Exhibit 10.1

EXECUTION COPY

REVOLVING CREDIT

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION,

as Agent

THE LENDERS PARTY HERETO

with

GENESIS MERGER SUB, INC.,

which upon the consummation of the Transactions (as defined herein)

shall be merged with and into

THE FINISH LINE, INC.

(with THE FINISH LINE, INC. as the surviving Person),

as Borrowing Agent

for

THE BORROWERS NAMED HEREIN

THE GUARANTORS NAMED HEREIN

WELLS FARGO BANK, NATIONAL ASSOCIATION

BANK OF AMERICA, N.A.,

as Co-Syndication Agents

PNC CAPITAL MARKETS, LLC

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Joint Lead Arrangers and Bookrunners

June 18, 2018

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TABLE OF CONTENTS

 

              Page  

I.

 

DEFINITIONS

     1    

1.1.

  

Accounting Terms

     1    

1.2.

  

General Terms

     2    

1.3.

  

Uniform Commercial Code Terms

     51    

1.4.

  

Certain Matters of Construction

     51  

II.

 

ADVANCES, PAYMENTS

     53    

2.1.

  

Revolving Advances; FILO Advances

     53    

2.2.

  

Procedures for Requesting Revolving Advances and FILO Advances; Procedures for
Selection of Applicable Interest Rates for All Advances

     55    

2.3.

  

Voluntary Prepayments

     57    

2.4.

  

Swing Loans

     58    

2.5.

  

Disbursement of Advance Proceeds

     59    

2.6.

  

Making and Settlement of Advances

     60    

2.7.

  

Maximum Advances

     62    

2.8.

  

Manner and Repayment of Advances

     62    

2.9.

  

Repayment of Excess Advances

     63    

2.10.

  

Statement of Account

     63    

2.11.

  

Letters of Credit

     63    

2.12.

  

Issuance of Letters of Credit

     64    

2.13.

  

Requirements For Issuance of Letters of Credit

     65    

2.14.

  

Disbursements, Reimbursement

     66    

2.15.

  

Repayment of Participation Advances

     67    

2.16.

  

Documentation

     68    

2.17.

  

Determination to Honor Drawing Request

     68    

2.18.

  

Nature of Participation and Reimbursement Obligations

     68    

2.19.

  

Liability for Acts and Omissions

     70    

2.20.

  

Mandatory Prepayments

     71    

2.21.

  

Use of Proceeds

     72    

2.22.

  

Defaulting Lender

     72    

2.23.

  

Payment of Obligations

     75    

2.24.

  

Increase in Maximum Revolving Advance Amount

     76    

2.25.

  

Decrease in Maximum Revolving Advance Amount

     78  

III.

 

INTEREST AND FEES

     79    

3.1.

  

Interest

     79    

3.2.

  

Letter of Credit Fees

     80    

3.3.

  

Facility Fees

     81    

3.4.

  

Collateral Evaluation Fee; Fee Letter

     82    

3.5.

  

Computation of Interest and Fees

     83    

3.6.

  

Maximum Charges

     83    

3.7.

  

Increased Costs

     83    

3.8.

  

Alternate Rate of Interest

     84  

 

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3.9.

  

Capital Adequacy

     86    

3.10.

  

Taxes

     87    

3.11.

  

Replacement of Lenders

     89  

IV.

 

COLLATERAL: GENERAL TERMS

     91    

4.1.

  

Security Interest in the Collateral

     91    

4.2.

  

Perfection of Security Interest

     91    

4.3.

  

Preservation of Collateral

     92    

4.4.

  

Ownership and Location of Collateral

     92    

4.5.

  

Defense of Agent’s and Lenders’ Interests

     93    

4.6.

  

Inspection of Premises; Physical Inventories

     94    

4.7.

  

Appraisals

     94    

4.8.

  

Receivables; Credit Card Receivables; Deposit Accounts and Securities Accounts

     95    

4.9.

  

Inventory

     100    

4.10.

  

Maintenance of Equipment

     100    

4.11.

  

Exculpation of Liability

     100    

4.12.

  

Financing Statements

     100  

V.

 

REPRESENTATIONS AND WARRANTIES

     100    

5.1.

  

Authority

     100    

5.2.

  

Formation and Qualification; Subsidiaries

     101    

5.3.

  

[Intentionally Omitted]

     101    

5.4.

  

Tax Returns

     101    

5.5.

  

Financial Statements

     102    

5.6.

  

Certificates of Beneficial Ownership

     102    

5.7.

  

Environmental Compliance

     103    

5.8.

  

Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance

     103    

5.9.

  

Patents, Trademarks, Copyrights and Licenses

     105    

5.10.

  

Licenses and Permits

     105    

5.11.

  

[Intentionally Omitted]

     106    

5.12.

  

No Default

     106    

5.13.

  

No Burdensome Restrictions

     106    

5.14.

  

No Labor Disputes

     106    

5.15.

  

Margin Regulations

     106    

5.16.

  

Investment Company Act

     106    

5.17.

  

Disclosure

     106    

5.18.

  

Delivery of Intercompany Subordinated Loan Documents and Holdings Loan Documents

     107    

5.19.

  

Delivery of Acquisition Agreement

     107    

5.20.

  

EEA Financial Institution

     107    

5.21.

  

Business and Property of Borrowers and Guarantors

     107    

5.22.

  

[Intentionally Omitted]

     107    

5.23.

  

Federal Securities Laws

     107    

5.24.

  

Equity Interests

     107    

5.25.

  

Commercial Tort Claims

     108  

 

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    5.26.    Letter of Credit Rights    108       5.27.    Material Contracts   
108       5.28.    Insurance    108       5.29.    Perfection of Agent’s Liens
   108       5.30.    Brokers    109       5.31.    Customer and Trade Relations
   109       5.32.    Casualty    109       5.33.    Senior Debt Status    109  

VI.

 

AFFIRMATIVE COVENANTS

     110       6.1.    Compliance with Laws    110       6.2.    Conduct of
Business and Maintenance of Existence and Assets    110       6.3.    Books and
Records; Accountants    110       6.4.    Payment of Obligations    111      
6.5.    Financial Covenant    111       6.6.    Insurance    111       6.7.   
Payment of Indebtedness and Leasehold Obligations    112       6.8.   
Environmental Matters    112       6.9.    Standards of Financial Statements   
113       6.10.    Federal Securities Laws    113       6.11.    Execution of
Supplemental Instruments    113       6.12.    ERISA Compliance    113      
6.13.    Government Receivables    113       6.14.    Material Contracts    114
      6.15.    Keepwell    114       6.16.    Certificates of Beneficial
Ownership and Other Additional Information    114  

VII.

 

NEGATIVE COVENANTS

     115       7.1.    Merger, Consolidation, Acquisition and Sale of Assets   
115       7.2.    Creation of Liens    116       7.3.    Guarantees    117      
7.4.    Investments    117       7.5.    Loans    117       7.6.    Hedge
Arrangements    117       7.7.    Dividends    117       7.8.    Indebtedness   
117       7.9.    Nature of Business    117       7.10.    Transactions with
Affiliates    117       7.11.    [Intentionally Omitted]    118       7.12.   
Subsidiaries    118       7.13.    Fiscal Year and Accounting Changes    119    
  7.14.    [Intentionally Omitted]    119       7.15.    Amendment of
Organizational Documents    119       7.16.    [Intentionally Omitted]    119  
    7.17.    Prepayment of Indebtedness    119       7.18.    Intercompany
Subordinated Loans; Holdings Loan    119       7.19.    Other Agreements    120
 

 

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    7.20.    Membership / Partnership Interests    120       7.21.    Burdensome
Agreements    120       7.22.    Issuance of Equity Interests    120       7.23.
   Capital Expenditures    121  

VIII.

 

CONDITIONS PRECEDENT

     121       8.1.    Conditions to Initial Advances    121       8.2.   
Conditions to Each Advance    125   IX.   INFORMATION AS TO BORROWERS AND
GUARANTORS    126       9.1.    Disclosure of Material Matters    126       9.2.
   Schedules    126       9.3.    Environmental Notice    127       9.4.   
Litigation    127       9.5.    Material Occurrences    127       9.6.   
Government Receivables    128       9.7.    Annual Financial Statements    128  
    9.8.    Quarterly Financial Statements    128       9.9.    [Intentionally
Omitted.]    129       9.10.    Other Reports    129       9.11.    Additional
Information    129       9.12.    Projected Operating Budget    129       9.13.
   Variances From Operating Budget    129       9.14.    Notice of Suits,
Adverse Events    129       9.15.    ERISA Notices and Requests    130      
9.16.    Material Contracts    130       9.17.    Additional Documents    130  
    9.18.    Updates to Certain Schedules    130       9.19.    Labor Matters   
130  

X.

 

EVENTS OF DEFAULT

     130       10.1.    Nonpayment    130       10.2.    Breach of
Representation    131       10.3.    Judicial Actions    131       10.4.   
Noncompliance    131       10.5.    Judgments    131       10.6.    Bankruptcy
   131       10.7.    Lien Priority    132       10.8.    [Intentionally
Omitted.];    132       10.9.    Cross Default    132       10.10.   
[Intentionally Omitted.];    132       10.11.    Change of Control    132      
10.12.    Invalidity    132       10.13.    [Intentionally Omitted.]    132    
  10.14.    Cessation of Business    132       10.15.    Pension Plans    133  
    10.16.    Loss of Collateral    133       10.17.    Indictment    133      
10.18.    Subordination Provisions    133  

 

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XI.

 

LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

     133       11.1.    Rights and Remedies    133       11.2.    Agent’s
Discretion    135       11.3.    Setoff    135       11.4.    Rights and
Remedies not Exclusive    136       11.5.    Allocation of Payments After Event
of Default    136   XII.   WAIVERS AND JUDICIAL PROCEEDINGS    137       12.1.
   Waiver of Notice    137       12.2.    Delay    138       12.3.    Jury
Waiver    138  

XIII.

 

EFFECTIVE DATE AND TERMINATION

     138       13.1.    Term    138       13.2.    Termination    138  

XIV.

 

REGARDING AGENT

     139       14.1.    Appointment    139       14.2.    Nature of Duties   
139       14.3.    Lack of Reliance on Agent    139       14.4.    Resignation
of Agent; Successor Agent    140       14.5.    Certain Rights of Agent    141  
    14.6.    Reliance    141       14.7.    Notice of Default    141       14.8.
   Indemnification    141       14.9.    Agent in its Individual Capacity    141
      14.10.    Delivery of Documents    142       14.11.    Borrowers’ and
Guarantors’ Undertaking to Agent    142       14.12.    No Reliance on Agent’s
Customer Identification Program    142       14.13.    Other Agreements    142  
    14.14.    Co-Syndication Agents; Joint Lead Arrangers    142  

XV.

 

BORROWING AGENCY

     143       15.1.    Borrowing Agency Provisions    143       15.2.    Waiver
of Subrogation    144   XVI.   MISCELLANEOUS    144       16.1.    Governing Law
   144       16.2.    Entire Understanding    145       16.3.    Successors and
Assigns; Participations; New Lenders    148       16.4.    Application of
Payments    151       16.5.    Indemnity    151       16.6.    Notice    153    
  16.7.    Survival    155  

 

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16.8.

  

Severability

     155    

16.9.

  

Expenses

     155    

16.10.

  

Injunctive Relief

     156    

16.11.

  

Consequential Damages

     156    

16.12.

  

Captions

     156    

16.13.

  

Counterparts; Electronic Signatures

     156    

16.14.

  

Construction

     157    

16.15.

  

Confidentiality; Sharing Information

     157    

16.16.

  

Publicity

     158    

16.17.

  

Certifications From Banks and Participants; USA PATRIOT Act

     158    

16.18.

  

Anti-Terrorism Laws

     159       16.19.    Acknowledgment and Consent to Bail-In of EEA Financial
Institutions    160  

 

vi

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LIST OF EXHIBITS AND SCHEDULES

 

Exhibits   

Exhibit 1.2

   Borrowing Base Certificate

Exhibit 1.2(a)

   Compliance Certificate

Exhibit 1.2(b)

   Guaranty

Exhibit 2.1(a)

   Revolving Credit Note

Exhibit 2.1(b)

   FILO Note

Exhibit 2.4(a)

   Swing Loan Note

Exhibit 5.5(b)

   Financial Projections

Exhibit 5.6

   Certificate of Beneficial Ownership

Exhibit 16.3

   Commitment Transfer Supplement

 

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Schedules   

Schedule 1.1(a)

   Borrowers

Schedule 1.1(b)

   Guarantors

Schedule 1.1(c)

   Lenders and Commitments

Schedule 1.2

   Permitted Encumbrances

Schedule 1.3

   Existing Letters of Credit

Schedule 4.4

  

Equipment and Inventory Locations; Warehouses; Places of Business, Chief
Executive Offices; Real Property

Schedule 4.8(j)(i)

   Deposit and Investment Accounts

Schedule 4.8(j)(ii)

   Credit Card Arrangements

Schedule 5.1

   Consents

Schedule 5.2(a)

   States of Qualification and Good Standing

Schedule 5.2(b)

   Subsidiaries

Schedule 5.7

   Environmental

Schedule 5.8(b)(i)

   Litigation

Schedule 5.8(b)(ii)

   Indebtedness

Schedule 5.8(d)

   Pension Benefit Plans

Schedule 5.9(a)

   Intellectual Property

Schedule 5.9(b)

   License Agreements

Schedule 5.9(c)

   Intellectual Property Claims

Schedule 5.10

   Licenses and Permits

Schedule 5.24(a)

   Equity Interests in Borrowers and Guarantors

Schedule 5.24(b)

   Equity Agreements

Schedule 5.24(c)

   Convertible Equity

Schedule 5.25

   Commercial Tort Claims

Schedule 5.26

   Letter of Credit Rights

Schedule 5.27

   Material Contracts

Schedule 5.28

   Insurance

Schedule 7.3

   Guarantees

Schedule 7.4

   Existing Permitted Investments

Schedule 7.10

   Existing Affiliate Transactions

Schedule 7.21

   Burdensome Agreements

Schedule 8.1

   Closing Date Other Documents

 

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REVOLVING CREDIT AND SECURITY AGREEMENT

Revolving Credit and Security Agreement dated as of June 18, 2018 among
(i) GENESIS MERGER SUB, INC., an Indiana corporation (“GMSI”), which upon the
consummation of the Transactions (as defined below) shall be merged with and
into THE FINISH LINE, INC., an Indiana corporation (with THE FINISH LINE, INC.
as the surviving Person) (as further defined herein, “Borrowing Agent”), (ii)
the Persons named on Schedule 1.1(a) hereto (together with GMSI and each Person
joined hereto as a borrower from time to time, collectively, the “Borrowers”,
and each a “Borrower”), (iii) the Persons named on Schedule 1.1(b) hereto
(together with each Person joined hereto as a guarantor from time to time,
collectively, the “Guarantors”, and each a “Guarantor”, in each case as further
defined herein), (iv) the financial institutions which are now or which
hereafter become a party hereto (collectively, the “Lenders” and each
individually a “Lender”), (v) PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent
for Lenders (PNC, in such capacity, the “Agent”), (vi) WELLS FARGO BANK,
NATIONAL ASSOCIATION and BANK OF AMERICA, N.A., as Co-Syndication Agents (each,
in such capacity, a “Co-Syndication Agent”), and (vii) PNC CAPITAL MARKETS, LLC
and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Joint Lead Arrangers (each, in
such capacity, a “Joint Lead Arranger”).

IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Guarantors, Lenders and Agent hereby agree as follows:

 

I. DEFINITIONS.

1.1.    Accounting Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined shall have the respective meanings given to them under GAAP; provided,
however, that, whenever such accounting terms are used for the purposes of
determining compliance with financial covenants in this Agreement, such
accounting terms shall be defined in accordance with GAAP as applied in
preparation of the audited financial statements of Borrowers and Guarantors for
the Fiscal Year ended March 3, 2018. If there occurs after the Closing Date any
change in GAAP that affects in any respect the calculation of any covenant
contained in this Agreement or the definition of any term defined under GAAP
used in such calculations, Agent, Lenders, Borrowers, and Guarantors shall
negotiate in good faith to amend the provisions of this Agreement that relate to
the calculation of such covenants with the intent of having the respective
positions of Agent, Lenders, Borrowers, and Guarantors after such change in GAAP
conform as nearly as possible to their respective positions as of the Closing
Date; provided, that, until any such amendments have been agreed upon, the
covenants in this Agreement shall be calculated as if no such change in GAAP had
occurred and Borrowers and Guarantors shall provide additional financial
statements or supplements thereto, attachments to Compliance Certificates and/or
calculations regarding financial covenants as Agent may reasonably require in
order to provide the appropriate financial information required hereunder with
respect to Borrowers and Guarantors both reflecting any applicable changes in
GAAP and as necessary to demonstrate compliance with the financial covenants
before giving effect to the applicable changes in GAAP. Anything in this
Agreement to the contrary notwithstanding, any obligation of a Person under a
lease (whether existing as of

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the Closing Date or entered into in the future) that is not (or would not be)
required to be classified and accounted for as a capital lease on the balance
sheet of such Person under GAAP as in effect at the time such lease is entered
into shall not be treated as a Capitalized Lease Obligation solely as a result
of (x) the adoption of any changes in, or (y) changes in the application of,
GAAP after such lease is entered into; provided, that, all payments under any
such lease shall continue to be treated as an expense for purposes of
calculating net income. Notwithstanding the foregoing, for purposes of
determining compliance with any covenant (including the computation of any
financial covenant or financial ratio) contained herein, the effects of FASB ASC
825, FASB ASC 470-20, FASB ASC-840-40-55 and FASB ASC 842 on financial
liabilities shall be disregarded.

1.2.    General Terms. For purposes of this Agreement the following terms shall
have the following meanings:

“Acceptable Document” means a negotiable bill of lading that is (i) issued by a
Common Carrier which is in physical possession of such Inventory, (ii) issued to
the order of a Borrower, or to the order of Agent, (iii) is subject to Agent’s
perfected first-priority security interest (subject to Permitted Encumbrances
having priority over the Lien of Agent by operation of Applicable Law) and as to
which Agent has control (as defined in the UCC (such as by the delivery of a
Common Carrier Agreement)), and (iv) is otherwise in form and substance
acceptable to Agent in its Permitted Discretion.

“Accountants” shall have the meaning set forth in Section 9.7 hereof.

“Acquisition Agreement” shall mean the Agreement and Plan of Merger including
all exhibits and schedules thereto, dated as of March 25, 2018, by and among JD
Sports Fashion Plc, Genesis Merger Sub, Inc., and The Finish Line, Inc.

“Adjustment Date” shall mean the first day of each calendar quarter, commencing
on October 1, 2018.

“Advances” shall mean and include the Revolving Advances (including, without
limitation, Letters of Credit, and Swing Loans) and the FILO Advances.

“Affected Lender” shall have the meaning set forth in Section 3.11 hereof.

“Affiliate” of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) solely with respect to the term “Affiliate” as used in
Section 7.10 hereof, any Person who is a director, manager, member, managing
member, general partner or officer (i) of such Person, (ii) of any Subsidiary of
such Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 10% or more of the Equity Interests having ordinary voting
power for the election of directors of such Person or other Persons performing
similar functions for any such Person, or (y) to direct or cause the direction
of the management and policies of such Person whether by ownership of Equity
Interests, contract or otherwise.

 

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“Agent” shall have the meaning set forth in the preamble to this Agreement and
shall include its successors and assigns.

“Agreement” shall mean this Revolving Credit and Security Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
highest of (a) the Base Rate in effect on such day, (b) the sum of the Overnight
Bank Funding Rate in effect on such day plus one half of one percent (0.5%), and
(c) the sum of the Daily LIBOR Rate in effect on such day plus one percent
(1.0%), so long as a Daily LIBOR Rate is offered, ascertainable and not
unlawful. Any change in the Alternate Base Rate (or any component thereof) shall
take effect at the opening of business on the day such change occurs.

“Alternate Source” shall have the meaning set forth in the definition of
Overnight Bank Funding Rate.

“Anti-Corruption Laws” shall mean the FCPA, the U.K. Bribery Act of 2010, as
amended, and all other applicable laws and regulations or ordinances concerning
or relating to bribery or corruption in any jurisdiction in which any Borrower
or Guarantor, or any Subsidiary or other Affiliate of any of the foregoing, is
located or is doing business.

“Anti-Money Laundering Laws” shall mean the applicable laws or regulations in
any jurisdiction in which any Borrower or Guarantor, or any Subsidiary or other
Affiliate of any of the foregoing, is located or is doing business that relates
to money laundering, any predicate crime to money laundering, or any financial
record keeping and reporting requirements related thereto.

“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering, bribery or
corruption, and any regulation, order, or directive promulgated, issued or
enforced pursuant to such Laws, all as amended, supplemented or replaced from
time to time, and including, without limitation, Anti-Corruption Laws and
Anti-Money Laundering Laws.

“Applicable Law” shall mean all Laws applicable to the Person, conduct,
transaction, covenant, Other Document or contract in question, all provisions of
all applicable state, federal and foreign constitutions, statutes, rules,
regulations, treaties, directives and orders of any Governmental Body, and all
orders, judgments and decrees of all courts and arbitrators.

“Applicable Margin” shall mean:

(a)     in the case of Revolving Advances (including Swing Loans) and Letter of
Credit Fees:

(i)    from and after the Closing Date until the first Adjustment Date, the
percentages set forth in Level II of the pricing grid below; and

(ii)    from and after the first Adjustment Date and on each Adjustment Date
thereafter, the Applicable Margin determined from the following pricing grid
based upon the Average Undrawn Availability for the most recent calendar quarter
ended immediately preceding such Adjustment Date;

 

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Level

  

Average Undrawn Availability

   Domestic Rate Loan
Margin (per annum)     LIBOR Rate Loan
Margin (per annum)   I    Greater than or equal to 50% of the Maximum Revolving
Advance Amount      0.25 %      1.25 %  II    Less than 50% of the Maximum
Revolving Advance Amount but greater than 25% of the Maximum Revolving Advance
Amount      0.375 %      1.375 %  III    Equal to or less than 25% of the
Maximum Revolving Advance Amount      0.50 %      1.50 % 

If Borrowers shall fail to deliver the Borrowing Base Certificates and related
supporting information required under Section 9.2 by the dates required pursuant
to such section, each Applicable Margin shall be conclusively presumed to equal
the highest Applicable Margin specified in the pricing table set forth above
until the date of delivery of such Borrowing Base Certificates and related
supporting information, at which time the Applicable Margin will be adjusted
based upon the Average Undrawn Availability reflected in such statements.

If, as a result of any restatement of, or other adjustment to, any Borrowing
Base Certificate, Agent determines that (a) Average Undrawn Availability as
previously calculated as of any applicable date for any applicable calendar
quarter was inaccurate, and (b) a proper calculation of Average Undrawn
Availability for any such calendar quarter would have resulted in different
Applicable Margin for any period, then (i) if the proper calculation of Average
Undrawn Availability would have resulted in a higher Applicable Margin for such
period, automatically and immediately without the necessity of any demand or
notice by Agent or any other affirmative act of any party, the interest accrued
on the applicable outstanding Advances and/or the amount of the fees accruing
for such period under the provisions of this Agreement and the Other Documents
shall be deemed to be retroactively increased by, and Borrowers shall be
obligated to immediately pay to Agent for the ratable benefit of Lenders an
amount equal to the excess of the amount of interest and fees that should have
been paid for such period over the amount of interest and fees actually paid for
such period; and (ii) if the proper calculation of Average Undrawn Availability
would have resulted in a lower Applicable Margin for such

 

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period, then the interest accrued on the applicable outstanding Advances and the
amount of the fees accruing for such period under the provisions of this
Agreement and the Other Documents shall be deemed to remain unchanged, and Agent
and Lenders shall have no obligation to repay interest or fees to the Borrowers;
provided, that, if as a result of any such restatement or other adjustment a
proper calculation of Average Undrawn Availability would have resulted in a
higher Applicable Margin for one or more periods and a lower Applicable Margin
for one or more other periods (due to the shifting of income or expenses from
one period to another period or any other reason), then the amount payable by
Borrowers pursuant to clause (i) above shall be based upon the excess, if any,
of the amount of interest and fees that should have been paid for all applicable
periods over the amounts of interest and fees actually paid for such periods.

(b)    In the case of FILO Advances, (i) 1.25% per annum, in the case of
Domestic Rate Loans, and (ii) 2.25% per annum, in the case of LIBOR Rate Loans.

“Application Date” shall have the meaning set forth in Section 2.8(b) hereof.

“Approved Electronic Communication” shall mean each notice, demand,
communication, information, document and other material transmitted, posted or
otherwise made or communicated by e-mail, E-Fax, the Credit Management Module of
PNC’s PINACLE® system, or any other equivalent electronic service agreed to by
Agent, whether owned, operated or hosted by Agent, any Lender, any of their
Affiliates or any other Person, that any party is obligated to, or otherwise
chooses to, provide to Agent pursuant to this Agreement or any Other Document,
including any financial statement, financial and other report, notice, request,
certificate and other information material; provided, that, Approved Electronic
Communications shall not include any notice, demand, communication, information,
document or other material that Agent specifically instructs a Person to deliver
in physical form.

“Authorized Officer” shall mean, with respect to any Borrower or Guarantor, the
Chief Executive Officer, President, Chief Financial Officer, Deputy Chief
Financial Officer, Chief Accounting Officer, Treasurer or Assistant Treasurer of
such Person or such other individuals, designated by written notice to Agent
from Borrowing Agent, authorized to execute notices, reports and other documents
on behalf of Borrowers or Guarantors required hereunder. Borrowing Agent may
amend such list of individuals from time to time by giving written notice of
such amendment to Agent.

“Average Undrawn Availability” shall mean, as of any date of determination, the
average daily Undrawn Availability for the immediately preceding calendar
quarter.

“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers
by the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

“Bail-In Legislation” shall mean, with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law for such EEA Member
Country from time to time which is described in the EU Bail-In Legislation
Schedule.

 

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“Base Rate” shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.

“Beneficial Owner” shall mean, for each Borrower, each of the following:
(a) each Person, if any, who, directly or indirectly, owns 25% or more of such
Borrower’s Equity Interests; and (b) a single Person with significant
responsibility to control, manage, or direct such Borrower.

“Benefited Lender” shall have the meaning set forth in Section 2.6(e) hereof.

“Blocked Account Bank” shall have the meaning set forth in Section 4.8(h)
hereof.

“Blocked Accounts” shall have the meaning set forth in Section 4.8(h) hereof.

“Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.

“Borrowers and Guarantors on a Consolidated Basis” shall mean the consolidation
in accordance with GAAP of the accounts or other items of Borrowers, Guarantors,
and their respective Subsidiaries.

“Borrowers’ Account” shall have the meaning set forth in Section 2.10 hereof.

“Borrowing Agent” shall have the meaning set forth in the preamble to this
Agreement and shall extend to all permitted successors and assigns of such
Person.

“Borrowing Base Certificate” shall mean a certificate in substantially the form
of Exhibit 1.2 hereto duly executed by an Authorized Officer of the Borrowing
Agent and delivered to the Agent, appropriately completed, by which such officer
shall certify to Agent the Formula Amount and calculation thereof as of the date
of such certificate.

“Business Day” shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by Law to be closed
for business in East Brunswick, New Jersey and, if the applicable Business Day
relates to any LIBOR Rate Loans, such day must also be a day on which dealings
are carried on in the London interbank market.

“Capital Expenditures” shall mean expenditures made for the acquisition of any
fixed assets or improvements (or of any replacements or substitutions thereof or
additions thereto) which have a useful life of more than one year and which, in
accordance with GAAP, would be classified as capital expenditures, other than
expenditures made utilizing the proceeds of insurance, as permitted under this
Agreement or any Other Document, in order to repair, restore or replace the
assets giving rise to such proceeds. Capital Expenditures shall include the
total principal portion of Capitalized Lease Obligations.

 

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“Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower or
Guarantor represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.

“Cash Dominion Event” shall mean (a) the occurrence and continuance of any Event
of Default, or (b) the failure of Borrowers to maintain Undrawn Availability of
at least the greater of (i) twelve and one-half of one percent (12.5%) of the
Revolving Loan Cap or (ii) $30,000,000 for five (5) consecutive Business Days.
The occurrence of a Cash Dominion Event shall be deemed continuing (A) so long
as such Event of Default is continuing, and (B) if the Cash Dominion Event
arises as a result of Borrowers’ failure to achieve the requisite Undrawn
Availability, until Undrawn Availability has exceeded such greater amount for
thirty (30) consecutive days, in which case a Cash Dominion Event shall no
longer be deemed to be continuing; provided, that, a Cash Dominion Event shall
be deemed continuing (even if an Event of Default is no longer continuing and/or
Undrawn Availability exceeds the required amount for thirty (30) consecutive
days) at all times after a Cash Dominion Event has occurred and been
discontinued on three (3) occasions in any twelve-month period.

“Cash Equivalents” shall mean (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers’ acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected against
currency fluctuations for any such deposits with a term of more than 180 days);
(iii) shares of money market, mutual or similar funds having assets in excess of
$100,000,000 and the investments of which consist primarily of assets described
in clauses (i), (ii), (iv) and (v); (iv) commercial paper of United States and
foreign banks and bank holding companies and their subsidiaries and United
States and foreign finance, commercial industrial or utility companies which, at
the time of acquisition, are rated A-1 (or better) by Standard & Poor’s, or P-1
(or better) by Moody’s; and (v) short-term tax exempt securities rated BBB or
better by Standard & Poor’s or Baa2 or better by Moody’s.

“Cash Management Liabilities” shall have the meaning provided in the definition
of “Cash Management Products and Services.”

“Cash Management Products and Services” shall mean agreements or other
arrangements under which Agent or any Lender or any Affiliate of Agent or a
Lender provides any of the following products or services to any Borrower or
Guarantor: (a) credit cards; (b) credit card processing services; (c) debit
cards and stored value cards; (d) commercial cards; (e) ACH transactions; and
(f) cash management and treasury management services and products, including
without limitation controlled disbursement accounts or services, lockboxes,
automated clearinghouse transactions, overdrafts, interstate depository network
services. The indebtedness, obligations and liabilities of any Borrower or
Guarantor to the provider of any Cash Management Products and Services
(including all obligations and liabilities owing to such provider in respect of
any returned items deposited with such provider) (the “Cash Management
Liabilities”) shall be “Obligations” hereunder, guaranteed obligations under the
Guaranty and secured obligations hereunder, as applicable, and otherwise treated
as Obligations for purposes of each of the Other Documents. The Liens securing
the Cash Management Products and Services shall be pari passu with the Liens
securing all other Obligations under this Agreement and the Other Documents,
subject to the express provisions of Section 11.5.

 

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“CEA” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended
from time to time, and any successor statute.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

“Certificate of Beneficial Ownership” shall mean, for each Borrower, a
certificate in substantially the form of Exhibit 5.6 hereto (as amended or
modified by Agent from time to time in its sole discretion), certifying, among
other things, the Beneficial Owner of such Borrower.

“CFTC” shall mean the Commodity Futures Trading Commission.

“Change in Law” shall mean the occurrence, after the Closing Date, of any of the
following: (a) the adoption or taking effect of any Applicable Law; (b) any
change in any Applicable Law or in the administration, implementation,
interpretation or application thereof by any Governmental Body; or (c) the
making or issuance of any request, rule, guideline or directive (whether or not
having the force of Law) by any Governmental Body; provided, that,
notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, regulations,
guidelines, interpretations or directives thereunder or issued in connection
therewith (whether or not having the force of Applicable Law) and (y) all
requests, rules, regulations, guidelines, interpretations 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 (whether or not having the force of Law), 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, issued, promulgated or implemented.

“Change of Control” shall mean: (a) the occurrence of any event (whether in one
or more transactions) which results in Holdings failing to (x) own, directly or
indirectly, one hundred percent (100%) of the Equity Interests (on a fully
diluted basis) of Intermediate Holdings, or (y) be entitled to direct or cause
the direction of the management and policies of any Borrower or Guarantor by
contract or otherwise, (b) the occurrence of any event (whether in one or more
transactions) which results in Intermediate Holdings failing to (x) own,
directly or indirectly, one hundred (100%) percent of the Equity Interests (on a
fully diluted basis) of any other Borrower or Guarantor, or (y) be entitled to
direct or cause the direction of the management and policies of any Borrower or
other Guarantor by contract or otherwise, or (c) any merger, consolidation or
sale of substantially all of the property or assets of any Borrower or
Guarantor, except as a result of a transaction expressly permitted hereby.

“Charges” shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with any

 

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interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including the Pension
Benefit Guaranty Corporation or any environmental agency or superfund), upon the
Collateral, any Borrower, any Guarantor, or any Affiliate of any of the
foregoing.

“CIP Regulations” shall have the meaning set forth in Section 14.12 hereof.

“Closing Date” shall mean the first date all the conditions precedent in
Section 8.1 are satisfied or waived in accordance with Section 16.2(b).

“Co-Syndication Agent” shall have the meaning set forth in the preamble to this
Agreement and shall include the permitted successors and assigns thereof.

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended
or supplemented from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in effect.

“Collateral” shall mean and include all right, title and interest of each
Borrower and each Guarantor in all of the following property and assets of such
Borrower or Guarantor, in each case whether now existing or hereafter arising or
created and whether now owned or hereafter acquired and wherever located:

(a)    all Receivables and all supporting obligations relating thereto;

(b)    all equipment and fixtures;

(c)    all general intangibles (including all payment intangibles (including all
Credit Card Receivables), and all software) and all supporting obligations
related thereto;

(d)    all Inventory;

(e)    all Intellectual Property;

(f)    all Subsidiary Stock, securities, investment property, and financial
assets;

(g)    all contract rights, rights of payment which have been earned under any
contract rights, chattel paper (including electronic chattel paper and tangible
chattel paper), commercial tort claims (whether now existing or hereafter
arising, and including the commercial tort claims described on Schedule 5.25
hereto); documents (including all warehouse receipts and bills of lading),
deposit accounts, securities accounts, goods, instruments (including promissory
notes), letters of credit (whether or not the respective letter of credit is
evidenced by a writing) and letter-of-credit rights, cash, certificates of
deposit, insurance proceeds (including hazard, flood and credit insurance),
security agreements, eminent domain proceeds, condemnation proceeds, tort claim
proceeds and all supporting obligations;

(h)    all ledger sheets, ledger cards, files, correspondence, records, books of
account, business papers, computers, computer software (owned by any Borrower or
Guarantor or in which it has an interest), computer programs, tapes, disks and
documents, including all of such property relating to the property described in
clauses (a) through (g) of this definition; and

 

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(i)    all proceeds and products of the property described in clauses
(a) through (h) of this definition, in whatever form. It is the intention of the
parties that if Agent shall fail to have a perfected Lien in any particular
property or assets of any Borrower or Guarantor for any reason whatsoever, but
the provisions of this Agreement and/or of the Other Documents, together with
all financing statements and other public filings relating to Liens filed or
recorded by Agent against Borrowers or Guarantors, would be sufficient to create
a perfected Lien in any property or assets that such Borrower or Guarantor may
receive upon the sale, lease, license, exchange, transfer or disposition of such
particular property or assets, then all such “proceeds” of such particular
property or assets shall be included in the Collateral as original collateral
that is the subject of a direct and original grant of a security interest as
provided for herein and in the Other Documents (and not merely as proceeds (as
defined in Article 9 of the Uniform Commercial Code) in which a security
interest is created or arises solely pursuant to Section 9-315 of the Uniform
Commercial Code).

Notwithstanding the foregoing or anything herein or in any Other Document to the
contrary, Collateral shall not include any Excluded Property.

“Common Carrier” shall mean any Person as may be selected by Borrower that is
reasonably acceptable to Agent to perform transportation of Inventory within the
United States (it being acknowledged that Agent will promptly consider the
acceptability of such Persons presented to it by Borrowing Agent for approval).

“Common Carrier Agreement” shall mean a common carrier agreement in form and
substance reasonably satisfactory to Agent, duly executed and delivered to Agent
by a Common Carrier and a Borrower.

“Commitment Transfer Supplement” shall mean a document in the form of Exhibit
16.3 hereto, properly completed and otherwise in form and substance satisfactory
to Agent by which the Purchasing Lender purchases and assumes a portion of the
obligation of Lenders to make Advances under this Agreement.

“Compliance Certificate” shall mean a compliance certificate substantially in
the form of Exhibit 1.2(a) hereto to be signed by an Authorized Officer of
Borrowing Agent.

“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on
or measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Consents” shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Borrower’s
or any Guarantor’s business or necessary (including to avoid a conflict or
breach under any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement and
the Other Documents, including any Consents required under all applicable
federal, state or other Applicable Law.

 

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“Consigned Inventory” shall mean Inventory of any Borrower that is in the
possession of another Person on a consignment, sale or return, or other basis
that does not constitute a final sale and acceptance of such Inventory.

“Contract Rate” shall have the meaning set forth in Section 3.1 hereof.

“Controlled Group” shall mean, at any time, each Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
any Borrower, are treated as a single employer under Section 414 of the Code.

“Covered Entity” shall have the meaning set forth in Section 16.18 hereof.

“Credit Card Issuer” shall mean any Person (other than a Borrower or Guarantor)
who issues or whose members issue credit cards, including, without limitation,
MasterCard or VISA bank credit or debit cards or other bank credit or debit
cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa
International and American Express, Discover, Diners Club, Carte Blanche, and
other non-bank credit or debit cards, including, without limitation, credit or
debit cards issued by or through American Express Travel Related Services
Company, Inc., and Novus Services, Inc. and other issuers approved by Agent.

“Credit Card Notifications” shall have the meaning set forth in Section 4.8(h)
hereof.

“Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any Borrower’s sales transactions involving credit card or debit card
purchases by customers using credit cards or debit cards issued by any Credit
Card Issuer. For the avoidance of doubt, PayPal, Inc., shall be a Credit Card
Processor for all purposes under this Agreement and the Other Documents.

“Credit Card Receivables” shall mean each “payment intangible” (as defined in
Article 9 of the Uniform Commercial Code) together with all income, payments and
proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a
Borrower resulting from charges by a customer of a Borrower on credit or debit
cards issued by such Credit Card Issuer in connection with the sale of goods by
a Borrower, or services performed by a Borrower, in each case in the Ordinary
Course of Business.

“Customer” shall mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.

“Customs” shall have the meaning set forth in Section 2.13(b) hereof.

“Daily LIBOR Rate” shall mean, for any day, the rate per annum equal to the
greater of (a) 0.00%, or (b) the rate determined by the Agent by dividing
(x) the Published Rate by (y) a number equal to 1.00 minus the Reserve
Percentage.

 

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“Debt Payments” shall mean for any period, in each case, all cash actually
expended by any Borrower or any Guarantor to make: (a) interest payments on any
Advances hereunder, plus (b) payments for all fees, commissions and charges set
forth herein or in any Other Document, plus (c) payments on Capitalized Lease
Obligations, plus (d) payments with respect to any other Indebtedness for
borrowed money, including without limitation, Intercompany Subordinated Loans
and the Holdings Loan.

“Default” shall mean an event, circumstance or condition which, with the giving
of notice or passage of time or both, would constitute an Event of Default.

“Default Rate” shall have the meaning set forth in Section 3.1 hereof.

“Defaulting Lender” shall mean any Lender that: (a) has failed, within two
(2) Business Days of the date required to be funded or paid, to (i) fund any
portion of its Revolving Commitment Percentage or FILO Commitment Percentage, as
applicable, of Advances, (ii) if applicable, fund any portion of its
Participation Commitment in Letters of Credit or Swing Loans or (iii) pay over
to Agent, Issuer, Swing Loan Lender or any Lender any other amount required to
be paid by it hereunder, unless, in the case of clause (i) above, such Lender
notifies Agent in writing that such failure is the result of such Lender’s good
faith determination that a condition precedent to funding (specifically
identified and including a particular Default or Event of Default, if any) has
not been satisfied; (b) has notified Borrowers or Agent in writing, or has made
a public statement to the effect, that it does not intend or expect to comply
with any of its funding obligations under this Agreement (unless such writing or
public statement indicates that such position is based on such Lender’s good
faith determination that a condition precedent (specifically identified and
including a particular Default or Event of Default, if any) to funding a loan
under this Agreement cannot be satisfied) or generally under other agreements in
which it commits to extend credit; (c) has failed, within two (2) Business Days
after request by Agent or Borrowing Agent, acting in good faith, to provide a
certification in writing from an authorized officer of such Lender that it will
comply with its obligations (and is financially able to meet such obligations)
to fund prospective Advances and, if applicable, participations in then
outstanding Letters of Credit and Swing Loans under this Agreement; provided,
that, such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon Agent’s receipt of such certification in form and substance
satisfactory to the Agent (a copy of which certification Agent shall send to
Borrowing Agent, but any failure to provide any such certification shall not
prevent such Lender from ceasing to be a Defaulting Lender); (d) has, or has a
direct or indirect parent company that has, (i) become the subject of an
Insolvency Event, or (ii) become the subject of a Bail-in Action; or (e) has
failed at any time to comply with the provisions of Section 2.6(e) with respect
to purchasing participations from the other Lenders, whereby such Lender’s share
of any payment received, whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and payable to all of the Lenders.

“Depository Accounts” shall have the meaning set forth in Section 4.8(h) hereof.

“Designated Lender” shall have the meaning set forth in Section 16.2(d) hereof.

“Disqualified Equity Interests” shall mean any Equity Interest that, by its
terms (or by the terms of any security or other Equity Interests into which it
is convertible or for which it is

 

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exchangeable), or upon the happening of any event or condition (a) matures or is
mandatorily redeemable (other than solely for Qualified Equity Interests),
pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the
option of the holder thereof (other than solely for Qualified Equity Interests),
in whole or in part, (c) provides for the scheduled payments of dividends in
cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or
any other Equity Interests that would constitute Disqualified Equity Interests.

“Document” shall have the meaning given to the term “document” in the Uniform
Commercial Code.

“Dollar” and the sign “$” shall mean lawful money of the United States of
America.

“Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.

“Drawing Date” shall have the meaning set forth in Section 2.14(b) hereof.

“EBITDA” shall mean for any period with respect to Borrowers and Guarantors on a
Consolidated Basis, the sum of (a) net income (or loss) for such period
(excluding extraordinary gains and losses), plus (b) all interest expense for
such period, plus (c) all charges against income for such period for federal,
state and local taxes, including, without limitation, excise taxes and franchise
taxes, plus (d) depreciation expenses for such period, plus (e) amortization
expenses for such period, including, without limitation, amortization of
goodwill and other intangible assets (including any impairment charges in
respect of intangible assets), plus (f) Transaction Costs incurred by Borrowers
and Guarantors during such period (to the extent not in excess of Twenty Million
Dollars ($20,000,000) in the four (4) consecutive Fiscal Quarter period
commencing with the Fiscal Quarter in which the Closing Date occurs, or Two
Million Five Hundred Thousand Dollars ($2,500,000) in any period of four
(4) consecutive Fiscal Quarters thereafter), plus (g) any fees, losses, costs
and expenses, each of which are infrequent or unusual in nature (as determined
in accordance with GAAP), paid or incurred during such period and, without
duplication, nonrecurring cash losses or expenses, or any non-recurring
restructuring charges or unusual or nonrecurring expenses or losses (whether or
not characterized as a restructuring charge in accordance with GAAP) paid or
incurred during such period, plus (h) non-cash expenses and charges (including
any impairment charges in respect of tangible assets and any non-cash expense
from any employee benefit or stock option plan and purchase accounting
adjustments in connection with the consummation of the Transactions).

“EEA Financial Institution” shall mean (a) any credit institution or investment
firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member
Country which is a parent of an institution described in clause (a) of this
definition, or (c) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (a) or (b)
of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” shall mean any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

 

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“EEA Resolution Authority” shall mean any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

“Effective Date” shall mean the date indicated in a document or agreement to be
the date on which such document or agreement becomes effective, or, if there is
no such indication, the date of execution of such document or agreement.

“Eligibility Date” shall mean, with respect to each Borrower and Guarantor and
each Swap, the date on which this Agreement or any Other Document becomes
effective with respect to such Swap (for the avoidance of doubt, the Eligibility
Date shall be the Effective Date of such Swap if this Agreement or any Other
Document is then in effect with respect to such Borrower or Guarantor, and
otherwise it shall be the Effective Date of this Agreement and/or such Other
Document(s) to which such Borrower or Guarantor is a party).

“Eligible Contract Participant” shall mean an “eligible contract participant” as
defined in the CEA and regulations thereunder.

“Eligible Credit Card Receivables” shall mean at the time of any determination
thereof, each Credit Card Receivable that satisfies the following criteria at
the time of creation and continues to meet the same at the time of such
determination, as determined by Agent in its Permitted Discretion: such Credit
Card Receivable (i) has been earned by performance and represents the bona fide
amounts due to a Borrower from a Credit Card Issuer or Credit Card Processor,
and in each case originated in the Ordinary Course of Business of such Borrower,
and (ii) in each case is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (i) below. Without
limiting the foregoing, to qualify as an Eligible Credit Card Receivable, such
Credit Card Receivable shall indicate no Person other than a Borrower as payee
or remittance party. In determining the amount to be so included, the face
amount of a Credit Card Receivable shall be reduced by, without duplication, to
the extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that a Borrower may be obligated to rebate to a customer, a Credit
Card Issuer or Credit Card Processor pursuant to the terms of any agreement or
understanding (written or oral)) and (ii) the aggregate amount of all cash
received in respect of such Credit Card Receivable but not yet applied by the
Borrowers to reduce the amount of such Credit Card Receivable. Except as
otherwise agreed by Agent, any Credit Card Receivable included within any of the
following categories shall not constitute an Eligible Credit Card Receivable:

(a)    Credit Card Receivables which do not constitute a “payment intangible”
(as defined in the Uniform Commercial Code);

(b)    Credit Card Receivables that have been outstanding for more than five
(5) Business Days from the date of sale;

(c)    Credit Card Receivables (i) that are not subject to a perfected first
priority security interest in favor of Agent (subject to Permitted Encumbrances
having priority over the Lien of Agent by operation of Applicable Law), or
(ii) with respect to which a Borrower does not have good, valid, and marketable
title thereto, free and clear of any Lien (other than Permitted Encumbrances);

 

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(d)    Credit Card Receivables which are disputed, are with recourse, or with
respect to which a claim, counterclaim, offset or chargeback has been asserted
(to the extent of such dispute, recourse, claim, counterclaim, offset or
chargeback);

(e)    Credit Card Receivables as to which the Credit Card Issuer or Credit Card
Processor has the right under certain circumstances to require a Borrower or
Guarantor to repurchase the Credit Card Receivables from such Credit Card Issuer
or Credit Card Processor;

(f)    Credit Card Receivables due from a Credit Card Issuer or Credit Card
Processor which is the subject of any bankruptcy or insolvency proceedings;

(g)    Credit Card Receivables which are not a valid, legally enforceable
obligation of the applicable Credit Card Issuer or Credit Card Processor with
respect thereto;

(h)    Credit Card Receivables which do not conform in all material respects to
all representations, warranties or other provisions in this Agreement and the
Other Documents relating to Credit Card Receivables; or

(i)    Credit Card Receivables which Agent determines in its Permitted
Discretion to be uncertain of collection or which do not meet such other
reasonable eligibility criteria for Credit Card Receivables as Agent may
determine in its Permitted Discretion.

“Eligible Domestic In-Transit Inventory” shall mean those items of Inventory
that do not qualify as Eligible Inventory solely because they are in-transit
within the United States, but as to which (a) such Inventory currently is, and
has been for a period not exceeding twenty (20) days, in transit (whether by
vessel, air, or land) within the United States to a location owned or leased by
a Borrower, (b) (i) a final sale of such Inventory to a Borrower has occurred
and such Borrower is the sole owner of such Inventory, no default shall exist
under any agreement in effect between the vendor of such Inventory and any
Borrower or Guarantor which would permit such vendor, and reasonably be expected
to cause such vendor, under any Applicable Law (including the UCC) to divert,
reclaim or stop shipment of such Inventory, (ii) the vendor of such Inventory is
acceptable to Agent in its Permitted Discretion, (iii) Agent has received
evidence satisfactory to it that all counterparts of the original Acceptable
Documents evidencing such Inventory are in the possession, in the United States,
of Agent or an agent of Agent, and (iv) such Inventory is in the possession of a
Common Carrier that has issued an Acceptable Document, or is in the possession
of a Secured Party as a result of delivery of such Acceptable Document by Agent
to such Borrower, (c) such Inventory is insured against types of loss, damage,
hazards, and risks, and in amounts, satisfactory to Agent, and (d) such Borrower
has certified to Agent (pursuant to an applicable Borrowing Base Certificate
delivered hereunder) that, to the knowledge of such Borrower, such Inventory
meets all of such Borrower’s representations and warranties contained in this
Agreement and the Other Documents concerning Eligible Inventory other than with
respect to its in-transit status, that to the knowledge of such Borrower there
is no reason why such Inventory would not be accepted by a Borrower when it
arrives at a location

 

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owned or leased by a Borrower, and that the shipment as evidenced by the
relevant documents conforms to the related order documents. Delivery of each
Borrowing Base Certificate pursuant to the terms hereof shall constitute a
representation and warranty by Borrowers that the Inventory listed (or otherwise
treated) therein as being Eligible Domestic In-Transit Inventory satisfies the
foregoing definition; provided, that, Eligible Domestic In-Transit Inventory
shall not include any Inventory being held at a location owned or leased by a
Borrower.

“Eligible Inventory” shall mean and include Inventory, excluding work in
process, valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not obsolete, slow moving or unmerchantable
and which Agent, in its Permitted Discretion, shall not deem ineligible
Inventory, based on such considerations as Agent may from time to time deem
appropriate including whether the Inventory is subject to a perfected,
first-priority security interest (subject to Permitted Encumbrances having
priority over the Lien of Agent by operation of Applicable Law) in favor of
Agent and no other Lien (other than a Permitted Encumbrance). In addition,
Inventory shall not be Eligible Inventory if it: (a) does not conform to all
standards imposed by any Governmental Body which has regulatory authority over
such goods or the use or sale thereof; (b) is Foreign In-Transit Inventory or
in-transit within the United States; (c) is located outside the continental
United States or at a location that is not otherwise in compliance with this
Agreement; (d) constitutes Consigned Inventory; (e) is the subject of an
Intellectual Property Claim; (f) is subject to a License Agreement that limits,
conditions or restricts the applicable Borrower’s or Agent’s right to sell or
otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent
Agreement with the Licensor under such License Agreement (or Agent shall agree
otherwise in its Permitted Discretion after establishing Reserves against the
Formula Amount with respect thereto as Agent shall deem appropriate in its
Permitted Discretion); (g) is situated at a distribution center not owned by a
Borrower, unless the owner or occupier of such location has executed in favor of
Agent a Lien Waiver Agreement (or Agent shall agree otherwise in its Permitted
Discretion after establishing Reserves against the Formula Amount with respect
thereto as Agent shall deem appropriate in its Permitted Discretion); (h) is
situated at a Macy’s Store or otherwise in the possession or control of Macy’s,
except to the extent (i) the Macy’s Tri-Party Agreement has been duly executed
and delivered and is in full force and effect, or (ii) Agent has agreed
otherwise in its Permitted Discretion after establishing Reserves against the
Formula Amount with respect thereto as Agent shall deem appropriate in its
Permitted Discretion; or (i) or if the sale of such Inventory would result in an
ineligible Receivable or an ineligible Credit Card Receivable.

“Eligible Receivables” shall mean and include, each Receivable (but excluding,
for the avoidance of doubt, Credit Card Receivables) of a Borrower arising in
the Ordinary Course of Business, as to which the Customer is Macy’s, and which
Agent, in its Permitted Discretion, shall deem to be an Eligible Receivable,
based on such considerations as Agent may from time to time deem appropriate in
its Permitted Discretion. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent’s first-priority perfected security interest
(subject to Permitted Encumbrances having priority over the Lien of Agent by
operation of Applicable Law) and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent or is payable by Macy’s pursuant to and in accordance with
the terms of the Macy’s Department License Agreement as in effect on the Closing
Date. In addition, no Receivable shall be an Eligible Receivable if:

(a)    it arises out of a sale made by any Borrower to an Affiliate of any
Borrower or to a Person controlled by an Affiliate of any Borrower;

 

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(b)    it is due or unpaid more than ninety (90) days after the original invoice
date or sixty (60) days after the original due date;

(c)    fifty percent (50%) or more of the Receivables from such Customer are not
deemed Eligible Receivables hereunder as a result of the operation of clause
(b) above;

(d)    any covenant, representation or warranty contained in this Agreement with
respect to such Receivable has been breached in any material respect;

(e)    an Insolvency Event shall have occurred with respect to such Customer;

(f)    the sale is to a Customer outside the continental United States of
America, unless the sale is on letter of credit, guaranty or acceptance terms,
in each case acceptable to Agent in its Permitted Discretion;

(g)    the sale to the Customer is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;

(h)    the goods giving rise to such Receivable have not been delivered to and
accepted by the Customer or the services giving rise to such Receivable have not
been performed by the applicable Borrower and accepted by the Customer or the
Receivable otherwise does not represent a final sale;

(i)    the Receivable is subject to any offset, deduction, defense, dispute,
credits or counterclaim (but such Receivable shall only be ineligible to the
extent of such offset, deduction, defense, dispute, credit, or counterclaim),
the Customer is also a creditor or supplier of a Borrower (it being understood
and agreed that, solely for purposes of this clause (i), Macy’s shall not be
deemed to be a creditor or supplier of a Borrower by virtue of any provisions
set forth in the Macy’s Department License Agreement as in effect on the date
hereof (including, without limitation, Sections 4.2 and 6.1 thereof)) or the
Receivable is contingent in any respect or for any reason;

(j)    the applicable Borrower has made any agreement with any Customer for any
deduction therefrom, except for discounts, deductions, allowances or sales
rebates made in the Ordinary Course of Business for prompt payment, all of which
discounts, deductions, allowances or sales rebates are reflected in the
calculation of the face value of each respective invoice related thereto;

(k)    any return, rejection or repossession of the merchandise has occurred or
the rendition of services has been disputed;

(l)    such Receivable is not payable to a Borrower;

 

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(m)    such Receivable is owing by a Customer that is a Sanctioned Person or
Sanctioned Entity; or

(n)    such Receivable is not otherwise satisfactory to Agent as determined in
good faith by Agent in the exercise of its Permitted Discretion in a reasonable
manner.

“Environmental Laws” shall mean all federal, state and local environmental,
health, chemical use, safety and sanitation Laws relating to the protection of
the environment, pollution, human health (as it relates to Hazardous Materials)
and/or governing the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous Materials and the
rules, regulations, policies, guidelines, interpretations, decisions, orders and
directives of federal, state, international and local governmental agencies and
authorities with respect thereto.

“Equity Interests” shall mean, with respect to any Person, any and all shares,
rights to purchase, options, warrants, general, limited or limited liability
partnership interests, member interests, participation or other equivalents of
or interest in (regardless of how designated) equity of such Person, whether
voting or nonvoting, including common stock, preferred stock, convertible
securities (excluding debt securities exchangeable for or convertible into
equity of such Person) or any other “equity security” (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act), including in each case all of the following rights relating
to such Equity Interests, whether arising under the Organizational Documents of
the Person issuing such Equity Interests (the “issuer”) or under the Applicable
Laws of such issuer’s jurisdiction of organization relating to the formation,
existence and governance of corporations, limited liability companies or
partnerships or business trusts or other legal entities, as the case may be:
(i) all economic rights (including all rights to receive dividends and
distributions) relating to such Equity Interests; (ii) all voting rights and
rights to consent to any particular action(s) by the applicable issuer;
(iii) all management rights with respect to such issuer; (iv) in the case of any
Equity Interests consisting of a general partner interest in a partnership, all
powers and rights as a general partner with respect to the management,
operations and control of the business and affairs of the applicable issuer;
(v) in the case of any Equity Interests consisting of the membership/limited
liability company interests of a managing member in a limited liability company,
all powers and rights as a managing member with respect to the management,
operations and control of the business and affairs of the applicable issuer;
(vi) all rights to designate or appoint or vote for or remove any officers,
directors, manager(s), general partner(s) or managing member(s) of such issuer
and/or any members of any board of members/managers/partners/directors that may
at any time have any rights to manage and direct the business and affairs of the
applicable issuer under its Organizational Documents as in effect from time to
time or under Applicable Law; (vii) all rights to amend the Organizational
Documents of such issuer, (viii) in the case of any Equity Interests in a
partnership or limited liability company, the status of the holder of such
Equity Interests as a “partner”, general or limited, or “member” (as applicable)
under the applicable Organizational Documents and/or Applicable Law; and
(ix) all certificates evidencing such Equity Interests, but in any case,
excluding debt securities convertible into or exchangeable for Equity Interests.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.

 

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“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor Person), as in effect
from time to time.

“Event of Default” shall have the meaning set forth in Article X hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Excluded Accounts” shall mean (a) deposit accounts exclusively used for
payroll, payroll taxes, withholding taxes, workers’ compensation, and other
employee wage and benefit payments (including, without limitation, in respect of
healthcare benefits) to or for any Borrower’s or Guarantor’s employees,
(b) deposit accounts exclusively used as trust or other fiduciary accounts,
(c) deposit accounts exclusively used for taxes, (d) (i) Local Store Accounts,
and (ii) zero balance accounts, in each case as to this clause (d) that are
subject to standing instructions from a Borrower pursuant to which all amounts
therein are transferred to a Blocked Account not less frequently than two
(2) times each week, (e) deposit accounts with an amount on deposit therein or
credited thereto of not more than $100,000 individually or $500,000 in the
aggregate for all such deposit accounts described in this clause (e), and
(f) dedicated cash collateral accounts with respect to Permitted Encumbrances of
the types described in clauses (c) and (d) of the definition thereof, to the
extent for the sole and exclusive benefit of a third party that is not an
Affiliate of any Borrower or Guarantor.

“Excluded Hedge Liability” or “Excluded Hedge Liabilities” shall mean, with
respect to each Borrower and Guarantor, each of its Swap Obligations if, and
only to the extent that, all or any portion of this Agreement or any Other
Document that relates to such Swap Obligation (or the guaranty of such Swap
Obligation, or the grant by any Borrower or Guarantor of a security interest in
the Collateral to secure such Swap Obligation) is or becomes illegal under the
CEA, or any rule, regulation or order of the CFTC, solely by virtue of such
Borrower’s and/or Guarantor’s failure to qualify as an Eligible Contract
Participant on the Eligibility Date for such Swap. Notwithstanding anything to
the contrary contained in the foregoing or in any other provision of this
Agreement or any Other Document, the foregoing is subject to the following
provisos: (a) if a Swap Obligation arises under a master agreement governing
more than one Swap, this definition shall apply only to the portion of such Swap
Obligation that is attributable to Swaps for which such guaranty or security
interest is or becomes illegal under the CEA, or any rule, regulations or order
of the CFTC, solely as a result of the failure by such Borrower or Guarantor for
any reason to qualify as an Eligible Contract Participant on the Eligibility
Date for such Swap; (b) if a guarantee of a Swap Obligation would cause such
obligation to be an Excluded Hedge Liability but the grant of a security
interest would not cause such obligation to be an Excluded Hedge Liability, such
Swap Obligation shall constitute an Excluded Hedge Liability for purposes of the
guaranty but not for purposes of the grant of the security interest; and (c) if
there is more than one Borrower or Guarantor executing this Agreement or the
Other Documents and a Swap Obligation would be an Excluded Hedge Liability with
respect to one or more of such Persons, but not all of them, the definition of
“Excluded Hedge Liability” and “Excluded Hedge Liabilities” with respect to each
such Person shall only be deemed applicable to (i) the particular Swap
Obligations that constitute Excluded Hedge Liabilities with respect to such
Person, and (ii) the particular Person with respect to which such Swap
Obligations constitute Excluded Hedge Liabilities.

 

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“Excluded Property” shall mean (a) any permit, lease, license, contract or
agreement that would otherwise constitute Collateral, to which any Borrower or
Guarantor is a party, and any of its rights or interests thereunder, if and to
the extent that a security interest therein is prohibited by or in violation of
(x) any Applicable Law, or (y) a term, provision or condition of any such lease,
license, contract or agreement (unless in each case, such Applicable Law, term,
provision or condition would be rendered ineffective with respect to the
creation of such security interest pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the Uniform Commercial Code (or any successor provision or provisions)
of any relevant jurisdiction or any other Applicable Law or principles of
equity); provided, however, that the foregoing shall cease to be treated as
“Excluded Property” (and shall constitute Collateral) immediately at such time
as the contractual or legal prohibition shall no longer be applicable and to the
extent severable, such security interest shall attach immediately to any portion
of such lease, license, contract or agreement not subject to the prohibitions
specified in (x) or (y) above; (b) any interest (whether as owner, lessor or
lessee) in any real property or any buildings, structures, parking areas or
other improvements thereon (including, without limitation, any Real Property);
(c) any trucks, trailers, tractors, service vehicles, automobiles, rolling stock
or other registered mobile equipment or equipment covered by certificates of
title or ownership of any Borrower or Guarantor; (d) any “intent to use”
trademark applications for which a statement of use has not been filed and
accepted with the United States Patent and Trademark Office; (e) any Equity
Interests in any Subsidiary of a Borrower or Guarantor (other than Subsidiary
Stock); and (f) other assets to the extent Agent determines in its Permitted
Discretion that the cost of obtaining such pledge or security interest is
excessive in relation to the benefit thereof to Secured Parties; provided, that,
Excluded Property shall not include any proceeds of any assets described in the
foregoing clauses (a) through (f), or any goodwill of Borrowers’ and Guarantors’
business associated therewith or attributable thereto.

“Excluded Taxes” shall mean, with respect to Agent, any Lender, Swing Loan
Lender, Issuer or any other recipient of any payment to be made by or on account
of any Obligations, (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
in which its principal office or applicable lending office is located or, in the
case of any Lender, Swing Loan Lender or Issuer, in which its applicable lending
office is located, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of
a Lender or Swing Loan Lender, any withholding Tax that is imposed on amounts
payable to or for the account of such Lender or Swing Loan Lender with respect
to an applicable interest in any Obligations pursuant to a law in effect on the
date on which (i) such Lender or Swing Loan Lender acquires such interest in the
Obligations (other than pursuant to an assignment request by the Borrowers under
Section 3.11(a)) or (ii) such Lender or Swing Loan Lender changes its lending
office, except in each case to the extent that, pursuant to Section 3.10,
amounts with respect to such Taxes were payable either to such Lender’s or Swing
Loan Lender’s assignor immediately before such Lender or Swing Loan Lender
became a party hereto or to such Lender or Swing Loan Lender immediately before
it changed its lending office, (c) Taxes attributable to such recipient’s
failure to comply with Section 3.10(f), and (d) any Taxes imposed under FATCA.
For the avoidance of doubt, for purposes of this definition, the term “Taxes”
includes any Charges.

 

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“Existing FINL Credit Agreement” shall mean that certain Second Amended and
Restated Credit Agreement, dated as of November 30, 2016, by and among the
Borrowers, the guarantors named therein and from time to time party thereto, the
lenders named therein and from time to time party thereto, and PNC, as
administrative agent, as amended and in effect immediately prior to the Closing
Date.

“Existing Letters of Credit” shall mean the letters of credit issued under the
Existing FINL Credit Agreement and outstanding on the Closing Date, as set forth
on Schedule 1.3.

“FATCA” shall mean 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) and any current or
future regulations thereunder or official interpretations thereof, any
agreements entered into pursuant to Section 147(b)(1) of the Code and any fiscal
or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement, treaty or convention among Governmental Bodies and
implementing such Sections of the Code.

“Federal Funds Effective Rate” shall mean, for any day, the greater of (a)
0.00%, or (b) the rate per annum (based on a year of 360 days and actual days
elapsed and rounded upward to the nearest 1/100 of 1%) calculated by the Federal
Reserve Bank of New York (or any successor), based on such day’s federal funds
transactions by depositary institutions, as determined in such manner as such
Federal Reserve Bank (or any successor) shall set forth on its public website
from time to time, and as published on the next succeeding Business Day by such
Federal Reserve Bank as the “Federal Funds Effective Rate”; provided, that, if
such Federal Reserve Bank (or its successor) does not publish such rate on any
day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.

“FCPA” shall mean the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder.

“Fee Letter” shall mean the Fee Letter, dated as of March 25, 2018, by and among
Holdings, Agent, and PNC Capital Markets LLC, to which Borrowers joined as
obligors pursuant to that certain Joinder to Fee Letter dated as of the Closing
Date, by and among Holdings, Borrowers, Agent, and PNC Capital Markets LLC.

“FILO Advance” shall have the meaning set forth in Section 2.1(b) hereof.

“FILO Advance Rates” shall have the meaning set forth in Section 2.1(b)(y)
hereof.

“FILO Commitment” shall mean, as to any Lender, the obligation of such Lender
(if applicable), to make FILO Advances, in an aggregate principal not to exceed
the FILO Commitment Amount (if any) of such Lender.

“FILO Commitment Amount” shall mean, (a) as to any Lender other than a New
Lender, the FILO Commitment amount (if any) set forth next to such Lender’s name
in Schedule 1.1(c) hereto under the heading “FILO Commitment Amount” (or, in the
case of any Lender that became party to this Agreement after the Closing Date
pursuant to Section 16.3(c) or (d) hereof,

 

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the FILO Commitment amount (if any) of such Lender as set forth in the
applicable Commitment Transfer Supplement), and (b) as to any Lender that is a
New Lender, the FILO Commitment amount provided for in the joinder signed by
such New Lender under Section 2.24(a)(x), in each case as the same may be
adjusted upon any increase by such Lender pursuant to Section 2.24 hereof, or
any assignment by or to such Lender pursuant to Section 16.3(c) or (d) hereof.

“FILO Commitment Percentage” shall mean, (a) as to any Lender other than a New
Lender, the FILO Commitment Percentage (if any) set forth next to such Lender’s
name in Schedule 1.1(c) hereto under the heading “FILO Commitment Percentage”
(or, in the case of any Lender that became party to this Agreement after the
Closing Date pursuant to Section 16.3(c) or (d) hereof, the FILO Commitment
Percentage (if any) of such Lender as set forth in the applicable Commitment
Transfer Supplement), and (b) as to any Lender that is a New Lender, the FILO
Commitment Percentage provided for in the joinder signed by such New Lender
under Section 2.24(a)(x), in each case as the same may be adjusted upon any
increase in the Maximum FILO Advance Amount pursuant to Section 2.24 hereof, or
any assignment by or to such Lender pursuant to Section 16.3(c) or (d) hereof.

“FILO Credit Card Advance Rate” shall have the meaning set forth in
Section 2.1(b)(y) hereof.

“FILO Facility Fee” shall have the meaning set forth in Section 3.3(b) hereof.

“FILO Formula Amount” shall have the meaning set forth in Section 2.1(b) hereof.

“FILO Interest Rate” shall mean (a) with respect to FILO Advances that are
Domestic Rate Loans and Swing Loans, an interest rate per annum equal to the sum
of the Applicable Margin plus the greater of (i) the Alternate Base Rate and
(ii) 0% and (b) with respect to FILO Advances that are LIBOR Rate Loans, the sum
of the Applicable Margin plus the greater of (i) the LIBOR Rate and (ii) 0%.

“FILO Inventory Advance Rate” shall have the meaning set forth in
Section 2.1(b)(y) hereof.

“FILO Loan Cap” shall have the meaning set forth in Section 2.1(b) hereof.

“FILO Note” shall mean, collectively, the promissory notes referred to in
Section 2.1(b) hereof.

“FILO Push Down Reserve” shall mean, at any time of determination, an amount
equal to the amount by which the then outstanding amount of FILO Advances
exceeds the then Maximum FILO Advance Amount.

“FILO Receivables Advance Rate” shall have the meaning set forth in
Section 2.1(b)(i) hereof.

“FINL PR” shall mean The Finish Line Puerto Rico, Inc., a Puerto Rico
corporation and a wholly owned Subsidiary of Borrowing Agent.

 

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“Fiscal Month” shall mean any fiscal month of any Fiscal Year, which month shall
generally consist of either four (4) or five (5) weeks and shall end on the
Saturday closest to the end of any calendar month in accordance with the fiscal
accounting calendar of Intermediate Holdings and its Subsidiaries.

“Fiscal Quarter” shall mean each quarterly accounting period of each Fiscal Year
of Intermediate Holdings and its Subsidiaries consisting of successive 13-week
periods (each such 13 week period to begin on a Sunday and end on a Saturday);
provided, that, for any 53-week Fiscal Year, the last Fiscal Quarter of such
Fiscal Year shall consist of the successive 14-week period from and including
the first day after the third Fiscal Quarter of such Fiscal Year through and
including the last day of such Fiscal Year.

“Fiscal Year” shall mean the annual accounting period of Intermediate Holdings
and its Subsidiaries ending on the Saturday closest to the last day of February
(or, to the extent in accordance with Section 7.13, January) in each calendar
year calculated in accordance with the National Retail Federation calendar.

“Fixed Charge Coverage Ratio” shall mean, with respect to any fiscal period, the
ratio of (a) EBITDA for such period, minus Unfunded Capital Expenditures made by
Borrowers and Guarantors during such period to (b) all Debt Payments made by
Borrowers and Guarantors during such period, plus distributions and dividends
made by or for the benefit of Intermediate Holdings (without duplication of any
distributions or dividends paid to any Borrower, Intermediate Holdings or any
other Guarantor by any Subsidiary for further distribution by or for the benefit
of Intermediate Holdings) during such period, plus cash taxes paid by Borrowers
and Guarantors during such period.

“Flood Laws” shall mean all Applicable Laws relating to policies and procedures
that address requirements placed on federally regulated lenders under the
National Flood Insurance Reform Act of 1994, as amended, and other Applicable
Laws related thereto.

“Foreign Currency Hedge” shall mean any foreign exchange transaction, including
spot and forward foreign currency purchases and sales, listed or
over-the-counter options on foreign currencies, non-deliverable forwards and
options, foreign currency swap agreements, currency exchange rate price hedging
arrangements, and any other similar transaction providing for the purchase of
one currency in exchange for the sale of another currency entered into by any
Borrower, Guarantor and/or any of their respective Subsidiaries.

“Foreign Currency Hedge Liabilities” shall have the meaning assigned in the
definition of Lender-Provided Foreign Currency Hedge.

“Foreign In-Transit Inventory” shall mean Inventory of a Borrower that is in
transit from a location outside the United States to any location within the
United States of such Borrower or a Customer of such Borrower.

“Foreign Lender” shall mean any Lender that is not a “United States Person” as
defined in Section 7701(a)(3) of the Code.

 

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“Foreign Subsidiary” shall mean any Subsidiary of any Person (a) that is not
organized or incorporated in the United States, any State thereof or the
District of Columbia, (b) is a “controlled foreign corporation” under
Section 957 of the Code, or (c) if substantially all of the assets of such
Subsidiary consists of Equity Interests in one or more Subsidiaries described in
clause (a) above.

“Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.

“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.

“GMSI” shall have the meaning set forth in the preamble to this Agreement.

“Governmental Acts” shall mean any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Body.

“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).

“Guarantor” or “Guarantors” shall have the meaning set forth in the preamble to
this Agreement, shall include each other Person who may hereafter guarantee
payment or performance of the whole or any part of the Obligations, and shall
extend to all permitted successors and assigns of the foregoing Persons;
provided, that, no Foreign Subsidiary shall be a Guarantor.

“Guaranty” shall mean any guaranty of the Obligations executed by a Guarantor in
favor of Agent for its benefit and for the ratable benefit of Lenders, in
substantially the form of Exhibit 1.2(b) hereto.

“Hazardous Discharge” shall mean any Release or threat of Release of a
reportable quantity of any Hazardous Material at any Real Property of a Borrower
or Guarantor.

“Hazardous Materials” shall mean, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in or subject to regulation under Environmental Laws.

“Hazardous Wastes” shall mean all waste materials subject to regulation under
CERCLA, RCRA or corresponding state Law, and any other applicable Federal and
state Laws now in force or hereafter enacted relating to hazardous waste
disposal.

 

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“Hedge Liabilities” shall mean collectively, the Foreign Currency Hedge
Liabilities and the Interest Rate Hedge Liabilities.

“Holdings” shall mean JD Sports Fashion Plc, a public limited company organized
under the laws of England and Wales.

“Holdings Facility Agreement” shall have the meaning set forth in the definition
of “Holdings Loan Documents” in this Section 1.2.

“Holdings Loan” shall mean the Indebtedness evidenced by the Holdings Loan
Documents.

“Holdings Loan Documents” shall mean (i) the Multicurrency Revolving Facility
Agreement, dated May 29, 2018 (the “Holdings Facility Agreement”), in the
original principal amount of £400,000,000, by and among, amongst others,
Holdings, as an “Original Borrower”, the Subsidiaries of Holdings listed in Part
1 of Schedule 1 thereto, as “Original Borrowers”, the Subsidiaries of Holdings
listed in Part 1 of Schedule 1 thereto, as “Original Guarantors”, Barclays Bank
PLC and HSBC Bank plc, as bookrunners and mandated lead arrangers, the financial
institutions listed in Part 2 of Schedule 1 thereto, as “Original Lenders”,
Barclays Bank PLC, as document co-ordinator, and Barclays Bank PLC, as “agent”,
(ii) each Accession Letter (in the form of Schedule 2 to the Holdings Facility
Agreement) executed by one or more Borrower(s) or Guarantor(s) following the
Closing Date pursuant to and in accordance with the Holdings Facility Agreement,
pursuant to which such Borrowers(s) or Guarantor(s) shall agree to become an
Additional Guarantor (as defined in the Holdings Facility Agreement), and
(iii) all other instruments, agreements and documents executed in connection
therewith, in each case to the extent permitted by this Agreement and the Other
Documents.

“Increasing Lender” shall have the meaning set forth in Section 2.24(a) hereof.

“Indebtedness” shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (a) borrowed money (including,
without limitation, any Intercompany Subordinated Loan); (b) amounts received
under or liabilities in respect of any note purchase or acceptance credit
facility, and all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) all Capitalized Lease Obligations;
(d) reimbursement obligations (contingent or otherwise) under any letter of
credit agreement, banker’s acceptance agreement or similar arrangement;
(e) obligations under any Interest Rate Hedge, Foreign Currency Hedge, or other
interest rate management device, foreign currency exchange agreement, currency
swap agreement, commodity price protection agreement or other interest or
currency exchange rate or commodity price hedging arrangement; (f) any other
advances of credit made to or on behalf of such Person or other transaction
(including forward sale or purchase agreements, capitalized leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements including to finance the purchase price of property or services and
all obligations of such Person to pay the deferred

 

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purchase price of property or services (but not including trade payables and
accrued expenses incurred in the Ordinary Course of Business which are not
represented by a promissory note or other evidence of indebtedness and which are
not more than ninety (90) days past due); (g) all Equity Interests of such
Person subject to repurchase or redemption rights or obligations (excluding
repurchases or redemptions at the sole option of such Person); (h) all
indebtedness, obligations or liabilities secured by a Lien on any asset of such
Person, whether or not such indebtedness, obligations or liabilities are
otherwise an obligation of such Person (excluding, for the avoidance of doubt,
any Taxes); (i) all obligations of such Person for “earnouts”, purchase price
adjustments, profit sharing arrangements, deferred purchase money amounts and
similar payment obligations or continuing obligations of any nature of such
Person arising out of purchase and sale contracts; (j) off-balance sheet
liabilities and/or pension plan liabilities of such Person; and (k) any guaranty
of any indebtedness (including, without limitation, the guaranty of any
obligations under the Holdings Loan Documents), obligations or liabilities of a
type described in the foregoing clauses (a) through (j).

“Indemnified Taxes” shall mean (a) Taxes (other than Excluded Taxes) imposed on
or with respect to any payment made by or on account of any obligation of any
Borrower or Guarantor under this Agreement or any Other Document, and (b) to the
extent not otherwise described in the foregoing clause (a), Other Taxes.

“Information Certificates” shall mean, collectively, the information
questionnaires and the responses thereto provided by each Borrower and each
Guarantor and delivered to Agent.

“Insolvency Event” shall mean, with respect to any Person, including without
limitation any Lender, such Person or such Person’s direct or indirect parent
company (a) becomes the subject of a bankruptcy or insolvency proceeding
(including any proceeding under Title 11 of the United States Code), or
regulatory restrictions that are the substantial equivalent of a bankruptcy or
insolvency proceeding, (b) has had a receiver, conservator, trustee,
administrator, custodian, assignee for the benefit of creditors or similar
Person charged with the reorganization or liquidation of its business appointed
for it or has called a meeting of its creditors, (c) admits in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (d) with respect to a Lender, such Lender is
unable to perform hereunder due to the application of Applicable Law, or (e) in
the good faith determination of Agent, has taken any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any such
proceeding or appointment of a type described in clause (a) or (b) above;
provided, that, an Insolvency Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person
or such Person’s direct or indirect parent company by a Governmental Body or
instrumentality thereof if, and only if, such ownership interest does not result
in or provide such Person 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 Person (or such Governmental Body or instrumentality)
to reject, repudiate, disavow or disaffirm any contracts or agreements made by
such Person.

“Intellectual Property” shall mean property constituting a patent, copyright,
trademark, service mark (or any application in respect of the foregoing), trade
name, mask work, trade secrets, design right, assumed name or license or other
right to use any of the foregoing under Applicable Law. For the avoidance of
doubt, “Intellectual Property” shall include all “Intellectual Property” under
and as defined in the Intellectual Property Security Agreement.

 

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“Intellectual Property Claim” shall mean the assertion, by any means, by any
Person of a claim that any Borrower’s or Guarantor’s ownership, use, marketing,
sale or distribution of any Inventory, equipment, Intellectual Property or other
property or asset is violative of any ownership of or right to use any
Intellectual Property of such Person.

“Intellectual Property Security Agreement” shall mean that certain Intellectual
Property Security Agreement, dated as of the Closing Date, by and among
Borrowing Agent, Spike’s Holding, LLC, and Agent, and any other intellectual
property security agreements executed subsequent to the Closing Date by any
other Person to secure the Obligations.

“Intercompany Subordinated Loans” shall mean the loans and Indebtedness
evidenced by the Intercompany Subordinated Loan Documents, subject at all times
to the Intercompany Subordination Agreement.

“Intercompany Subordinated Loan Documents” shall mean (i) (a) the Credit
Agreement, dated as of the Closing Date (the “Genesis Intercompany Loan
Agreement”), between GMSI (which upon the consummation of the Transactions shall
be merged with and into Borrowing Agent, with Borrowing Agent as the surviving
Person) and Intermediate Holdings, in the original principal amount of
$225,000,000, and (b) the Note, dated as of the Closing Date, made payable by
Borrowing Agent to Intermediate Holdings, in the original principal amount of
$225,000,000, evidencing the loans made pursuant to the Genesis Intercompany
Loan Agreement, (ii) (a) the Credit Agreement, dated as of the Closing Date (the
“UK Finco Intercompany Loan Agreement”), between Intermediate Holdings and UK
Finco, in the original principal amount of $225,000,000, and (b) the Note, dated
as of the Closing Date, made payable by Intermediate Holdings to UK Finco, in
the original principal amount of $225,000,000, evidencing the loans made
pursuant to the UK Finco Intercompany Loan Agreement, and (iii) all other
instruments, agreements and documents executed in connection therewith, in each
case as to the instruments, agreements and documents described in this
definition, as amended, restated, supplemented or otherwise modified in
accordance with the terms hereof and of the Intercompany Subordination
Agreement.

“Intercompany Subordination Agreement” shall mean the Subordination Agreement,
dated as of the Closing Date, by and among Agent, Borrowers, Guarantors, and UK
Finco.

“Interest Period” shall mean the period provided for any LIBOR Rate Loan
pursuant to Section 2.2(c) hereof.

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or
similar agreements entered into by any Borrower, Guarantor and/or their
respective Subsidiaries in order to provide protection to, or minimize the
impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries
of increasing floating rates of interest applicable to Indebtedness.

“Interest Rate Hedge Liabilities” shall have the meaning assigned in the
definition of Lender-Provided Interest Rate Hedge.

 

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“Intermediate Holdings” shall mean Genesis Holdings, Inc., an Indiana
corporation and the direct parent company of Borrowing Agent.

“Intermediate Holdings and its Subsidiaries on a Consolidated Basis” shall mean
the consolidation in accordance with GAAP of the accounts or other items of
Intermediate Holdings and its Subsidiaries.

“Inventory” shall mean and include as to each Borrower all of such Borrower’s
inventory (as defined in Article 9 of the Uniform Commercial Code) and all of
such Borrower’s goods, merchandise and other personal property, wherever
located, to be furnished under any consignment arrangement, contract of service
or held for sale or lease, all raw materials, work in process, finished goods
and materials and supplies of any kind, nature or description which are or might
be used or consumed in such Borrower’s business or used in selling or furnishing
such goods, merchandise and other personal property, and all Documents
representing or evidencing any of the foregoing.

“Issuer” shall mean, individually or collectively (as the context may require),
(a) with respect to each Existing Letter of Credit and until such Existing
Letter of Credit expires, is terminated or is returned undrawn, the issuer
thereof identified on Schedule 1.3, (b) Agent in its capacity as the issuer of
Letters of Credit under this Agreement or any successor issuer of Letters of
Credit hereunder (which successor may only be a Lender having a Revolving
Commitment selected by Agent in its discretion and agreed to by Borrowing Agent
and such Lender), and (c) each of Wells Fargo Bank, National Association and
Bank of America, N.A. in its capacity as the issuer of Letters of Credit under
this Agreement, provided, that, the aggregate face amount of Letters of Credit
issued by either such Person shall not exceed such Person’s Revolving Commitment
Percentage multiplied by the Letter of Credit Sublimit.

“Joint Lead Arranger” shall have the meaning set forth in the preamble to this
Agreement and shall include the permitted successors and assigns thereof.

“Law(s)” shall mean any law(s) (including common law and equitable principles),
constitution, statute, treaty, regulation, rule, ordinance, opinion, issued
guidance, code, release, ruling, order, executive order, injunction, writ,
decree, judgment, authorization or approval, lien or award of or any settlement
arrangement, by agreement, consent or otherwise, with any Governmental Body,
foreign or domestic.

“Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender. For the purpose of provision of
this Agreement or any Other Document which provides for the granting of a
security interest or other Lien to the Agent for the benefit of Lenders as
security for the Obligations, “Lenders” shall include any Affiliate of a Lender
to which such Obligation (specifically including any Hedge Liabilities and any
Cash Management Liabilities) is owed.

“Lender-Provided Foreign Currency Hedge” shall mean a Foreign Currency Hedge
which is provided by any Lender or any Affiliate of any Lender, and for which
such Lender confirms to Agent in writing prior to the execution thereof that
it: (a) is documented in a standard

 

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International Swap Dealers Association, Inc. Master Agreement or another
reasonable and customary manner; (b) provides for the method of calculating the
reimbursable amount of the provider’s credit exposure in a reasonable and
customary manner; and (c) is entered into for hedging (rather than speculative)
purposes. The liabilities owing to the provider of any Lender-Provided Foreign
Currency Hedge (the “Foreign Currency Hedge Liabilities”) by any Borrower, any
Guarantor, or any of their respective Subsidiaries that is party to such
Lender-Provided Foreign Currency Hedge shall, for purposes of this Agreement and
all Other Documents be “Obligations” of such Person and of each other Borrower
and Guarantor, be guaranteed obligations under any Guaranty and secured
obligations hereunder, as applicable, and otherwise treated as Obligations for
purposes of the Other Documents, except to the extent constituting Excluded
Hedge Liabilities of such Person. The Liens securing the Foreign Currency Hedge
Liabilities shall be pari passu with the Liens securing all other Obligations
under this Agreement and the Other Documents, subject to the express provisions
of Section 11.5 hereof.

“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender or any Affiliate of a Lender and with respect to which
such Lender confirms to Agent in writing prior to the execution thereof that it:
(a) is documented in a standard International Swap Dealers Association, Inc.
Master Agreement or another reasonable and customary manner; (b) provides for
the method of calculating the reimbursable amount of the provider’s credit
exposure in a reasonable and customary manner; and (c) is entered into for
hedging (rather than speculative) purposes. The liabilities owing to the
provider of any Lender-Provided Interest Rate Hedge (the “Interest Rate Hedge
Liabilities”) by any Borrower, any Guarantor or any of their respective
Subsidiaries that is party to such Lender-Provided Interest Rate Hedge shall,
for purposes of this Agreement and all Other Documents be “Obligations” of such
Person and of each other Borrower and Guarantor, be guaranteed obligations under
any Guaranty and secured obligations hereunder, as applicable, and otherwise
treated as Obligations for purposes of the Other Documents, except to the extent
constituting Excluded Hedge Liabilities of such Person. The Liens securing the
Interest Rate Hedge Liabilities shall be pari passu with the Liens securing all
other Obligations under this Agreement and the Other Documents, subject to the
express provisions of Section 11.5 hereof.

“Letter of Credit Application” shall have the meaning set forth in
Section 2.12(a) hereof.

“Letter of Credit Borrowing” shall have the meaning set forth in Section 2.14(d)
hereof.

“Letter of Credit Fees” shall have the meaning set forth in Section 3.2 hereof.

“Letter of Credit Sublimit” shall mean $50,000,000.

“Letters of Credit” shall have the meaning set forth in Section 2.11 hereof and
shall include, for the avoidance of doubt, the Existing Letters of Credit.

“LIBOR Alternate Source” shall have the meaning set forth in the definition of
LIBOR Rate.

“LIBOR Rate” shall mean for any LIBOR Rate Loan for the then current Interest
Period relating thereto, the interest rate per annum determined by Agent by
dividing (the resulting quotient rounded upwards, if necessary, to the nearest
1/100th of 1% per annum) (a) the rate

 

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which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg
page that displays rates at which U.S. dollar deposits are offered by leading
banks in the London interbank deposit market), or the rate which is quoted by
another source selected by Agent as an authorized information vendor for the
purpose of displaying rates at which U.S. dollar deposits are offered by leading
banks in the London interbank deposit market (a “LIBOR Alternate Source”), at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for an amount comparable to such LIBOR Rate Loan and having a
borrowing date and a maturity comparable to such Interest Period (or (x) if
there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1
(or any substitute page) or any LIBOR Alternate Source, a comparable replacement
rate determined by Agent at such time (which determination shall be conclusive
absent manifest error), or (y) if the LIBOR Rate is unascertainable as set forth
in Section 3.8.2, a comparable replacement rate determined in accordance with
Section 3.8.2), by (b) a number equal to 1.00 minus the Reserve Percentage;
provided, however, that if the LIBOR Rate determined as provided above would be
less than zero, such rate shall be deemed to be zero for purposes of this
Agreement.

The LIBOR Rate shall be adjusted with respect to any LIBOR Rate Loan that is
outstanding on the effective date of any change in the Reserve Percentage as of
such effective date. Agent shall give reasonably prompt notice to the Borrowing
Agent of the LIBOR Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.

“LIBOR Rate Loan” shall mean any Advance that bears interest based on the LIBOR
Rate.

“LIBOR Termination Date” shall have the meaning set forth in Section 3.8.2(a)
hereof.

“License Agreement” shall mean any agreement between any Borrower and a Licensor
pursuant to which such Borrower is authorized to use any Intellectual Property
in connection with the manufacturing, marketing, sale or other distribution of
any Inventory of such Borrower in connection with such Borrower’s business
operations.

“Licensor” shall mean any Person from whom any Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property in
connection with such Borrower’s manufacture, marketing, sale or other
distribution of any Inventory in connection with such Borrower’s business
operations.

“Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor,
in form and substance reasonably satisfactory to Agent, by which Agent is given
the right, vis-á-vis such Licensor, to enforce Agent’s Liens with respect to and
to dispose of any Borrower’s Inventory with the benefit of any Intellectual
Property applicable thereto, irrespective of such Borrower’s default under any
License Agreement with such Licensor.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in

 

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respect of any asset of any kind or nature whatsoever including any conditional
sale or other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction.

“Lien Waiver Agreement” shall mean an agreement which is executed in favor of
Agent by a Person who owns or occupies premises at which any Collateral may be
located from time to time, or who is in possession, custody, or control of any
Collateral from time to time, in each case in form and substance reasonably
satisfactory to Agent.

“Liquid Portfolio Investments” shall mean liquid investments held in a
securities account maintained with one or more of the Lenders or any of their
respective Affiliates and consisting of (i) Cash Equivalents or (ii) other
securities rated BBB or better by Standard & Poor’s or Baa2 or better by
Moody’s.

“Liquidation” shall mean the exercise by Agent of those rights and remedies
accorded to Agent under this Agreement, the Other Documents and applicable Law
as a creditor of Borrowers and Guarantors with respect to the realization on the
Collateral, including (after the occurrence and during the continuation of an
Event of Default) the conduct by Borrowers and Guarantors acting with the
consent of Agent, of any public, private or “going out of business”, “store
closing”, or other similarly themed sale or other disposition of the Collateral
for the purpose of liquidating the Collateral. Derivations of the word
“Liquidation” (such as “Liquidate”) are used with like meaning in this
Agreement.

“Local Store Account” shall have the meaning set forth in Section 4.8(k) hereof.

“Macy’s” shall mean Macy’s Retail Holdings, Inc., Macy’s Puerto Rico, Inc.,
Macys.com, Inc., or any Affiliate of any of the foregoing.

“Macy’s Department License Agreement” shall mean that certain Department License
Agreement, dated as of September 27, 2012, by and among (i) Macy’s Retail
Holdings, Inc. and Macy’s Puerto Rico, Inc., for themselves and their
subsidiaries, and (ii) Borrowing Agent and FINL PR, as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.

“Macy’s Tri-Party Agreement” shall mean that certain letter agreement to be
entered into pursuant to the Post-Closing Letter by and among Borrowers,
Guarantors, Macy’s, and Agent.

“Margin Stock” shall have the meaning set forth for such term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, results of operations, assets, business or properties of
the Borrowers and the Guarantors, taken as a whole, (b) the ability of the
Borrowers and the Guarantors, taken as a whole, to duly and punctually pay or
perform the Obligations in accordance with the terms of this Agreement and the
Other Documents, (c) the value of a material portion of the Collateral, or
Agent’s Liens on a material portion of the Collateral or the priority of any
such Lien or (d) Agent’s and each Lender’s rights and remedies under this
Agreement and the Other Documents.

 

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“Material Contract” shall mean any contract, agreement, instrument, permit,
lease or license, written or oral, of any Borrower or Guarantor, which (a) is in
respect of the exchange of goods and/or services having a value in any Fiscal
Year of Borrowers and Guarantors in excess of $10,000,000, or (b) with respect
to which the non-performance or cancellation thereof could reasonably be
expected to result in a Material Adverse Effect.

“Maximum FILO Advance Amount” shall mean $15,000,000.

“Maximum Revolving Advance Amount” shall mean $300,000,000 plus any increases in
accordance with Section 2.24 minus any reductions in accordance with
Section 2.25.

“Maximum Swing Loan Advance Amount” shall mean $30,000,000; provided, that, upon
the effective date of each increase in the Maximum Revolving Advance Amount in
accordance with Section 2.24, the Maximum Swing Loan Advance Amount shall
increase by an amount equal to ten percent (10%) of the amount of such increase
in the Maximum Revolving Advance Amount.

“Maximum Undrawn Amount” shall mean, with respect to any outstanding Letter of
Credit as of any date, the amount of such Letter of Credit that is or may become
available to be drawn, including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become
effective.

“Modified Commitment Transfer Supplement” shall have the meaning set forth in
Section 16.3(d) hereof.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which contributions are required or, within the
preceding five plan years, were required by any Borrower or any member of the
Controlled Group.

“Multiple Employer Plan” shall mean an employee benefit plan which has two or
more contributing sponsors (including any Borrower, any Guarantor, or any member
of the Controlled Group) at least two of whom are not under common control, as
such a plan is described in Section 4064 of ERISA.

“Negative Pledge Agreement” shall mean that certain Negative Pledge Agreement,
dated as of the Closing Date, by Borrowers and Guarantors in favor of Agent.

“Negotiable Document” shall mean a Document that is “negotiable” within the
meaning of Article 7 of the Uniform Commercial Code.

“Net Invoice Cost” shall mean, with respect to equipment, the net invoice cost
of such equipment (excluding taxes, shipping, delivery, handling, installation,
overhead and other so called “soft” costs).

“New Lender” shall have the meaning set forth in Section 2.24(a) hereof.

 

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“NOLV” shall mean, with respect to any Inventory, the net appraised orderly
liquidation value (expressed as a percentage) of such Inventory, as determined
from time to time by Agent in its Permitted Discretion by reference to the most
recent appraisal of Inventory in form and substance acceptable to Agent in its
Permitted Discretion, obtained by Agent; provided, that, it is understood and
agreed by all parties hereto that such net orderly liquidation value percentage
may vary from month to month based on the applicable appraiser’s assessment as
set forth in such appraisal of the monthly variation in such net orderly
liquidation value percentage.

“Non-Defaulting Lender” shall mean, at any time, any Lender holding a Revolving
Commitment that is not a Defaulting Lender at such time.

“Non-Qualifying Party” shall mean any Borrower or any Guarantor that on the
Eligibility Date fails for any reason to qualify as an Eligible Contract
Participant.

“Note” shall mean, collectively, the Revolving Credit Note, the FILO Note, and
the Swing Loan Note.

“Obligations” shall mean and include any and all loans (including without
limitation, all Advances and Swing Loans), advances, debts, liabilities,
obligations (including without limitation all reimbursement obligations and cash
collateralization obligations with respect to Letters of Credit issued
hereunder), covenants and duties owing by any Borrower or Guarantor under this
Agreement or any Other Document (and any amendments, extensions, renewals or
increases thereto), to Issuer, Swing Loan Lender, Lenders or Agent (or to any
other direct or indirect subsidiary or affiliate of Issuer, Swing Loan Lender,
any Lender or Agent) of any kind or nature, present or future (including any
interest or other amounts accruing thereon, any fees accruing under or in
connection therewith, any costs and expenses of any Person payable by any
Borrower or Guarantor and any indemnification obligations payable by any
Borrower or Guarantor arising or payable after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to any Borrower or Guarantor, whether
or not a claim for post-filing or post-petition interest, fees or other amounts
is allowable or allowed in such proceeding), whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise including, subject to Section 16.9
hereof, all costs and expenses of Agent, Issuer, Swing Loan Lender and any
Lender incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable and documented attorneys’ fees and expenses and all
obligations of any Borrower or Guarantor to Agent, Issuer, Swing Loan Lender or
Lenders to perform acts or refrain from taking any action, in each case,
pursuant to the terms of this Agreement or any Other Document, (ii) all Hedge
Liabilities and (iii) all Cash Management Liabilities. Notwithstanding anything
to the contrary contained in the foregoing, the Obligations shall not include
any Excluded Hedge Liabilities.

“OFAC” shall mean The Office of Foreign Assets Control of the U.S. Department of
the Treasury.

 

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“Ordinary Course of Business” shall mean, with respect to any Borrower or
Guarantor, the ordinary course of such Borrower’s or Guarantor’s business as
conducted on the Closing Date and reasonable extensions thereof.

“Organizational Documents” shall mean, with respect to any Person, any charter,
articles or certificate of incorporation, certificate of organization,
registration or formation, certificate of partnership or limited partnership,
bylaws, operating agreement, limited liability company agreement, or partnership
agreement of such Person and any and all other applicable documents relating to
such Person’s formation, organization or entity governance matters (including
any shareholders’ or equity holders’ agreement or voting trust agreement) and
specifically includes, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity.

“Other Connection Taxes” shall mean, with respect to any recipient, Taxes
imposed as a result of a present or former connection between such recipient and
the jurisdiction imposing such Tax (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
Obligation, or sold or assigned an interest in any Obligation).

“Other Documents” shall mean the Note, the Information Certificates, the Fee
Letter, any Guaranty, any Pledge Agreement, any Intellectual Property Security
Agreement, the Credit Card Notifications, the Lien Waiver Agreements, the
Certificates of Beneficial Ownership, any Lender-Provided Interest Rate Hedge,
any Lender-Provided Foreign Currency Hedge, any Cash Management Products and
Services, the Macy’s Tri-Party Agreement, the Web Host Services Control
Agreement, any deposit account control agreements and securities account control
agreements, the Intercompany Subordination Agreement, the Negative Pledge
Agreement, the Post-Closing Letter, and any and all other agreements,
instruments and documents, including intercreditor agreements, guaranties,
pledges, powers of attorney, consents, interest or currency swap agreements or
other similar agreements and all other writings heretofore, now or hereafter
executed by any Borrower or any Guarantor and/or delivered to Agent or any
Lender in respect of the transactions contemplated by this Agreement, in each
case together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.

“Other Taxes” shall mean all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes arising from any payment made
hereunder or under any Other Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any Other
Document, except any such Taxes that are Other Connection Taxes imposed with
respect to an assignment (other than an assignment made pursuant to
Section 3.11(a)).

“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(e)
hereof.

“Overnight Bank Funding Rate” shall mean, for any, day the rate per annum (based
on a year of 360 days and actual days elapsed) comprised of both overnight
federal funds and overnight Eurocurrency borrowings by U.S.-managed banking
offices of depository institutions,

 

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as such composite rate shall be determined by the Federal Reserve Bank of New
York, as set forth on its public website from time to time, and as published on
the next succeeding Business Day as the overnight bank funding rate by such
Federal Reserve Bank (or by such other recognized electronic source (such as
Bloomberg) selected by the Agent for the purpose of displaying such rate) (an
“Alternate Source”); provided, that, if such day is not a Business Day, the
Overnight Bank Funding Rate for such day shall be such rate on the immediately
preceding Business Day; provided, further, that if such rate shall at any time,
for any reason, no longer exist, a comparable replacement rate determined by the
Agent at such time (which determination shall be conclusive absent manifest
error). If the Overnight Bank Funding Rate determined as above would be less
than zero, then such rate shall be deemed to be zero. The rate of interest
charged shall be adjusted as of each Business Day based on changes in the
Overnight Bank Funding Rate without notice to any Borrower or Guarantor.

“Parent” of any Person shall mean a corporation or other entity owning, directly
or indirectly, greater than 50% of the Equity Interests issued by such Person
having ordinary voting power to elect a majority of the directors of such
Person, or other Persons performing similar functions for any such Person.

“Participant” shall have the meaning set forth in Section 16.3(b) hereof.

“Participant Register” shall have the meaning set forth in Section 16.3(b)
hereof.

“Participation Advance” shall have the meaning set forth in Section 2.14(d)
hereof.

“Participation Commitment” shall mean the obligation hereunder of each Lender
holding a Revolving Commitment to buy a participation equal to its Revolving
Commitment Percentage (subject to any reallocation pursuant to
Section 2.22(b)(iii) hereof) in the Swing Loans made by Swing Loan Lender
hereunder as provided for in Section 2.4(c) hereof and in the Letters of Credit
issued hereunder as provided for in Section 2.14(a) hereof.

“Payment Conditions” shall mean, at the time of determination with respect to
any specified transaction or payment, that (a) no Event of Default then exists
or would occur as a result of entering into such transaction or the making of
such payment, (b) (i) the average pro forma Undrawn Availability for the thirty
(30) consecutive day period immediately preceding the date of such transaction
or payment, and (ii) the pro forma Undrawn Availability as of such date (after
giving effect to such transaction or payment), in each case shall be not less
than the greater of (x) fifteen percent (15%) of the Revolving Loan Cap, and (y)
$37,500,000, (c) the Fixed Charge Coverage Ratio, after giving effect to such
transaction or payment on a pro-forma basis for the twelve consecutive Fiscal
Month period preceding such transaction or payment (as if such transaction or
the making of such payment had occurred on the first day of such period), was
greater than 1.00:1.00; provided, that, the provisions of this clause (c) shall
not be applicable if (i) the average pro forma Undrawn Availability for the
thirty (30) consecutive day period immediately preceding the date of such
transaction or payment, and (ii) the pro forma Undrawn Availability as of such
date (after giving effect to such transaction or payment), in each case shall be
not less than the greater of (x) twenty percent (20%) of the Revolving Loan Cap,
and (y) $52,500,000, in each case calculated as if such transaction or payment
had occurred on the first day of such period, and (d) Borrowers shall have
delivered to Agent a certificate duly executed

 

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by an Authorized Officer of Borrowing Agent and attaching evidence of
satisfaction of the conditions contained in clauses (b) and (c) above, as
applicable, on a basis reasonably satisfactory to Agent.

“Payment Office” shall mean initially Two Tower Center Boulevard, East
Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and to each Lender to be the
Payment Office.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.

“Pension Benefit Plan” shall mean at any time any “employee pension benefit
plan” as defined in Section 3(2) of ERISA (including a Multiple Employer Plan,
but not a Multiemployer Plan) which is covered by Title IV of ERISA or is
subject to the minimum funding standards under Sections 412, 430 or 436 of the
Code and either (i) is maintained or to which contributions are required by any
Borrower or any member of the Controlled Group or (ii) has at any time within
the preceding five years been maintained or to which contributions have been
required by a Borrower or any entity which was at such time a member of the
Controlled Group.

“Permitted Acquisitions” shall mean acquisitions of the assets or Equity
Interests of another Person (the “target”) so long as:

(a)    with respect to the acquisition of Equity Interests, such target shall
(i) have a positive EBITDA (determined as if the reference to Borrowers and
Guarantors in the definition of “EBITDA” contained in Section 1.2 is a reference
to the target and its Subsidiaries), calculated in accordance with GAAP, for the
most recent four Fiscal Quarter period immediately prior to such acquisition,
(ii) unless it is a Foreign Subsidiary, be added as a Borrower or as a Guarantor
to this Agreement and be jointly and severally liable for all Obligations, and
(iii) unless it is a Foreign Subsidiary, grant to Agent a first-priority lien
(subject to Permitted Encumbrances having priority over the Lien of Agent by
operation of Applicable Law) in all assets of such target (other than Excluded
Property);

(b)    the applicable target or property is used or useful in the Borrowers’ and
Guarantors’ Ordinary Course of Business, and the business being acquired shall
be permitted by Section 7.9;

(c)    Agent shall have received a first-priority security interest (subject to
Permitted Encumbrances having priority over the Lien of Agent by operation of
Applicable Law) in all acquired assets or Equity Interests (other than Excluded
Property), subject to documentation reasonably satisfactory to Agent (to the
extent that Agent would not otherwise have, following the consummation of such
Acquisition, such first-priority security interest pursuant to this Agreement
and the Other Documents as then in effect);

(d)    the board of directors (or other comparable governing body) of the
applicable target or owner of the property being acquired shall have duly
approved the transaction;

 

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(e)    in the case of any Acquisition for which the aggregate consideration
payable by the Borrowers and Guarantors exceeds $25,000,000, Borrowers shall
have delivered to Agent (i) a pro forma balance sheet and pro forma financial
statements and a Compliance Certificate demonstrating that, upon giving effect
to such acquisition on a pro forma basis, Borrowers and Guarantors would be in
compliance with the financial covenants set forth in Section 6.5 as of the most
recent Fiscal Quarter end, and (ii) financial statements of the applicable
target for the two most recent fiscal years then ended, in form reasonably
acceptable to Agent;

(f)    if such Acquisition includes general partnership interests or any other
Equity Interest that does not have a corporate (or similar) limitation on
liability of the owners thereof, then such Acquisition shall be effected by
having such Equity Interests acquired by a corporate holding company directly or
indirectly wholly-owned by a Borrower and newly formed for the sole purpose of
effecting such acquisition;

(g)    no assets acquired in any such transaction(s) shall be included in the
Formula Amount until Agent has received a field examination and/or appraisal of
such assets, in form and substance reasonably acceptable to Agent; and

(h)    the Payment Conditions have been satisfied.

For the purposes of calculating Undrawn Availability under this definition, no
assets being acquired in the proposed Acquisition shall be included in the
Formula Amount or the FILO Formula Amount until Agent has received a field
examination and/or appraisal of such assets as set forth in clause (g) above, in
form and substance, and with results, acceptable to Agent in its Permitted
Discretion (it being understood and agreed that, notwithstanding anything in
this Agreement to the contrary, Borrowers shall be liable for costs and expenses
of such field examination and appraisal, which costs and expenses shall not be
subject to (and shall not be included in) any generally applicable limitations
on the number of field examinations and appraisals, or the Borrowers’ liability
for such costs and expenses under this Agreement) and such assets satisfy the
applicable eligibility criteria set forth herein.

“Permitted Assignees” shall mean: (a) Agent, any Lender or any of their direct
or indirect Affiliates; (b) any fund that is administered or managed by Agent or
any Lender, an Affiliate of Agent or any Lender or a related entity; and (c) any
Person to whom Agent or any Lender assigns its rights and obligations under this
Agreement as part of an assignment and transfer of such Agent’s or Lender’s
rights in and to all or substantially all of such Agent’s or Lender’s portfolio
of asset-based credit facilities that are substantially similar to the credit
facilities evidenced by this Agreement (including, without limitation, retail
credit facilities).

“Permitted Discretion” shall mean a determination made in good faith and in the
exercise (from the perspective of a secured asset-based lender) of commercially
reasonable business judgment.

“Permitted Dividends” shall mean:

(a)    dividends or distributions to a Borrower or Guarantor;

 

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(b)    dividends or distributions payable solely in the form of Equity Interests
(other than Disqualified Equity Interests) or in options, warrants or other
rights to purchase such Equity Interests; and

(c)    other dividends or distributions to the extent the Payment Conditions
have been satisfied.

“Permitted Encumbrances” shall mean:

(a)    Liens in favor of Agent for the benefit of Agent and Lenders, including
without limitation, Liens securing Hedge Liabilities and Cash Management
Products and Services;

(b)    Liens for taxes, assessments or other governmental charges not yet due,
not delinquent, or being Properly Contested;

(c)    deposits or pledges to secure obligations under worker’s compensation (or
to participate in the Ordinary Course of Business in any fund in connection with
workmen’s compensation), old-age pensions, social security or similar laws, or
under unemployment insurance or other social security programs;

(d)    deposits or pledges to secure bids, tenders, contracts (other than
contracts for the repayment of borrowed money), leases, statutory obligations,
surety, appeal, indemnity, performance or other similar bonds and other
obligations of like nature arising in the Ordinary Course of Business;

(e)    Liens arising by virtue of the rendition, entry or issuance against any
Borrower, any Guarantor, or any Subsidiary, or any property of any Borrower, any
Guarantor, or any Subsidiary, of any judgment, writ, order, or decree to the
extent the rendition, entry, issuance or continued existence of such judgment,
writ, order or decree (or any event or circumstance relating thereto) has not
resulted in the occurrence of an Event of Default under Section 10.5 hereof;

(f)    carriers’, repairmens’, mechanics’, workers’, warehousemens’, landlords’,
materialmen’s, or other like Liens arising in the Ordinary Course of Business
with respect to obligations which are not due and payable or which are being
Properly Contested and Liens under Applicable Law (or otherwise, to the extent
(x) existing on the Closing Date, or (y) granted on furniture, fixtures, and
equipment (but not on Inventory) after the Closing Date, or (z) granted on
Inventory, but only with the consent of the Agent, which may be granted or
withheld in the Agent’s Permitted Discretion) of landlords securing obligations
to pay lease payments that are not yet due and payable or are in default;

(g)    Liens placed upon assets (other than assets of the type included in the
Formula Amount or the FILO Formula Amount) (i) hereafter acquired to secure a
portion of the purchase price thereof (including, without limitation, assets
acquired through Capital Expenditures (other than Unfunded Capital
Expenditures)), and (ii) sold in connection with a Sale and Leaseback
Transaction permitted hereunder to secure Capitalized Lease Obligations
permitted to be incurred hereunder in connection therewith; provided, that,
(i) any such Lien

 

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shall not encumber any other property of any Borrower or Guarantor, and (ii) the
aggregate amount of Indebtedness secured by such Liens during any Fiscal Year of
Borrowers and Guarantors shall not exceed the amount of Capital Expenditures
permitted to be incurred under Section 7.23 hereof;

(h)    easements, rights-of-way, zoning restrictions, minor defects or
irregularities in title and other charges or encumbrances, in each case, which
do not interfere in any material respect with the Ordinary Course of Business of
Borrowers, Guarantors, and their respective Subsidiaries;

(i)    Liens disclosed on Schedule 1.2; provided, that, such Liens shall secure
only those obligations which they secure on the Closing Date (and extensions,
renewals and refinancing of such obligations permitted by Section 7.8 hereof)
and shall not subsequently apply to any other property or assets of any Borrower
or Guarantor other than the property and assets to which they apply as of the
Closing Date;

(j)    any interest or title of the lessor in the property subject to any
operating lease entered into by any Borrower or Guarantor;

(k)    Liens assumed by any Borrower or Guarantor securing Indebtedness assumed
in connection with a Permitted Acquisition;

(l)    Liens in favor of Credit Card Issuers and Credit Card Processors arising
in the Ordinary Course of Business securing the obligation to pay customary fees
and expenses in connection with credit card arrangements;

(m)    [reserved];

(n)    Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto incurred in the Ordinary Course
of Business;

(o)    licenses or sublicenses of trademarks and other rights in Intellectual
Property granted in the Ordinary Course of Business by any Borrower or Guarantor
and not interfering in any material respect with the Ordinary Course of Business
of such Borrower or Guarantor; provided, that, the grant of such license or
sublicense shall not derogate from Agent’s rights to use such Intellectual
Property in accordance with the terms hereof and the Other Documents;

(p)    Liens arising from precautionary Uniform Commercial Code financing
statements or similar filings made in respect of operating leases, bailment
arrangements, and consignment arrangements entered into by any Borrower or
Guarantor, in each case to the extent permitted hereunder;

(q)    Liens (including the right of set-off) in favor of a bank or other
depository institution arising as a matter of law;

 

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(r)    Liens on goods in the possession of customs authorities in favor of such
customs authorities which secure payment of customs duties in connection with
importation of goods;

(s)    any extensions, renewals, replacements and modifications of the foregoing
permitted Liens, so long as the principal balance of the Indebtedness secured
thereby (if any) is not increased; and

(t)    other Liens not specifically listed above securing obligations not to
exceed $10,000,000 in the aggregate outstanding at any one time, so long as such
Liens do not attach to any Real Property (or any other interest in or with
respect to Real Property), or to assets included in the Formula Amount or the
FILO Formula Amount.

“Permitted Indebtedness” shall mean:

(a)    the Obligations;

(b)    Indebtedness incurred for Capital Expenditures (including, without
limitation, Capitalized Lease Obligations) permitted under Section 7.23 hereof
and any Permitted Refinancing Indebtedness in respect thereof;

(c)    contingent Indebtedness in the form of unsecured guarantees by Borrowers
or Guarantors of the obligations of the borrowers under the Holdings Loan
Documents;

(d)    any guarantees of Indebtedness permitted under Section 7.3 hereof or
otherwise constituting Permitted Indebtedness under this definition;

(e)    any Indebtedness listed on Schedule 5.8(b)(ii) hereof (including any
extensions or renewals thereof); provided, that, there is no increase in the
amount thereof or other significant change in the terms thereof unless otherwise
specified on Schedule 5.8(b)(ii);

(f)    Indebtedness under the Intercompany Subordinated Loan Documents, subject
at all times to the Intercompany Subordination Agreement;

(g)    Indebtedness incurred in connection with Permitted Acquisitions to the
extent it is subordinated to the Obligations on terms and conditions
satisfactory to Agent, together with Permitted Refinancing Indebtedness in
respect thereof;

(h)    Indebtedness of a Person that is in existence when such Person becomes a
Subsidiary pursuant to a Permitted Acquisition or that is secured by an asset
when such asset is so acquired, together with any Permitted Refinancing
Indebtedness in respect thereof;

(i)    Indebtedness arising from agreements providing for indemnification,
adjustment of purchase price, earnout or similar obligations, or from guarantees
or letters of credit, securing the performance of any Borrower or Guarantor
pursuant to such agreements, incurred or contracted for in connection with
Permitted Acquisitions

 

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(j)    Indebtedness consisting of Permitted Loans made by one or more
Borrower(s) or Guarantor(s) or by any Subsidiary to any other Borrower(s) or
Guarantor(s);

(k)    Indebtedness in respect of (i) Interest Rate Hedges, Foreign Currency
Hedges and other Hedging Liabilities permitted under Section 7.6, (ii) other
Interest Rate Hedges approved by Agent or (iii) any Cash Management Products and
Services;

(l)    intercompany Indebtedness owing from one or more Borrowers or Guarantors
to any other one or more Borrowers, Guarantors or Subsidiaries in accordance
with clause (d) of the definition of Permitted Loans;

(m)    Indebtedness consisting of (i) the financing of insurance premiums or
(ii) take-or-pay obligations contained in supply arrangements, in each case, in
the Ordinary Course of Business;

(n)    [Intentionally Omitted];

(o)    Indebtedness incurred in the Ordinary Course of Business in respect of
netting services, overdraft protections and otherwise in connection with deposit
accounts or securities accounts;

(p)    obligations in respect of workers’ compensation claims, export or import
indemnities or similar instruments, performance, bid, surety and appeal bonds
and performance and completion guarantees provided by any Borrower or Guarantor
or obligations related thereto, in each case in the Ordinary Course of Business;
and

(q)    other Indebtedness in an amount not to exceed $10,000,000 in the
aggregate at any time outstanding; provided, that, such Indebtedness is not
secured by a Lien.

“Permitted Investments” shall mean:

(a)    investments in (i) Cash Equivalents and, and (ii) Permitted Loans;

(b)    existing investments set forth on Schedule 7.4 in an amount not greater
than the amount thereof on the Closing Date;

(c)    investments in trade receivables or received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the Ordinary Course of Business;

(d)    investments consisting of deposit accounts maintained in the Ordinary
Course of Business;

(e)    investments consisting of non-cash consideration from a sale, assignment,
transfer, lease, conveyance or other disposition of property permitted by
Section 7.1(b);

(f)    investments constituting Permitted Acquisitions;

 

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(g)    Liquid Portfolio Investments;

(h)    loans, advances, and other investments in any Borrower, Guarantor or
Subsidiary by any other Borrower or Guarantor, made exclusively with funds
received from Intermediate Holdings or one or more direct or indirect holders of
Equity Interests in Intermediate Holdings; and

(i)    other investments if the Payment Conditions are satisfied.

“Permitted Joint Venture” shall mean any Person (a) with respect to which any
Borrower, Guarantor, or Subsidiary thereof owns less than 100% of the Equity
Interests thereof; (b) that is engaged in a line of business permitted by
Section 7.2; (c) Borrowers’ and Guarantors’ investment in which constitutes a
Permitted Investment; and (d) with respect to which the Equity Interests thereof
were acquired or formed by such Borrower, Guarantor, or Subsidiary in a
transaction permitted by Section 7.10.

“Permitted Loans” shall mean:

(a)    the extension of trade credit in the Ordinary Course of Business;

(b)    loans to officers and employees to meet expenses incurred by such
officers and employees in the Ordinary Course of Business and consistent with
past practices;

(c)    the Intercompany Subordinated Loans, subject at all times to the
Intercompany Subordination Agreement; and

(d)    other intercompany loans between and among Borrowers, Guarantors and
their respective Subsidiaries, so long as, at the reasonable request of Agent,
each such intercompany loan is evidenced by a promissory note (including, if
applicable, any master intercompany note executed by Borrowers, Guarantors and
their respective Subsidiaries) on terms and conditions (including terms
subordinating payment of the indebtedness evidenced by such note to the prior
payment in full of all Obligations) acceptable to Agent in its reasonable
discretion that, in the case of any such promissory notes issued to any Borrower
or Guarantor in a principal amount that exceeds $500,000 individually or
$1,000,000 in the aggregate, has been delivered to Agent either endorsed in
blank or together with an undated instrument of transfer executed in blank by
the applicable Borrower(s) and Guarantor(s) that are the payee(s) on each such
note;

provided, that, any such loan described in this definition shall not constitute
a Permitted Loan if the repayment of all or any portion thereof is limited,
restricted, or otherwise conditioned or impaired by any provision of the
Holdings Facility Agreement.

“Permitted Refinancing Indebtedness” shall mean, with respect to any
Indebtedness (the “Refinanced Indebtedness”), any Indebtedness issued in
exchange for, or the net proceeds of which are used to modify, refinance,
refund, renew or extend such Refinanced Indebtedness; provided, that, (a) the
aggregate principal amount (or accreted value, if applicable) thereof does not
exceed the aggregate principal amount (or accreted value, if applicable) of the
Refinanced Indebtedness outstanding immediately prior to such exchange,
modification, refinancing,

 

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refunding, renewal or extension, except by an amount equal to the unpaid accrued
interest and premium thereon plus other reasonable and customary amounts paid,
and reasonable and customary fees and expenses incurred, in connection with such
exchange, modification, refinancing, refunding, renewal or extension, (b) any
Permitted Refinancing Indebtedness has a final maturity date equal to or later
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Refinanced Indebtedness, (c) immediately before and after giving effect thereto,
no Event of Default shall have occurred and be continuing, (d) if the Refinanced
Indebtedness is subordinated in right of payment to the Obligations, any
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Obligations on terms at least as favorable to Agent and the other Secured
Parties as those contained in the documentation governing the Refinanced
Indebtedness, (e) the primary obligor(s) in respect of any Permitted Refinancing
Indebtedness are the primary obligor(s) in respect of the applicable Refinanced
Indebtedness, and each Person (if any) that guarantees, any Permitted
Refinancing Indebtedness is a Person (if any) that guaranteed (or would have
been obligated to guarantee) the applicable Refinanced Indebtedness, (f) the
interest rate applicable to such Permitted Refinancing Indebtedness shall not
exceed the then applicable market interest rate, (g) such Permitted Refinancing
Indebtedness shall not require any scheduled principal payments due prior to the
expiration of the Term in excess of, or prior to, the scheduled principal
payments due for the Refinanced Indebtedness prior to the expiration of the
Term, (h) such Permitted Refinancing Indebtedness shall be otherwise on terms
not materially less favorable to the Secured Parties than those contained in the
documentation governing the Refinanced Indebtedness, including, without
limitation, with respect to financial and other covenants and events of default,
and (i) to the extent the Refinanced Indebtedness is secured, any such Permitted
Refinancing Indebtedness shall be secured by no additional assets of the
Borrowers or Guarantors other than the assets securing such Refinanced
Indebtedness (except to the extent of after-acquired assets or proceeds of
assets that would have secured such Refinanced Indebtedness).

“Person” shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, limited liability
partnership, institution, public benefit corporation, joint venture, entity or
Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

“Pledge Agreement” shall mean that certain Collateral Pledge Agreement, dated as
of the Closing Date, executed by Borrowers and Guarantors in favor of Agent, and
any other pledge agreements executed subsequent to the Closing Date by any other
Person to secure the Obligations.

“PNC” shall have the meaning set forth in the preamble to this Agreement and
shall extend to all of its successors and assigns.

“Post-Closing Letter” shall mean that certain letter agreement, dated as of the
Closing Date, by and among Agent, Borrowers, and Guarantors, pursuant to which
Borrowers and Guarantors shall have agreed to take certain actions following the
Closing Date within the time periods set forth therein.

 

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“Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a)
hereof.

“Pro Forma Financial Statements” shall have the meaning set forth in
Section 5.5(b) hereof.

“Projections” shall have the meaning set forth in Section 5.5(b) hereof.

“Properly Contested” shall mean, in the case of any Indebtedness, Lien, Taxes or
other obligations, as applicable, of any Person that are not paid as and when
due or payable by reason of such Person’s bona fide dispute concerning its
liability to pay the same or concerning the amount thereof: (a) such
Indebtedness, Lien, Taxes or other obligations, as applicable, are being
properly contested in good faith by appropriate proceedings promptly instituted
and diligently conducted; (b) such Person has established appropriate reserves
as shall be required in conformity with GAAP; (c) the non-payment of such
Indebtedness, Taxes or other obligations, as applicable, will not have a
Material Adverse Effect or result in a forfeiture of a material portion of the
assets of such Person; (d) no Lien is imposed upon any of such Person’s assets
with respect to such Indebtedness, Taxes or other obligations, as applicable,
unless (i)

such Lien is at all times junior and subordinate in priority to the Liens in
favor of the Agent (except only with respect to Liens that have priority as a
matter of Applicable Law), and (ii) enforcement of such Lien is stayed during
the period prior to the final resolution or disposition of such dispute; and
(e) if such Indebtedness, Lien or other obligations, as applicable, results
from, or is determined by the entry, rendition or issuance against a Person or
any of its assets of a judgment, writ, order or decree, enforcement of such
judgment, writ, order or decree is stayed pending a timely appeal or other
judicial review.

“Protective Advances” shall have the meaning set forth in Section 16.2(f)
hereof.

“Published Rate” shall mean the greater of (a) 0.00%, or (b) the rate of
interest published each Business Day in the Wall Street Journal “Money Rates”
listing under the caption “London Interbank Offered Rates” for a one month
period (or, if no such rate is published therein for any reason, then the
Published Rate shall be the LIBOR Rate for a one month period as published in
another publication selected by the Agent).

“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.

“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.

“Qualified ECP Loan Party” shall mean each Borrower or Guarantor that on the
Eligibility Date is (a) a corporation, partnership, proprietorship,
organization, trust, or other entity other than a “commodity pool” as defined in
Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets
exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause
another Person to qualify as an Eligible Contract Participant on the Eligibility
Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise
providing a “letter of credit or keepwell, support, or other agreement” for
purposes of Section 1a(18)(A)(v)(II) of the CEA.

 

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“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et seq., as same may be amended from time to time.

“Real Property” shall mean all of the owned and leased premises identified on
Schedule 4.4 hereto and any other premises or real property that are hereafter
owned or leased by any Borrower or any Guarantor.

“Real Property Leases” shall mean all of the leases, subleases, licenses or
other occupancy agreements identified on Schedule 4.4 hereto or in and to any
other premises or Real Property that are hereafter leased by any Borrower or any
Guarantor.

“Receivables” shall mean and include, as to each Borrower, all of such
Borrower’s accounts (as defined in Article 9 of the Uniform Commercial Code) and
all of such Borrower’s contract rights, instruments (including those evidencing
indebtedness owed to such Borrower by its Affiliates), documents, chattel paper
(including electronic chattel paper), general intangibles relating to accounts,
contract rights, instruments, documents and chattel paper, and drafts and
acceptances and all other forms of obligations owing to such Borrower arising
out of or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder. For the avoidance of
doubt, Receivables shall not include Credit Card Receivables.

“Register” shall have the meaning set forth in Section 16.3(e) hereof.

“Reimbursement Obligation” shall have the meaning set forth in Section 2.14(b)
hereof.

“Release” shall mean releases, spills, discharges, leaks or disposal of
Hazardous Materials at, upon, under or migrating from or onto any Real Property
owned, leased or occupied by any Borrower or any Guarantor, except for those
Releases which are in full compliance with Environmental Laws.

“Reportable Compliance Event” shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any aspect of its operations is in actual or probable violation of any
Anti-Terrorism Law.

“Reportable ERISA Event” shall mean a reportable event described in
Section 4043(c) of ERISA or the regulations promulgated thereunder for which the
notice requirement has not been waived by the PBGC.

“Required Cash Collateral Amount” shall have the meaning set forth in
Section 3.2(b) hereof.

“Required Lenders” shall mean Lenders (not including Swing Loan Lender (in its
capacity as such Swing Loan Lender) or any Defaulting Lenders) holding greater
than fifty percent (50%) of either (a) the aggregate of (x) the Revolving
Commitment Amounts of all

 

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Lenders (excluding any Defaulting Lenders), and (y) the FILO Commitment Amounts
of all Lenders (excluding any Defaulting Lenders), or (b) after the termination
of all commitments of the Lenders hereunder, the sum of (x) the outstanding
Revolving Advances and FILO Advances, plus the Maximum Undrawn Amount of all
outstanding Letters of Credit; provided, however, if there are three (3) or
fewer Lenders, Required Lenders shall mean all Lenders (excluding any Defaulting
Lender).

“Reserves” shall mean (i) the FILO Push Down Reserve, and (ii) other reserves
against the Maximum Revolving Advance Amount or the Formula Amount as Agent may
reasonably deem proper and necessary from time to time in its Permitted
Discretion.

“Reserve Percentage” shall mean as of any day the maximum effective percentage
in effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

“Revolving Advance Rates” shall have the meaning set forth in Section 2.1(a)(y)
hereof.

“Revolving Advances” shall mean Advances other than FILO Advances (but
including, for the avoidance of doubt, Letters of Credit and Swing Loans).

“Revolving Commitment” shall mean, as to any Lender, the obligation of such
Lender (if applicable), to make Revolving Advances and participate in Swing
Loans and Letters of Credit, in an aggregate principal and/or face amount not to
exceed the Revolving Commitment Amount (if any) of such Lender.

“Revolving Commitment Amount” shall mean, (a) as to any Lender other than a New
Lender, the Revolving Commitment amount (if any) set forth next to such Lender’s
name in Schedule 1.1(c) hereto under the heading “Revolving Commitment Amount”
(or, in the case of any Lender that became party to this Agreement after the
Closing Date pursuant to Section 16.3(c) or (d) hereof, the Revolving Commitment
amount (if any) of such Lender as set forth in the applicable Commitment
Transfer Supplement), and (b) as to any Lender that is a New Lender, the
Revolving Commitment amount provided for in the joinder signed by such New
Lender under Section 2.24(a)(x), in each case as the same may be adjusted upon
any increase by such Lender pursuant to Section 2.24 hereof or upon any decrease
by such Lender pursuant to Section 2.25 hereof, or any assignment by or to such
Lender pursuant to Section 16.3(c) or (d) hereof.

“Revolving Commitment Percentage” shall mean, (a) as to any Lender other than a
New Lender, the Revolving Commitment Percentage (if any) set forth next to such
Lender’s name in Schedule 1.1(c) hereto under the heading “Revolving Commitment
Percentage” (or, in the case of any Lender that became party to this Agreement
after the Closing Date pursuant to Section 16.3(c) or (d) hereof, the Revolving
Commitment Percentage (if any) of such Lender as set forth in the applicable
Commitment Transfer Supplement), and (b) as to any Lender that is a New Lender,
the Revolving Commitment Percentage provided for in the joinder signed by such
New Lender under Section 2.24(a)(x), in each case as the same may be adjusted
upon any increase in

 

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the Maximum Revolving Advance Amount pursuant to Section 2.24 hereof, any
decrease in the Maximum Revolving Advance Amount pursuant to Section 2.25
hereof, or any assignment by or to such Lender pursuant to Section 16.3(c) or
(d) hereof.

“Revolving Credit Card Advance Rate” shall have the meaning set forth in
Section 2.1(a)(y) hereof.

“Revolving Credit Note” shall mean, collectively, the promissory notes referred
to in Section 2.1(a) hereof.

“Revolving Facility Fee” shall have the meaning set forth in Section 3.3(a)
hereof.

“Revolving Interest Rate” shall mean (a) with respect to Revolving Advances that
are Domestic Rate Loans and Swing Loans, an interest rate per annum equal to the
sum of the Applicable Margin plus the greater of (i) the Alternate Base Rate and
(ii) 0% and (b) with respect to LIBOR Rate Loans, the sum of the Applicable
Margin plus the greater of (i) the LIBOR Rate and (ii) 0%.

“Revolving Inventory Advance Rate” shall have the meaning set forth in
Section 2.1(a)(y) hereof.

“Revolving Loan Cap” shall have the meaning set forth in Section 2.1(a) hereof.

“Revolving Receivables Advance Rate” shall have the meaning set forth in
Section 2.1(a)(y) hereof.

“Sale and Leaseback Transaction” shall mean any sale or other transfer of
property by any Person with the intent to lease such property as lessee.

“Sanctioned Entity” shall mean (a) a country or a government of a country,
(b) an agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, or (d) a Person resident
in or determined to be resident in a country, in each case of clauses
(a) through (d) that is a target of Sanctions, including a target of any country
sanctions program administered and enforced by OFAC.

“Sanctioned Person” shall mean, at any time (a) any Person named on the list of
Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s
consolidated Non-SDN list or any other Sanctions-related list maintained by any
Governmental Authority, (b) a Person or legal entity that is a target of
Sanctions, (c) any Person operating, organized or resident in a Sanctioned
Entity, or (d) any Person directly or indirectly owned or controlled
(individually or in the aggregate) by or acting on behalf of any such Person or
Persons described in clauses (a) through (c) above.

“Sanctions” shall mean, individually and collectively, respectively, any and all
economic sanctions, trade sanctions, financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes anti-terrorism laws and other sanctions
laws, regulations or embargoes, including those imposed, administered or
enforced from time to time by: (a) the United States of America, including those
administered by OFAC, the U.S. Department of State, the U.S. Department of

 

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Commerce, or through any existing or future executive order, (b) the United
Nations Security Council, (c) the European Union or any European Union member
state, (d) Her Majesty’s Treasury of the United Kingdom, or (d) any other
Governmental Body with jurisdiction over any Secured Party, Borrower, or
Guarantor or any of their respective Subsidiaries or Affiliates.    

“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

“Secured Parties” shall mean, collectively, Agent, Issuer, Swing Loan Lender,
Lenders, and any Affiliates of Agent or any Lender to whom any Hedge Liabilities
or Cash Management Liabilities are owed and with each other holder of any of the
Obligations, and the respective successors and assigns of each of them.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Settlement” shall have the meaning set forth in Section 2.6(d) hereof.

“Settlement Date” shall have the meaning set forth in Section 2.6(d) hereof.

“Specified Acquisition Agreement Representations” shall mean such of the
representations and warranties made by or on behalf of Borrowing Agent and its
Subsidiaries (including, without limitation, in respect of such Persons’ assets
and businesses) in the Acquisition Agreement as are material to the interests of
the Lenders, but only to the extent that Holdings or an Affiliate thereof has
the right (without regard to any notice requirement) to terminate its
obligations under the Acquisition Agreement or decline to consummate the
transactions contemplated by the Acquisition Agreement to be consummated
thereunder as of the Closing Date, as a result of a breach of such
representations and warranties in the Acquisition Agreement.

“Specified Representations” shall mean the representations and warranties of
Borrowers and Guarantors contained in the first and second sentences of
Section 5.1, clause (a) of the third sentence of Section 5.1, clause (b)(i) of
the third sentence of Section 5.1 (but only immediately after giving effect to
the Transactions), clause (b)(iii) of the third sentence of Section 5.1 (except
to the extent that any conflict or violation could not reasonably be expected to
have a Material Adverse Effect), clause (i) of the first sentence of
Section 5.2(a), clauses (i) and (ii) of Section 5.8(a) (in each case after
giving effect to the Transactions), Section 5.15, Section 5.16, Section 5.29
(but subject to the last sentence of Section 8.1), and Section 16.18(a).

“Standard & Poor’s” shall mean S&P Global Ratings, a business unit of Standard &
Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and its
successors.

“Store” shall mean any retail store (which may include any Real Property,
fixtures, equipment, inventory and other property related thereto) operated, or
to be operated, by any Borrower or Guarantor.

“Subsidiary” shall mean with respect to any Person a corporation or other entity
of whose Equity Interests having ordinary voting power (other than Equity
Interests having such power only by reason of the happening of a contingency) to
elect a majority of the directors of such corporation, or other Persons
performing similar functions for such entity, are owned, directly or indirectly,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
Intermediate Holdings.

 

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“Subsidiary Stock” shall mean (a) with respect to the Equity Interests issued to
a Borrower or Guarantor by any Subsidiary (other than a Foreign Subsidiary),
100% of such issued and outstanding Equity Interests, and (b) with respect to
any Equity Interests issued to a Borrower or Guarantor by any Foreign Subsidiary
(i) 100% of such issued and outstanding Equity Interests not entitled to vote
(within the meaning of Treas. Reg. Section 1.956(c)(2)) and (ii) 65% (or such
greater percentage that, due to a change in Applicable Law after the date
hereof, (x) could not reasonably be expected to cause the undistributed earnings
of such Foreign Subsidiary as determined for United States federal income tax
purposes to be treated as a deemed dividend to such Borrower or Guarantor and
(y) could not reasonably be expected to cause any material adverse tax
consequences) of such issued and outstanding Equity Interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)).

“Supermajority Lenders” shall mean Lenders (not including Swing Loan Lender (in
its capacity as such Swing Loan Lender) or any Defaulting Lenders) holding at
least sixty-six and two thirds percent (66 2/3%) of either (a) the aggregate of
(x) the Revolving Commitment Amounts of all Lenders (excluding any Defaulting
Lenders), and (y) the FILO Commitment Amounts of all Lenders (excluding any
Defaulting Lenders), or (b) after the termination of all commitments of the
Lenders hereunder, the sum of (x) the outstanding Revolving Advances and FILO
Advances, plus the Maximum Undrawn Amount of all outstanding Letters of Credit;
provided, however, if there are three (3) or fewer Lenders, Supermajority
Lenders shall mean all Lenders (excluding any Defaulting Lender).

“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and
regulations thereunder other than (a) a swap entered into on, or subject to the
rules of, a board of trade designated as a contract market under Section 5 of
the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation
32.3(a).

“Swap Obligation” shall mean any obligation to pay or perform under any
agreement, contract or transaction that constitutes a Swap which is also a
Lender-Provided Interest Rate Hedge, or a Lender-Provided Foreign Currency
Hedge.

“Swing Loan Lender” shall mean PNC, in its capacity as lender of the Swing
Loans.

“Swing Loan Note” shall mean the promissory note described in Section 2.4(a)
hereof.

“Swing Loans” shall mean the Advances made pursuant to Section 2.4 hereof.

“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Body, including any interest, additions to tax or penalties
applicable thereto.

“Term” shall have the meaning set forth in Section 13.1 hereof.

“Termination Event” shall mean: (a) a Reportable ERISA Event with respect to any
Pension Benefit Plan; (b) the withdrawal of any Borrower or any member of the
Controlled

 

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Group from a Multiple Employer Plan 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) the filing of a notice of intent to terminate the
treatment of a plan amendment as a termination under Sections 4041 or 4041A of
ERISA or the commencement of proceedings by the PBGC to terminate a Pension
Benefit Plan or Multiemployer Plan; (d) 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 Benefit Plan or Multiemployer Plan;
(e) the partial or complete withdrawal within the meaning of Section 4203 or
4205 of ERISA, of any Borrower or any member of the Controlled Group from a
Multiemployer Plan or notice that a Multiemployer Plan is in reorganization; or
(f) the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent, upon any Borrower or any member of the
Controlled Group.

“Toxic Substance” shall mean and include any material present on the Real
Property which has been shown to have significant adverse effect on human health
under certain conditions, or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., corresponding state
law, or any other applicable Federal or state laws now in force or hereafter
enacted relating to Toxic Substances. “Toxic Substance” includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

“Transaction Costs” shall mean the fees, costs and expenses payable by any
Borrower or Guarantor in connection with (i) the execution, delivery and
performance of this Agreement, the Other Documents, the Intercompany
Subordinated Loan Documents, the Holdings Loan Documents and the Acquisition
Agreement, or any amendments, waivers or other modifications to any of the
foregoing, or (ii) any Permitted Acquisition or other Permitted Investment.

“Transactions” shall have the meaning set forth in Section 5.5(a) hereof.

“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.

“UK Finco” shall mean Genesis Finco Limited, a corporation organized under the
laws of England and Wales and a wholly owned Subsidiary of Holdings.

“Undrawn Availability” at a particular date shall mean an amount equal to
(a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance
Amount minus the Maximum Undrawn Amount of all outstanding Letters of Credit,
minus (b) the sum of (i) the outstanding amount of Advances (other than the FILO
Advances) plus (ii) all amounts due and owing to any Borrower’s trade creditors
which are outstanding beyond ninety (90) days or more past their due date and
not otherwise on extended terms, plus (iii) fees and expenses incurred in
connection with the Transactions for which Borrowers are liable but which have
not been paid or charged to Borrowers’ Account.

“Unfunded Capital Expenditures” shall mean, as to any Borrower or Guarantor,
without duplication, a Capital Expenditure funded (a) from such Borrower’s or
Guarantor’s internally generated cash flow or (b) with the proceeds of a
Revolving Advance (including, without limitation, a Swing Loan) or a FILO
Advance.

“Uniform Commercial Code” shall have the meaning set forth in Section 1.3
hereof.

 

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“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

“Usage Amount” shall have the meaning set forth in Section 3.3(a) hereof.

“Web Host Services Control Agreement” shall mean that certain tri-party
agreement to be entered into pursuant to the Post-Closing Letter by and among
Borrowers, Guarantors, Rackspace US, Inc. or an Affiliate thereof, and Agent.

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (b) the then outstanding principal
amount of such Indebtedness.

“Write-Down and Conversion Powers” shall mean, with respect to any EEA
Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule.

1.3.    Uniform Commercial Code Terms. All terms used herein and defined in the
Uniform Commercial Code as adopted in the State of New York from time to time
(the “Uniform Commercial Code”) shall have the meaning given therein unless
otherwise defined herein. Without limiting the foregoing, the terms “accounts”,
“chattel paper” (and “electronic chattel paper” and “tangible chattel paper”),
“commercial tort claims”, “deposit accounts”, “documents”, “equipment”,
“financial asset”, “fixtures”, “general intangibles”, “goods”, “instruments”,
“inventory”, “investment property”, “letter-of-credit rights”, “payment
intangibles”, “proceeds”, “promissory note” “securities”, “software” and
“supporting obligations” as and when used in the description of Collateral shall
have the meanings given to such terms in Article 8 or 9 of the Uniform
Commercial Code, as applicable. To the extent the definition of any category or
type of collateral is expanded by any amendment, modification or revision to the
Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.

1.4.    Certain Matters of Construction. The terms “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. All references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any
pronoun used shall be deemed to cover all genders. Wherever appropriate in the
context, terms used herein in the singular also include the plural and vice
versa. All references to Laws shall include any amendments of the same and any
successor Laws. Unless otherwise provided, all references to any instruments or
agreements, including references to this Agreement or any of the Other
Documents, shall include any and all modifications, supplements, waivers or
amendments thereto, any and all restatements, amendment and restatements or

 

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replacements thereof and any and all extensions or renewals thereof, in each
case, in accordance therewith and herewith. All references herein to the time of
day shall mean the time in New York, New York. Unless otherwise provided, all
financial calculations shall be performed with Inventory valued on a first-in,
first-out basis. Whenever the words “including” or “include” shall be used, such
words shall be understood to mean “including, without limitation” or “include,
without limitation”. A Default or an Event of Default shall be deemed to exist
at all times during the period commencing on the date that such Default or Event
of Default occurs to the date on which such Default or Event of Default is
waived in writing pursuant to this Agreement or, in the case of a Default, is
cured within any period of cure expressly provided for in this Agreement; and an
Event of Default shall “continue” or be “continuing” until such Event of Default
has been waived in writing by Required Lenders. Any Lien referred to in this
Agreement or any of the Other Documents as having been created in favor of
Agent, any agreement entered into by Agent pursuant to this Agreement or any of
the Other Documents, any payment made by or to or funds received by Agent
pursuant to or as contemplated by this Agreement or any of the Other Documents,
or any act taken or omitted to be taken by Agent, shall, unless otherwise
expressly provided, be created, entered into, made or received, or taken or
omitted, for the benefit or account of Agent and the other Secured Parties.
Wherever the phrase “to the best of Borrowers’ and Guarantors’ knowledge” or
words of similar import relating to the knowledge or the awareness of any
Borrower or any Guarantor are used in this Agreement or Other Documents, such
phrase shall mean and refer to the actual knowledge of an Authorized Officer of
any Borrower or Guarantor. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition exists. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of a breach of a representation or warranty
hereunder. Any reference herein or in any Other Document to the satisfaction,
repayment, or payment in full of the Obligations shall mean (1) the repayment in
Dollars in full in cash or immediately available funds (or, in the case of
contingent reimbursement obligations with respect to Letters of Credit and Cash
Management Liabilities (other than Interest Rate Hedges) and any other
contingent Obligation, including indemnification obligations, providing cash
collateralization in an amount equal to one hundred and three percent (103%) of
the Maximum Undrawn Amount of all outstanding Letters of Credit (or, in the case
of Cash Management Liabilities (other than Interest Rate Hedges), cash
collateralization in an amount reasonably requested by the applicable provider
of the Cash Management Products and Services giving rise thereto) or other
collateral as may be reasonably requested by Agent of all of the Obligations
(including the payment of any termination amount then applicable (or which would
become applicable as a result of the repayment of the other Obligations) under
Interest Rate Hedges) other than (i) unasserted contingent indemnification
Obligations and expense reimbursement Obligations, (ii) Cash Management
Liabilities (other than Interest Rate Hedges) that, at such time, are allowed by
the applicable provider thereof to remain outstanding without being required to
be repaid or collateralized by cash or other collateral as may be reasonably
requested by Agent, and (iii) any Cash Management Liabilities relating to
Interest Rate Hedges that, at such time, are allowed by the applicable provider
thereof to remain outstanding without being required to be repaid, (2) the

 

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termination of all commitments to lend or provide any other financial
accommodation (including Letters of Credit) hereunder, and (3) the termination
of this Agreement and the Other Documents in accordance with their terms. Any
reference herein or in any Other Document to the Obligations having been
satisfied, repaid, or paid in full shall have a correlative meaning.

 

II.    ADVANCES, PAYMENTS.

2.1.    Revolving Advances; FILO Advances.

(a)    Amount of Revolving Advances. Subject to the terms and conditions set
forth in this Agreement specifically including Section 2.1(c), each Lender,
severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender’s Revolving
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount,
less the outstanding amount of Swing Loans, less the aggregate Maximum Undrawn
Amount of all outstanding Letters of Credit, less Reserves established hereunder
or (y) an amount equal to the sum of:

(i)    up to 85% (the “Revolving Receivables Advance Rate”) of Eligible
Receivables, plus

(ii)    up to 90% (the “Revolving Credit Card Advance Rate”) of Eligible Credit
Card Receivables, plus

(iii)    up to 90% (the “Revolving Inventory Advance Rate”; the Revolving
Inventory Advance Rate, together with the Revolving Receivables Advance Rate and
the Revolving Credit Card Advance Rate, are referred to herein as the “Revolving
Advance Rates”) of the NOLV of Eligible Inventory, provided, that, borrowing
availability based upon Eligible Inventory located in Macy’s Stores pursuant to
this clause (iii), when aggregated with the amount of borrowing availability
based upon Eligible Inventory located in Macy’s Stores pursuant to
Section 2.1(b)(y)(iii), shall not exceed the greater of (1) $50,000,000, or
(2) the lesser of (A) $75,000,000, or (B) 25% of the sum of the Formula Amount
and the FILO Formula Amount, plus

(iv)    up to the Revolving Inventory Advance Rate of the NOLV of Eligible
Domestic In-Transit Inventory, minus

(v)    “the aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit, minus

(vi)    the FILO Push Down Reserve, minus

(vii)    other Reserves established hereunder.

The excess (if any) of (x) the amounts derived from the sum of Sections
2.1(a)(y)(i), (ii), (iii), and (iv) over (y) the amounts derived from the sum of
Sections 2.1(a)(y)(v), (vi), and (vii), at any time and from time to time shall
be referred to as the “Formula Amount”. The Revolving Advances shall be
evidenced by one or more secured promissory notes (collectively, the “Revolving
Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).

 

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Notwithstanding anything to the contrary contained in the foregoing or otherwise
in this Agreement, (x) the outstanding aggregate principal amount of Revolving
Advances (including, without limitation, Swing Loans) at any one time
outstanding shall not exceed an amount equal to the lesser of (i) the Maximum
Revolving Advance Amount less the Maximum Undrawn Amount of all outstanding
Letters of Credit less Reserves established hereunder or (ii) the Formula Amount
(such lesser amount, the “Revolving Loan Cap”), and (y) Agent shall be entitled
in its Permitted Discretion to calculate the NOLV of Inventory on an aggregate
basis for all Inventory or individually for specific categories of Inventory by
type.

(b)    Amount of FILO Advances. Subject to the terms and conditions set forth in
this Agreement specifically including Section 2.1(c), each Lender, severally and
not jointly, will make loans (each such loan, a “FILO Advance”) to Borrowers in
aggregate amounts outstanding at any time equal to such Lender’s FILO Commitment
Percentage of the lesser of (x) the Maximum FILO Advance Amount or (y) an amount
equal to the sum of:

(i)    up to 5% (the “FILO Receivables Advance Rate”) of Eligible Receivables,
plus

(ii)    up to 5% (the “FILO Credit Card Advance Rate”) of Eligible Credit Card
Receivables, plus

(iii)    up to 5% (the “FILO Inventory Advance Rate”; the FILO Inventory Advance
Rate, together with the FILO Receivables Advance Rate and the FILO Credit Card
Advance Rate, are referred to herein as the “FILO Advance Rates”) of the NOLV of
Eligible Inventory, provided, that, borrowing availability based upon Eligible
Inventory located in Macy’s Stores pursuant to this clause (iii), when
aggregated with the amount of borrowing availability based upon Eligible
Inventory located in Macy’s Stores pursuant to Section 2.1(a)(y)(iii), shall not
exceed the greater of (1) $50,000,000, or (2) the lesser of (A) $75,000,000, or
(B) 25% of the sum of the Formula Amount and the FILO Formula Amount; plus

(iv)    up to the FILO Inventory Advance Rate of the NOLV of Eligible Domestic
In-Transit Inventory.

The amounts derived from the sum of Sections 2.1(b)(y)(i), (ii), (iii), and
(iv), at any time and from time to time shall be referred to as the “FILO
Formula Amount”. The FILO Advances shall be evidenced by one or more secured
promissory notes (collectively, the “FILO Note”) substantially in the form
attached hereto as Exhibit 2.1(a). Notwithstanding anything to the contrary
contained in the foregoing or otherwise in this Agreement, (x) the outstanding
aggregate principal amount of FILO Advances at any one time outstanding shall
not exceed an amount equal to the lesser of (i) the Maximum FILO Advance Amount
or (ii) the FILO Formula Amount (such lesser amount, the “FILO Loan Cap”), and
(y) Agent shall be entitled in its Permitted Discretion to calculate the NOLV of
Inventory on an aggregate basis for all Inventory or individually for specific
categories of Inventory by type.

(c)    Discretionary Rights. The amount of Reserves may be increased or
decreased by Agent at any time and from time to time in the exercise of its
Permitted Discretion,

 

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in consultation with the Borrowing Agent. Each Borrower consents to any such
increases or decreases and acknowledges that increasing or imposing Reserves may
limit or restrict Advances requested by Borrowing Agent. The rights of Agent
under this subsection are subject to the provisions of Section 16.2(b).

2.2.    Procedures for Requesting Revolving Advances and FILO Advances;
Procedures for Selection of Applicable Interest Rates for All Advances.

(a)    Borrowing Agent on behalf of any Borrower may notify Agent prior to 3:00
p.m. on a Business Day of a Borrower’s request to incur, on that day, a FILO
Advance or, subject to the terms of Section 2.2(b) hereof, a Revolving Advance
hereunder. Should any amount required to be paid as interest hereunder, or as
fees or other Obligations payable under this Agreement or any Other Document,
become due, the same shall be deemed a request for a FILO Advance or a Revolving
Advance, as applicable, in each case maintained as a Domestic Rate Loan as of
the date such payment is due, in the amount required to pay in full such
interest, fee or other Obligation, and such request shall be irrevocable.

(b)    Notwithstanding the provisions of subsection (a) above, Borrowers shall
not request, and the Lenders shall be under no obligation to fund, any Revolving
Advance unless Borrowers have borrowed the full amount available under the FILO
Loan Cap (to the extent that the FILO Commitments have not been terminated). If
any FILO Advance is prepaid in whole or part pursuant to Section 2.3, 2.8, 2.9,
or 2.20, any Advances to Borrowers thereafter requested shall be FILO Advances
until the aggregate principal amount of FILO Advances outstanding equals the
FILO Loan Cap and thereafter shall be Revolving Advances.

(c)    Notwithstanding the provisions of subsection (a) above, in the event any
Borrower desires to obtain a LIBOR Rate Loan for any Advance (other than a Swing
Loan), Borrowing Agent shall give Agent written notice by no later than 3:00
p.m. on the day which is three (3) Business Days prior to the date such LIBOR
Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing
(which shall be a Business Day), (ii) the type of borrowing and the amount of
such Advance to be borrowed, which amount shall be in a minimum amount of
$1,000,000 and in integral multiples of $500,000 in excess thereof, (iii) the
duration of the first Interest Period therefor, and (iv) whether such Advance is
to be a Revolving Advance or a FILO Advance (and if the former, that the
outstanding principal balance of FILO Advances is not then less than the FILO
Loan Cap). Interest Periods for LIBOR Rate Loans shall be for one, two, three or
six months; provided, that, if an Interest Period would end on a day that is not
a Business Day, it shall end on the next succeeding Business Day unless such day
falls in the next succeeding calendar month in which case the Interest Period
shall end on the next preceding Business Day. Any Interest Period that begins on
the last Business Day of a calendar month (or a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. Upon the occurrence and during the continuance of an Event of
Default, at the election of Agent or at the direction of Required Lenders, no
LIBOR Rate Loan shall be made available to any Borrower. After giving effect to
each requested LIBOR Rate Loan, including those which are converted from a
Domestic Rate Loan under Section 2.2(f), there shall not be outstanding more
than eight (8) LIBOR Rate Loans, in the aggregate.

 

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(d)    Each Interest Period of a LIBOR Rate Loan shall commence on the date such
LIBOR Rate Loan is made and shall end on such date as Borrowing Agent may elect
as set forth in subsection (c) above or subsection (f) below; provided, that,
the exact length of each Interest Period shall be determined in accordance with
the practice of the interbank market for offshore Dollar deposits and no
Interest Period shall end after the last day of the Term.

(e)    Borrowing Agent shall elect the initial Interest Period applicable to a
LIBOR Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(c) or by its notice of conversion given to Agent pursuant to
Section 2.2(f), as the case may be. Borrowing Agent shall elect the duration of
each succeeding Interest Period by giving irrevocable written notice to Agent of
such duration not later than 3:00 p.m. on the day which is three (3) Business
Days prior to the last day of the then current Interest Period applicable to
such LIBOR Rate Loan. If Agent does not receive timely notice of the Interest
Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have
elected to convert such LIBOR Rate Loan to a Domestic Rate Loan subject to
Section 2.2(f) below.

(f)    Provided that no Event of Default shall have occurred and be continuing
with respect to which Agent or the Required Lenders have elected to suspend
Borrowers’ ability to borrow LIBOR Rate Loans, Borrowing Agent may, on the last
Business Day of the then current Interest Period applicable to any outstanding
LIBOR Rate Loan, or on any Business Day with respect to Domestic Rate Loans,
convert any such loan into a loan of another type in the same aggregate
principal amount; provided, that, any conversion of a LIBOR Rate Loan shall be
made only on the last Business Day of the then current Interest Period
applicable to such LIBOR Rate Loan. If Borrowing Agent desires to convert a
loan, Borrowing Agent shall give Agent written notice by no later than 3:00 p.m.
(i) on the day which is three (3) Business Days prior to the date on which such
conversion is to occur with respect to a conversion from a Domestic Rate Loan to
a LIBOR Rate Loan, or (ii) on the day which is one (1) Business Day prior to the
date on which such conversion is to occur (which date shall be the last Business
Day of the Interest Period for the applicable LIBOR Rate Loan) with respect to a
conversion from a LIBOR Rate Loan to a Domestic Rate Loan, specifying, in each
case, the date of such conversion, the loans to be converted and if the
conversion is to a LIBOR Rate Loan, the duration of the first Interest Period
therefor.

(g)    At its option and upon written notice given prior to 3:00 p.m. at least
three (3) Business Days prior to the date of such prepayment, any Borrower may,
subject to Section 2.2(h) hereof, prepay the LIBOR Rate Loans in whole at any
time or in part from time to time with accrued interest on the principal being
prepaid to the date of such repayment. Such Borrower shall specify the date of
prepayment of Advances which are LIBOR Rate Loans and the amount of such
prepayment. In the event that any prepayment of a LIBOR Rate Loan is required or
permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, such Borrower shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(h) hereof.

(h)    Each Borrower shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and all losses or expenses that Agent and
Lenders may sustain or incur as a consequence of any prepayment, conversion of
or any default by any Borrower in the payment of the principal of or interest on
any LIBOR Rate Loan or failure by

 

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any Borrower to complete a borrowing of, a prepayment of or conversion of or to
a LIBOR Rate Loan after notice thereof has been given, including, but not
limited to, any interest payable by Agent or Lenders to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive
absent manifest error; provided, that, Borrowers shall not be required to
compensate Agent or a Lender pursuant to this subsection for any amounts
incurred more than one hundred eighty (180) days prior to the date that Agent or
such Lender, as the case may be, notifies a Borrower of such losses or expenses
and of Agent’s or such Lender’s intention to claim compensation therefor.

(i)    Notwithstanding any other provision hereof, if any Applicable Law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, including without limitation any Change in Law, shall
make it unlawful for Lenders or any Lender (for purposes of this subsection (i),
the term “Lender” shall include any Lender and the office or branch where any
Lender or any Person controlling such Lender makes or maintains any LIBOR Rate
Loans) to make or maintain its LIBOR Rate Loans, the obligation of Lenders (or
such affected Lender) to make LIBOR Rate Loans hereunder shall forthwith be
cancelled and Borrowers shall, if any affected LIBOR Rate Loans are then
outstanding, promptly upon request from Agent, either pay all such affected
LIBOR Rate Loans or convert such affected LIBOR Rate Loans into loans of another
type. If any such payment or conversion of any LIBOR Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such LIBOR Rate
Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts
set forth in clause (h) above. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing
Agent shall be conclusive absent manifest error; provided, that, Borrowers shall
not be required to compensate Agent or a Lender pursuant to this subsection for
any amounts incurred more than one hundred eighty (180) days prior to the date
that Agent or such Lender, as the case may be, notifies a Borrower of such
losses or expenses and of Agent’s or such Lender’s intention to claim
compensation therefor.

(j)    Anything to the contrary contained herein notwithstanding, neither any
Agent nor any Lender, nor any of their Participants, is required actually to
acquire LIBOR deposits to fund or otherwise match fund any Obligation as to
which interest accrues based on the LIBOR Rate. The provisions set forth herein
shall apply as if each Lender or its Participants had match funded any
Obligation as to which interest is accruing based on the LIBOR Rate by acquiring
LIBOR deposits for each Interest Period in the amount of the LIBOR Rate Loans.

2.3.    Voluntary Prepayments.

(a)    Borrowers may, upon notice from Borrowing Agent to Agent, at any time or
from time to time, and subject to the provisions of Section 2.3(b) below,
voluntarily prepay Advances in whole or in part without premium or penalty;
provided, that, (i) such notice must be received by Agent not later than 3:00
p.m. (A) three Business Days prior to any date of prepayment of LIBOR Rate Loans
and (B) on the date of prepayment of Domestic Rate Loans; and (ii) any
prepayment of LIBOR Rate Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $500,000 in excess thereof, or, if less, the entire principal
amount thereof then outstanding. Each such notice shall specify (i) the date and
amount of such prepayment, (ii) whether such Advances to be prepaid are
(x) Revolving Advances or FILO Advances, and (y)

 

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LIBOR Rate Loans or Domestic Rate Loans, and (iii) if LIBOR Rate Loans, the
Interest Period(s) thereof. Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s Revolving
Commitment Percentage or FILO Commitment Percentage, as applicable, of such
prepayment. If such notice is given by Borrowing Agent, Borrowers shall make
such prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein; provided, that, such notice may be
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by Borrowers (by notice to Agent on or prior to the
specified effective date) if such condition is not satisfied. Any prepayment of
a LIBOR Rate Loan shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to
Section 2.2(i). Each such prepayment shall be applied to the Revolving Advances
or FILO Advances, as applicable, of the Lenders in accordance with their
respective Revolving Commitment Percentages or FILO Commitment Percentages, as
applicable.

(b)    Notwithstanding the provisions of Section 2.3(a), Borrowers may
voluntarily prepay the FILO Advances in whole or in part, only if (i) the
prepayment date therefor is after the first anniversary of the Closing Date, and
(ii) the Payment Conditions have been satisfied.

2.4.    Swing Loans.

(a)    Subject to the terms and conditions set forth in this Agreement, and in
order to minimize the transfer of funds between Lenders and Agent for
administrative convenience, Agent, Lenders holding Revolving Commitments and
Swing Loan Lender agree that in order to facilitate the administration of this
Agreement, Swing Loan Lender may, at its election and option made in its sole
discretion cancelable at any time for any reason whatsoever, make swing loan
advances (“Swing Loans”) available to Borrowers as provided for in this
Section 2.4 at any time or from time to time after the date hereof to, but not
including, the expiration of the Term, in an aggregate principal amount up to
but not in excess of the Maximum Swing Loan Advance Amount; provided, that, the
outstanding aggregate principal amount of Revolving Advances (including, without
limitation, Swing Loans) at any one time outstanding shall not exceed an amount
equal to the lesser of (i) the Maximum Revolving Advance Amount less the Maximum
Undrawn Amount of all outstanding Letters of Credit and (ii) the Formula Amount.
All Swing Loans shall be Domestic Rate Loans only. Borrowers may borrow (at the
option and election of Swing Loan Lender), repay and reborrow (at the option and
election of Swing Loan Lender) Swing Loans and Swing Loan Lender may make Swing
Loans as provided in this Section 2.4 during the period between Settlement
Dates. All Swing Loans shall, at the request of the Swing Loan Lender, be
evidenced by a secured promissory note (the “Swing Loan Note”) substantially in
the form attached hereto as Exhibit 2.4(a). Swing Loan Lender’s agreement to
make Swing Loans under this Agreement is cancelable at any time for any reason
whatsoever and the making of Swing Loans by Swing Loan Lender from time to time
shall not create any duty or obligation, or establish any course of conduct,
pursuant to which Swing Loan Lender shall thereafter be obligated to make Swing
Loans in the future.

(b)    Upon either (i) any request by Borrowing Agent for a Revolving Advance
made pursuant to Section 2.2(a) hereof (other than any such request for a LIBOR
Rate Loan) or (ii) the occurrence of any deemed request by Borrowers for a
Revolving Advance pursuant to the

 

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provisions of Section 2.2(a) hereof, Swing Loan Lender may elect, in its sole
discretion, to have such request or deemed request treated as a request for a
Swing Loan, and may advance same day funds to Borrowers as a Swing Loan;
provided, that, notwithstanding anything to the contrary provided for herein,
Swing Loan Lender may not make Swing Loans if Swing Loan Lender has been
notified by Agent or by Required Lenders that one or more of the applicable
conditions set forth in Section 8.2 of this Agreement have not been satisfied or
the Revolving Commitments have been terminated for any reason.

(c)    Upon the making of a Swing Loan (whether before or after the occurrence
of a Default or an Event of Default and regardless of whether a Settlement has
been requested with respect to such Swing Loan), each Lender holding a Revolving
Commitment shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from Swing Loan Lender, without
recourse or warranty, an undivided interest and participation in such Swing Loan
in proportion to its Revolving Commitment Percentage. Swing Loan Lender or Agent
may, at any time, require the Lenders holding Revolving Commitments to fund such
participations by means of a Settlement as provided for in Section 2.6(d) below.
From and after the date, if any, on which any Lender holding a Revolving
Commitment is required to fund, and funds, its participation in any Swing Loans
purchased hereunder, Agent shall promptly distribute to such Lender its
Revolving Commitment Percentage of all payments of principal and interest and
all proceeds of Collateral received by Agent in respect of such Swing Loan;
provided, that, no Lender holding a Revolving Commitment shall be obligated in
any event to make Revolving Advances in an amount in excess of its Revolving
Commitment Amount minus its Participation Commitment (taking into account any
reallocations under Section 2.22) of the Maximum Undrawn Amount of all
outstanding Letters of Credit.

2.5.    Disbursement of Advance Proceeds. All Advances shall be disbursed from
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers’ Account on Agent’s books. The proceeds of each
Revolving Advance (including, without limitation, any Swing Loan) or FILO
Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have
been requested by any Borrower under Section 2.2(a), 2.6(b) or 2.14 hereof
shall, (i) with respect to requested Revolving Advances or FILO Advances, to the
extent Lenders make such Revolving Advances or FILO Advances, as applicable, in
accordance with Section 2.2(a), 2.6(b) or 2.14 hereof, and with respect to Swing
Loans made upon any request or deemed request by Borrowing Agent for a Revolving
Advance to the extent Swing Loan Lender makes such Swing Loan in accordance with
Section 2.4(b) hereof, be made available to the applicable Borrower on the day
so requested by way of credit to such Borrower’s operating account at PNC, or
such other bank as Borrowing Agent may designate following notification to
Agent, in immediately available federal funds or other immediately available
funds, or (ii) with respect to Revolving Advances or FILO Advances deemed to
have been requested by any Borrower or Swing Loans made upon any deemed request
for a Revolving Advance or a FILO Advance by any Borrower, be disbursed to Agent
to be applied to the outstanding Obligations giving rise to such deemed request.
During the Term, Borrowers may use the Revolving Advances (including, without
limitation, Swing Loans) and FILO Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof.

 

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2.6.    Making and Settlement of Advances.

(a)    Each borrowing of Revolving Advances shall be advanced according to the
applicable Revolving Commitment Percentages of Lenders holding the Revolving
Commitments (subject to any contrary terms of Section 2.22). Each borrowing of
FILO Advances shall be advanced according to the applicable FILO Commitment
Percentages of Lenders holding the FILO Commitments (subject to any contrary
terms of Section 2.22). Each borrowing of Swing Loans shall be advanced by Swing
Loan Lender alone.

(b)    Promptly after receipt by Agent of a request or a deemed request for a
Revolving Advance or a FILO Advance pursuant to Section 2.2(a) and, with respect
to Revolving Advances, to the extent Agent elects not to provide a Swing Loan or
the making of a Swing Loan would result in the aggregate amount of all
outstanding Swing Loans exceeding the maximum amount permitted in
Section 2.4(a), Agent shall notify Lenders holding the Revolving Commitments or
Lenders holding the FILO Commitments, as applicable, of its receipt of such
request specifying the information provided by Borrowing Agent and the
apportionment among Lenders of the requested Revolving Advance or FILO Advance,
as applicable, as determined by Agent in accordance with the terms hereof. Each
Lender shall remit the principal amount of each Revolving Advance or FILO
Advance, as applicable, to Agent such that Agent is able to, and Agent shall, to
the extent the applicable Lenders have made funds available to it for such
purpose and subject to Section 8.2, fund such Revolving Advance or FILO Advance,
as applicable, to Borrowers in U.S. Dollars and immediately available funds at
the Payment Office prior to the close of business, on the applicable borrowing
date; provided, that, if any applicable Lender fails to remit such funds to
Agent in a timely manner, Agent may elect in its sole discretion to fund with
its own funds the Revolving Advance or FILO Advance, as applicable, of such
Lender on such borrowing date, and such Lender shall be subject to the repayment
obligation in Section 2.6(c) hereof.

(c)    Unless Agent shall have been notified by telephone, confirmed in writing,
by any Lender holding a Revolving Commitment or any Lender holding a FILO
Commitment, as applicable, that such Lender will not make the amount which would
constitute its applicable Revolving Commitment Percentage of the requested
Revolving Advance or its applicable FILO Commitment Percentage of the requested
FILO Advance, as applicable, available to Agent, Agent may (but shall not be
obligated to) assume that such Lender has made such amount available to Agent on
such date in accordance with Section 2.6(b) and may, in reliance upon such
assumption, make available to Borrowers a corresponding amount. In such event,
if a Lender has not in fact made its applicable Revolving Commitment Percentage
of the requested Revolving Advance or its applicable FILO Commitment Percentage
of the requested FILO Advance, as applicable, available to Agent, then the
applicable Lender and Borrowers severally agree to pay to Agent on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to Borrowers through but excluding the date
of payment to Agent, at (i) in the case of a payment to be made by such Lender,
the greater of (A) (x) the daily average Federal Funds Effective Rate (computed
on the basis of a year of 360 days) during such period as quoted by Agent, times
(y) such amount or (B) a rate determined by Agent in accordance with banking
industry rules on interbank compensation, and (ii) in the case of a payment to
be made by Borrowers, the Revolving Interest Rate for Revolving Advances that
are Domestic Rate Loans or the FILO Interest Rate for FILO Advances that are

 

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Domestic Rate Loans, as applicable. If such Lender pays its share of the
applicable Revolving Advance or FILO Advance, as applicable, to Agent, then the
amount so paid shall constitute such Lender’s Revolving Advance or FILO Advance,
as applicable. Any payment by Borrowers shall be without prejudice to any claim
Borrowers may have against a Lender holding a Revolving Commitment or a FILO
Commitment that shall have failed to make such payment to Agent. A certificate
of Agent submitted to any Lender or Borrower with respect to any amounts owing
under this paragraph (c) shall be conclusive, in the absence of manifest error.

(d)    Agent, on behalf of Swing Loan Lender, shall demand settlement (a
“Settlement”) of all or any Swing Loans with Lenders holding the Revolving
Commitments on at least a weekly basis, or on any more frequent date that Agent
elects or that Swing Loan Lender at its option exercisable for any reason
whatsoever may request, by notifying Lenders holding the Revolving Commitments
of such requested Settlement by facsimile, telephonic or electronic transmission
no later than 3:00 p.m. on the date of such requested Settlement (the
“Settlement Date”). Subject to any contrary provisions of Section 2.22, each
Lender holding a Revolving Commitment shall transfer the amount of such Lender’s
Revolving Commitment Percentage of the outstanding principal amount (plus
interest accrued thereon to the extent requested by Agent) of the applicable
Swing Loan with respect to which Settlement is requested by Agent, to such
account of Agent as Agent may designate not later than 5:00 p.m. on such
Settlement Date if requested by Agent by 3:00 p.m., otherwise not later than
5:00 p.m. on the next Business Day. Settlements may occur at any time
notwithstanding that the conditions precedent to making Revolving Advances or
FILO Advances set forth in Section 8.2 have not been satisfied or the Revolving
Commitments or FILO Commitments shall have otherwise been terminated at such
time. All amounts so transferred to Agent shall be applied against the amount of
outstanding Swing Loans and, when so applied shall constitute Revolving Advances
of such Lenders accruing interest as Domestic Rate Loans. If any such amount is
not transferred to Agent by any Lender holding a Revolving Commitment on such
Settlement Date, Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon as specified in Section 2.6(c).

(e)    If any Lender or Participant (a “Benefited Lender”) shall at any time
receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such Benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under Applicable Law, that each
Lender so purchasing a portion of another Lender’s Advances may exercise all
rights of payment (including rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion, and the
obligations owing to each such purchasing Lender in respect of such
participation and such purchased portion of any other Lender’s Advances shall be
part of the Obligations secured by the Collateral.

 

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2.7.    Maximum Advances. The aggregate balance of Revolving Advances
(including, without limitation, Swing Loans) outstanding at any time shall not
exceed the Revolving Loan Cap. The aggregate balance of FILO Advances
outstanding at any time shall not exceed the FILO Loan Cap. The aggregate
balance of Advances outstanding at any time shall not exceed the sum of the
Revolving Loan Cap and the FILO Loan Cap.

2.8.    Manner and Repayment of Advances.

(a)    The Revolving Advances (including, without limitation, Swing Loans) and
the FILO Advances shall be due and payable in full on the last day of the Term
subject to earlier prepayment as herein provided. Notwithstanding the foregoing,
all Advances shall be subject to earlier repayment upon (x) acceleration upon
the occurrence and during the continuance of an Event of Default under this
Agreement or (y) termination of this Agreement. Each payment (including each
prepayment) by any Borrower on account of the principal of and interest on the
Advances shall be applied, (i) first, to the outstanding Swing Loans, (ii)
second, pro rata according to the applicable Revolving Commitment Percentages of
Lenders, to the outstanding Revolving Advances (including cash collateralization
of all Obligations relating to any outstanding Letters of Credit in accordance
with the provisions of Section 3.2(b); provided, however, that if no Default or
Event of Default has occurred and is continuing, such repayments shall be
applied to cash collateralize any Obligations related to outstanding Letters of
Credit last) (subject to any contrary provisions of Section 2.22), and (iii)
third, pro rata according to the applicable FILO Commitment Percentages of
Lenders, to the outstanding FILO Advances (subject to any contrary provisions of
Section 2.22).

(b)    Each Borrower recognizes that the amounts evidenced by checks, notes,
drafts or any other items of payment relating to and/or proceeds of Collateral
may not be collectible by Agent on the date received by Agent. Agent shall
conditionally credit Borrowers’ Account for each item of payment on the next
Business Day after the Business Day on which such item of payment is received by
Agent (and the Business Day on which each such item of payment is so credited
shall be referred to, with respect to such item, as the “Application Date”).
Agent is not, however, required to credit Borrowers’ Account for the amount of
any item of payment which is unsatisfactory to Agent and Agent may charge
Borrowers’ Account for the amount of any item of payment which is returned, for
any reason whatsoever, to Agent unpaid. Subject to the foregoing, Borrowers
agree that for purposes of computing the interest charges under this Agreement,
each item of payment received by Agent shall be deemed applied by Agent on
account of the Obligations on its respective Application Date. Borrowers further
agree that there is a monthly float charge payable to Agent for Agent’s sole
benefit, in an amount equal to (y) the face amount of all items of payment
received during the prior month (including items of payment received by Agent as
a wire transfer or electronic depository check) multiplied by (z) the Revolving
Interest Rate with respect to Domestic Rate Loans for one (1) Business Day. All
proceeds received by Agent shall be applied to the Obligations in accordance
with Section 4.8(h).

 

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(c)    All payments of principal, interest and other amounts payable hereunder,
or under any of the Other Documents shall be made to Agent at the Payment Office
not later than 1:00 p.m. on the due date therefor in Dollars in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment of any and all Obligations due and owing hereunder by
charging Borrowers’ Account or by making Advances as provided in Section 2.2
hereof.

(d)    Except as expressly provided herein, all payments (including prepayments)
to be made by any Borrower on account of principal, interest, fees and other
amounts payable hereunder shall be made without deduction, setoff or
counterclaim.

2.9.    Repayment of Excess Advances. If at any time the aggregate balance of
outstanding Revolving Advances (including, without limitation, Swing Loans),
FILO Advances, and/or Advances taken as a whole exceeds the maximum amount of
such type of Advances and/or Advances taken as a whole (as applicable) permitted
hereunder (other than as a result of a Protective Advance), such excess Advances
shall be immediately due and payable without the necessity of any demand, at the
Payment Office, whether or not a Default or an Event of Default has occurred.

2.10.    Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrowers’ Account”) in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent or Lenders and the date and amount of each payment in respect thereof;
provided, however, the failure by Agent to record the date and amount of any
Advance shall not adversely affect Agent or any Lender. Each month, Agent shall
send to Borrowing Agent a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and other transactions
between Agent, Lenders and Borrowers during such month. The monthly statements
shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers
unless Agent receives a written statement of Borrowers’ specific exceptions
thereto within sixty (60) days after such statement is received by Borrowing
Agent. The records of Agent with respect to Borrowers’ Account shall be
conclusive evidence absent manifest error of the amounts of Advances and other
charges thereto and of payments applicable thereto.

2.11.    Letters of Credit.

(a)    Subject to the terms and conditions hereof, Issuer shall issue or cause
the issuance of standby and/or trade letters of credit denominated in Dollars
(“Letters of Credit”) for the account of any Borrower or any Subsidiary
(provided, that, any Letter of Credit issued for the benefit of any Subsidiary
that is not a Borrower shall be issued naming a Borrower as the account party on
any such Letter of Credit but such Letter of Credit may contain a statement that
it is being issued for the benefit of such Subsidiary) except to the extent that
the issuance thereof would then cause the sum of (i) the outstanding Revolving
Advances (including, without limitation, Swing Loans), plus (ii) the Maximum
Undrawn Amount of all outstanding Letters of Credit, plus (iii) the Maximum
Undrawn Amount of the Letter of Credit to be issued to exceed the Revolving Loan
Cap. The Maximum Undrawn Amount of all outstanding Letters of Credit shall not
exceed in the aggregate at any time the Letter of Credit Sublimit. All
disbursements or

 

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payments related to Letters of Credit shall be deemed to be Domestic Rate Loans
consisting of Revolving Advances and shall bear interest at the Revolving
Interest Rate for Domestic Rate Loans. Letters of Credit that have not been
drawn upon shall not bear interest (but fees shall accrue in respect of
outstanding Letters of Credit as provided in Section 3.2 hereof).

(b)    Notwithstanding any provision of this Agreement, Issuer shall not be
under any obligation to issue any Letter of Credit if (i) any order, judgment or
decree of any Governmental Body or arbitrator shall by its terms purport to
enjoin or restrain Issuer from issuing any Letter of Credit, or any Law
applicable to Issuer or any request or directive (whether or not having the
force of law) from any Governmental Body with jurisdiction over Issuer shall
prohibit, or request that Issuer refrain from, the issuance of letters of credit
generally or the Letter of Credit in particular or shall impose upon Issuer with
respect to the Letter of Credit any restriction, reserve or capital requirement
(for which Issuer is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date, and which Issuer in good faith
deems material to it, or (ii) the issuance of the Letter of Credit would violate
one or more policies of Issuer applicable to letters of credit generally.

(c)    Notwithstanding that a Letter of Credit issued or outstanding hereunder
is in support of any obligations of a Subsidiary, Borrowers shall be obligated
to reimburse Issuer hereunder for any and all drawings under such Letter of
Credit. Borrowers hereby acknowledge that the issuance of Letters of Credit for
the benefit of any Subsidiary inures to the benefit of Borrowers, and that
Borrowers’ business derives substantial benefits from the business of such
Subsidiary.

2.12.    Issuance of Letters of Credit.

(a)    Borrowing Agent, on behalf of any Borrower, may request Issuer to issue
or cause the issuance of a Letter of Credit by delivering to Issuer, with a copy
to Agent at the Payment Office, prior to 1:00 p.m., at least three (3) Business
Days (or such shorter period as Issuer may agree) prior to the proposed date of
issuance, such Issuer’s form of Letter of Credit Application (the “Letter of
Credit Application”) completed to the satisfaction of Agent and Issuer, together
with such other certificates, documents and other papers and information as
Agent or Issuer may reasonably request. Issuer shall not issue any requested
Letter of Credit if such Issuer has received notice from Agent or any Lender
that one or more of the applicable conditions set forth in Section 8.2 of this
Agreement have not been satisfied or the commitments of Lenders to make
Revolving Advances hereunder have been terminated for any reason.

(b)    Each Letter of Credit shall, among other things, (i) provide for the
payment of sight drafts, other written demands for payment, or acceptances of
usance drafts when presented for honor thereunder in accordance with the terms
thereof and when accompanied by the documents described therein and (ii) have an
initial expiry date not later than twelve (12) months after such Letter of
Credit’s date of issuance and in no event later than the last day of the Term.
Borrowers understand and agree that Issuer is not required to extend the expiry
date of any Letter of Credit for any reason, but that at Borrowers’ request and
in the sole discretion of Issuer, Issuer may agree to issue a Letter of Credit
with an “automatic amendment” provision to extend the expiry date thereof to
twelve (12) months following the

 

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then-current expiry date. With respect to any such Letter of Credit containing
an “automatic amendment” provision, Issuer, in its sole and absolute discretion,
subject to the terms of such Letter of Credit, may give notice of non-renewal of
such Letter of Credit at any time prior to the then-current expiry date, and, if
Borrowers do not at any time want the then-current expiry date of such Letter of
Credit to be extended, Borrowers will so notify Agent and Issuer at least thirty
(30) calendar days before Issuer is required to notify the beneficiary of such
Letter of Credit or any advising bank of such non-extension pursuant to the
terms of such Letter of Credit. As a condition to renewal of any such Letter of
Credit past the last day of the Term, Issuer may require, and Borrowers shall
provide upon request of Issuer (which request may be upon such renewal or at
such later date, but in any event on or prior to the last day of the Term), cash
collateral in an amount equal to one hundred and three percent (103%) of the
Maximum Undrawn Amount of such Letter of Credit, in accordance with
Section 3.2(b).

(c)    Each standby Letter of Credit shall be subject either to the Uniform
Customs and Practice for Documentary Credits as most recently published by the
International Chamber of Commerce at the time a Letter of Credit is issued (the
“UCP”) or the International Standby Practices (International Chamber of Commerce
Publication Number 590) (the “ISP98 Rules”), or any subsequent revision thereof
at the time a standby Letter of Credit is issued, as determined by Issuer, and
each trade Letter of Credit shall be subject to the UCP. In addition, no trade
Letter of Credit may permit the presentation of an ocean bill of lading that
includes a condition that the original bill of lading is not required to claim
the goods shipped thereunder.

(d)    Agent shall use its reasonable efforts to notify Lenders of the request
by Borrowing Agent for a Letter of Credit hereunder. Any Issuer (other than
Agent) shall notify Agent in writing no later than the Business Day prior to the
Business Day on which such Issuer issues any Letter of Credit. In addition, each
Issuer (other than Agent) shall, on the first Business Day of each week, submit
to Agent a report detailing the daily undrawn amount of each Letter of Credit
issued by such Issuer during the prior calendar week.

(e)    Each party hereto hereby acknowledges and agrees that all Existing
Letters of Credit shall constitute Letters of Credit under this Agreement on and
after the Closing Date with the same effect as if such Existing Letters of
Credit were issued by Issuer at the request of Borrowers on the Closing Date.

2.13.    Requirements For Issuance of Letters of Credit.

(a)    Borrowing Agent shall authorize and direct any Issuer to name the
applicable Borrower as the “Applicant” or “Account Party” of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent
shall authorize and direct such Issuer to deliver to Agent all instruments,
documents, and other writings and property received by such Issuer pursuant to
such Letter of Credit and to accept and rely upon Agent’s instructions and
agreements with respect to all matters arising in connection with such Letter of
Credit, and the application therefor.

(b)    In connection with all trade Letters of Credit issued or caused to be
issued by Issuer under this Agreement, each Borrower hereby appoints Issuer, or
its designee, as its attorney, with full power and authority if an Event of
Default shall have occurred and be

 

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continuing: (i) to sign and/or endorse such Borrower’s name upon any warehouse
or other receipts, and acceptances; (ii) to sign such Borrower’s name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department (“Customs”) in the name of such Borrower or Issuer or Issuer’s
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower’s
name or Issuer’s name, or in the name of Issuer’s designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. This power, being coupled with an interest, is irrevocable
as long as any trade Letters of Credit remain outstanding. Neither Agent, Issuer
nor their attorneys will be liable for any acts or omissions nor for any error
of judgment or mistakes of fact or law, except for Agent’s, Issuer’s or their
respective attorney’s gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final non-appealable judgment).

2.14.    Disbursements, Reimbursement.

(a)    Immediately upon the issuance of each Letter of Credit, each Lender
holding a Revolving Commitment shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from Issuer a participation in each Letter
of Credit and each drawing thereunder in an amount equal to such Lender’s
Revolving Commitment Percentage of the Maximum Undrawn Amount of such Letter of
Credit (as in effect from time to time) and the amount of such drawing,
respectively.

(b)    In the event of any request for a drawing under a Letter of Credit by the
beneficiary or transferee thereof, Issuer will promptly notify Agent and
Borrowing Agent. Provided that Borrowing Agent shall have received such notice,
Borrowers shall reimburse (such obligation to reimburse Issuer shall sometimes
be referred to as a “Reimbursement Obligation”) Issuer prior to 12:00 Noon, on
the first Business Day immediately following each date that an amount is paid by
Issuer under any Letter of Credit (each such date, a “Drawing Date”) in an
amount equal to the amount so paid by Issuer. In the event Borrowers fail to
reimburse Issuer for the full amount of any drawing under any Letter of Credit
by 12:00 Noon, on the first Business Day immediately following the Drawing Date
(regardless of whether Borrowing Agent shall have received notice), Issuer will
promptly notify Agent and each Lender holding a Revolving Commitment thereof,
and Borrowers shall be automatically deemed to have requested that a Revolving
Advance maintained as a Domestic Rate Loan be made by Lenders to be disbursed on
the first Business Day immediately following the Drawing Date under such Letter
of Credit, and Lenders holding the Revolving Commitments shall be
unconditionally obligated to fund such Revolving Advance (all whether or not the
conditions specified in Section 8.2 are then satisfied or the commitments of
Lenders to make Revolving Advances hereunder have been terminated for any
reason) as provided for in Section 2.14(c) immediately below. Any notice given
by Issuer pursuant to this Section 2.14(b) may be oral if promptly confirmed in
writing; provided, that, the lack of such a confirmation shall not affect the
conclusiveness or binding effect of such notice.

(c)    Each Lender holding a Revolving Commitment shall upon any notice pursuant
to Section 2.14(b) make available to Issuer through Agent at the Payment Office
an amount in immediately available funds equal to its Revolving Commitment
Percentage (subject to any contrary provisions of Section 2.22) of the amount of
the applicable drawing, whereupon

 

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the participating Lenders shall (subject to Section 2.14(d)) each be deemed to
have made a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in
that amount. If any Lender holding a Revolving Commitment so notified fails to
make available to Agent, for the benefit of Issuer, the amount of such Lender’s
Revolving Commitment Percentage of such amount by 2:00 p.m. on the first
Business Day immediately following the Drawing Date, then interest shall accrue
on such Lender’s obligation to make such payment, from the first Business Day
immediately following the Drawing Date to the date on which such Lender makes
such payment (i) at a rate per annum equal to the Federal Funds Effective Rate
during the first three (3) days following the first Business Day immediately
following the Drawing Date and (ii) at a rate per annum equal to the rate
applicable to Revolving Advances maintained as a Domestic Rate Loan on and after
the fourth day following the first Business Day immediately following the
Drawing Date. Agent and Issuer will promptly give notice of the occurrence of
the Drawing Date, but failure of Agent or Issuer to give any such notice on the
Drawing Date or in sufficient time to enable any Lender holding a Revolving
Commitment to effect such payment on the first Business Day immediately
following such Drawing Date shall not relieve such Lender from its obligations
under this Section 2.14(c); provided, that, such Lender shall not be obligated
to pay interest as provided in Section 2.14(c)(i) and (ii) until and commencing
from the date of receipt of notice from Agent or Issuer of a drawing.

(d)    With respect to any unreimbursed drawing that is not converted into a
Revolving Advance maintained as a Domestic Rate Loan to Borrowers in whole or in
part as contemplated by Section 2.14(b), because of Borrowers’ failure to
satisfy the conditions set forth in Section 8.2 hereof (other than any notice
requirements) or for any other reason, Borrowers shall be deemed to have
incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the
amount of such drawing. Such Letter of Credit Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the rate per annum
applicable to a Revolving Advance maintained as a Domestic Rate Loan. Each
applicable Lender’s payment to Agent pursuant to Section 2.14(c) shall be deemed
to be a payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a “Participation Advance” from such Lender in
satisfaction of its Participation Commitment in respect of the applicable Letter
of Credit under this Section 2.14.

(e)    Each applicable Lender’s Participation Commitment in respect of the
Letters of Credit shall continue until the last to occur of any of the following
events: (x) Issuer ceases to be obligated to issue or cause to be issued Letters
of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains
outstanding and uncancelled; and (z) all Persons (other than Borrowers) have
been fully reimbursed for all payments made under or relating to Letters of
Credit.

2.15.    Repayment of Participation Advances.

(a)    Upon (and only upon) receipt by Agent for the account of Issuer of
immediately available funds from Borrowers (i) in reimbursement of any payment
made by Issuer or Agent under the Letter of Credit with respect to which any
Lender has made a Participation Advance to Agent, or (ii) in payment of interest
on such a payment made by Issuer or Agent under such a Letter of Credit, Agent
will pay to each Lender holding a Revolving Commitment, in the same funds as
those received by Agent, the amount of such Lender’s

 

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Revolving Commitment Percentage of such funds, except Agent shall retain the
amount of the Revolving Commitment Percentage of such funds of any Lender
holding a Revolving Commitment that did not make a Participation Advance in
respect of such payment by Issuer or Agent (and, to the extent that any of the
other Lender(s) holding a Revolving Commitment have funded any portion of such
Defaulting Lender’s Participation Advance in accordance with the provisions of
Section 2.22, Agent will pay over to such Non-Defaulting Lenders a pro rata
portion of the funds so withheld from such Defaulting Lender).

(b)    If Issuer or Agent is required at any time to return to any Borrower, or
to a trustee, receiver, liquidator, custodian, or any official in any insolvency
proceeding, any portion of the payments made by Borrowers or Guarantors to
Issuer or Agent pursuant to Section 2.15(a) in reimbursement of a payment made
under any Letter of Credit or interest or fee thereon, each applicable Lender
shall, on demand of Agent, forthwith return to Issuer or Agent the amount of its
Revolving Commitment Percentage of any amounts so returned by Issuer or Agent
plus interest at the Federal Funds Effective Rate.

2.16.    Documentation. Each Borrower agrees to be bound by the terms of the
Letter of Credit Application and by Issuer’s reasonable, good faith
interpretations of any Letter of Credit issued on behalf of such Borrower and by
Issuer’s written regulations and customary practices relating to letters of
credit, though Issuer’s interpretations may be different from such Borrower’s
own. In the event of a conflict between the Letter of Credit Application and
this Agreement, this Agreement shall govern. It is understood and agreed that,
except in the case of gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final non-appealable judgment), Issuer
shall not be liable for any error, negligence and/or mistakes, whether of
omission or commission, in following Borrowing Agent’s or any Borrower’s
instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.

2.17.    Determination to Honor Drawing Request. In determining whether to honor
any request for drawing under any Letter of Credit by the beneficiary thereof,
Issuer shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit and that any other drawing condition appearing on the face of
such Letter of Credit has been satisfied in the manner so set forth.

2.18.    Nature of Participation and Reimbursement Obligations. The obligation
of each Lender holding a Revolving Commitment in accordance with this Agreement
to make the Revolving Advances or Participation Advances, as applicable, as a
result of a drawing under a Letter of Credit, and the obligations of Borrowers
to reimburse Issuer upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Section 2.18 under all circumstances, including the
following circumstances:

(i)    any set-off, counterclaim, recoupment, defense or other right which such
Lender or any Borrower, as the case may be, may have against Issuer, Agent, any
Borrower or any Lender, as the case may be, or any other Person for any reason
whatsoever;

 

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(ii)    the failure of any Borrower or any other Person to comply, in connection
with a Letter of Credit Borrowing, with the conditions set forth in this
Agreement for the making of a Revolving Advance, it being acknowledged that such
conditions are not required for the making of a Letter of Credit Borrowing and
the obligation of Lenders to make Participation Advances under Section 2.14;

(iii)    any lack of validity or enforceability of any Letter of Credit;

(iv)    any claim of breach of warranty that might be made by any Borrower,
Agent, Issuer or any Lender against the beneficiary of a Letter of Credit, or
the existence of any claim, set-off, recoupment, counterclaim, cross-claim,
defense or other right which any Borrower, Agent, Issuer or any Lender may have
at any time against a beneficiary, any successor beneficiary or any transferee
of any Letter of Credit or assignee of the proceeds thereof (or any Persons for
whom any such transferee or assignee may be acting), Issuer, Agent or any Lender
or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between any Borrower or any Subsidiaries of such Borrower and the
beneficiary for which any Letter of Credit was procured);

(v)    the lack of power or authority of any signer of (or any defect in or
forgery of any signature or endorsement on) or the form of or lack of validity,
sufficiency, accuracy, enforceability or genuineness of any draft, demand,
instrument, certificate or other document presented under or in connection with
any Letter of Credit, or any fraud or alleged fraud in connection with any
Letter of Credit, or the transport of any property or provision of services
relating to a Letter of Credit, in each case even if Issuer or any of Issuer’s
Affiliates has been notified thereof;

(vi)    payment by Issuer under any Letter of Credit against presentation of a
demand, draft or certificate or other document which is forged or does not fully
comply with the terms of such Letter of Credit (provided, that, the foregoing
shall not excuse Issuer from any obligation under the terms of any applicable
Letter of Credit to require the presentation of documents that on their face
appear to satisfy any applicable requirements for drawing under such Letter of
Credit prior to honoring or paying any such draw);

(vii)    the solvency of, or any acts or omissions by, any beneficiary of any
Letter of Credit, or any other Person having a role in any transaction or
obligation relating to a Letter of Credit, or the existence, nature, quality,
quantity, condition, value or other characteristic of any property or services
relating to a Letter of Credit;

(viii)    any failure by Issuer or any of Issuer’s Affiliates to issue any
Letter of Credit in the form requested by Borrowing Agent, unless Agent and
Issuer have each received written notice from Borrowing Agent of such failure
within three (3) Business Days after Issuer shall have furnished Agent and
Borrowing Agent a copy of such Letter of Credit and such error is material and
no drawing has been made thereon prior to receipt of such notice;

(ix)    the occurrence of any Material Adverse Effect;

 

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(x)    any breach of this Agreement or any Other Document by any party thereto;

(xi)    the occurrence or continuance of an Insolvency Event with respect to any
Borrower or any Guarantor;

(xii)    the fact that a Default or an Event of Default shall have occurred and
be continuing;

(xiii)    the fact that the Term shall have expired or this Agreement or the
obligations of Lenders to make Advances have been terminated; and

(xiv)    any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing.

2.19.    Liability for Acts and Omissions.

(a)    As between Borrowers and Issuer, Swing Loan Lender, Agent and Lenders,
each Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit by, the respective beneficiaries of such Letters of Credit,
other than as a result of the gross negligence or willful misconduct of the
Issuer as determined by a final non-appealable judgment of a court of competent
jurisdiction. In furtherance and not in limitation of the foregoing, Issuer
shall not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for an issuance of any such Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged (even if Issuer or any of its Affiliates shall
have been notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower or Guarantor against any beneficiary of such Letter of
Credit, or any such transferee, or any dispute between or among any Borrower or
Guarantor and any beneficiary of any Letter of Credit or any such transferee;
(iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, facsimile, telex or otherwise, whether or not they
be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Issuer, including any Governmental Acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Issuer’s rights or powers hereunder. Nothing in the preceding sentence shall
relieve Issuer from liability for Issuer’s gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment) in connection with actions or omissions described in
such clauses (i) through (viii) of such sentence. In no event shall Issuer or
Issuer’s Affiliates be liable to any Borrower for any indirect, consequential,
incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any
change in the value of any property relating to a Letter of Credit.

 

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(b)    Without limiting the generality of the foregoing, Issuer and each of its
Affiliates: (i) may rely on any oral or other communication believed in good
faith by Issuer or such Affiliate to have been authorized or given by or on
behalf of the applicant for a Letter of Credit; (ii) may honor any presentation
if the documents presented appear on their face substantially to comply with the
terms and conditions of the relevant Letter of Credit; (iii) may honor a
previously dishonored presentation under a Letter of Credit, whether such
dishonor was pursuant to a court order, to settle or compromise any claim of
wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the
same extent as if such presentation had initially been honored, together with
any interest paid by Issuer or its Affiliates; (iv) may honor any drawing that
is payable upon presentation of a statement advising negotiation or payment,
upon receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Issuer or its Affiliate in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a steamship agent or carrier or any document or instrument of like
import (each an “Order”) and honor any drawing in connection with any Letter of
Credit that is the subject of such Order, notwithstanding that any drafts or
other documents presented in connection with such Letter of Credit fail to
conform in any way with such Letter of Credit.

(c)    In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by Issuer under or in
connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence or willful misconduct (in either case, as determined by a court
of competent jurisdiction in a final non-appealable judgment), shall not put
Issuer under any resulting liability to any Borrower, Agent or any Lender.

2.20.    Mandatory Prepayments.

(a)    Borrower shall prepay the Advances as and when required pursuant to
Section 2.9. Any amounts prepaid shall be applied (i) first, to the outstanding
Swing Loans, (ii) second, pro rata according to the applicable Revolving
Commitment Percentages of Lenders, to the outstanding Revolving Advances
(including cash collateralization of all Obligations relating to any outstanding
Letters of Credit in accordance with the provisions of Section 3.2(b); provided,
however, that if no Default or Event of Default has occurred and is continuing,
such repayments shall be applied to cash collateralize any Obligations related
to outstanding Letters of Credit last) (subject to any contrary provisions of
Section 2.22), and (iii) third, pro rata according to the applicable FILO
Commitment Percentages of Lenders, to the outstanding FILO Advances (subject to
any contrary provisions of Section 2.22), subject to Borrowers’ ability to
reborrow Revolving Advances and FILO Advances in accordance with the terms
hereof.

 

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(b)    The Borrower shall prepay the Advances (including cash collateralization
of all Obligations relating to any outstanding Letters of Credit in accordance
with the provisions of Section 3.2(b); provided, however, that if no Default or
Event of Default has occurred and is continuing, such repayments shall be
applied to cash collateralize any Obligations related to outstanding Letters of
Credit last) in accordance with the provisions of Section 4.8(h) hereof.

2.21.    Use of Proceeds.

(a)    Borrowers shall apply the proceeds of Advances to (i) repay existing
indebtedness owing under the Existing FINL Credit Agreement, (ii) provide for a
portion of the consideration for the Transactions and pay fees and expenses
relating to the Transactions, and (iii) fund ongoing working capital, Capital
Expenditures, Permitted Acquisitions and general corporate purposes, in each
case to the extent permitted hereunder.

(b)    Without limiting the generality of Section 2.21(a) above, none of the
Borrowers, the Guarantors, or any other Person which may in the future become
party to this Agreement or the Other Documents as a Borrower or Guarantor,
intends to use nor shall they use any portion of the proceeds of the Advances,
directly or indirectly, (i) to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock or
for any purpose that violates the provisions of Regulation T, U, or X of the
Board of Governors of the Federal Reserve System, (ii) to make any payments to a
Sanctioned Entity or a Sanctioned Person, to fund any investments, loans or
contributions in, or otherwise make such proceeds available to, a Sanctioned
Entity or a Sanctioned Person, to fund any operations, activities or business of
a Sanctioned Entity or a Sanctioned Person, or in any other manner that would
result in a violation of Sanctions by any Person, (iii) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in violation of any Sanctions,
Anti-Corruption Laws or Anti-Money Laundering Laws, or (iv) for any other
purpose in violation of Applicable Law.

2.22.    Defaulting Lender.

(a)    Notwithstanding anything to the contrary contained herein, in the event
any Lender is a Defaulting Lender, all rights and obligations hereunder of such
Defaulting Lender and of the other parties hereto shall be modified to the
extent of the express provisions of this Section 2.22 so long as such Lender is
a Defaulting Lender.

(b)    (i) Except as otherwise expressly provided for in this Section 2.22, (x)
Revolving Advances shall be made pro rata from Lenders holding Revolving
Commitments which are not Defaulting Lenders based on their respective Revolving
Commitment Percentages, and no Revolving Commitment Percentage of any Lender or
any pro rata share of any Revolving Advances required to be advanced by any
Lender shall be increased as a result of any Lender being a Defaulting Lender,
and (y) FILO Advances shall be made pro rata from Lenders holding FILO
Commitments which are not Defaulting Lenders based on their respective FILO
Commitment Percentages, and no FILO Commitment Percentage of any Lender or any
pro rata share of any FILO Advances required to be advanced by any Lender shall
be increased as a result of any Lender being a Defaulting Lender. Amounts
received in respect of principal of any

 

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type of Revolving Advances or FILO Advances, as applicable, shall be applied to
reduce such type of Revolving Advances or FILO Advances, as applicable, of each
Lender (other than any Defaulting Lender) holding a Revolving Commitment or a
FILO Commitment, as applicable, in accordance with their Revolving Commitment
Percentages or FILO Commitment Percentages, as applicable; provided, that, Agent
shall not be obligated to transfer to a Defaulting Lender any payments received
by Agent for Defaulting Lender’s benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder (including any principal,
interest or fees). Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion, re-lend to a
Borrower the amount of such payments received or retained by it for the account
of such Defaulting Lender;

(ii)    Fees pursuant to Section 3.3 hereof shall cease to accrue in favor of
such Defaulting Lender;

(iii)    If any Swing Loans are outstanding or any Letters of Credit (or
drawings under any Letter of Credit for which Issuer has not been reimbursed)
are outstanding or exist at the time any such Lender holding a Revolving
Commitment becomes a Defaulting Lender, then:

(A)    Such Defaulting Lender’s Participation Commitment in the outstanding
Swing Loans and of the Maximum Undrawn Amount of all outstanding Letters of
Credit shall be reallocated among Non-Defaulting Lenders holding Revolving
Commitments in proportion to the respective Revolving Commitment Percentages of
such Non-Defaulting Lenders to the extent (but only to the extent) that (x) such
reallocation does not cause the aggregate sum of outstanding Revolving Advances
made by any such Non-Defaulting Lender holding a Revolving Commitment plus such
Lender’s reallocated Participation Commitment in the outstanding Swing Loans
plus such Lender’s reallocated Participation Commitment in the aggregate Maximum
Undrawn Amount of all outstanding Letters of Credit to exceed the Revolving
Commitment Amount of any such Non-Defaulting Lender, and (y) no Event of Default
has occurred and is continuing at such time;

(B)    if the reallocation described in clause (A) above cannot, or can only
partially, be effected, Borrowers shall within one Business Day following notice
by Agent (x) first, prepay any outstanding Swing Loans that cannot be
reallocated, and (y) second, cash collateralize for the benefit of Issuer,
Borrowers’ obligations corresponding to such Defaulting Lender’s Participation
Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving
effect to any partial reallocation pursuant to clause (A) above) in accordance
with Section 3.2(b) for so long as such Obligations are outstanding (provided,
that, so long as no Event of Default is then continuing, such cash collateral
shall be released to Borrowers if at any time such Defaulting Lender no longer
constitutes a Defaulting Lender hereunder);

(C)    if Borrowers cash collateralize any portion of such Defaulting Lender’s
Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit
pursuant to clause (B) above, Borrowers shall not be required to pay any fees to
such Defaulting Lender pursuant to Section 3.2(a) with respect to such
Defaulting Lender’s Revolving Commitment Percentage of the Maximum Undrawn
Amount of all Letters of Credit during the period such Defaulting Lender’s
Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit
is cash collateralized;

 

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(D)    if Defaulting Lender’s Participation Commitment in the Maximum Undrawn
Amount of all Letters of Credit is reallocated pursuant to clause (A) above,
then the fees payable to Lenders holding Revolving Commitments pursuant to
Section 3.2(a) shall be adjusted and reallocated to Non-Defaulting Lenders
holding Revolving Commitments in accordance with such reallocation; and

(E)    if all or any portion of such Defaulting Lender’s Participation
Commitment in the Maximum Undrawn Amount of all Letters of Credit is neither
reallocated nor cash collateralized pursuant to clause (A) or (B) above, then,
without prejudice to any rights or remedies of Issuer or any other Lender
hereunder, all Letter of Credit Fees payable under Section 3.2(a) with respect
to such Defaulting Lender’s Revolving Commitment Percentage of the Maximum
Undrawn Amount of all Letters of Credit shall be payable to the Issuer (and not
to such Defaulting Lender) until (and then only to the extent that) such
Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit
is reallocated and/or cash collateralized.

(iv)    So long as any Lender holding a Revolving Commitment is a Defaulting
Lender, Swing Loan Lender shall not be required to fund any Swing Loans and
Issuer shall not be required to issue, amend or increase any Letter of Credit,
unless such Issuer is satisfied that the related exposure and Defaulting
Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters
of Credit and all Swing Loans (after giving effect to any such issuance,
amendment, increase or funding) will be fully allocated to Non-Defaulting
Lenders holding Revolving Commitments and/or cash collateral for such Letters of
Credit will be provided by Borrowers in accordance with clauses (A) and (B)
above, and participating interests in any newly made Swing Loan or any newly
issued or increased Letter of Credit shall be allocated among Non-Defaulting
Lenders in a manner consistent with Section 2.22(b)(iii)(A) above (and such
Defaulting Lender shall not participate therein).

(c)    A Defaulting Lender shall not be entitled to give instructions to Agent
or to approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents, and all amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definitions of “Required
Lenders” and “Supermajority Lenders”, a Defaulting Lender shall not be deemed to
be a Lender, to have any outstanding Advances or a Revolving Commitment
Percentage or FILO Commitment Percentage; provided, that, this clause (c) shall
not apply to the vote of a Defaulting Lender in the case of an amendment, waiver
or other modification described in clause (i) or (ii) of Section 16.2(b).

(d)    Other than as expressly set forth in this Section 2.22, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other parties hereto shall remain unchanged. Nothing in this
Section 2.22 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, any Guarantor,
Agent or any Lender may have against any Defaulting Lender as a result of any
default by such Defaulting Lender hereunder.

 

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(e)    In the event that Agent, Borrowers, Swing Loan Lender and Issuer agree in
writing that a Defaulting Lender has adequately remedied all matters that caused
such Lender to be a Defaulting Lender, then Agent will so notify the parties
hereto, and, if such cured Defaulting Lender is a Lender holding a Revolving
Commitment, then the Participation Commitments of Lenders holding Revolving
Commitments (including such cured Defaulting Lender) of the Swing Loans and
Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated
to reflect the inclusion of such Lender’s Revolving Commitment, and on such date
such Lender shall purchase at par such of the Revolving Advances of the other
Lenders as Agent shall determine may be necessary in order for such Lender to
hold such Revolving Advances in accordance with its Revolving Commitment
Percentage.

(f)    If Swing Loan Lender or Issuer has a good faith belief that any Lender
holding a Revolving Commitment has defaulted in fulfilling its obligations under
one or more other agreements in which such Lender commits to extend credit,
Swing Loan Lender shall not be required to fund any Swing Loans and Issuer shall
not be required to issue, amend or increase any Letter of Credit, unless Swing
Loan Lender or Issuer, as the case may be, shall have entered into arrangements
with Borrowers or such Lender, satisfactory to Swing Loan Lender or Issuer, as
the case may be, to defease any risk to it in respect of such Lender hereunder.

2.23.    Payment of Obligations. Agent may charge to Borrowers’ Account as a
Revolving Advance, as a FILO Advance or, at the discretion of Swing Loan Lender,
as a Swing Loan (i) all payments with respect to any of the Obligations required
hereunder (including without limitation principal payments, payments of
interest, payments of Letter of Credit Fees and all other fees provided for
hereunder and payments under Sections 16.5 and 16.9) as and when each such
payment shall become due and payable (whether as regularly scheduled, upon or
after acceleration, upon maturity or otherwise), (ii) without limiting the
generality of the foregoing clause (i), (a) all amounts expended by Agent or any
Lender pursuant to Section 4.2 or 4.3 hereof and (b) all reasonable and
documented out-of-pocket expenses which Agent incurs in connection with the
forwarding of Advance proceeds and the establishment and maintenance of any
Blocked Accounts or Depository Accounts as provided for in Section 4.8(h), and
(iii) any sums expended by Agent or any Lender due to any Borrower’s failure to
perform or comply with its obligations under this Agreement or any Other
Document including any Borrower’s obligations under Sections 3.3, 3.4, 4.4, 4.6,
4.7, 6.4, 6.6, 6.7 and 6.8 hereof, and all amounts so charged shall be added to
the Obligations and shall be secured by the Collateral, and in each case Agent
shall provide prompt notice thereof to Borrowing Agent (but any failure to
provide any such notice shall not affect the liability of Borrowers and
Guarantors for such amounts). To the extent Revolving Advances or FILO Advances
are not actually funded by the other Lenders in respect of any such amounts so
charged, all such amounts so charged shall be deemed to be Revolving Advances or
FILO Advances, as applicable, made by and owing to Agent and Agent shall be
entitled to all rights (including accrual of interest) and remedies of a Lender
under this Agreement and the Other Documents with respect to such Revolving
Advances or FILO Advances, as applicable.

 

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2.24.    Increase in Maximum Revolving Advance Amount.

(a)    Borrowers may, at any time, request that the Maximum Revolving Advance
Amount be increased by (1) one or more of the current Lenders increasing their
Revolving Commitment Amount (any current Lender which elects to increase its
Revolving Commitment Amount shall be referred to as an “Increasing Lender”) or
(2) one or more new lenders (each a “New Lender”) joining this Agreement and
providing a Revolving Commitment Amount hereunder, subject to the following
terms and conditions:

(i)    no current Lender shall be obligated to increase its Revolving Commitment
Amount and any increase in the Revolving Commitment Amount by any current Lender
shall be in the sole discretion of such current Lender;

(ii)    Borrowers may not request the addition of a New Lender unless (and then
only to the extent that) there is insufficient participation on behalf of the
existing Lenders in the increased Revolving Commitments being requested by
Borrowers;

(iii)    there shall exist no Event of Default on the effective date of such
increase after giving effect to such increase;

(iv)    after giving effect to such increase, the Maximum Revolving Advance
Amount shall not exceed $400,000,000 minus the amount of any previous reduction
of the Revolving Commitments implemented in accordance with Section 2.25;

(v)    Borrowers may not request an increase in the Maximum Revolving Advance
Amount under this Section 2.24 more than four (4) times during the Term, and no
single such increase in the Maximum Revolving Advance Amount shall be for an
amount less than $25,000,000;

(vi)    Borrowers and Guarantors shall deliver to Agent on or before the
effective date of such increase the following documents in form and substance
reasonably satisfactory to Agent: (1) certifications of their corporate
secretaries with attached resolutions certifying that the increase in the
Revolving Commitment Amounts has been approved by Borrowers and Guarantors,
(2) certificate dated as of the effective date of such increase certifying that
no Default or Event of Default shall have occurred and be continuing and
certifying that the representations and warranties made by each Borrower and
Guarantor herein and in the Other Documents are true and correct in all material
respects with the same force and effect as if made on and as of such date
(except (x) to the extent any such representation or warranty is qualified by
materiality or “Material Adverse Effect” or similar language, in which case such
representation and warranty is true and correct in all respects, and (y) to the
extent any such representation or warranty expressly relates only to any earlier
and/or specified date, in which case such representation and warranty is true
and correct in all material respects (or in all respects, as applicable) as of
such earlier and/or specified date), (3) such other agreements, instruments and
information (including supplements or modifications to this Agreement and/or the
Other Documents executed by Borrowers and Guarantors as Agent reasonably deems
necessary in order to document the increase to the Maximum Revolving Advance
Amount and to protect, preserve and continue the perfection and priority of the
liens, security interests, rights and remedies of Agent and Lenders hereunder
and under the Other Documents in light of such increase, and (4) an opinion of
counsel in form and substance reasonably satisfactory to Agent

 

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which shall cover such matters related to such increase as Agent may reasonably
require and each Borrower and Guarantor hereby authorizes and directs such
counsel to deliver such opinions to Agent and Lenders;

(vii)    Borrowers shall execute and deliver (1) to each Increasing Lender a
replacement Note reflecting the new amount of such Increasing Lender’s Revolving
Commitment Amount after giving effect to the increase (and the prior Note issued
to such Increasing Lender shall be promptly returned by such Increasing Lender
to the Borrowing Agent and deemed to be cancelled) and (2) to each New Lender a
Note reflecting the amount of such New Lender’s Revolving Commitment Amount;

(viii)    any New Lender shall be subject to the approval of Agent, Issuer and
the Borrowing Agent (which approval shall not be unreasonably withheld,
conditioned or delayed);

(ix)    each Increasing Lender shall confirm its agreement to increase its
Revolving Commitment Amount pursuant to an acknowledgement in a form reasonably
acceptable to Agent, signed by it and each Borrower and delivered to Agent at
least one (1) Business Day before the effective date of such increase; and

(x)    each New Lender shall execute a lender joinder in form and substance
reasonably satisfactory to Agent, pursuant to which such New Lender shall join
and become a party to this Agreement and the Other Documents with a Revolving
Commitment Amount as set forth in such lender joinder.

(b)    On the effective date of such increase, (i) Borrowers and Agent shall
effect a settlement of all outstanding Revolving Advances among the Lenders
holding Revolving Commitments (including any Increasing Lenders and New Lenders)
that will reflect the adjustments to the Revolving Commitment Amounts of the
Lenders as a result of such increase, and (ii) the Revolving Commitment
Percentages of Lenders holding a Revolving Commitment (including each Increasing
Lender and/or New Lender) shall be recalculated such that each such Lender’s
Revolving Commitment Percentage is equal to (x) the Revolving Commitment Amount
of such Lender divided by (y) the aggregate of the Revolving Commitment Amounts
of all Lenders. Each Lender shall participate in any new Revolving Advances made
on or after such date in accordance with its Revolving Commitment Percentage
after giving effect to the increase in the Maximum Revolving Advance Amount and
recalculation of the Revolving Commitment Percentages contemplated by this
Section 2.24.

(c)    On the effective date of such increase, each Increasing Lender shall be
deemed to have purchased an additional/increased participation in, and each New
Lender will be deemed to have purchased a new participation in, each then
outstanding Letter of Credit and each drawing thereunder and each then
outstanding Swing Loan in an amount equal to such Lender’s Revolving Commitment
Percentage (as calculated pursuant to Section 2.24(b) above) of the Maximum
Undrawn Amount of each such Letter of Credit (as in effect from time to time)
and the amount of each drawing and of each such Swing Loan, respectively. As
necessary to effectuate the foregoing, each existing Lender holding a Revolving
Commitment that is not an Increasing Lender shall be deemed to have sold to each
applicable Increasing Lender and/or New

 

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Lender, as necessary, a portion of such existing Lender’s participations in such
outstanding Letters of Credit and drawings and such outstanding Swing Loans such
that, after giving effect to all such purchases and sales, each Lender holding a
Revolving Commitment (including each Increasing Lender and/or New Lender) shall
hold a participation in all Letters of Credit (and drawings thereunder) and all
Swing Loans in accordance with their respective Revolving Commitment Percentages
(as calculated pursuant to Section 2.24(b) above).

(d)    On the effective date of such increase, Borrowers shall, subject to and
in accordance with Section 16.9, pay all reasonable and documented out-of-pocket
costs and expenses incurred by Agent in connection with the negotiations
regarding, and the preparation, negotiation, execution and delivery of all
agreements and instruments executed and delivered by any of Agent, Borrowers,
Guarantors, and/or Increasing Lenders and New Lenders in connection with, such
increase (including all fees for any supplemental or additional public filings
of any Other Documents necessary to protect, preserve and continue the
perfection and priority of the liens, security interests, rights and remedies of
Agent and Lenders hereunder and under the Other Documents in light of such
increase), to the extent a reasonably detailed invoice therefor has been
delivered to the Borrowing Agent at least one (1) Business Day prior to the
effective date of such increase.

(e)    In connection with any such increase, if any Borrower, Guarantor, or
Subsidiary owns or will acquire any Margin Stock, then to the extent required by
Applicable Law or reasonably requested by Agent, Borrowers shall deliver to
Agent an updated Form U-1 (with sufficient additional originals thereof for each
Lender), duly executed and delivered by Borrowers, together with such other
documentation as Agent shall reasonably request, in order to enable Agent and
the Lenders to comply with any of the requirements under Regulations T, U, or X
of the Board of Governors of the Federal Reserve System.

2.25.    Decrease in Maximum Revolving Advance Amount.

(a)    Borrowers may, upon irrevocable notice from Borrowing Agent to Agent
(provided, that, such notice may be conditioned upon the effectiveness of other
credit facilities, in which case such notice may be revoked by Borrowers (by
notice to Agent on or prior to the specified effective date) if such condition
is not satisfied), terminate the Revolving Commitments or from time to time
permanently reduce the Maximum Revolving Advance Amount; provided, that, (i) any
such notice shall be received by Agent not later than 1:00 p.m. (x) ten (10)
Business Days prior to the date of termination, or (y) three (3) Business Days
prior to the date of reduction, (ii) any such partial reduction shall be in an
aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess
thereof, (iii) Borrowers shall not terminate or reduce the Revolving Commitments
if, after giving effect thereto and to any concurrent prepayments hereunder, the
aggregate outstanding amount of Revolving Advances (including, without
limitation, Swing Loans, together with the Maximum Undrawn Amount of all
outstanding Letters of Credit), would exceed the Maximum Revolving Advance
Amount, and (iv) in no event shall the Maximum Revolving Advance Amount be
reduced to less than $150,000,000.

(b)    If, after giving effect to any reduction of the Maximum Revolving Advance
Amount, the Letter of Credit Sublimit or the Maximum Swing Loan Advance Amount
exceeds the Maximum Revolving Advance Amount, such Letter of Credit Sublimit or
Maximum Swing Loan Advance Amount shall be automatically reduced by the amount
of such excess.

 

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(c)    In the event that the Revolving Commitments are terminated, the FILO
Commitments shall be automatically terminated. For the avoidance of doubt, the
FILO Commitments cannot be reduced hereunder and cannot be terminated except in
accordance with the terms of this Section 2.25.

(d)    Agent will promptly notify the Lenders of any termination or reduction of
the Letter of Credit Sublimit, the Maximum Swing Loan Advance Amount, the
Revolving Commitments (or the Maximum Revolving Advance Amount), or the FILO
Commitments (or the Maximum FILO Advance Amount). Upon any reduction of the
Revolving Commitments, the Revolving Commitment of each Lender shall be reduced
by such Lender’s Revolving Commitment Percentage of such reduction amount. All
fees (including, without limitation, commitment fees and Letter of Credit Fees)
and interest in respect of the Revolving Commitments and the FILO Commitments
accrued until the effective date of any termination of the Revolving Commitments
and FILO Commitments shall be paid on the effective date of such termination.

(e)    In connection with any reduction in the Revolving Commitments prior to
the end of the Term, if any Borrower, Guarantor, or Subsidiary owns any Margin
Stock, then to the extent required by Applicable Law or reasonably requested by
Agent, Borrowers shall deliver to Agent an updated Form U-1 (with sufficient
additional originals thereof for each Lender), duly executed and delivered by
Borrowers, together with such other documentation as Agent shall reasonably
request, in order to enable Agent and the Lenders to comply with any of the
requirements under Regulations T, U, or X of the Board of Governors of the
Federal Reserve System.

 

III. INTEREST AND FEES.

3.1.    Interest. Interest on Advances shall be payable in arrears on the first
day of each calendar quarter with respect to Domestic Rate Loans and, with
respect to LIBOR Rate Loans, at (a) the end of each Interest Period, and (b) for
LIBOR Rate Loans with an Interest Period in excess of three months, at the end
of each three month period during such Interest Period; provided, further, that
all accrued and unpaid interest shall be due and payable at the end of the Term.
Interest charges shall be computed on the actual principal amount of Advances
outstanding from time to time at a rate per annum equal to (i) with respect to
Revolving Advances, the applicable Revolving Interest Rate, (ii) with respect to
Swing Loans, the Revolving Interest Rate for Domestic Rate Loans, and (iii) with
respect to FILO Advances, the applicable FILO Interest Rate (as applicable, the
“Contract Rate”). Except as expressly provided otherwise in this Agreement, any
Obligations other than the Advances that are not paid when due shall accrue
interest at the Revolving Interest Rate for Domestic Rate Loans, subject to the
provisions of the final sentence of this Section 3.1 regarding the Default Rate.
Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is
increased or decreased, the applicable Contract Rate shall be similarly changed
without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate during the time such change or changes remain
in effect. The LIBOR Rate shall be adjusted with respect to LIBOR

 

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Rate Loans without notice or demand of any kind on the effective date of any
change in the Reserve Percentage as of such effective date. Upon the occurrence
and during the continuance of an Event of Default, at the election of Agent or
at the direction of Required Lenders (or, in the case of any Event of Default
under Section 10.1 or 10.6, immediately and automatically upon the occurrence of
any such Event of Default without the requirement of any affirmative action by
any party), the Obligations shall bear interest at the applicable Contract Rate
(or, if no rate of interest is applicable thereto, at the Alternate Base Rate)
plus two percent (2%) per annum (the “Default Rate”).

3.2.    Letter of Credit Fees.

(a)    Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders
holding Revolving Commitments, fees for each Letter of Credit for the period
from and excluding the date of issuance of same to and including the date of
expiration or termination of such Letter of Credit, equal to the aggregate daily
face amount of each outstanding Letter of Credit multiplied by the Applicable
Margin for Revolving Advances consisting of LIBOR Rate Loans, such fees to be
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable quarterly in arrears on the first day of each calendar quarter
and on the last day of the Term, and (y) to each Issuer, a fronting fee of one
eighth of one percent (0.125%) per annum times the aggregate daily face amount
of each outstanding Letter of Credit issued by such Issuer for the period from
and excluding the date of issuance of same to and including the date of
expiration or termination of such Letter of Credit, to be payable quarterly in
arrears on the first day of each calendar quarter and on the last day of the
Term (all of the foregoing fees, the “Letter of Credit Fees”). In addition,
Borrowers shall pay to Agent, for the benefit of Issuer, any and all
administrative, issuance, amendment, payment and negotiation charges with
respect to Letters of Credit and all fees and expenses as agreed upon by Issuer
and the Borrowing Agent in connection with any Letter of Credit, including in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder, all such charges, fees and expenses, if
any, to be payable on demand. All such charges shall be deemed earned in full on
the date when the same are due and payable hereunder and shall not be subject to
rebate or pro-ration upon the termination of this Agreement for any reason. Any
such charge in effect at the time of a particular transaction shall be the
charge for that transaction, notwithstanding any subsequent change in Issuer’s
prevailing charges for that type of transaction. Upon the occurrence and during
the continuance of an Event of Default, at the election of Agent or at the
direction of Required Lenders (or, in the case of any Event of Default under
Section 10.6, immediately and automatically upon the occurrence of any such
Event of Default without the requirement of any affirmative action by any
party), the Letter of Credit Fees described in clause (x) of this Section 3.2(a)
shall be increased by an additional two percent (2.0%) per annum.

(b)    At any time following the occurrence and during the continuance of an
Event of Default, at the election of Agent or at the direction of Required
Lenders (or, in the case of any Event of Default under Section 10.6, immediately
and automatically upon the occurrence of such Event of Default, without the
requirement of any affirmative action by any party), or upon the expiration of
the Term or any other termination of this Agreement (and also, if applicable, in
connection with any mandatory prepayment under Section 2.20), Borrowers will
cause cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to one hundred and three percent (103%) of the
Maximum Undrawn Amount of all

 

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outstanding Letters of Credit (the “Required Cash Collateral Amount”), and each
Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower’s behalf and in such Borrower’s name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower (provided, that, the aggregate
amount required to be maintained in such accounts as to all Borrowers shall not
exceed the Required Cash Collateral Amount), out of the proceeds of Receivables,
Credit Card Receivables, or other Collateral or out of any other funds of such
Borrower coming into any Lender’s possession at any time. Agent may, in its
discretion, invest such cash collateral (less applicable reserves) in such
short-term money-market items as to which Agent and such Borrower mutually agree
(or, in the absence of such agreement, as Agent may reasonably select) and the
net return on such investments shall be credited to such account and constitute
additional cash collateral, or Agent may (notwithstanding the foregoing)
establish the account provided for under this Section 3.2(b) as a non-interest
bearing account and in such case Agent shall have no obligation (and Borrowers
hereby waive any claim) under Article 9 of the Uniform Commercial Code or under
any other Applicable Law to pay interest on such cash collateral being held by
Agent. No Borrower may withdraw amounts credited to any such account except upon
payment in full of all Obligations; provided, however, that (i) prior to the
expiration of the Term, if this Agreement has not otherwise terminated, the
Borrowers may withdraw amounts credited to such accounts if no Event of Default
is continuing and, after giving effect to such withdrawal, the Borrowers would
not be required to make a mandatory prepayment under Section 2.20 and (ii) the
Borrowers may withdraw amounts credited to such accounts at any time to the
extent that the aggregate amount on deposit therein exceeds the Required Cash
Collateral Amount. Borrowers hereby assign, pledge and grant to Agent, for its
benefit and the ratable benefit of Issuer, Lenders and each other Secured Party,
a continuing security interest in and to and Lien on any such cash collateral
and any right, title and interest of Borrowers in any deposit account,
securities account or investment account into which such cash collateral may be
deposited from time to time to secure the Obligations, specifically including
all Obligations with respect to any Letters of Credit. Borrowers agree that upon
the coming due of any Reimbursement Obligations (or any other Obligations,
including Obligations for Letter of Credit Fees) with respect to the Letters of
Credit, Agent may use such cash collateral to pay and satisfy such Obligations.

3.3.    Facility Fees.

(a)     If, for any day in each calendar quarter during the Term, the daily
unpaid balance of the sum of Revolving Advances (including, without limitation,
Swing Loans and the Maximum Undrawn Amount of all outstanding Letters of Credit)
(the “Revolving Usage Amount”) for each day of such calendar quarter does not
equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent,
for the ratable benefit of Lenders holding the Revolving Commitments based on
their Revolving Commitment Percentages, a fee at a rate equal to two tenths of
one percent (0.20%) per annum on the amount by which the Maximum Revolving
Advance Amount on such day exceeds such Revolving Usage Amount (the “Revolving
Facility Fee”). Such Revolving Facility Fee shall be payable to Agent in arrears
on the first day of each calendar quarter with respect to each day in the
previous calendar quarter.

(b)    If, for any day in each calendar quarter during the Term, the daily
unpaid balance of the sum of FILO Advances (the “FILO Usage Amount”) for each
day of such

 

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calendar quarter does not equal the Maximum FILO Advance Amount, then Borrowers
shall pay to Agent, for the ratable benefit of Lenders holding the FILO
Commitments based on their FILO Commitment Percentages, a fee at a rate equal to
two tenths of one percent (0.20%) per annum on the amount by which the Maximum
FILO Advance Amount on such day exceeds such FILO Usage Amount (the “FILO
Facility Fee”). Such FILO Facility Fee shall be payable to Agent in arrears on
the first day of each calendar quarter with respect to each day in the previous
calendar quarter.

3.4.    Collateral Evaluation Fee; Fee Letter.

(a)    Borrowers shall pay to Agent promptly at the conclusion of any collateral
evaluation performed by or for the benefit of Agent (whether such examination is
performed by Agent’s employees or by a third party retained by Agent),
including, without limitation, any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Agent in its
Permitted Discretion (or at the direction of the Required Lenders) and which
evaluation is undertaken by Agent or for Agent’s benefit, a collateral
evaluation fee in an amount equal to $1,250 (or such other amount customarily
charged by Agent to its customers) per day for each person employed to perform
such evaluation (based on an eight (8) hour day, and subject to adjustment if
additional hours are worked), plus a per examination field exam management fee
in the amount of $2,500 for new facilities, and $1,500 for recurring
examinations (or, in each case, such other amount customarily charged by Agent
to its customers), plus all reasonable and documented out-of-pocket costs and
disbursements incurred by Agent in the performance of such examination or
analysis, and further provided, that, if third parties are retained to perform
such collateral evaluations, either at the request of another Lender or for
extenuating reasons determined by Agent in its Permitted Discretion (or at the
direction of the Required Lenders), then such fees charged by such third parties
plus all reasonable and documented out-of-pocket costs and disbursements
incurred by such third party, shall be the responsibility of Borrowers and shall
not be subject to the foregoing limits; provided, however, that Borrowers and
Guarantors shall be responsible for reimbursing Agent for only up to one
collateral evaluation per Fiscal Year of Borrowers, unless (i) Undrawn
Availability is less than the greater of (x) twenty percent (20%) of the
Revolving Loan Cap and (y) $52,500,000 for five (5) or more consecutive Business
Days, in which case Borrowers and Guarantors shall be responsible for
reimbursing Agent for up to two collateral evaluations in the subsequent twelve
month period, (ii) any additional collateral evaluation is required by
Applicable Law, in which case Borrowers and Guarantors shall be responsible for
reimbursing Agent for such collateral evaluation undertaken by or on behalf of
Agent, or (iii) an Event of Default has occurred and is continuing, in which
case Borrowers and Guarantors shall be responsible for reimbursing Agent for all
collateral evaluations undertaken by or on behalf of Agent.

(b)    Borrowers shall pay the amounts required to be paid in the Fee Letter in
the manner and at the times required by the Fee Letter.

(c)    All of the fees and reasonable and documented out-of-pocket costs and
expenses of any collateral evaluations, inspections, inventories, and appraisals
conducted pursuant to this Section 3.4 and Sections 4.6 and 4.7 hereof shall be,
to the extent provided in such sections, paid for when due, in full and without
deduction, off-set or counterclaim by Borrowers.

 

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3.5.    Computation of Interest and Fees. Interest and fees hereunder shall be
computed on the basis of a year of 360 days (other than for Domestic Rate Loans,
which shall be calculated on the basis of a year of 365 or 366 days, as
applicable) and for the actual number of days elapsed. If any payment of
Advances or Reimbursement Obligations to be made hereunder becomes due and
payable on a day other than a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest thereon shall be
payable at the applicable Contract Rate during such extension, except that
Advances shall be due on the Business Day preceding the last day of the Term if
such last day is not a Business Day. If any payment (other than Advances and
Reimbursement Obligations) to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day, and such extension of time shall not be included in
computing interest or fees, if any, in connection with such payment.

3.6.    Maximum Charges. In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under Applicable Law. In
the event interest and other charges as computed hereunder would otherwise
exceed the highest rate permitted under Applicable Law: (i) the interest rates
hereunder will be reduced to the maximum rate permitted under Applicable Law;
(ii) such excess amount shall be first applied to any unpaid principal balance
owed by Borrowers; and (iii) if the then remaining excess amount is greater than
the previously unpaid principal balance, Lenders shall promptly refund such
excess amount to Borrowers and the provisions hereof shall be deemed amended to
provide for such permissible rate.

3.7.    Increased Costs. In the event that any Applicable Law or any Change in
Law or compliance by any Lender (for purposes of this Section 3.7, the term
“Lender” shall include Agent, Swing Loan Lender, any Issuer or Lender and any
corporation or bank controlling Agent, Swing Loan Lender, any Lender or Issuer
and the office or branch where Agent, Swing Loan Lender, any Lender or Issuer
(as so defined) makes or maintains any LIBOR Rate Loans) with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall:

(a)    subject Agent, Swing Loan Lender, any Lender or Issuer to any Tax with
respect to this Agreement, any Letter of Credit, any participation in a Letter
of Credit or any LIBOR Rate Loan, or change the basis of taxation of payments to
Agent, Swing Loan Lender, such Lender or Issuer in respect thereof (other than
(A) Indemnified Tax and Other Taxes, (B) Taxes described in clauses (b) through
(d) of the definition of Excluded Taxes, (C) Connection Income Taxes, and
(D) the imposition of, or any change in the rate of, any Excluded Tax payable by
Agent, Swing Loan Lender, such Lender or the Issuer);

(b)    impose, modify or deem applicable any reserve, special deposit,
assessment, compulsory loan, insurance charge or similar requirement against
assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Agent, Swing Loan Lender, Issuer or any
Lender, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or

(c)    impose on Agent, Swing Loan Lender, any Lender or Issuer or the London
interbank eurodollar market any other condition, loss or expense (other than
Taxes) affecting this Agreement or any Other Document or any Advance made by any
Lender, or any Letter of Credit or participation therein;

 

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and the result of any of the foregoing is to increase the cost to Agent, Swing
Loan Lender, any Lender or Issuer of making, converting to, continuing, renewing
or maintaining its Advances hereunder by an amount that Agent, Swing Loan
Lender, such Lender or Issuer deems to be material or to reduce the amount of
any payment (whether of principal, interest or otherwise) in respect of any of
the Advances by an amount that Agent, Swing Loan Lender or such Lender or Issuer
deems to be material, then, in any case Borrowers shall promptly pay Agent,
Swing Loan Lender, such Lender or Issuer, upon its demand, such additional
amount as will compensate Agent, Swing Loan Lender or such Lender or Issuer for
such additional cost or such reduction, as the case may be; provided, that, the
foregoing shall not apply to increased costs which are reflected in the LIBOR
Rate, as the case may be. Agent, Swing Loan Lender, such Lender or Issuer shall
certify the amount of such additional cost or reduced amount to Borrowing Agent,
and such certification shall be conclusive absent manifest error.
Notwithstanding the foregoing, Borrowers shall not be required to compensate
Agent, Swing Loan Lender, any Lender or Issuer pursuant to this Section 3.7 for
any amounts incurred more than one hundred eighty (180) days prior to the date
that Agent, Swing Loan Lender, such Lender or Issuer, as the case may be,
notifies a Borrower of such additional cost or reduced amount and of Agent’s,
Swing Loan Lender’s, such Lender’s or Issuer’s intention to claim compensation
therefor.

3.8.    Alternate Rate of Interest.

3.8.1.    Interest Rate Inadequate or Unfair. In the event that Agent or any
Lender shall have determined that:

(a)    reasonable means do not exist for ascertaining the LIBOR Rate applicable
pursuant to Section 2.2 hereof for any Interest Period; or

(b)    Dollar deposits in the relevant amount and for the relevant maturity are
not available in the London interbank eurodollar market, with respect to an
outstanding LIBOR Rate Loan, a proposed LIBOR Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a LIBOR Rate Loan; or

(c)    the making, maintenance or funding of any LIBOR Rate Loan has been made
impracticable or unlawful by compliance by Agent or such Lender in good faith
with any Applicable Law or any interpretation or application thereof by any
Governmental Body or with any request or directive of any such Governmental Body
(whether or not having the force of law), or

(d)    the LIBOR Rate will not adequately and fairly reflect the cost to such
Lender of the establishment or maintenance of any LIBOR Rate Loan,

then Agent shall give Borrowing Agent prompt written or telephonic notice of
such determination. If such notice is given prior to a LIBOR Termination Date
(as defined below) or prior to the date on which Section 3.8.2(a)(ii) applies,
(i) any such requested LIBOR Rate Loan shall be made as a Domestic Rate Loan,
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1:00 p.m. two (2) Business Days prior to the date of such proposed borrowing,
that its request for such borrowing shall be cancelled or made as an unaffected
type of LIBOR Rate Loan, (ii) any Domestic Rate Loan or LIBOR Rate Loan which
was to have been converted to an affected type of LIBOR Rate Loan shall be
continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent
shall notify Agent, no later than 1:00 p.m. two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of LIBOR Rate
Loan, and (iii) any outstanding affected LIBOR Rate Loans shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later
than 1:00 p.m. two (2) Business Days prior to the last Business Day of the then
current Interest Period applicable to such affected LIBOR Rate Loan, shall be
converted into an unaffected type of LIBOR Rate Loan, on the last Business Day
of the then current Interest Period for such affected LIBOR Rate Loans (or
sooner, if any Lender cannot continue to lawfully maintain such affected LIBOR
Rate Loan). Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of LIBOR Rate Loan or maintain outstanding
affected LIBOR Rate Loans and no Borrower shall have the right to convert a
Domestic Rate Loan or an unaffected type of LIBOR Rate Loan into an affected
type of LIBOR Rate Loan.

3.8.2.    Successor LIBOR Rate Index.

(a)    If the Agent determines (which determination shall be final and
conclusive, absent manifest error) that either (i) (A) the circumstances set
forth in Section 3.8.1(a) have arisen and are unlikely to be temporary, or
(B) the circumstances set forth in Section 3.8.1(a) have not arisen but the
applicable supervisor or administrator (if any) of the LIBOR Rate or a
Governmental Body having jurisdiction over Agent has made a public statement
identifying the specific date after which the LIBOR Rate shall no longer be used
for determining interest rates for loans (either such date, a “LIBOR Termination
Date”), or (ii) a rate other than the LIBOR Rate has become a widely recognized
benchmark rate for newly originated loans in Dollars in the U.S. market, then
Agent may (in consultation with Borrowers) choose a replacement index for the
LIBOR Rate and make adjustments to applicable margins and related amendments to
this Agreement as referred to below such that, to the extent practicable, the
all-in interest rate based on the replacement index will be substantially
equivalent to the all-in LIBOR Rate-based interest rate in effect prior to its
replacement.

(b)    Agent, Borrowers, and Guarantors shall enter into an amendment to this
Agreement (in form and substance reasonably satisfactory to Borrowing Agent and
Agent) to reflect the replacement index, the adjusted margins and such other
related amendments as may be appropriate, in the discretion of the Agent, for
the implementation and administration of the replacement index-based rate.
Notwithstanding anything to the contrary in this Agreement or the Other
Documents (including, without limitation, Section 16.2), such amendment shall
become effective without any further action or consent of any other party to
this Agreement at 5:00 p.m. on the tenth (10th) Business Day after the date a
draft of the amendment is provided to the Lenders, unless Agent receives, on or
before such tenth (10th) Business Day, a written notice from the Required
Lenders stating that such Lenders object to such amendment.

(c)    Selection of the replacement index, adjustments to the applicable
margins, and other related amendments to this Agreement (i) will be determined
with due consideration to the then-current market practices for determining and
implementing a rate of interest for newly

 

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originated loans in the United States and loans converted from a LIBOR
Rate-based rate to a replacement index-based rate, and (ii) may also reflect
adjustments to account for (x) the effects of the transition from the LIBOR Rate
to the replacement index and (y) yield- or risk-based differences between the
LIBOR Rate and the replacement index.

(d)    Until an amendment reflecting a new replacement index in accordance with
this Section 3.8.2 is effective, each advance, conversion and renewal of a LIBOR
Rate Loan will continue to bear interest with reference to the LIBOR Rate;
provided, however, that if Agent determines (which determination shall be final
and conclusive, absent manifest error) that a LIBOR Termination Date has
occurred, then following the LIBOR Termination Date, all LIBOR Rate Loans shall
automatically be converted to Domestic Rate Loans until such time as an
amendment reflecting a replacement index and related matters as described above
is implemented.

(e)    Notwithstanding anything to the contrary contained herein, if at any time
the replacement index is less than zero, at such times, such index shall be
deemed to be zero for purposes of this Agreement.

3.9.    Capital Adequacy.

(a)    In the event that Agent, Swing Loan Lender or any Lender shall have
determined that any Applicable Law or guideline regarding capital adequacy, or
any Change in Law or any change in the interpretation or administration thereof
by any Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent, Swing Loan
Lender, Issuer or any Lender (for purposes of this Section 3.9, the term
“Lender” shall include Agent, Swing Loan Lender, Issuer or any Lender and any
corporation or bank controlling Agent, Swing Loan Lender or any Lender and the
office or branch where Agent, Swing Loan Lender or any Lender (as so defined)
makes or maintains any LIBOR Rate Loans) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Agent, Swing Loan Lender or any Lender’s capital as a
consequence of its obligations hereunder (including the making of any Swing
Loans) to a level below that which Agent, Swing Loan Lender or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent’s, Swing Loan Lender’s and each Lender’s policies with
respect to capital adequacy) by an amount deemed by Agent, Swing Loan Lender or
any Lender to be material, then, from time to time, Borrowers shall pay promptly
upon demand to Agent, Swing Loan Lender or such Lender such additional amount or
amounts as will compensate Agent, Swing Loan Lender or such Lender for such
reduction. In determining such amount or amounts, Agent, Swing Loan Lender or
such Lender may use any reasonable averaging or attribution methods. The
protection of this Section 3.9 shall be available to Agent, Swing Loan Lender
and each Lender regardless of any possible contention of invalidity or
inapplicability with respect to the Applicable Law, rule, regulation, guideline
or condition.

(b)    A certificate of Agent, Swing Loan Lender or such Lender setting forth
such amount or amounts as shall be necessary to compensate Agent, Swing Loan
Lender or such Lender with respect to Section 3.9(a) hereof when delivered to
Borrowing Agent shall be conclusive absent manifest error.

 

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3.10.    Taxes.

(a)    Any and all payments by or on account of any Obligations hereunder or
under any Other Document shall be made without deduction or withholding for any
Taxes; provided, that, if Borrowers or Guarantors shall be required by
Applicable Law to deduct or withhold any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section) Agent or each Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions or withholdings
been made, (ii) Borrowers and Guarantors shall make such deductions, and
(iii) Borrowers and Guarantors shall timely pay the full amount deducted to the
relevant Governmental Body in accordance with Applicable Law. Without
duplication of Section 3.10(b) or Section 3.10(c), if (x) any tax by any
Governmental Body is imposed on or as a result of any transaction between any
Borrower or any Guarantor, on one hand, and Agent or any Lender, on the other
hand, described herein or in any Other Document which Agent or any Lender is
required by Applicable Law to withhold or pay, or (y) in Agent’s or any Lender’s
opinion, a valid Lien on the Collateral may reasonably be expected to be created
(which Lien is not a Permitted Encumbrance), in either case (i) as a result of
any taxes, assessments, or other Charges that remain unpaid after the date fixed
for their payment or (ii) as a result of any Tax claim which shall be made by
any applicable Governmental Body, then Agent may without notice to Borrowers or
Guarantors pay the taxes, assessments or other Charges, and each Borrower and
each Guarantor, except to the extent such payments constitute Excluded Taxes,
hereby indemnifies and holds Agent and each Lender harmless in respect thereof.
Agent will not pay any taxes, assessments or Charges to the extent that any
applicable Borrower or Guarantor has Properly Contested those taxes, assessments
or Charges. A certificate as to the amount of such payment or liability
delivered to Borrowers by any Lender or by Agent on its own behalf or on behalf
of a Lender shall be conclusive absent manifest error.

(b)    Without limiting the provisions of Section 3.10(a) above, Borrowers shall
timely pay any Other Taxes to the relevant Governmental Body in accordance with
Applicable Law.

(c)    Each Borrower shall indemnify Agent and each Lender within ten (10) days
after demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by Agent or such
Lender, as the case may be, and any reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Body. A
certificate as to the amount of such payment or liability delivered to Borrowers
by any Lender or by Agent on its own behalf or on behalf of a Lender shall be
conclusive absent manifest error.

 

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(d)    As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by any Borrower to a Governmental Body, Borrowers shall deliver to Agent
the original or a certified copy of a receipt issued by such Governmental Body
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to Agent.

(e)    Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments hereunder or under any Other Document
shall deliver to Borrowers (with a copy to Agent), at the time or times
prescribed by Applicable Law or reasonably requested by Borrowers or Agent, such
properly completed and executed documentation prescribed by Applicable Law as
will permit such payments to be made without withholding or at a reduced rate of
withholding. Notwithstanding the submission of such documentation claiming a
reduced rate of or exemption from U.S. withholding tax, Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate
if in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under § 1.1441-7(b) of the United
States Income Tax Regulations or other Applicable Law. Further, Agent is
indemnified under § 1.1461-1(e) of the United States Income Tax Regulations
against any claims and demands of any Lender, Issuer or assignee or participant
of a Lender or Issuer for the amount of any tax it deducts and withholds in
accordance with regulations under § 1441 of the Code. In addition, any Lender,
if requested by Borrowers or Agent, shall deliver such other documentation
prescribed by Applicable Law or reasonably requested by Borrowers or Agent as
will enable Borrowers or Agent to determine whether or not such Lender is
subject to backup withholding or information reporting requirements. Without
limiting the generality of the foregoing, each Lender shall deliver to Borrowers
and Agent (in such number of copies as shall be requested by Borrowers and
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 request of Borrowers or
Agent, but only if such Lender is legally entitled to do so), whichever of the
following is applicable:

(i)    two (2) duly executed valid originals of IRS Form W-8BEN or W-8BEN-E
claiming eligibility for benefits of an income tax treaty to which the United
States of America is a party, and as applicable establishing an exemption from,
or reduction of U.S. federal withholding Tax pursuant to the “interest” article
of such tax treaty or the “business profits” or “other income” article of such
tax treaty,

(ii)    two (2) duly executed valid originals of IRS Form W-8ECI,

(iii)    in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under section 881(c) of the Code, (x) a certificate to
the effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrowers
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (y) two
duly executed valid originals of IRS Form W-8BEN or W-8BEN-E,

(iv)    any other form prescribed by Applicable Law as a basis for claiming
exemption from or a reduction in United States federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
Applicable Law to permit Borrowers to determine the withholding or deduction
required to be made (including, but not limited to, Form W-8IMY and the forms
mentioned in this Section 3.10), or

 

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(v)    if any Lender is not a Foreign Lender, two (2) duly executed originals of
an IRS Form W-9 or any other form prescribed by Applicable Law demonstrating
that such Lender is not a Foreign Lender.

(f)    If a payment made to a Lender or Agent under this Agreement or any Other
Document would be subject to U.S. federal withholding Tax imposed by FATCA if
such Person fails 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 Agent shall deliver to the Agent (in the case of a
Lender) and Borrowers (A) a certification signed by the chief financial officer,
principal accounting officer, treasurer or controller of such Person, and
(B) such documentation prescribed by Applicable Law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such other documentation reasonably
requested by Agent or any Borrower sufficient for Agent and Borrowers to comply
with their obligations under FATCA and to determine that a Lender or Agent has
complied with such applicable reporting requirements. Solely for purposes of
this clause (f), “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.

(g)    Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
promptly update such form or certification or notify the Borrowers and the Agent
in writing of its legal inability to do so.

(h)    If Agent or a Lender determines, in its sole discretion exercised in good
faith, that it has received a refund of any Taxes, assessments or other Charges
as to which it has been indemnified by Borrowers or with respect to which
Borrowers have paid additional amounts pursuant to this Section, it shall pay to
Borrowers an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by Borrowers under this Section with
respect to the Taxes, assessments or other Charges giving rise to such refund),
net of all out-of-pocket expenses (including Taxes, assessments or other
Charges) of the Agent or such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Body with respect to
such refund); provided, that, Borrowers, upon the request of Agent or such
Lender, agree to repay the amount paid over to Borrowers (plus any penalties,
interest or other charges imposed by the relevant Governmental Body) to Agent or
such Lender, in the event Agent or such Lender is required to repay such refund
to such Governmental Body. This Section shall not be construed to require Agent
or such Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to Borrowers or any other
Person.

(i)    For purposes of this Section, the term “Applicable Law” includes FATCA,
and the term “Lender” includes Swing Loan Lender, any Participant, and Issuer.

3.11.    Replacement of Lenders.

(a) If any Lender (an “Affected Lender”) (i) makes demand upon Borrowers for (or
if Borrowers are otherwise required to pay) amounts pursuant to Section 3.7 or
3.9 hereof,

 

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or if Borrowers are required to pay any Indemnified Taxes or additional amounts
to any Lender or any Governmental Body for the account of any Lender pursuant to
Section 3.10 hereof and, in each case, such Lender has declined or is unable to
designate a different lending office in accordance with paragraph (b) of this
Section, (ii) is unable to make or maintain LIBOR Rate Loans as a result of a
condition described in Section 2.2(i) hereof, (c) is a Defaulting Lender, or
(d) denies any consent requested by the Agent pursuant to Section 16.2(b)
hereof, Borrowers may, within one hundred twenty (120) days of receipt of such
demand, notice (or the occurrence of such other event causing Borrowers to be
required to pay such compensation or causing Section 2.2(i) hereof to be
applicable), or such Lender becoming a Defaulting Lender or denial of a request
by Agent pursuant to Section 16.2(b) hereof, as the case may be, by notice in
writing to the Agent and such Affected Lender (A) request the Affected Lender to
cooperate with Borrowers in obtaining a replacement Lender satisfactory to Agent
and Borrowers (the “Replacement Lender”); (B) request the non-Affected Lenders
to acquire and assume all of the Affected Lender’s Advances and its Revolving
Commitment Percentage and/or FILO Commitment Percentage, as applicable, as
provided herein, but none of such Lenders shall be under any obligation to do
so; or (C) propose a Replacement Lender reasonably satisfactory to Agent. If any
satisfactory Replacement Lender shall be obtained, and/or if any one or more of
the non-Affected Lenders shall agree to acquire and assume all of the Affected
Lender’s Advances and its Revolving Commitment Percentage and/or FILO Commitment
Percentage, as applicable, then such Affected Lender shall assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 16.3 hereof), all of its Advances and its
Revolving Commitment Percentage and/or FILO Commitment Percentage, as
applicable, and of its interests, rights and obligations under this Agreement
and the Other Documents to such Replacement Lender or non-Affected Lenders, as
the case may be, in exchange for payment of the principal amount so assigned and
all interest and fees accrued on the amount so assigned, plus all other
Obligations then due and payable to the Affected Lender. If any Affected Lender
does not execute an assignment in accordance with Section 16.3 within five
(5) Business Days after receipt of notice to do so by Agent or Borrowing Agent,
then such assignment shall become effective for purposes of Section 16.3 and
this Agreement upon execution by Agent and Borrowing Agent.

(b)    If any Borrower is or will be required to pay any Indemnified Taxes or
additional amounts to any Lender or any Governmental Body for the account of any
Lender pursuant to Section 3.7, 3.9 or 3.10, then such Lender shall, at the
written request of the Borrowers, use reasonable efforts to designate a
different lending office for funding or booking its Obligations hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the reasonable judgment of such Lender, such designation
or assignment (i) would eliminate or reduce amounts payable pursuant to
Section 3.7, 3.9 or 3.10 in the future, (ii) would not subject such Lender to
any material unreimbursed cost or expense and would not otherwise be materially
disadvantageous to such Lender, and (iii) would not require such Lender to take
any action inconsistent with its internal policies or legal or regulatory
restrictions. If the Borrowers request a different lending office, then the
Borrowers hereby agree to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

 

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IV. COLLATERAL: GENERAL TERMS

4.1.    Security Interest in the Collateral. To secure the prompt payment and
performance to Agent, Issuer and each Lender (and each other holder of any
Obligations) of the Obligations, each Borrower and each Guarantor hereby
assigns, pledges and grants to Agent for its benefit and for the ratable benefit
of each Lender, Issuer and each other Secured Party, a continuing security
interest in and to and Lien on all of its Collateral (other than, for the
avoidance of doubt, any Excluded Property), whether now owned or existing or
hereafter created, acquired or arising and wheresoever located. Each Borrower
and each Guarantor shall mark its books and records as may be necessary or
appropriate to evidence, protect and perfect Agent’s security interest. Each
Borrower and each Guarantor shall provide Agent with written notice of all
commercial tort claims with a value in excess of $500,000 individually and
$1,000,000 in the aggregate for all such claims, in the Compliance Certificate
for the period in which any legal proceedings related to any such claim(s) shall
commence, such notice to contain a brief description of the claim(s), the events
out of which such claim(s) arose, the parties against which such claims have
been asserted and the case title together with the applicable court and docket
number. Upon delivery of each such notice, such Borrower or Guarantor shall be
deemed to thereby grant to Agent a security interest and lien in and to such
commercial tort claims described therein and all proceeds thereof. Each Borrower
and each Guarantor shall provide Agent with written notice promptly upon
becoming the beneficiary under any letter of credit or otherwise obtaining any
right, title or interest in any letter of credit rights, in each case having a
face amount that exceeds $500,000 individually and $1,000,000 in the aggregate
for all such letters of credit, and at Agent’s request shall take such actions
as Agent may reasonably request for the perfection of Agent’s security interest
therein.

4.2.    Perfection of Security Interest. Each Borrower and each Guarantor shall
take all action that may be necessary, or that Agent may reasonably request, so
as at all times to maintain the validity, perfection, enforceability and
priority of Agent’s security interest in and Lien on the Collateral or to enable
Agent to protect, exercise or enforce its rights hereunder and in the
Collateral, including, but not limited to, (i) immediately discharging all Liens
other than Permitted Encumbrances, (ii) to the extent reasonably requested by
Agent, using commercially reasonable efforts to obtain Lien Waiver Agreements
with respect to each location as to which Collateral having a value in excess of
$5,000,000 is controlled or maintained, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping
or marking, in such manner as Agent may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, in each case having a value in excess of
$500,000 individually and $1,000,000 in the aggregate, and (iv) executing and
delivering financing statements, account control agreements (except with respect
to Excluded Accounts), instruments of pledge, notices and assignments, in each
case in form and substance reasonably satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent’s security
interest in and Lien on the Collateral under the Uniform Commercial Code or
other Applicable Law. By its signature hereto, each Borrower and each Guarantor
hereby authorizes Agent to file against such Borrower or Guarantor, one or more
financing, continuation or amendment statements pursuant to the Uniform
Commercial Code in form and substance reasonably satisfactory to Agent (which
statements may have a description of collateral which is broader than that set
forth herein, including without limitation a description of Collateral as “all
assets” and/or “all personal

 

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property” of any Borrower or Guarantor). All reasonable and documented
out-of-pocket charges, expenses and fees Agent may incur in doing any of the
foregoing, and any local taxes relating thereto, at all times after the
occurrence and during the continuation of a Cash Dominion Event, shall be
charged to Borrowers’ Account as a Revolving Advance or FILO Advance, as
applicable, of a Domestic Rate Loan and added to the Obligations or, at Agent’s
option, (and at all times that a Cash Dominion Event has not occurred and is
continuing), be paid by Borrowers to Agent for its benefit and for the ratable
benefit of Lenders promptly upon demand.

4.3.    Preservation of Collateral. During the continuance of a Default or an
Event of Default, in addition to the rights and remedies set forth in
Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems
necessary to protect Agent’s interest in and to preserve the Collateral,
including the hiring of security guards or the placing of other security
protection measures as Agent may deem appropriate; and (b) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of Borrowers’ or Guarantors’
owned or leased property, in each case subject to any limitations under the Real
Property Leases and the Lien Waiver Agreements. During the continuance of an
Event of Default, in addition to the rights and remedies set forth in
Section 11.1 hereof and the immediately preceding sentence, Agent: (a) may
employ and maintain at any of any Borrower’s or Guarantor’s premises a custodian
who shall have full authority to do all acts necessary to protect Agent’s
interests in the Collateral; (b) may lease warehouse facilities to which Agent
may move all or part of the Collateral; and (c) may use any Borrower’s or
Guarantor’s owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral, in each case subject to any
limitations under the Real Property Leases and the Lien Waiver Agreements. Each
Borrower and each Guarantor shall cooperate fully with all of Agent’s efforts to
preserve the Collateral pursuant to the terms of this Agreement and the Other
Documents and will take such actions to preserve the Collateral as Agent may
direct. All of Agent’s reasonable and documented out-of-pocket expenses of
preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers’ Account as a Revolving Advance or a
FILO Advance, as applicable, of a Domestic Rate Loan and added to the
Obligations.

4.4.     Ownership and Location of Collateral.

(a)    With respect to the Collateral, at the time the Collateral becomes
subject to Agent’s security interest: (i) each Borrower or Guarantor, as
applicable, shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant to Agent a first priority security interest
(subject to Permitted Encumbrances having priority over the Lien of Agent by
operation of Applicable Law) in each and every item of its respective
Collateral; and, except for Permitted Encumbrances the Collateral shall be free
and clear of all Liens whatsoever; (ii) each of the representations and
warranties made by any Borrower or any Guarantor in or pursuant to this
Agreement, the Other Documents and any related agreements to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement, the Other Documents or any related
agreement, in each case in respect of or relating to any such Collateral, shall
be true and correct in all material respects on and as of such date as if made
on and as of such date (except (x) to the extent any such representation or
warranty is qualified by materiality or “Material Adverse Effect” or similar
language, in which case such representation

 

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and warranty shall be true and correct in all respects, and (y) to the extent
any such representation or warranty expressly relates only to any earlier and/or
specified date, in which case such representation and warranty shall be true and
correct in all material respects (or in all respects, as applicable) as of such
earlier and/or specified date); (iii) all signatures and endorsements of each
Borrower and each Guarantor that appear on such documents and agreements shall
be genuine and each Borrower and each Guarantor shall have full capacity to
execute same; and (iv) each Borrower’s and each Guarantor’s equipment and
Inventory shall be located as set forth on Schedules 4.4(b)(i), 4.4(b)(ii),
4.4(b)(iii) and 4.4(b)(iv) (collectively, “Schedule 4.4”) and shall not be
removed from such location(s) without the prior written consent of Agent except
(A) with respect to the sale of Inventory and transport of Inventory to or
between locations set forth on Schedule 4.4, in either case in the Ordinary
Course of Business, and (B) with respect to equipment, to the extent permitted
in Section 7.1(b) hereof.

(b)    (i) As of the Closing Date, there is no location at which any Borrower or
Guarantor has any Inventory (except for Inventory in transit) or other
Collateral other than those locations listed on Schedule 4.4(b)(i); (ii)
Schedule 4.4(b)(ii) hereto contains a correct and complete list, as of the
Closing Date, of the legal names and addresses of each warehouse at which
Inventory of any Borrower or Guarantor is stored, and none of the receipts
received by any Borrower or Guarantor from any warehouse states that the goods
covered thereby are to be delivered to bearer or to the order of a named Person
or to a named Person and such named Person’s assigns; (iii) Schedule 4.4(b)(iii)
hereto sets forth a correct and complete list as of the Closing Date of (A) each
place of business of each Borrower and each Guarantor and (B) the chief
executive office of each Borrower and each Guarantor; and (iv) Schedule
4.4(b)(iv) hereto sets forth a correct and complete list as of the Closing Date
of the location, by state and street address, of all Real Property owned or
leased by each Borrower and each Guarantor, identifying which properties are
owned and which are leased.

4.5.    Defense of Agent’s and Lenders’ Interests. Until payment and performance
in full of all of the Obligations, Agent’s security interests in the Collateral
shall continue in full force and effect. During such period no Borrower or
Guarantor shall, without Agent’s prior written consent, pledge, sell (except for
sales or other dispositions otherwise permitted in Section 7.1(b) hereof),
assign, transfer, create or suffer to exist a Lien upon or encumber or allow or
suffer to be encumbered in any way except for Permitted Encumbrances, any part
of the Collateral. Each Borrower and each Guarantor shall use all commercially
reasonable efforts to defend Agent’s security interests in the Collateral
against any and all Persons whatsoever (other than Persons holding Permitted
Encumbrances). At any time following demand by Agent for payment of all
Obligations upon the occurrence and during the continuance of an Event of
Default, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including:
labels, stationery, documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral, upon the occurrence
and during the continuance of an Event of Default, Borrowers and Guarantors
shall, upon demand, assemble it in the best manner possible and make it
available to Agent at a place reasonably convenient to Agent, subject to any
limitations under the Real Property Leases and the Lien Waiver Agreements. In
addition, with respect to all Collateral, Agent and Lenders shall be entitled to
all of the rights and remedies set forth herein and further provided to a
secured party on default by the Uniform Commercial Code or other Applicable Law.
Each Borrower and each Guarantor shall, and Agent may, at its option upon

 

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the occurrence and during the continuance of an Event of Default, instruct all
suppliers, carriers, forwarders, warehousers or others receiving or holding
cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver same to Agent and/or subject to Agent’s order and
if they shall come into any Borrower’s or Guarantor’s possession, they, and each
of them, shall be held by such Borrower or Guarantor in trust as Agent’s
trustee, and such Borrower or Guarantor will immediately deliver them to Agent
in their original form together with any necessary endorsement.

4.6.    Inspection of Premises; Physical Inventories.

(a)    At all reasonable times upon reasonable prior notice and from time to
time as often as Agent shall elect in its Permitted Discretion, Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Borrower’s and each Guarantor’s books, records,
audits, correspondence and all other papers relating to the Collateral and the
operation of each Borrower’s and each Guarantor’s business. Agent, any Lender
and their agents may enter upon any premises of any Borrower or Guarantor at any
time during business hours and at any other reasonable time, and from time to
time as often as Agent shall elect in its Permitted Discretion, for the purpose
of inspecting the Collateral and any and all records pertaining thereto and the
operation of such Borrower’s or Guarantor’s business; provided, that, each
Lender shall provide Borrowing Agent with reasonable notice prior to any visit
or inspection; provided, further, that absent the continuance of an Event of
Default, each Lender shall be limited to two such inspections in any twelve
(12) month period.

(b)    Without limiting the generality of the provisions of clause (a) above,
Borrowers and Guarantors shall cause not fewer than four (4) cycle counts to be
undertaken, at the expense of Borrowers, in each twelve (12) month period, in
each case consistent with past practices, conducted by such inventory takers as
are reasonably satisfactory to Agent and following such methodology as is
consistent with the methodology used in the immediately preceding inventory or
as otherwise may be reasonably satisfactory to Agent. Agent, at the expense of
Borrowers, may participate in and/or observe each scheduled cycle count of
Inventory which is undertaken on behalf of any Borrower or Guarantor. Borrowing
Agent, within sixty (60) days following the completion of such cycle count,
shall provide Agent with a reconciliation of the results of such cycle count (as
well as of any other cycle count or physical inventory undertaken by a Borrower
or Guarantor) and shall post such results to Borrowers’ and Guarantors’ stock
ledgers and general ledgers, as applicable. Borrowers and Guarantors shall
permit the Agent, in its Permitted Discretion, if any Event of Default has
occurred and is continuing, to cause such additional cycle counts and physical
inventories to be taken as Agent determines in its Permitted Discretion (each,
at the expense of Borrowers).

4.7.    Appraisals.

(a)    Agent may, in its Permitted Discretion (and shall, upon the direction of
the Required Lenders), at any time after the Closing Date and from time to time,
engage the services of an independent appraisal firm or firms of reputable
standing, reasonably satisfactory to Agent, for the purpose of appraising the
then current values of Borrowers’ and Guarantors’ assets; provided, that,
Borrowers and Guarantors shall be responsible for reimbursing Agent for only up
to one appraisal per Fiscal Year of Borrowers, unless (i) Undrawn Availability
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greater of (x) twenty percent (20%) of the Revolving Loan Cap and (y)
$52,500,000 for five (5) or more consecutive Business Days, in which case
Borrowers and Guarantors shall be responsible for reimbursing Agent for up to
two appraisals in the subsequent twelve month period, (ii) required by
Applicable Law, in which case Borrowers and Guarantors shall be responsible for
reimbursing Agent for all such appraisals undertaken by or on behalf of Agent,
or (iii) an Event of Default has occurred and is continuing, in which case
Borrowers and Guarantors shall be responsible for reimbursing Agent for all
appraisals undertaken by or on behalf of Agent. Absent the occurrence and
continuance of an Event of Default at such time, Agent shall consult with
Borrowers as to the identity of any firm described in the immediately preceding
sentence.

(b)    In the event the value of Borrowers’ Inventory, Receivables, and/or
Credit Card Receivables, as so determined pursuant to such appraisal, is less
than anticipated by Agent or Lenders, such that the Revolving Advances or FILO
Advances, as applicable, are in excess of such Advances permitted hereunder,
then, promptly upon Agent’s demand for same, to the extent required pursuant to
Section 2.9 hereof as a result of a reduction in the Formula Amount and/or the
FILO Formula Amount based on the implementation of such appraisal, Borrowers
shall make mandatory prepayments of the then outstanding Revolving Advances
and/or FILO Advances, as applicable, so as to eliminate the excess Advances.

4.8.    Receivables; Credit Card Receivables; Deposit Accounts and Securities
Accounts.

(a)    Each of the Receivables shall be a bona fide and valid account
representing a bona fide indebtedness incurred by the Customer therein named,
for a fixed sum as set forth in the invoice or settlement statement relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. The
Receivables shall be due and owing in accordance with the applicable Borrower’s
standard terms of sale without dispute, setoff or counterclaim except as may be
stated on the accounts receivable schedules delivered by Borrowers to Agent.
Each of the Credit Card Receivables, and all records, papers and documents
relating thereto, (i) is (x) genuine, and (y) in all material respects, correct
and what it purports to be, (ii) represents the legal, valid and binding
obligation of the account debtor, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating
to or limiting creditors’ rights generally or by equitable principles relating
to enforceability, evidencing indebtedness unpaid and owed by such account
debtor, arising out of the performance of labor or services or the sale, lease,
license, assignment or other disposition and delivery of the goods or other
property listed therein or out of an advance or a loan, and (iii) is in all
material respects in compliance and conforms with all applicable federal, state
and local Laws and Applicable Laws of any relevant foreign jurisdiction.

(b)    Each Customer, to the best of each Borrower’s knowledge, as of the date
each Receivable is created, is and will be solvent and able to pay all
Receivables on which the Customer is obligated in full when due. With respect to
such Customers of any Borrower who are not solvent, such Borrower has set up on
its books and in its financial records bad debt reserves to the extent required
in accordance with GAAP, adequate to cover such Receivables.

 

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(c)    Each Borrower’s and each Guarantor’s chief executive office as of the
Closing Date is located as set forth on Schedule 4.4(b)(iii). Until written
notice is given to Agent by Borrowing Agent of any other office at which any
Borrower or Guarantor keeps its records pertaining to Receivables and Credit
Card Receivables, all such records shall be kept at such executive office.

(d)    As and when required pursuant to the Post-Closing Letter, Borrowers shall
deliver to Agent copies of notifications (each, a “Credit Card Notification”) in
form and substance reasonably satisfactory to Agent, which have been executed on
behalf of each applicable Borrower and delivered to the Credit Card Issuers and
Credit Card Processors listed on Schedule 4.8(j)(ii). In addition, Borrowers
shall instruct their Customers and the Credit Card Processors and Credit Card
Issuers to deliver all remittances upon Receivables and Credit Card Receivables
(whether paid by check or by wire transfer of funds) to such Blocked Account(s)
and/or Depository Accounts (and any associated lockboxes) as Agent shall
designate from time to time as contemplated by Section 4.8(h) or as otherwise
established by Borrowers from time to time with the prior written consent of
Agent. Notwithstanding the foregoing, to the extent any Borrower or Guarantor
directly receives any remittances upon Receivables or Credit Card Receivables,
such Borrower or Guarantor shall, at such Borrower’s or Guarantor’s sole cost
and expense, (i) upon the occurrence and during the continuance of a Cash
Dominion Event, on Agent’s behalf and for Agent’s account, collect and hold in
trust for Agent all amounts received on Receivables or Credit Card Receivables,
and shall not commingle such collections with any Borrower’s or Guarantor’s
funds or use the same except to pay Obligations, and (ii) as soon as possible
and in any event no later than three (3) Business Days after the receipt thereof
(x) in the case of remittances paid by check, deposit all such remittances in
their original form (after supplying any necessary endorsements) and (y) in the
case of remittances paid by wire transfer of funds, transfer all such
remittances, in each case, into such Blocked Accounts(s) and/or Depository
Account(s). Upon the occurrence and during the continuance of a Cash Dominion
Event, each Borrower and each Guarantor shall deposit in a Blocked Account
and/or Depository Account or, upon request by Agent, deliver to Agent, in
original form and within one (1) Business Day after the date of receipt thereof,
all checks, drafts, notes, money orders, acceptances, cash and other evidences
of Indebtedness. Agent acknowledges and agrees that notwithstanding anything in
a Credit Card Notification, this Agreement or any Other Document to the
contrary, (A) Agent shall not provide notices to any Credit Card Issuers or
Credit Card Processors to direct remittances upon Receivables or Credit Card
Receivables to an account not identified in the applicable Credit Card
Notification unless a Cash Dominion Event has occurred and is continuing, and
(B) promptly following termination of any Cash Dominion Event, to the extent
Agent previously provided notices described in the foregoing clause (A) during
such Cash Dominion Event, Agent shall provide a notice to such Credit Card
Issuers and/or Credit Card Processors to direct such remittances to a Blocked
Account (but without prejudice to Agent’s right to provide subsequent notices if
another Cash Dominion Event arises thereafter).

(e)    At any time following the occurrence and during the continuance of a Cash
Dominion Event, Agent shall have the sole right to direct the collection of
Receivables and Credit Card Receivables. At any time following the occurrence
and during the continuance of an Event of Default, Agent shall have the right to
send notice of the assignment of, and Agent’s security interest in and Lien on,
the Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Agent’s actual collection expenses,

 

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including, but not limited to, stationery and postage, telephone, facsimile,
telegraph, secretarial and clerical expenses and the salaries of any collection
personnel used for collection, may be charged to Borrowers’ Account and added to
the Obligations.

(f)    At any time following the occurrence and during the continuance of an
Event of Default, Agent shall have the right to receive, endorse, assign and/or
deliver in the name of Agent or any Borrower or any Guarantor any and all
checks, drafts and other instruments for the payment of money relating to the
Receivables and Credit Card Receivables, and each Borrower and each Guarantor
hereby waives notice of presentment, protest and non-payment of any instrument
so endorsed. Each Borrower and each Guarantor hereby constitutes Agent or
Agent’s designee as such Borrower’s or Guarantor’s attorney-in-fact with power
(i) at any time, to sign such Borrower’s or Guarantor’s name on all financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and
to file same, (ii) at any time when a Cash Dominion Event has occurred and is
continuing, (A) to endorse such Borrower’s or Guarantor’s name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (B) to sign such Borrower’s or Guarantor’s name on any invoice or
bill of lading relating to any of the Receivables, the Credit Card Receivables,
drafts against Customers, assignments and verifications of Receivables and
Credit Card Receivables; (C) [reserved]; (D) to receive, open and dispose of all
mail addressed to any Borrower or Guarantor at any post office box/lockbox
maintained by Agent for Borrowers and Guarantors or at any other business
premises of Agent, and (iii) at any time when an Event of Default has occurred
and is continuing, (A) to demand payment of the Receivables and the Credit Card
Receivables; (B) to enforce payment of the Receivables and the Credit Card
Receivables by legal proceedings or otherwise; (C) to exercise all of such
Borrower’s or Guarantor’s rights and remedies with respect to the collection of
the Receivables, the Credit Card Receivables and any other Collateral; (D) to
sue upon or otherwise collect, extend the time of payment of, settle, adjust,
compromise, extend or renew the Receivables and the Credit Card Receivables;
(E) to settle, adjust or compromise any legal proceedings brought to collect
Receivables and the Credit Card Receivables; (F) to prepare, file and sign such
Borrower’s or Guarantor’s name on a proof of claim in bankruptcy or similar
document against any Customer; (G) to prepare, file and sign such Borrower’s or
Guarantor’s name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables and the Credit Card
Receivables; (H) to accept the return of goods represented by any of the
Receivables and the Credit Card Receivables; (I) to change the address for
delivery of mail addressed to any Borrower or Guarantor to such address as Agent
may designate; and (J) to do all other acts and things necessary to carry out
this Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence or willful
misconduct (in either case as determined by a court of competent jurisdiction in
a final non-appealable judgment); this power being coupled with an interest is
irrevocable until payment in full of the Obligations in accordance with the
terms of this Agreement.

(g)    Neither Agent nor any Lender shall, under any circumstances or in any
event whatsoever, have any liability for any error or omission or delay of any
kind occurring in the settlement, collection or payment of any of the
Receivables or any of the Credit Card Receivables or any instrument received in
payment of any of the foregoing, or for any damage resulting therefrom, except
for the gross negligence or willful misconduct of Agent or any Lender as
determined by a final and non-appealable judgment of a court of competent
jurisdiction.

 

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(h)    All proceeds of Collateral shall be deposited by Borrowers and Guarantors
into either (i) a lockbox account, dominion account, deposit account or such
other “blocked account” (“Blocked Accounts”) established at a bank or banks
acceptable to Agent in its Permitted Discretion (each such bank, a “Blocked
Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may
be reasonably acceptable to Agent or (ii) depository accounts (“Depository
Accounts”) established at Agent for the deposit of such proceeds. Agent, each
Blocked Account Bank, and each applicable Borrower or Guarantor shall enter into
a deposit account control agreement in form and substance reasonably
satisfactory to Agent that is sufficient to give Agent “control” (for purposes
of Articles 8 and 9 of the Uniform Commercial Code) in “springing form” over
such account and which directs such Blocked Account Bank, at the written
direction of Agent (which may not be given except upon the occurrence and during
the continuance of a Cash Dominion Event and shall be revoked by Agent when no
Cash Dominion Event is continuing, but without prejudice to Agent’s right to
provide subsequent directions if another Cash Dominion Event arises thereafter),
to transfer such funds so deposited on a daily basis or at other times
acceptable to Agent to Agent, either to any account maintained by Agent at said
Blocked Account Bank or by wire transfer to appropriate account(s) at Agent;
provided, that, with respect to accounts existing as of the Closing Date, such
control agreements shall be required to be delivered only as, when and to the
extent required pursuant to the Post-Closing Letter (without prejudice to
Borrowers’ and Guarantors’ obligations under Section 6.11). All funds deposited
in such Blocked Accounts or Depository Accounts (whether or not a Cash Dominion
Event has occurred and is continuing) shall immediately become subject to the
security interest of Agent for its own benefit and the ratable benefit of
Issuer, Lenders and all other holders of the Obligations, and each account
control agreement with such Blocked Account Bank shall contain an agreement by
such Blocked Account Bank to waive any offset rights against the funds so
deposited (except as may otherwise be agreed by Agent pursuant to such account
control agreement). Neither Agent nor any Lender assumes any responsibility for
such blocked account arrangement, including any claim of accord and satisfaction
or release with respect to deposits accepted by any Blocked Account Bank
thereunder. Upon the occurrence and during the continuance of a Cash Dominion
Event, but subject to Section 11.5, Agent shall apply all funds received by it
from the Blocked Accounts and/or Depository Accounts to the satisfaction of the
Obligations (including the cash collateralization of the Letters of Credit) in
the following order: (i) first, to the outstanding Swing Loans, (ii) second, pro
rata according to the applicable Revolving Commitment Percentages of Lenders, to
the outstanding Revolving Advances (including cash collateralization of all
Obligations relating to any outstanding Letters of Credit in accordance with the
provisions of Section 3.2(b)) (subject to any contrary provisions of
Section 2.22), and (iii) third, pro rata according to the applicable FILO
Commitment Percentages of Lenders, to the outstanding FILO Advances (subject to
any contrary provisions of Section 2.22).

(i)    No Borrower or Guarantor will, without Agent’s consent, compromise or
adjust any material amount of the Receivables or Credit Card Receivables (or any
amount to the extent such Receivables or Credit Card Receivables constitute
Eligible Receivables or Eligible Credit Card Receivables), or extend the time
for payment thereof, or accept any material returns

 

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(or any returns, as applicable) of merchandise or grant any additional
discounts, allowances or credits thereon except for those compromises,
adjustments, extensions, returns, discounts, credits and allowances as have been
heretofore customary in the Ordinary Course of Business of such Borrower or
Guarantor.

(j)    All deposit accounts (including all Blocked Accounts and Depository
Accounts), securities accounts and investment accounts of each Borrower, each
Guarantor, and each Subsidiary of any of the foregoing as of the Closing Date
are set forth on Schedule 4.8(j)(i). Attached hereto as Schedule 4.8(j)(ii) is a
list describing all arrangements as of the Closing Date to which any Borrower,
any Guarantor, and any Subsidiary of any of the foregoing is a party with
respect to the processing and/or payment to such Borrower, Guarantor, or
Subsidiary of the proceeds of any credit card charges and debit card charges for
sales made by such Borrower, Guarantor, or Subsidiary. No Borrower or Guarantor
shall open any new deposit account, securities account or investment account
unless (i) Borrowers shall have given written notice thereof to Agent, and
(ii) if such account is to be maintained with a bank, depository institution or
securities intermediary that is not Agent and is not an Excluded Account, such
bank, depository institution or securities intermediary, each applicable
Borrower or Guarantor and Agent shall within thirty (30) days after the opening
of such account (or, if a Cash Dominion Event has occurred and is continuing,
contemporaneously with the opening of such account) enter into an account
control agreement in form and substance reasonably satisfactory to Agent
sufficient to give Agent “control” (for purposes of Articles 8 and 9 of the
Uniform Commercial Code) over such account. No Borrower or Guarantor shall enter
into any agreements with Credit Card Issuers or Credit Card Processors other
than those expressly contemplated by this Section 4.8.

(k)    Notwithstanding anything to the contrary in this Agreement or any Other
Document:

(i)    Borrowers and Guarantors shall not be required to obtain deposit account
control agreements for any Excluded Accounts;

(ii)    Borrowers and Guarantors shall not be required to cause the cash
deposited in Excluded Accounts (other than Excluded Accounts described in clause
(d) of the definition of such term) to be remitted to a Blocked Account or a
Depository Account; and

(iii)    without limitation of subsection (d) above, Borrowers and Guarantors
may in their discretion maintain deposit accounts with banks or financial
institutions other than Agent as accounts for the deposit of the proceeds of
sales of Collateral at any one or more Stores (and not for purposes of making
disbursements or holding operating funds of any Borrower or Guarantor) (any such
account, a “Local Store Account”). All proceeds of all sales of Collateral at
any Store on any Business Day shall be deposited no less frequently than twice
per week into a Blocked Account or a Local Store Account; provided, that, Stores
shall be permitted to retain cash for Store operations in the Ordinary Course of
Business in an amount up to $3,000 at any one time. Borrowers and Guarantors
shall cause the funds in each Local Store Account to be transferred to a Blocked
Account maintained with Agent on each Business Day when the funds on deposit in
such Local Store Account shall exceed $10,000, and in any event no less
frequently than twice per week in accordance with the definition of “Excluded
Account”; provided, that, the Borrowers and Guarantors shall be permitted to
maintain de minimis amounts in each Local Store Account to cover fees and
chargebacks.

 

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4.9.    Inventory. To the extent Inventory held for sale or lease has been
produced by any Borrower, it has been and will be produced by such Borrower in
accordance in all material respects with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders thereunder.

4.10.    Maintenance of Equipment. The equipment useful and necessary to the
business of the Borrowers and Guarantors shall be maintained in good operating
condition and repair (reasonable wear and tear and casualty excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of such equipment shall be maintained and preserved
consistent with industry standards; provided, that, the same shall not be
required if not necessary for the continued operation of the business of the
Borrowers and Guarantors. No Borrower or Guarantor shall use or operate its
equipment in violation of any Applicable Law, except to the extent such
violation could not reasonably be expected to have a Material Adverse Effect.

4.11.    Exculpation of Liability. Nothing herein contained shall be construed
to constitute Agent or any Lender as any Borrower’s or Guarantor’s agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof,
except for the gross negligence or willful misconduct of Agent or any Lender (as
determined by a final and non-appealable judgment of a court of competent
jurisdiction). Neither Agent nor any Lender, whether by anything herein or in
any assignment or otherwise, assumes any of any Borrower’s or Guarantor’s
obligations under any contract or agreement assigned to Agent or such Lender,
and neither Agent nor any Lender shall be responsible in any way for the
performance by any Borrower or Guarantor of any of the terms and conditions
thereof.

4.12.    Financing Statements. Except with respect to the financing statements
naming Agent as secured party, the financing statements described on Schedule
1.2, and financing statements filed in connection with Permitted Encumbrances,
no financing statement covering any of the Collateral or any proceeds thereof is
or will be on file in any public office.

 

V. REPRESENTATIONS AND WARRANTIES.

Each Borrower and each Guarantor represents and warrants as follows:

5.1.    Authority. Such Borrower and such Guarantor has full power, authority
and legal right to enter into this Agreement and the Other Documents to which it
is a party and to perform all its respective Obligations hereunder and
thereunder. This Agreement and the Other Documents to which it is a party have
been duly executed and delivered by such Borrower and such Guarantor, and this
Agreement and the Other Documents to which it is a party constitute the legal,
valid and binding obligation of such Borrower and such Guarantor enforceable in
accordance with their terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, receivership, moratorium or
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creditors’ rights generally and by general principles of equity. The execution,
delivery and performance of this Agreement and of the Other Documents to which
it is a party (a) are within such Borrower’s and such Guarantor’s corporate or
limited liability company powers, as applicable, and have been duly authorized
by all necessary corporate or limited liability company action, as applicable,
(b) will not violate (i) the terms of such Borrower’s or such Guarantor’s
Organizational Documents, (ii) any Material Contract to which such Borrower or
such Guarantor is a party or by which such Borrower or such Guarantor is bound,
including the Intercompany Subordinated Loan Documents, the Holdings Loan
Documents, or the Acquisition Agreement, or (iii) any Applicable Law in any
material respect, (c) will not require the Consent of any Governmental Body, any
party to a Material Contract or any other Person, except those Consents set
forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or
compiled prior to the Closing Date and which are in full force and effect and
(d) will not result in the creation of any Lien except Permitted Encumbrances
upon any asset of such Borrower or such Guarantor, except, with respect to any
conflict, violation or Consent referred to in clause (b)(ii) (other than the
Intercompany Subordinated Loan Documents, the Holdings Loan Documents and the
Acquisition Agreement), (c), or (d) above, to the extent such conflict,
violation or failure to obtain such Consent, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.

5.2.    Formation and Qualification; Subsidiaries.

(a)    Such Borrower and such Guarantor is (i) duly incorporated or formed, as
applicable, (ii) in good standing under the laws of the state listed on
Schedule 5.2(a), and (iii) qualified to do business and is in good standing in
the states listed on Schedule 5.2(a) which constitute all states in which
qualification and good standing are necessary for such Borrower or such
Guarantor to conduct its business and own its property and where the failure to
so qualify, as to this clause (iii), could reasonably be expected to have a
Material Adverse Effect. Each Borrower and each Guarantor has delivered to Agent
true and complete copies of its Organizational Documents (including any
amendments thereto to the extent required to be delivered pursuant to
Section 9.5(g)).

(b)    The only Subsidiaries of each Borrower and each Guarantor as of the
Closing Date are listed on Schedule 5.2(b).

(c)    FINL PR (i) has no assets of the type included in the Formula Amount or
the FILO Formula Amount in excess of five percent (5%) of the total assets of
the Borrowers and Guarantors, taken as a whole, (ii) has no other assets in
excess of five percent (5%) of the total assets of the Borrowers and Guarantors,
taken as a whole, and (iii) conducts no business necessary to the conduct of the
Borrowers’ and Guarantors’ operations.

5.3.    [Intentionally Omitted].

5.4.    Tax Returns. Each Borrower and each Guarantor has filed all federal and
material state and local tax returns and other material reports that it is
required by Applicable Law to file and has paid all material taxes, assessments,
fees and other governmental charges that are due and payable, except to the
extent (i) Properly Contested, or (ii) not in excess of $250,000 in the
aggregate as to all such unpaid taxes, assessments, fees and other governmental
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provision for taxes on the books of each Borrower and each Guarantor is adequate
for all years not closed by applicable statutes, and for its current Fiscal
Year, and no Borrower or Guarantor has any knowledge of any material deficiency
or additional assessment in connection therewith not provided for on its books.

5.5.    Financial Statements.

(a)    The pro forma balance sheet of Borrowers and Guarantors on a Consolidated
Basis (the “Pro Forma Balance Sheet”) furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated by the Intercompany
Subordinated Loan Documents, the Holdings Loan Documents, the Acquisition
Agreement, this Agreement and the Other Documents (collectively, the
“Transactions”) and fairly reflects in all material respects the financial
condition of Borrowers and Guarantors on a Consolidated Basis as of the Closing
Date after giving effect to the Transactions. All financial statements referred
to in this subsection 5.5(a), including the related schedules and notes thereto,
have been prepared in accordance with GAAP, consistently applied, except as may
be disclosed in such financial statements.

(b)    The pro forma balance sheet and statements of operations and cash flow
projections of Borrowers and Guarantors on a Consolidated Basis for the years
2018 through 2023 (which include quarterly projections for the first four
quarters following the Closing Date and annual projections thereafter), copies
of which are annexed hereto as Exhibit 5.5(b) (the “Projections”) were prepared
in good faith based on estimates and assumptions believed by the management of
Borrowing Agent to be reasonable at the time of delivery thereof on the Closing
Date; provided, that, the Projections are subject to significant uncertainties
and contingencies, many of which are beyond the control of Borrowers and
Guarantors, that no assurance can be given that any particular estimate,
forecast, model, projection or other forward looking statement will be realized,
that the Projections are not to be viewed as facts and that the Projections may
vary from actual results during the periods covered by the Projections and that
such variances may be material. The Projections, together with the Pro Forma
Balance Sheet, are referred to herein collectively as the “Pro Forma Financial
Statements”.

(c)    The consolidated balance sheet of Borrowing Agent and its Subsidiaries as
of March 3, 2018, and the related statements of operations, changes in
shareholders’ equity, and cash flows for the Fiscal Year ended on such date, all
accompanied by reports thereon containing opinions without qualification by
independent certified public accountants (other than any qualification that is
expressly solely with respect to, or expressly resulting solely from, an
upcoming maturity date of borrowed money within one year from the date of such
opinion), copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application to
which such accountants concur) and present fairly, in all material respects, the
consolidated financial position of Borrowing Agent and its Subsidiaries at such
date and the consolidated results of their operations for such period. Since
March 3, 2018, there has been no event or circumstance that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.6.    Certificates of Beneficial Ownership. Each Certificate of Beneficial
Ownership executed and delivered to Agent and Lenders for a Borrower on or prior
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Agreement, as updated from time to time in accordance with this Agreement, is
accurate, complete and correct as of the date hereof and as of the date any such
update is delivered. Each Borrower acknowledges and agrees that the Certificate
of Beneficial Ownership for such Borrower is one of the Other Documents.

5.7.    Environmental Compliance.

(a)    Each Borrower and each Guarantor is, and to the knowledge of each has
been, in compliance with applicable Environmental Laws except as set forth on
Schedule 5.7 hereto or except in such instances in which the failure to so
comply, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.

(b)    Except as set forth on Schedule 5.7 or where the failure to so comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect: (i) there have been no releases, spills, discharges,
leaks or disposal (collectively referred to as “Releases”) of Hazardous
Materials at, upon, under or migrating from or onto any Real Property owned,
leased or occupied by any Borrower or any Guarantor, except for those Releases
which are in full compliance with Environmental Laws; (ii) there are no
underground storage tanks or polychlorinated biphenyls on any Real Property
owned by any Borrower or any Guarantor, except for such underground storage
tanks or polychlorinated biphenyls that are present in compliance with
Environmental Laws; (iii) to the knowledge of Borrowers and Guarantors, there
are no underground storage tanks or polychlorinated biphenyls on any Real
Property leased or occupied by any Borrower or any Guarantor, except for such
underground storage tanks or polychlorinated biphenyls that are present in
compliance with Environmental Laws; (iv) the Real Property including any
premises owned, leased or occupied by any Borrower or any Guarantor has never
been used by any Borrower or any Guarantor to dispose of Hazardous Materials,
except as authorized by Environmental Laws; and (v) no Hazardous Materials are
managed by any Borrower or any Guarantor on any Real Property including any
premises owned, leased or occupied by any Borrower or any Guarantor, excepting
such quantities as are managed in accordance with all applicable manufacturer’s
instructions and compliance with Environmental Laws and as are necessary for the
operation of the commercial business of any Borrower, of any Guarantor, or of
any tenant of any of the foregoing.

(c)     All Real Property owned by Borrowers and Guarantors is insured pursuant
to policies and other bonds which are valid and in full force and effect and
which provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of each such Borrower and
Guarantor in accordance with prudent business practice in the industry of such
Borrower and Guarantor.

5.8.    Solvency; No Litigation, Violation, Indebtedness or Default; ERISA
Compliance.

(a)    (i) After giving effect to the Transactions as of the Closing Date, and
before and after giving effect to each Advance, the Borrowers and the
Guarantors, taken as a whole, are and will be solvent, able to pay their debts
as they mature, and have and will have capital sufficient to carry on their
business and all businesses in which they are about to engage, (ii) as of the
Closing Date, after giving effect to the Transactions, the fair present saleable
value of the assets of the Borrowers and the Guarantors, taken as a whole,
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concern basis, is in excess of the amount of their liabilities, and
(iii) subsequent to the Closing Date, the fair saleable value of the assets of
the Borrowers and the Guarantors, taken as a whole (calculated on a going
concern basis) will be in excess of the amount of their liabilities.

(b)    Except as disclosed in Schedule 5.8(b)(i), no Borrower or Guarantor has
any pending or, to the knowledge of such Borrower or Guarantor, threatened
litigation, arbitration, actions or proceedings (i) affecting or pertaining to
the transactions contemplated by this Agreement and the Other Documents, the
Intercompany Subordinated Loan Documents, the Holdings Loan Documents, or the
Acquisition Agreement, or (ii) which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. No Borrower or
Guarantor has any outstanding Indebtedness other than the Obligations, except
for (i) Indebtedness disclosed in Schedule 5.8(b)(ii) and (ii) Indebtedness
otherwise permitted under Section 7.8 hereof.

(c)    No Borrower or Guarantor is in violation of any applicable statute, law,
rule, regulation or ordinance in any respect which could reasonably be expected
to have a Material Adverse Effect, nor is any Borrower or Guarantor in violation
of any order of any court, Governmental Body or arbitration board or tribunal
which could reasonably be expected to have a Material Adverse Effect. Each
Pension Benefit Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state laws.

(d)    As of the Closing Date, no Borrower, Guarantor, or any member of the
Controlled Group maintains or is required to contribute to any Pension Benefit
Plan other than those listed on Schedule 5.8(d) hereto. Except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) each Borrower, each Guarantor, and each member of the
Controlled Group has met all applicable minimum funding requirements under
Section 302 of ERISA and Section 412 of the Code in respect of each Pension
Benefit Plan, and each Pension Benefit Plan is in compliance with Sections 412,
430 and 436 of the Code and Sections 206(g), 302 and 303 of ERISA, without
regard to waivers and variances; (ii) each Pension Benefit Plan which is
intended to be a qualified plan under Section 401(a) of the Code has received a
favorable determination, opinion or advisory letter from the Internal Revenue
Service (or an application for such a letter is currently being processed by the
Internal Revenue Service) and, to the knowledge of Borrowers, nothing has
occurred which would prevent, or cause the loss of, such qualification;
(iii) none of any Borrower, any Guarantor, or any other member of the Controlled
Group has incurred any liability to the PBGC other than for the payment of
premiums, and there are no PBGC premium payments which have become due which are
unpaid; (iv) no Pension Benefit Plan has been terminated by the plan
administrator thereof nor by the PBGC, and there is no occurrence which would
cause the PBGC to institute proceedings under Title IV of ERISA to terminate any
Pension Benefit Plan; (v) the current value of the assets of each Pension
Benefit Plan exceeds the present value of the accrued benefits; (vi) none of any
Borrower, any Guarantor, or any other member of the Controlled Group has
breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Pension Benefit Plan; (vii) none of any Borrower, any
Guarantor, or any other member of a Controlled Group has incurred any liability
for any excise tax arising under Section 4971 or 4972 of the Code, and no fact
is known by any Borrower, Guarantor or other member of the Controlled Group to
exist which could reasonably be expected to give rise to any such liability;
(viii) none of any Borrower, any Guarantor, or any other member of the
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Group nor any fiduciary of, nor any trustee to, any Pension Benefit Plan, has
engaged in a “prohibited transaction” described in Section 406 of the ERISA or
Section 4975 of the Code with respect to such Pension Benefit Plan nor taken any
action which would constitute or result in a Termination Event with respect to
any such Pension Benefit Plan which is subject to ERISA; (ix) no Termination
Event has occurred or is reasonably expected to occur; (x) there exists no event
described in Section 4043 of ERISA, for which the thirty (30) day notice period
has not been waived; (xi) none of any Borrower, any Guarantor, or any other
member of the Controlled Group has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; (xii) none of any Borrower, any
Guarantor, or any other member of the Controlled Group has withdrawn, completely
or partially, within the meaning of Section 4203 or 4205 of ERISA, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980 and no fact is known by any Borrower, Guarantor or other
member of the Controlled Group to exist which could reasonably be expected to
result in any such liability; and (xiii) no Pension Benefit Plan fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty with respect to such Pension Benefit Plan or for any failure in connection
with the administration or investment of the assets of a Pension Benefit Plan.

5.9.    Patents, Trademarks, Copyrights and Licenses. All Intellectual Property
owned by any Borrower or any Guarantor: (i) that is material to the business or
operations of any Borrower or Guarantor, is set forth on Schedule 5.9(a) (as
such schedule may be updated in accordance with the terms hereof from time to
time); and (ii) is valid and has been duly registered or filed with all
appropriate Governmental Bodies. All License Agreements that are material to the
business of any Borrower or any Guarantor (other than commercially available
off-the-shelf software that is generally available to the public which have been
licensed to a Borrower or Guarantor pursuant to an end-user license) are set
forth on Schedule 5.9(b) (as such schedule may be updated in accordance with the
terms hereof from time to time). All Intellectual Property (including, without
limitation, License Agreements) described on Schedule 5.9(a) and Schedule 5.9(b)
constitutes all of the intellectual property rights which are necessary for the
operation of the businesses of Borrowers and Guarantors. To the knowledge of
Borrowers and Guarantors, there is no objection to, pending challenge to the
validity of, or proceeding by any Governmental Body to suspend, revoke,
terminate or adversely modify, any such Intellectual Property that is material
to the conduct of the business of the Borrowers and Guarantors and no Borrower
or Guarantor is aware of any grounds for any challenge or proceedings in respect
of such Intellectual Property, except as set forth in Schedule 5.9(c) hereto
(together with Schedule 5.9(a) and Schedule 5.9(b), collectively, “Schedule
5.9”). All Intellectual Property owned by any Borrower or Guarantor and material
to the conduct of its business consists of original material or property
developed by such Borrower or Guarantor or was lawfully acquired by such
Borrower or Guarantor from the proper and lawful owner thereof.

5.10.    Licenses and Permits. Except as set forth in Schedule 5.10 or where the
failure to be in such compliance or to so procure and possess could not
reasonably be expected to have a Material Adverse Effect, each Borrower and each
Guarantor (a) is in compliance with and (b) has procured and is now in
possession of, all licenses or permits required by any Applicable Law for the
operation of its business in each jurisdiction wherein it is now conducting or
proposes to conduct business.

 

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5.11.    [Intentionally Omitted].

5.12.    No Default. No Default or Event of Default has occurred and is
continuing.

5.13.    No Burdensome Restrictions. No Borrower or Guarantor is party to any
contract or agreement the performance of which could reasonably be expected to
have a Material Adverse Effect. Each Borrower and each Guarantor has heretofore
delivered or made available to Agent true and complete copies of all Material
Contracts to which it is a party or to which it or any of its properties is
subject. No Borrower or Guarantor has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which
is not a Permitted Encumbrance.

5.14.    No Labor Disputes. Each of the Borrowers and Guarantors is in
compliance with all employment agreements, employment contracts, collective
bargaining agreements and other agreements among any Borrower or Guarantor and
its employees (collectively, “Labor Contracts”) and all applicable federal,
state and local labor and employment Laws including those related to equal
employment opportunity and affirmative action, labor relations, minimum wage,
overtime, child labor, medical insurance continuation, worker adjustment and
retraining notices, immigration controls and worker and unemployment
compensation, where the failure to comply could reasonably be expected to have a
Material Adverse Effect. There are no outstanding grievances, arbitration awards
or appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of any of the Borrowers and Guarantors which in any case could
reasonably be expected to have a Material Adverse Effect.

5.15.    Margin Regulations. None of any Borrower, any Guarantor, or any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock. No part of the proceeds of the Advances will be used to purchase
or carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock or for any purpose that violates the
provisions of Regulation T, U, or X of the Board of Governors of the Federal
Reserve System. None of any Borrower, any Guarantor, or any Subsidiary has any
current intention as of the Closing Date to acquire any Margin Stock.

5.16.    Investment Company Act. No Borrower or Guarantor is an “investment
company” as defined in, and registered or required to be registered under, the
Investment Company Act of 1940, as amended, nor is it controlled by such a
company.

5.17.    Disclosure. No representation or warranty made by any Borrower or
Guarantor in this Agreement or any Other Document, or in any financial
statement, report, certificate or any other document furnished in connection
herewith or therewith, taken as a whole, contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not materially misleading in light of the
circumstances under which they were made, it being understood and agreed, with
respect to Projections, that (w) such Projections and other information are
subject to significant uncertainties and contingencies, many of which are beyond
the control of Borrowers and Guarantors, (x) no assurance can be given that any
particular estimate, forecast, model, projection or other forward looking
statement will be realized, (y) the Projections are not to be viewed as facts
and that the Projections may vary from actual results during the periods covered
by the Projections, and (z) such variances

 

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may be material. There is no fact known to any Borrower or Guarantor which such
Borrower or Guarantor has not disclosed to Agent in writing with respect to the
Transactions which could reasonably be expected to have a Material Adverse
Effect.

5.18.    Delivery of Intercompany Subordinated Loan Documents and Holdings Loan
Documents. Agent has received complete copies of the Intercompany Subordinated
Loan Documents, the Holdings Loan Documents, and material related documents
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any) and all amendments thereto, waivers relating
thereto and other material side letters or agreements affecting the terms
thereof. None of such documents and agreements has been amended or supplemented
in any material respect, nor have any of the provisions thereof been waived,
except pursuant to a written agreement or instrument which has heretofore been
delivered to Agent.

5.19.    Delivery of Acquisition Agreement. Agent has received complete copies
of the Acquisition Agreement and material related documents (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other material side letters or agreements affecting the terms thereof. None
of such documents and agreements has been amended or supplemented in any
material respect, nor have any of the provisions thereof been waived, except
pursuant to a written agreement or instrument which has heretofore been
delivered to Agent.

5.20.    EEA Financial Institution. No Borrower or Guarantor is an EEA Financial
Institution.

5.21.    Business and Property of Borrowers and Guarantors. Upon and after the
Closing Date, Borrowers and Guarantors do not propose to engage in any business
other than the online and in-store retail sale of athletic footwear and related
merchandise and activities necessary to conduct the foregoing, and any other
businesses substantially similar, related, ancillary or incidental thereto. On
the Closing Date, each Borrower and each Guarantor will own all the property and
possess all of the rights and Consents necessary for the conduct of the business
of such Borrower or Guarantor.

5.22.    [Intentionally Omitted].

5.23.    Federal Securities Laws. None of any Borrower, any Guarantor, or any of
their respective Subsidiaries (i) is required to file periodic reports under the
Exchange Act following the Closing Date, subject to the approval by the SEC of
the deregistration of the securities of Borrowing Agent (the request for which
deregistration was submitted to the SEC on or about the Closing Date), (ii) has
any securities registered under the Exchange Act, subject to the approval by the
SEC of the deregistration of the securities of Borrowing Agent (the request for
which deregistration was submitted to the SEC on or about the Closing Date), or
(iii) has filed a registration statement that has not yet become effective under
the Securities Act.

5.24.    Equity Interests. The authorized and outstanding Equity Interests of
each Borrower and each Guarantor, and each legal and beneficial holder thereof,
in each case as of the Closing Date, are as set forth on Schedule 5.24(a)
hereto. All of the Equity Interests of each Borrower and each Guarantor have
been duly and validly authorized and issued and are fully

 

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paid and non-assessable and have been sold and delivered to the holders thereof
in compliance with, or under valid exemption from, all federal and state laws
and the rules and regulations of each Governmental Body governing the sale and
delivery of securities. Except for the rights and obligations set forth on
Schedule 5.24(b) and as set forth in the Organizational Documents of Borrowers
and Guarantors, after giving effect to the Transactions, there are no
subscriptions, warrants, options, calls, commitments, rights or agreements by
which any Borrower, any Guarantor, or any of the shareholders of any of the
foregoing is bound relating to the issuance, transfer, voting or redemption of
shares of its Equity Interests or any pre-emptive rights held by any Person with
respect to the Equity Interests of Borrowers or Guarantors as of the Closing
Date. Except as set forth on Schedule 5.24(c), Borrowers and Guarantors have
not, after giving effect to the Transactions, issued any securities convertible
into or exchangeable for shares of their Equity Interests or any options,
warrants or other rights to acquire such shares or securities convertible into
or exchangeable for such shares as of the Closing Date.

5.25.    Commercial Tort Claims. As of the Closing Date, no Borrower or
Guarantor has any commercial tort claims except as set forth on Schedule 5.25
hereto.

5.26.    Letter of Credit Rights. As of the Closing Date, no Borrower or
Guarantor has any letter of credit rights except as set forth on Schedule 5.26
hereto.

5.27.    Material Contracts. Schedule 5.27 sets forth all Material Contracts of
Borrowers and Guarantors as of the Closing Date. All Material Contracts are in
full force and effect and no defaults currently exist thereunder which could
reasonably be expected to have a Material Adverse Effect.

5.28.    Insurance. The properties of Borrowers, Guarantors, and their
respective Subsidiaries are insured with financially sound and reputable
insurance companies which are not Affiliates of Borrowers or Guarantors, in such
amounts (after giving effect to any self-insurance), with such deductibles and
covering such risks (including, without limitation, workmen’s compensation,
public liability, business interruption and property damage insurance) as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the applicable Borrower, Guarantor, or
Subsidiary operates. Schedule 5.28 sets forth a description of all insurance
maintained by or on behalf of the Borrowers, Guarantors, and their respective
Subsidiaries as of the Closing Date. Each insurance policy listed on Schedule
5.28 is in full force and effect as of the Closing Date and all premiums in
respect thereof that are due and payable have been paid.

5.29.    Perfection of Agent’s Liens.

(a)    This Agreement and the Other Documents create in favor of Agent, for the
benefit of the Secured Parties, a legal, valid, continuing and enforceable
security interest in the Collateral. Upon the filing of the UCC-1 financing
statements, releases and other filings (which Borrowers and Guarantors represent
are in appropriate form) in the office of secretary of state (or other
applicable filing office) of each Borrower’s and Guarantor’s jurisdiction of
organization specified in Schedule 5.2(a) and/or the obtaining of “control” (as
defined in the Uniform Commercial Code), Agent will have a perfected Lien on,
and security interest in, to and under all right, title and interest of
Borrowers and Guarantors in all of their respective Collateral that may

 

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be perfected by filing, recording or registering a financing statement or
analogous document (including without limitation the proceeds of such Collateral
subject to the limitations relating to such proceeds in the Uniform Commercial
Code) or by obtaining control, under the Uniform Commercial Code (in effect on
the date this representation is made) in each case prior and superior in right
to any other Person (subject only to holders of Permitted Encumbrances having
priority over the Lien of Agent by operation of Applicable Law).

(b)    When this Agreement, the Intellectual Property Security Agreement or a
short form hereof or thereof is filed in the United States Patent and Trademark
Office and the United States Copyright Office and when UCC-1 financing
statements, releases and other filings in appropriate form are filed in the
office of the secretary of state (or other applicable filing office) of each
Borrower’s and Guarantor’s jurisdiction of organization specified in Schedule
5.2(a), Agent shall have a fully perfected Lien on, and security interest in,
all right, title and interest of the applicable Borrowers and Guarantors in
their respective Intellectual Property in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other Person (subject only to holders of Permitted
Encumbrances having priority over the Lien of Agent by operation of Applicable
Law) (it being understood that subsequent recordings in the United States Patent
and Trademark Office and the United States Copyright Office may be necessary to
perfect a Lien on registered trademarks, trademark applications and copyrights
acquired by the Borrowers and Guarantors after the Closing Date).

5.30.    Brokers. No broker or finder brought about the obtaining, making or
closing of the Advances or transactions contemplated by this Agreement and the
Other Documents, and no Borrower, Guarantor, or Affiliate thereof has any
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.

5.31.    Customer and Trade Relations. There exists no actual or, to the
knowledge of any Borrower or Guarantor, threatened, termination or cancellation
of, or any material adverse modification or change in the business relationship
of any Borrower or Guarantor with any supplier material to its operations.

5.32.    Casualty. Neither the businesses nor the properties of any Borrower,
Guarantor, or Subsidiary are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance) that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

5.33.    Senior Debt Status. The Obligations shall at all times be pari passu or
prior in right to all other Indebtedness of Borrowers and Guarantors, other than
Indebtedness secured by Permitted Encumbrances.

 

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VI. AFFIRMATIVE COVENANTS.

Each Borrower and each Guarantor shall, until payment in full of the
Obligations:

6.1.    Compliance with Laws. Comply with all Applicable Laws with respect to
the Collateral or any part thereof or to the operation of such Borrower’s or
Guarantor’s business the non-compliance with which could reasonably be expected
to have a Material Adverse Effect (except to the extent any separate provision
of this Agreement shall expressly require compliance with any particular
Applicable Law(s) pursuant to another standard). Each Borrower and each
Guarantor may, however, contest or dispute any Applicable Laws in any reasonable
manner; provided, that, any related Lien is inchoate or stayed and sufficient
reserves are established to the reasonable satisfaction of Agent to protect
Agent’s Lien on or security interest in the Collateral.

6.2.    Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business
practices and maintain all of its properties useful or necessary in its business
in good working order and condition in accordance with industry standards
(reasonable wear and tear and casualty excepted and except as may be disposed of
in accordance with the terms of this Agreement), including all Intellectual
Property that is material to the conduct of the business of Borrowers and
Guarantors, and take all commercially reasonable actions reasonably necessary to
enforce and protect the validity of any material Intellectual Property right or
other right included in the Collateral that is material to the conduct of the
business of Borrowers and Guarantors; provided, that, nothing in this subsection
(a) shall prevent a Borrower or Guarantor from discontinuing the operation or
maintenance of any of such property if such discontinuance is, in the judgment
of such Borrower or Guarantor, desirable in the conduct of its business;
(b) keep in full force and effect its existence and comply in all respects with
Applicable Laws governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect; and (c) make all
such reports and pay all such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United
States or any political subdivision thereof where the failure to do so could
reasonably be expected to have a Material Adverse Effect.

6.3.    Books and Records; Accountants.

(a)    Keep proper books of record and account in which full, true and correct
entries will be made of all dealings or transactions of or in relation to its
business and affairs (including without limitation accruals for taxes,
assessments, Charges, levies and claims, allowances against doubtful Receivables
and accruals for depreciation, obsolescence or amortization of assets), all in
accordance with, or as required by, GAAP consistently applied in the opinion of
such independent public accountant as shall then be regularly engaged by
Borrowers and Guarantors; and

(b)    at all times retain an independent public accountant which is reasonably
satisfactory to Agent (it being acknowledged and agreed that, as of the Closing
Date, KPMG LLP is reasonably satisfactory to Agent) and instruct such accountant
to cooperate with, and be available to, Agent or its representatives to discuss
Borrowers’ and Guarantors’ financial performance, financial condition, operating
results, controls, and such other matters, within the scope of the retention of
such accountant, as may be reasonably raised by Agent; provided, that, an
Authorized Officer of Holdings or Borrowing Agent may be present in such
discussions (but such presence shall not be a pre-requisite to the occurrence of
such discussions).

 

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6.4.    Payment of Obligations. Pay, when the same shall become due and payable
(subject to any applicable grace periods), all obligations and liabilities
(other than Indebtedness, which is governed by Section 6.7), including (i)
taxes, assessments and other Charges lawfully levied or assessed upon such
Borrower or Guarantor or any of the Collateral, including real and personal
property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes, and (ii) all lawful
claims (including, without limitation, claims of landlords, warehousemen,
customs brokers, freight forwarders, consolidators and carriers) which, if
unpaid, would by law become a Lien upon its property (which Lien is not a
Permitted Encumbrance), except in the case of clause (i) and (ii) to the extent
Properly Contested.

6.5.    Financial Covenant. Cause to be maintained at all times Undrawn
Availability of not less than the greater of (i) $30,000,000 and (ii) ten
percent (10%) of the Revolving Loan Cap.

6.6.    Insurance.

(a)    (i) Keep all its insurable properties and properties in which such
Borrower or Guarantor has an interest insured against the hazards of fire,
flood, sprinkler leakage, those hazards covered by extended coverage insurance
and such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to such Borrower’s or Guarantor’s
including business interruption insurance; (ii) maintain a bond or bonds in such
amounts as is customary in the case of companies engaged in businesses similar
to such Borrower or Guarantor insuring against larceny, embezzlement or other
criminal misappropriation of insured’s officers and employees who may either
singly or jointly with others at any time have access to the assets or funds of
such Borrower or Guarantor either directly or through authority to draw upon
such funds or to direct generally the disposition of such assets; (iii) maintain
public and product liability insurance against claims for personal injury, death
or property damage suffered by others; (iv) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which such Borrower or Guarantor is engaged in business;
(v) furnish Agent with (A) copies of all policies and evidence of the
maintenance of such policies by the renewal thereof at least thirty (30) days
before any expiration date, and (B) appropriate loss payable endorsements in
form and substance reasonably satisfactory to Agent, naming Agent as an
additional insured, mortgagee and/or lender loss payee (as applicable) as its
interests may appear with respect to all insurance coverage referred to in
clauses (i) and (iii) above, and providing (I) that all proceeds thereunder
shall be payable to Agent to the extent required hereunder or under an Other
Document, (II) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy, and (III) that such
policy and loss payable clauses may not be cancelled, amended or terminated
unless at least thirty (30) days prior written notice is given to Agent (or in
the case of non-payment, at least ten (10) days prior written notice). In the
event of any loss thereunder, the carriers named therein hereby are directed by
Agent and the applicable Borrower or Guarantor to make payment for such loss to
Agent and not to Agent and such Borrower or Guarantor jointly; provided, that,
if no Cash Dominion Event is then continuing at the time of a casualty loss,
Borrowers and Guarantors shall be permitted to retain (and Agent shall remit to
the applicable Borrower or Guarantor) the proceeds of the applicable insurance
claim to the extent not in excess of $1,000,000 so long as such Borrower or
Guarantor promptly (but in any event within ninety (90) days of such Borrower or
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such proceeds) utilizes such proceeds to repair, restore or replace the assets
that are the subject of such claim. If any insurance losses are paid by check,
draft or other instrument payable to Agent and such Borrower or Guarantor
jointly, Agent may endorse such Borrower’s or Guarantor’s name thereon and do
such other things as Agent may deem advisable to reduce the same to cash.

(b)    Upon the occurrence and during the continuance of an Event of Default,
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in Sections 6.6(a)(i) and (iii) above. All loss recoveries
received by Agent (to the extent not remitted to the applicable Borrower or
Guarantor in accordance with the proviso set forth in the penultimate sentence
of Section 6.6(a) above) under any such insurance may be applied to the
Obligations, in such order as Agent in its sole discretion shall determine. Any
surplus shall be paid by Agent to Borrowers or applied as may be otherwise
required by Applicable Law. If any Borrower or Guarantor fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
such Borrower or Guarantor, which payments shall be charged to Borrowers’
Account and constitute part of the Obligations.

6.7.    Payment of Indebtedness and Leasehold Obligations. Pay, discharge or
otherwise satisfy (i) at or before maturity (subject, where applicable, to
specified grace periods) all its Indebtedness, except when the failure to do so
could not reasonably be expected to have a Material Adverse Effect or when the
amount or validity thereof is currently being Properly Contested, subject at all
times to any applicable subordination arrangement in favor of Lenders and
(ii) when due its rental obligations under all leases under which it is a
tenant, and shall otherwise comply, in all respects, with all other terms of
such leases and keep all such leases in full force and effect in accordance with
their respective terms and conditions, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect or when the amount
or validity thereof is currently being Properly Contested.

6.8.    Environmental Matters.

(a)    Ensure that the Real Property and all operations and businesses conducted
thereon are in compliance and remain in compliance with all Environmental Laws
and it shall manage any and all Hazardous Materials on any Real Property in
compliance with Environmental Laws, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

(b)    Establish and maintain an environmental management and compliance system
to assure and monitor continued compliance with all applicable Environmental
Laws, except where the failure to do so could not reasonably be expected to have
a Material Adverse Effect.

(c)    Respond promptly to any Hazardous Discharge or Environmental Complaint
and take all necessary action in order to safeguard the health of any Person and
to avoid subjecting the Collateral or Real Property to any Lien, except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect. If any Borrower or Guarantor shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or any Borrower or Guarantor
shall fail to comply with any of the requirements of any

 

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Environmental Laws as provided in this Section 6.8(c), Agent on behalf of
Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent’s interest in the Collateral at any time that an Event of
Default shall have occurred and be continuing: (i) give such notices or
(ii) enter onto the Real Property (or authorize third parties to enter onto the
Real Property) and take such actions as Agent (or such third parties as directed
by Agent) deem reasonably necessary or advisable, to remediate, remove, mitigate
or otherwise manage with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights, including any sums paid
in connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances or FILO
Advances, as applicable, shall be paid upon demand by Borrowers, and until paid
shall be added to and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other agreement between Agent, any
Lender, any Borrower, and any Guarantor.

6.9.    Standards of Financial Statements. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.10, 9.11, 9.12, and 9.13 as to which GAAP is
applicable to (i) present fairly, in all material respects, the financial
position of Intermediate Holdings and its Subsidiaries on a Consolidated Basis
(and, to the extent required in accordance with the terms hereof, on a
consolidating basis) as of the applicable date thereof, and (ii) be prepared in
accordance with GAAP applied on a basis consistent with prior practices (subject
to lack of footnotes and, in the case of interim financial statements, to normal
and recurring year-end adjustments),

6.10.    Federal Securities Laws. Promptly notify Agent in writing if any
Borrower, any Guarantor, or any of their respective Subsidiaries (i) is required
to file periodic reports under the Exchange Act, subject to the approval by the
SEC of the deregistration of the securities of Borrowing Agent (the request for
which deregistration was submitted to the SEC on or about the Closing Date),
(ii) registers any securities under the Exchange Act, subject to the approval by
the SEC of the deregistration of the securities of Borrowing Agent (the request
for which deregistration was submitted to the SEC on or about the Closing Date),
or (iii) files a registration statement under the Securities Act.

6.11.    Execution of Supplemental Instruments. Execute and deliver to Agent,
and furnish to Agent, from time to time, promptly after Agent’s request
therefor, such supplemental agreements, statements, assignments and transfers,
or instructions or documents relating to the Collateral, and such other
instruments, and take such actions, as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.

6.12.    ERISA Compliance. Establish, maintain and operate all Pension Benefit
Plans to comply in all material respects with the provisions of ERISA, and the
governing documents for the respective Pension Benefit Plans, except where such
failure to establish, maintain or operate such Pension Benefit Plans could not
reasonably be expected to result in a Material Adverse Effect.

6.13.    Government Receivables. Take all commercially reasonable steps
necessary to protect Agent’s interest in the Collateral under the Federal
Assignment of Claims Act, the Uniform Commercial Code and all other applicable
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deliver to Agent appropriately endorsed, any instrument or chattel paper
connected with any Receivable arising out of any contract between any Borrower
and the United States, any state or any department, agency or instrumentality of
any of them.

6.14.    Material Contracts. (a) Perform and observe all the terms and
provisions of each Material Contract to be performed or observed by it, except
to the extent that the failure to do so could not reasonably be expected to have
a Material Adverse Effect, (b) maintain each such Material Contract in full
force and effect in accordance with the terms thereof, (c) enforce the material
provisions of each such Material Contract in accordance with the terms thereof,
(d) take all such action to such end as may be from time to time reasonably
requested by Agent, (e) upon the reasonable request of Agent, make to each other
party to each such Material Contract such demands and requests for information
and reports or for action as any Borrower, Guarantor, or Subsidiary is entitled
to make under such Material Contract, and (f) cause each of its Subsidiaries to
do the foregoing.

6.15.    Keepwell. If it is a Qualified ECP Loan Party, then jointly and
severally, together with each other Qualified ECP Loan Party, hereby absolutely
unconditionally and irrevocably (a) guarantees the prompt payment and
performance of all Swap Obligations owing by each Non-Qualifying Party (it being
understood and agreed that this guarantee is a guaranty of payment and not of
collection), and (b) undertakes to provide such funds or other support as may be
needed from time to time by any Non-Qualifying Party to honor all of such
Non-Qualifying Party’s obligations under this Agreement or any Other Document in
respect of Swap Obligations (provided, however, that each Qualified ECP Loan
Party shall only be liable under this Section 6.15 for the maximum amount of
such liability that can be hereby incurred without rendering its obligations
under this Section 6.15, or otherwise under this Agreement or any Other
Document, voidable under applicable law, including applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount).
The obligations of each Qualified ECP Loan Party under this Section 6.15 shall
remain in full force and effect until payment in full of the Obligations. Each
Qualified ECP Loan Party intends that this Section 6.15 constitute, and this
Section 6.15 shall be deemed to constitute, a guarantee of the obligations of,
and a “keepwell, support, or other agreement” for the benefit of each other
Borrower and Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the CEA.

6.16.    Certificates of Beneficial Ownership and Other Additional Information.
Provide to Agent and the Lenders, with respect to each Borrower: (i) upon the
request of Agent or any Lender, confirmation of the accuracy of the information
set forth in the most recent Certificate of Beneficial Ownership provided to the
Agent and Lenders for such Borrower; (ii) a new Certificate of Beneficial
Ownership, in form and substance acceptable to Agent and each Lender, when the
Person (s) to be identified as a Beneficial Owner in respect of such Borrower
have changed; and (iii) such other information and documentation as may
reasonably be requested by Agent or any Lender from time to time for purposes of
compliance by Agent or such Lender with Applicable Law (including without
limitation the USA PATRIOT Act and other Anti-Corruption Laws), and any policy
or procedure implemented by Agent or such Lender to comply therewith.

 

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VII. NEGATIVE COVENANTS.

No Borrower or Guarantor shall, until payment in full of the Obligations:

7.1.    Merger, Consolidation, Acquisition and Sale of Assets.

(a)    Enter into any merger, consolidation or other reorganization with or into
any other Person or acquire all or a substantial portion of the assets or Equity
Interests of any Person or permit any other Person to consolidate with or merge
with it, except:

(i)    any Borrower may (x) merge, consolidate or reorganize with another
Borrower, or (y) acquire the assets or Equity Interests of another Borrower or
Guarantor, in each case so long as such Borrower provides Agent with ten
(10) days prior written notice of such merger, consolidation or reorganization
and delivers to Agent all of the relevant documents evidencing such merger,
consolidation or reorganization;

(ii)    any Guarantor may merge, consolidate or reorganize with another
Guarantor or acquire the assets or Equity Interests of another Guarantor so long
as such Guarantor provides Agent with ten (10) days’ prior written notice of
such merger, consolidation or reorganization and delivers to Agent all of the
relevant documents evidencing such merger, consolidation or reorganization;

(iii)    any (x) Guarantor, or (y) Subsidiary of a Borrower or Guarantor may
merge with and into a Borrower and any Subsidiary of a Borrower or Guarantor
that is not a Borrower may merge with and into a Borrower or Guarantor;

(iv)    any Subsidiary of a Borrower that is not a Borrower or Guarantor may be
liquidated, wound-up or dissolved; provided, that, The Finish Line MA, Inc. and
Spike’s Holding, LLC may be liquidated, wound-up or dissolved at any time so
long as any and all assets of such entities are transferred to another Borrower
or Guarantor prior to, or as a result of, the dissolution;

(v)    any Borrower or Guarantor may acquire the assets or Equity Interests of
any Subsidiary that is not a Borrower or Guarantor, to the extent expressly
permitted by Section 7.10, and

(vi)    Permitted Acquisitions.

(b)    Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except:

(i)    the sale of Inventory in the Ordinary Course of Business,

(ii)    the sale, lease, transfer or other disposition of obsolete, surplus or
worn-out equipment or retail store fixtures in the Ordinary Course of Business
which are no longer necessary or required in the conduct of such Borrower’s or
Guarantor’s business,

(iii)    bulk sales or other dispositions of the Inventory of a Borrower or
Guarantor not in the Ordinary Course of Business in connection with Store
closings, at arm’s length, provided, that, such Store closings and related
Inventory dispositions shall not exceed (x) in any Fiscal Year of Borrowing
Agent and its Subsidiaries, ten percent (10%) of the number of the Borrowers’
and Guarantors’ Stores as of the beginning of such Fiscal Year (net of new

 

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Store openings and excluding (I) closings in connection with the relocation of
any Stores or the consolidation of two or more Stores within the same geographic
market, and (II) closings of licensed departments within Macy’s Stores due to
the closure of such Macy’s Stores as a whole) and (y) in the aggregate from and
after the Closing Date, thirty percent (30%) of the number of the Borrowers’ and
Guarantors’ Stores in existence as of the Closing Date (net of new Store
openings and excluding (I) closings in connection with the relocation of any
Stores or the consolidation of two or more Stores within the same geographic
market, and (II) closings of licensed departments within Macy’s Stores due to
the closure of such Macy’s Stores as a whole), provided, further, that all sales
of Inventory in connection with Store closings shall be in accordance with
liquidation agreements and with professional liquidators reasonably acceptable
to the Agent,

(iv)    a lease, sublease or assignment of leased Real Property, to the extent
that such Real Property is not being used in the conduct of any Borrower’s or
Guarantor’s business and such lease, sublease or assignment does not interfere
in any material respect with any Borrower’s or Guarantor’s business or Agent’s
access to any Collateral,

(v)    the use of cash or Cash Equivalents in any manner permitted by this
Agreement,

(vi)    non-exclusive licenses or sublicenses of Intellectual Property rights in
the Ordinary Course of Business consistent with past practice and not
interfering, individually or in the aggregate, in any material respect with the
conduct of any Borrower’s or Guarantor’s business or Agent’s rights in any
Collateral,

(vii)    dispositions permitted under Section 7.1(a), 7.2, 7.4 or 7.7,

(viii)    the voluntary termination of Hedging Liabilities to which a Borrower
or Guarantor is a party,

(ix)    Sale and Leaseback Transactions to the extent any Liens created and
Indebtedness incurred in connection therewith are permitted under Sections 7.2
and 7.8, respectively,

(x)    any sale, transfer, or lease of assets by any Borrower or Guarantor to
another Borrower or Guarantor, and

(xi)    other sales, leases, transfers or other dispositions of assets (other
than Real Property (or any other interest in or with respect to Real Property)
or assets of the type included in the Formula Amount or the FILO Formula Amount)
having a fair market value not in excess of (A) $20,000,000 in the aggregate
following the Closing Date and (B) $10,000,000 for any individual sale, lease,
transfer or disposition during any Fiscal Year; provided, that, (x) no Event of
Default shall have occurred and be continuing, (y) such sale, lease, transfer or
other disposition is on arm’s length terms and (z) at least 75% of the
consideration received in respect of such sale, lease, transfer or other
disposition shall be in the form of cash of Cash Equivalents.

7.2.    Creation of Liens. Create or suffer to exist any Lien upon or against
any of its property or assets now owned or hereafter created or acquired, except
Permitted Encumbrances.

 

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7.3.    Guarantees. Become liable upon the obligations or liabilities of any
Person by assumption, endorsement or guaranty thereof or otherwise (other than
to Agent and the other Secured Parties) except (a) as disclosed on Schedule 7.3,
(b) an unsecured guarantee by one or more Borrower(s) or Guarantor(s) of the
Holdings Loan, which guarantee is evidenced by the Holdings Loan Documents,
(c) guarantees by one or more Borrower(s) or Guarantor(s) of the Indebtedness or
obligations of any other Borrower(s) or Guarantor(s) or any Subsidiary thereof
to the extent such Indebtedness or obligations are permitted to be incurred
and/or outstanding pursuant to the provisions of this Agreement, and (d) the
endorsement of checks in the Ordinary Course of Business.

7.4.    Investments. Purchase or acquire obligations or Equity Interests of, or
any other interest in, any Person, other than Permitted Investments.

7.5.    Loans. Make advances, loans or extensions of credit to any Person,
including any Parent, Subsidiary or Affiliate other than Permitted Loans and
other Permitted Investments.

7.6.    Hedge Arrangements. Enter into any Interest Rate Hedge or Foreign
Currency Hedge except in the Ordinary Course of Business and not for speculative
purposes.

7.7.    Dividends. Declare, pay or make any dividend or distribution on any
Equity Interests of any Borrower or Guarantor (other than dividends or
distributions payable in its Equity Interests, or split-ups or reclassifications
of its Equity Interests (other than, in each case, Disqualified Equity
Interests)) or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any Equity Interest, or of any options to
purchase or acquire any Equity Interest of any Borrower or Guarantor, in each
case, other than Permitted Dividends.

7.8.    Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
other than Permitted Indebtedness.

7.9.    Nature of Business. Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
(including, without limitation, pursuant to Section 7.4 or 7.5) purchase or
invest in, directly or indirectly, any assets or property other than in the
Ordinary Course of Business for assets or property which are useful in,
necessary or desirable for and are to be used in its business as presently
conducted or any other businesses that are substantially similar, related,
ancillary or incidental thereto.

7.10.    Transactions with Affiliates. Directly or indirectly, purchase, acquire
or lease any property from, or sell, transfer or lease any property to, or
otherwise enter into any transaction or deal with, any Affiliate, except for
(i) transactions among Borrowers and Guarantors which are not expressly
prohibited by the terms of this Agreement and which are in the Ordinary Course
of Business, (ii) payments by Borrowers and Guarantors of dividends and
distributions permitted under Section 7.7 hereof, (iii) transactions which are
in the Ordinary Course of Business, on an arm’s-length basis on terms and
conditions no less favorable than terms and conditions which would have been
obtainable from a Person other than an Affiliate, (iv) reasonable fees,
compensation and other benefits paid or provided to (including issuances and
grant of securities and stock options, retirement and health plans, employment
agreements and stock option and ownership plans for the benefit of), and
indemnity provided on behalf of, officers, directors,

 

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employees or consultants of any Borrower, any Guarantor or any Subsidiary as
determined in good faith by Intermediate Holdings’ or Borrowing Agent’s Board of
Directors or senior management, (v) the Intercompany Subordinated Loan Documents
and the Holdings Loan Documents, and any Permitted Refinancing Indebtedness
thereof, (vi) any agreement in effect as of the Closing Date and identified on
Schedule 7.10 or any amendment to or replacement of any such agreement or any
transaction contemplated thereby (so long as any such amendment or replacement
agreement is not more disadvantageous to the Lenders, taken as a whole, in any
material respect than the original agreement as in effect on the Closing Date),
and (vii) loans or advances to employees and officers of Borrowing Agent and its
Subsidiaries in the Ordinary Course of Business, to the extent permitted hereby.

7.11.    [Intentionally Omitted].

7.12.    Subsidiaries.

(a)    Form or acquire any Subsidiary unless (i) the formation or acquisition of
such Subsidiary shall constitute a Permitted Investment, (ii) at Agent’s
discretion, such Subsidiary expressly joins in this Agreement as a Borrower or a
Guarantor, becomes jointly and severally liable for the Obligations, and grants
first-priority Liens (subject to Permitted Encumbrances having priority over the
Lien of Agent by operation of Applicable Law) in favor of Agent for the benefit
of Secured Parties on all of its assets and property constituting Collateral to
secure the Obligations, all pursuant to such joinder agreements and other legal
documentation as Agent may reasonably require; provided, that, no Foreign
Subsidiary shall be required to join this Agreement as a Borrower or a Guarantor
(and, for the avoidance of doubt, no assets of such Foreign Subsidiary shall be
included in the Formula Amount or the FILO Formula Amount), (iii) Agent shall
have received all documents, instruments and agreements, and all actions shall
have been taken, as Agent may reasonably require to create a Lien and pledge in
favor of Agent in the Subsidiary Stock of such Subsidiary to secure the
Obligations, and (iv) Agent shall have received all documents, instruments and
agreements (including, without limitation, security agreements, pledge
agreements, certificates and legal opinions) and, if such Subsidiary will become
a Borrower hereunder, appraisals and field examinations as Agent may reasonably
require to establish compliance with each of the foregoing conditions in
connection therewith; provided, that, notwithstanding anything to the contrary,
(x) no assets of any such new Subsidiary described in this clause (a) and joined
to this Agreement as a Borrower shall be included in the Formula Amount or the
FILO Formula Amount until Agent has received a field examination with respect to
such Subsidiary and its assets and an inventory appraisal with respect to the
Inventory of such Subsidiary, in form and substance, and with results,
acceptable to Agent in its Permitted Discretion, and (y) Borrowers shall be
liable for costs and expenses of such field examination and appraisal, which
costs and expenses shall not be subject to (and shall not be included in) any
generally applicable limitations on the number of field examinations and
appraisals, or the Borrowers’ liability for such costs and expenses under this
Agreement.

(b)    Enter into any partnership, joint venture or similar arrangement other
than in connection with a Permitted Joint Venture.

(c)    Permit FINL PR to (i) own any assets of the type included in the Formula
Amount or the FILO Formula Amount in excess of five percent (5%) of the total
assets of the

 

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Borrowers and Guarantors, taken as a whole, (ii) own any other assets in excess
of five percent (5%) of the total assets of the Borrowers and Guarantors, taken
as a whole, or (iii) conduct any business necessary to the conduct of the
Borrowers’ and Guarantors’ operations, unless in any such event FINL PR
expressly joins in this Agreement as a Borrower, becomes jointly and severally
liable for the Obligations and otherwise complies with Section 7.12(a) in
respect of such a joinder as though FINL PR was a newly formed or acquired
Subsidiary; provided, that, no such joinder and compliance shall be required if,
at the time FINL PR would otherwise be required to so join and comply, such
joinder and compliance could reasonably be expected to cause (x) the
undistributed earnings of FINL PR as determined for United States federal income
tax purposes to be treated as a deemed dividend to any existing Borrower or
Guarantor, or (y) any material adverse tax consequences to the Borrowers and
Guarantors.

7.13.    Fiscal Year and Accounting Changes. Change its Fiscal Year from a
Fiscal Year ending on the Saturday closest to the last day of February (except
that Borrowers and Guarantors may change their Fiscal Year to a Fiscal Year
ending on the Saturday closest to the last day in January to coincide with the
Fiscal Year of Holdings) or make any significant change (i) in accounting
treatment and reporting practices except as required by GAAP or (ii) in tax
reporting treatment in a manner that could reasonably be expected to materially
impact any Borrower’s or Guarantor’s balance sheet except as required by
Applicable Law.

7.14.    [Intentionally Omitted].

7.15.    Amendment of Organizational Documents. (i) Change its legal name,
(ii) change its form of legal entity (e.g., converting from a corporation to a
limited liability company or vice versa), (iii) change its chief executive
office, (iv) change its jurisdiction of organization or become (or attempt or
purport to become) organized in more than one jurisdiction, or (v) otherwise
amend, modify or waive any term or provision of its Organizational Documents in
a manner materially adverse to Agent and the other Secured Parties unless
required by law, in any such case without (x) giving at least ten (10) days’
prior written notice of such intended change to Agent so that Agent may take all
steps necessary to continue the perfection of and protect the enforceability and
priority of its Liens in the Collateral belonging to such Borrower or Guarantor
and in the Equity Interests of such Borrower or Guarantor and (z) in any case
under clause (v), having received the prior written consent of Agent and
Required Lenders to such amendment, modification or waiver.

7.16.    [Intentionally Omitted].

7.17.    Prepayment of Indebtedness. At any time, directly or indirectly, prepay
any Indebtedness (other than the Obligations), or repurchase, redeem, retire or
otherwise acquire any Indebtedness of any Borrower or Guarantor, in each case
except (i) as permitted pursuant to Section 7.18 hereof, or (ii) to the extent
the Payment Conditions are then satisfied.

7.18.    Intercompany Subordinated Loans; Holdings Loan.

(a)    At any time, directly or indirectly, pay, prepay, repurchase, redeem,
retire or otherwise acquire, or make any payment on account of any principal of,
interest on or premium payable in connection with the repayment or redemption of
the Intercompany Subordinated Loans, except as expressly permitted in the
Intercompany Subordination Agreement; or

 

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(b)    At any time, directly or indirectly, pay, prepay, repurchase, redeem,
retire or otherwise acquire, or make any payment on account of any principal of,
interest on or premium payable in connection with the repayment or redemption of
the Holdings Loan, except to the extent that the Payment Conditions have been
satisfied.

7.19.    Other Agreements. Enter into any material amendment, waiver or
modification of (i) the Acquisition Agreement, the Intercompany Subordinated
Loan Documents, or the Holdings Loan Documents, or (ii) any Material Contract,
in each case to the extent that such amendment, waiver or modification would
result in a Default or Event of Default hereunder or under any of the Other
Documents, or would be (x) prohibited by the terms of any subordination
agreement with respect to such documents, instruments or agreements,
(y) materially adverse to Agent and the other Secured Parties, or (z) otherwise
reasonably likely to have a Material Adverse Effect.

7.20.    Membership / Partnership Interests. Designate or permit any of their
Subsidiaries to (a) treat their limited liability company membership interests
or partnership interests, as the case may be, as securities as contemplated by
the definition of “security” in Section 8-102(15) and by Section 8-103 of
Article 8 of the Uniform Commercial Code or (b) certificate their limited
liability membership interests or partnership interests, as applicable.

7.21.    Burdensome Agreements. Enter into or permit to exist any contractual
obligation (other than this Agreement or any Other Document) that (a) limits the
ability (i) of any Subsidiary to make dividends or distributions to any Borrower
or Guarantor or to otherwise transfer property to or invest in a Borrower or
Guarantor, (ii) of any Subsidiary to guarantee the Obligations, (iii) of any
Subsidiary to make or repay loans to a Borrower or Guarantor; provided, however,
that this clause (iii) shall not prohibit any such limitations set forth in
Clause 23.10 of the Holdings Facility Agreement as in effect as of the date
hereof, or (iv) of any Borrower, Guarantor, or Subsidiary to create, incur,
assume or suffer to exist Liens on property of such Person in favor of Agent;
provided, however, that this clause (iv) shall not prohibit (x) any negative
pledge incurred or provided in favor of any holder of Indebtedness permitted
under clause (b) of the definition of Permitted Indebtedness solely to the
extent any such negative pledge relates to the property financed by or the
subject of such Indebtedness, or (y) any restrictions or prohibitions on the
granting of Liens on any Permitted Joint Venture assets or Equity Interests that
may be contained in such Permitted Joint Venture’s Organizational Documents; or
(b) requires the grant of a Lien on the assets of, or Equity Interests in, any
Borrower or Guarantor to secure an obligation of such Person if a Lien is
granted to secure another obligation of such Person. Notwithstanding the
foregoing, this Section 7.21 shall not prohibit any contractual obligation
existing on the Closing Date and set forth on Schedule 7.21, or any contractual
obligation of any Person that after the Closing Date becomes a Subsidiary of any
Borrower or Guarantor so long as such contractual obligation was not entered
into solely in contemplation of such Person becoming a Subsidiary.

7.22.    Issuance of Equity Interests. Issue any additional shares of any
Borrower’s or any Guarantor’s Equity Interests or any options, warrants or other
rights in respect thereof to any Person other than to another Borrower or
Guarantor, except (i) any such issuances by

 

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Intermediate Holdings that would not result in a Change of Control, and (ii) the
issuance of Equity Interests to the extent consisting of directors’ qualifying
shares or shares required by Applicable Law to be held by a Person other than a
Borrower or Guarantor.

7.23.    Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any Fiscal Year in an aggregate amount
for all Borrowers and Guarantors in excess of $60,000,000; provided, however, in
the event Capital Expenditures during any Fiscal Year are less than the amount
permitted for such Fiscal Year, then the unused amount (the “Carryover Amount”)
may be carried over and used in the immediately succeeding Fiscal Year;
provided, further, that any Carryover Amount shall be deemed to be the last
amount spent in such succeeding Fiscal Year.

 

VIII. CONDITIONS PRECEDENT.

8.1.    Conditions to Initial Advances. The agreement of Lenders to make the
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:

(a)    Note. Agent shall have received the Notes duly executed and delivered by
an Authorized Officer of each Borrower in favor of each Lender requesting a
Note;

(b)    Other Documents. Agent shall have received each of the executed Other
Documents and other documents identified on Schedule 8.1;

(c)    Intercompany Subordination Agreement. Agent shall have entered into the
Intercompany Subordination Agreement with Borrowers and Guarantors, which shall
set forth the basis upon which the Creditor Obligors (as defined therein) may
receive, and the Debtor Obligors (as defined therein) may make, payments under
the Intercompany Subordinated Loan Documents;

(d)    [Intentionally Omitted].

(e)    Closing Certificate. Agent shall have received a closing certificate
signed by the Chief Financial Officer of each Borrower and Guarantor dated as of
the date hereof, certifying, as of the Closing Date and after giving effect to
the Transactions, (i) that the conditions set forth in Section 8.2(a)(ii) have
been satisfied, and (ii) as to the solvency of Borrowers and Guarantors;

(f)    Borrowing Base. Agent shall have received evidence from Borrowers that
the aggregate amount of Eligible Receivables, Eligible Credit Card Receivables,
Eligible Inventory, and Eligible Domestic In-Transit Inventory is sufficient in
value and amount to support Advances in the amount requested by Borrowers on the
Closing Date;

(g)    Undrawn Availability. On the Closing Date, after giving effect to the
initial Advances hereunder, Borrowers shall have Undrawn Availability of at
least $60,000,000, which shall be evidenced by a Borrowing Base Certificate
delivered to Agent, reflecting the Formula Amount as of the end of the month
most recently ended prior to the Closing Date;

 

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(h)    Intercompany Subordinated Loan Documents, Holdings Loan Documents, and
Acquisition Agreement. Agent shall have received final executed copies,
certified by an Authorized Officer of Borrowing Agent, of the Intercompany
Subordinated Loan Documents, the Holdings Facility Agreement and other material
Holdings Loan Documents (including, without limitation, all Holdings Loan
Documents as to which any Borrower or Guarantor is a party), the Acquisition
Agreement, and all related material agreements, documents and instruments
relating to the Acquisition Agreement, in each case as in effect on the Closing
Date, all of the foregoing to be reasonably satisfactory in form and substance
to Agent ((it being understood and agreed that the form of the Acquisition
Agreement (together with the exhibits thereto and the “Company Disclosure
Letter” referenced therein) provided to PNC at 7:31 p.m. New York City time on
March 25, 2018 is satisfactory to Agent) and the transactions contemplated by
such documentation shall be consummated prior to or substantially simultaneously
with the making of the initial Advance including, without limitation, the
receipt by Borrowers of (i) a cash capital contribution in an amount not less
than 33.33% of the total pro formal capitalization of Borrowing Agent as of the
Closing Date, and (ii) the proceeds of the Intercompany Subordinated Loans in
the sum of $207,000,000;

(i)    Filings, Registrations and Recordings; Lien Searches.

(i)    Each document (including any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under Applicable Law or
reasonably requested by Agent to be filed, registered or recorded in order to
create, in favor of Agent, a perfected security interest in or lien upon the
Collateral shall, substantially contemporaneously with the consummation of the
Transactions, be properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and promptly thereafter, Agent shall have received an acknowledgment
copy, or other evidence reasonably satisfactory to it, of each such filing,
registration or recordation and reasonably satisfactory evidence of the payment
of any necessary fee, tax or expense relating thereto; and

(ii)    Agent shall have received results of searches or other evidence
reasonably satisfactory to Agent (in each case dated as of a recent date
reasonably satisfactory to the Agent) indicating the absence of Liens on the
assets of Borrowers and Guarantors, except for Permitted Encumbrances and Liens
for which termination statements and releases, satisfactions and discharges of
any mortgages, and releases or subordination agreements reasonably satisfactory
to Agent are being tendered substantially concurrently with such extension of
credit or other arrangements reasonably satisfactory to Agent for the delivery
of such termination statements and releases, satisfactions and discharges have
been made;

(j)    Secretary’s Certificates, Authorizing Resolutions and Good Standings of
Borrowers. Agent shall have received a certificate of the Secretary or Assistant
Secretary (or other equivalent officer, partner or manager) (or, in the case of
GMSI, the Chief Financial Officer) of each Borrower in form and substance
reasonably satisfactory to Agent dated as of the Closing Date which shall
certify (i) copies of resolutions in form and substance reasonably satisfactory
to Agent, of the board of directors (or other equivalent governing body, member
or partner) of such Borrower authorizing (x) the execution, delivery and
performance of this Agreement, the Notes and each Other Document to which such
Borrower is a party (including

 

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authorization of the incurrence of indebtedness, borrowing of Revolving Advances
(including, without limitation, Swing Loans), FILO Advances, and requesting of
Letters of Credit on a joint and several basis with all Borrowers, as provided
for herein), and (y) the granting by such Borrower of the security interests in
and liens upon the Collateral to secure all of the joint and several Obligations
of Borrowers (and such certificate shall state that such resolutions have not
been amended, modified, revoked or rescinded as of the date of such
certificate), (ii) the incumbency and signature of the officers of such Borrower
authorized to execute this Agreement and the Other Documents, (iii) copies of
the Organizational Documents of such Borrower as in effect on such date,
complete with all amendments thereto, and (iv) the good standing (or equivalent
status) of such Borrower in its jurisdiction of organization, as evidenced by
good standing certificate(s) (or the equivalent thereof issued by any applicable
jurisdiction) dated not more than thirty (30) days prior to the Closing Date,
issued by the Secretary of State or other appropriate official of each such
jurisdiction;

(k)    Secretary’s Certificates, Authorizing Resolutions and Good Standings of
Guarantors. Agent shall have received a certificate of the Secretary or
Assistant Secretary (or other equivalent officer, partner or manager) (or, in
the case of Intermediate Holdings, the Chief Financial Officer) of each
Guarantor in form and substance reasonably satisfactory to Agent dated as of the
Closing Date which shall certify (i) copies of resolutions in form and substance
reasonably satisfactory to Agent, of the board of directors (or other equivalent
governing body, member or partner) of each Guarantor authorizing (x) the
execution, delivery and performance of this Agreement, such Guarantor’s Guaranty
and each Other Document to which such Guarantor is a party and (y) the granting
by such Guarantor of the security interests in and liens upon the Collateral to
secure its obligations under its Guaranty (and such certificate shall state that
such resolutions have not been amended, modified, revoked or rescinded as of the
date of such certificate), (ii) the incumbency and signature of the officers of
such Guarantor authorized to execute this Agreement and the Other Documents,
(iii) copies of the Organizational Documents of such Guarantor as in effect on
such date, complete with all amendments thereto, and (iv) the good standing (or
equivalent status) of such Guarantor in its jurisdiction of organization, as
evidenced by good standing certificate(s) (or the equivalent thereof issued by
any applicable jurisdiction) dated not more than thirty (30) days prior to the
Closing Date, issued by the Secretary of State or other appropriate official of
each such jurisdiction;

(l)    Legal Opinions. Agent shall have received the executed legal opinions of
Hughes Hubbard & Reed LLP and Taft Stettinius & Hollister LLP, each in form and
substance reasonably satisfactory to Agent and which shall cover such matters
incident to the transactions contemplated by this Agreement and the Other
Documents as Agent may reasonably require and each Borrower and each Guarantor
hereby authorizes and directs such counsel to deliver such opinions to Agent and
Lenders;

(m)    No Injunctions. No injunction, writ, restraining order or other order
restraining or prohibiting the consummation of the Transactions shall have been
issued by any Governmental Body;

(n)    Fees. Agent shall have received all fees payable to Agent and Lenders on
or prior to the Closing Date hereunder, including pursuant to Article III hereof
and the Fee Letter;

 

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(o)    Pro Forma Financial Statements. Agent shall have received a copy of the
Pro Forma Financial Statements;

(p)    Insurance. Except as otherwise provided in the Post-Closing Letter, Agent
shall have received in form and substance reasonably satisfactory to Agent,
(i) evidence that adequate insurance, including without limitation, casualty and
liability insurance, required to be maintained under this Agreement is in full
force and effect, (ii) insurance certificates and endorsements issued by
Borrowers’ and Guarantors’ insurance broker containing such information
regarding Borrowers’ and Guarantors’ casualty and liability insurance policies
as Agent shall reasonably request and naming Agent as an additional insured,
lenders loss payee and/or mortgagee, as applicable, (iii) loss payable
endorsements issued by Borrowers’ and Guarantors’ insurer naming Agent as
lenders loss payee and mortgagee, as applicable, and (iv) notice of cancellation
endorsements issued by Borrowers’ and Guarantors’ insurer specifying that Agent
is entitled to receive notice of cancellation as required hereunder;

(q)    Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances
made pursuant to this Agreement;

(r)    Consents. Agent shall have received any and all Consents necessary to
permit the effectuation of the transactions contemplated by this Agreement and
the Other Documents;

(s)    No Adverse Material Change. Since March 25, 2018, there shall not have
occurred any event, condition or fact which has had, or would reasonably be
expected to have, a Company Material Adverse Effect (as defined in the
Acquisition Agreement);

(t)    Due Diligence. Agent shall have received copies of all third-party due
diligence reports initiated and received by Holdings as it relates to the
Transactions;

(u)    KYC. Agent and Lenders shall have received, at least three (3) Business
Days prior to the Closing Date, an executed Certificate of Beneficial Ownership
and such other documentation and other information about Borrowers and
Guarantors (including, without limitation, personal information required to
conduct beneficial ownership analysis) as has been reasonably requested in
writing at least ten (10) days prior to the Closing Date by Agent or a Lender
that such Person reasonably determines is required by regulatory authorities
under the Anti-Terrorism Laws (including, without limitation, the USA PATRIOT
Act and other applicable “know your customer” rules and regulations); and

(v)    Indebtedness. Agent shall have received payoff letters from the holders
of all third party Indebtedness for borrowed money of Borrowers and Guarantors
(other than the Obligations and other Permitted Indebtedness) that is
outstanding on the Closing Date (including, without limitation, pursuant to the
Existing FINL Credit Agreement), which payoff letters shall be duly executed by
the parties thereto and in form and substance reasonably satisfactory to Agent,
evidencing that such Indebtedness has been or substantially concurrently with
the Closing Date is being terminated, all obligations thereunder are being paid
in full, and all Liens securing any obligations in respect thereof have been or
substantially concurrently with the Closing Date are being released.

 

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Notwithstanding the foregoing or anything in this Agreement or any Other
Document to the contrary, to the extent any security interest in any Collateral
is not or cannot be provided and/or perfected on the Closing Date (other than
the creation of and perfection (including by delivery of certificates
representing Equity Interests, if any) of security interests in (i) the Equity
Interests in any of Borrowing Agent’s material Subsidiaries that are not Foreign
Subsidiaries (which shall be delivered on the Closing Date to the extent made
available to Borrowing Agent on the Closing Date), and (ii) other assets located
in the United States with respect to which a Lien may be perfected by the filing
of a financing statement under the Uniform Commercial Code) after Borrowers’ and
Guarantors’ use of commercially reasonable efforts to do so without undue burden
or expense, then the provision and/or perfection of a security interest in such
Collateral shall not constitute a condition precedent to the making of Advances
on the Closing Date, but instead shall be required to be provided or perfected
after the Closing Date pursuant to the terms of the Post-Closing Letter.

8.2.    Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any date (including, except with respect to clauses
(a)(i) and (b) below, the initial Advance), is subject to the satisfaction of
the following conditions precedent as of the date such Advance is made:

(a)    Representations and Warranties.

(i)    Other than with respect to Advances to be made on the Closing Date, each
of the representations and warranties made by any Borrower or any Guarantor in
or pursuant to this Agreement, the Other Documents and any related agreements to
which it is a party, and each of the representations and warranties contained in
any certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement, the Other Documents or any related
agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date (except (x) to the extent any such
representation or warranty is qualified by materiality or “Material Adverse
Effect” or similar language, in which case such representation and warranty
shall be true and correct in all respects, and (y) to the extent any such
representation or warranty expressly relates only to any earlier and/or
specified date, in which case such representation and warranty shall be true and
correct in all material respects (or in all respects, as applicable) as of such
earlier and/or specified date); and

(ii)    with respect to Advances to be made on the Closing Date, the Specified
Acquisition Agreement Representations shall be true and correct in all respects
and the Specified Representations shall be true and correct in all material
respects on and as of the Closing Date (except (x) to the extent any Specified
Representation is qualified by materiality or “Material Adverse Effect” or
similar language, in which case the definition thereof shall be a Company
Material Adverse Effect (as defined in the Acquisition Agreement) for purposes
of any such representations and warranties made or deemed made on, or as of, the
Closing Date (or any date prior thereto) and such Specified Representation shall
be true and correct in all respects, and (y) to the extent any Specified
Representation expressly relates only to any earlier and/or specified date, in
which case such Specified Representation shall be true and correct in all
material respects (or in all respects, as applicable) as of such earlier and/or
specified date);

 

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(b)    No Default. Other than with respect to Advances to be made on the Closing
Date, no Event of Default or Default shall have occurred and be continuing on
such date, or would exist after giving effect to the Advances requested to be
made, on such date; provided, however, that Agent, in its sole discretion, may
continue to make Advances notwithstanding the existence of an Event of Default
or Default and that any Advances so made shall not be deemed a waiver of any
such Event of Default or Default; and

(c)    Maximum Advances. In the case of any type of Advance requested to be
made, after giving effect thereto, the aggregate amount of such type of Advance
shall not exceed the maximum amount of such type of Advance permitted under this
Agreement. In the case of any type of Revolving Advance requested to be made,
the maximum principal amount of FILO Advances outstanding equals the FILO Loan
Cap.

(d)    Request for Credit Extension. Agent (and Issuer, if applicable) shall
have received a request for such Advance (including, without limitation, an
application for a Letter of Credit, if applicable) satisfying the requirements
hereof.

Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the applicable conditions contained in this subsection shall have been
satisfied.

 

IX. INFORMATION AS TO BORROWERS AND GUARANTORS.

Each Borrower and each Guarantor shall, or (except with respect to Section 9.11)
shall cause Borrowing Agent on its behalf to, until satisfaction in full of the
Obligations:

9.1.    Disclosure of Material Matters. Promptly report to Agent all matters
materially affecting the value, enforceability or collectability of any portion
of the Collateral having a value in excess of $5,000,000, including any
Borrower’s or Guarantor’s reclamation or repossession of, or the return to any
Borrower or Guarantor of, a material amount of goods or material claims or
disputes asserted by any Customer or other obligor.

9.2.    Schedules. Deliver to Agent (i) on or before the fifteenth (15th) day of
each Fiscal Month (or, if such day is not a Business Day, on the next succeeding
Business Day) in respect of the prior Fiscal Month (a) accounts receivable
agings inclusive of reconciliations to the general ledger, (b) accounts payable
schedules inclusive of reconciliations to the general ledger, (c) Inventory
reports, and (d) a Borrowing Base Certificate in form and substance reasonably
satisfactory to Agent (which shall be calculated as of the last day of the prior
Fiscal Month and which shall not be binding upon Agent or restrictive of Agent’s
rights under this Agreement); provided, that, if a Cash Dominion Event has
occurred and is continuing, all of the foregoing shall be delivered on or before
the Wednesday of each week (or, if such day is not a Business Day, on the next
succeeding Business Day) as of the close of business on the immediately
preceding Saturday, and (ii) on or before Tuesday of each week, a sales report /
roll forward, together with any cash receipt journal, in each case for the prior
week. In addition, each Borrower will deliver to Agent at such intervals as
Agent may reasonably require:

 

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(i) confirmatory assignment schedules; (ii) copies of Customer’s invoices;
(iii) evidence of shipment or delivery; and (iv) such further schedules,
documents and/or information regarding the Collateral as Agent may require
including trial balances and test verifications. Agent shall have the right to
confirm and verify all Receivables and Credit Card Receivables by any manner and
through any medium it considers reasonably advisable (provided, that, so long as
no Event of Default has occurred and is continuing, Agent shall only conduct
verifications of Receivables and Credit Card Receivables over the phone with
participation from Borrowing Agent or with Borrowing Agent being present), and
do whatever it may deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section are to be in form reasonably
satisfactory to Agent and executed by each Borrower and delivered to Agent from
time to time solely for Agent’s convenience in maintaining records of the
Collateral, and any Borrower’s failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect
to the Collateral. Unless otherwise agreed to by Agent, the items to be provided
under this Section 9.2 shall be delivered to Agent by the specific method of
Approved Electronic Communication designated by Agent.

9.3.    Environmental Notice. As soon as possible and in any event within ten
(10) Business Days after receipt by any Borrower or Guarantor, deliver a copy of
(i) any notice or claim to the effect that such Borrower or Guarantor has
violated any Environmental Laws, and (ii) any notice alleging any violation of
any Environmental Laws by such Borrower or Guarantor, if, in either case, such
notice or claim, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.

9.4.    Litigation. Promptly notify Agent in writing of any claim, litigation,
suit or administrative proceeding affecting any Borrower or Guarantor, whether
or not the claim is covered by insurance, and of any litigation, suit or
administrative proceeding, which in any such case affects a material portion of
the Collateral or which could reasonably be expected to have a Material Adverse
Effect.

9.5.    Material Occurrences. Promptly, and in any event within five
(5) Business Days, notify Agent in writing upon the occurrence of: (a) any Event
of Default or Default; (b) any event of default under the Intercompany
Subordinated Loan Documents or the Holdings Loan Documents; (c) any event which
with the giving of notice or lapse of time, or both, would constitute an event
of default under the Subordinated Loan Documents or the Holdings Loan Documents;
(d) any event, development or circumstance whereby any financial statements or
other reports furnished to Agent fail in any material respect to present fairly,
in accordance with GAAP consistently applied, the financial condition or
operating results of any Borrower or Guarantor as of the date of such
statements; (e) any accumulated retirement plan funding deficiency which, if
such deficiency continued for two plan years and was not corrected as provided
in Section 4971 of the Code, could subject any Borrower or Guarantor to a tax
imposed by Section 4971 of the Code; (g) without limiting the requirements of
Section 7.15, (x) any material amendment or change to any Organizational
Document of any Borrower or Guarantor, and (y) any material amendment, waiver,
supplement or other material modification of any Holdings Loan Document or
Intercompany Subordinated Loan Document; and (h) any other development in the
business or affairs of any Borrower or Guarantor, which could reasonably be
expected to have a Material Adverse Effect; in each case describing the nature
thereof and the action Borrowers and Guarantors propose to take with respect
thereto.

 

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9.6.    Government Receivables. Notify Agent promptly, and in any event within
ten (10) Business Days, if any of its Receivables arise out of contracts between
any Borrower and the United States, any state, or any department, agency or
instrumentality of any of them.

9.7.    Annual Financial Statements. Furnish Agent within one hundred twenty
(120) days after the end of each Fiscal Year of Intermediate Holdings
(commencing with the Fiscal Year ending February 2, 2019), (i) with respect to
the Fiscal Year ending February 2, 2019, audited financial statements of
Intermediate Holdings and its Subsidiaries on a Consolidated Basis for the
period commencing on the Closing Date and ending February 2, 2019, including,
but not limited to, statements of income and stockholders’ equity and cash flow
from the beginning of such period to the end of such period and the balance
sheet as at the end of such period, all prepared in accordance with GAAP applied
on a basis consistent with prior practices, and reported upon without any “going
concern” or like qualification by KPMG LLP or another independent certified
public accounting firm selected by Borrowers and reasonably satisfactory to
Agent (the “Accountants”), and (ii) with respect to each Fiscal Year thereafter,
audited financial statements of Intermediate Holdings and its Subsidiaries on a
Consolidated Basis including, but not limited to, statements of income and
stockholders’ equity and cash flow from the beginning of such Fiscal Year to the
end of such Fiscal Year and the balance sheet as at the end of such Fiscal Year,
all prepared in accordance with GAAP applied on a basis consistent with prior
practices, and reported upon without any “going concern” or like qualification
(other than any qualification that is expressly solely with respect to, or
expressly resulting solely from, an upcoming maturity date of borrowed money
within one year from the date of such opinion) by the Accountants. In addition,
all such audited financial statements shall be accompanied by a Compliance
Certificate.

9.8.    Quarterly Financial Statements.

(a)    Furnish Agent (i) within sixty (60) days after the end of each of the
first two full Fiscal Quarters following the Closing Date, and (ii) within
forty-five (45) days after the end of each Fiscal Quarter thereafter, an
unaudited balance sheet of Intermediate Holdings and its Subsidiaries on a
Consolidated Basis and unaudited statements of income and stockholders’ equity
and cash flow of Intermediate Holdings and its Subsidiaries on a Consolidated
Basis reflecting results of operations from the beginning of the Fiscal Year to
the end of such quarter and for such quarter, prepared in accordance with GAAP
applied on a basis consistent with prior practices, subject to lack of footnotes
and normal and recurring year-end adjustments, and setting forth in comparative
form the respective financial statements for the corresponding date and period
in the previous Fiscal Year.

(b)    Upon Agent’s reasonable request therefor, contemporaneously with delivery
of the financial statements described in clause (a) above, furnish Agent such
financial statements of Intermediate Holdings and its Subsidiaries on a
consolidating basis.

(c)    The unaudited financial statements described in this Section 9.8 shall be
accompanied by a Compliance Certificate.

 

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9.9.    [Intentionally Omitted.]

9.10.    Other Reports. Furnish Agent as soon as available, but in any event
within ten (10) Business Days after the issuance thereof, (i) with copies of
such financial statements, reports and returns as each Borrower or Guarantor
shall send to the holders of its Equity Interests and (ii) copies of any
material notices, reports, financial statements and other materials sent by any
Borrower or Guarantor pursuant to the Intercompany Subordinated Loan Documents
or the Holdings Loan Documents.

9.11.    Additional Information. Furnish Agent with such additional information
as Agent shall reasonably request in order to enable Agent to determine whether
the terms, covenants, provisions and conditions of this Agreement and the Other
Documents have been complied with by Borrowers and Guarantors including, without
the necessity of any request by Agent, (a) copies of all environmental audits
and reviews, and (b) at least thirty (30) days prior thereto, notice of any
Borrower’s or Guarantor’s opening of any new office or place of business or any
Borrower’s or Guarantor’s closing of any existing office or place of business.

9.12.    Projected Operating Budget. Furnish Agent, no later than thirty
(30) days after the beginning of each Borrower’s Fiscal Years commencing with
Fiscal Year 2019, a month by month projected operating budget and cash flow of
Borrowers and Guarantors on a Consolidated basis for such Fiscal Year (including
a model of Undrawn Availability for each Fiscal Month, an income statement for
each Fiscal Month, and a balance sheet as at the end of the last Fiscal Month in
each Fiscal Quarter), such projections to be accompanied by a certificate signed
by an Authorized Officer of Borrowing Agent to the effect that such projections
have been prepared based upon good faith estimates and stated assumptions
believed to be reasonable and fair as of the date made in light of conditions
and facts then known and, as of such date, reflect good faith, reasonable and
fair estimates of the information projected for the periods set forth therein;
it being understood that (i) such projections are subject to significant
uncertainties and contingencies, many of which are beyond the control of
Borrowers and Guarantors, that no assurance can be given that such projections
will be realized, that such projections may vary from actual results and that
such variances may be material and (ii) no representation is made with respect
to information of an industry specific or general economic nature.

9.13.    Variances From Operating Budget. Furnish Agent, within ten
(10) Business Days of the delivery of the financial statements referred to in
Sections 9.7 and 9.8, a written report summarizing all material variances from
budgets submitted by Borrowers pursuant to Section 9.12 and, to the extent
requested by Agent, a discussion and analysis by management with respect to such
variances.

9.14.    Notice of Suits, Adverse Events. Furnish Agent with prompt written
notice of (i) any lapse or other termination of any Consent issued to any
Borrower or Guarantor by any Governmental Body or any other Person that is
material to the operation of any Borrower’s or Guarantor’s business, (ii) any
refusal by any Governmental Body or any other Person to renew or extend any such
Consent; and (iii) copies of any periodic or special reports filed by any
Borrower or Guarantor with any Governmental Body or Person that is not an
Affiliate of Intermediate Holdings, if such reports indicate any material change
in the business, operations, affairs or condition of any Borrower or Guarantor,
or if copies thereof are requested by Agent, and (iv) copies of any material
notices and other material communications from any Governmental Body or Person
that is not an Affiliate of Intermediate Holdings which specifically relate to
any Borrower or Guarantor.

 

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9.15.    ERISA Notices and Requests. Furnish Agent with prompt written notice in
the event of any notice of the occurrence of any Termination Event.

9.16.    Material Contracts. Promptly after Agent’s request therefor, furnish
Agent with copies of all Material Contracts requested.

9.17.    Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.

9.18.    Updates to Certain Schedules. Deliver to Agent promptly as shall be
required to maintain the related representations and warranties as true and
correct in all material respects, updates to Schedules 4.4 (Equipment and
Inventory Locations; Place of Business, Chief Executive Office, Real Property),
5.9 (Intellectual Property), 5.24 (Equity Interests), 5.25 (Commercial Tort
Claims), and 5.26 (Letter-of-Credit Rights); provided, that, absent the
occurrence and continuance of any Event of Default, Borrowers and Guarantors
shall only be required to provide such updates on a quarterly basis in
connection with delivery of a Compliance Certificate with respect to the
applicable Fiscal Quarter. Any such updated Schedules delivered by Borrowers or
Guarantors to Agent in accordance with this Section 9.18 shall automatically and
immediately be deemed to amend and restate the prior version of such Schedule
previously delivered to Agent and attached to and made part of this Agreement.
Notwithstanding the foregoing, Agent’s acceptance of any such updated Schedules
shall not be deemed to constitute a waiver of any Event of Default arising as a
result of the occurrence of an event not permitted by the terms of this
Agreement..

9.19.    Labor Matters. Promptly upon any Borrower’s learning thereof, (i) any
material labor dispute to which such Borrower or any of its Subsidiaries may
become a party, including, without limitation, any strikes, lockouts, walkouts
or other disputes relating to such Persons’ plants and other facilities, and
(ii) any Worker Adjustment and Retraining Notification Act liability incurred
with respect to the closing of any plant or other facility of any Borrower or
any of its Subsidiaries, and (iii) the expiration of any labor contract to which
any Borrower or Guarantor is a party or by which any Borrower or Guarantor is
bound.

 

X. EVENTS OF DEFAULT.

The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

10.1.    Nonpayment. Failure by any Borrower or Guarantor to pay when due (a)
any principal or interest on the Obligations (including without limitation
pursuant to Section 2.9), or (b) any other fee, charge, amount or liability
provided for herein or in any Other Document, in each case whether at maturity,
by reason of acceleration pursuant to the terms of this Agreement, by notice of
intention to prepay or by required prepayment;

 

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10.2.    Breach of Representation. (i) Any representation or warranty made or
deemed made by any Borrower or Guarantor in this Agreement or any Other Document
or in any certificate, document or financial or other statement furnished at any
time in connection herewith or therewith shall prove to have been incorrect or
misleading in any material respect (or, in the case of any representation or
warranty qualified by materiality or “Material Adverse Effect” or similar
language, in any respect) on the date when made or deemed to have been made, or
(ii) any representation or warranty contained in Section 16.18(a) is or becomes
false or misleading at any time;

10.3.    Judicial Actions. Issuance of a notice of Lien, levy, assessment,
injunction or attachment (a) against any Borrower’s or Guarantor’s Inventory,
Receivables or Credit Card Receivables in an amount in excess of $5,000,000,
individually or in the aggregate, or (b) against a material portion of any
Borrower’s or Guarantor’s other property which is not stayed or lifted within
sixty (60) days;

10.4.    Noncompliance. (i) Failure or neglect of any Borrower or Guarantor to
perform, keep or observe any term, provision, condition or covenant contained in
Section 2.21, Section 6.2, Section 6.5, Section 6.6, Section 6.7, Section 6.9,
Section 6.12, Section 6.14, Section 6.16, or Article VII hereof, or (ii) except
as otherwise provided for in Sections 10.1 and 10.4(i), failure or neglect of
any Borrower or any Guarantor to perform, keep or observe any term, provision,
condition or covenant contained in this Agreement, any Other Document or any
other agreement or arrangement now or hereafter entered into between any
Borrower or Guarantor and Agent or any Lender which is not cured within twenty
(20) days from the occurrence of such failure or neglect;

10.5.    Judgments. There is rendered against any Borrower or any Guarantor
(a) (i) any final judgment or judgments, writ(s), order(s) or decree(s) for the
payment of money for an amount in excess of $15,000,000, individually or in the
aggregate (to the extent not covered by independent third-party insurance as to
which the insurer has been notified of such judgment, writ, order or decree and
has not denied or failed to acknowledge coverage), or (ii) any final
non-monetary judgment or judgments, writ(s), or order(s) that have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and, in either case, (b) (i) action shall be legally taken by any
judgment creditor to levy upon assets or properties of any Borrower or any
Guarantor to enforce any such judgment, (ii) such judgment shall remain
undischarged for a period of sixty (60) consecutive days during which a stay of
enforcement of such judgment shall not be in effect, or (iii) any Liens arising
by virtue of the rendition, entry or issuance of such judgment upon assets or
properties of any Borrower or any Guarantor shall be senior to any Liens in
favor of Agent on such assets or properties, unless such Liens constitute a
Permitted Encumbrance;

10.6.    Bankruptcy. Any Borrower or any Guarantor shall (i) apply for, consent
to or suffer the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state or federal bankruptcy or
receivership laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent (including by entry of any order for relief in

 

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any involuntary bankruptcy or insolvency proceeding commenced against it), (vi)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, within sixty
(60) days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the purpose of effecting any of
the foregoing;

10.7.    Lien Priority. Any Lien created hereunder or provided for hereby or
under any Other Document for any reason (other than in accordance with the terms
hereof and thereof) ceases to be or is not a valid and perfected Lien having a
first priority interest (subject only to Permitted Encumbrances that have
priority as a matter of Applicable Law);

10.8.    [Intentionally Omitted.];

10.9.    Cross Default. Either (x) any “event of default” under any Indebtedness
(other than the Obligations, the Intercompany Subordinated Loans, or, to the
extent not resulting from an action or inaction by any Borrower or Guarantor,
the Holdings Loan) of any Borrower or Guarantor with a then-outstanding
principal balance (or, in the case of any Indebtedness not so denominated, with
a then-outstanding total obligation amount) of $15,000,000 or more, or any other
event or circumstance which would permit the holder of any such Indebtedness of
any Borrower or Guarantor to accelerate such Indebtedness (and/or the
obligations of such Borrower or Guarantor thereunder) prior to the scheduled
maturity or termination thereof, shall occur (regardless of whether the holder
of such Indebtedness shall actually accelerate, terminate or otherwise exercise
any rights or remedies with respect to such Indebtedness) or (y) a default of
the obligations of any Borrower or Guarantor under any Material Contract shall
occur which has or is reasonably likely to have a Material Adverse Effect;

10.10.    [Intentionally Omitted.];

10.11.    Change of Control. Any Change of Control shall occur;

10.12.    Invalidity. Any material provision of this Agreement or any Other
Document shall, for any reason (other than as expressly permitted hereunder or
thereunder), cease to be valid and binding on any Borrower or any Guarantor, or
any Borrower or any Guarantor shall so claim in writing to Agent or any Lender
or any Borrower or any Guarantor challenges the validity of or its liability
under this Agreement or any Other Document;

10.13.    [Intentionally Omitted.];

10.14.    Cessation of Business. Except as otherwise expressly permitted
hereunder, any Borrower or any Guarantor shall take any action, or shall make a
determination, whether or not yet formally approved by any Borrower’s or any
Guarantor’s management or board of directors, to (i) suspend the operation of
all or a material portion of its business in the ordinary course, (ii) suspend
the performance under Material Contracts in the ordinary course, (iii) solicit
proposals for the liquidation of, or undertake to liquidate, all or a material
portion of its assets or Store locations, or (iv) solicit proposals for the
employment of, or employ, an agent or other third party to conduct a program of
closings, liquidations, or “Going-Out-Of-Business” sales of any material portion
of its business;

 

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10.15.    Pension Plans. (i) A Termination Event occurs with respect to a
Pension Benefit Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of any Borrower under Title IV of
ERISA to the Pension Benefit Plan, Multiemployer Plan or PBGC in an aggregate
amount in excess of $15,000,000, or (ii) any Borrower or any member of the
Controlled Group 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 $15,000,000;

10.16.    Loss of Collateral. There occurs any uninsured loss to any portion of
the Collateral having a value in excess of $5,000,000;

10.17.    Indictment. There occurs, with respect to any Borrower or Guarantor or
any director or Authorized Officer of any Borrower or Guarantor, (i) a criminal
indictment or conviction of a felony for fraud or dishonesty in connection with
any Borrower’s or Guarantor’s business (unless, in the case of such director or
Authorized Officer, such director or Authorized Officer promptly resigns or is
removed or replaced), or (ii) the charging by a Governmental Body of a violation
under any Anti-Terrorism Laws, Anti-Corruption Laws, Anti-Money Laundering Laws
or Sanctions; or

10.18.    Subordination Provisions. (a) The subordination provisions of the
documents evidencing or governing any Indebtedness subordinated to the
Obligations (including, without limitation, the Subordinated Intercompany Loans
and the Intercompany Subordination Agreement) (the “Subordination Provisions”)
shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable against any holder of the applicable
subordinated Indebtedness; or (b) any Borrower or any Guarantor shall, directly
or indirectly, disavow or contest in any manner (i) the effectiveness, validity
or enforceability of any of the Subordination Provisions, (ii) that the
Subordination Provisions exist for the benefit of the Secured Parties, or
(iii) that all payments of principal of or premium and interest on the
applicable Indebtedness, or realized from the liquidation of any property of any
Borrower or Guarantor, shall be subject to any of the Subordination Provisions.

 

XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

11.1.    Rights and Remedies.

(a)    Upon the occurrence and during the continuance of: (i) an Event of
Default pursuant to Section 10.6 (other than Sections 10.6(ii) and 10.6(vii))
with respect to any Borrower, all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated, (ii) any of the other Events of Default, at the option of
Agent or at the direction of Required Lenders all Obligations shall be
immediately due and payable and Agent or Required Lenders shall have the right
to terminate this Agreement and to terminate the obligation of Lenders to make
Advances; and (iii) without limiting Section 8.2 hereof, any Default under
Section 10.6(vii) hereof with respect to any Borrower, the obligation of Lenders
to make Advances hereunder shall be suspended until such time as such
involuntary petition shall be dismissed. Upon the occurrence and during the
continuance of any Event of Default, (A) Agent shall have the right to exercise
any and all rights and remedies provided for herein, under the Other Documents,
under the Uniform Commercial

 

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Code and at law or equity generally, including the right to foreclose the
security interests granted herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession of and sell any or all of
the Collateral with or without judicial process; (B) Agent may enter any of any
Borrower’s or Guarantor’s premises or other premises without legal process and
without incurring liability to any Borrower or Guarantor therefor, and Agent may
thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Agent may deem
advisable and Agent may require Borrowers and Guarantors to make the Collateral
available to Agent at a convenient place, subject to any limitations under the
Real Property Leases and the Lien Waiver Agreements; and (C) with or without
having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, as part of one or
more going out of business sales in Agent’s own right or by one or more agents
and contractors, at any time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, all as
Agent may elect, subject to any limitations under the Real Property Leases and
the Lien Waiver Agreements. Agent and any agent or contractor, in conjunction
with any such sale, may augment the Inventory with other goods (all of which
other goods shall remain the sole property of Agent or such agent or
contractor). Any amounts realized from the sale of such goods which constitute
augmentations to the Inventory (net of an allocable share of the costs and
expenses incurred in their disposition) shall be the sole property of Agent or
such agent or contractor and none of any Borrower, any Guarantor or any Person
claiming under or in right of any Borrower or Guarantor shall have any interest
therein. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrowers and Guarantors reasonable
notification of the sale or sales described in the foregoing provisions of this
clause (a), it being agreed that in all events written notice mailed to
Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid (including credit
bid) for and become the purchaser, and Agent, any Lender or any other purchaser
at any such sale thereafter shall hold the Collateral sold absolutely free from
any claim or right of whatsoever kind, including any equity of redemption and
all such claims, rights and equities are hereby expressly waived and released by
each Borrower and each Guarantor. In connection with the exercise of the
foregoing remedies, including the sale of Inventory, Agent is granted a
perpetual nonrevocable, royalty-free, nonexclusive license and Agent is granted
permission to use all of each Borrower’s and each Guarantor’s (a) owned
Intellectual Property which is used or useful in connection with Inventory for
the purpose of marketing, advertising for sale and selling or otherwise
disposing of such Inventory and (b) equipment, Real Property (subject to any
limitations under the Real Property Leases and the Lien Waiver Agreements) and
other assets for the purpose of completing the manufacture of unfinished goods
and otherwise exercising its remedies hereunder and under the Other Documents.
The cash proceeds realized from the sale of any Collateral shall be applied to
the Obligations in the order set forth in Section 11.5 hereof. Noncash proceeds
will only be applied to the Obligations as they are converted into cash. If any
deficiency shall arise, Borrowers and Guarantors shall remain liable to Agent
and Lenders therefor.

(b)    To the extent that Applicable Law imposes duties on Agent to exercise
remedies in a commercially reasonable manner, each Borrower and each Guarantor
acknowledges and agrees that it is not commercially unreasonable for Agent:
(i) to fail to incur expenses reasonably deemed significant by Agent to prepare
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otherwise to complete raw material or work in process into finished goods or
other finished products for disposition; (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of;
(iii) to fail to exercise collection remedies against Customers or other Persons
obligated on Collateral or to remove Liens on or any adverse claims against
Collateral; (iv) to exercise collection remedies against Customers and other
Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists; (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature; (vi) to contact other Persons,
whether or not in the same business as any Borrower or Guarantor, for
expressions of interest in acquiring all or any portion of such Collateral;
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature;
(viii) to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets;
(ix) to dispose of assets in wholesale rather than retail markets; (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure Agent against risks
of loss, collection or disposition of Collateral or to provide to Agent a
guaranteed return from the collection or disposition of Collateral; or (xii) to
the extent deemed appropriate by the Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist Agent
in the collection or disposition of any of the Collateral. Each Borrower and
each Guarantor acknowledges that the purpose of this Section 11.1(b) is to
provide non-exhaustive indications of what actions or omissions by Agent would
not be commercially unreasonable in Agent’s exercise of remedies against the
Collateral and that other actions or omissions by Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 11.1(b). Without limitation upon the foregoing, nothing contained in
this Section 11.1(b) shall be construed to grant any rights to any Borrower or
any Guarantor or to impose any duties on Agent that would not have been granted
or imposed by this Agreement or by Applicable Law in the absence of this
Section 11.1(b).

11.2.    Agent’s Discretion. Agent shall have the right in its sole discretion
to determine which rights, Liens, security interests or remedies Agent may at
any time pursue, relinquish, subordinate, or modify, which procedures, timing
and methodologies to employ, and any other action to take with respect to any or
all of the Collateral and in what order, and such determination will not in any
way modify or affect any of Agent’s or Lenders’ rights hereunder as against
Borrowers, Guarantors, or each other.

11.3.    Setoff. Subject to Section 14.13, in addition to any other rights which
Agent or any Lender may have under Applicable Law, upon the occurrence and
during the continuance of an Event of Default hereunder, Agent and such Lender
shall have a right, immediately and without notice of any kind, to apply any
Borrower’s or Guarantors’ property held by Agent and such Lender or any of their
Affiliates to reduce the Obligations and to exercise any and all rights of
setoff which may be available to Agent and such Lender with respect to any
deposits held by Agent or such Lender.

11.4.    Rights and Remedies not Exclusive. The enumeration of the foregoing
rights and remedies is not intended to be exhaustive and the exercise of any
rights or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.

 

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11.5.    Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by Agent on account of the Obligations (including without limitation any amounts
on account of any of Cash Management Liabilities or Hedge Liabilities), or in
respect of the Collateral may, at Agent’s discretion, be paid over or delivered
as follows:

FIRST, to the payment of all reasonable and documented out-of-pocket costs and
expenses (including reasonable and documented attorneys’ fees) of Agent in
connection with enforcing its rights and the rights of Lenders under this
Agreement and the Other Documents, and any Out-of-Formula Loans and Protective
Advances funded by Agent with respect to the Collateral under or pursuant to the
terms of this Agreement;

SECOND, to payment of any fees owed to Agent;

THIRD, to the payment of all reasonable and documented out-of-pocket costs and
expenses (including reasonable and documented attorneys’ fees) of each of the
Lenders to the extent owing to such Lender pursuant to the terms of this
Agreement;

FOURTH, to the payment of all of the Obligations consisting of accrued interest
on account of the Swing Loans;

FIFTH, to the payment of the outstanding principal amount of the Obligations
consisting of Swing Loans;

SIXTH, to the payment of all Obligations arising under this Agreement and the
Other Documents consisting of accrued fees and interest in respect of Revolving
Advances (other than interest in respect of Swing Loans paid pursuant to clause
FOURTH above);

SEVENTH, to the payment of the outstanding principal amount of the Obligations
in respect of Revolving Advances (other than principal in respect of Swing Loans
paid pursuant to clause FIFTH above and Letters of Credit pursuant to clause
EIGHTH below) arising under this Agreement;

EIGHTH, to the payment or cash collateralization of any outstanding Letters of
Credit in accordance with Section 3.2(b) hereof;

NINTH, to the payment of all Obligations arising under this Agreement and the
Other Documents consisting of accrued fees and interest in respect of FILO
Advances;

TENTH, to the payment of the outstanding principal amount of the Obligations
arising under this Agreement in respect of FILO Advances;

 

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ELEVENTH, to the payment of Cash Management Liabilities which shall have become
due and payable (hereunder, under the Other Documents or otherwise) and not
repaid pursuant to clauses “FIRST” through “TENTH” above;

TWELFTH, to the payment of Hedge Liabilities which shall have become due and
payable (hereunder, under the Other Documents or otherwise) and not repaid
pursuant to clauses “FIRST” through “ELEVENTH” above;

THIRTEENTH, to all other Obligations which shall have become due and payable and
not repaid pursuant to clauses “FIRST” through “TWELFTH”; and

FOURTEENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “THIRD”, “SIXTH”, “SEVENTH”, “EIGHTH”, “NINTH”, “TENTH”, and
“THIRTEENTH” above; and, with respect to clauses “ELEVENTH” and “TWELFTH” above,
an amount equal to its pro rata share (based on the proportion that the then
outstanding Cash Management Liabilities and Hedge Liabilities held by such
Lender bears to the aggregate then outstanding Cash Management Liabilities and
Hedge Liabilities); and (iii) notwithstanding anything to the contrary in this
Section 11.5, no Swap Obligations of any Non-Qualifying Party shall be paid with
amounts received from such Non-Qualifying Party under its Guaranty (including
sums received as a result of the exercise of remedies with respect to such
Guaranty) or from the proceeds of such Non-Qualifying Party’s Collateral if such
Swap Obligations would constitute Excluded Hedge Liabilities, provided, however,
that to the extent possible appropriate adjustments shall be made with respect
to payments and/or the proceeds of Collateral from other Borrowers and/or
Guarantors that are Eligible Contract Participants with respect to such Swap
Obligations to preserve the allocation to Obligations otherwise set forth above
in this Section 11.5; and (iv) in the case of amounts provided pursuant to
clause “EIGHTH” above, such amounts shall be held by Agent as cash collateral
for the Letters of Credit pursuant to Section 3.2(b) hereof and applied
(A) first, to reimburse Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “NINTH”,
“TENTH”, “ELEVENTH”, “TWELFTH”, and “THIRTEENTH” above in the manner provided in
this Section 11.5.

 

XII. WAIVERS AND JUDICIAL PROCEEDINGS.

12.1.    Waiver of Notice. To the fullest extent permitted by Applicable Law,
each Borrower and each Guarantor hereby waives notice of non-payment of any of
the Receivables or Credit Card Receivables, demand, presentment, protest and
notice thereof with respect to any and all instruments, notice of acceptance
hereof, notice of loans or advances made, credit extended, Collateral received
or delivered, or any other action taken in reliance hereon, and all other
demands and notices of any description, except such as are expressly provided
for herein.

 

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12.2.    Delay. No delay or omission on Agent’s or any Lender’s part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any Default or Event of Default.

12.3.    Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, ANY OTHER DOCUMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM,
COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

XIII. EFFECTIVE DATE AND TERMINATION.

13.1.    Term. This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of each Borrower,
each Guarantor, Agent, Swing Loan Lender, Issuer and each Lender, shall become
effective on the Closing Date and shall continue in full force and effect until
June 18, 2023 (the “Term”) unless sooner terminated as herein provided.

13.2.    Termination. The termination of this Agreement shall not affect Agent’s
or any Lender’s rights, or any of the Obligations having their inception prior
to the effective date of such termination or any Obligations which pursuant to
the terms hereof continue to accrue after such date, and the provisions hereof
shall continue to be fully operative until all transactions entered into, rights
or interests created and Obligations have been fully and finally paid, disposed
of, concluded or liquidated. The security interests, Liens and rights granted to
Agent and Lenders hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrowers’ Account may from time to time be
temporarily in a zero or credit position, until all of the Obligations have been
fully and finally paid and performed. Accordingly, each Borrower and each
Guarantor waives any rights which it may have under the Uniform Commercial Code
to demand the filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination statements to each
Borrower or Guarantor, or to file them with any filing office, unless and until
this Agreement shall have been terminated in accordance with its terms and all
Obligations have been fully and finally immediately available funds. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations are fully and finally
paid and performed.

 

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XIV. REGARDING AGENT.

14.1.    Appointment. Each Lender hereby designates PNC to act as Agent for such
Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
2.8(b) and 3.4 and the Fee Letter), charges and collections received pursuant to
this Agreement, for the ratable benefit of Lenders. Agent may perform any of its
duties hereunder by or through its agents or employees. As to any matters not
expressly provided for by this Agreement (including collection of the Notes)
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of Required
Lenders, and such instructions shall be binding; provided, however, that Agent
shall not be required to take any action which, in Agent’s discretion, exposes
Agent to liability or which is contrary to this Agreement or the Other Documents
or Applicable Law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.

14.2.    Nature of Duties. Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other Documents. Neither
Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment), or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Borrower, any
Guarantor, or any officer of any of the foregoing contained in this Agreement,
or in any of the Other Documents or in any certificate, report, statement or
other document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any of the Other Documents or for the value,
validity, effectiveness, genuineness, due execution, enforceability or
sufficiency of this Agreement, or any of the Other Documents or for any failure
of any Borrower or Guarantor to perform its obligations hereunder. Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Other Documents, or to inspect the properties,
books or records of any Borrower or Guarantor. The duties of Agent as respects
the Advances to Borrowers shall be mechanical and administrative in nature;
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement or the transactions described herein except as
expressly set forth herein.

14.3.    Lack of Reliance on Agent. Independently and without reliance upon
Agent or any other Lender, each Lender has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
each Borrower and each Guarantor in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of

 

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each Borrower and each Guarantor. Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by any Borrower or Guarantor pursuant to the terms hereof. Agent
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document,
certificate or statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Agreement or any Other Document, or of the financial
condition of any Borrower or Guarantor, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Note, the Other Documents or the financial
condition or prospects of any Borrower or any Guarantor, or the existence of any
Event of Default or any Default.

14.4.    Resignation of Agent; Successor Agent. Agent may resign on sixty
(60) days written notice to each Lender and Borrowing Agent and upon such
resignation, Required Lenders will promptly designate a successor Agent
reasonably satisfactory to Borrowers (provided, that, no such approval by
Borrowers shall be required (i) in any case where the successor Agent is one of
the Lenders or (ii) after the occurrence and during the continuance of any Event
of Default). If a successor Agent shall not have been so appointed within said
sixty (60) day period, the retiring Agent may appoint a successor Agent
reasonably satisfactory to Borrowers who shall serve as an Agent until such
time, if any, as the Required Lenders appoint a successor Agent as provided
above. Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and shall in particular succeed to all of Agent’s right, title and
interest in and to all of the Liens in the Collateral securing the Obligations
created hereunder or any Other Document (including the Intellectual Property
Security Agreement, the Pledge Agreement and all account control agreements),
and the term “Agent” shall mean such successor agent effective upon its
appointment, and the former Agent’s rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. However, notwithstanding the foregoing, if at the time of the
effectiveness of the new Agent’s appointment, any further actions need to be
taken in order to provide for the legally binding and valid transfer of any
Liens in the Collateral from former Agent to new Agent and/or for the perfection
of any Liens in the Collateral as held by new Agent or it is otherwise not then
possible for new Agent to become the holder of a fully valid, enforceable and
perfected Lien as to any of the Collateral, former Agent shall continue to hold
such Liens solely as agent for perfection of such Liens on behalf of new Agent
until such time as new Agent can obtain a fully valid, enforceable and perfected
Lien on all Collateral; provided, that, Agent shall not be required to or have
any liability or responsibility to take any further actions after such date as
such agent for perfection to continue the perfection of any such Liens (other
than to forego from taking any affirmative action to release any such Liens).
After any Agent’s resignation as Agent, the provisions of this Article XIV, and
any indemnification rights under this Agreement, including without limitation,
rights arising under Section 16.5 hereof, shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement (and in the event resigning Agent continues to hold any Liens pursuant
to the provisions of the immediately preceding sentence, the provisions of this
Article XIV and any indemnification rights under this Agreement, including
without limitation, rights arising under Section 16.5 hereof, shall inure to its
benefit as to any actions taken or omitted to be taken by it in connection with
such Liens).

 

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14.5.    Certain Rