, banking, title and recording tax
expenses and commissions) paid by any Credit Party or a Subsidiary to third
parties (other than Affiliates) in connection with such event, (y) in the case
of a sale or other disposition of an asset described in Section 2.05(b) other
than Collateral, income or other taxes paid or reasonably estimated by the
Borrower Representative (determined in good faith by a Financial Officer) to be
actually payable in connection therewith and (z) in the case of a sale or other
disposition of an asset described in Sections 2.05(b) and (c), the amount of all
payments required to be made by any Credit Party (or to establish an escrow) for
the repayment of any Indebtedness by the terms thereof (other than the
Obligations) secured by such asset to the extent the lien in favor of the holder
of such Indebtedness is permitted by Section 7.03(a)(viii); provided that such
payments made shall not exceed the amount of cash proceed received by such
Credit Party or the aggregate amount of such Indebtedness.
“Non-Consenting Lender” means any Lender (other than the Administrative Agent)
that does not approve any consent, waiver or amendment that (a) requires the
approval of all Lenders or all affected Lenders in accordance with the terms of
Section 11.01 and (b) has been approved by the Required Lenders (or to the
extent there are only two (2) Lenders, would have been approved by the Required
Lenders if such Lender had approved of such consent, waiver or amendment).
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.
“Notice of Continuation” means a Notice of Continuation to be provided by the
Borrower Representative to request a continuation of any Loans as Eurodollar
Rate Loans, in the form of Exhibit I.
“Notice of Withdrawal” has the meaning specified in Section 2.02(c).
“Obligations” means all advances to, and debts, liabilities and obligations of,
any Credit Party arising under any Loan Document or otherwise with respect to
any Loan or Letter of Credit, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees and expenses that
accrue after the commencement by or against any Credit Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest, fees or expenses
are allowed claims in such proceeding, and shall include on and after the
Closing Date any Prepetition ABL Obligations.
“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.
“Official Committee” means the official committee of unsecured creditors
appointed in the Chapter 11 Cases pursuant to Section 1102 of the Bankruptcy
Code.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing, excise, property or similar taxes, charges or
similar levies that arise from any payment made under, from the execution,
delivery, performance, enforcement or registration of from the receipt or
perfection of a security interest under, or otherwise with respect to, any Loan
Document, except any such Taxes that are Other Connection Taxes imposed with
respect to an assignment or sale of a participation (other than an assignment
made pursuant to Section 3.06).
“Outstanding” means the outstanding principal amount of the Loans after giving
effect to any Borrowings and prepayments or repayments of the Loans occurring on
such date.

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“Participant” has the meaning specified in Section 11.06(d).
“Participant Register” has the meaning specified in Section 11.06(d).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Act” means the Pension Protection Act of 2006.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Sections 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by any Borrower and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code.
“Perfection Certificates” means, collectively, (i) each Perfection Certificate
delivered by the Credit Parties to the Administrative Agent on the Closing Date
and (ii) each other Perfection Certificate from time to time delivered by the
Credit Parties following the Closing Date to the Administrative Agent in
accordance with this Agreement.
“Permitted Adequate Protection Payments” means the adequate protection payments
to the secured parties under the Prepetition ABL Documents and Prepetition
Secured Notes Documents pursuant to the terms of the DIP Order.

“Permitted Discretion” means a determination made by the Required Lenders in
their sole and absolute judgment.
“Permitted Holders” means (i) Dov Charney, (ii) the spouse or a family member,
estate or heir of Dov Charney, and (iii) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest (or beneficial
interest, in the case of a trust) of which consist of Dov Charney and/or such
other Persons referred to in clause (ii) above or any combination thereof.
“Permitted Liens” means those Liens permitted by Section 7.03.
“Permitted Prior Liens” means Liens otherwise permitted by the Prepetition ABL
Debt Documents (other than Existing Primed Secured Facilities) only to the
extent that, as of the Petition Date, such Liens were valid, properly perfected
(or subsequently perfected as permitted by Section 546(b) of the Bankruptcy
Code) non-avoidable and senior in priority to the Liens securing the Prepetition
Facilities.
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
“Petition Date” shall have the meaning assigned to the term in the recitals
hereto.

“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of any Borrower or
any ERISA Affiliate or any such Plan to which any Borrower or any ERISA
Affiliate is required to contribute on behalf of any of its employees.
“Plan Effective Date” shall have the meaning assigned to the term “Effective
Date” in the Approved Plan of Reorganization.

“Platform” has the meaning specified in Section 11.02(e).

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“Pledge Agreements” means, collectively, (i) the Prepetition U.S. Pledge
Agreement and (ii) any other pledge agreement or share charge granted by any
Credit Party as required by Section 6.12 which shall be in form and substance
reasonably satisfactory to the Administrative Agent.
“Prepetition ABL Agent” means Wilmington Trust, National Association, as
administrative agent for the Prepetition ABL Lenders.
“Prepetition ABL Documents” means the Prepetition ABL Facility and all
instruments and documents executed at any time in connection therewith.
“Prepetition ABL Facility” means that certain Amended and Restated Credit
Agreement dated as of August 17, 2015 as amended and supplemented from time to
time by and among AA USA as a borrower and as borrower representative for itself
and the other borrowers party thereto, the guarantors party thereto, the lenders
party thereto from time to time, and Wilmington Trust, National Association, as
administrative agent.
“Prepetition ABL Lenders” means the lenders party to the Prepetition ABL
Facility, from time to time, under and as defined in the Prepetition ABL
Facility.
“Prepetition ABL Liens” means collectively all Liens that secure all Prepetition
ABL Obligations.
“Prepetition ABL Loans” means those Prepetition Obligations for all loans
outstanding under (and as defined in) the Prepetition ABL Facility as of the
Petition Date.
“Prepetition ABL Obligations” means those Prepetition Obligations arising under
the Prepetition ABL Facility.
“Prepetition Debt Documents” means, collectively, the Prepetition ABL Documents,
the Prepetition Senior Notes Documents, the Lion Debt Documents and the
Subordinated Debt Documents.
“Prepetition Existing Letters of Credit” means the Letters of Credit issued by
Capital One, N.A. and set forth in Schedule 1.01.
“Prepetition Facilities” means, collectively, the Prepetition ABL Facility and
the Prepetition Senior Notes Facility.
“Prepetition Indebtedness Holders” means, collectively, the Prepetition ABL
Agent, the Prepetition ABL Lenders, the Prepetition Senior Notes Trustee and the
Prepetition Senior Notes Lenders.
“Prepetition Obligations” means all indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries to the Prepetition ABL Agent and the
Prepetition ABL Lenders, Prepetition Senior Notes Trustee, Prepetition Senior
Notes Lenders and SG UK Lenders incurred prior to the Petition Date arising from
or related to the Prepetition ABL Facility, the Prepetition Senior Notes
Facility, the Lion Facility and the SG Facility, and the other agreements,
instruments and other documents related thereto including fees, premiums,
expenses, indemnities and reimbursement obligations due thereunder and interest
thereon accruing both before and after the Petition Date, whether such
indebtedness, obligations or liabilities are direct or indirect, joint or
several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising.
“Prepetition Senior Notes” means the 13.0% senior secured notes due 2020 issued
pursuant to the Prepetition Senior Notes Facility.
“Prepetition Senior Notes Documents” means the Prepetition Senior Notes
Facility, the Prepetition Senior Notes and any other related documents or
instruments from time to time executed in favor of the Prepetition Senior Notes
Trustee and the collateral agent thereto for the holders of the Prepetition
Senior Notes, or all or any of the holders of the Prepetition Senior Notes.

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“Prepetition Senior Notes Facility” means that certain Indenture dated April 4,
2013, by and among Holdings, the guarantors party thereto, the lenders party
thereto from time to time and the Prepetition Senior Notes Trustee, as trustee
and collateral agent..
“Prepetition Senior Notes Lenders” means those Lenders party to the Prepetition
Senior Notes Facility from time to time.
“Prepetition Senior Notes Lien” means, collectively all Liens that secure the
Prepetition Senior Notes and all other obligations under the Prepetition Senior
Notes Documents.
“Prepetition Senior Notes Trustee” means U.S. Bank National Association in its
capacity as trustee and collateral agent under the Prepetition Senior Notes
Facility and its successors and assigns.
“Prepetition U.S. Pledge Agreement” means that certain Ownership Interest and
Intercompany Note Pledge and Security Agreement, entered into by the Credit
Parties and the Administrative Agent.
“Prime Rate” means the highest of the rate of interest announced by Citibank,
N.A. or Bank of America, N.A. from time to time as its prime rate, which rate
may be set by such banks on the basis of various factors, including its costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above or
below such rate. Any change in such rate shall take effect at the opening of
business on the day specified in the public announcement or publication, as
applicable, of such change.
“Priming Lien” has the meaning specified in Section 10.05(a)(iv).
“Purchase Rights” means purchase rights described in the Form 8-K report of
Holdings, filed with the SEC on June 30, 2014, relating to a dividend
distribution of rights to purchase preferred stock.
“Purchased Loans” has the meaning specified in the recitals to this Agreement.
“RCRA” has the meaning specified in the definition of “Environmental Laws”.
“Real Estate” means all real property at any time owned or leased (as lessee or
sublessee) by any Credit Party.
“Recipient” means the Administrative Agent, any Lender or any other recipient of
any payment to be made by or on account of any obligation of any Credit Party
hereunder.
“Register” has the meaning specified in Section 11.06(c).
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers and advisors of such Person and of such Person’s
Affiliates.
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30-day notice period has been waived.
“Required Lenders” means, as of any date of determinations, Lenders holding more
than 50% of the sum of the (a) outstanding Loans and (b) aggregate unused
Commitments; provided that the unused Commitment of, and the Loans held or
deemed held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.
“Restricted Payment” means any (a) dividend or other distribution (whether in
cash, securities or other property) with respect to any Capital Stock of any
Credit Party or any Subsidiary, (b) any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such Capital Stock, or on account of any return of capital to

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the stockholders, partners or members (or the equivalent Person thereof) of any
Credit Party or any Subsidiary, or (c) any payment (whether in cash, securities
or other property) of management fees (or other fees of a similar nature) by
such Credit Party or such Subsidiary to any equity holder or Affiliate of such
Credit Party or such Subsidiary.
“Restructuring Support Agreement” means that restructuring support agreement
entered into on October 4, 2015 by AA USA and its Subsidiaries party thereto and
the Lenders and the other creditor parties party thereto as “Supporting
Parties”.
“Sanction(s)” means any international economic sanction administered or enforced
by the United States Government (including, without limitation, OFAC), the
United Nations Security Council, the European Union, Her Majesty’s Treasury or
other relevant sanctions authority.
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
“Secured Parties” means, collectively, the Administrative Agent, the Lenders and
each Sub-Agent and the other Persons the Obligations owing to which are or are
purported to be secured by the Collateral under the terms of the Security
Documents.
“Security Agreements” means, collectively, (i) Security Agreement dated as of
the date hereof entered into by the Credit Parties and the Administrative Agent
and (ii) any other security agreement granted by any Credit Party as required by
Section 6.12 which shall be in form and substance reasonably satisfactory to the
Administrative Agent.
“Security Documents” means the Guarantees, the Security Agreements, the IP
Security Agreement, the Pledge Agreements, the Mortgages (if any), the Agency
Account Agreements, the DIP Orders and all other guarantees, security
agreements, intellectual property security agreements, pledge agreements,
mortgages, deeds of trust, control agreements, instruments and documents,
including without limitation Uniform Commercial Code financing statements and
other equivalent registrations and personal property security filings with
respect to any other applicable jurisdiction, control agreements, required to be
executed or delivered pursuant to, or in connection with, this Agreement or any
other Loan Document, all in form and substance reasonably acceptable to the
Administrative Agent.
“Senior Management” means, with respect to the any of the Credit Parties, its
chairman, president, Financial Officer, chief executive officer or general
counsel.
“SG Credit Agreement” means that certain Credit Agreement dated as of March 25,
2015, among American Apparel (Carnaby) Limited, the other borrowers named
therein, America Apparel, Inc., and the SG UK Lenders.
“SG Debt” means all Indebtedness and all other obligations incurred by any
Credit Party or any of its Subsidiaries under the SG Debt Documents.
“SG Debt Documents” means the SG Credit Agreement and any other related material
documents or instruments from time to time executed in favor of Standard General
or any other lender under the SG Credit Agreement and their respective
successors and assigns.
“SG Facility” means that facility created by the SG Credit Agreement.
“SG DIP Lenders” means Standard General and/or affiliates of Standard General
that are party to this Agreement as Lenders.
“SG UK Lenders” means the affiliates of Standard General party to the SG Credit
Agreement as lenders from time to time.
“Specified Senior Management” means with respect to any of the Borrowers, its
chairman of the Board of Directors and chief executive officer.

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“Specified Store Closure Proceeds” means Net Cash Proceeds from the closure
and/or liquidation of stores (and the inventory contained therein) of Holdings
and its Subsidiaries; it being understood and agreed that Specified Store
Closure Proceeds shall not include cash proceeds from the closure and/or
liquidation of stores (and the inventory contained therein) of the AA UK
Subsidiaries, so long as such cash proceeds are applied in accordance with the
Approved Budget.
“Standard General” means Standard General, L.P.
“Standstill Debt” means all debt for borrowed money incurred by any Credit Party
or any of its Subsidiaries prior to Petition Date (for avoidance of doubt,
“Standstill Debt” does not include the DIP Facility).
“Standstill Debt Documents” means the finance agreement and any other related
material documents or instruments evidencing Standstill Debt executed in favor
of any Lender and their respective successors and assigns.
“Standstill Period” means, with respect to any Standstill Debt, the period of
time commencing on the Business Day on which a default or an event of default
occurs under such Standstill Debt and ending on the earlier of (x) the date
which is 180 days after such Business Day and (y) the Company files any motion
or pleading with the Bankruptcy Court, or otherwise supports any treatment of
such Standstill Debt, that in each case is not consistent with the treatment of
such Standstill Debt in the plan of reorganization attached as Exhibit A to the
Restructuring Support Agreement.
“Sub-Agent” means any co-agent, sub-agent, attorney-in-fact, bailee or other
designee appointed by the Administrative Agent from time to time pursuant to
Section 9.05 and approved by the Required Lenders.
“Subordinated Debt” means unsecured Indebtedness of any Credit Party or any
Subsidiary that is expressly subordinated and made junior to the payment and
performance in full of the Obligations, and evidenced as such by a Subordination
Agreement.
“Subordinated Debt Documents” means all documents, agreements and instruments
evidencing any Subordinated Debt and/or executed and/or delivered in connection
with the incurrence of any Subordinated Debt, including, without limitation,
each Subordination Agreement.
“Subordination Agreement” means a subordination and intercreditor agreement or
such other written instrument containing subordination provisions, each in form
and substance reasonably acceptable to the Required Lenders.
“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
Holdings.
“Supplemental Approved Budget” means, with respect of the Initial Approved
Budget, supplemental or replacement budgets prepared and delivered in accordance
with Section 6.04(n) and accepted by the Required Lenders (covering any time
period covered by a prior budget or covering additional time periods).

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or

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governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement, including any such obligations or
liabilities under any master agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts.
“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Test Date” has the meaning specified in Section 7.13(a).
“Trade Date” has the meaning specified in Section 11.06(b)(i).
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in
Section 3.01(e)(ii)(B)(III).
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in
effect in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, “Uniform Commercial Code” or
“UCC” means the Uniform Commercial Code as in effect from time to time in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.
“United States” and “U.S.” mean the United States of America.
“Withdrawal” means a disbursement of funds from the DIP Funding Account.
“Withdrawal Date” means that date of a Withdrawal.
1.02    Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:
(a)    The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall,” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Governing Document) shall be construed as referring to
such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors

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and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of
similar import when used in any Loan Document, shall be construed to refer to
such Loan Document in its entirety and not to any particular provision thereof,
(iv) all references in a Loan Document to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, the Loan Document in which such references appear, (v) any
reference to any law shall include all statutory and regulatory provisions
consolidating, amending, replacing or interpreting such law and any reference to
any law or regulation shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (vi) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
(b)    In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
(c)    Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.
1.03    Accounting Terms.
(a)     Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.
(b)    Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio, negative covenant or requirement set forth
in any Loan Document, and either the Borrowers or the Required Lenders shall so
request, the Administrative Agent, the Lenders and the Borrowers shall negotiate
in good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders); provided that, until so amended, (i) such ratio, negative covenant or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrowers shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio, covenant or requirement made before and
after giving effect to such change in GAAP. Without limiting the foregoing,
leases shall continue to be classified and accounted for on a basis consistent
with GAAP as in effect on December 31, 2012 for all purposes of this Agreement,
notwithstanding any change in GAAP relating thereto and regardless of whether
such leases are in effect as of the date hereof or entered into as of the date
hereof, unless the parties hereto shall enter into a mutually acceptable
amendment addressing such changes, as provided for above.
1.04    Rounding. Any financial ratios required to be maintained by any of the
Credit Parties pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
1.05    Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Eastern time (daylight or standard, as
applicable).
1.06    Certain Currency Translations. For purposes of the incurrence of
Indebtedness by Foreign Subsidiaries under Section 7.02 or where the
permissibility of a transaction depends upon compliance with an amount
limitation stated in Dollars, any requisite currency translation shall be based
on the exchange rate in effect on the date of incurrence of any amounts to be
tested against the limitation of such transaction and shall not be affected by
subsequent fluctuations in exchange rates; provided that if any such
Indebtedness is incurred to refinance other Indebtedness

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denominated in a foreign currency, and such refinancing would cause the
applicable Dollar-denominated limitation to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
Dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced. The principal amount of
any Indebtedness incurred to refinance other Indebtedness, if incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currency in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS
2.01    Commitments to Lend; Loans.
(a)    Subject to the terms and conditions set forth herein and in the DIP
Order, each Lender severally agrees to make, on the applicable borrowing date, a
Loan to the Borrowers in an aggregate amount not to exceed such Lender’s
Commitment.  The Borrowers may make only two Borrowings under the Commitments
that shall be, in the case of the Interim Loans, on the Closing Date and in an
aggregate principal amount not to exceed $10,000,000 and, in the case of the
Final Loans, on the Final Loan Date and in an aggregate principal amount not to
exceed $20,000,000. The Commitments in respect of the Interim Loans shall
terminate automatically immediately after the making of the Interim Loans on the
Closing Date and the Commitments in respect of the Final Loans shall terminate
automatically immediately after the making of the Final Loans on the Final Loan
Date. All Loans and all other amounts owed hereunder with respect to the Loans
shall be paid in full not later than the Maturity Date. Proceeds of the Loans
shall be deposited in the DIP Funding Account and used solely as permitted
herein.
(b)    Effective upon the occurrence of the Closing Date (i) without any further
action by any party to this Agreement, the Bankruptcy Court or any other Person,
the Prepetition ABL Obligations owing to each Lender at the Closing Date shall
be refinanced into and constitute Loans hereunder and the outstanding principal
balance of and interest and fees accrued under the Prepetition ABL Loans and all
other amounts in respect thereof owing to such Lender shall constitute a portion
of the Outstanding amount of the Loans owing to such Lender hereunder and (ii)
with respect to the outstanding principal amount of the “Loans” under the
Prepetition ABL Facility immediately prior to the Closing Date held by
Prepetition ABL Lenders that are not Lenders hereunder (such Prepetition ABL
Lenders, the “Non-Participating Prepetition ABL Lenders”) and all accrued and
unpaid interest thereon and all accrued and unpaid unused facility fees of the
Non-Participating Prepetition ABL Lenders with respect thereto (collectively,
the “Non-Participating Prepetition ABL Lenders’ Obligations”), subject to the
terms and conditions herein the Borrowers shall borrow Loans from the Lenders,
the Lenders shall make Loans to the Borrowers and the Borrowers shall repay in
full the Non-Participating Prepetition ABL Lenders’ Obligations, in each case on
the Closing Date, such that after giving effect to such borrowing and making of
Loans and such prepayments (A) the Loans of each Lender made and deemed made
under this Section 2.01(b) shall be equal to such Lender’s Applicable Percentage
of the aggregate outstanding principal amount of the “Loans” under the
Prepetition ABL Facility immediately prior to the Closing Date held by the
Prepetition ABL Lenders and all accrued and unpaid interest thereon and all
accrued and unpaid unused facility fees of the Prepetition ABL Lenders with
respect thereto and (B) except with respect to indemnification obligations as
set forth in Section 11.04(b), the Prepetition ABL Obligations of the
Prepetition ABL Lenders shall have been paid in full.
Any Loans borrowed and subsequently repaid or prepaid, in whole or in part, may
not be reborrowed. 
2.02    Borrowings and Continuations of Loans.
(a)    Each Borrowing shall be made upon the Borrower Representative’s
irrevocable notice to the Administrative Agent via a Borrowing Request Notice
and each continuation of Eurodollar Rate Loans shall be made upon the Borrower
Representative’s irrevocable notice to the Administrative Agent via a Notice

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of Continuation, in each case, appropriately completed and signed by a member of
Senior Management of the Borrower Representative, which may be given by any
Electronic Medium. Each such notice must be received by the Administrative Agent
not later than 1:00 p.m. Eastern time (10:00 a.m. Pacific time) at least three
(3) Business Days prior (other than with respect to the funding of the Interim
Loan on the Closing Date) to the requested date of the applicable Borrowing of
or continuation of Eurodollar Rate Loans (or such shorter time as agreed by the
Administrative Agent and Requisite Lenders). Each Borrowing Request Notice and
Notice of Continuation shall specify (i) the Borrower requesting such Borrowing
or continuation, (ii) the requested date of such Borrowing continuation (which
shall be a Business Day), (iii) the principal amount of Loans to be borrowed or
continued and (iv) if applicable, the duration of the Interest Period with
respect thereto. If the Borrower Representative requests a Borrowing of or
continuation of Eurodollar Rate Loans in any notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.
(b)    Following receipt of a Borrowing Request Notice by the Administrative
Agent, the Administrative Agent shall promptly notify each Lender of the amount
of its Applicable Percentage of the applicable Loans and each Lender shall make
the amount of its Applicable Percentage available to the Administrative Agent in
immediately available funds at the Administrative Agent’s Office not later than
3:00 p.m. Eastern time (12:00 p.m. Pacific time) (or such shorter time as may be
agreed by the Administrative Agent) on the Business Day specified in the
applicable Borrowing Request Notice which shall be one Business Day after the
Interim Order Entry Date, for the Interim Loans (or such shorter time as may be
agreed by the Administrative Agent and Required Lenders), and not later than
three Business Days after the Final Order Entry Date, for the Final Loans (or
such shorter time as may be agreed by the Administrative Agent and Required
Lenders). Upon satisfaction of the applicable conditions set forth in Sections
4.02 and 4.03, the Administrative Agent shall pay all fees and expenses then due
and payable under Section 2.09 and the amount net of such applied amount shall
be deposited by the Administrative Agent in the DIP Funding Account.
(c)    Subject to Section 4.03 and the other terms and conditions set forth
herein, the Borrower Representative may only request disbursements from the DIP
Funding Account by delivering to the Administrative Agent a written notice
substantially in the form of Exhibit B hereto (a “Notice of Withdrawal”), not
later than 12:00 p.m., New York City time, one Business Day before (or such
shorter time as agreed by the Administrative Agent) the proposed date of the
applicable Withdrawal. Promptly, but in no event later than one Business Day,
following receipt of a Notice of Withdrawal and the satisfaction of the
conditions set forth in Section 4.03, the Administrative Agent shall disburse
funds from the DIP Funding Account in an aggregate principal amount equal to the
amount specified in such Notice of Withdrawal to the Master Operating Account
specified by the Borrower Representative in such Notice of Withdrawal (or such
other deposit account or securities account of the Borrowers that the Required
Lenders may approve). All proceeds of the Loans shall be held in the DIP Funding
Account at all times until such proceeds are disbursed in accordance with this
Section 2.02(c) solely for purposes permitted under Section 6.11 or to be
applied in accordance with Section 2.05 or Section 8.03 or Section 10.05.
(d)    Subject to Section 4.03 and the other terms and conditions set forth
herein, the Administrative Agent shall honor instructions received from the
Borrower Representative in the form of a Notice of Withdrawal unless and until
directed otherwise in writing by the Required Lenders upon the occurrence and
continuation of an Event of Default. On and after the date of receipt by the
Administrative Agent of a written direction from the Required Lenders
instructing the Administrative Agent that it may no longer honor instructions
from the Borrower Representative with respect to the DIP Funding Account, the
Borrower Representative and the other Credit Parties shall have no right to
request Withdrawals from the DIP Funding Account and the Administrative Agent
shall not honor such requests (in each case, other than (i) to pay the Carve-Out
and (ii) to the extent permitted by the last sentence of the final paragraph of
Section 8.02 during the notice period specified therein); provided, that the
Administrative Agent shall not be liable for (A) any disbursements made pursuant
to instructions from the Borrower Representative or (B) irrevocable electronic
funds transfers or wire transfers that are subject to cut-off times, in each
case, that were processed prior to receipt of such written direction from the
Required Lenders.

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(e)    Each submission by the Borrower Representative to the Administrative
Agent of a Notice of Withdrawal shall be deemed to constitute a representation
and warranty by the Borrower Representative, on behalf of the Borrowers, that
the conditions set forth in Section 4.03 have been satisfied as of the date of
the Withdrawal. With respect to any disbursement, withdrawal, transfer, or
application of funds from the DIP Funding Account hereunder, the Administrative
Agent shall be entitled to conclusively rely upon, and shall be fully protected
in relying upon, (i) any Notice of Withdrawal submitted by the Borrower
Representative and (ii) any instructions from the Required Lenders.
Notwithstanding anything herein to the contrary, the Administrative Agent shall
have no obligation to fund any amount in excess of the amounts then held in the
DIP Funding Account.
(f)    Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of an Event of Default, the Administrative Agent may
(and shall at the direction of the Required Lenders) declare that no Loan may be
requested as or continued as Eurodollar Rate Loans.
(g)    After giving effect to all Borrowings and all continuations of Loans,
there shall not be more than two (2) Interest Periods in effect.
2.03    [Intentionally Omitted].
2.04    [Intentionally Omitted].
2.05    Mandatory Prepayments.
(a)    Asset Dispositions. (i) Immediately upon receipt by any Credit Party of
Net Cash Proceeds from any asset disposition on Collateral (excluding (A)
dispositions of inventory in the ordinary course of business and (B) Specified
Store Closure Proceeds in an aggregate amount from the Closing Date not
exceeding $3,000,000 and solely to the extent such Specified Store Closure
Proceeds are applied to fund disbursements in accordance with the Approved
Budget), the Borrowers shall prepay the Obligations in an amount equal to 100%
of the Net Cash Proceeds so received in excess of such amount (such prepayments
shall be directed to the DIP Funding Account for application as provided below).
(b)    Casualty Events and Extraordinary Receipts. The Borrowers shall
(i) prepay the Obligations in an amount equal to 100% such Net Cash Proceeds
received by any Credit Party from Casualty Events with respect to Collateral and
(ii) subject to the terms of the DIP Order, prepay the Obligations in an amount
equal to 100% of all other Casualty Events or Extraordinary Receipts (subject to
the terms of the DIP Order, such prepayments shall be directed to the DIP
Funding Account for application as provided below).
(c)    Equity Issuances. Immediately upon (a) the sale or issuance by any Credit
Party or any of its Subsidiaries of any Capital Stock (other than Excluded
Equity Issuances) or (b) the receipt of any capital contribution by any Credit
Party or any of its Subsidiaries on account of any Capital Stock (other than
capital contributions received on account of Excluded Equity Issuances and
capital contributions received from a Credit Party or any Subsidiary of a Credit
Party) issued by or in such Credit Party or such Subsidiary, the Borrowers shall
prepay the Obligations in an amount equal to 100% of such Net Cash Proceeds so
received (such prepayments shall be directed to the DIP Funding Account for
application as provided below).
(d)    Incurrence of Indebtedness. Immediately upon the incurrence or issuance
by any Credit Party or any of its Subsidiaries of any Indebtedness (other than
Excluded Debt Incurrences), the Borrowers shall prepay the Obligations in an
amount equal to 100% of such Net Cash Proceeds so received (such prepayments
shall be directed to the DIP Funding Account for application as provided below).
(e)    Application of Mandatory Prepayments. Each prepayment of Loans pursuant
to Sections 2.05(a), (c) and (d) shall be accompanied by the Exit Fee on the
principal amount of such prepayment and shall be applied to the prepayment of
the Obligations in accordance with Section 2.07(c) (it being understood

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and agreed that for purposes of such application the principal on the Loans in
amount equal to the prepayment then required pursuant to this Section 2.05 shall
be then due and payable for purposes of clause “Fourth” of Section 2.07(c)).
2.06    Voluntary Prepayments; Termination or Reduction of Commitments.
(a)    The Borrowers may prepay the Loans, in whole or in part, at any time
(subject to payment of Breakage Costs on Eurodollar Rate Loans pursuant to
Section 3.05). Any such voluntary prepayment pursuant to this Section 2.06(a)
shall be accompanied by the Exit Fee on the principal amount of such prepayment
and shall be applied ratably among the Lenders in proportion to their Applicable
Percentages.
(b)     The Borrower Representative may, upon notice to the Administrative
Agent, terminate the DIP Facility in full or permanently reduce the DIP Facility
in part; provided that (i) any such notice shall be received by the
Administrative Agent not later than 2:00 p.m. Eastern time (11:00 am Pacific
time) five (5) Business Days prior to the date of termination or reduction,
(ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or
any whole multiple of $1,000,000 in excess thereof, and (iii) the Borrowers
ratably pay to the Lender’s the Exit Fee on the amount of such reduction. The
Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the DIP Facility. Any reduction of the DIP Facility
shall be applied to the Commitment of each DIP Lender according to its
Applicable Percentage. All fees accrued until the effective date of any
termination of the DIP Facility shall be paid on the effective date of such
termination.
2.07    Repayment of Loans.
(a)    Maturity. The Borrowers shall repay to the Lenders, on the Maturity Date
applicable to the DIP Facility, the aggregate principal amount of all Loans
outstanding on such date, together with all other Obligations in respect
thereof.
(b)    [Intentionally Omitted].
(c)    Application of Payments. Subject to clause (d) below, all funds
transferred and credited to the DIP Funding Account (or otherwise on account of
the payment of the Obligations) shall be applied to the Obligations as follows:
(i)    First, to pay Obligations owing to the Administrative Agent constituting
(a) indemnities and expenses then due and payable under this Agreement and the
other Loan Documents and (b) the fees then due and payable under the
Administrative Agent’s Letter Agreement;
(ii)    Second, to pay Obligations owing to the Lenders constituting indemnities
and expenses then due and payable under this Agreement and the other Loan
Documents;
(iii)    Third, to pay Obligations constituting interest and fees then due and
payable to the Lenders by the Borrowers under this Agreement and the other Loan
Documents ratably among them in proportion to the respective amounts described
in this clause Third payable to them;
(iv)    Fourth, to repay principal on the Loans then due and payable and the
Exit Fee thereon ratably among the holders thereof in proportion to the
respective amounts described in this clause Fourth payable to them; and
(v)    Fifth, to be retained in the DIP Funding Account to be accessed by the
Borrower pursuant to a Notice of Withdrawal in accordance with and subject to
the terms and conditions of this Agreement.
All payments applied to the Loans pursuant to this Section 2.07(c) shall be
applied to the Loans owing to the Lenders in accordance with their respective
Applicable Percentages.

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(d)    Following the occurrence and during the continuance of an Event of
Default, the Administrative Agent may (and at the direction of the Required
Lenders, shall) apply all funds transferred and credited to the DIP Funding
Account (or otherwise on account of the payment of the Obligations) to the
Obligations in accordance with Section 8.03.
2.08    Interest.
(a)    Subject to the provisions of subsection (b) below, each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate.
(b)    Following the occurrence and during the continuance of an Event of
Default, if the Administrative Agent or the Required Lenders in their discretion
so elect, the Obligations shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.
(c)    Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest accrued on any other Obligations shall be due and
payable as provided in the Loan Documents and, if no payment date is specified,
shall be due and payable (i) on demand by the Administrative Agent during the
continuance of an Event of Default or (ii) otherwise, within 10 Business Days of
receipt of invoice or statement; provided that the Credit Parties acknowledge
and agree that the Administrative Agent may charge such Obligations to the Loan
balance (as deemed Loans) immediately to satisfy such Obligations. Interest
accruing at the Default Rate shall be due and payable on demand by the
Administrative Agent. Interest hereunder shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
2.09    Fees. All fees payable to the Administrative Agent and described in this
Section 2.09 shall be fully earned when paid and shall not be refundable for any
reason whatsoever.
(a)    Exit Fee. Upon the termination of the Commitments or prepayment of the
Loans under Section 2.06 or repayment of Loans under Section 2.05, Section 2.07
or Section 8.03 or on any other payment, prepayment or repayment of the Loans
whatsoever (whether voluntary or mandatory, and including as a result of
acceleration of the Loans, but other than in connection with (i) any mandatory
prepayment under Section 2.05(b) or (ii) the conversion to exit facility
financing upon the consummation of the Approved Plan of Reorganization pursuant
to Section 2.18), the Borrowers shall pay to the Administrative Agent for the
benefit of the Lenders the Exit Fee, unless amended, modified or waived by the
Required Lenders.
(b)    Agency Fees. The Borrowers shall pay to the Administrative Agent the fees
in the amounts and at the times specified in the Administrative Agent’s Letter
Agreement.
(c)    Commitment Fees. The Borrowers shall pay to the Lenders the Commitment
Fees in the amounts and at the times specified in the Lender Letter Agreement.
2.10    Computation of Interest and Fees. All computations of fees and interest
shall be made on the basis of a year of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.
2.11    Evidence of Debt. The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business.

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The accounts or records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit Extensions
made by the Lenders to the Borrowers and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrowers hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.
2.12    Payments Generally; Administrative Agent’s Clawback.
(a)    General. All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrowers
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 12:00 p.m.
Eastern time (9:00 a.m. Pacific time) on the date specified herein. The
Administrative Agent may promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s Lending Office or upon
the weekly settlement date. All payments received by the Administrative Agent
after 12:00 p.m. Eastern time (9:00 a.m. Pacific time) may be deemed received on
the next succeeding Business Day and any applicable interest or fee shall
continue to accrue. If any payment to be made by the Borrowers shall come due on
a day other than a Business Day, payment shall be made on the next following
Business Day (unless otherwise provided herein), and such extension of time
shall be reflected in computing interest or fees, as the case may be.
(b)    (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of Loans that such Lender will not make available
to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount in immediately available funds with interest thereon,
for each day from and including the date such amount is made available to the
Borrowers to but excluding the date of payment to the Administrative Agent, at
the interest rate applicable to such Loans made. If the Borrowers and such
Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrowers the amount of such interest paid by the Borrowers for such period. If
such Lender pays its share of the applicable Borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender’s Loan included in
such Borrowing. Any payment by the Borrowers shall be without prejudice to any
claim the Borrowers may have against a Lender that shall have failed to make
such payment to the Administrative Agent.
(ii)    Payments by Borrowers; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrowers prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders the amount due. In such event, if the Borrowers have not in fact made
such payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender, in immediately available funds with interest thereon in an amount equal
to the interest owing by the Borrowers on such payment (for the account of the
Administrative Agent), for each day from and including the date such amount was
distributed to the Lenders but excluding the date of payment to the
Administrative Agent.

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A notice of the Administrative Agent to any Lender or the Borrowers with respect
to any amount owing under this subsection (b) shall be conclusive, absent
manifest error.
(c)    Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to the Borrowers by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds promptly (in like funds as received from such
Lender) to such Lender, without interest.
(d)    Obligations of Lenders Several. The obligations of the Lenders hereunder
to make Loans applicable to it and to make payments pursuant to Section 11.04(c)
are several and not joint. The failure of any Lender to make any Loan, to fund
any such participation or to make any payment under Section 11.04(c) on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loans, to purchase its participation
or to make its payment under Section 11.04(c).
(e)    Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
2.13    Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Loans made by it, then the Lender
receiving such greater proportion shall (a) notify the Administrative Agent of
such fact, and (b) purchase (for cash at face value) participations in the Loans
of the other Lenders, or make such other adjustments as shall be equitable, so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and other amounts owing them provided that:
(i)    if any such participations or subparticipations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
or subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and
(ii)    the provisions of this Section shall not be construed to apply to
(x) any payment made by the Borrowers pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrowers or any
Subsidiary of the Borrowers (as to which the provisions of this Section shall
apply).
The Borrowers consent to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrowers rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation.
2.14    Collateral and Guarantees; Joint and Several Liabilities.
(a)    Guarantees. Payment of the Loans and the other Obligations shall be
irrevocably and unconditionally guaranteed by each Guarantor, jointly and
severally with the other Guarantors as a primary obligor and not merely as a
surety (whether at the stated maturity, by prepayment, by acceleration or
otherwise) subject to the terms of the Guarantees.
(b)    Further Assurances. Each Credit Party covenants and agrees that it shall,
and shall cause each of its Subsidiaries party to the Security Documents to,
comply with all terms and conditions of each of the Security Documents and that
each Credit Party shall, and shall cause each of its Subsidiaries party to the
Security Documents to, at any time and from time to time at the request of the
Administrative Agent or the

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Required Lenders execute and deliver such instruments and documents and do such
acts and things as the Administrative Agent or the Required Lenders may
reasonably request in order to provide for or protect or perfect the Lien of the
Administrative Agent in the Collateral subject to the terms of the Security
Documents.
(c)    Joint and Several Liabilities. Each Borrower hereby irrevocably and
unconditionally agrees that it is jointly and severally liable for all of the
liabilities, covenants and Obligations whether now or hereafter existing or due
or to become due. The Obligations may be enforced by the Administrative Agent
and the Lenders against any Borrower or all Borrowers in any manner or order
selected by the Administrative Agent or the Required Lenders in their sole
discretion. Each Borrower hereby irrevocably waives (i) any rights of
subrogation and (ii) any rights of contribution, indemnity or reimbursement, in
each case, that it may acquire or that may arise against any other Borrower due
to any payment or performance made under this Agreement, in each case until all
Obligations shall have been fully satisfied. Without limiting the foregoing
provisions of this Section 2.14(c), each Borrower acknowledges and agrees that:
(i)    its obligations under this Agreement shall remain enforceable against it
even though such obligations may be unenforceable or not allowable against any
other Credit Party due to the existence of any proceeding under any Debtor
Relief Law involving any other Credit Party;
(ii)    its obligations under this Agreement are independent of the obligations
of any other Credit Party, and a separate action or actions may be brought and
prosecuted against it in respect of such obligations irrespective of whether any
action is brought against any other Credit Party or any other Credit Party is
joined in any such action or actions;
(iii)    it hereby irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to, any or all of the following:
(A)    any lack of validity or enforceability of this Agreement or any other
Loan Document or any agreement or instrument relating thereto in respect of any
other Credit Party;
(B)    any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of any other Credit Party under or in
respect of this Agreement or any other Loan Document, or any other amendment or
waiver of or any consent to departure from this Agreement, in respect of any
other Credit Party;
(C)    any change, restructuring or termination of the structure or existence of
any other Credit Party;
(D)    the failure of any other Person to execute or deliver any other agreement
or the release or reduction of liability of any other Person with respect to any
obligations of the Credit Parties under this Agreement; or
(E)    any other circumstance (including any statute of limitations but other
than the Obligations having been fully satisfied) or any existence of or
reliance on any representation by any other Person that might otherwise
constitute a defense available to, or a discharge of, any other Borrower;
(iv)    its obligations under this Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any such
obligations is rescinded or must otherwise be returned by any Person upon the
institution of any proceeding under any Debtor Relief Law of any other Credit
Party, all as though such payment had not been made; and

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(v)    it hereby unconditionally and irrevocably waives any right to revoke its
joint and several liability under the Loan Documents and acknowledges that such
liability is continuing in nature and applies to all Obligations, whether
existing now or in the future.
2.15    Defaulting Lenders.
(a)    Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:
(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders” and
Section 11.01.
(ii)    Defaulting Lender Waterfall. The Administrative Agent may, in its
discretion, receive and retain any amounts payable to a Defaulting Lender under
the Loan Documents, and a Defaulting Lender shall be deemed to have assigned to
the Administrative Agent such amounts until all Obligations owing to the
Administrative Agent, Non-Defaulting Lenders and other Secured Parties have been
paid in full. The Administrative Agent may apply such amounts to the Defaulting
Lender’s defaulted obligations or readvance the amounts to the Borrowers
hereunder.
(b)    Defaulting Lender Cure. If the Borrowers and the Administrative Agent
agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein, that Lender will, to the extent applicable, purchase at par that
portion of outstanding Loans of the other Lenders or take such other actions as
the Administrative Agent may determine to be necessary to cause the Loans to be
held on a pro rata basis by the Lenders in accordance with their Applicable
Percentages, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrowers while that Lender was
a Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.
2.16    Loan Account.
(a)    The Administrative Agent shall maintain in accordance with its usual and
customary practices an account or accounts (“Loan Account”) evidencing the
Indebtedness of the Borrowers resulting from each Loan. Any failure of the
Administrative Agent to record anything in the Loan Account, or any error in
doing so, shall not limit or otherwise affect the obligation of the Borrowers to
pay any amount owing hereunder.
(b)    Entries made in the Loan Account shall constitute presumptive evidence of
the information contained therein. If any information contained in the Loan
Account is provided to or inspected by any Person, then such information shall
be conclusive and binding on such Person for all purposes absent manifest error,
except to the extent such Person notifies the Administrative Agent in writing
within thirty (30) days after receipt or inspection that specific information is
subject to dispute.
(c)    Unless payment is otherwise timely made by the Borrowers, the becoming
due of any Obligations (whether principal, interest, fees or other charges)
shall be deemed to be a Borrowing request of Eurodollar Rate Loans on the due
date, in the amount of such Obligations. The proceeds of such Loans may be
disbursed as direct payment of the relevant Obligation. In addition, the
Administrative Agent is authorized to charge to the Loan balance on behalf of
the Borrowers and cause to be paid all fees, expenses, charges, costs and
interest and principal owing by the Borrowers under this Agreement or any of the
other Loan Documents. To the extent permitted by law, any charges so made shall
constitute part of the Loans hereunder.

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The Administrative Agent shall provide monthly statements to the Borrower
Representative showing any such charges.
2.17    Borrower Representative. Each Credit Party hereby designates AA USA as
its representative and agent on its behalf for the purposes of issuing Borrowing
Request Notices, giving instructions with respect to the disbursement of the
proceeds of the Loans, selecting interest rate options, delivering financial
statements and other financial information, delivering Compliance Certificates,
giving and receiving all other notices, communications and consents hereunder or
under any of the other Loan Documents, executing Loan Documents and taking all
other actions (including in respect of compliance with covenants) on behalf of
any Credit Party under the Loan Documents. The Borrower Representative hereby
accepts such appointment. The Administrative Agent and each Lender may regard
any notice or other communication pursuant to any Loan Document from the
Borrower Representative as a notice or communication from all Credit Parties,
and may give any notice or communication required or permitted to be given to
any Credit Party hereunder to the Borrower Representative on behalf of such
Credit Party or Credit Parties. Each Credit Party agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by the Borrower Representative shall be deemed for all purposes to
have been made by such Credit Party and shall be binding upon and enforceable
against such Credit Party to the same extent as if the same had been made
directly by such Credit Party.
2.18    Conversion of Loans to Exit Facility; Implementation.
(a)    Upon the consummation of an Approved Plan of Reorganization, subject to
the satisfaction or waiver of the conditions set forth in the Exit Term Sheet
and otherwise in accordance with the terms and conditions set forth in the Exit
Credit Agreement (as defined below), (i) the Borrowers shall continue or convert
the Loans into an exit term facility financing and (ii) each Lender hereby
agrees to provide, severally and not jointly, its Applicable Percentage of the
$30,000,000 Incremental Exit Loan, subject to the reduction of such commitment
as provided in the Exit Term Sheet (the “Exit Conversion”).
(b)    If the Borrowers exercise the Exit Conversion, then:
(i)    each Lender, severally and not jointly, hereby agrees to continue the
Loans hereunder outstanding on the date of consummation of an Approved Plan of
Reorganization as loans under, and subject entirely and exclusively to the terms
and provisions of, the definitive documentation to be agreed (including a credit
agreement governing the continuation and conversion of the Loans, the “Exit
Credit Agreement”) and related documentation to the extent that such
documentation is consistent with, and contains the terms set forth in, the Exit
Term Sheet and is in form and substance satisfactory to the Required Lenders;
(ii)    subject to Section 2.18(a) and clause (i) above, the Administrative
Agent, the Lenders and the Credit Parties agree that, upon the effectiveness of
the Exit Credit Agreement:
(A)    the Borrowers, in their capacity as reorganized Borrowers, and each
Guarantor, in its capacity as a reorganized Guarantor, shall assume all the
Obligations hereunder with respect to the Loans and all other obligations in
respect thereof in the manner set forth in the Exit Credit Agreement and related
loan documents;
(B)    the Loans hereunder shall be continued or converted, as the case may be,
as loans under the Exit Credit Agreement;
(C)    each Lender hereunder shall be a lender under the Exit Credit Agreement;
(D)    except as otherwise agreed between the Required Lenders and the
Borrowers, the Administrative Agent hereunder shall be the administrative agent
and collateral agent under the Exit Credit Agreement; and

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(E)    this Agreement shall terminate and be superseded and replaced by the Exit
Credit Agreement; and
(iii)     each Lender may assign all or a portion of its commitment to provide
its Applicable Percentage of the Incremental Exit Loan to any of its Affiliates.
(c)    If the Borrowers do not exercise the Exit Conversion:
(i)    the Borrowers shall prepay the Loans in full in accordance with Section
2.07; and
(ii)    ratably pay to the Lenders the Exit Fee on the amount of such
prepayment.
ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY
3.01    Taxes.
(a)    Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.
(i)    Any and all payments by or on account of any obligation of any Credit
Party under any Loan Document shall be made without deduction or withholding for
any Taxes, except as required by applicable Laws. If any applicable Laws (as
determined in the good faith discretion of the Administrative Agent or Credit
Party) require the deduction or withholding of any Tax from any such payment by
the Administrative Agent or a Credit Party, then the Administrative Agent or
such Credit Party shall be entitled to make such deduction or withholding, upon
the basis of the information and documentation to be delivered pursuant to
subsection (e) below.
(ii)    If any Credit Party or the Administrative Agent shall be required by the
Code to withhold or deduct any Taxes, including both United States Federal
backup withholding and withholding taxes, from any payment, then (A) the
Administrative Agent or Credit Party shall withhold or make such deductions as
are determined by the Administrative Agent or Credit Party to be required taking
into account the information and documentation it has received pursuant to
subsection (e) below, (B) the Administrative Agent or Credit Party, to the
extent required by the Code, shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with the Code, and
(C) to the extent that the withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the applicable Credit Party shall be
increased as necessary so that after any required withholding or the making of
all required deductions (including deductions applicable to additional sums
payable under this Section 3.01) the applicable Recipient receives an amount
equal to the sum it would have received had no such withholding or deduction
been made.
(iii)    If any Credit Party or the Administrative Agent shall be required by
any applicable Laws other than the Code to withhold or deduct any Taxes from any
payment, then (A) such Credit Party or the Administrative Agent, as required by
such Laws, shall withhold or make such deductions as are determined by it to be
required taking into account the information and documentation it has received
pursuant to subsection (e) below, (B) such Credit Party or the Administrative
Agent, to the extent required by such Laws, shall timely pay the full amount
withheld or deducted to the relevant Governmental Authority in accordance with
such Laws, and (C) to the extent that the withholding or deduction is made on
account of Indemnified Taxes, the sum payable by the applicable Credit Party
shall be increased as necessary so that after any required withholding or the
making of all required deductions (including deductions applicable to additional
sums payable under this Section 3.01) the applicable Recipient receives an
amount equal to the sum it would have received had no such withholding or
deduction been made.

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(b)    Payment of Other Taxes by the Credit Parties. Without limiting the
provisions of subsection (a) above, the Credit Parties shall timely pay to the
relevant Governmental Authority in accordance with applicable law (without
duplication of the provisions of subsection (a) above), or at the option of the
Administrative Agent timely reimburse the Administrative Agent for the payment
of, any Other Taxes.
(c)    Tax Indemnifications.
(i)    Without duplicating the provisions of subsection (a) above, each of the
Credit Parties shall, and does hereby, jointly and severally indemnify each
Recipient, and shall make payment in respect thereof within 10 days after demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section 3.01) payable or paid by such Recipient or required to be withheld or
deducted from a payment to such Recipient, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount (and describing
the basis) of such payment or liability delivered to the Borrowers by a Lender
(with a copy to the Administrative Agent), or by the Administrative Agent on its
own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(ii)    Each Lender does hereby, severally indemnify, and shall make payment in
respect thereof within 10 days after demand therefor, (x) the Administrative
Agent against any Indemnified Taxes attributable to such Lender (but only to the
extent that any Credit Party has not already indemnified the Administrative
Agent for such Indemnified Taxes and without limiting the obligation of the
Credit Parties to do so), (y) the Administrative Agent and the Credit Parties,
as applicable, against any Taxes attributable to such Lender’s failure to comply
with the provisions of Section 11.06(d) relating to the maintenance of a
Participant Register and (z) the Administrative Agent against any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the
Administrative Agent in connection with any Loan Document, and any reasonable
expenses arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to any Lender by the Administrative Agent or Credit Party shall be conclusive
absent manifest error. Each Lender hereby authorizes the Administrative Agent
and the Credit Parties to set off and apply any and all amounts at any time
owing to such Lender under this Agreement or any other Loan Document against any
amount due to the Administrative Agent and the Credit Parties under this
clause (ii).
(d)    Evidence of Payments. Upon request by the Borrowers or the Administrative
Agent, as the case may be, after any payment of Taxes by the Borrowers or by the
Administrative Agent or Recipient to a Governmental Authority as provided in
this Section 3.01, the Borrowers shall deliver to the Administrative Agent or
the Administrative Agent or Recipient shall deliver to the Borrowers, as the
case may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
Laws to report such payment or other evidence of such payment reasonably
satisfactory to the Borrowers or the Administrative Agent, as the case may be.
(e)    Status of Lenders; Tax Documentation.
(i)    Any Lender and Recipient that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrowers and the Administrative Agent, at the
time or times prescribed by applicable Laws and at the time or times reasonably
requested by the Borrowers or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable Laws or reasonably requested
by the Borrowers or the Administrative Agent as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Lender and Recipient, if reasonably requested by the Borrowers or the
Administrative Agent, shall deliver such other documentation

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prescribed by applicable law or reasonably requested by the Borrowers or the
Administrative Agent as will enable the Borrowers or the Administrative Agent to
determine whether or not such Lender or Recipient is subject to any withholding
(including backup withholding) or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 3.01(e)(ii)(A), (ii)(B), (ii)(D) and
(ii)(E) below) shall not be required if in the Lender’s or Recipient’s
reasonable judgment, as a result of a Change in Law, such completion, execution
or submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Lender or Recipient.
(ii)    Without limiting the generality of the foregoing, in the event that any
Borrower is a U.S. Person,
(A)    any Lender that is a U.S. Person shall deliver to the Borrowers and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrowers or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from
U.S. federal backup withholding tax (or any substantively comparable subsequent
versions thereof or successors thereto);
(B)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrowers and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrowers or the Administrative
Agent), whichever of the following is applicable:
(I)    in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS
Form W-8BEN-E (or any substantively comparable subsequent versions thereof or
successors thereto) establishing an exemption from, or reduction of,
U.S. federal withholding Tax pursuant to the “interest” article of such tax
treaty and (y) with respect to any other applicable payments under any Loan
Document, IRS Form W-8BEN or IRS Form W-8BEN-E (or any substantively comparable
subsequent versions thereof or successors thereto) establishing an exemption
from, or reduction of, U.S. federal withholding Tax pursuant to the “business
profits” or “other income” article of such tax treaty;
(II)    executed originals of IRS Form W-8ECI (or any substantively comparable
subsequent versions thereof or successors thereto);
(III)    in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 871(h) or 881(c) of the Code with respect
to payments of “portfolio interest” a statement substantially in the form of
Exhibit G-1(a “U.S. Tax Compliance Certificate”), as applicable, and duly
executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E (or any substantively
comparable subsequent versions thereof or successors thereto); or
(IV)    to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY (or any substantively comparable subsequent
versions thereof or successors thereto), accompanied by IRS Form W-8ECI, IRS
Form W-8BEN or IRS Form W-8BEN-E (or any substantively comparable subsequent
versions thereof or successors thereto), a U.S. Tax Compliance Certificate
substantially in the form of Exhibit G-2 or

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Exhibit G-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on
behalf of each such direct and indirect partner;
(C)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrowers and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrowers or the Administrative
Agent), executed originals of any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrowers or the Administrative Agent
to determine the withholding or deduction required to be made; and
(D)    the Administrative Agent shall deliver to the Borrowers on or prior to
the date on which the Administrative Agent becomes the Administrative Agent
under this Agreement (and from time to time thereafter upon the request of the
Borrowers) two copies of IRS Form W-9 (or any substantively comparable
subsequent versions thereof or successors thereto) certifying that the
Administrative Agent is exempt from United States federal backup withholding tax
and such other documentation as will enable the Borrowers to determine whether
or not the Administrative Agent is subject to United States federal backup
withholding tax or information reporting requirements.
(E)    If a payment made to a Lender or other Recipient under any Loan Document
would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
or other Recipient were to fail to comply with the applicable reporting
requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code, as applicable), such Lender or other Recipient shall deliver to the
Borrowers and the Administrative Agent at the time or times prescribed by law
and at such time or times reasonably requested by the Borrowers or the
Administrative Agent such documentation prescribed by applicable law (including
as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrowers or the Administrative Agent
as may be necessary for the Borrowers and the Administrative Agent to comply
with their obligations under FATCA and to determine that such Lender or other
Recipient has complied with such Lender’s or such Recipient’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.
Solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.
(iii)    Each Lender and other Recipient agrees that if any form or
certification it previously delivered pursuant to this Section 3.01 expires or
becomes obsolete or inaccurate in any respect, it shall update such form or
certification or promptly notify the Borrowers and the Administrative Agent in
writing of its legal inability to do so.
(f)    Treatment of Certain Refunds. Unless required by applicable Laws, at no
time shall the Administrative Agent have any obligation to file for or otherwise
pursue on behalf of a Lender, or have any obligation to pay to any Lender, any
refund of Taxes withheld or deducted from funds paid for the account of such
Lender, as the case may be. If any Recipient determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which
it has been indemnified by any Credit Party or with respect to which any Credit
Party has paid additional amounts pursuant to this Section 3.01, it shall pay to
the Credit Party an amount equal to such refund (but only to the extent of
indemnity payments made, or additional

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amounts paid, by a Credit Party under this Section 3.01 with respect to the
Taxes giving rise to such refund), net of all out-of-pocket expenses (including
Taxes) incurred by such Recipient in connection with such refund, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Credit Party, upon the request
of the Recipient, agrees to repay the amount paid over to the Credit Party (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Recipient in the event the Recipient is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this subsection, in no event will the applicable Recipient be required to pay
any amount to the Credit Party pursuant to this subsection the payment of which
would place the Recipient in a less favorable net after-Tax position than such
Recipient would have been in if the indemnification payments or additional
amounts giving rise to such refund had never been paid. This subsection shall
not be construed to require any Recipient to make available its tax returns (or
any other information relating to its taxes that it deems confidential) to any
Credit Party or any other Person.
(g)    Survival. Each party’s obligations under this Section 3.01 shall survive
the resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all other Obligations.
3.02    Illegality. If any Lender determines that any Law has made it unlawful,
or that any Governmental Authority has asserted that it is unlawful, for any
Lender or its applicable Lending Office to make, maintain or fund Loans, or to
determine or charge interest rates, in each case, based upon the Eurodollar
Rate, or any Governmental Authority has imposed material restrictions on the
authority of such Lender to purchase or sell, or to take deposits of, Dollars in
the London interbank market, then, on notice thereof by such Lender to the
Borrowers through the Administrative Agent, (i) any obligation of such Lender to
make Loans by reference to the Eurodollar Rate or to continue Eurodollar Rate
Loans shall be suspended, and (ii) if such notice asserts the illegality of such
Lender making or maintaining Base Rate Loans the interest rate on which is
determined by reference to the Eurodollar Rate component of the Base Rate, the
interest rate on which Base Rate Loans of such Lender shall, if necessary to
avoid such illegality, be determined by the Administrative Agent without
reference to the Eurodollar Rate component of the Base Rate, in each case, until
such Lender notifies the Administrative Agent and the Borrower Representative
that the circumstances giving rise to such determination no longer exist. Until
such circumstances giving rise to the determination no longer exist, as set
forth in a written notice provided by such Lender to the Administrative Agent
and the Borrower Representative, all outstanding Loans of such Lender and Loans
thereafter made by such Lender shall bear interest at the Base Rate (determined
by the Administrative Agent without reference to the Eurodollar Rate component
of the Base Rate if necessary to avoid such illegality) plus the Applicable Rate
(or at the Default Rate if an Event of Default has occurred that is continuing)
in the amount specified therein.
3.03    Inability to Determine Rates. If the Required Lenders determine that for
any reason in connection with any request for a Loan or continuation thereof
that (a) Dollar deposits are not being offered to banks in the London interbank
eurodollar market for the applicable amount and/or Interest Period, (b) adequate
and reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period or (c) the Eurodollar Rate with respect to a proposed
Loan does not adequately and fairly reflect the cost to such Lenders of funding
such Loan, the Administrative Agent will promptly so notify the Borrowers and
each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain
Loans at an interest rate based on the Eurodollar Rate shall be suspended and
(y) in the event of a determination described in the preceding sentence with
respect to the Eurodollar Rate component of the Base Rate, the utilization of
the Eurodollar Rate component of the Base Rate shall be suspended, in each case,
until the Administrative Agent (upon the instruction of the Required Lenders)
revokes such notice and during such time, all such outstanding Loans shall bear
interest at the Base Rate (determined by the Administrative Agent without
reference to the Eurodollar Rate component of the Base Rate if necessary
pursuant to clause (y) above) plus the Applicable Rate (or at the Default Rate
if an Event of Default has occurred that is continuing). Upon receipt of such
notice, the Borrowers may revoke any pending request for a Borrowing of or
continuation of Eurodollar Rate Loans (to the extent of the affected Eurodollar
Rate Loans or Interest Periods).
3.04    Increased Costs.
(a)    Increased Costs Generally. If any Change in Law shall:

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(i)    impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender;
(ii)    subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal,
commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto; or
(iii)    impose on any Lender or the London interbank market any other condition
(other than any condition related to Taxes), cost or expense affecting this
Agreement or Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender, by an amount that such Lender deems to be material, of making,
continuing or maintaining any Loan (or of maintaining its obligation to make any
such Loan), or to increase the cost to such Lender, by an amount that such
Lender, as the case may be, deems to be material, of participating in, or to
reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or any other amount) then, upon request of such
Lender, the Borrowers will pay to such Lender such additional amount or amounts
as will compensate such Lender for such additional costs incurred or reduction
suffered.
Notwithstanding the foregoing, no Lender shall claim any amounts pursuant to
Section 3.04(a)(ii) unless such Lender provides the Borrower Representative with
a statement that it is generally seeking compensation with respect to such Taxes
from similarly situated borrowers.
(b)    Capital Requirements. If any Lender determines that any Change in Law
affecting such Lender or any Lending Office of such Lender or such Lender’s, if
any, regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement, the
Commitments of such Lender or the Loans made by such Lender, to a level below
that which such Lender or such Lender’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy), by
an amount that such Lender deems to be material, then from time to time the
Borrowers will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender’s holding company for any such reduction
suffered.
(c)    Certificates for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in subsection (a) or (b) of this
Section and delivered to the Borrowers shall be conclusive absent manifest
error. The Borrowers shall pay such Lender the amount shown as due on any such
certificate within ten (10) days after receipt thereof.
(d)    Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender’s right to demand such compensation, provided
that the Borrowers shall not be required to compensate a Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than six months prior to the date that such Lender
notifies the Borrowers of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the six-month period referred to above shall be
extended to include the period of retroactive effect thereof).
3.05    Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrowers shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of (a) any continuation, payment or prepayment of any
Eurodollar Rate Loan on a day other than the last day of the Interest Period for
such Loan (whether voluntary, mandatory, automatic,

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by reason of acceleration or otherwise), (b) any failure by any Borrower (for a
reason other than the failure of such Lender to make a Loan) to prepay, borrow
or continue any Eurodollar Rate Loan on the date or in the amount notified by
the Borrower Representative or (c) any assignment of a Eurodollar Rate Loan on a
day other than the last day of the Interest Period therefor as a result of a
request by the Borrowers pursuant to Section 11.13, excluding any loss of
anticipated profits but including any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained
(all of such losses, costs or expenses, together with any administrative fees
referred to in the following sentence, are referred to herein collectively as
the “Breakage Costs”). The Borrowers shall also pay any customary administrative
fees charged by such Lender in connection with the foregoing. The Lenders shall
not be required to purchase Dollar deposits in any interbank or offshore Dollar
market to fund any Eurodollar Rate Loan.
3.06    Mitigation Obligations; Replacement of Lenders.
(a)    Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or requires any Borrower to pay any Indemnified
Taxes or additional amounts to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.01, or if any Lender gives a notice
pursuant to Section 3.02, then at the request of the Borrower Representative
such Lender shall, as applicable, use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02. as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender (it being understood that the Borrowers shall be
given a reasonable opportunity to reimburse such costs or expenses). The
Borrowers hereby agree to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b)    Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrowers are required to pay any Indemnified Taxes or
additional amounts to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.01 and, in each case, such Lender has
declined or is unable to designate a different lending office in accordance with
Section 3.06(a), the Borrowers may replace such Lender in accordance with
Section 11.13.
3.07    Survival. All of the Borrowers’ obligations under this Article III shall
survive termination of the DIP Facility and repayment of all other Obligations
hereunder.
ARTICLE IV

CONDITIONS PRECEDENT
4.01    Conditions to Effectiveness of the Commitments. Each Lender’s Commitment
shall become binding and enforceable on such Lender immediately and
automatically upon its execution and delivery of a signed counterpart of this
Agreement to the Borrowers.
4.02    Conditions to Closing Date and Initial Credit Extension. The obligations
of the Lenders to make any Loans hereunder shall not become effective unless and
until the date that each of the following conditions precedent is satisfied (or
waived in accordance with Section 11.01), which date shall be not later than the
first Business Day after the Interim Order Entry Date. Each of the following
conditions shall be satisfactory to the Administrative Agent (and/or, to the
extent specified below, to each Lender or the Required Lenders) in form and
substance:
(a)     The Chapter 11 Cases shall have been commenced in the Bankruptcy Court
and all of the “first day orders” and all related pleadings to be filed at the
time of commencement of the Chapter 11 Cases or shortly thereafter shall be in
form and substance reasonably satisfactory to the Required Lenders.

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(b)     The Interim Order shall have been entered by the Bankruptcy Court by not
later than the date occurring five (5) Business Days after the date hereof and
the Administrative Agent shall have received a true and complete copy of such
order, and such order shall and shall be in form and substance satisfactory to
the Required Lenders (and with respect to any provisions that affect the rights
or duties of the Administrative Agent, the Administrative Agent) in their sole
discretion, be in full force and effect, and shall not have been reversed,
modified, amended, stayed or vacated absent prior written consent of the
Required Lenders (and with respect to any provisions that affect the rights or
duties of the Administrative Agent, the Administrative Agent).
(c)     All orders entered by the Bankruptcy Court pertaining to cash management
(such orders, together, the “Cash Management Orders”) and all other motions and
documents filed or to be filed with, and submitted to, the Bankruptcy Court in
connection therewith, shall be in form and substance satisfactory to the
Required Lenders (and with respect to any provisions that affect the rights or
duties of the Administrative Agent, the Administrative Agent) in their sole
discretion.
(d)     No trustee, examiner or receiver shall have been appointed or designated
with respect to the Credit Parties’ business, properties or assets and the
Bankruptcy Court shall not have entered any order granting any party, other than
the Credit Parties, control over any Collateral (other than a de minimis portion
of the Collateral).
(e)     The Prepetition Senior Notes Trustee, the Prepetition Senior Notes
Lenders, the Prepetition ABL Agent and the Prepetition ABL Lenders shall have
each either consented to the use of collateral or received adequate protection
(if applicable) in respect of the liens securing their respective obligations
pursuant to the Interim Order.
(f)     The Administrative Agent shall have received UCC, tax and judgment lien
searches and other appropriate evidence in form and substance reasonably
satisfactory to the Required Lenders evidencing the absence of any other liens
or mortgages on the Collateral, except the liens securing the Prepetition
Facilities, liens permitted under the Prepetition ABL Facility and other
existing liens acceptable to the Required Lenders in their sole discretion.
(g)     The Interim Order and the Security Documents shall be effective to
create in favor of the Administrative Agent a legal, valid and enforceable first
priority (subject to Permitted Prior Liens and the Carve-Out) security interest
in and Lien upon the Collateral and the Administrative Agent, for its benefit
and the benefit of each Lender, shall have been granted a perfected lien on the
Collateral by the Interim Order on the terms and conditions set forth herein and
the other Loan Documents.
(h)     The Administrative Agent shall have received appropriate UCC-1 financing
statements for filing under the UCC of each jurisdiction of organization of each
Credit Party.
(i)    The Administrative Agent and Lenders shall have received (i) the initial
4-week cash flow budget for Holdings and its Subsidiaries, attached as Exhibit F
hereto, setting forth, on a weekly and a line item basis, projected cash
receipts and projected disbursements (including ordinary course operating
expenses, initiatives, realization of trade terms, bankruptcy-related expenses
under the Chapter 11 Cases, capital expenditures, asset sales, including the
fees relating thereto, and estimated fees and expenses of legal counsel and
financial advisor), in each case for each week from the first day of the week in
which the Closing Date occurs through the last day of the week that is 4 weeks
thereafter, to be attached to the Interim Order which shall be in form and
substance satisfactory to the Required Lenders (the “Initial Approved Budget”),
provided that the Required Lenders hereby acknowledge and agree that the Initial
Approved Budget attached hereto as Exhibit F is in form and substance
satisfactory to the Required Lenders, (ii) a 13-week cash flow projection for
Holdings and its Subsidiaries, which shall be in form and substance satisfactory
to the Required Lenders, and (iii) a 6-month cash flow projection for Holdings
and its Subsidiaries, which shall be in form and substance satisfactory to the
Required Lenders.

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(j)     The Administrative Agent’s receipt of the following, each of which shall
be originals or facsimile or other electronic image transmission (e.g. “PDF” or
“TIF” via electronic mail), unless otherwise specified, each properly executed
by a member of the Senior Management of the signing Credit Party, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance reasonably
satisfactory to the Lenders:
(i)    executed counterparts of this Agreement and the applicable executed
Borrowing Request Notice;
(ii)    an officer’s certificate of each Credit Party executing a Loan Document,
(A) certifying and attaching true, correct and complete copies of: (1) the
certificate or articles of incorporation (or such equivalent thereof) of such
Credit Party, certified as of a recent date from the Secretary of State (or
applicable Governmental Authority) of the state in which such Credit Party is
incorporated or formed, (2) the by-laws, limited liability company agreement,
partnership agreement or other applicable Governing Document of such Credit
Party, and (3) the resolutions or votes of the board of directors or board of
managers (or equivalent thereof) of such Credit Party, authorizing such Credit
Party’s entry into the Loan Documents to which it is a party; and (B) certifying
the incumbency of members of the Senior Management of such Credit Party
authorized to act in connection with this Agreement and the other Loan Documents
to which such Credit Party is a party and providing a specimen signature of such
members of the Senior Management of such Credit Party who will be signing Loan
Documents on the Closing Date and thereafter;
(iii)    such documents and certifications as the Administrative Agent and the
Required Lenders may require to evidence that each Credit Party executing a Loan
Document is validly existing, in good standing and qualified to engage in
business (A) in its jurisdiction of incorporation or formation, as applicable,
and (B) in each other jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification (other
than any jurisdiction to the extent the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect) (and in any event
excluding any jurisdiction to the extent the Credit Parties ownership, lease or
operation of properties or the conduct of business consists solely of the
operation of retail stores numbering four or fewer) in such jurisdiction; and
(iv)    a certificate of a member of the Senior Management of the Borrower
Representative certifying that (A) the conditions specified in this Section
4.02 have been satisfied and (B) upon entry of the Interim Order, all consents,
licenses and approvals required in connection with the execution, delivery and
performance by each Credit Party and the validity against each Credit Party of
the Loan Documents to which such Credit Party is a party have been obtained, and
that such consents, licenses and approvals shall be in full force and effect
(including, without limitation, consents, approvals and/or amendments necessary
under any document or instrument evidencing any Indebtedness of any Credit
Party).
(k)    The Administrative Agent shall have received either a duly executed
direction letter to Capital One, signed by each of the applicable parties
thereto, in form and substance satisfactory to the Required Lenders, directing
Capital One to transfer funds in the Main Concentration Accounts specified in
the Capital One Control Agreement to the DIP Funding Account, or (ii) an
amendment to the Capital One Control Agreement, signed by each of the applicable
parties thereto in form and substance satisfactory to the Required Lenders with
respect to the matters described in clause (i) of this Section 4.02(k) (such
direction letter or amendment, the “Capital One Direction”).
(l)    The Administrative Agent shall have received copies of policies and
certificates of insurance and endorsements from an independent insurance broker
naming the Administrative Agent as additional insured or lender’s loss payee
thereunder, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of this Agreement and the

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other Loan Documents, which shall be in amounts, types and terms and conditions
reasonably satisfactory to the Required Lenders.
(m)    The Administrative Agent shall have received an executed guarantee
agreement (or agreements, as the case may be) that is substantially similar to
the Guarantees.
(n)    The Administrative Agent shall have received all Intercompany Notes,
together with allonges (executed in blank) with respect to each such
Intercompany Note, each duly executed and a signed original and in form and
substance reasonably satisfactory to the Required Lenders, together with a
Subordination Agreement with respect to the Intercompany Note among the Credit
Parties, as payors, and the Credit Parties, as payees.
(o)    The Administrative Agent shall have received a funds flow memorandum with
respect to the transactions contemplated hereby on the Closing Date in form,
scope and substance reasonably satisfactory to the Lenders.
(p)    Any fees required to be paid under the Loan Documents on or before the
Closing Date shall have been paid.
(q)    The Administrative Agent shall have received such other assurances,
certificates, documents, consents or opinions as the Administrative Agent or
Required Lenders reasonably may require.
Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.02,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or reasonably acceptable
or satisfactory to such Person unless the Administrative Agent shall have
received notice from such Person prior to the proposed Closing Date specifying
its objection thereto.
4.03    Conditions to each Credit Extension and each Withdrawal Date. The
obligation of the Lenders to make the Loans hereunder (including the Interim
Loans), and the Borrower’s right to make a Withdrawal on each Withdrawal Date
are subject to the satisfaction of the following conditions or the waiver of
such conditions in accordance with Section 11.01:
(a)     Solely with respect to any Borrowing on the Final Loan Date or any
Withdrawal from and after the Final Loan Date, the Final Order shall have been
entered by the Bankruptcy Court not later than 45 days following the Interim
Order Entry Date and the Administrative Agent shall have received a true and
complete copy of such order, and such order shall and shall be in form and
substance satisfactory to the Required Lenders (and with respect to any
provisions that affect the rights or duties of the Administrative Agent, the
Administrative Agent) in their sole discretion, be in full force and effect, and
shall not have been reversed, modified, amended, stayed or vacated absent prior
written consent of the Required Lenders (and with respect to any provisions that
affect the rights or duties of the Administrative Agent, the Administrative
Agent).
(b)    The representations and warranties of the Borrowers and each other Credit
Party contained in Article V or any other Loan Document, or which are contained
in any document furnished at any time under or in connection herewith or
therewith, shall be true and correct in all material respects (but without any
duplication of any materiality qualifications) on and as of the date of such
Credit Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects (but without any duplication of any materiality
qualifications) as of such earlier date, and except that for purposes of this
Section 4.03, the representations and warranties contained in Section 5.02 shall
be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b) respectively, of Section 6.04.

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(c)     The Interim Order or the Final Order, as applicable, shall be in full
force and effect, and shall not (in whole or in part) have been reversed,
modified, amended, stayed, vacated, or subject to a stay pending appeal.
(d)    No Default or Event of Default shall exist, or would result from such
proposed Borrowing or Withdrawal or from the application of the proceeds
thereof.
(e)    The Credit Parties shall be in compliance in all material respects with
the Interim Order or the Final Order, as applicable.
(f)    The Credit Parties shall be in compliance in all material respects with
the Cash Management Order.
(g)    The Administrative Agent and Lenders shall have received all periodic
updates to the Approved Budget required pursuant to Section 6.04(n), in form and
substance satisfactory to the Required Lenders, and the Borrowers shall be in
compliance with the Approved Budget.
(h)    Except as disclosed to the Administrative Agent, since the Petition Date,
no event, circumstance or change shall have occurred that has caused, be
reasonably expected to cause, or evidences, either in any case or in the
aggregate, to have a Material Adverse Effect.
(i)    The Borrowers shall have paid all fees, charges and disbursements of
counsel to the Administrative Agent, the Committee of Lead Lenders, Standard
General and the Lenders to the extent invoiced prior to such Withdrawal Date or
the date of such Borrowing.
(j)    The Borrowers shall have delivered a Notice of Withdrawal or a Notice of
Borrowing, as applicable.
(k)     Except for actions, suits, proceedings, investigations, claims or
disputes (i) stayed by 11 U.S.C. § 362, (ii) set forth on Schedule 5.07 or (iii)
involving directors or officers (including, without limitation, any member of
Senior Management) of any Credit Party or Subsidiary thereof, there shall be no
actions, suits, proceedings, investigations, claims or disputes pending or, to
the knowledge of the Credit Parties, threatened in writing, at law, in equity,
in arbitration or before any Governmental Authority, by or against the Credit
Parties or any of its Domestic Subsidiaries or against any of their properties
or revenues that (a) purport to affect or pertain to this Agreement or any other
Loan Document or (b) could reasonably be expected to result in a Material
Adverse Effect.
Each Notice of Borrowing or Notice of Withdrawal submitted by the Borrower
Representative shall be deemed to be a representation and warranty that the
conditions specified herein have been satisfied on and as of the date of the
applicable Borrowing or Withdrawal.
ARTICLE V

REPRESENTATIONS AND WARRANTIES
Each Credit Party signatory hereto represents and warrants to the Lenders and
the Administrative Agent for itself and on behalf of its Subsidiaries as
follows:
5.01    Corporate Authority, Etc.
(a)    Existence, Qualification and Power. Except as previously disclosed to the
Administrative Agent and the Lenders with respect to clause (iii) hereof, each
Credit Party and each Domestic Subsidiary thereof (i) is duly organized or
formed, validly existing and, as applicable, in good standing under the Laws of
the jurisdiction of its incorporation or organization, (ii) subject to the entry
and the terms of the Chapter 11

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Orders in the case of the Credit Parties, has all requisite power and authority
and all requisite governmental licenses, authorizations, consents and approvals
to (A) own or lease its assets and carry on its business and (B) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and (iii) is duly qualified and is licensed and, as applicable, in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i) or of
this Section 5.01, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(b)    Authorization; No Contravention. The execution, delivery and performance
by each Credit Party of each Loan Document to which such Person is party,
subject to the entry and terms of the DIP Order, have been duly authorized by
all necessary corporate or other organizational action, and do not and will not
(i) contravene the terms of any of such Person’s Governing Documents;
(ii) conflict with or result in any breach or contravention of, or the creation
of any Lien under, or require any payment to be made under (A) any Contractual
Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (B) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; or (iii) violate any Law;
except in each case referred to in clause (ii) or (iii) of this Section 5.01(b)
to the extent that such conflict, breach, contravention, creation, payment or
violation could not reasonably be expected to have a Material Adverse Effect
(c)    Governmental Authorization; Other Consents. Subject to the entry of the
DIP Order, each Credit Party and Subsidiary has, is in compliance with, and is
in good standing, with respect to all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and required reports
to, all Governmental Authorities necessary to conduct its business and to own,
lease and operate its properties except as could not reasonably be expected to
have a Material Adverse Effect. Except where noncompliance could not reasonably
be expected to have a Material Adverse Effect, all necessary import, export or
other licenses, permits or certificates for the import or handling of any goods
or other Collateral have been procured and are in effect, and the Credit Parties
and their Subsidiaries have complied with all foreign and domestic laws with
respect to the shipment and importation of any goods or Collateral, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect. Subject to the entry of the DIP Order, no approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (i) the execution, delivery or performance by, or enforcement
against, any Credit Party of this Agreement or any other Loan Document or
(ii) the grant by any Credit Party of the Liens created under the Security
Documents and the perfection thereof (including the first priority nature
thereof subject in priority only to Permitted Prior Liens and the Carve-Out),
except for approvals, consents, exemptions, authorizations, actions, notice and
filing which have been duly obtained, taken, given or made and are in full force
and effect and the filing of UCC financing statements.
(d)    Binding Effect. Subject to the entry of the Chapter 11 Orders, this
Agreement has been, and each other Loan Document, when delivered hereunder, will
have been, duly executed and delivered by each Credit Party that is party
thereto. Subject to the entry of the DIP Order, this Agreement constitutes, and
each other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Credit Party, enforceable against each Credit Party
that is party thereto in accordance with its terms, subject to applicable Debtor
Relief Laws and general principles of equity relating to enforceability (whether
considered in a proceeding at law or in equity) but such principles do not make
the remedies afforded by the Loan Documents inadequate for the practical
realization of the principal benefits intended to be provided thereby.
5.02    Financial Statements; Projections.
(a)    There has been furnished to the Lenders a consolidated and consolidating
balance sheet of the Holdings and its Subsidiaries as of the date of the Audited
Financial Statements, and a consolidated and consolidating statements of income
or operations, cash flows and shareholders’ equity of Holdings and its
Subsidiaries for the Fiscal Year then ended, and in the case of the consolidated
financial statements, certified by Marcum LLP. Such financial statements have
been prepared in accordance with GAAP and fairly present

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the financial condition of Holdings and its Subsidiaries as at the close of
business on the date thereof and the results of operations for the Fiscal Year
then ended. There are no contingent liabilities of Holdings or any Subsidiary as
of such date involving material amounts, known to the officers of Holdings or
any Subsidiary, required to be disclosed in such balance sheet and the notes
related thereto in accordance with GAAP, which were not disclosed in such
balance sheet and the notes related thereto.
(b)    There has been furnished to the Lenders an unaudited consolidated and
consolidating balance sheet of Holdings and its Subsidiaries as of the close of
the Fiscal Month ending August 31, 2015 and unaudited consolidated and
consolidating statements of income or operations and cash flow of Holdings and
its Subsidiaries as of the close of such Fiscal Month, in each case, certified
by a Financial Officer of Holdings. Such balance sheet and statement of income
or operations and cash flows have been prepared in accordance with GAAP and
fairly present the financial condition of Holdings and its Subsidiaries as at
the close of business on the date thereof and the results of operations subject
to year-end and quarterly adjustments and the absence of footnotes. There are no
contingent liabilities of Holdings or any Subsidiary as of such date involving
material amounts, known to the officers of Holdings or any Subsidiary required
to be disclosed in such balance sheet and the notes related thereto in
accordance with GAAP which were not disclosed in such balance sheet and the
notes related thereto.
(c)    There has also been furnished to the Lenders willing to receive such
information a 13-week cash flow forecast for the such period commencing on the
Closing Date. To the knowledge of the Credit Parties, as of the Closing Date, no
facts exist that (individually or in the aggregate) would reasonably be expected
to result in any material change in any of such projections (taken as a whole).
Such projections have been prepared on a pro forma basis after giving effect to
the transactions contemplated hereby. As of the Closing Date, such projections
referenced in clause (c) are based upon reasonable estimates and assumptions and
reflect the reasonable estimates of the Credit Parties of the results of
operations and other information projected therein (it being understood that
such projections are not a guarantee of future performance and that future
performance is subject to material contingencies, many of which are beyond the
control of the Credit Parties).
5.03    [Intentionally Omitted].
5.04    No Material Adverse Change. Since December 31, 2014, there has occurred
no Material Adverse Effect.
5.05    Ownership of Property; Liens. Other than as a result of the Chapter 11
Cases, each of the Credit Parties and each Subsidiary has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business and good
title to all of its personal property, in each case, except for such defects in
title as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The property of the Credit Parties and their
Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.03.
5.06    Franchises, Patents, Copyrights, etc. Each Credit Party possesses all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of its business
without known material conflict with any rights of others. The Perfection
Certificate delivered on the Closing Date sets forth a true, correct and
complete list of all patents, patent applications, federally registered
copyrights and copyright applications, trademarks and trademark applications
owned by any Credit Party as of the Closing Date.
5.07    Litigation. Except for actions, suits, proceedings, investigations,
claims or disputes (i) stayed by 11 U.S.C. § 362, (ii) set forth in Schedule
5.07, or (iii) involving directors or officers (including, without limitation,
any member of Senior Management) of any Credit Party or Subsidiary thereof,
there are no actions, suits, proceedings, investigations, claims or disputes
pending or, to the knowledge of the Credit Parties or any of its Domestic
Subsidiaries, threatened in writing, at law, in equity, in arbitration or before
any Governmental Authority, by or against the Credit Parties, any of their
Domestic Subsidiaries or against any of their properties or revenues that
(a) purport to affect or

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pertain to this Agreement or any other Loan Document, or (b) could reasonably be
expected to result in a Material Adverse Effect.
5.08    No Default. No Default or Event of Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.
5.09    Compliance with Laws. Each Credit Party and each Subsidiary thereof is
in compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. No material inventory has been produced in violation of the Fair Labor
Standards Act of 1938.
5.10    Tax Status. The Credit Parties (i) have filed or caused to be filed all
material federal, material provincial and all material state, and material
foreign income and all other material tax returns, reports and declarations
required by any jurisdiction to which any of them is subject and (ii) subject to
the approval of the Bankruptcy Court and the Approved Budget, have paid all
material Taxes (including withholdings) required to have been paid including in
their capacity as tax withholding agents, except (a) those being contested in
good faith and by appropriate proceedings and for which the Credit Parties have
set aside on their books reasonably adequate provisions therefor in accordance
with GAAP (unless foreclosure or other similar enforcement action has been
commenced in respect thereof or any Lien has been filed or otherwise perfected
therefor, in which case such exception does not apply) or (b) those that have
been excused or prohibited from being paid pursuant to an order of the
Bankruptcy Court or pursuant to the Bankruptcy Code. Proper and accurate amounts
have been withheld by each Credit Party from its respective employees for all
periods in material compliance with all material applicable, federal, state,
local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities.
5.11    Insurance. The properties of the Credit Parties are insured with
financially sound and reputable insurance companies that are not Affiliates of
the Borrowers, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Credit Parties operate.
5.12    Holding Company and Investment Company Acts. None of any Credit Party,
any Person Controlling any Credit Party, or any Subsidiary of any Credit Party,
(a) is subject to regulation under the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or (b) is or is required to be
registered as an “investment company” under the Investment Company Act of 1940.
5.13    ERISA Compliance.
(a)    Other than as a result of the Chapter 11 Cases, each Plan is in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other Federal or state laws. Each Pension Plan that is intended to be a
qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the IRS to the effect that the form of such Plan is
qualified under Section 401(a) of the Code and the trust related thereto has
been determined by the IRS to be exempt from federal income tax under
Section 501(a) of the Code, or an application for such a letter is currently
being processed by the IRS. To the best knowledge of each Credit Party, nothing
has occurred that would prevent or cause the loss of such tax-qualified status.
(b)    There are no pending or, to the best knowledge of each Credit Party,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that would reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
would reasonably be expected to result in a Material Adverse Effect.

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(c)    Other than as a result of the Chapter 11 Cases, (i) no ERISA Event has
occurred, and neither any Credit Party nor any ERISA Affiliate is aware of any
fact, event or circumstance that could reasonably be expected to constitute or
result in an ERISA Event with respect to any Pension Plan; (ii) each Credit
Party and each ERISA Affiliate has met all applicable requirements under the
Pension Funding Rules in respect of each Pension Plan, and no waiver of the
minimum funding standards under the Pension Funding Rules has been applied for
or obtained; (iii) as of the most recent valuation date for any Pension Plan,
the funding target attainment percentage (as defined in Section 430(d)(2) of the
Code) is 60% or higher and neither any Credit Party nor any ERISA Affiliate
knows of any facts or circumstances that could reasonably be expected to cause
the funding target attainment percentage for any such plan to drop below 60% as
of the most recent valuation date; (iv) neither any Credit Party nor any ERISA
Affiliate has incurred any liability to the PBGC other than for the payment of
premiums, and there are no premium payments which have become due that are
unpaid; (v) neither any Credit Party nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or Section 4212(c) of ERISA;
and (vi) no Pension Plan has been terminated by the plan administrator thereof
nor by the PBGC, and no event or circumstance has occurred or exists that could
reasonably be expected to cause the PBGC to institute proceedings under Title IV
of ERISA to terminate any Pension Plan.
(d)    Neither any Credit Party nor any ERISA Affiliate maintains or contributes
to, or has any unsatisfied obligation to contribute to, or liability under, any
active or terminated Pension Plan.
(e)    With respect to any Foreign Plan, (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance, or
the book reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations with respect to all current and former participants in such Foreign
Plan according to the actuarial assumptions and valuations most recently used to
account for such obligations in accordance with applicable generally accepted
accounting principles; and (iii) it has been registered as required and has been
maintained in good standing with applicable regulatory authorities.
5.14    Regulations U and X. The proceeds of the Loans shall be used solely for
the purposes specified in Section 6.11. No portion of any Loan is to be used for
the purpose of purchasing or carrying any “margin security” or “margin stock” as
such terms are used in Regulations U and X of the FRB 12 C.F.R. Parts 221 and
224.
5.15    True Copies of Governing Documents. As of the Closing Date, the Credit
Parties have furnished or caused to be furnished to each of the Lenders true and
complete copies of the Governing Documents (together with any amendments
thereto) of each Credit Party.
5.16    Fiscal Year. The Credit Parties have a fiscal year ending December 31 of
each year.
5.17    Subsidiaries, etc. As of the Closing Date, Holdings does not have any
Subsidiaries except as set forth on Schedule 5.17 hereto and, as of the Closing
Date, all of the outstanding Capital Stock in such Subsidiaries has been validly
issued, fully paid and nonassessable and are owned by Holdings (or a Subsidiary
of Holdings) in the amounts specified on Schedule 5.17 free and clear of all
Liens (other than (a) Liens in favor the Administrative Agent granted under the
Security Documents and (b) Liens securing the obligations under the Prepetition
Facilities).
5.18    Environmental Compliance. Based upon the actual knowledge of the Chief
Executive Officer and Chief Financial Officer of Holdings, and except as
specifically disclosed in Schedule 5.18, existing Environmental Laws and claims,
as they relate to the Credit Parties and their Subsidiaries, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.19    Bank Accounts. The Perfection Certificate delivered on the Closing Date
sets forth the true, correct and complete account numbers and location of all
bank accounts of the Credit Parties as of the Closing Date.

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5.20    Labor Contracts. Except as set forth on Schedule 5.20, as of the Closing
Date, none of the Credit Parties is party to any collective bargaining
agreement. Except as otherwise disclosed to the Administrative Agent there are
no material grievances, disputes or controversies with any union or other
organization of any Credit Party’s employees, or threats of strikes or work
stoppages that would reasonably be expected to result in a Material Adverse
Effect.
5.21    Disclosure. Each Credit Party has disclosed to the Administrative Agent
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any
Credit Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not materially misleading.
5.22    OFAC. No Credit Party, nor, to the knowledge of any Credit Party, any
Related Party, (i) is currently the subject of any Sanctions, (ii) is located,
organized or residing in any Designated Jurisdiction, or (iii) is or has been
(within the previous five (5) years) engaged in any transaction with any Person
who is now or was then the subject of Sanctions or who is located, organized or
residing in any Designated Jurisdiction. No Loan, nor the proceeds from any
Loan, has been used, directly or indirectly, to lend, contribute, provide or has
otherwise made available to fund any activity or business in any Designated
Jurisdiction or to fund any activity or business of any Person located,
organized or residing in any Designated Jurisdiction or who is the subject of
any Sanctions, or in any other manner that will result in any violation by any
Person (including any Lender or the Administrative Agent) of Sanctions.
5.23    Other Debt Documents.
(a)    Subject to the entry of the DIP Order, the Loans and the Loan Documents
and the transactions contemplated hereby and thereby do not violate and/or
conflict with any provision of the Prepetition Senior Notes Documents, the
Subordinated Debt Documents, the Lion Debt Document or the SG Debt Documents.
(b)    Except for the Prepetition Obligations, the Borrowers do not have any
other Indebtedness for borrowed money outstanding on the date hereof.
5.24    Approved Budget. The Approved Budget was prepared in good faith by the
management of the Borrowers, based on assumptions believed by the management of
the Borrowers to be reasonable at the time made and upon information believed by
the management of the Borrowers to have been accurate based upon the information
available to the management of Borrower at the time such Approved Budget was
furnished. On and after the date of delivery of any Variance Report in
accordance with this Agreement, such Variance Report shall be complete and
correct and fairly represent in all material respects the results of operations
of Holdings and its Subsidiaries for the period covered thereby and in the
detail to be covered thereby.
ARTICLE VI

AFFIRMATIVE COVENANTS
Each Credit Party signatory hereto covenants and agrees for itself and on behalf
of its Subsidiaries that, so long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation remains outstanding:
6.01    Intentionally Omitted.
6.02    Maintenance of Office; Certain Changes. Each Credit Party will maintain
its chief executive office, distribution center, warehouse, shipping center,
plant, factory, or other similar location at the locations identified in the
Perfection Certificate delivered by such Credit Party to the Administrative
Agent, or at such other place as the Borrower

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Representative shall designate upon not less than 30 days’ prior written notice
to the Administrative Agent (or such shorter period as may be acceptable to the
Administrative Agent). Each Credit Party shall notify the Administrative Agent,
in writing, not less than thirty (30) days prior to any change in its name or
the type of its organization, jurisdiction or organization, organizational
identification number, or tax identification number (or such shorter period as
may be acceptable to the Administrative Agent).
6.03    Records and Accounts. Each Credit Party will (i) keep true and accurate
records and books of account in which full, true and correct entries will be
made in accordance with, and all financial statements provided for herein shall
be prepared in accordance with GAAP consistently applied; (ii) maintain adequate
accounts and reserves for all material unpaid taxes (including income taxes);
and (iii) at all times, maintain independent certified public accountants as the
Credit Parties’ accountants which shall be reasonably satisfactory to the
Required Lenders (it being understood that Marcum LLP, PricewaterhouseCoopers,
Deloitte Touche Tohmatsu, Ernst & Young, KPMG and BDO Seidman shall be
satisfactory to the Required Lenders).
6.04    Financial Statements, Certificates and Information. The Credit Parties
will deliver to the Administrative Agent and the Lenders:
(a)    as soon as practicable, but in any event not later than the earlier of
ninety (90) days after the end of each Fiscal Year and fifteen (15) days after
the date required to be filed with the SEC, (i) the consolidated and
consolidating balance sheet of Holdings and its Subsidiaries, as at the end of
such Fiscal Year, and the related consolidated and consolidating statements of
income or operations, cash flows and shareholders’ equity for such Fiscal Year,
each setting forth in comparative form the figures for the previous Fiscal Year
and all such consolidated and consolidating financial statements to be in
reasonable detail, prepared in accordance with GAAP consistently applied and
such consolidated financial statements to be audited and accompanied by a report
and opinion prepared in accordance with generally accepted auditing standards by
Marcum LLP or by other independent certified public accountants reasonably
satisfactory to the Administrative Agent and certified without qualification and
without expression of uncertainty as to the ability of Holdings and its
Subsidiaries to continue as going concerns, together with (x) a written
statement from such accountants (to the extent then available on commercially
reasonable terms) to the effect that, in making the examination necessary to
said certification, nothing has come to their attention to cause them to believe
that any Default or Event of Default has occurred or specifying those Defaults
or Events of Defaults that they have become aware of and (y) a copy of their
accountants’ management letter (if any) for such Fiscal Year and (ii) a
Compliance Certificate duly executed by a Financial Officer of Holdings, which,
among other things, (A) attaches and certifies to the foregoing consolidated and
consolidating financial statements, accountants statements, management letters
and a management discussion and analysis prepared in connection with such
financial statements (which may be the management discussion and analysis
provided for in Holdings’ 10-K report), (B) specifying whether the Credit
Parties are in compliance with Section 7.13 and (C) states that such Financial
Officer has reviewed this Agreement and the other Loan Documents and has no
knowledge of any Default or Event of Default during such Fiscal Year, or if such
Financial Officer has such knowledge, specifying each Default or Event of
Default and the nature thereof;
(b)    as soon as practicable, but in any event not later than thirty (30) days
after the end of each Fiscal Month (including the last Fiscal Month of each
Fiscal Year), (i) the unaudited monthly consolidated and consolidating financial
statements of Holdings and its Subsidiaries for such Fiscal Month, including the
consolidated and consolidating balance sheet of Holdings and its Subsidiaries,
as at the end of such Fiscal Month, the related consolidated and consolidating
statements of income or operations, cash flows and shareholders’ equity for such
Fiscal Month and for the portion of the Fiscal Year then ended, each setting
forth in comparative form the figures for the corresponding Fiscal Month of the
previous Fiscal Year and the corresponding portion of the previous Fiscal Year,
each, prepared in accordance with GAAP consistently applied, (ii) a statement of
change in any intercompany accounts, and (iii) for each Fiscal Month that is the
last Fiscal Month of a Fiscal Quarter, a Compliance Certificate duly executed by
a Financial Officer of Holdings, which, among other things, (A) attaches and
certifies to the foregoing financial statements, (B) certifies that the
information contained in such financial statements fairly presents in all
material respects the financial condition of Holdings and its Subsidiaries on
the dates indicated therein (subject to year-end adjustments and

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the absence of footnotes), (C) sets forth in comparative form the results for
and through such Fiscal Month with the most recent projections delivered to the
Administrative Agent pursuant to Section 6.04(d), (D) specifying whether the
Credit Parties are in compliance with Section 7.13, (E) sets forth (if
applicable) reconciliations to reflect changes in GAAP since the date of the
Audited Financial Statements and (F) states that such Financial Officer has
reviewed this Agreement and the other Loan Documents and has no knowledge of any
Default or Event of Default during such Fiscal Month, or if such Financial
Officer has such knowledge, specifying each Default or Event of Default and the
nature thereof to the Administrative Agent’s reasonable satisfaction; provided
that, with respect to each Fiscal Month that is not the last Fiscal Month of a
Fiscal Quarter, delivery of such financial statements to the Administrative
Agent shall be deemed to be a representation by the Credit Parties that the
information contained in such financial statements fairly presents in all
material respects the financial condition of Holdings and its Subsidiaries on
the dates indicted therein (subject to year-end adjustments and the absence of
footnotes);
(c)    as soon as practicable, but in any event not later than forty-five
(45) days after the end of each Fiscal Quarter, a management discussion and
analysis prepared in connection with the financial statements of Holdings and
its Subsidiaries for such Fiscal Quarter (which may be any management and
discussion analysis provided for in Holdings’ Form 10-Q report for such Fiscal
Quarter; provided that any management discussion and analysis prepared in
connection with the financial statements of Holdings and its Subsidiaries for
the fourth Fiscal Quarter of each Fiscal Year shall not be required to be as
comprehensive in scope and detail as is customary for one provided in a
Form 10-Q report);
(d)    not later than December 31 of each Fiscal Year, an annual business plan
and projections for Holdings and its Subsidiaries for the following Fiscal Year
on a monthly basis (such projections to include consolidated and consolidating
balance sheets, statements of cash flows, statements of income or operations of
Holdings and its Subsidiaries prepared on a month-by-month basis);
(e)    promptly upon receipt thereof, copies of any detailed audit reports,
financial control reports, management letters or recommendations submitted to
the board of directors (or the audit committee of the board of directors) of the
Credit Parties by independent accountants or internal auditors in connection
with any audit of any of them;
(f)    promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of any Credit Party, and copies of all annual, regular, periodic
and special reports and registration statements which the any Credit Party may
file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto;
(g)    promptly, and in any event within two (2) Business Day after receipt
thereof by any Credit Party or any Subsidiary thereof, copies of each notice or
other correspondence received from the SEC or any other Governmental Authority
concerning any investigation or possible investigation or other inquiry by such
agency regarding financial or other operational results of any Credit Party or
any Subsidiary;
(h)    promptly after delivery or receipt thereof, copies of all notices,
reports and other communications delivered or received by any Credit Party in
connection with the Prepetition Debt Documents and not later than five
(5) Business Days following the effectiveness thereof, copies of any new
Prepetition Debt Document or any amendment, supplement, waiver, or other
modification, replacement or renewal with respect to any Prepetition Debt
Document;
(i)    (i) promptly following the reasonable request of the Administrative
Agent, a report summarizing the insurance coverage in effect for each Credit
Party, and (ii) promptly following the modification, renewal, replacement of any
insurance policy of any Credit Party, updated insurance certificates and
endorsements evidencing such coverage;

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(j)    as soon as practicable, but in any event not later than ten (10) days (or
such longer period as agreed by the Administrative Agent in its discretion)
following the end of each Fiscal Quarter (or more frequently at the election of
the Credit Parties), (i) an updated Perfection Certificate as to each Credit
Party in substantially the same form as the Perfection Certificate most recently
delivered to the Administrative Agent (with such scope and detail as the
Administrative Agent’s may reasonably require) or a certificate confirming that
there has been no change in such information since the Perfection Certificate
delivered on the Closing Date or the most recent Perfection Certificate
delivered pursuant to this Section 6.04(j) and (ii) updated Schedules 5.07,
5.17, 5.18, 5.20 and 7.08 in substantially the same form as the most recent
schedule of the same delivered to the Administrative Agent to the Administrative
Agent’s reasonable satisfaction;
(k)    substantially simultaneously therewith, any financial data and other
information delivered pursuant to the Prepetition Debt Documents not otherwise
provided under this Agreement and, promptly following a request therefor, from
time to time such other financial data and information as the Administrative
Agent or any Lender may reasonably request with respect to the Credit Parties,
including without limitation, updates and such other information and copies of
documents with respect to pending litigation or the settlement or compromise
thereof.
(l)    promptly after the filing thereof, copies of all pleadings, motions,
applications, financial information and other papers and documents filed by any
Credit Party in the Chapter 11 Cases, which papers and documents shall also be
given or served on the Administrative Agent’s counsel;
(m)    promptly after the sending thereof, copies of all written reports given
by any Credit Party to the Official Committee or any unofficial creditors’
committee in the Chapter 11 Cases related to the operations, business, assets,
properties or financial condition of the Borrowers (including, without
limitation, audits, appraisals, valuations, projections and other financial
reports) containing information not otherwise already available to the
Administrative Agent and the Lenders other than any written reports subject to
privilege, provided that such Person may redact any confidential information
contained in any such written report if it provides a summary of the nature of
the information redacted to the Administrative Agent;
(n)     (i) on October 13, 2015, a supplement to the Initial Approved Budget in
substantially the same form (including the same assumptions and methodology made
or used therein) updated and extending the period of such Initial Approved
Budget to cover a 13-week period, and (ii) on the Tuesday of each week
thereafter (each such day, a “Supplemental Budget Delivery Date”) (i.e.,
commencing on October 20, 2015) a supplemental 13 week cash flow budget
extending and supplementing the Approved Budget most recently delivered in
substantially the same form (including the same assumptions and methodology made
or used therein); provided that (A) for each supplemental budget delivered
pursuant to this Section 6.04(n), the Required Lenders shall have the right to
approve and dispute such supplemental budget and any line item contained therein
(but not, for the avoidance of doubt, the Initial Approved Budget) for the
Budget Period that is the calendar week occurring two weeks after such
Supplemental Budget Delivery Date (i.e. with respect to the supplemental budget
required to be delivered on October 20, 2015, the calendar week commencing
Monday November 2, 2015) and (B) if the Required Lenders dispute any line item
within the supplemental budget they shall provide specific notice thereof to the
Borrowers within three Business Days of such delivery; provided further that in
the case of a disputed receipt or disbursement contained in a specific line
item, such receipt or disbursement (or the amount of such receipt or
disbursement that is in dispute as determined by the Required Lenders) shall be
deemed excluded and disregarded in such line item, until in each case the
Required Lenders and the Borrower reach agreement as to any revision thereof;
and

(o)    on each Tuesday of each calendar week, commencing with October 13, 2015
(each such day, a “Variance Report Date”), a budget variance
report/reconciliation (the “Variance Report”), certified by a Financial Officer,
in form acceptable to the Required Lenders, setting forth the actual cash
receipts and disbursements of the Holdings and its Subsidiaries (including on an
individual basis for each Foreign Subsidiary of Holdings) (i) for the Budget
Period ending immediately prior to such Variance Report Date and (ii) on a
cumulative basis, for the period commencing on the Petition Date and ending on
the Friday immediately preceding such Variance Report Date (the “Cumulative
Period”), in each case on (A) a line-item basis as of

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the end of the Budget Period and the Cumulative Period, respectively, and (B) in
aggregate as of the end of the Budget Period and the Cumulative Period,
respectively, the variance in dollar amounts of the actual disbursements for
each Budget Period and the Cumulative Period, respectively, from those budgeted
amounts for the corresponding Budget Period and the Cumulative Period,
respectively, reflected in the Approved Budget and the variance of the actual
cash receipts for the Budget Period from those budgeted amounts for the
corresponding Budget Period and the Cumulative Period, respectively, reflected
in the Approved Budget. Promptly following the delivery of Variance Reports, a
Financial Officer of the Borrowers shall host a telephone conference call for
the Administrative Agent and its advisors and the Lenders and their advisors to
review the Variance Reports.

Documents required to be delivered pursuant to Section 6.04 (to the extent any
such documents are included in materials otherwise filed with the SEC or the
Bankruptcy Court) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the applicable Credit
Party posts such documents and provides a link thereto on such Credit Party’s
website on the Internet at the website address listed on Schedule 11.02; or
(ii) on which such documents are posted on the applicable Credit Party’s behalf
on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (i) upon the
request of the Administrative Agent, the applicable Credit Party shall deliver
paper copies of such documents to the Administrative Agent until a written
request to cease delivering paper copies is given by the Administrative Agent
and (ii) the Borrower Representative shall notify the Administrative Agent and
each Lender (by facsimile or electronic mail) of the posting of any such
documents and provide to the Administrative Agent and each Lender by electronic
mail electronic versions (i.e., soft copies) of such documents. The
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by any Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.
6.05    Notices.
(a)    Defaults. The Credit Parties will promptly (but in any event within two
(2) Business Days) notify the Administrative Agent and each Lender in writing of
the occurrence of (i) any Default or Event of Default, or (ii) any “default”,
“event of default” or material breach under any Subordinated Debt Document or
any Material Agreement, other than any such default or event of default
resulting from the effect of filing the Chapter 11 Cases.
(b)    Material Adverse Effect. The Credit Parties shall promptly (but in any
event within two (2) Business Days) disclose in writing to the Administrative
Agent (for distribution to each Lender) of any matter that has resulted or would
reasonably be expected to result in a Material Adverse Effect.
(c)    ERISA Events. The Credit Parties shall promptly disclose in writing to
the Administrative Agent the occurrence of any ERISA Event;
(d)    Change in Accounting Policies or Financial Reporting. The Credit Parties
shall promptly disclose in writing to the Administrative Agent notice of (i) any
material change in accounting policies or financial reporting practices by
Holdings or any Subsidiary or (ii) discharge by any Credit Party of its
independent accountants or any withdrawal or resignation by such independent
accountants.
(e)    Notice of Tax Claims, Litigation and Judgments. The Credit Parties will
give notice to the Administrative Agent in writing within three (3) Business
Days of any written notice of proposed assessment or written notice of the
commencement of any material audit by any Governmental Authority for unpaid
Taxes of any Credit Party or any Subsidiary that are due and payable, any
commencement of any litigation or proceedings that are not stayed the Chapter 11
Cases and are allowed to proceed in a forum other than the Bankruptcy Court that
affects any Credit Party, any Subsidiary or any member of the Senior Management
of any Credit Party or any of its Subsidiaries or to which any Credit Party, any
Subsidiary or any member of the Senior Management of any Credit Party or any of
its Subsidiaries is or becomes a party

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(other than the Chapter 11 Cases) that (i) involves any claim that has resulted
in or would reasonably be expected to result in liabilities of more than
$350,000 that are not covered by insurance policies maintained in accordance
with Section 6.07, (ii) to the knowledge of the general counsel or chief
financial officer of Holdings, involves any adverse claim or proceeding against
any member of the Senior Management of Holdings, which has resulted in or would
reasonably be expected to result in material publicity with respect to the
Credit Parties or such member of the Senior Management of Holdings, (iii) has
resulted in or would reasonably be expected to result in a Material Adverse
Effect or (iv) is a criminal investigation or involves a criminal penalty for
any felony. The Credit Parties will give notice to the Administrative Agent and
each Lender, in writing, in form and detail reasonably satisfactory to the
Administrative Agent, within five (5) Business Days of any judgment not covered
by insurance, final or otherwise, against any Credit Party in an amount in
excess of $350,000 or of the entry of any non-monetary judgment that would
reasonably be expected to have a Material Adverse Effect.
(f)    Notification of Claim against Collateral. The Credit Parties will
promptly notify the Administrative Agent and each Lender in writing of any
setoff, claims (including, with respect to the Real Estate, environmental
claims), withholdings or other defenses in amounts greater than $1,000,000 to
the extent not covered by insurance policies maintained in accordance with
Section 6.07, or defenses to the Administrative Agent’s rights with respect to
the Collateral.
(g)    Notices Concerning Collateral. The Borrowers shall provide to the
Administrative Agent prompt notice of (i) any physical count of any Borrower’s
inventory, together with a copy of the results thereof certified by the
Borrowers, (ii) any determination by the Borrowers that the aggregate inventory
levels of the Borrowers are not adequate to meet the sales projections of the
Borrowers, (iii) any failure of any Credit Party to pay rent which is incurred
and is due and payable after the Petition Date at any leased location where
inventory is located, which failure continues for more than ten (10) days
following the day on which such payment rent is due and payable and (iv) of any
return of inventory involving an aggregate Value of inventory in excess of
$1,000,000. Promptly following the occurrence thereof, the Credit Parties shall
deliver to the Administrative Agent, in form and scope reasonably acceptable to
the Administrative Agent and with such supporting detail, documentation and
information as the Administrative Agent shall reasonably request regarding any
change to inventory cost methodology.
(h)    Notification of Additional Intellectual Property Rights. Concurrently
with the delivery of financial statements with respect to any Fiscal Quarter,
the Credit Parties will notify the Administrative Agent in writing of any
patents, patent applications, patent application disclosures filed with any
patent office during such Fiscal Quarter, registered copyrights or mask works
registered during such Fiscal Quarter, applications for registration of
copyrights or mask works filed during such Fiscal Quarter and trademark and
service mark registrations during such Fiscal Quarter, and trademark and service
mark registration applications filed during such Fiscal Quarter, all of the
foregoing whether a foreign or United States right, to the extent not listed on
the Perfection Certificate most recently delivered to the Administrative Agent
in accordance with this Agreement.
(i)    Environmental Events. The Credit Parties will promptly give notice to the
Administrative Agent and each Lender (i) of any violation of any Environmental
Law that any Credit Party reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral report is
made) to any Governmental Authority and (ii) upon any member of Senior
Management of any Credit Party becoming aware thereof of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential Environmental Liability, of any Governmental Authority that, in the
case of clauses (i) or (ii) above, would reasonably be expected to result in a
Material Adverse Effect.
(j)    Prepayment Events. Promptly following the occurrence of any event for
which the Borrowers are required to make a prepayment under Sections 2.05(b)
through (e), together with all supporting information reasonably requested by
the Administrative Agent or the Required Lenders.

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(k)    Change in CEO or CFO. The Credit Parties shall provide to the
Administrative Agent prompt written notice of any change in any Credit Party’s
chief executive officer or chief financial officer.
(l)    Labor Relations. The Credit Parties shall provide to the Administrative
Agent prompt written notice of any collective bargaining agreement or other
labor contract to which a Credit Party becomes a party, or the application for
the certification of a collective bargaining agent.
(m)    Fundamental Changes. The Credit Parties shall provide to the
Administrative Agent promptly written notice of the occurrence of any event
described in Section 7.05(a) and Section 7.05(b)(v).
Delivery by the Credit Parties to the Administrative Agent of any and all
notices required to be delivered to the Lenders as herein required shall be
deemed made upon receipt of such notices by the Administrative Agent.
6.06    Legal Existence; Maintenance of Properties.
(a)    Except as permitted by Section 7.05, each Credit Party will do all things
necessary to (i) maintain in full force and effect its legal existence and good
standing under the laws of its jurisdiction of organization or incorporation,
(ii) maintain its qualification to do business in each state or other
jurisdiction in which the failure to do so would result in a Material Adverse
Effect, and (iii) maintain all of its rights and franchises, except where the
failure to maintain such right or franchise would not result in a Material
Adverse Effect.
(b)    Each Credit Party (i) will cause all of its properties used or useful in
the conduct of its business to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment, subject to ordinary
wear and tear and except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, (ii) will cause to be made all
necessary repairs, renewals and replacement thereof, all as in the judgment of
the Credit Parties may be necessary so that the business carried on in
connection therewith may be properly conducted at all times, and (iii) will
continue to engage in the material lines of businesses conducted by them on the
date hereof; provided that nothing in this Section 6.06(b) shall prevent any
Credit Party from discontinuing the operation and maintenance of any of its
properties if such discontinuance is permitted by Section 7.05(b).
6.07    Insurance. Each Credit Party will maintain with financially sound and
reputable insurers insurance with respect to its properties and business against
such casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for such periods
as may be reasonable and prudent and in accordance with the terms of the
Security Documents. Such policies of insurance shall name the Administrative
Agent as an additional insured or lender’s loss payee, as applicable and provide
for such notice to the Administrative Agent of termination, lapse or
cancellation of such insurance as is acceptable to the Administrative Agent (and
Administrative Agent acknowledges that 30 days’ prior written notice (or 10 days
in the case of non-payment of the premium) is acceptable to the Administrative
Agent).
6.08    Taxes. Subject to the approval of the Bankruptcy Court and the Approved
Budget, each Credit Party will duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all material federal, state
and other Taxes, assessments and other governmental charges imposed upon it and
its real properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all materials claims for labor,
materials, or supplies that if unpaid might by law become a Lien or charge upon
any of its property; provided that any such Taxes, assessment, charge, levy or
claim need not be paid if (a) the validity or amount thereof shall be contested
in good faith by appropriate proceedings and such Credit Party shall have set
aside on its books adequate reserves in accordance with GAAP with respect
thereto or (b) it shall have been excused or prohibited from being paid pursuant
to an order of the Bankruptcy Court or pursuant to the Bankruptcy Code. Each
Credit Party shall file or cause to be filed all federal, material state and all
material provincial, local and foreign income tax incomes, and all other
material tax returns, reports, and declarations required by any jurisdiction to
which it is subject as required by applicable Law.

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6.09    Compliance with Laws, Contracts, Licenses, Permits; Leaseholds and
Payment of Obligations Generally.
(a)    Compliance with Laws, Contracts, Licenses and Permits. Each of the Credit
Parties will comply with (i) the applicable Laws wherever its business is
conducted, including, without limitation all Environmental Laws, (ii) the
provisions of its Governing Documents, (iii) all agreements and instruments by
which it or any of its properties may be bound, (iv) the Chapter 11 Orders and
(v) all applicable decrees, orders, and judgments, provided, that in each case,
such compliance shall be required by this Agreement only where noncompliance
with this Section 6.09(a)(i)-(v) would result in a Material Adverse Effect. If
any authorization, consent, approval, permit or license from any Governmental
Authority or any central bank or other fiscal or monetary authority shall become
necessary or required in order that any Credit Party may fulfill any of its
obligations hereunder or any of the other Loan Documents to which such Credit
Party is a party, each Credit Party will promptly take or cause to be taken all
reasonable steps within the power of such Credit Party to obtain such
authorization, consent, approval, permit or license, and upon request of the
Administrative Agent, to furnish the Administrative Agent and the Lenders with
evidence thereof.
(b)    Compliance with Terms of Leaseholds. Subject to the approval of the
Bankruptcy Court, if necessary, and the Approved Budget and except as otherwise
prohibited, stayed or limited by the Chapter 11 Cases, each Credit Party will
make all payments and otherwise perform all material obligations in respect of
all leases and licenses of real property (including, without limitation, with
respect to any concession units) to which such Credit Party is a party within
any grace period provided therefor under such lease, except in the case where
the enforcement of any non-compliance resulting in a default is stayed by the
Chapter 11 Cases, notify the Administrative Agent of any default by any party
with respect to such leases or licenses and cooperate with the Administrative
Agent in all respects to cure any such default by a Credit Party, and cause each
of its Domestic Subsidiaries to do so, except, (i) to the extent such
obligations shall be contested in good faith by appropriate proceedings and for
which the Credit Parties have set aside on their books reasonably adequate
provisions therefor in accordance with GAAP and (ii) the failure to make
payments in respect of leases for no more than five (5) retail stores of the
Credit Parties at any time.
(c)    Payment of Obligations Generally. Subject to the approval of the
Bankruptcy Court (where applicable) and the Approved Budget and except to the
extent prohibited by Article VII, each of the Credit Parties will pay and
discharge, as the same shall become due and payable, all its other obligations
and liabilities, including all lawful claims which, if unpaid, would by law
become a Lien that is not a Permitted Lien upon its property or otherwise would
reasonably be expected to result in a Material Adverse Effect.
6.10    Physical Inventories. The Credit Parties, at their own expense, shall
cause not less than (a) one (1) physical inventory for each warehouse location
of the Credit Parties to be conducted in connection with each Fiscal Year-end of
the Credit Parties and (b) one (1) physical inventory for each retail store
location of the Credit Parties to be conducted in connection with each Fiscal
Year-end of the Credit Parties, in each case, conducted by the Credit Parties
and in the case of such Fiscal-Year-end physical inventories of warehouse
locations and retail stores, accompanied by their independent certified public
accountants reasonably satisfactory to the Administrative Agent and following
such methodology as is consistent with the methodology used in the immediately
preceding inventory or as otherwise may be satisfactory to the Administrative
Agent. The Administrative Agent and the Lenders and/or their agents or
representatives, at the expense of the Credit Parties, may participate in and/or
observe each scheduled physical count of inventory which is undertaken on behalf
of any Credit Party. The Credit Parties, within ten (10) Business Days (or such
longer period as agreed by the Administrative Agent in its discretion) following
the completion of such inventory, shall provide the Administrative Agent with a
reconciliation of the results of such inventory (as well as of any other
physical inventory undertaken by a Credit Party) and shall post such results to
the Credit Parties’ stock ledgers and general ledgers, as applicable. The
Administrative Agent or the Required Lenders, in their respective Permitted
Discretion, if any Event of Default exists and is continuing, may cause such
inventories to be taken as the they determine (each, at the expense of the
Credit Parties).

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6.11    Use of Proceeds.
(a)    Subject to the terms and conditions herein, the use of cash collateral
and the proceeds of the Loans made hereunder will be used in accordance with the
terms of the DIP Order: (i) to repay on the Closing Date an amount equal to, and
used to refinance, all amounts due and owing under the Prepetition ABL Facility
as of the date of repayment of the Prepetition ABL Facility, (ii) to pay related
transaction costs, fees and expenses with respect to the DIP Facility, (iii) to
make the Permitted Adequate Protection Payments in accordance with the Approved
Budget, (iv) to fund the Carve-Out, and (v) to provide working capital, and for
other general corporate purposes of the Credit Parties, and to pay
administration costs of the Chapter 11 Cases and claims or amounts approved by
the Bankruptcy Court in accordance with the Approved Budget.
(b)    No portion of the Borrower’s cash collateral, the Loans or the Collateral
may be used to investigate, commence or prosecute any action, proceeding or
objection with respect to or related to (1) the claims, liens or security
interests of the Administrative Agent, the Prepetition ABL Agent, the
Prepetition Senior Notes Trustee, the Lenders, the Prepetition ABL Lenders or
Prepetition Notes Lenders, (2) any claims, demands, liabilities,
responsibilities, disputes, remedies, causes of action, indebtedness or
obligations that are subjects of a release under the Approved Plan of
Reorganization or (3) certain stipulations to be made by the Credit Parties and
approved by the Interim Order; provided that, advisors to the Official
Committee, if one is appointed, may investigate the liens granted pursuant to,
or any claims under or causes of action with respect to, the Prepetition
Facilities at an aggregate expense for such investigation not to exceed $50,000,
provided that no portion of such amount may be used to prosecute any such
claims.
6.12    Covenant to Guarantee Obligations and Give Security.
(a)    Upon the formation or Acquisition by any Credit Party of any new direct
or indirect Domestic Subsidiary after the Closing Date (other than any Foreign
Subsidiaries) (provided, that prior to any such formation or Acquisition, such
Credit Party shall have received the written consent of the Required Lenders),
then the Credit Parties shall, at the Credit Parties’ expense:
(i)    within ten (10) days (or such longer period as agreed by the
Administrative Agent in its discretion) after such formation or Acquisition,
cause such Subsidiary, and cause each direct and indirect parent and Subsidiary
of such Subsidiary (if it has not already done so and is not a Foreign
Subsidiary), to be joined as a Borrower hereto or duly execute and deliver to
the Administrative Agent a Guarantee guaranteeing the other Credit Parties’
obligations under the Loan Documents,
(ii)    within ten (10) days (or such longer period as agreed by the
Administrative Agent in its discretion) after such formation or Acquisition,
furnish to the Administrative Agent a description of the real and personal
properties of such Subsidiary, in detail reasonably satisfactory to the
Administrative Agent,
(iii)    within fifteen (15) days (or such longer period as agreed by the
Administrative Agent in its discretion) after such formation or Acquisition,
cause such Subsidiary and each direct and indirect parent of such Subsidiary (if
it has not already done so) to duly execute and deliver to the Administrative
Agent Security Documents, as specified by and in form and substance reasonably
satisfactory to the Administrative Agent (including delivery of all certificates
representing the Capital Stock in and of such Subsidiary), securing payment of
all the Obligations of such Subsidiary or such parent, as the case may be, under
the Loan Documents and constituting Liens on all such real and personal
properties,
(iv)    within fifteen (15) days (or forty-five (45) days with respect to fee
owned real property required to be subject to a Mortgage unless substantially
all of such property is subject to a Lien permitted by Section 7.03(a)(viii))
(in each case, or such longer period as agreed by the Administrative Agent in
its discretion) after such formation or Acquisition, cause such Subsidiary and
each direct and indirect parent of such Subsidiary (if it has not already done
so) to take whatever action (including the recording of Mortgages, the filing of
Uniform Commercial Code financing

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statements, the giving of notices and the endorsement of notices on title
documents or such other actions as are necessary or desirable under any
applicable Law) may be necessary or advisable in the reasonable opinion of the
Administrative Agent to vest in the Administrative Agent (or in any
representative of the Administrative Agent designated by it) valid and
subsisting Liens on the properties purported to be subject to the Security
Documents delivered pursuant to this Section 6.12, enforceable against all third
parties in accordance with their terms,
(v)    within fifteen (15) days after such formation or Acquisition, deliver to
the Administrative Agent, upon the request of the Administrative Agent in its
sole discretion, a signed copy of a favorable opinion, addressed to the
Administrative Agent and the other Secured Parties, of counsel for the Credit
Parties reasonably acceptable to the Administrative Agent as to the matters
contained in clauses (i), (iii) and (iv) above, and as to such other matters as
the Administrative Agent may reasonably request; and
(vi)    as promptly as practicable after such formation or Acquisition, deliver,
upon the request of the Administrative Agent in its sole discretion, to the
Administrative Agent with respect to each parcel of fee owned real property
having a fair market value greater than $2,500,000 (unless substantially all of
such property is subject to a Lien permitted by Section 7.03(a)(viii)) owned or
held by the entity that is the subject of such formation or Acquisition and that
is to be subject to a Mortgage as provided in this Section 6.12, title reports,
surveys and to the extent in the Credit Party’s possession or to the extent
required by applicable Law, engineering, soils and other reports, and
environmental assessment reports, each in scope, form and substance reasonably
satisfactory to the Administrative Agent, provided, however, that to the extent
that any Credit Party or any of its Subsidiaries shall have otherwise received
any of the foregoing items with respect to such real property, such items shall,
promptly after the receipt thereof, be delivered to the Administrative Agent.
(b)    Upon the acquisition of any property by any Credit Party following the
Closing Date (provided, that prior to any such acquisition of any property, such
Credit Party shall have received the written consent of the Required Lenders),
if such property, in the reasonable judgment of the Administrative Agent, shall
not already be subject to a perfected first priority security interest (subject
in priority only to the Carve-Out) in favor of the Administrative Agent for the
benefit of the Secured Parties (unless such property is specifically excluded as
Collateral by the terms of the Security Documents or is subject to a Lien
permitted by Section 7.03(a)(viii)), then the Credit Parties shall, at the
Credit Parties’ expense:
(i)    within ten (10) days (or such longer period as agreed by the
Administrative Agent in its discretion) after such acquisition, furnish to the
Administrative Agent a description of the property so acquired in detail
reasonably satisfactory to the Administrative Agent,
(ii)    within fifteen (15) days (or such longer period as agreed by the
Administrative Agent in its discretion) after such acquisition, cause the
applicable Credit Party to duly execute and deliver to the Administrative Agent
Security Documents (to the extent not already delivered), as specified by and in
form and substance reasonably satisfactory to the Administrative Agent, securing
payment of all the Obligations of the applicable Credit Party under the Loan
Documents and constituting Liens on all such properties,
(iii)    within fifteen (15) days (or forty-five (45) days with respect to fee
owned real property required to be subject to a Mortgage) after such
acquisition, cause the applicable Credit Party to take whatever action
(including the recording of Mortgages, the filing of Uniform Commercial Code
financing statements, the giving of notices and the endorsement of notices on
title documents or such action necessary or desirable under applicable Law) may
be necessary or advisable in the opinion of the Administrative Agent to vest in
the Administrative Agent (or in any representative of the Administrative Agent
designated by it) valid and subsisting Liens on such property, enforceable
against all third parties,

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(iv)    within fifteen (15) days (or forty-five (45) days with respect to fee
owned real property required to be subject to a Mortgage unless substantially
all of such property is subject to a Lien permitted by Section 7.03(a)(viii))
after such acquisition, deliver to the Administrative Agent, upon the request of
the Administrative Agent in its sole discretion, a signed copy of a favorable
opinion, addressed to the Administrative Agent and the other Secured Parties, of
counsel for the Credit Parties reasonably acceptable to the Administrative Agent
as to the matters contained in clauses (ii) and (iii) above and as to such other
matters as the Administrative Agent may reasonably request, and
(v)    as promptly as practicable after any acquisition of fee owned real
property having a fair market value greater than $2,500,000 (unless
substantially all of such property is subject to a Lien permitted by
Section 7.03(a)(viii), deliver, upon the request of the Administrative Agent in
its sole discretion to the Administrative Agent with respect to such real
property that is to be subject to a Mortgage as provided in this Section 6.12,
flood zone determination forms, flood insurance certificates, to the extent
applicable, (and to the extent provided or required to be provided to the Senior
Notes Trustee) title reports, surveys and engineering, soils and other reports,
and environmental assessment reports, each in scope, form and substance
reasonably satisfactory to the Administrative Agent, provided, however, that to
the extent that any Credit Party or any of its Subsidiaries shall have otherwise
received any of the foregoing items with respect to such real property, such
items shall, promptly after the receipt thereof, be delivered to the
Administrative Agent;
provided that notwithstanding anything contained in this Section 6.12(b) or any
Loan Document to the contrary, (A) no more than 65% of the voting Capital Stock
and 100% of the non-voting Capital Stock of any Foreign Subsidiary formed or
acquired by any Credit Party shall be required to be subject to the security
interest of the Administrative Agent and (B) notwithstanding clause (A) or
anything in any Loan Document to the contrary, no Capital Stock which is
directly or indirectly owned by any CFC shall be subject to the security
interest of the Administrative Agent.
(c)    At any time upon request of the Administrative Agent or the Required
Lenders, promptly execute and deliver any and all further instruments and
documents and take all such other action as the Administrative Agent or the
Required Lenders may deem necessary or desirable in obtaining the full benefits
of, or (as applicable) in perfecting and preserving the Liens of, such Security
Documents.
6.13    Further Assurances. Each Credit Party will cooperate with the Lenders
and the Administrative Agent and execute such further instruments and documents
as the Lenders or the Administrative Agent shall reasonably request to carry out
to their reasonable satisfaction the transactions contemplated by this Agreement
and the other Loan Documents.
6.14    Inspections; Collateral Reports; Appraisals, etc.
(a)    General. Each Credit Party shall permit the Lenders and the
Administrative Agent, at the Credit Parties’ expense, to visit and inspect any
of the properties of any Credit Party accompanied by a representative of the
Credit Party to the extent such representative does not interfere with such
inspection, to examine the books of account of such Credit Party (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances and
accounts of such Credit Party with, and to be advised as to the same by, its and
their officers, in each case, except when an Event of Default shall have
occurred and be continuing, at such reasonable times and intervals and with
reasonable prior notice as the Administrative Agent or any Lender may reasonably
request.
(b)    Appraisals. From time to time upon the request of the Administrative
Agent or the Required Lenders, at the Credit Parties’ expense, the Credit
Parties shall permit and shall enable the Administrative Agent to obtain
appraisal reports for delivery to the Administrative Agent and the Lenders
(including field appraisal reports), in each case, in its Permitted Discretion
from Appraisers, including, without limitation of scope, among other things, the
then current fair market, liquidation value and forced liquidation values of all
or any portion of the inventory owned by the Credit Parties and describing
changes to cost calculation methodology; provided that the Credit Parties shall
not be required to incur the costs and expenses of more

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than two appraisals of any type (one of which shall be a “desktop” appraisal)
unless an Event of Default has occurred and is continuing when an appraisal is
initiated, then there shall be no limit on the number of appraisals of any type
made at the expense of the Credit Parties. Each Credit Party acknowledges and
agrees that any Appraiser may be an Affiliate of a (i) the Administrative Agent,
(ii) any Lender, (iii) any Participant or (iv) any assignee or other participant
permitted under Section 11.06.
(c)    Communications with Accountants. Each Credit Party authorizes the
Administrative Agent and the Lenders to communicate directly with such Credit
Party’s independent certified public accountants and authorizes such accountants
to disclose to the Administrative Agent and the Lenders any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial
condition and other affairs of such Credit Party (provided that the Credit
Parties shall have the opportunity to participate in any such communication). At
the request of the Administrative Agent or any Lender, each Credit Party shall
deliver a letter addressed to such accountants authorizing them to communicate
directly with the Administrative Agent and the Lenders in accordance with the
foregoing.
6.15    Bank Accounts.
(a)    General. The Credit Parties shall (i) (a) instruct account debtors with
respect to Credit Card Receivables and Wholesale Receivables of the Credit
Parties, pursuant to instruction letters, in form and substance reasonably
satisfactory to the Administrative Agent, to remit all cash proceeds of
Receivables, checks and other items of payment directly to depository accounts
with the Administrative Agent or the Sub-Agent that are subject to Agency
Account Agreements and designated as a “Main Concentration Account” on
Schedule 12 to the Perfection Certificate or the associated lockbox reflected on
Schedule 12 to the Perfection Certificate, and to take all reasonable steps
thereafter to insure that all collections of the Credit Parties received from
credit card issuers or credit card processors (pursuant to Credit Card
Agreements or otherwise with respect to Credit Card Receivables) and all
collections from account debtors in respect of commercial receivables, are
directed or deposited into a Main Concentration Account and (b) cause, on each
Business Day, all cash and checks collected from the Credit Parties’ retail
store locations (or directly by the Credit Parties at any other location) to be
deposited directly to (x) local depository accounts (“Local Accounts”) for
transfer to depository accounts with financial institutions which have entered
into Agency Account Agreements in form and substance reasonably satisfactory to
the Administrative Agent (collectively, “Concentration Accounts”), or (y) a
Concentration Account, in each case of clauses (a) and (b), for transfer to a
Main Concentration Account and for ultimate transfer to the DIP Funding Account,
which proceeds received in the DIP Funding Account shall be applied to the
payment of the Obligations in accordance with Section 2.07(c); and (ii) at all
times ensure that all other cash, cash proceeds, checks and other items of
payment of the Credit Parties not contained in Excluded Accounts of the types
described in clauses (a), (b) and (d) of the definition thereof (including
proceeds of any Collateral or any Net Cash Proceeds in connection with events or
transactions described in Sections 2.05(a) through (d)), be immediately
deposited in a Local Account, Concentration Account or transferred directly into
a Main Concentration Account. Each depository institution with a Local Account
shall be required to cause all funds held in each such Local Account to be
transferred to, and only to, a Concentration Account or directly to a Main
Concentration Account not less frequently than once each Business Day. Each
depository institution with a Concentration Account (other than a Main
Concentration Account) shall be required to cause all funds held in each such
Concentration Account to be transferred not less frequently than once each
Business Day to, and only to, a Main Concentration Account for ultimate transfer
on each Business Day to the DIP Funding Account. For all deposit accounts,
securities accounts and commodities accounts of the Credit Parties (other than
the Local Accounts and Concentration Accounts subject to the foregoing
provisions of this Section 6.15(a), Excluded Accounts, and until such time as
the Credit Parties have opened checking accounts at Wilmington Trust, National
Association or such other depository bank that is reasonably acceptable to the
Required Lenders, the Master Operating Accounts), the Credit Parties shall cause
all amounts contained in all such deposit accounts, securities accounts and
commodities accounts to be immediately transferred to the DIP Funding Account.
The Credit Parties shall not transfer amounts to its disbursements accounts at
Capital One, National Association in excess of the amounts required to fund
checks, fund payroll, fund sales taxes or make payments to third party vendors
in the ordinary course of business.

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Any disbursement account in the name of a Credit Party held with Capital One,
National Association shall be maintained as a zero balance account.
(b)    Other Accounts. The Credit Parties shall cause all deposit accounts, all
securities accounts and all commodities accounts (other than Excluded Accounts)
of the Credit Parties to be subject to Agency Account Agreements. Without the
prior written consent of the Administrative Agent (which consent shall not be
unreasonably withheld), no Credit Party shall modify or amend the instructions
provided to account debtors, credit card issuers, credit card processors and
other obligors pursuant to any of the notices of assignment, instruction
letters, Credit Card Agreements or the Agency Account Agreements. The Credit
Parties shall not open any deposit account, securities account or commodities
account on or after the Closing Date at any institution other than Wilmington
Trust, National Association or such other depositary bank or clearing bank that
is reasonably acceptable to the Required Lenders. Notwithstanding anything to
the contrary in any Loan Document, it is understood and agreed that the
Administrative Agent may serve any notice of exclusive control or activation
notice (or other similar notice) at any time under the Capital One Control
Agreement (whether or not a Default or an Event of Default is continuing) to
direct the disposition of funds in the Credit Parties’ accounts subject thereto
to (i) any other deposit account or securities account of the Credit Parties at
Capital One, Wilmington Trust, National Association or the designee of the
Administrative Agent or (ii) after the occurrence of an Event of Default, to the
Administrative Agent to be applied to the Obligations.
6.16    Chapter 11 Cases.
(a)    Comply with each Chapter 11 Order in all material respects.
(b)    The Borrowers shall promptly provide to and discuss with the
Administrative Agent and each Lender any and all information and developments in
connection with (i) any proposed conveyance, sale, assignment, transfer or other
disposition of all or any substantial part of the assets of the Borrower or its
Subsidiaries, (ii) the sale or other disposition or issuance of any equity
interests of the Borrower or (iii) Change of Control, including, without
limitation, any letters of intent, commitment letters or engagement letters
received by the Borrowers, and any other event or condition which is reasonably
likely to have a material effect on the Borrowers, the Loans or the Chapter 11
Cases, including, without limitation, the progress of any proposed or confirmed
Chapter 11 plan of reorganization.
(c)    In consultation with the Lenders, the Borrowers shall take such action as
shall be reasonably necessary to (i) cause the confirmation of an Approved Plan
of Reorganization and (ii) minimize the length of time between entry of the
Confirmation Order and the Plan Effective Date, and shall diligently pursue
consummation of an Approved Plan of Reorganization.
6.17    Post-Closing Obligations. Each Credit Party shall comply with each of
the covenants contained in Schedule 6.17 on or before the time periods specified
therein.
ARTICLE VII

NEGATIVE COVENANTS
Each Credit Party signatory hereto covenants and agrees for itself and on behalf
of its Subsidiaries that, so long as any Lender shall have any Commitment
hereunder or any Loan or other Obligation remains outstanding:
7.01    Investments. None of the Credit Parties nor any of its Subsidiaries will
make any Investment in any Person, except for Investments which consist of:
(a)    Investments comprised of notes payable, or stock or other securities
issued by non-Affiliated account debtors to such Credit Parties (or issued by
account debtors to Subsidiaries that are not Credit Parties) pursuant to
negotiated agreements with respect to settlement of such account debtor’s
accounts in the ordinary course of business or following delinquency or
financial distress of such account debtor;

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(b)    Capital Stock (i) issued and outstanding on the Closing Date in its
Subsidiaries in existence on the Closing Date, (ii) issued following the Closing
Date by a Credit Party to another Credit Party, (iii) issued following the
Closing Date by a Subsidiary that is not a Credit Party in favor of a Credit
Party, (iv) issued following the Closing Date by a Subsidiary that is not (and
that is not required to be) a Credit Party in favor of another Subsidiary that
is not (and this is not required to be) a Credit Party or (v) issued to a Credit
Party following the Closing Date by another Person that will become a Credit
Party promptly following such issuance or capital contribution between such
Persons;
(c)    Investments consisting of capital contributions by (i) a Credit Party to
another Credit Party or (ii) a Subsidiary that is not a Credit Party in favor of
a Credit Party or a Subsidiary that is not a Credit Party;
(d)    Investments consisting of (i) unsecured, intercompany loans by and among
the Credit Parties so long as the Administrative Agent has a first priority,
perfected Lien (subject to the Carve-Out) in such intercompany loans and has
received the Intercompany Note evidencing such intercompany loans, together with
transfer powers executed in blank and a Subordination Agreement in connection
therewith, and (ii) intercompany loans made by any Subsidiary to any Credit
Party on terms and conditions reasonably acceptable to the Required Lenders,
including the Administrative Agent’s receipt of a Subordination Agreement;
(e)    Investments by a Subsidiary that is not a Credit Party in a Credit Party
or a Subsidiary that is not a Credit Party;
(f)    Investments consisting of any Credit Party or any Subsidiary Guaranteeing
(i) the Obligations of the Credit Parties and (ii) any obligations or other
Indebtedness if such Credit Party or such Subsidiary would be permitted to
directly incur such Indebtedness under Section 7.02 or if such obligations would
be permitted to be incurred under this Agreement, except in each case, the
Guarantee by a Credit Party of Indebtedness or trade payables of Foreign
Subsidiaries other than as permitted under clause (k) of this Section 7.01:
(g)    Investments in cash or Cash Equivalents;
(h)    Investments consisting of loans to its respective employees on an
arm’s-length basis in the ordinary course of business consistent with past
practices for travel expenses, relocation costs and similar purposes up to a
maximum of $20,000 per employee at any one time outstanding and $125,000 in the
aggregate at any one time outstanding;
(i)    Investments existing as of the Petition Date and set forth on
Schedule 7.01:
(j)    Investments in Foreign Subsidiaries (other than the AA Canadian
Subsidiaries) after the Closing Date in an aggregate amount outstanding at any
time not to exceed $2,500,000; provided that, to the extent such Investments are
in the form of loans, advances or other extensions of credit to a Foreign
Subsidiary, such Investments are evidenced by the Intercompany Note pledged to
the Administrative Agent, together with transfer powers executed in blank in
connection therewith;
(k)    Investments by the Credit Parties in their Foreign Subsidiaries
consisting of extensions of credit in the nature of intercompany accounts
receivables from the sale of inventory; provided that (i) the aggregate book
value of all outstanding accounts receivable of all Subsidiaries that are not
Credit Parties owing to any Credit Party, whether or not arising out of the sale
of inventory, shall not exceed $20,000,000 at any time, (ii) the amount of cash
held (A) at all Foreign Subsidiaries of the Credit Parties organized in the
Republic of Korea and the People’s Republic of China (excluding cash on deposit
with third parties as security under a lease agreement) shall not exceed
$10,000,000 in the aggregate as of the last day of any Fiscal Month except, for
any period not to exceed 2 consecutive Fiscal Months in any Fiscal Year, by an
amount not greater than $2,500,000, and (B) at all other Foreign Subsidiaries of
the Credit Parties (excluding cash on deposit with third parties as security
under a lease agreement) shall not exceed $1,000,000 in the aggregate as of the
last

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day of any Fiscal Month, (iii) such Investments may not be converted into
Capital Stock or a capital contribution, no payments with respect to such
Investments may be waived by the Credit Parties and such Investments are
repayable in cash by the Foreign Subsidiaries; provided that returns of
inventory by any Foreign Subsidiary to any Credit Party in the ordinary course
of business may be credited to any outstanding accounts receivable of such
Foreign Subsidiary owing to such Credit Party, and (iv) such Investments are
evidenced by the Intercompany Note pledged to the Administrative Agent, together
with transfer powers executed in blank in connection therewith;
(l)    advances of payroll payments to employees in the ordinary course of
business consistent with past practices in an amount not to exceed payments for
one (1) payroll period for any employee;
(m)    Investments held solely by Foreign Subsidiaries denominated in any
foreign currency that is the local foreign currency of such Foreign Subsidiary
customarily used by similar foreign companies for cash management purposes in
any jurisdiction outside the United States to the extent reasonably required or
desirable in connection with any business conducted by any Foreign Subsidiary
organized in such jurisdiction;
(n)    Investments consisting of any Credit Party Guaranteeing (i) pursuant to
the Prepetition Senior Notes Documents, the Indebtedness evidenced by the
Prepetition Senior Notes incurred by another Credit Party to the extent such
incurrence is permitted by Section 7.02(c), (ii) pursuant to the Prepetition ABL
Documents, the Indebtedness evidenced by the Prepetition ABL Facility incurred
by another Credit Party to the extent such incurrence is permitted by Section
7.02(c), (iii) pursuant to the Lion Debt Documents, the Indebtedness evidenced
by the Lion Credit Agreement incurred by another Credit Party to the extent such
incurrence is permitted by Section 7.02(j) and such Guaranteeing Credit Party is
a guarantor of such Indebtedness under the Lion Debt Documents on the Closing
Date, or (iv) pursuant to the SG Debt Documents, the Indebtedness evidenced by
the SG Credit Agreement incurred by another Credit Party to the extent such
incurrence is permitted by Section 7.02(k) and such Guaranteeing Credit Party is
a guarantor of such Indebtedness under the SG Debt Documents on the Closing
Date; and
(o)    Investments in an aggregate outstanding amount not exceeding $100,000,
including the aggregate amount of Investments made and outstanding pursuant to
Section 7.01(j), made when (i) no Default or Event of Default has occurred and
is continuing; (ii) with respect to any such Investment in the form of loans,
advances or other extensions of credit to a Credit Party or Subsidiary, such
Investment is evidenced by the Intercompany Note pledged to the Administrative
Agent, together with transfer powers executed in blank in connection therewith;
and (iii) not less than 10 days (or such shorter period as agreed by the
Administrative Agent in its discretion) prior to such Investment, the Borrower
Representative has delivered a certificate to the Administrative Agent
demonstrating compliance with this Section 7.01(o).
7.02    Restrictions on Indebtedness. None of the Credit Parties nor any of its
Subsidiaries will incur, assume, guarantee or be or remain liable, contingently
or otherwise, with respect to any Indebtedness other than:
(a)    Indebtedness secured by purchase money security interests and Capitalized
Leases permitted by Section 7.03(a)(viii) and any permitted refinancing thereof
agreeable to the Required Lenders .
(b)    Indebtedness of the Credit Parties consisting of the Obligations under
the Loan Documents;
(c)    Prepetition Obligations outstanding on the Petition Date and any other
Indebtedness described in Schedule 7.02, but not any extensions, renewals or
replacements of such Prepetition Obligations or other Indebtedness;
(d)    Indebtedness under the Prepetition Existing Letters of Credit to the
extent cash collateralized pursuant to the CapOne Agreement;
(e)    Indebtedness consisting of intercompany loans and advances permitted by
Section 7.01;

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(f)    Guarantees by (i) any Credit Party of Indebtedness of any Credit Party
permitted by this Section 7.02, (ii) any Subsidiary that is not a Credit Party
of any Indebtedness of any Credit Party permitted by this Section 7.02,
(iii) any Subsidiary that is not a Credit Party of any Indebtedness of any other
Subsidiary that is also not a Credit Party permitted by this Section 7.02 and
(iv) a Credit Party of any Indebtedness of any other Subsidiary that is not a
Credit Party permitted by Section 7.01(k);
(g)    Indebtedness consisting of contingent liabilities under surety bonds and
similar instruments incurred in the ordinary course of business;
(h)    Indebtedness in respect of netting services, automatic clearing house
arrangements and similar arrangement in the ordinary course of business in each
case in connection with deposit and securities account;
(i)    to the extent constituting Indebtedness, obligations in respect of
agreements for the deferred payment of premiums or to finance the deferred
payment of premiums owing by any Credit Party under any insurance policies
entered into in the ordinary course of business that are either (i) unsecured or
(ii) secured by a Lien permitted under Section 7.03(a)(xiv);
(j)    unsecured Indebtedness incurred pursuant to the Lion Debt Documents on or
prior to the Petition Date in an aggregate principal amount not to exceed the
aggregate principal amount outstanding on the Petition Date plus the amount of
any increase in principal for the purpose of paying interest in kind pursuant to
the Lion Credit Agreement as in effect on May 22, 2013 and as amended by
Amendment No. 1 thereto dated as of November 29, 2013, Amendment No. 2 thereto
dated as of September 8, 2014 and Amendment No. 3 thereto dated as of August 17,
2015, or as a result of accretion thereof; and
(k)    unsecured Indebtedness of the borrowers under the SG Debt Documents on
the Petition Date in an aggregate principal amount not to exceed the amount
outstanding on the Petition Date plus the amount of any increase in principal
for the purpose of paying interest in kind or as a result of accretion thereof.
7.03    Restrictions on Liens.
(a)    Permitted Liens. None of the Credit Parties nor any of its Subsidiaries
will create or incur or suffer to be created or incurred or to exist any Lien
upon any of their respective property or assets of any character whether now
owned or hereafter acquired, or upon the income or profits therefrom other than:
(i)    Liens of landlords, carriers, warehousemen, mechanics and materialmen and
other like Liens created in the ordinary course of business, for amounts not yet
due or which are being contested in good faith by appropriate proceedings and as
to which adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP;
(ii)    pledges or deposits made in connection with worker’s compensation,
employee benefit plans, unemployment or other insurance, old age pensions, or
other Social Security benefits, and good faith deposits in connection with
tenders, contracts, bids, statutory obligations or leases to which it is a party
or deposits to secure, or in lieu of, surety, penalty or appeal bonds,
performance bonds, letters of credit and other similar obligations or arising as
a result of progress payments under government contracts or contracts with
public utilities, in each case, in the ordinary course of business;
(iii)    such minor defects, irregularities, encumbrances, easements, rights of
way, and clouds on title as normally exist with respect to similar properties
which do not materially interfere with the present or proposed use of the
applicable real property;
(iv)    Liens in favor of the Administrative Agent and the other Secured Parties
securing the Obligations, including Liens on cash collateral;

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(v)    Liens that secure the Prepetition Facilities;
(vi)    Liens in favor of the issuer of the Prepetition Existing Letters of
Credit on the cash constituting cash collateral (and the deposit account holding
such cash) in respect of the Prepetition Existing Letters of Credit pursuant to
the CapOne Agreement; provided that the amount of such cash collateral shall not
exceed the lesser of (x) the amount thereof contemplated by the CapOne Agreement
on August 17, 2015 and (y) 105% of the face amount of the Prepetition Existing
Letters of Credit at such time;
(vii)    Liens in existence on the Petition Date and listed on Schedule 7.03;
provided that (A) the Lien does not extend to any additional property (other
than accessions to equipment and proceeds thereof) and (B) to the extent such
amount secured constitutes Indebtedness, such Indebtedness is permitted by
Section 7.02(c);
(viii)    Liens created after the Closing Date by conditional sale or other
title retention agreements (including Capitalized Leases) or in connection with
purchase money Indebtedness, in each case, with respect to equipment and fixed
assets acquired by any Credit Party or any Subsidiary of a Credit Party,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and obligations with respect to conditional sale or title retention agreements
of not more than $100,000 outstanding at any one time for all such Liens
(provided that such Liens attach only to the assets subject to such purchase
money debt and such Indebtedness is incurred within one hundred twenty
(120) days following such purchase and does not exceed 100% of the purchase
price of the subject assets);
(ix)    judgment Liens for the payment of money not constituting an Event of
Default so long as the enforcement of such Lien has been effectively stayed and
so long as such Lien is junior to the Lien in favor of the Administrative Agent
granted under the DIP Order or the Security Documents;
(x)    Liens in favor of a banking institution encumbering deposits (including
the right of set-off) and which are within the general parameters customary in
the banking industry to secure usual and customary fees, returned items and
other like exposure with respect to such account relating to deposit or
securities accounts maintained by Holdings or any of its Subsidiaries with such
banking institution;
(xi)    Liens arising by operation of law under Article 2 of the UCC in favor of
a reclaiming seller of goods or buyer of goods;
(xii)    Liens for Taxes not yet due and payable or which are being contested in
good faith by appropriate proceedings, provided that the applicable Credit Party
or Subsidiary shall have set aside on its books adequate reserves in accordance
with GAAP with respect thereto;
(xiii)    Liens in favor of customs and revenue authorities to secure payment of
customs duties in connection with the importation of goods;
(xiv)    Liens on unearned insurance premiums securing the payment of financed
insurance premiums so long as such financed amounts are promptly paid; provided
that such Liens extend only to such insurance premiums or loss payment or
similar payment from any insurance provider in an amount not in excess of any
unpaid financed premiums;
(xv)    Liens on assets of a Subsidiary that is not a Credit Party in favor of a
Credit Party or Subsidiary thereof, provided that, if such Liens relate to
obligations under the Intercompany Note, such Liens are assigned to the
Administrative Agent (or, in the Administrative Agent’s discretion,

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subject to a Subordination Agreement) pursuant to documentation and agreements
in form and substance reasonably satisfactory to the Administrative Agent; and
(xvi)    Liens in favor of the Prepetition Indebtedness Holders as adequate
protection granted pursuant to the DIP Order.
(b)    Restrictions on Negative Pledges and Upstream Limitations. No Credit
Party shall nor shall any Subsidiary (a) enter into or permit to exist any
arrangement or agreement which directly or indirectly prohibits any Credit Party
from creating, assuming or incurring any of the Obligations or any Lien upon its
properties, revenues or assets whether now owned or hereafter acquired, as
security for the Obligations, or from making Guarantees of, or payments on, the
Obligations, or (b) enter into any agreement, contract or arrangement (excluding
this Agreement and the other Loan Documents, the Prepetition ABL Documents and
the Prepetition Senior Notes Documents) restricting the ability of any
Subsidiary of any Credit Party to pay or make dividends or distributions in cash
or kind to any Credit Party, to make loans, advances or other payments of
whatsoever nature to any Credit Party, or to make transfers or distributions of
all or any part of its assets to any Credit Party in each case other than
customary anti-assignment provisions contained in leases, licensing agreement
and other agreements restricting the assignment thereof entered into by any
Credit Party or any Subsidiary in the ordinary course of its business; provided
that this Section 7.03(b) shall not apply with respect to (i) prohibitions and
restrictions contained in this Agreement, the other Loan Documents, the
Prepetition Senior Notes Documents, the Lion Debt Documents and the SG Debt
Documents and (ii) Indebtedness permitted under Section 7.02(a) solely to the
extent related to the property financed thereby or the property subject thereto.
7.04    Restricted Payments; Prepayments.
(a)    Restricted Payments. No Credit Party nor any Subsidiary shall make any
Restricted Payment, except (a) Restricted Payments to a Credit Party and
(d) Restricted Payments by a Subsidiary of a Credit Party that is not a Credit
Party made ratably to the holders of its Capital Stock.
(b)    Prepayments of Indebtedness. No Credit Party nor any Subsidiary shall
pay, prepay, redeem, purchase, defease or otherwise satisfy in any manner (i)
any Indebtedness entered into on or prior to the Petition Date and (ii) any
Claim, other than payments contemplated by and in compliance with the Approved
Budget and any other payments agreed to in writing by the Required Lenders and,
if necessary, authorized by the Bankruptcy Court, provided that such
restrictions shall not apply (A) to Foreign Subsidiaries to the extent such
payments are made from cash held at such Foreign Subsidiary on the Closing Date
and (B) payments from cash proceeds generated by operations and activities of
the AA UK Subsidiaries (including cash proceeds from the closure and/or
liquidation of stores (and the inventory contained therein) of the AA UK
Subsidiaries), so long as such cash proceeds are applied in accordance with the
Approved Budget.
7.05    Merger, Consolidation and Disposition of Assets.
(a)    Mergers and Acquisitions. None of the Credit Parties nor any Subsidiary
will become a party to any merger, dissolution, liquidation or consolidation,
except for, so long as no Default or Event of Default is continuing or would
result therefrom:
(i)    the merger or consolidation of one or more of the Domestic Subsidiaries
of AA USA with and into a Credit Party (other than Holdings); provided that such
Credit Party shall be the surviving entity; and
(ii)    the merger or consolidation of any Subsidiary that is not a Credit Party
with any other Subsidiary that is not a Credit Party.
(b)    Disposition of Assets. No Credit Party nor any Subsidiary shall dissolve,
liquidate or sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including any Capital

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Stock of any of its Subsidiary (whether in a public or a private offering or
otherwise), any of its receivables or any of its other Investments, other than:
(i)    the sale of inventory in the ordinary course of business;
(ii)    dispositions of assets (other than receivables owned by Credit Parties)
(A) among Credit Parties, (B) by Subsidiaries that are not Credit Parties to
(x) Credit Parties and (y) other Subsidiaries that are not Credit Parties,
(C) among Foreign Subsidiaries or (D) by Foreign Subsidiaries to Credit Parties;
(iii)    dispositions of obsolete or worn out equipment or fixtures no longer
useful in the business, whether now owned or hereafter acquired, in the ordinary
course of business;
(iv)    non-exclusive licenses of intellectual property in the ordinary course
of business (other than to the extent such licenses would restrict the ability
of the Credit Party or the Administrative Agent to sell or license the subject
intellectual property or impair the security interests granted to the
Administrative Agent); provided that to the extent approved by the
Administrative Agent in its Permitted Discretion, such licenses are permitted to
be exclusive to the extent such licenses relate to specific lines or products or
specific geographic locations;
(v)    the abandonment or termination of intellectual property rights in the
ordinary course of business which are not material to the operation of the
business of the Credit Parties;
(vi)    dispositions of cash and Cash Equivalents except with respect to
transactions prohibited hereunder so long as such dispositions are not in
violation of Section 6.15 or the Agency Account Agreements to which they are
subject; and
(vii)    the liquidation of stores (and the inventory contained therein) of
Holdings and its Subsidiaries specified in the Approved Budget; provided that
the Net Cash Proceeds received by Holdings or any of its Subsidiaries in
connection therewith are applied in accordance with the Approved Budget and
Section 2.05(a).
Notwithstanding anything to the contrary contained in this Section 7.05, (i) any
disposition of Capital Stock or (ii) any merger, dissolution, liquidation or
consolidation, in each case, among the Credit Parties and/or their Subsidiaries
that would otherwise be permitted by this Section 7.05 shall be subject to the
requirement that (a) the Credit Parties provide the Administrative Agent not
less than thirty (30) days’ notice (or such earlier time acceptable to the
Administrative Agent) prior to the consummation of any such disposition, merger,
dissolution, liquidation or consolidation and (b) the Credit Parties shall have
complied with Section 6.12 prior to the consummation thereof; provided further
that the deadlines for the execution and delivery of Loan Documents,
descriptions, legal opinions, resolutions, and all other instruments,
certificates, documents, agreements and deliverables referred to in Section 6.12
shall be deemed to refer to the date of such disposition, merger, dissolution,
liquidation or consolidation, and all action required to be taken by the Credit
Parties under Section 6.12 shall be required to be taken on or before the date
of such disposition, merger, dissolution, liquidation or consolidation.
7.06    Sale and Leaseback. No Credit Party nor any Subsidiary shall engage in
any sale-leaseback of or similar transaction or incur any Synthetic Lease
Obligations involving any of its assets, except sale leaseback transactions
consummated prior to the Petition Date and described in Schedule 7.06.
7.07    Accounting Changes; Change of Fiscal Year. No Credit Party nor any
Subsidiary will make any change in (i) accounting policies or reporting
practices, except as permitted by GAAP or (ii) their Fiscal Year (except to make
the Fiscal Year of a Subsidiary end on December 31).
7.08    Transactions with Affiliates. No Credit Party nor any Subsidiary will
engage in any transaction with any Affiliate or its or any of its Affiliate’s
employees, officers or directors, whether or not in the ordinary course

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of business, including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such Affiliate, on terms more favorable to such Person than would have been
obtainable on an arm’s-length basis in the ordinary course of business, provided
that the foregoing restriction shall not apply to (i) transactions solely among
the Credit Parties otherwise permitted hereunder, (ii) transactions solely among
Subsidiaries that are not Credit Parties, (iii) any Restricted Payment permitted
under Section 7.04, (iv) Investments permitted by Section 7.01, (v) Indebtedness
permitted under Section 7.02(e) and (f), (vi) employment, benefit,
indemnification and severance arrangements between the Credit Parties, their
Subsidiaries and their respective officers, directors and employees in the
ordinary course of business and consistent with past practices,
(vii) transactions pursuant to agreements in existence on the Petition Date and
set forth on Schedule 7.08 or any amendment thereto that is not materially
adverse to any Lender or any Credit Party and (viii) the transactions referenced
in and contemplated by that certain Nomination, Standstill and Support
Agreement, dated as of July 9, 2014, provided that any Indebtedness incurred
thereunder is Lion Debt.
7.09    No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions.
7.10    Change in Terms of Governing Documents; Material Agreements. No Credit
Party nor any Subsidiary shall change or amend, modify, supplement or waive the
terms of any (a) of its Governing Documents in any material respect;
(b) Prepetition ABL Documents, Prepetition Senior Notes Documents, the Lion Debt
Documents or the SG Debt Documents without the prior written consent of the
Required Lenders, to the extent such amendment, modification, supplement or
waiver shall (i) increase the aggregate principal amount of the Prepetition
Senior Notes, the Lion Debt or the SG Debt or interest, premiums or fees owing
thereon, (ii) shorten the weighted average life, (iii) change the amortization
(other than to extend the same), (iv) amend the maturity date (other than to
extend the same), (v) increase the overall interest rate, or (vi) otherwise
amend the representations, covenants and defaults under the Prepetition Senior
Notes Documents, the Lion Debt Documents or the SG Debt Documents in a manner
that would result in such covenants and defaults being materially less favorable
to the Credit Parties, taken as a whole, or materially more adverse to the
interests of the Lenders; or (c) any Subordinated Debt Document, except to the
extent permitted by the Subordination Agreement applicable thereto.
7.11    Change in Nature of Business. No Credit Party nor any Subsidiary shall
engage in any line of business substantially different from those lines of
business conducted by such Credit Party on the Petition Date other than lines of
business reasonably related or ancillary to such lines of business conducted on
the Petition Date.
7.12    Margin Regulations. No Credit Party shall use the proceeds of any Credit
Extension, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.
7.13    Financial Covenant.
(a)    Disbursements. The Credit Parties shall not, as of the last Friday of
each calendar month (each a “Test Date”), commencing on Friday, October 30,
2015, permit the sum of all Disbursements of Holdings and its Subsidiaries on a
cumulative basis for the period commencing on the Petition Date and ending on
such Test Date to exceed the amount of “Total Disbursements” for such period set
forth in Part A of Schedule 7.13. As used in this Section 7.13, “Disbursements”
means all disbursements and expenditures of Holdings and its Subsidiaries,
excluding (i) all professional fees which have been allowed by the Bankruptcy
Court in the Chapter 11 Cases and (ii) interest and fees accrued with respect to
the DIP Facility.

(b)     Receipts. The Credit Parties shall not, as of each Test Date, commencing
on Friday, October 30, 2015, permit the sum of all cash receipts of Holdings and
its Subsidiaries on a cumulative basis for the period commencing on the Petition
Date and ending on such Test Date to be less than the amount of “Total Receipts”
for such period set forth in Part B of Schedule 7.13.

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(c)     Cash Flow. The Credit Parties shall not, as of each Test Date,
commencing on Friday, October 30, 2015, permit the (i) the sum of all cash
receipts of Holdings and its Subsidiaries on a cumulative basis for the period
commencing on the Petition Date and ending on such Test Date less (ii) sum of
all Disbursements of Holdings and its Subsidiaries on a cumulative basis for the
period commencing on the Petition Date and ending on such Test Date, to be less
than the “Minimum Cumulative Cash Flow Amount” for such period set forth in Part
C of Schedule 7.13.

7.14    Maximum Capital Expenditures. The Credit Parties shall not make any
Capital Expenditures other than Capital Expenditures provided for in the
Approved Budget (including normal replacements and maintenance which are
properly charged to current operations).
7.15    Contingent Obligations under Approved Budget. With respect to the
Approved Budget, (a) it is understood and agreed that the Approved Budget shall
contain a “contingent obligations” line item for each Budget Period which shall
provide for disbursements for such Budget Period in an amount equal to 5% of the
aggregate amount of disbursements set forth for such Budget Period in the other
line items set forth in the Approved Budget for such Budget Period (excluding
any items of extraordinary expenditure not in the ordinary course of business
and contained in any Supplemental Budget delivered pursuant to Section 6.04(n)
and approved by the Required Lenders); and (b) no Credit Party may make a
disbursement pursuant to the “contingent obligations” line item other than (i)
to make disbursements in any Budget Period for extraordinary unforeseen items of
expenditure that were not previously identified in prior budgets delivered
pursuant to Section 6.04(n) and (ii) with respect to disbursements identified in
any line item in the Approved Budget for any Budget Period, to make such
disbursements in excess of the amount set forth for such lien item for such
Budget Period.
7.16    Sanctions. No Credit Party nor any Subsidiary shall permit any Loan or
the proceeds of any Loan, directly or indirectly, (i) to be lent, contributed or
otherwise made available to fund any activity or business in any Designated
Jurisdiction; (ii) to fund any activity or business of any Person located,
organized or residing in any Designated Jurisdiction or who is the subject of
any Sanctions; or (iii) in any other manner that will result in any violation by
any Person (including any Lender or Administrative Agent) of any Sanctions.
7.17    Consignments. No Credit Party shall acquire or accept any inventory on
consignment or approval without the Administrative Agent’s written consent. No
Credit Party shall sell any wholesale inventory on consignment or approval or
any other basis under which the customer may return or require a Credit Party to
repurchase such inventory except in the ordinary course of business or otherwise
disclosed to the Administrative Agent.
7.18    Chapter 11 Claims; Adequate Protection. No Credit Party shall incur,
create, assume, suffer to exist or permit (i) any administrative expense,
unsecured claim, or other super-priority claim or Lien that is pari passu with
or senior to the claims of the Secured Parties against the Borrowers hereunder,
or apply to the Bankruptcy Court for authority to do so, except for the
Permitted Prior Liens and the Carve-Out or (ii) any obligation to make adequate
protection payments, or otherwise provide adequate protection, other than
Permitted Adequate Protection Payments.
7.19    Chapter 11 Orders. No Credit Party shall make or permit to be made any
change, amendment or modification, or any application or motion for any change,
amendment or modification, to any Chapter 11 Order without the prior written
consent of the Required Lenders.
ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES
8.01    Events of Default. If any of the following events (“Events of Default”)
shall occur:
(a)    Non-Payment. Any Credit Party shall fail to pay (i) any principal of the
Loans when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment; or (ii) any interest on the Loans, the fees or other sums due hereunder

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or under any of the other Loan Documents, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment; or
(b)    Specific Covenants.
(i)    Any Credit Party shall fail to comply with any of its covenants contained
in Section 6.04(n), Section 6.04(o), Section 6.05(a), Section 6.06(a),
Section 6.07, Section 6.11, Section 6.14, Section 6.15, Section 6.16, Section
6.17 or Article VII; or
(ii)    Any Credit Party shall fail to comply with any of its covenants
contained in Section 6.04 (other than clauses (n) and (o) thereof) or
Section 6.05(e), (f), (g), (i), (k) and (m) and such failure continues for two
(2) Business Days; or
(c)    Other Defaults. Any Credit Party shall fail (or, to the extent
applicable, fail to cause its Subsidiaries) to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other than
those specified elsewhere in this Section 8.01) and such failure continues for
thirty (30) days; or
(d)    Representations and Warranties. Any representation or warranty of any
Credit Party in this Agreement or any of the other Loan Documents or in any
other document or instrument delivered pursuant to or in connection with this
Agreement shall prove to have been false in any material respect (but without
any duplication of any materiality qualifications) upon the date when made or
deemed to have been made or repeated; or
(e)    Judgments. There shall remain in force for more than thirty (30) days,
whether or not consecutive, except for matters subject to the automatic stay,
any final judgment against any Credit Party (considered collectively) that
exceeds in the aggregate $500,000 which are not covered by insurance policies
unless such judgment has been discharged, satisfied, bonded or stayed pending
appeal; or
(f)    ERISA Event. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Credit Parties under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000, or
(ii) any Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $500,000; or
(g)    Indebtedness. Any Credit Party shall fail to pay at maturity, or within
any applicable period of grace, any obligation for Indebtedness in excess of
$500,000, or fail to observe or perform any material term, covenant or agreement
(other than (i) in connection with or as a result of the Chapter 11 Cases or
(ii) any such obligation with respect to which the Bankruptcy Code prohibits the
Credit Parties from complying with such obligation or permits the Credit Parties
not to comply with such obligation) contained in any agreement by which it is
bound, evidencing or securing Indebtedness in excess of $500,000 for such period
of time as would permit (assuming the lapse of time and/or giving of appropriate
notice if required and assuming such breach has not been cured within the
applicable grace period thereunder) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof; or
(h)    Invalidity of Loan Documents; Etc. If any of the Loan Documents shall be
cancelled, terminated, revoked, rescinded or otherwise ceases to be in full
force and effect other than in accordance with their terms; or the
Administrative Agent’s security interests, mortgages or Liens in all or a
material portion of the Collateral shall cease to be perfected, or shall cease
to have the priority contemplated by the Security Documents in accordance with
the terms thereof or with a consent or approval obtained in accordance with
Section 11.01; or any action at law, suit or in equity or other legal proceeding
to cancel, revoke, rescind or declare void any of the Loan Documents shall be
commenced by or on behalf of any Credit Party, any Subsidiary or any of their
respective equity holders; or any court or any other Governmental Authority
shall make a

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determination that, or issue a judgment, order, decree or ruling to the effect
that, any one or more of the Loan Documents is illegal, invalid or unenforceable
in accordance with the terms thereof; or
(i)    Change of Control. A Change of Control shall occur; or
(j)    Loss of Collateral; Labor Matters; Force Majeure; Etc. There shall occur
(i) any strike, lockout, labor dispute, embargo, condemnation, expropriation,
act of God or public enemy, or other casualty, which in any such case causes the
cessation or substantial curtailment of revenue producing activities at any
facility of any Credit Party if such event or circumstance is not covered by
business interruption insurance and would have a Material Adverse Effect or
(ii) any material damage to, or loss, theft or destruction of, any Collateral
having a value in excess of $1,000,000, not covered by insurance; or
(k)    Conduct of Business. Any Credit Party shall be enjoined, restrained or in
any way prevented by the order of any Governmental Authority from conducting any
part of their business unless such order would not have a Material Adverse
Effect; or there shall otherwise be, except to the extent permitted by
Section 7.05(b), a suspension of the conduct of any material portion of the
Credit Parties business, taken as a whole in the ordinary course, a liquidation
of any material portion of the Credit Parties’ assets or store locations, a
retention of an agent or other third party to conduct any store closings, store
liquidations or “Going-Out-Of Business” sales with respect to any material
portion of the Credit Parties’ assets or store locations (or any Credit Party
shall take any action in furtherance of the foregoing, whether by vote of its
board of directors (or equivalent governing body) or otherwise); or
(l)    Licenses, Permits, Etc. There shall occur the loss, suspension or
revocation of, or failure to renew, any license or permit now held or hereafter
acquired by any Credit Party if such loss, suspension, revocation or failure to
renew would have a Material Adverse Effect; or
(m)    Indictment. Any Credit Party, any of its Subsidiaries or any member of
the Senior Management of any Credit Party or any of its Subsidiaries shall be
indicted or convicted for a state or federal crime or any other criminal action
having the force of law for a felony; or
(n)    [Intentionally Omitted]
(o)    Approved Budget. Subject to Section 7.15 and, other than with respect to
all professional fees which have been allowed by the Bankruptcy Court in the
Chapter 11 Cases and interest and fees accrued with respect to the DIP Facility,
(i) the proceeds of any Loan shall have been expended in a manner, or a
withdrawal from the DIP Funding Account shall be for a purpose, which is not in
accordance with the Approved Budget, or (ii) any disbursement is made by any
Credit Party that is not set forth in a line item on the Approved Budget; or
(p)    Collateral Documents. The Interim Order and the Final Order, as
applicable, shall cease to create a valid and perfected lien with such priority
required by this Agreement and such DIP Order, subject to Permitted Prior Liens
and the Carve-Out, on a material portion of the Collateral purported to be
covered thereby; or
(q)    Entry of Order. The Final Order Entry Date shall not have occurred within
45 days after the Interim Order Entry Date; or
(r)    Conversion to Chapter 7. An order with respect to any of the Chapter 11
Cases shall be entered by the Bankruptcy Court converting such Chapter 11 Case
to a Chapter 7 case; or
(s)    Alternate Financing. Any Credit Party shall file a motion in the Chapter
11 Cases to obtain additional or replacement financing from a party other than
the Lenders under Section 364(d) of the Bankruptcy Code or to use cash
collateral of a Lender under Section 363(c) of the Bankruptcy Code, except (i)
with the

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express written consent of Required Lenders or (ii) to the extent any such
financing shall provide for the payment in full of the Obligations; or
(t)    Prepetition Claims. Any Credit Party shall file a motion seeking, or the
Bankruptcy Court shall enter, an order (i) approving payment of any prepetition
claim (or the Credit Parties shall otherwise make a payment on any prepetition
claim) other than (x) as provided for in the “first-day orders” and included in
the Approved Budget or (y) otherwise consented to by the Required Lenders in
writing, (ii) granting relief from the automatic stay applicable under Section
362 of the Bankruptcy Code to any holder of any security interest to permit
foreclosure on any assets having a book value in excess of $1,000,000 in the
aggregate or to permit other actions that would have a material adverse effect
on the Credit Parties or their estates, or (iii) except with respect to the
Prepetition Obligations as provided in the Interim Order and the Final Order, as
applicable, approving any settlement or other stipulation not approved by the
Required Lenders and not included in the Approved Budget with any secured
creditor of any Credit Party providing for payments as adequate protection or
otherwise to such secured creditor; or
(u)    Appointment of Trustee or Examiner. An order with respect to any of the
Chapter 11 Cases shall be entered by the Bankruptcy Court appointing, or any
Credit Party, any Subsidiary of a Credit Party, or any Affiliate of a Credit
Party shall file an application for an order with respect to any Chapter 11 Case
seeking the appointment of, (i) a trustee under Section 1104 of the Bankruptcy
Code, or (ii) an examiner with enlarged powers relating to the operation of the
business (powers beyond those set forth in Section 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; or
(v)    Dismissal of Chapter 11. An order shall be entered by the Bankruptcy
Court dismissing any of the Chapter 11 Cases which does not contain a provision
for termination of the Commitment, and payment in full of all obligations of the
Credit Parties under the Loan Documents; or
(w)    Order With Respect to Chapter 11 Cases. An order with respect to any of
the Chapter 11 Cases shall be entered by the Bankruptcy Court without the
express prior written consent of the Required Lenders (and with respect to any
provisions that affect the rights or duties of the Administrative Agent, the
Administrative Agent), (i) to revoke, reverse, stay, modify, supplement or amend
any of the Interim Order and the Final Order, as applicable, (ii) to permit any
administrative expense or any claim (now existing or hereafter arising, of any
kind or nature whatsoever) to have administrative priority as to the Credit
Parties equal or superior to the priority of the Chapter 11 Cases shall be
entered by the Bankruptcy Court without the express prior written consent of the
Administrative Agent and the Lenders in respect of the Obligations (other than
the Carve Out) or (iii) to grant or permit the grant of a lien on the Collateral
(other than Permitted Liens); or
(x)    Application for Order by Third Party. An application for any of the
orders described in clauses (aa) through (cc) above shall be made by a person
other than the Credit Parties and such application is not contested by the
Credit Parties in good faith or the relief requested is not withdrawn, dismissed
or denied within 45 days after filing or any person obtains a final order under
Section 506(c) of the Bankruptcy Code against the Administrative Agent or
obtains a final order adverse in any material respect to the Administrative
Agent or the Lenders or any of their respective rights and remedies under the
Loan Documents or in the Collateral; or
(y)    Right to File Chapter 11 Plan. The entry of an order by the Bankruptcy
Court terminating or modifying the exclusive right of any Credit Party to file a
Chapter 11 plan pursuant to Section 1121 of the Bankruptcy Code, without the
prior written consent of the Required Lenders; or
(z)    Liens. (i) Any Credit Party shall attempt to invalidate, reduce or
otherwise impair the liens or security interests of the Administrative Agent
and/or the Lenders, claims or rights against such person or to subject any
Collateral to assessment pursuant to Section 506(c) of the Bankruptcy Code, (ii)
any lien or security interest created by Loan Documents or the Chapter 11 Orders
with respect to Collateral shall, for any reason, cease to be valid or (iii) any
action is commenced by the Credit Parties which contests the validity,

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perfection or enforceability of any of the liens and security interests of the
Administrative Agent and/or the Lenders created by any of the Interim Order, the
Final Order, or the Loan Documents; or
(aa)    Invalidation of Claims. Any Credit Party shall seek to, or shall support
(in any such case by way of any motion or other pleading filed with the
Bankruptcy Court or any other writing to another party-in-interest executed by
or on behalf of such Credit Party) any other person’s motion to, disallow in
whole or in part the Lenders’ claim in respect of the obligations or contest any
material provision of any Loan Document or any material provision of any Loan
Document shall cease to be effective; or
(bb)    Amendment of DIP Order. The Interim Order or the Final Order is amended,
supplemented, reversed, vacated or otherwise modified without the prior written
consent of the Required Lenders (and with respect to amendments, modifications
or supplements that affect the rights or duties of the Administrative Agent, the
Administrative Agent); or
(cc)    Modifications. The Approved Plan of Reorganization or the Confirmation
Order is amended, supplemented or otherwise modified without the prior written
consent of the Required Lenders (and with respect to amendments, modifications
or supplements that affect the rights or duties of the Administrative Agent, the
Administrative Agent); or
(dd)    Withdrawal or Termination of Reorganization Plan. The withdrawal or
termination of the Approved Plan of Reorganization; or
(ee)    Payments. Any Credit Party or any of their Affiliates shall have filed a
motion seeking the entry of, or the Bankruptcy Court shall have entered, an
order approving a payment to any Person that would be materially inconsistent
with the treatment of any such Person under the Approved Plan of Reorganization,
without the prior written consent of the Required Lenders; or
(ff)    Confirmation Order. The entry of the Confirmation Order, in form and
substance satisfactory to the Required Lenders (and with respect to any
provisions that affect the rights or duties of the Administrative Agent, the
Administrative Agent), shall not have occurred by the date that is 120 days
after the Petition Date; or
(gg)    Plan Effective Date. The effective date of the Approved Plan of
Reorganization shall not have occurred by the date that is 180 days after the
Petition Date, or such later date to which the Required Lenders have consented
in writing; or
(hh)    Restructuring Support Agreement. The failure of the Credit Parties to
comply in any material respect with the Restructuring Support Agreement or a
“Supporting Party Termination Event” (as defined therein) under the
Restructuring Support Agreement as a result of a breach by a Credit Party has
occurred; or
(ii)    Disclosure Statement. The failure of the Credit Parties to obtain an
order of the Bankruptcy Court approving the disclosure statement with respect to
the Approved Plan of Reorganization, within 60 days of the Petition Date.
8.02    Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent may, or at the request of the Required
Lenders, shall take any or all of the following actions:
(a)    reduce and/or condition the availability of Loans and/or declare the
Commitment of each Lender to make Loans terminated, whereupon the Loans shall be
reduced or conditioned, as applicable, and/or such Commitments shall be
terminated;
(b)    declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document (including the

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Exit Fee) to be immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Credit Parties; and
(c)    exercise on behalf of itself and the other Secured Parties all rights and
remedies available to it and the other Secured Parties under the Loan Documents.
No termination of the Commitments hereunder shall relieve any Credit Party of
any of the Obligations.
In addition, the Administrative Agent may declare a termination, reduction or
restriction on the ability of the Credit Parties to use any cash collateral
derived solely from the proceeds of Collateral (any such declaration shall be
made to the Credit Parties, the Official Committee (if applicable) and the
United States Trustee (if applicable)).
In addition, subject solely to the giving of five (5) Business Days’ written
notice as set forth below, the automatic stay provided in Section 362 of the
Bankruptcy Code shall be deemed automatically vacated without further action or
order of the Bankruptcy Court and the Administrative Agent and the Lenders shall
be entitled to exercise all of their respective rights and remedies under the
Loan Documents, including all rights and remedies with respect to the Collateral
and the Guarantors. In addition to the remedies set forth above, the
Administrative Agent may exercise any other remedies provided for by this
Agreement and the Loan Documents in accordance with the terms hereof and thereof
or any other remedies provided by applicable law. Notwithstanding the foregoing,
any exercise of remedies is subject to the requirement of the giving of five (5)
Business Days’ prior written notice to counsel for the Borrowers, the Office of
the U.S. Trustee and counsel for the Official Committee in accordance with the
terms of the Chapter 11 Orders, during which period the Credit Parties and/or
the Official Committee may seek an emergency hearing before the Bankruptcy Court
for the purpose of determining whether an Event of Default has occurred (but in
any such hearing the only issue that may be raised in opposition to any exercise
of remedies shall be whether, in fact, an Event of Default has occurred and is
continuing). During the five (5) Business Day notice period, the Credit Parties
may use proceeds of the Loans or cash collateral of the Lenders to (i) fund
operations in accordance with the Approved Budget or (ii) fund the Carve-Out.
8.03    Application of Funds. In the event that, following the occurrence and
during the continuance of any Event of Default, the Administrative Agent or any
Lender, as the case may be, receives any monies in connection with the
enforcement of any of the Loan Documents, or otherwise with respect to the
realization upon any of the Collateral, the Administrative Agent may apply (and
shall apply at (a) the request of the Required Lenders or (b) following the
exercise of remedies pursuant to Section 8.02, including without limitation,
pursuant to the proviso thereof) such monies as follows (and each Lender shall
comply with the instructions of the Administrative Agent in the case of any such
monies received by any Lender):
(i)    First, to payment of that portion of Obligations owing to the
Administrative Agent constituting (a) indemnities and expenses due and payable
under this Agreement and the other Loan Documents (including fees, charges and
disbursements of counsel to the Administrative Agent) and (b) the fees due and
payable under the Administrative Agent’s Letter Agreement;
(ii)    Second, to payment of that portion of the Obligations constituting
indemnities and expenses (including fees, charges and disbursements of counsel
to Lenders and amounts payable under Article III) due and payable to the Lenders
under this Agreement and the other Loan Documents, ratably among such Persons in
proportion to the respective amounts described in this clause Second payable to
them;
(iii)    Third, to payment of that portion of the Obligations constituting
accrued and unpaid interest, fees and Exit Fee and payable to the Lenders under
this Agreement and the other Loan Documents ratably among such Persons in
proportion to the respective amounts described in this clause Third payable to
them;

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(iv)    Fourth, to (i) the payment of that portion of the Obligations
constituting unpaid principal of the Loans and the Exit Fee thereon, ratably
among the holders thereof in proportion to the respective amounts described in
this clause Fourth held by them;
(v)    Fifth, to the payment of all other Obligations (including, without
limitation, the Exit Fee) ratably among the holders thereof in proportion to the
respective amounts described in this clause Fifth;
(vi)    Sixth, the balance, if any, after all of the Obligations have been
indefeasible paid in full, to the Borrowers or as otherwise required by Law.
All payments applied to the Loans pursuant to this Section 8.03 shall be applied
to the Loans owing to the Lenders in accordance with their respective Applicable
Percentages.
ARTICLE IX

ADMINISTRATIVE AGENT
9.01    Appointment and Authority.
(a)    Each of the Lenders hereby irrevocably appoints Wilmington Trust,
National Association to act on its behalf as the Administrative Agent hereunder
and under the other Loan Documents and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. The provisions of this
Article are solely for the benefit of the Administrative Agent and the Lenders,
and neither any Borrower nor any other Credit Party shall have rights as a third
party beneficiary of any of such provisions other than as provided in
Section 9.09. It is understood and agreed that the use of the term “agent”
herein or in any other Loan Documents (or any other similar term) with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead such term is used as a matter of market custom and is intended to
create or reflect only an administrative relationship between contracting
parties. The Borrowers and the Required Lenders hereby direct the Administrative
Agent, in its capacity as “First Lien Secured Party” under the Capital One
Control Agreement, to execute the Capital One Direction and instruct Capital One
to disburse all collected and available funds in the Main Concentration Accounts
(as defined in the Capital One Control Agreements) to the DIP Funding Account.
(b)    The Administrative Agent shall also act as the “collateral agent” under
the Loan Documents, and each of the Lenders hereby irrevocably appoints and
authorizes the Administrative Agent to act as the collateral agent of such
Lender for purposes of acquiring, holding and enforcing any and all Liens on
Collateral granted by any of the Credit Parties to secure any of the
Obligations, together with such powers and discretion as are reasonably
incidental thereto. In this connection, the Administrative Agent, as “collateral
agent” and any Sub-Agent for purposes of holding or enforcing any Lien on the
Collateral (or any portion thereof) granted under the Security Documents, or for
exercising any rights and remedies thereunder at the direction of the
Administrative Agent, shall be entitled to the benefits of all provisions of
this Article IX and Article XI (including Section 11.04(c) as though such
Sub-Agent were the “collateral agent” under the Loan Documents) as if set forth
in full herein with respect thereto.
9.02    Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, own
securities of, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Credit Parties or any

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Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the
Lenders.
9.03    Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents, and its duties hereunder shall be administrative in nature.
Without limiting the generality of the foregoing, the Administrative Agent:
(a)    shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing;
(b)    shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose it to liability or that is contrary to any Loan Document
or applicable law, including for the avoidance of doubt any action that may be
in violation of the automatic stay under any Debtor Relief Law or that may
effect a forfeiture, modification or termination of property of a Defaulting
Lender in violation of any Debtor Relief Law; and
(c)    shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Credit Parties or any of their
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 11.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction in a final non-appealable order. The Administrative Agent
shall not be deemed to have knowledge of any Default or Event of Default unless
and until notice describing such Default or Event of Default is given to the
Administrative Agent in writing by a Credit Party or a Lender. The
Administrative Agent shall promptly notify the Lenders upon receipt of any such
notice. The Administrative Agent shall hold all security for itself and for and
on behalf of the Secured Parties, in accordance with this Agreement and the
other Loan Documents. The Administrative Agent shall provide copies of all
Security Documents requested by any Lender and follow the instructions of the
Required Lenders with respect to perfecting and maintaining the security granted
to the Administrative Agent under this Agreement or Security Documents, provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose it to liability or that is
contrary to any Loan Document or applicable law, including for the avoidance of
doubt any action that may be in violation of the automatic stay under any Debtor
Relief Law or that may effect a forfeiture, modification or termination of
property of a Defaulting Lender in violation of any Debtor Relief Law.
The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default or Event of Default,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document, or the creation, perfection or priority of any Lien purported to be
created by the Security Documents, (v) the value or the sufficiency of any
Collateral, or (vi) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
Notwithstanding anything to the contrary set forth herein, the Administrative
Agent shall not be required to take, or to omit to take, any action hereunder or
under the Loan Documents unless, upon demand, the Administrative

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Agent receives an indemnification satisfactory to it from the Lenders (or, to
the extent applicable and acceptable to the Administrative Agent, any other
Secured Party) against all liabilities, costs and expenses that, by reason of
such action or omission, may be imposed on, incurred by or asserted against such
Administrative Agent or any of its directors, officers, employees and agents.
9.04    Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person. The Administrative Agent also may rely upon any statement made to
it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan or any
Withdrawal from the DIP Funding Account that by its terms must be fulfilled to
the satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Loan or the Withdrawal from the DIP Funding Account. The Administrative
Agent may consult with legal counsel (who may be counsel for the Credit
Parties), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
9.05    Delegation of Duties. The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more Sub-Agents appointed by the
Administrative Agent. The Administrative Agent and any such Sub-Agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such Sub-Agent and to the Related Parties of the
Administrative Agent and any such Sub-Agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent. The Administrative
Agent shall not be responsible for the negligence or misconduct of any
Sub-Agents except to the extent that a court of competent jurisdiction
determines in a final and nonappealable judgment that the Administrative Agent
acted with gross negligence or willful misconduct in the selection of such
Sub-Agents.
9.06    Resignation of Administrative Agent. The Administrative Agent may at any
time give notice of its resignation to the Lenders and the Borrowers. Upon
receipt of any such notice of resignation, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor from among the
Lenders (or an Affiliate of a Lender) or a financial institution or other entity
that provides agency or trustee services, in each case, having an office in the
United States. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent gives notice of its resignation (or such
earlier day as shall be agreed by the Required Lenders), then the retiring
Administrative Agent may on behalf of the Lenders, appoint a successor meeting
the qualifications set forth above; provided that if the Administrative Agent
shall notify the Borrowers and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by the Administrative Agent on behalf of the Lenders under any of the Loan
Documents, the retiring Administrative Agent shall continue to hold such
collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or
to each Lender, until such time as the Required Lenders appoint a successor as
provided for above in this Section. Upon the acceptance of a successor’s
appointment hereunder, such successor shall succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrowers to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrowers and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Article and

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Section 11.04 shall continue in effect for the benefit of such retiring
Administrative Agent any Sub-Agent and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them prior to such
resignation.
9.07    Non-Reliance. Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.
9.08    Administrative Agent May File Proofs of Claim. In case of the pendency
of any proceeding under any Debtor Relief Law or any other judicial proceeding
relative to any Credit Party, the Administrative Agent (irrespective of whether
the principal of any Loan shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrowers) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Sections 2.09 and 11.04) allowed in such judicial
proceeding; and
(b)    to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 11.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender to authorize the Administrative Agent to
vote in respect of the claim of any Lender in any such proceeding.
9.09    Collateral and Guarantee Matters; Credit Bidding. Each of the Lenders
irrevocably authorizes the Administrative Agent to and upon the commercially
reasonable request of the Borrower Representative (and at its sole cost and
expense) with reasonable advance notice, the Administrative Agent hereby agrees,
(a)    to release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon termination of the DIP
Facility and payment in full in cash of all Obligations (other than contingent
indemnification obligations for which no claim has then been asserted) (ii) that
is sold or to be sold as part of or in connection with any sale permitted
hereunder (other than sales among Credit Parties), or (iii) subject to
Section 11.01, if approved, authorized or ratified in writing by the Required
Lenders; and
(b)    to release any Guarantor from its obligations under the Security
Documents and release any related Collateral if such Person ceases to be a
Subsidiary as a result of a transaction permitted by Section 7.05.

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Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release its interest
in particular types or items of property, or to release any Guarantor from its
obligations under the Guarantees pursuant to this Section 9.09.
The Administrative Agent shall not be responsible for or have a duty to
ascertain or inquire into any representation or warranty regarding the
existence, value or collectability of the Collateral, the existence, priority or
perfection of the Administrative Agent’s Lien thereon, or any certificate
prepared by any Credit Party in connection therewith, nor shall the
Administrative Agent be responsible or liable to the Lenders for any failure to
monitor or maintain any portion of the Collateral.
The Credit Parties and the Secured Parties hereby irrevocably authorize the
Administrative Agent, based upon the instruction of the Required Lenders, to
(a) credit bid and in such manner purchase (either directly or through one or
more acquisition vehicles) all or any portion of the Collateral at any sale
thereof conducted under the provisions of the Bankruptcy Code of the United
States, including under Section 363 of the Bankruptcy Code of the United States
or any similar Laws in any other jurisdictions to which a Credit Party is
subject, or (b) credit bid and in such manner purchase (either directly or
through one or more acquisition vehicles) all or any portion of the Collateral
at any other sale or foreclosure conducted by (or with the consent or at the
direction of) the Administrative Agent (whether by judicial action or otherwise)
in accordance with applicable Law. In connection with any such credit bid and
purchase, the Obligations owed to the Secured Parties shall be entitled to be,
and shall be, credit bid on a ratable basis (with Obligations with respect to
contingent or unliquidated claims being estimated for such purpose if the fixing
or liquidation thereof would not unduly delay the ability of the Administrative
Agent to credit bid and purchase at such sale or other disposition of the
Collateral and, if such claims cannot be estimated without unduly delaying the
ability of the Administrative Agent to credit bid, then such claims shall be
disregarded, not credit bid, and not entitled to any interest in the asset or
assets purchased by means of such credit bid) and the Secured Parties whose
Obligations are credit bid shall be entitled to receive interests (ratably based
upon the proportion of their Obligations credit bid in relation to the aggregate
amount of Obligations so credit bid) in the asset or assets so purchased (or in
the Capital Stock of the acquisition vehicle or vehicles that are used to
consummate such purchase). Upon request by the Administrative Agent or the
Borrower Representative at any time, the Secured Parties will confirm in writing
the Administrative Agent’s authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 9.09.
ARTICLE X

SECURITY AND ADMINISTRATIVE PRIORITY
10.01    Prepetition ABL Obligations. Each of the Credit Parties hereby
acknowledges, confirms and agrees that the Borrowers are each indebted to the
Prepetition ABL Agent and the Prepetition ABL Lenders for the Prepetition ABL
Obligations, as of the date hereof, in an aggregate principal amount of not less
than $60,023,965 plus accrued and unpaid interest thereon, fees, costs,
expenses, charges and disbursements incurred in connection therewith (including
attorneys’ fees), indemnities, reimbursement obligations and other charges now
or hereafter owed by the Borrowers to the Prepetition ABL Agent and the
Prepetition ABL Lenders pursuant to the terms of the Prepetition ABL Facility,
all of which are unconditionally owing by the Borrowers to the Prepetition ABL
Agent and the Prepetition ABL Lenders, without offset, defense or counterclaim
of any kind, nature and description whatsoever.
10.02    Acknowledgment of Security Interests. As of Petition Date, each of the
Credit Parties hereby acknowledges, confirms and agrees (and hereby agrees that
it will not dispute, challenge or otherwise contest) that (i) the Prepetition
ABL Agent and the Prepetition ABL Lenders have valid, enforceable and perfected
first priority and senior liens (subject only to “Permitted Liens” (as defined
in the Prepetition ABL Documents)) upon and security interests in all of the
Collateral (as defined in the Prepetition ABL Documents) granted pursuant to the
Prepetition ABL Documents and the other “Security Documents” (as defined in the
Prepetition ABL Documents) as in effect on the Petition Date to secure all of
the Prepetition ABL Obligations and (ii) such Liens are not subject to
avoidance, set off, counterclaim, recharacterization, reduction, disallowance,
impairment or subordination (whether contractual, equitable or otherwise) or
other challenge pursuant to the Bankruptcy Code or applicable non-bankruptcy
law.

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10.03    Binding Effect of Documents. Each of the Borrowers hereby acknowledges,
confirms and agrees (and hereby agrees that it will not dispute, challenge or
otherwise contest) that (i) each of the Prepetition ABL Documents and the other
“Security Documents” (as defined in the Prepetition ABL Documents) to which it
is a party is in full force and effect as of the date hereof, (ii) the
agreements and obligations of the Credit Parties contained in the Prepetition
ABL Documents and the other “Security Documents” (as defined in the Prepetition
ABL Documents) constitute the legal, valid and binding obligations of each of
the Credit Parties enforceable against each of them in accordance with their
respective terms and no Credit Party has any valid defense, offset or
counterclaim to the enforcement of such obligations and (iii) the Prepetition
ABL Agent and the Prepetition ABL Lenders are and shall be entitled to all of
the rights, remedies and benefits provided for in the Prepetition ABL Documents
and the other “Security Documents” (as defined in the Prepetition ABL
Documents), except to the extent clauses (ii) and (iii) above are subject to the
automatic stay under the Bankruptcy Code upon commencement of the Chapter 11
Cases.
10.04 Collateral; Grant of Lien and Security Interest.
(a)    Pursuant to the DIP Orders and in accordance with the terms thereof, as
security for the full and timely payment and performance of all of the
Obligations, the Credit Parties hereby, assign, pledge and grant to the
Administrative Agent, for the benefit of the Secured Parties, a security
interest in and to and, subject to Section 10.05, a Lien on all of the
Collateral.
(b)    Notwithstanding anything herein to the contrary (i) all proceeds received
by the Administrative Agent and the Lenders from the Collateral subject to the
Liens granted in Section 10.04(a) and in each other Loan Document and by the
Chapter 11 Orders shall be subject to the Carve-Out, and (ii) no Person entitled
to amounts in respect of the Carve Out shall be entitled to dispose of any
Collateral, and without limiting such Person’s right to receive proceeds of a
sale or other disposition of Collateral up to the amount of the Carve-Out owed
to such Person, such Person shall not seek or object to the sale or other
disposition, of any Collateral.
(c)    Any funding or payment of the Carve Out shall be added to, and made a
part of, the secured obligations secured by the Collateral (subject in the case
of the “Carve-Out Account” (as defined in the DIP Order) to the DIP Order) and
shall be otherwise entitled to the protections granted under the DIP Order, the
Loan Documents, the Bankruptcy Code, and applicable Law.
10.05    Priority and Liens Applicable to Credit Parties.
(a)    Upon entry of the Interim Order or Final Order and subject to the terms
thereof, as the case may be, the Obligations, Liens and security interests in
favor of the Administrative Agent, for the benefit of the Secured Parties,
referred to in Section 10.04(a) hereof shall, subject to the Carve Out, at all
times:
(i)    pursuant to Section 364(c)(1) of the Bankruptcy Code, be entitled to
joint and several super-priority administrative expense claim status in the
Chapter 11 Cases, which claims in respect of the DIP Facility shall be superior
to all other claims;
(ii)    pursuant to Section 364(c)(2) of the Bankruptcy Code, have a first
priority lien on all unencumbered assets of the Credit Parties (now or hereafter
acquired and all proceeds thereof);
(iii)    pursuant to Section 364(c)(2) of the Bankruptcy Code, have a first
priority lien on cash in the DIP Funding Account (and all proceeds thereof);
(iv)    pursuant to Section 364(d) of the Bankruptcy Code, have a first priority
priming lien (the “Priming Liens”) on all assets of the Credit Parties (now or
hereafter acquired and all proceeds thereof) that were subject to a lien as of
the Petition Date.
(b)    The Priming Liens shall prime the liens securing the Prepetition
Facilities and other secured obligations including foreign exchange, currency
and interest rate hedged obligations (the “Existing Primed

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Secured Facilities”), but that the liens so created as described in clauses (a)
(ii), (iii), and (iv) above shall be subject to “Permitted Liens” (as such term
is defined under the Prepetition ABL Facility) as of the Petition Date, except
those securing the Existing Primed Secured Facilities.
(c)    Subject to the Carve-Out, the Liens to be granted by the Bankruptcy Court
in favor of the Administrative Agent, for the benefit of the Secured Parties,
shall cover all property of the Credit Parties (now or hereafter acquired and
all proceeds thereof), including property or assets that do not secure the
Prepetition Facilities, except (i) any security representing more than 65% of
the voting Capital Stock and any asset which is directly or indirectly owned by
a CFC, (ii) any leasehold interest (or any of rights or interests thereunder)
the grant of a Lien on which, notwithstanding the Bankruptcy Code, shall
constitute or result in the abandonment, invalidation or unenforceability of any
right, title or interest of the obligor under any lease governing such leasehold
interest or a breach or termination pursuant to the terms of, or a default
under, any such lease, provided that the proceeds of the leasehold interests so
excluded from the Collateral shall constitute Collateral and be subject to such
Liens, and (iii) until entry of the Final Order, claims and causes of action
under the Avoidance Actions.
(d)    [Intentionally Omitted.]
(e)     All of the liens described herein with respect to the assets of the
Credit Parties shall be effective and perfected as of the Interim Order Entry
Date and without the necessity of the execution or filing of mortgages, security
agreements, pledge agreements, financing statements or other agreements.
(f)    Except to the extent expressly set forth in this Agreement, the DIP Order
shall contain provisions prohibiting the Borrowers from incurring any
Indebtedness which (x) ranks pari passu with or senior to the loans under the
Loan Documents or (y) benefits from a first priority lien under Section 364 of
the Bankruptcy Code.
10.06    Administrative Priority. Each Borrower agrees that its Obligations
shall constitute allowed administrative expenses in the Chapter 11 Cases, having
priority over all administrative expenses of and unsecured claims against such
Person now existing or hereafter arising, of any kind or nature whatsoever,
including, without limitation, all administrative expenses of the kind specified
in, or arising or ordered under, Sections 105, 326, 328, 330, 331, 503(b),
506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy Code, subject
only to prior payment of the Carve-Out and the terms and conditions of the
Chapter 11 Orders.
10.07    Grants, Rights and Remedies. The Liens and security interests granted
pursuant to Section 10.04(a) hereof and the administrative priority and lien
priority granted pursuant to Section 10.05 hereof may be independently granted
by the Loan Documents and by other Loan Documents hereafter entered into. This
Agreement, the DIP Order and such other Loan Documents supplement each other,
and the grants, priorities, rights and remedies of the Administrative Agent and
the Lenders hereunder and thereunder are cumulative.
10.08    No Filings Required. The Liens and security interests referred to
herein shall be deemed valid and perfected by entry of the Interim Order or the
Final Order, as the case may be, and entry of the Interim Order shall have
occurred on or before the date of each Loan. The Administrative Agent shall not
be required to file any financing statements, mortgages, notices of Lien or
similar instruments in any jurisdiction or filing office, take possession or
control of any Collateral, or take any other action in order to validate or
perfect the Lien and security interest granted by or pursuant to this Agreement,
the Interim Order or the Final Order, as the case may be, or any other Loan
Document.
10.09    Survival. The Liens, lien priority, administrative priorities and other
rights and remedies granted to the Administrative Agent and the Lenders pursuant
to this Agreement, the DIP Order and the other Loan Documents (specifically
including, but not limited to, the existence, perfection and priority of the
Liens and security interests provided herein and therein, and the administrative
priority provided herein and therein) shall not be modified, altered or impaired
in any manner by any other financing or extension of credit or incurrence of
Indebtedness by the Borrowers (pursuant to Section 364 of the Bankruptcy Code or
otherwise), or by any dismissal or conversion of any of the Chapter 11

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Cases, or by any other act or omission whatsoever. Without limitation,
notwithstanding any such order, financing, extension, incurrence, dismissal,
conversion, act or omission:
(a)    except to the extent of the Carve-Out, no fees, charges, disbursements,
costs or expenses of administration which have been or may be incurred in the
Chapter 11 Cases or any conversion of the same or in any other proceedings
related thereto, and no priority claims, are or will be prior to or on parity
with any claim of the Administrative Agent and the Lenders against the Borrowers
in respect of any Obligation. For the avoidance of doubt, no fees, costs,
expenses, charges and disbursements shall be payable by the Borrowers to their
attorneys, accountants or other professionals or to attorneys, accountants or
other professionals of the Official Committee except as provided in the
Carve-Out;
(b)    the Liens in favor of the Administrative Agent and the Lenders set forth
in Section 10.04(a) shall constitute valid and perfected first priority Liens
and security interests, and shall be prior to all other Liens and security
interests, now existing or hereafter arising, in favor of any other creditor or
any other Person whatsoever subject to the Carve-Out; and
(c)    the Liens in favor of the Administrative Agent and the Lenders set forth
in Section 10.04(a) and in the other Loan Documents shall continue to be valid
and perfected without the necessity that the Administrative Agent file financing
statements or mortgages, take possession or control of any Collateral, or
otherwise perfect its Lien under applicable non-bankruptcy law.
ARTICLE XI

MISCELLANEOUS
11.01    Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrowers or any other Credit Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrowers or the applicable
Credit Party, as the case may be, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such amendment, waiver or consent shall:
(a)    extend, increase or decrease the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 8.02) without the written consent
of such Lender;
(b)    postpone any date fixed by this Agreement or any other Loan Document for
any payment of principal, interest, fees or other amounts due to the Lenders (or
any of them) hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby; provided that for the
avoidance of doubt, mandatory prepayments pursuant to Section 2.05 may be
postponed, delayed, reduced, waived or modified with the consent of the Required
Lenders;
(c)    reduce the principal of, or the rate of interest specified herein on any
Loan, or any fees or other amounts payable hereunder or under any other Loan
Document, without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of the Required Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrowers to pay interest at the Default Rate;
(d)    (i) change Section 2.13 or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby or the order of the application of
payments thereunder, in each case, without the written consent of each Lender or
(ii) change Section 2.05 in a manner that would alter the pro rata sharing of
Commitments reductions required thereby without the written consent of each
Lender affected thereby;
(e)    change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify

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any rights hereunder or make any determination or grant any consent hereunder
without the written consent of each Lender; or
(f)    (i) release all or substantially all of the Collateral in any transaction
or series of related transactions, (ii) release all or substantially all of the
Guarantors party to the Guarantees, (iii) subordinate the Obligations hereunder
to any other Indebtedness, (iv) except as provided by operation of applicable
law, subordinate the Liens on all or substantially all of the Collateral granted
in favor of the Administrative Agent for itself and the other Secured Parties
under the Security Documents to any other Lien, in each case, without the
written consent of each Lender;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; and (ii) the Administrative Agent’s
Letter Agreement may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to exercise any
voting, consent, elective or request right as a Lender, approve or disapprove
any amendment, waiver or consent hereunder (and any amendment, waiver or consent
which by its terms requires the consent of all Lenders or each affected Lender
may be effected with the consent of all applicable Lenders other than Defaulting
Lenders), except that (x) the Commitment of any Defaulting Lender may not be
increased or extended without the consent of such Defaulting Lender and (y) any
waiver, amendment or modification requiring the consent of all Lenders or each
affected Lender that by its terms affects any Defaulting Lender more adversely
than other affected Lenders shall require the consent of such Defaulting Lender.
Each Affiliated Lender, solely in its capacity as a Lender hereunder, hereby
agrees that such Affiliated Lender shall have no right whatsoever to vote with
respect to any amendment, modification, waiver, consent or other such action
with respect to any of the terms of this Agreement or any other Loan Document
and that it shall be deemed to have voted its interest as a Lender without
discretion in the same proportion as the allocation of voting with respect to
such matter by Lenders that are not Affiliated Lenders; provided that,
notwithstanding the foregoing, (x) each such Affiliated Lender shall be
permitted to vote if such amendment, modification, waiver, consent or other such
action disproportionately and adversely affects such Affiliated Lender as
compared to other Lenders that are not Affiliated Lenders, (y) no amendment,
modification, waiver, consent or other action shall, without the consent of such
Affiliated Lender, deprive such Affiliated Lender of its share of any payments
which the Lenders are entitled to share on a pro rata basis hereunder and (z)
each such Affiliated Lender shall be permitted to vote if such amendment,
modification, waiver, consent or other such action would require the consent of
all Lenders or each affected Lender.
Each Affiliated Lender, solely in its capacity as a Lender and solely in
relation to such Affiliated Lender’s claim with respect to the Obligations held
by such Affiliated Lender, hereby further agrees that if any Credit Party shall
be subject to any Insolvency Proceeding:
(A)     such Affiliated Lender, solely in its capacity as a Lender hereunder and
solely in relation to such Affiliated Lender’s claim with respect to the
Obligations held by such Affiliated Lender, shall not take any step or action
(whether directly or indirectly) in such proceeding to object to, impede, or
delay the exercise of any right or the taking of any action by the
Administrative Agent (or the taking of any action by a third party that to which
Administrative Agent has consented with respect to any disposition of assets by
any Credit Party or any equity or debt financing to be made to any Credit
Party), including, without limitation, the filing of any pleading by the
Administrative Agent) in the proceeding so long as the Administrative Agent is
not taking any action to treat the Obligations held by such Affiliated Lender in
a manner that is less favorable to such Affiliated Lender than the proposed
treatment of similar Obligations held by other Lenders that are not Affiliated
Lenders (including, without limitation, objecting to any debtor-in-possession
financing, use of cash collateral, grant of adequate protection, sale or
disposition, compromise or plan of reorganization); and
(B)    such Affiliated Lender shall be deemed to have voted in such proceedings
in the same proportion as the allocation of voting with respect to such matter
by those Lenders that are not Affiliated Lenders, except to the extent that any
plan under the Bankruptcy Code proposes to treat the Obligations held by the
Affiliated Lenders in a manner that is less favorable to the Affiliated Lenders
than the proposed treatment of similar Obligations

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held by the Lenders that are not Affiliated Lenders. Each such Affiliated Lender
agrees and acknowledges that the foregoing constitutes an irrevocable proxy in
favor of the Administrative Agent to vote or consent on behalf of the claims of
such Affiliated Lender with respect to the Obligations held by such Lender in
any proceeding in the manner set forth above and that such Affiliated Lender
shall be irrevocably bound to any such votes made or consents given and further
shall not challenge or otherwise object to such votes or consents and shall not
itself vote or provide consents in the proceeding.
11.02    Notices; Effectiveness; Electronic Communication.
(a)    Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:
(i)    if to any Borrower, any other Credit Party or the Administrative Agent,
to the address, facsimile number, electronic mail address or telephone number
specified for such Person on Schedule 11.02: and
(ii)    if to any other Lender, to the address, facsimile number, electronic
mail address or telephone number specified in its Administrative Questionnaire.
Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by facsimile shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
(b)    Electronic Communications. Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including through any Electronic Medium) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender pursuant to Article II if such Lender has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrowers may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) upon notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses (i)
and (ii), if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next business day for the
recipient.
(c)    Change of Address, Etc. Each of the Borrowers and the Administrative
Agent, may change its address, facsimile or telephone number for notices and
other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, facsimile or telephone number for notices and
other communications hereunder by notice to the Borrowers and the Administrative
Agent. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, facsimile number and
electronic

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mail address to which notices and other communications may be sent and
(ii) accurate wire instructions for such Lender.
(d)    Reliance by Administrative Agent and Lenders. The Administrative Agent
and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Notices of Continuation) purportedly given by or on behalf of the
Borrowers even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrowers shall indemnify the
Administrative Agent, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Borrowers. All
telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.
(e)    Platform. Borrower Materials may be delivered pursuant to procedures
approved by the Administrative Agent, including electronic delivery (if
possible) upon request by the Administrative Agent to an electronic system
maintained by the Administrative Agent (“Platform”). The Borrower Representative
shall notify the Administrative Agent of each posting of Borrower Materials on
the Platform and the materials shall be deemed received by the Administrative
Agent only upon its receipt of such notice. Borrower Materials and other
information relating to this credit facility may be made available to the
Lenders on the Platform. The Platform is provided “as is” and “as available.”
The Administrative Agent does not warrant the accuracy or completeness of any
information on the Platform nor the adequacy or functioning of the Platform, and
expressly disclaims liability for any errors or omissions in the Borrower
Materials or any issues involving the Platform. NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENT
WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. The Lenders acknowledge that
Borrower Materials may include material non- public information of the Credit
Parties and should not be made available to any personnel who do not wish to
receive such information or who may be engaged in investment or other
market-related activities with respect to any Credit Party’s securities. None of
the Administrative Agent or any Related Party thereof shall have any liability
to the Credit Parties, the Lenders or any other Person for losses, claims,
damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) relating to use by any Person of the Platform or delivery of Borrower
Materials and other information through the Platform
11.03    No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided and provided under
each other Loan Document are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Credit Parties or any of them shall be vested
exclusively in, and all actions and proceedings at law in connection with such
enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 8.02 for the benefit of all the
Lenders; provided, however, that the foregoing shall not prohibit (a) the
Administrative Agent from exercising on its own behalf the rights and remedies
that inure to its benefit (solely in its capacity as Administrative Agent)
hereunder and under the other Loan Documents, (b) any Lender from exercising
setoff rights in accordance with Section 11.08 (subject to the terms of
Section 2.13), or (c) any Lender from filing proofs of claim or appearing and
filing pleadings on its own behalf during the pendency of a proceeding relative
to any Credit Party under any Debtor Relief Law; and provided, further, that if
at any time there is no Person acting as Administrative Agent hereunder and
under the other Loan Documents, then (i) the Required Lenders shall have the
rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02
and (ii) in addition to the matters set forth in clauses (c) and (d) of the

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preceding proviso and subject to Section 2.13, any Lender may, with the consent
of the Required Lenders, enforce any rights and remedies available to it and as
authorized by the Required Lenders.
11.04    Expenses; Indemnity; Damage Waiver.
(a)    Costs and Expenses. The Borrowers shall pay (i) all reasonable and
documented out-of-pocket expenses incurred by the Administrative Agent, the
Committee of Lead Lenders, the SG DIP Lenders, the other Lenders and their
respective Affiliates (including, in each case, the reasonable fees, charges and
disbursements of counsel and advisors for such Persons, including, without
limitation, local counsel to such Persons in any relevant jurisdiction), in
connection with the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
reasonable and documented out-of-pocket expenses incurred by the Administrative
Agent, the Committee of Lead Lenders, Standard General and the other Lenders
(including, in each case, the fees, charges and disbursements of counsel
(including, without limitation, local counsel to such Persons in any relevant
jurisdiction) and advisors for the Lenders) in connection with the enforcement
or protection of its rights (A) relating to or arising out of, in connection
with or the result of this Agreement and the other Loan Documents, including its
rights under this Section, (B) relating to or arising out of, in connection
with, or as a result of, the Loans made hereunder, including all such reasonable
documented out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or (C) relating to or arising out of, in
connection with or the result of the commencement, defense, conduct of,
intervention in, or the taking of any other action (including, without
limitation, preparation for and/or response to any subpoena or document request)
related to this Agreement, the other Loan Documents, or the Loans in any action,
litigation, investigation, or proceeding; provided that, solely with respect to
the SG DIP Lenders, the Borrower’s obligations under this Section 11.04(a) with
respect to the SG DIP Lenders shall be limited to the fees and expenses of
Debevoise & Plimpton LLP and one local counsel.
(b)    Indemnification by the Borrowers. The Borrowers shall indemnify the
Administrative Agent (and any Sub-Agent thereof), each Lender and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities, costs and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any Person (including the
Borrowers or any other Credit Party or the Official Committee) arising out of,
in connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder, the consummation of the transactions
contemplated hereby or thereby, or, in the case of the Administrative Agent (and
any Sub-Agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use
of the proceeds therefrom, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by any of the
Borrowers or any other Credit Party, or any Environmental Liability related in
any way to any of the Borrowers or any other Credit Party, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by or on behalf of any Person (including any of the Borrowers or any
other Credit Party or the Official Committee), and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities, costs or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee, if the Borrowers have
obtained a final and nonappealable judgment in their favor on such
indemnification claim by such Indemnitee as determined by a court of competent
jurisdiction. Without limiting the provisions of Section 3.01(c), this
Section 11.04(b) shall not apply with respect to Taxes other than any Taxes that
represent losses, claims, damages, etc. arising from any non-Tax claim. It is
understood and agreed that the indemnification obligations under the Prepetition
ABL Loan

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Documents shall survive the Closing Date and shall continue as indemnification
obligations hereunder following the Closing Date subject to the terms hereof.
(c)    Reimbursement by Lenders. To the extent that any Borrower for any reason
fails to pay any amount required under subsection (a) or (b) of this Section to
be paid by it to the Administrative Agent (and any Sub-Agent thereof) or any
Related Party of any of the foregoing, each Lender severally agrees to pay to
the Administrative Agent (and any Sub-Agent thereof) or such Related Party, as
the case may be, such Lender’s pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought based on each
Lender’s share of the Outstandings at such time) of such unpaid amount
(including any such unpaid amount in respect of a claim asserted by such
Lender), such payment to be made severally among them based on such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought), provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent (and any Sub-Agent thereof). The obligations of the Lenders
under this subsection (c) are subject to the provisions of Section 2.12(d).
(d)    Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Borrowers shall not assert, and the Borrowers hereby waive,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby other
than for direct or actual damages resulting from the gross negligence, bad
faith, willful misconduct or material breach of this Agreement by such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.
(e)    Payments. All amounts due under this Section shall be payable not later
than ten (10) Business Days after demand therefor.
(f)    Survival. The agreements in this Section and the indemnity provisions of
Section 11.02(d) shall survive the resignation of the Administrative Agent, the
replacement of any Lender, the termination of the DIP Facility and the
repayment, satisfaction or discharge of all the other Obligations.
(g)    Other. Without duplication with Section 11.04(a), the Borrowers shall pay
or reimburse, as applicable, all professional fees and other reasonable and
documented out-of-pocket expenses of the Administrative Agent, the Committee of
Lead Lenders and Standard General (including the fees, charges and disbursements
of their respective counsel and financial advisors) incurred in connection with
the Credit Parties, the transactions contemplated hereby, the plan of
reorganization of the Credit Parties, the Chapter 11 Orders, participation in
the Chapter 11 Cases and any refinancing or restructuring of the indebtedness of
Holdings and its Subsidiaries, including the Exit Conversion, but excluding fees
and expenses of Standard General and the SG DIP Lenders relating to any
litigation commenced against Standard General or the SG DIP Lenders or any
challenges to the Standard General or the SG DIP Lenders’ Claims unless such
litigation or challenges are (i) brought by the Committee of Lead Lenders or the
Credit Parties or (ii) against any SG Lender directly in its capacity as Lender
hereunder; provided that, solely with respect to Standard General and the SG DIP
Lenders, the Borrower’s obligations under this Section 11.04(g) with respect to
Standard General and the SG DIP Lenders shall be limited to the fees and
expenses of Debevoise & Plimpton LLP and one local counsel.
11.05    Payments Set Aside. To the extent that any payment by or on behalf of
any Credit Party is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or

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such Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The obligations of
the Lenders under clause (b) of the preceding sentence shall survive the payment
in full of the Obligations and the termination of this Agreement.
11.06    Successors and Assigns.
(a)    Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Credit Party
(except to the extent permitted by Section 7.05(a) to the extent a transaction
permitted thereby would constitute an assignment) may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of subsection (b) of this Section,
(ii) by way of participation in accordance with the provisions of subsection (d)
of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection (d)
of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b)    Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that any such assignment shall be subject to the following
conditions:
(i)    Except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, the aggregate amount of the Commitment (which for
this purpose includes Loans outstanding thereunder) or, if the Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment, determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $2,000,000 in the case
of any assignment, unless the Administrative Agent consents (such consent not to
be unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met.
(ii)    Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned.
(iii)    No consent shall be required for any assignment except to the extent
required by subsection (b(i)) of this Section and, in addition, the consent of
the Administrative Agent (such consent not to be unreasonably withheld or
delayed) shall be required for assignments in respect of any Commitment if such
assignment is to a Person that is not a Lender, an Affiliate of such Lender or
an Approved Fund with respect to such Lender.

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(iv)    The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee in the amount of $3,500 payable to the Administrative Agent;
provided, however, that the Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any
assignment. The assignee, if it is not a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.
(v)    No such assignment shall be made (a) to any Credit Party or any Affiliate
(except pursuant to Section 11.06(g)) or Subsidiary of any Credit Party, (b) to
any Defaulting Lender or any of its Subsidiaries, or any Person who, upon
becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (b), (c) to a natural person, or (d) to any Person if,
after giving effect to such assignment, such Person, together with any of its
Affiliates or Approved Funds that are (or would become pursuant to such
assignment or any concurrent assignments) Lenders, holds Loans and Commitments
in an aggregate principal amount in excess of 25% of the aggregate principal
amount of Loans and Commitments then outstanding, unless the Required Lenders
(determined without regard to the existence or holdings of the proposed assignor
Lender or any Lenders that are Affiliates or Approved Funds of such proposed
assignor Lender or of such assignee Person) shall have given their prior written
consent to such assignment. Each Lender, upon execution and delivery hereof or
upon succeeding to an interest in the Commitments and Loans, as the case may be,
represents and warrants as of the Closing Date or as of the effective date of
assignment that it is an Eligible Assignee. The Administrative Agent and each
Lender may conclusively rely (without any duty to inquiry or further diligence)
on a representation made by another Person that such Person is an Eligible
Assignee for the purposes of establishing that such Person is an Eligible
Assignee for all purposes of this Agreement.
(vi)    In connection with any assignment of rights and obligations of any
Defaulting Lender hereunder, no such assignment shall be effective unless and
until, in addition to the other conditions thereto set forth herein, the parties
to the assignment shall make such additional payments to the Administrative
Agent in an aggregate amount sufficient, upon distribution thereof as
appropriate (which may be outright payment, purchases by the assignee of
participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrowers and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent or any Lender
hereunder (and interest accrued thereon) and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans. Notwithstanding the
foregoing, in the event that any assignment of rights and obligations of any
Defaulting Lender hereunder shall become effective under applicable Law without
compliance with the provisions of this paragraph, then the assignee of such
interest shall be deemed to be a Defaulting Lender for all purposes of this
Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits and obligations of Sections 3.01, 3.04, 3.05, and
10.04 with respect to facts and circumstances occurring prior to the effective
date of such assignment; provided that except to the extent otherwise expressly
agreed by the affected parties, no assignment by a Defaulting Lender will
constitute waiver or release of any claim of any party hereunder arising from
that Lender having been a Defaulting Lender. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement

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as a sale by such Lender of a participation in such rights and obligations in
accordance with subsection (d) of this Section. Notwithstanding the foregoing,
with the consent of the Administrative Agent, but without the consent of any
Borrower, any Lender may assign to Standard General and/or its Affiliates all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it.
(c)    Register. The Administrative Agent, acting solely for this purpose as a
non-fiduciary agent of the Borrowers (and such agency being solely for tax
purposes), shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it (or the equivalent thereof in
electronic form) and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amounts (and stated
interest) of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register shall be conclusive
absent manifest error, and the Borrowers, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrowers and any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(d)    Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrowers or the Administrative Agent, sell participations to any
Person (other than a natural Person, a Defaulting Lender or any Credit Party or
any Affiliate or Subsidiary of any Credit Party) (each, a “Participant”) in all
or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers, the
Administrative Agent and the Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. For the avoidance of doubt, each Lender shall be responsible for
the indemnity under Section 11.04(c) without regard to the existence of any
participation.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 11.01 that affects such Participant. The Borrowers agree that each
Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section (it being understood that
the documentation required under Section 3.01(e) shall be delivered to the
Lender who sells the participation) to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to subsection (b) of this
Section (subject to the requirements and limitations therein, including the
requirements under Section 3.01(e)); provided that such Participant (A) agrees
to be subject to the provisions of Sections 3.06 and 11.13 as if it were an
assignee under paragraph (b) of this Section and (B) shall not be entitled to
receive any greater payment under Sections 3.01 or 3.04, with respect to any
participation, than the Lender from whom it acquired the applicable
participation would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation. Each Lender
that sells a participation agrees, at the Borrowers’ request and expense, to use
reasonable efforts to cooperate with the Borrowers to effectuate the provisions
of Section 3.06 with respect to any Participant. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 11.08 as
though it were a Lender; provided that such Participant agrees to be subject to
Section 2.13 as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers
(solely for tax purposes), maintain a register on which it enters the name and
address of each Participant and the principal amounts (and stated interest) of
each Participant’s interest in the Loans or other obligations under the Loan
Documents (the “Participant Register”): provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register (including
the identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary
to

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establish that such commitment, loan or other obligation is in registered form
under Section 5f.103-1(c) of the United States Treasury Regulations. The entries
in the Participant Register shall be conclusive absent manifest error, and such
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. For the avoidance of doubt, the
Administrative Agent (in its capacity as such) shall have no responsibility for
maintaining a Participant Register.
(e)    Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
(f)    Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
(g)    Assignments to Affiliated Lenders. Affiliated Lenders and assignments of
Loans and Commitments to Affiliated Lenders pursuant to this Section 11.06 shall
be subject to the following additional conditions and limitations:
(i)    Affiliated Lenders will not be entitled to attend or participate in
meetings attended solely by Lenders who are not Affiliated Lenders (and not
attended by the Administrative Agent);
(ii)    Affiliated Lenders shall be subject to the voting restrictions set forth
in the final two paragraphs of Section 11.01;
(iii)    the aggregate principal amount of all Loans and Commitments held by the
Affiliated Lenders shall not exceed 25% of the aggregate principal amount of
Loans and Commitments then outstanding; and
(iv)    each Affiliated Lender, upon succeeding to an interest in the
Commitments and Loans shall disclose in any Assignment and Assumption that it is
an Affiliated Lender. Unless such designation is set forth in an Assignment and
Assumption, the Administrative Agent and each Lender may conclusively rely
(without any duty of inquiry or further diligence) on a representation made by
another Person that such Person is not an Affiliated Lender.
11.07    Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ Related Parties (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent required or requested by any
regulatory authority purporting to have jurisdiction over such Person or its
Related Parties (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party hereto, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrowers and their obligations, (g) on a confidential basis to any

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rating agency in connection with rating the Credit Parties or the DIP Facility,
(h) with the consent of the Borrowers or (i) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Administrative Agent, any Lender, or any
of their respective Affiliates on a nonconfidential basis from a source other
than the Borrowers.
For purposes of this Section, “Information” means all information received from
the Borrowers or any Credit Party relating to the Borrowers or any Credit Party
or any of their respective businesses, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by the Borrowers or any Credit Party, provided that, in the
case of information received from the Borrowers or any Credit Party after the
Closing Date, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
Each of the Administrative Agent and the Lenders acknowledges that (a) the
Information may include material non-public information concerning the Borrowers
or a Credit Party, as the case may be, (b) it has developed compliance
procedures regarding the use of material non-public information and (c) it will
handle such material non-public information in accordance with applicable Law,
including Federal and state securities Laws.
Notwithstanding anything to the contrary contained in this Section 11.07, each
Credit Party consents to the publication by the Administrative Agent or the
Lenders of any press releases, tombstones, advertising or other promotional
materials (including, without limitation, via any Electronic Medium) relating to
the financing transactions contemplated by this Agreement using such Credit
Party’s name, product photographs, logo or trademark. No party hereto shall or
shall permit any of its Affiliates to, issue any press release or other public
disclosure relating to the closing of the credit facilities provided for herein
(other than any document required to be filed by the Credit Party with the SEC)
using the name, logo or otherwise referring to any Lender, the Administrative
Agent or the Sub-Agent or of any of their Affiliates or the Loan Documents to
which any such Person is a party without the prior written consent (including
via e-mail) of such Person (not to be unreasonably withheld) except to the
extent required to do so under applicable Requirements of Law and then, only
after consulting with such Persons.
11.08    Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and their respective Affiliates is hereby authorized at
any time and from time to time after obtaining the prior written consent of the
Administrative Agent, to the fullest extent permitted by applicable law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender or any such
Affiliate to or for the credit or the account of any Credit Party against any
and all of the obligations of any Credit Party now or hereafter existing under
this Agreement or any other Loan Document to such Lender or its respective
Affiliates, irrespective of whether or not such Lender or such Affiliate shall
have made any demand under this Agreement or any other Loan Document and
although such obligations of such Credit Party may be contingent or unmatured or
are owed to a branch, office or Affiliate of such Lender different from the
branch, office or Affiliate holding such deposit or obligated on such
indebtedness, provided, that in the event that any Defaulting Lender shall
exercise any such right of setoff, (x) all amounts so set off shall be paid over
immediately to the Administrative Agent for further application in accordance
with the provisions of Section 2.12 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Administrative Agent and the Lenders, and (y) the
Defaulting Lender shall provide promptly to the Administrative Agent a statement
describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of setoff. The rights of each Lender and its
respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender or its respective
Affiliates may have. Each Lender agrees to notify the Borrower Representative
and the Administrative Agent, promptly after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
11.09    Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall

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receive interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrowers. In determining whether the interest
contracted for, charged, or received by the Administrative Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by applicable
Law, (a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.
11.10    Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective when it shall have been executed
by the Administrative Agent and when the Administrative Agent shall have
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile or other electronic imaging means
shall be effective as delivery of a manually executed counterpart of this
Agreement.
11.11    Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied.
11.12    Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the foregoing provisions of this
Section 11.12, if and to the extent that the enforceability of any provisions of
this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief
Laws, as determined in good faith by the Administrative Agent as applicable,
then such provisions shall be deemed to be in effect only to the extent not so
limited.
11.13    Replacement of Lenders. If the Borrowers are entitled to replace a
Lender pursuant to the provisions of Section 3.06, or if any Lender is a
Defaulting Lender or a Non-Consenting Lender, then (x) the Borrowers may, at its
sole expense and effort, upon notice to such Lender and the Administrative Agent
and (y) the Administrative Agent may upon notice to such Lender, require such
Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in, and consents required by, Section 11.06), all
of its interests, rights (other than its existing rights to payments pursuant to
Sections 3.01 and 3.04) and obligations under this Agreement and the related
Loan Documents to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:
(a)    the Borrowers shall have paid to the Administrative Agent the assignment
fee (if any) specified in Section 11.06(b):
(b)    such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts);

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(c)    in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter;
(d)    such assignment does not conflict with applicable Laws; and
(e)    in the case of an assignment resulting from a Lender becoming a
Non-Consenting Lender, the Administrative Agent shall have consented to such
assignment and the applicable assignee shall have consented to the applicable
amendment, waiver or consent;
provided that the failure by any Lender to execute and deliver an Assignment and
Assumption in connection with any of the foregoing assignments shall not impair
the validity of the removal of such Lender and the mandatory assignment of such
Lender’s Commitments and outstanding Loans and participations pursuant to this
Section 11.13 shall nevertheless be effective without the execution by such
Lender of an Assignment and Assumption.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling any Borrower to require such assignment and delegation
cease to apply.
11.14    Governing Law; Jurisdiction; Etc. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT NEW YORK LAW IS SUPERSEDED BY THE
BANKRUPTCY CODE.
(a)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE BANKRUPTCY COURT, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH BORROWER HEREBY IRREVOCABLY ACCEPTS IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
BANKRUPTCY COURT. EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF THE BANKRUPTCY COURT AND IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE BORROWERS AT THEIR ADDRESS FOR NOTICES AS SET FORTH IN SECTION 11.02. THE
BORROWERS AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE ADMINISTRATIVE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY BORROWER IN ANY OTHER JURISDICTION. EACH BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b)    EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING
ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER

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LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR
OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER
CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE
ADMINISTRATIVE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE ADMINISTRATIVE AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION,
PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH BORROWER
HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ADMINISTRATIVE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT.
11.15    USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined), the Administrative Agent (for itself and not on behalf of
any Lender) hereby notifies the Credit Parties that pursuant to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Credit Parties and their Subsidiaries, which information includes
the name and address of the Credit Parties and their Subsidiaries and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Credit Parties and their Subsidiaries in accordance
with the Act. The Credit Parties shall, promptly following a request by the
Administrative Agent or any Lender, provide all documentation and other
information that the Administrative Agent or such Lender requests in order to
comply with its ongoing obligations under applicable “know your customer” an
anti-money laundering rules and regulations, including the Act.
11.16    ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
11.17    No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
each Credit Party acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (i) (A) the arranging and other services regarding this
Agreement provided by the Administrative Agent and the Lenders are arm’s-length
commercial transactions between the Credit Parties and their respective
Affiliates, on the one hand, and the Administrative Agent and the Lenders, on
the other hand, (B) each Credit Party has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and
(C) each Credit Party is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) the Administrative Agent and each Lender is and
has been acting solely as a principal and, except as expressly agreed in writing
by the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for any Credit Party or any of its Affiliates, or
any other Person and (B) none of the Administrative Agent or any Lender has any
obligation to any Credit Party or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; and (iii) the Administrative Agent, the
Lenders and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of Credit Parties and
their Affiliates, and neither the Administrative Agent nor any Lender have any
obligation to disclose any of such interests to the Credit Parties or any of
their Affiliates. To the fullest extent permitted by law, the Credit Parties
hereby waive and release any claims that they may have against the
Administrative Agent with respect to any breach or alleged breach of agency or
fiduciary duty in connection with any aspect of any transaction contemplated
hereby.
11.18    Standstill. Notwithstanding anything to the contrary contained herein,
except as Required Lenders may otherwise agree and without prejudice to the
refinancing of the Prepetition ABL Obligations pursuant to Section 2.01(b), each
Lender hereby agrees that during the Standstill Period it shall not take any
action to (a) exercise any right to foreclose, execute or levy on, collect on,
seize, sequester or sell or otherwise realize upon (judicially or
non-judicially) the collateral or any other property or assets securing any
obligation under any Standstill Debt, or (b) exercise any other

97

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

remedies under any of the Standstill Debt Documents to setoff against the
collateral therefor, including any account owned or controlled by any Credit
Party or its Subsidiaries.
[The Remainder of this Page Left Intentionally Blank]

98

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
Borrowers:
AMERICAN APPAREL (USA), LLC,
as Debtor and Debtor-in-Possession

By:
/s/ Hassan Natha
Name: Hassan Natha
Title: Chief Financial Officer

AMERICAN APPAREL RETAIL, INC.,
as Debtor and Debtor-in-Possession

By:
/s/ Hassan Natha
Name: Hassan Natha
Title: Chief Financial Officer

AMERICAN APPAREL DYEING & FINISHING. INC.,
as Debtor and Debtor-in-Possession

By:
/s/ Hassan Natha
Name: Hassan Natha
Title: Chief Financial Officer

KCL KNITTING, LLC,
as Debtor and Debtor-in-Possession

By:
/s/ Hassan Natha
Name: Hassan Natha
Title: Chief Financial Officer

CREDIT AGREEMENT
Signature Page

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

The Guarantors:
AMERICAN APPAREL, INC.,
as Debtor-in-Possession

By:
/s/ Hassan Natha
Name: Hassan Natha
Title: Chief Financial Officer

FRESH AIR FREIGHT, INC.,
as Debtor-in-Possession

By:
/s/ Hassan Natha
Name: Hassan Natha
Title: Chief Financial Officer

CREDIT AGREEMENT
Signature Page

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

The Administrative Agent:
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Administrative Agent
By:
/s/ Meaghan H. McCauley
Name: Meaghan H. McCauley
Title: Assistant Vice President

CREDIT AGREEMENT
Signature Page

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

MONARCH MASTER FUNDING LTD.
By:
Monarch Alternative Capital LP
Its:
Advisor
 
 

By:
/s/ Christopher Santana
 
Name: Christopher Santana
 
Title: Managing Principal

CREDIT AGREEMENT
Signature Page

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

COLISEUM CAPITAL PARTNERS, L.P.
By:
Coliseum Capital, LLC, General Partner

By:
/s/ Adam Gray
 
 
 
 
BLACKWELL PARTNERS, LLC, SERIES A
By:
Coliseum Capital Management, LLC, Attorney-in-fact

By:
/s/ Adam Gray
 
 
COLISEUM CAPITAL PARTNERS II, L.P.
By:
Coliseum Capital, LLC, General Partner

By:
/s/ Adam Gray
 
 

CREDIT AGREEMENT
Signature Page

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

GOLDMAN SACHS TRUST, on behalf of the GOLDMAN SACHS HIGH YIELD FLOATING RATE
FUND
By:
Goldman Sachs Asset Management, L.P., as investment advisor and not as principal

By:
/s/ Jean Joseph
Name:
Jean Joseph
Title:
Managing Director
 
 
 
 
GOLDMAN SACHS LUX INVESTMENT FUNDS for the benefit of GOLDMAN SACHS HIGH YIELD
FLOATING RATE PORTFOLIO (LUX)
By:
Goldman Sachs Asset Management, L.P., solely as itsinvestment advisor and not as
principal

By:
/s/ Jean Joseph
Name:
Jean Joseph
Title:
Managing Director

GOLDMAN SACHS LUX INVESTMENT FUNDS for the benefit of GOLDMAN SACHS GLOBAL
MULTI-SECTOR CREDIT PORTFOLIO (LUX)
By:
Goldman Sachs Asset Management, L.P., solely as its investment advisor and not
as principal

By:
/s/ Jean Joseph
Name:
Jean Joseph
Title:
Managing Director

CREDIT AGREEMENT
Signature Page

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

GLOBAL OPPORTUNITIES, LLC
By:
Goldman Sachs Asset Management, L.P., not in its individual capacity, but solely
as investment advisor

By:
/s/ Jean Joseph
Name:
Jean Joseph
Title:
Managing Director

GLOBAL OPPORTUNITIES OFFSHORE, LTD.
By:
Goldman Sachs Asset Management, L.P., not in its individual capacity, but solely
as investment advisor

By:
/s/ Jean Joseph
Name:
Jean Joseph
Title:
Managing Director

CREDIT AGREEMENT
Signature Page

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

PWCM MASTER FUND LTD.

By:
/s/ Neal Nenadovic
 
Name: Neal Nenadovic
 
Title: Chief Financial Officer
     Pentwater Capital Management LP

OCEANA MASTER FUND LTD.

By:
/s/ Neal Nenadovic
 
Name: Neal Nenadovic
 
Title: Chief Financial Officer
     Pentwater Capital Management LP

CREDIT AGREEMENT
Signature Page

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

STANDARD GENERAL MASTER FUND, L.P.
By:
Standard General L.P., its investment manager

By:
/s/ Soohyung Kim
Name:
Soohyung Kim
Title:
CEO

P STANDARD GENERAL LTD.

By:
/s/ Soohyung Kim
Name:
Soohyung Kim
Title:
CEO of its Investment Manager

CREDIT AGREEMENT
Signature Page

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

SCHEDULE 1.01
Existing Letters of Credit
Issuer: Capital One
Beneficiary
Letter of Credit No.
Type
Expiration
Amount
Zurich Am. Insurance
30003726
Workers’ Compensation
November 12, 2015
$250,000
Liberty Property Ltd.
30003773
Landlord
May 14, 2016
$650,000
American Express
30003774
Credit Card
December 31, 2015
$50,000
Alternative Insurance
30004282
Freight/Customs Insurance
August 15, 2015
$130,000

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

SCHEDULE 1.02
Disqualified Assignees

Kenneth Vaughn; Tokiko Miyashiro; Sean Alonzo; Dianne Galindo; Maks Akter;
Krista Martin; Piedad Torres; Fabelito Ajtun; Maribel Fabian; Pascual Mateos;
Angelica Serrano; Cipriano Vilchis; Ana Hernandez; Domingo Marcos; Salvadora
Cruz; Silvia Hernandez; Savino Refugio; Ana Amador; Sylvia Hernandez; Richard
Krehl; Gabriel Alarcon; Gabriela Tafoya; Eliana Reynoso; Jan Hubner; Eliana
Rodriguez; Carolina Crespo; Iris Alonzo; Pat Honda; Melissa Gross; Esmeralda
Morales; Stephanie Santos; Sophia Wu; Kyung Chung; Joey Ng; Marcia Brady; Rafi
Agopian; Adrian Kowalewski; Adrian Taylor; Lyndon Lea; Minho Roth; and David
Nisenbaum

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

SCHEDULE 2.01

Commitments and Applicable Percentages

Lender

Commitment

Applicable Percentage
Standard General Master Fund L.P.
$4,282,200.00
14.274000000%
P Standard General Ltd.
$1,717,800.00
5.726000000%
Monarch Master Funding Ltd
$6,000,000.00
20.000000000%
Coliseum Capital Partners, L.P.
$1,101,586.26
3.671954200%
Coliseum Capital Partners II, L.P.
$3,398,413.74
11.328045800%
Blackwell Partners, LLC, Series A
$1,500,000.00
5.000000000%
Goldman Sachs Trust - Goldman Sachs High Yield Floating Rate Fund
$1,374,000.00
4.580000000%
Goldman Sachs Lux Investment Funds - Goldman Sachs High Yield Floating Rate
Portfolio (LUX)
$252,000.00
0.840000000%
Goldman Sachs Lux Investment Funds - Global Multi-Sector Credit Portfolio (LUX)
$420,000.00
1.400000000%
Global Opportunities LLC
$1,143,000.00
3.810000000%
Global Opportunities Offshore Ltd
$2,811,000.00
9.370000000%
Oceana Master Fund Ltd.
$1,231,800.00
4.106000000%
PWCM Master Fund Ltd.
$4,768,200.00
15.894000000%
Total
$30,000,000
100.000000000%

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

SCHEDULE 5.07
Litigation

1.
Shareholder Derivative Actions. In 2010, two shareholder derivative lawsuits
were filed in the United States District Court for the Central District of
California (the “Court”) that were subsequently consolidated for all purposes
into a case entitled In re American Apparel, Inc. Shareholder Derivative
Litigation, Lead Case No. CV106576 (the “First Derivative Action”). Plaintiffs
in the First Derivative Action alleged a cause of action for breach of fiduciary
duty arising out of (i) AA USA’s (the “Company”) alleged failure to maintain
adequate accounting and internal control policies and procedures; (ii) the
Company’s alleged violation of state and federal immigration laws in connection
with the previously disclosed termination of over 1,500 employees following an
Immigration and Customs Enforcement inspection; and (iii) the Company’s alleged
failure to implement controls sufficient to prevent a sexually hostile and
discriminatory work environment. The Company does not maintain any direct
exposure to loss in connection with these shareholder derivative lawsuits. The
Company’s status as a “Nominal Defendant” in the actions reflects that the
lawsuits are purportedly maintained by the named plaintiffs on behalf of
American Apparel and the plaintiffs seek damages on the Company’s behalf. The
Company filed a motion to dismiss the First Derivative Action which was granted
with leave to amend on July 31, 2012. Plaintiffs did not amend the complaint and
subsequently filed a motion to dismiss each of their claims, with prejudice, for
the stated purpose of taking an immediate appeal of the Court’s July 31, 2012
order. On October 16, 2012, the Court granted the Plaintiffs’ motion to dismiss
and entered judgment accordingly. On November 12, 2012, Plaintiffs filed a
Notice of Appeal to the Ninth Circuit Court of Appeals where the case is
currently pending.

In 2010, four shareholder derivative lawsuits were filed in the Superior Court
of the State of California for the County of Los Angeles (the “Superior Court”)
which were subsequently consolidated for all purposes into a case entitled In re
American Apparel, Inc. Shareholder Derivative Litigation, Lead Case No. BC
443763 (the “State Derivative Action”). Three of the matters comprising the
State Derivative Action alleged causes of action for breach of fiduciary duty
arising out of (i) the Company’s alleged failure to maintain adequate accounting
and internal control policies and procedures; and (ii) the Company’s alleged
violation of state and federal immigration laws in connection with the
previously disclosed termination of over 1,500 employees following an
Immigration and Customs Enforcement inspection. The fourth matter alleges seven
causes of action for breach of fiduciary duty, unjust enrichment, abuse of
control, gross mismanagement, and waste of corporate assets also arising out of
the same allegations. On April 12, 2011, the Superior Court issued an order
granting a stay (which currently remains in place) of the State Derivative
Action on the grounds that, among other reasons, the case is duplicative of the
First Derivative Action.
In July 2014, two shareholder derivative lawsuits were filed in the Court that
were subsequently consolidated for all purposes into a case entitled In re
American Apparel, Inc. 2014 Shareholder Derivative Litigation, Lead Case No.
14-CV-5699 (the “Second Derivative Action,” and together with the First
Derivative Action, the “Federal Derivative Actions”). Plaintiffs in the Second
Derivative Action alleged similar causes of action for breach of fiduciary duty
by failing to (i) maintain adequate internal control and exercise proper
oversight over Mr. Charney, whose alleged misconduct and mismanagement has
purportedly harmed the Company’s operations and financial condition, (ii) ensure
Mr. Charney’s suspension as CEO did not trigger material defaults under two of
the Company’s credit agreements, and (iii) prevent Mr. Charney from increasing
his ownership percentage of the Company. The Second Derivative Action primarily
seeks to recover damages and reform corporate governance and internal
procedures. The Company does not maintain any direct exposure to loss in
connection with these shareholder derivative lawsuits. The Company’s status as a
“Nominal Defendant” in the actions reflects that the lawsuits are purportedly
maintained by the named plaintiffs on behalf of American Apparel and that
plaintiffs seek damages on the Company’s behalf. On April 28, 2015, the Court
granted the Company’s motion to dismiss, with leave to amend. On July 17, 2015,
the Court dismissed the action, without prejudice, for failure to prosecute and
to comply with court rules and orders.
Both the Federal Derivative Actions and State Derivative Actions are covered
under the Company’s Directors and Officers Liability insurance policy, subject
to a deductible and a reservation of rights.

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

Should the above matters (i.e., the Federal Derivative Actions or the State
Derivative Action) be decided against the Company in an amount that exceeds the
Company’s insurance coverage, or if liability is imposed on grounds that fall
outside the scope of the Company’s Directors and Officers Liability insurance
coverage, the Company could not only incur a substantial liability, but also
experience an increase in similar suits and suffer reputational harm. The
Company is unable to predict the financial outcome of these matters at this
time, and any views formed as to the viability of these claims or the financial
exposure which could result may change from time to time as the matters proceed
through their course. However, no assurance can be made that these matters,
either individually or together with the potential for similar suits and
reputational harm, will not result in a material financial exposure, which could
have a material adverse effect upon the Company’s financial condition, results
of operations, or cash flows.
2.
Jan Hubner v. American Apparel. On April 21, 2015, purported shareholder and
former employee Jan Hubner and purported shareholder Eric Ribner filed suit
against Company directors Allan Mayer, David Danziger, Robert Greene, Marvin
Igelman, and William Mauer, and the Company. This matter was filed as a related
case with respect to In re American Apparel, Inc., 2014 Derivative Shareholder
Litigation. Both of plaintiffs’ claims are premised on the ground that American
Apparel’s April 28, 2014, Proxy Statement (Schedule 14-A) issued in advance of
the company’s 2014 Annual Meeting contained misrepresentations and omissions.
Specifically, plaintiffs contend that the proxy statement inaccurately stated
that Dov Charney would continue serving in his dual role as CEO and Chairman of
the Board and did not disclose that the company was intending to suspend Charney
for cause shortly after the board member elections for which the company was
soliciting proxies. Plaintiffs contend that the allegedly inaccurate proxy
statement was designed to ensure certain directors’ re- election to the board
and therefore continued control of the company by directors who were willing to
remove Charney from his positions with the company. Had plaintiffs known about
the company’s plans to remove Charney before the Annual Meeting, they allege
that they would not have voted to re-elect the directors who were up for
re-election and instead would have sought the election of different directors.
On the foregoing basis the lawsuit alleges the following counts: (1) Violation
of Section 14(a) of the Securities Exchange Act and Rule 14a-9 promulgated
thereunder; (2) Violation of Section 20(a) of the Securities Exchange Act; (3)
Breach of the Duty of Disclosure/candor; and (4) Aiding and Abetting Breaches of
the Duty of Disclosure/candor. The lawsuit primarily seeks to recover equitable
or injunctive relief. On May 1, 2015, Plaintiffs filed a Motion for Preliminary
Injunction seeking relief substantially similar to that sought by the Complaint
itself (the “Motion”).

On June 8, 2014, the Court denied the Motion. On June 18, 2015, Plaintiffs
stipulated to dismissal of this action, with prejudice. On June 26, 2015,
Plaintiffs filed a Notice of Appeal to the Ninth Circuit Court of Appeals. On
July 28, 2015, Defendants filed a Motion to Dismiss the Appeal for Lack of
Jurisdiction.
The Company’s Directors and Officers Liability insurance carriers have
acknowledged coverage of this suit and have deemed it related to In re American
Apparel, Inc., 2014 Derivative Shareholder Litigation, referenced above.
Accordingly, coverage is subject to a reservation of rights and the deductible
applicable to that matter. If any liability is imposed against any of the
individual director defendants in these cases in an amount that exceeds our
insurance policy limits, and/or if liability is imposed upon grounds which fall
outside the scope of our insurance coverage, then the Company may be indirectly
liable as a result of the Company’s duties to indemnify its officers and
directors.
3.
Eliana Gil Rodriguez v. Allan Mayer et al. On April 30, 2015, purported
shareholder Eliana Gil Rodriguez filed a class action lawsuit against Company
directors Allan Mayer, David Danziger, Robert Greene, Alberto Chehebar, Marv
Ingelleman, William Mauer, David Glazek, Thomas Sullivan, Laura Lee, Joseph
Magnacca, Colleen Brown, former CFO John Luttrell and Standard General L.P. The
lawsuit also names Standard General L.P. as a defendant for aiding and abetting
the officers and directors in their alleged breaches of fiduciary duties.
Plaintiff Rodriguez alleges that the defendant officers and directors breached
their fiduciary duties by orchestrating a plan to oust former CEO and Chairman
of the Board, Dov Charney, including by diluting Charney’s stock ownership and
by failing to disclose in the proxy statement for American Apparel’s 2014 Annual
Meeting that the board was intending to suspend Charney for cause shortly
thereafter. Plaintiff Rodriguez also alleges that with Standard General’s
assistance, the defendant directors have taken improper measures to prevent
Charney from regaining control of the company, including by adopting a
shareholder rights plan (i.e., “poison pill”), amending the company’s bylaws,

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

and entering into certain contractual arrangements. On the foregoing basis the
lawsuit alleges the following counts: (1) Breach of Fiduciary Duty as to the
directors; (2) Breach of Fiduciary Duty as to Luttrell; (3) Breach of Fiduciary
Duty as to the directors; (4) Breach of Fiduciary Duty as to the directors; (5)
Breach of Fiduciary Duty as to the current directors; and (6) Aiding and
Abetting against Standard General. The lawsuit primarily seeks to recover
equitable or injunctive relief. On July 27, 2015, Defendants filed Motions to
Dismiss. Plaintiff has indicated her intent to voluntarily dismiss her
litigation against Defendants, without prejudice, and the parties are currently
negotiating the form of an order.
The Company’s Directors and Officers Liability insurance carriers have
acknowledged coverage of this suit and have deemed it related to In re American
Apparel, Inc., 2014 Derivative Shareholder Litigation, referenced above.
Accordingly, coverage is subject to a reservation of rights and the deductible
applicable to that matter. If any liability is imposed against any of the
individual director defendants in these cases in an amount that exceeds our
insurance policy limits, and/or if liability is imposed upon grounds which fall
outside the scope of our insurance coverage, then the Company may be indirectly
liable as a result of the Company’s duties to indemnify its officers and
directors.
4.
Charney v. American Apparel. On June 18, 2014, American Apparel’s Board of
Directors suspended its CEO, Dov Charney, and gave notice of the Company’s
intention to terminate him for cause. On June 23, 2014, Mr. Charney commenced
arbitration against the Company and asserted claims “in excess of $50 million”
for the Company’s alleged “breach of employment agreement, breach of covenant of
good faith and fair dealing, retaliatory discharge, violation of Age
Discrimination in Employment Act, intentional infliction of emotional distress,
defamation and related claims.” That matter was stayed by agreement of the
parties pursuant to the Nomination, Support, and Standstill Agreement dated as
of July 9, 2014, and appended to the Form 8-K filed by the Company with the SEC.

On March 26, 2015, Keith Fink, who purports to represent Dov Charney, requested
a lift of the stay and has reinitiated arbitration. Mr. Fink alleges that he
intends to demand up to $35 million, plus the return of art that is hanging in
the Factory, which he alleges is owned by Mr. Charney. The Company has asserted
that Mr. Fink has a conflict of interest and cannot represent parties adverse to
the Company, in particular in respect of labor and employment claims. On May 12,
2015, an arbitrator was appointed. Arbitration is scheduled for February 7,
2017. The Company has tendered this matter to its insurance carriers and is
awaiting coverage positions.
5.
Dov Charney v. Standard General, L.P., American Apparel, Inc. et al. On June 24,
2015, former CEO Dov Charney filed the above-referenced lawsuit against the
Company, Standard General, L.P., Standard General Master Fund L.P., Standard
General Ltd., Company directors Allan Mary, David Danziger, Robert Greene,
Marvin Igelman, William Mauer, and former CFO John Luttrell, alleging:
(1)    Violation of California Corporations Code § 25401; (2) Intentional
Misrepresentation; (3) Negligent Misrepresentation; (4) Breach of Fiduciary
Duty; (5) Fraud in the Inducement/Rescission; (6) Conspiracy; (7) Intentional
Infliction of Emotional Distress; (8) Negligent Infliction of Emotional
Distress; and (9) Declaratory Relief. Charney alleges that Standard General L.P.
engaged in fraud and conspiracy with certain Company officers and directors to
induce Charney to dilute his equity in the Company such that defendant parties
could control the Company. Charney seeks damages in excess of $100 million. On
July 29, 2015, Defendants Standard General, L.P., Standard General Master Fund
L.P., and Standard General Ltd. filed a Motion to Stay on the Ground of
Inconvenient Forum (the “Motion”). American Apparel filed a Notice of Joinder to
the Motion this same day. The Company has tendered this matter to its insurance
carriers and is awaiting coverage positions.

6.
Brittany Covell v. American Apparel, Inc. On April 2, 2015, Brittany Covell
filed a complaint in the California Superior Court for San Diego County against
American Apparel, Inc. and American Apparel Retail, Inc., as a putative class
action alleging claims under Cal. Civ. Code § 1747.08 (known as California’s
Song-Beverly Credit Card Act), relating to the Company’s alleged practices for
collecting e-mail addresses in connection with credit card transactions. On May
19, 2015, the Company filed an Answer to the Complaint. The Company’s insurance
carriers have denied coverage for this matter, and the Company is currently
considering any potential responses thereto.

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

SCHEDULE 5.17
List of Wholly-Owned Subsidiaries American Apparel

Investment In
Location
Owned By
Percentage
Ownership
 
American Apparel (USA), LLC
California, USA
American Apparel, Inc.
100
%
American Apparel Canada Retail Inc.
Canada
American Apparel, Inc.
100
%
American Apparel Canada Wholesale Inc.
Canada
American Apparel, Inc.
100
%
American Apparel Retail, Inc.
California, USA
American Apparel (USA), LLC
100
%
KCL Knitting, LLC
California, USA
American Apparel (USA), LLC
100
%
American Apparel Dyeing and Finishing, Inc.
California, USA
American Apparel (USA), LLC
100
%
Fresh Air Freight, Inc.
California, USA
American Apparel (USA), LLC
100
%
American Apparel Deutschland GmbH
Germany
American Apparel (USA), LLC
100
%
American Apparel (Carnaby) Limited
United Kingdom
American Apparel (USA), LLC
100
%
American Apparel (UK) Limited
United Kingdom
American Apparel (USA), LLC
100
%
American Apparel Australia Pty Ltd.
Australia
American Apparel, Inc..
100
%
American Apparel do Brasil Comercio de
Roupas Ltda.
Brazil
American Apparel Retail, Inc.
99
%
 
 
American Apparel (USA), LLC
1
%
American Apparel Mexico, S. de R.L. de C.V.
Mexico
American Apparel Retail, Inc.
.03
%
 
 
American Apparel (USA), LLC
99.97
%
American Apparel Mexico Labor,S. de R.L. de C.V.
Mexico
American Apparel Retail, Inc.
100
%

American Apparel Mexico Import, S. de R.L. de C.V.
Mexico
American Apparel Mexico, S. de R.L. de C.V.
99.97
%
 
 
American Apparel Mexico Labor, S. de R.L. de C.V.
.03
%
American Apparel Retail (Israel), Ltd.
Israel
American Apparel Retail, Inc.
100
%
American Apparel Japan Y.K.
Japan
American Apparel (USA),LLC
100
%
American Apparel Korea Co., Ltd.
Korea
American Apparel Retail, Inc.
100
%
American Apparel Ireland Limited
Ireland
American Apparel Retail, Inc.
100
%
American Apparel (Beijing) Trading Company, Ltd.
China
American Apparel, Inc.
100
%
American Apparel Italia SRL
Italy
American Apparel Deutschland GmbH
100
%
American Apparel Spain, S.L.
Spain
American Apparel Deutschland GmbH
100
%

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

All our direct and indirect subsidiaries of are wholly owned by their respective
parent companies.

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

SCHEDULE 5.18
Environmental Compliance

None.

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

SCHEDULE 5.20
Labor Matters

(a)    Collective Bargaining Agreements. None.

(b)    Other Labor Matters.

An organization calling itself “the General Brotherhood of Workers of American
Apparel” (the “GBWAA”) purports to represent the rights of some of our current
and former employees. The GWAA was formed with the assistance of local
immigrants-rights group Hermandad Mexicana and Nativo Lopez, a representative
for the organization. The GWAA has communicated demands to American Apparel,
Inc. (the “Company”) that are purportedly made on behalf of current and former
employees, and has recently registered with the U.S. Department of Labor, Office
of Labor-Management Standards, as a labor organization and has filed a
constitution and bylaws. By letter dated August 18, 2015, the GWAA formally
requested that the Company recognize it as the collective bargaining
representative for the Company’s employees. The Company denied this request
pursuant to a letter dated August 27, 2015.
 
While the GWAA purports to advocate on behalf of workers’ rights, its central
message has been that Dov Charney should be returned to the Company. Since
February 2014, GWAA has maintained a public relations campaign widely
disseminating this message to the Company’s employees and the press, along with
statements about the Company and its management that the Company believes are
false and misleading.

With the GWAA’s support, employees regularly stage protests at the Company’s
manufacturing facilities. The protests have, on occasion, involved violence,
including destruction of property, and physical intimidation of Company
employees. For example, on August 10, 2015, the GWAA and its supporters, led by
two terminated employees, stormed the Company’s headquarters by physical force
in a self-styled “riot,” successfully interrupting operations throughout the
building and occupying several floors of the building. The Los Angeles Police
Department was called to the scene, whereupon the GWAA and its supporters
evacuated the building. Numerous employees expressed concerns about their
personal safety after this incident. In response, the Company was forced to
incur the expense of an increased security presence and other safety measures.
On August 19, 2015, GWAA staged a protest in the parking lot of the Company’s
headquarters during which several employees violently beat and stabbed a
larger-than-life-sized piñata in the image of CEO Paula Schneider while
on-looking protesters cheered. Shortly before Labor Day 2015, the GWAA spread
rumors that it was going to strike. These rumors have re-surfaced in the last
several weeks. Employees have reported being threatened with violence if they
did not show their support for the GWAA.
 
The GWAA also stages protests at the Company’s retail stores. On August 10,
2015, the GWAA staged a protest in front of the Company’s Little Tokyo retail
store in Los Angeles. On August 15, 2015, the GWAA protested in front of the
Company’s Echo Park retail store in Los Angeles. During the protest, a GWAA
supporter spat in the face of a Company employee attempting to enter the store.
On August 21, 2015, the GWAA protested at the Company’s Melrose Avenue retail
store in Los Angeles. On August 31, 2015, the GWAA and its supporters staged a
protest outside the Company’s Hollywood retail store in Los Angeles, blocking
ingress to and egress from the store. On September 19, 2015, the GWAA protested
in front of the Company’s high-traffic Third Street Promenade store in Santa
Monica. On September 28, 2015, the GWAA and Mr. Charney protested in front of
the Company’s Echo Park retail store in Los Angeles.

Since March 2015, GWAA supporters have filed 34 unfair labor practice charges
against the Company with the National Labor Relations Board. Twenty-five of
these charges have been dismissed or withdrawn. Nine charges remain pending.

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

SCHEDULE 6.18
Post-Closing Obligations

None.

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

SCHEDULE 7.01
Existing Investments

In or about July 2013, American Apparel, Inc. entered into an Inventory Purchase
Agreement with Canary New York, Inc., Louis Terline, and Jeff Madelana, for the
purchase of inventory and the assumption of certain obligations relating to the
business known as “Oak NYC.” As a result of that Agreement, (i) American
Apparel, Inc. or certain of its subsidiaries subleased, assumed, or began making
payments on two real property leases in New York, New York, and two real
property leases in Los Angeles, California, (ii) American Apparel (USA), LLC
offered and began providing employment to Mssrs. Terline and Madelana, and (iii)
American Apparel, Inc. agreed to assume all of the liabilities and obligations
of “Oak NYC,” including a sales tax obligation owed to the State of New York
totaling, as of September 2015, approximately $175,000.

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

SCHEDULE 7.02
Existing Indebtedness

1.
Indebtedness pursuant to that certain Cash Loan Agreement, dated as of December
20, 2012, by and between American Apparel Korea Co., Ltd., as creditor and
American Apparel, Inc., as debtor, for an initial advance amount of $1,000,000.

2.
The sale-leaseback transaction listed on Schedule 7.06.

3.
Indebtedness pursuant to certain Capitalized Leases existing on the Closing Date
between American Apparel (USA), LLC and certain of its subsidiaries, as lessees
and the following lessors (the amounts listed being as of September 29, 2015):
(i) Axis Capital, Inc., in an amount of $75,887.48, (ii) Atalaya Asset Income
Fund 1 LP, in an amount of $1,583,508.82, (iii) General Electric Capital
Corporation, in an amount of $11,857.17, (iv) Utica Lease Co., LLC in an amount
of $1,138,873.28, and (v) CIT Finance, in an amount of $67,393.26.

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

SCHEDULE 7.03
Existing Liens

Search Type

Jurisdiction
Thru Date
File Date
File Number

Secured Party

Description
4.    American Apparel, Inc.
UCC
DE, Department of State
9/7/2015
1/31/2008
2008 0385805
Cisco Systems Capital Corporation
Leased equipment
 
 
 
6/16/2011
2011 2313438
Farnam Street Financial, Inc.
All equipment under any lease between AA, Inc. and Farnam Street Financial, Inc.
 
 
 
2/13/2013
2013 0582388
Raymond Leasing Corporation
All material handling equipment and accessories under Equipment Master Lease
Schedule No. 308461
 
 
 
3/28/2013
2013 1190397
Passchendaele Capital Fund (assignment #2013 3330470 filed 8/26/2013 to Atalaya
Asset Income Fund I LP)
All goods, furniture, fixtures, equipment and other personal property under
Lease Agreement No. CG-5588
 
 
 
4/29/2013
2013 1630194
Axis Capital, Inc.
All equipment
 
 
 
6/10/2013
2013 2206762
Western Equipment Finance, Inc.
Equipment
 
 
 
7/3/2013
2013 2582295
TFG Leasing Fund I, LLC (additional SP: TFG-California, L.P.)
Equipment, etc. under Master Lease Agreement No. TFG/AA 070313 dated 7/3/2013
 
 
 
7/19/2013
2013 2791433
Prime Alliance Bank (additional SP: TFG-California, L.P.)
Equipment etc. under Master Lease Agreement No. TFG/AA 070313 dated 7/3/2013
 
 
 
7/22/2013
2013 2822279
Axis Capital, Inc.
Equipment
 
 
 
7/24/2013
2013 2869353
Brother International Corporation
Equipment
 
 
 
7/26/2013
2013 2923846
TFG Leasing Fund I, LLC (additional SP: TFG-California, L.P.)
Cash held as security under Security Agreement dated July 3, 2013
 
 
 
8/7/2013
2013 3099299
Prime Alliance Bank
Cash held as security under Security Agreement dated July 18, 2013
 
 
 
8/9/2013
2013 3137552
Atalaya Asset Income Fund I LP
Lease collateral
 
 
 
8/15/2013
2013 3202141
Technology Finance Corporation (assignment #2013 3858124 filed 10/2/2013 to CIT
Finance LLC
Equipment
 
 
 
8/22/2013
2013 3288363
Axis Capital, Inc.
Equipment
 
 
 
10/1/2013
2013 3816858
Passchendaele Capital Fund (assignment #2014 0087122 filed 1/8/2014 to Atalaya
Asset Income Fund I LP)
Equipment lease under Lease No. CG-5588
 
 
 
1/9/2014
2014 0115030
Atalaya Asset Income Fund I LP
Lease collateral
 
 
 
2/21/2014
2014 0681254
General Electric Capital Corporation
Equipment
5.    American Apparel Retail, Inc.
UCC
CA, Secretary of State
9/10/2015
6/1/2011
11-7271528862
Focus Investments, Ltd.
Goods, wares, equipment, fixtures at 1126 Pearl Street, Boulder, CO
UCC
CA, Secretary of State
 
8/18/10
10-7242117126
ADT Security Services, Inc. Sensormatic Division
All equipment provided by ADT Security Services
State Tax Lien
CA, Secretary of State
9/20/2015
8/17/2015
15-7480665951
State of California, Employment Development Department
$1,334.53

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

Search Type

Jurisdiction
Thru Date
File Date
File Number

Secured Party

Description
State Tax Lien
CA, Los Angeles County
9/12/2015
9/10/2015
20151113555
State of California, Employment Development Department
$1,332.53
State Tax Lien
CA, Los Angeles County
9/21/2015
9/10/2015
20151113555
 
$1332.53
State Tax Lien
CA, Secretary of State
9/27/2015
8/17/2015
157480665951
State of California, Employment Development Department
$1334.53
6.    American Apparel (USA), LLC
UCC
CA, Secretary of State
9/10/2015
 
 
 
 
 
 
 
12/14/2009
09-7216927902
Cisco Systems Capital Corporation
Equipment under Lease No. 5514-MM007-0
 
 
 
12/14/2009
09-7216928034
Cisco Systems Capital Corporation
Equipment under Lease No. 5514-MM008-0
 
 
 
12/14/2009
09-7216928539
Cisco Systems Capital Corporation
Equipment under Lease No. 5514-MM010-0
 
 
 
12/14/2009
09-7216928913
Cisco Systems Capital Corporation
Equipment under Lease No. 5514-MM011-0
 
 
 
12/14/2009
09-7216937549
Cisco Systems Capital Corporation
Equipment under Lease No. 5514-MM009-0
 
 
 
9/17/2010
10-7245283698
Wells Fargo Bank, N.A.
Equipment under Loan and Security Agreement No. 8476124-001
 
 
 
7/24/2013
13-7370879469
Brother International Corporation
Equipment
State Tax Lien
CA, Secretary of State
9/20/2015
8/17/2015
15-7480700496
State of California, Employment Development Department
$178.42
State Tax Lien
CA, Los Angeles County
9/12/2015
9/12/2015
20151113567
State of California, Employment Development Department
$176.42
State Tax Lien
CA, Los Angeles County
9/21/2015
9/10/2015
20151113567
State of California, Employment Development Department
$176.42
State Tax Lien
CA, Secretary of State
9/27/2015
8/17/2015
15-7480700496
State of California, Employment Development Department
$178.42

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

SCHEDULE 7.06

Sale-Leasebacks

(1)
On January 11, 2011, American Apparel, Inc. and its subsidiaries (collectively
the “Company”) entered into an agreement to sell and simultaneously lease back
certain of the Company’s unencumbered manufacturing equipment, for a term of 48
months and an interest rate of 14.8%. The sale price of the manufacturing
equipment was approximately $3,100,000. The Company has an option, exercisable
during the fourth year of the lease term, to repurchase the manufacturing
equipment for approximately $310,000. On November 16, 2012, the Company renewed
the lease for a term of three years and an interest rate of 16%. The transaction
is accounted for as a financing transaction and is recorded in the accompanying
consolidated financial statements as a capital lease.

(2)
In November 2012, American Apparel, Inc. and American Apparel (USA), LLC (“AA
USA”) initiated a sale- leaseback transaction with Utica Leaseco LLC for certain
of its heavy equipment in its manufacturing facilities. In exchange for transfer
of title, Utica paid AA USA approximately $4.5 million, which was paid directly
to one of AA USA’s primary lenders. The lease agreement provided for a term of
48 months, with rental payments totaling approximately $5.58 million. The lease
had a purchase option for AA USA, which was never exercised. On January 31,
2014, the parties entered into an amendment to increase rent obligations to
address an apparent arrearage.

(3)
In late 2013, American Apparel, Inc. entered into a sale-leaseback agreement
with CG Commercial Finance, for equipment located in its manufacturing
facilities. The parties subsequently entered into a series of amendments to
cover financing for newly acquired equipment. On August 5, 2013, Consultants
Group assigned its interest in the lease transaction to Atalaya Asset Income
Fund 1 LP.

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

SCHEDULE 7.08
Transactions with Affiliates

In December 2005, the American Apparel, Inc. and its subsidiaries (collectively,
the “Company”) entered into an operating lease, which commenced on November 15,
2006, for its knitting facility with a related company (“American Central Plaza,
LLC”), which is partially owned by the Chief Manufacturing Officer (“CMO”) of
the Company. The Company’s CMO holds a 6.25% interest in American Central Plaza,
LLC. The remaining members of American Central Plaza, LLC are not affiliated
with the Company. The lease expired in November 2011 and was subsequently
extended for the next five years on substantially the same terms. Rent expense
(including property taxes and insurance payments) related to this lease was
$83,000, $622,000 and $712,000 for the years ended December 31, 2012, 2011 and
2010, respectively.

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

SCHEDULE 7.13
Financial Covenants
Part A - Disbursements
 
Test Date
Test Period
Total Disbursements
October 30, 2015
From Petition Date through Friday October 30, 2015
$35,245,600
November 27, 2015
From Petition Date through Friday November 27, 2015
$67,292,900
December 25, 2015
From Petition Date through Friday December 25, 2015
$99,022,400
January 29, 2016
From Petition Date through Friday January 29, 2016
$142,507,100
February 26, 2016
From Petition Date through Friday February 26, 2016
$178,024,600
March 25, 2016
From Petition Date through Friday March 25, 2016
$212,463,300

 
Part B - Receipts
 
Test Date
Test Period
Total Receipts
October 30, 2015
From Petition Date through Friday October 30, 2015
$25,647,500
November 27, 2015
From Petition Date through Friday November 27, 2015
$52,894,000
December 25, 2015
From Petition Date through Friday December 25, 2015
$83,547,400
January 29, 2016
From Petition Date through Friday January 29, 2016
$114,439,600
February 26, 2016
From Petition Date through Friday February 26, 2016
$140,507,600
March 25, 2016
From Petition Date through Friday March 25, 2016
$169,959,100

 
 

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

Part C – Cumulative Net Cash Flow
 
Test Date
Test Period
Minimum Cumulative Cash Flow Amount
October 30, 2015
From Petition Date through Friday October 30, 2015
($3,898,600)
November 27, 2015
From Petition Date through Friday November 27, 2015
($2,644,600)
December 25, 2015
From Petition Date through Friday December 25, 2015
$2,529,000
January 29, 2016
From Petition Date through Friday January 29, 2016
($2,636,500)
February 26, 2016
From Petition Date through Friday February 26, 2016
($6,293,100)
March 25, 2016
From Petition Date through Friday March 25, 2016
($4,735,400)

“(__)” denoting a negative amount.

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

SCHEDULE 11.02

Administrative Agent’s Office; Certain Addresses for Notices

Notice to the Administrative Agent:

Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, Minnesota 55402
Attention: Meghan McCauley
Facsimile: +1 (612) 217-5651
E-mail: mmccauley@wilmingtontrust.com

with a copy to:

Covington & Burling LLP
The New York Times Building
620 Eighth Avenue
New York, New York 10018
Attention: Ronald Hewitt
Facsimile: +1 (646) 441-9220
E-mail: rhewitt@cov.com

Notices to the Credit Parties:

American Apparel, Inc.
747 Warehouse Street
Los Angeles, California 90021
Attn: General Counsel
Attn: Chief Financial Officer
Telephone: (213) 488-0226, Ext. 1412
Facsimile: (213) 201-3033
cgrayson@americanapparel.net
hnatha@americanapparel.net

Jones Day
Attn: Steven A. Domanowski
77 W. Wacker Drive, Suite 3500
Chicago, IL 60601
Office +1.312.269.4262
Fax: +1.312.782.8585
Email: sdomanowski@jonesday.com

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

EXHIBIT A
FORM OF BORROWING REQUEST NOTICE
Date: [_____],20[__]
To:    Wilmington Trust, National Association, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Debtor-in-Possession Credit Agreement, dated
as of October [4], 2015 (as amended, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “DIP Credit
Agreement:” the terms used herein but not defined herein having the meaning as
therein defined), among American Apparel (USA), LLC, a California limited
liability company, as debtor and debtor-in-possession (“AA USA”), as a Borrower
(as defined below) and as Borrower Representative for the other Borrowers party
thereto, American Apparel Retail, Inc. (“AA Retail”, a California corporation,
as debtor and debtor-in-possession, American Apparel Dying & Finishing, Inc., a
California corporation, as debtor and debtor-in-possession (“AA Dyeing &
Finishing”), and KCL Knitting, a California limited liability company, as debtor
and debtor-in-possession (“KCL Knitting” and together with AA USA, AA Retail and
AA Dyeing & Finishing, each individually, a “Borrower” and collectively, the
“Borrowers”), the other Credit Parties party thereto, each lender from time to
time party thereto (collectively, the “Lenders” and individually, a “Lender”)
and Wilmington Trust, National Association, as Administrative Agent (the
“Administrative Agent”).
The Borrower Representative refers to the above described DIP Credit Agreement
and, on behalf of the Borrowers, hereby irrevocably notifies you of the
Borrowing requested below.  
The Borrowing shall consist of the following:
Borrower requesting Borrowing
Amount of Borrowing
Business Day of Proposed Borrowing
Interest Period (months)
 
$
[_______] , 20[__]
 
 
$
[_______] , 20[__]
 
 
$
[_______] , 20[__]
 
 
$
[_______] , 20[__]
 

The Borrowing requested herein complies with Sections 2.01 and 2.02(a) of the
DIP Credit Agreement.
[The Borrower Representative, on behalf of itself and each other Borrower,
hereby agrees that the payments made in accordance with the Funds Flow
Memorandum dated as of October [4], 2015 among AA USA and Ducera Partners LLC
(the “Funds Flow”) are made for the administrative convenience of the Borrowers
and that the legal effect thereof is the same as if the proceeds of the
requested Borrowing were transferred directly to Borrowers by the Lenders and
distributed by the Borrowers. Furthermore, the Borrower Representative, on
behalf of itself and each other Borrowers, hereby acknowledges that the Lenders
and the Administrative Agent shall make payments strictly on the basis of the
information set forth in this Borrowing Request Notice and the Funds Flow, even
if such information is incorrect. In the event that any

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

of such information is incorrect, the Borrower Representative, on behalf of
itself and each other Borrowers, agrees that the Lenders and the Administrative
Agent shall not have any liability with respect thereto.
The Borrower Representative, on behalf of itself and each other Borrowers,
hereby represents and warrants that the instructions set forth in the Funds Flow
comply with the Credit Agreement. In the event any of the amounts set forth in
the Funds Flow are incorrect, the Borrowers shall be liable for any losses,
costs and expenses arising therefrom.]
The Borrower Representative hereby represents and warrants that the conditions
specified in (a) Section 4.02 in respect of the Interim Loans or (b)
Section 4.03 in respect of all other loans shall be satisfied on and as of the
date of the applicable Credit Extension.
[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

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

AMERICAN APPAREL (USA), LLC, as Borrower Representative
By:    ____________________________
Name
Title:

[Signature Page –Borrowing Request Notice]

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

EXHIBIT B
FORM OF NOTICE OF WITHDRAWAL

Wilmington Trust, National Association,
as Administrative Agent
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: Meghan McCauley
Telephone: (612) 217-5647
Facsimile: (612) 217-5651

[Date]

Ladies and Gentlemen:

Reference is made to the Debtor-in-Possession Credit Agreement dated as of
October [4], 2015 (as amended, modified or supplemented from time to time, the
“DIP Credit Agreement”) among American Apparel (USA), LLC, a California limited
liability company, as debtor and debtor-in-possession (“AA USA”), as a Borrower
(as defined below) and as Borrower Representative (as defined in Section 2.17 of
the DIP Credit Agreement) for the other Borrowers party thereto, American
Apparel Retail, Inc. (“AA Retail”, a California corporation, as debtor and
debtor-in-possession, American Apparel Dying & Finishing, Inc., a California
corporation, as debtor and debtor-in-possession (“AA Dyeing & Finishing”), and
KCL Knitting, a California limited liability company, as debtor and
debtor-in-possession (“KCL Knitting” and together with AA USA, AA Retail and AA
Dyeing & Finishing, each individually, a “Borrower” and collectively, the
“Borrowers”), the other Credit Parties party thereto, each lender from time to
time party thereto (collectively, the “Lenders” and each individually, a
“Lender”) and Wilmington Trust, National Association, as Administrative Agent
(the “Administrative Agent”). Capitalized terms defined in the DIP Credit
Agreement and not otherwise defined herein have, as used herein, the respective
meanings provided for therein. This notice constitutes a Notice of Withdrawal
pursuant to Section 2.02(c) of the DIP Credit Agreement.

1.    The date of the withdrawal from the DIP Funding Account shall be
[_______], 2015 or such other date following the entry of the Interim Bankruptcy
Court Order] [[_____], 2015] (the “Withdrawal Date”).

2.    The aggregate principal amount of the Withdrawal shall be [$________]
[$_________] (the “Withdrawal”).

3.    The account to be credited with the proceeds of the Withdrawal is:

Beneficiary: [American Apparel (USA), LLC, as Borrower Representative]
 
Bank:
Address:
Account Number: [________]

ABA Number: [________]
Reference:

4.    The Borrower Representative hereby represents and warrants, on behalf of
the Borrowers, that the conditions to the Withdrawal on the Withdrawal Date set
forth in Section 4.03 of the DIP Credit Agreement are satisfied.

5.    The Withdrawal requested herein complies, and the application of the funds
so disbursed to the Borrowers will comply, with the terms of the DIP Credit
Agreement, including without limitation the Approved Budget, in all respects.

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

[Signature page follows]

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

AMERICAN APPAREL (USA), LLC,
as Borrower Representation and Borrower

By:                 
Name:
Title:

    

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

EXHIBIT C

FORM OF INTERIM ORDER

[To be included]

    

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

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date: [_______]
To:    Wilmington Trust, National Association, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Debtor-in-Possession Credit Agreement, dated
as of October [4], 2015 (as amended, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “DIP Credit
Agreement:” the terms used herein but not defined herein having the meaning as
therein defined), among American Apparel (USA), LLC, a California limited
liability company, as debtor and debtor-in-possession (“AA USA”), as a Borrower
(as defined below) and as Borrower Representative for the other Borrowers party
thereto, American Apparel Retail, Inc. (“AA Retail”, a California corporation,
as debtor and debtor-in-possession, American Apparel Dying & Finishing, Inc., a
California corporation, as debtor and debtor-in-possession (“AA Dyeing &
Finishing”), and KCL Knitting, a California limited liability company, as debtor
and debtor-in-possession (“KCL Knitting” and together with AA USA, AA Retail and
AA Dyeing & Finishing, each individually, a “Borrower” and collectively, the
“Borrowers”), the other Credit Parties party thereto, each lender from time to
time party thereto (collectively, the “Lenders” and individually, a “Lender”)
and Wilmington Trust, National Association, as Administrative Agent (the
“Administrative Agent”).
The undersigned hereby certifies as of the date hereof that he/she is a
Financial Officer of American Apparel, Inc., a Delaware corporation
(“Holdings”), and that as such he/she is authorized to execute and deliver this
Certificate to the Administrative Agent on behalf of the Credit Parties, and in
such capacity that:
[Use following paragraph 1 for Fiscal Year-end financial statements]
1.    The Credit Parties are delivering attached hereto as Exhibit A and as
required by Section 6.04(a) of the DIP Credit Agreement for the Fiscal Year
ended as of the above date, the consolidated and consolidating balance sheet of
Holdings and its Subsidiaries, as at the end of such Fiscal Year, and the
related consolidated and consolidating statements of income or operations, cash
flows and shareholders’ equity for such Fiscal Year, each setting forth in
comparative form the figures for the previous Fiscal Year and all such
consolidated and consolidating financial statements, in reasonable detail,
prepared in accordance with GAAP consistently applied and such consolidated
financial statements, audited and accompanied by a report and opinion prepared
in accordance with generally accepted auditing standards by Marcum LLP [or by
other independent certified public accountants reasonably satisfactory to the
Administrative Agent] and certified without qualification and without expression
of uncertainty as to the ability of Holdings and its Subsidiaries to continue as
a going concern. The information contained in such consolidating financial
statements fairly presents in all material respects the financial condition of
the Holdings and its Subsidiaries on the dates indicated therein. Attached
hereto as Schedule 1. Schedule 2, Schedule 3 and Schedule 4, respectively, are:
(i) computations evidencing compliance with Section 7.13 of the DIP Credit
Agreement; (ii) a written statement from such accountants (to the extent
available on commercially reasonable terms) to the effect that, in making the
examination necessary to said certification, nothing has come to their attention
to cause them to believe that any Default or Event of Default has occurred or
specifying those Defaults or

    

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

Events of Defaults that they have become aware of; (iii) a copy of their
accountants’ management letter (if any) for such Fiscal Year; and (iv) a
management discussion and analysis prepared in connection with such financial
statements (which may be the management discussion and analysis provided for in
Holdings’ 10-K report).
[Use following paragraph 1 for Fiscal Month-end financial statements]
1.    The Credit Parties are delivering attached hereto as Exhibit A and as
required by Section 6.04(b) of the DIP Credit Agreement for the Fiscal Month
ended as of the above date, the unaudited monthly consolidated and consolidating
financial statements of Holdings and its Subsidiaries for such Fiscal Month,
including the consolidated and consolidating balance sheet of Holdings and its
Subsidiaries, as at the end of such Fiscal Month, the related consolidated and
consolidating statements of income or operations, cash flows and shareholders’
equity for such Fiscal Month and for the portion of the Fiscal Year then ended,
each setting forth in comparative form the figures for the corresponding Fiscal
Month of the previous Fiscal Year, the corresponding portion of the previous
Fiscal Year and the most recent projections delivered to the Administrative
Agent pursuant to Section 6.04(d) of the DIP Credit Agreement, each, prepared in
accordance with GAAP consistently applied at such date and for such period. The
information contained in such financial statements fairly presents in all
material respects the financial condition of Holdings and its Subsidiaries on
the dates indicated therein (subject to quarterly and year-end adjustments and
the absence of footnotes). Attached hereto as Schedule 1, Schedule 2, Schedule 3
and Schedule 4, respectively, are (i) computations evidencing compliance with
Section 7.13 of the DIP Credit Agreement, (ii) a statement of change in any
intercompany accounts; (iii) reconciliations to reflect changes in GAAP since
the date of the last audited financial statements of Holdings and its
Subsidiaries; and (iv) a management discussion and analysis prepared in
connection with the financial statements of Holdings and its Subsidiaries for
such Fiscal Month if Fiscal Month ends on a Fiscal Quarter (which may be any
management and discussion analysis provided for in Holding’s Form 10-Q report
for such Fiscal Month ending on a Fiscal Quarter).
2.    The undersigned has reviewed and is familiar with the terms of the DIP
Credit Agreement and the Loan Documents and has made, or has caused to be made
under his/her supervision, a detailed review of the transactions and condition
(financial or otherwise) of the Credit Parties during the accounting period
covered by such financial statements.
3.    A review of the activities of the Credit Parties during such fiscal period
has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Credit Parties performed and
observed all their Obligations under the Loan Documents, and
[select one:]
[the undersigned has no knowledge of any Default or Event of Default during such
fiscal period by any of the Credit Parties.]
—or—
[the undersigned, has knowledge of the following list of Default(s) and /or
Event(s) of Default and the nature thereof:]
4.    The representations and warranties of the Credit Parties contained in
Article V of the DIP Credit Agreement and all representations and warranties of
any Credit Party that are contained in any document furnished at any time under
or in connection with the Loan Documents, are true and correct in all material
respects (but without any duplication of any materiality qualifications) on and
as of the date

    

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

of the date hereof, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct in all material respects (but without any duplication of any
materiality qualifications) as of such earlier date, and except that for
purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Section 5.02 of the DIP Credit Agreement
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.04 of the DIP Credit Agreement,
including the statements in connection with which this Compliance Certificate is
delivered.
5.    The financial covenant analyses and information set forth on Schedules 1,
2, 3, and 4 attached hereto are true and accurate on and as of the date of this
Certificate. All the financial covenant calculations set forth on Schedules 1,
2, 3 and 4 attached hereto have been made in accordance with the DIP Credit
Agreement and are subject to the applicable terms thereof.
[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

    

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

IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of    [_____], 20[__]
AMERICAN APPAREL, INC.
By:    ____________________________
Name
Title:

    

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

SCHEDULE 1

SCHEDULE 2

SCHEDULE 3

SCHEDULE 4

    

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

EXHIBIT A

EXHIBIT E

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each](1) Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each](2) Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors] [the Assignees](3) hereunder are several and not joint.](4)
Capitalized terms used but not defined herein shall have the meanings given to
them in the DIP Credit Agreement identified below (as amended, the “DIP Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the DIP Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a Lender]
[their respective capacities as Lenders] under the DIP Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the Commitment identified below and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of [the Assignor (in its capacity as a Lender)][the respective Assignors
(in their respective capacities as Lenders)] against any Person, whether known
or unknown, arising under or in connection with the DIP Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned by [the][any] Assignor to
[the][any] Assignee pursuant to clauses (i) and (ii) above being referred to
herein collectively as [the][an] “Assigned Interest”). Each such sale and
assignment is without recourse to [the][any] Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by [the][any] Assignor.
(1)
For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.

(2)
For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.

(3)
Select as appropriate.

    

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

(4)
Include bracketed language if there are either multiple Assignors or multiple
Assignees.

(5)
Include all applicable subfacilities.

1.
Assignor[s]:

[Assignor [is] [is not] a Defaulting Lender]
2.
Assignee[s]:

[for each Assignee, indicate:
[Assignee Group][Affiliate][Approved Fund] of [identify Lender(s)]]
[Affiliated Lender]
3.
Borrowers: American Apparel (USA), LLC, a California limited liability company,
American Apparel Retail, Inc., a California corporation, American Apparel Dyeing
& Finishing, Inc., a California corporation, and KCL Knitting, LLC, a California
limited liability company.

4.
Administrative Agent: Wilmington Trust, National Association, as the
Administrative Agent under the DIP Credit Agreement

5.
DIP Credit Agreement:    Debtor-in-Possession Credit Agreement, dated as October
[__], 2015 (as amended, supplemented, restated or otherwise modified from time
to time), among the Borrowers, each Borrower as debtor and debtor-in-possession,
the other Credit Parties party thereto, the Lenders from time to time party
thereto and Wilmington Trust, National Association, as Administrative Agent.

6.
Assigned Interest:

Interest
Assignor[s](6)
Assignee [s] (7)
Aggregate Amount of Commitments/ Loans for all Lenders(8)
Amount of Commitment/Loan Assigned
Percentage Assigned of Commitment/ Loans(9)
Loans
 
 
$
$
%
Commitments
 
 
$
$
%
Total Commitment
 
 
$
$
%

[7.
Trade Date:    ](10)

Effective Date :                 , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR]
(6)
List each Assignor, as appropriate.

(7)
List each Assignee, as appropriate.

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

(8)
Amounts in this column and in the column immediately to the right to be adjusted
by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.

(9)
Set forth, to at least 9 decimals, as a percentage of the Commitment of all
Lenders thereunder.

(10)
To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

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

The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:    __________________________________
Name:
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:    __________________________________
Name:
Title:

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.    Representations and Warranties.
1.1.    Assignor. [The][Each] Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of [the] [[the relevant] Assigned Interest,
(ii) [the] [such] Assigned Interest is free and clear of any lien, encumbrance
or other adverse claim, (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and (iv) it is [not] a
Defaulting Lender; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the DIP
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrowers, any of their respective Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrowers, any of their respective Subsidiaries or Affiliates
or any other Person of any of their respective obligations under any Loan
Document.
1.2.    Assignee. [The] [Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the DIP Credit Agreement,
(ii) it meets all the requirements to be an assignee under Section 11.06(b) of
the DIP Credit Agreement (subject to such consents, if any, as may be required
under Section 11.06(b) of the DIP Credit Agreement), including, without
limitation, that Assignee is an Eligible Assignee as defined in

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

the DIP Credit Agreement, (iii) from and after the Effective Date, it shall be
bound by the provisions of the DIP Credit Agreement as a Lender thereunder and,
to the extent of [the] [the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by [the] [such] Assigned
Interest and either it, or the Person exercising discretion in making its
decision to acquire [the][such] Assigned Interest, is experienced in acquiring
assets of such type, (v) it has received a copy of the DIP Credit Agreement, and
has received or has been accorded the opportunity to receive copies of the most
recent financial statements delivered pursuant to Section 5.02 thereof, as
applicable, and such other documents and information as it deems appropriate to
make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase [the][such] Assigned Interest, (vi) it has,
independently and without reliance upon the Administrative Agent, any other
Lender, any Credit Party or any Affiliate of the foregoing and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase [the] [such] Assigned Interest, (vii) if it is a Foreign Lender,
attached hereto is any documentation required to be delivered by it pursuant to
the terms of the DIP Credit Agreement, duly completed and executed by
[the][such] Assignee, (viii) after giving effect to the assignment of the
Assigned Interest, [the][such] Assignee, together with any of its Affiliates or
Approved Funds that are (or would become pursuant to this Assignment and
Assumption or any concurrent assignments of interests under the DIP Credit
Agreement) Lenders, does not hold Loans and Commitments in an aggregate
principal amount in excess of 25% of the aggregate principal amount of Loans and
Commitments then outstanding, unless the Required Lenders (determined without
regard to the existence or holdings of the Assignor[s] or any Affiliates or
Approved Funds of the Assignor[s] or of [such][the] Assignee) shall have given
their prior written consent to such assignment of the Assigned Interest to
[the][such] Assignee, and (ix) if it is an Affiliated Lender, the aggregate
principal amount of all Loans and Commitments held by all Affiliated Lenders
(after giving effect to the assignment of the Assigned Interest to the Assignee
hereunder) does not exceed 25% of the aggregate principal amount of all
outstanding Loans and Commitments; and (b) agrees that (i) it will,
independently and without reliance upon the Administrative Agent, [the][any]
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.
2.    Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of [the] [each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the] [the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the] [the relevant] Assignee for amounts which have accrued from and after
the Effective Date.
3.    General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York
(excluding the laws applicable to conflicts or choice of law (other than the New
York General Obligations Law §5-1401)), except to the extent New York law is
superseded by the Bankruptcy Code.

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

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

EXHIBIT F
INITIAL APPROVED BUDGET
[To be included]

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

EXHIBIT G-1
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is made to that certain Debtor-in-Possession Credit Agreement, dated
as of October [4], 2015 (as amended, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “DIP Credit
Agreement”), among (a) AMERICAN APPAREL (USA), LLC, a California limited
liability company (“AA USA”), as a Borrower and as the Borrower Representative
for itself and the other Borrowers party thereto, (b) AMERICAN APPAREL RETAIL,
INC., a California corporation (“AA Retail”) AMERICAN APPAREL DYEING &
FINISHING, INC., a California corporation (“AA Dyeing & Finishing”), and KCL
KNITTING, LLC, a California limited liability company (“KCL Knitting” and
together with AA USA, AA Retail and AA Dyeing & Finishing, each individually, a
“Borrower” and collectively, the “Borrowers”), (c) the other Credit Parties
party thereto, (d) each Lender from time to time party thereto and
(e) Wilmington Trust, National Association, as Administrative Agent.
Pursuant to the provisions of Section 3.01(e) of the DIP Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and
(iv) it is not a controlled foreign corporation related to any Borrower as
described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower
Representative with a certificate of its non-U.S. Person status on IRS
Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned
agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform the Borrower Representative and the
Administrative Agent, and (2) the undersigned shall have at all times furnished
the Borrower Representative and the Administrative Agent with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the DIP Credit Agreement and
used herein shall have the meanings given to them in the DIP Credit Agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

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

[LENDER]
By:    ___________________________________
Name:
Title:
[Address]
Dated:    , 20[    ]

EXHIBIT G-2
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is made to that certain Debtor-in-Possession Credit Agreement, dated
as of October [4], 2015 (as amended, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “DIP Credit
Agreement”), among (a) AMERICAN APPAREL (USA), LLC, a California limited
liability company (“AA USA”), as a Borrower and as the Borrower Representative
for itself and the other Borrowers party thereto, (b) AMERICAN APPAREL RETAIL,
INC., a California corporation (“AA Retail”) AMERICAN APPAREL DYEING &
FINISHING, INC., a California corporation (“AA Dyeing & Finishing”), and KCL
KNITTING, LLC, a California limited liability company (“KCL Knitting” and
together with AA USA, AA Retail and AA Dyeing & Finishing, each individually, a
“Borrower” and collectively, the “Borrowers”), (c) the other Credit Parties
party thereto, (d) each Lender from time to time party thereto and
(e) Wilmington Trust, National Association, as Administrative Agent.
Pursuant to the provisions of Section 3.01(e) of the DIP Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent shareholder of any Borrower within the meaning of
Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to any Borrower as described in Section 881(c)(3)(C) of the
Code.
The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided on
this certificate changes, the undersigned shall promptly so inform such Lender
in writing, and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either
the calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

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

Unless otherwise defined herein, terms defined in the DIP Credit Agreement and
used herein shall have the meanings given to them in the DIP Credit Agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

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

[PARTICIPANT]
By:    ____________________________________
Name:
Title:
[Address]
Dated:    , 20[    ]

EXHIBIT G-3
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)
Reference is made to that certain Debtor-in-Possession Credit Agreement, dated
as of October [4], 2015 (as amended, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “DIP Credit
Agreement”), among (a) AMERICAN APPAREL (USA), LLC, a California limited
liability company (“AA USA”), as a Borrower and as the Borrower Representative
for itself and the other Borrowers party thereto, (b) AMERICAN APPAREL RETAIL,
INC., a California corporation (“AA Retail”) AMERICAN APPAREL DYEING &
FINISHING, INC., a California corporation (“AA Dyeing & Finishing”), and KCL
KNITTING, LLC, a California limited liability company (“KCL Knitting” and
together with AA USA, AA Retail and AA Dyeing & Finishing, each individually, a
“Borrower” and collectively, the “Borrowers”), (c) the other Credit Parties
party thereto, (d) each Lender from time to time party thereto and
(e) Wilmington Trust, National Association, as Administrative Agent.
Pursuant to the provisions of Section 3.01(e) of the DIP Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of any
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS
Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender and (2) the
undersigned shall have at all times furnished such Lender with a properly
completed and currently effective certificate in either the calendar year in
which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

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

Unless otherwise defined herein, terms defined in the DIP Credit Agreement and
used herein shall have the meanings given to them in the DIP Credit Agreement.

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

[PARTICIPANT]
By:    ____________________________________
Name:
Title:
[Address]
Dated:    , 20[    ]

EXHIBIT G-4
FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Debtor-in-Possession Credit Agreement, dated
as of October [4], 2015 (as amended, amended and restated, extended,
supplemented or otherwise modified in writing from time to time, the “DIP Credit
Agreement”), among (a) AMERICAN APPAREL (USA), LLC, a California limited
liability company (“AA USA”), as a Borrower and as the Borrower Representative
for itself and the other Borrowers party thereto, (b) AMERICAN APPAREL RETAIL,
INC., a California corporation (“AA Retail”) AMERICAN APPAREL DYEING &
FINISHING, INC., a California corporation (“AA Dyeing & Finishing”), and KCL
KNITTING, LLC, a California limited liability company (“KCL Knitting” and
together with AA USA, AA Retail and AA Dyeing & Finishing, each individually, a
“Borrower” and collectively, the “Borrowers”), (c) the other Credit Parties
party thereto, (d) each Lender from time to time party thereto and
(e) Wilmington Trust, National Association, as Administrative Agent.
Pursuant to the provisions of Section 3.01(e) of the DIP Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of any Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to any
Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower
Representative with IRS Form W-8IMY accompanied by one of the following forms
from each of its partners/members that is claiming the portfolio interest
exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS
Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of
such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(1) if the information provided on this certificate changes, the undersigned
shall promptly so inform the Borrower and the Administrative Agent, and (2) the
undersigned shall have at all times furnished the Borrower and the
Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

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

Unless otherwise defined herein, terms defined in the DIP Credit Agreement and
used herein shall have the meanings given to them in the DIP Credit Agreement.
[LENDER]
By:    ____________________________________
Name:
Title:
[Address]
Dated:    , 20[    ]

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

EXHIBIT H

EXIT TERM SHEET

[to be annexed]

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

EXHIBIT I

FORM OF NOTICE OF CONTINUATION
[_________], 20[_]
American Apparel (USA), LLC, a California limited liability company (the
“Borrower Representative”), pursuant to Section 2.02 of the Debtor-In-Possession
Credit Agreement dated as of October [4], 2015 (together with all amendments,
restatements, supplements or other modifications thereto, the “Credit
Agreement”), among the Borrowers, the other Credit Parties from time to time
party thereto, the Lenders from time to time party thereto, and Wilmington
Trust, National Association, as Administrative Agent (unless otherwise defined
herein, each capitalized term used herein is defined in the Credit Agreement),
hereby makes a continuation request as follows:
(i)    The Borrowing to which this Notice of Continuation applies is
[___________];
(ii)    The effective date of the election made pursuant to this Notice of
Continuation is [___________], 20[_]; [and]
(iii)    The resulting Borrowing is to be a Eurodollar Rate Loan; and
(iv)     The Interest Period applicable to the resulting Eurodollar Rate Loan
after giving effect to such election is [one] [two] [three] [six] months.
[Signature page follows]

AMERICAN APPAREL (USA), LLC,
as Borrower Representation and Borrower

By:                 
Name:
Title: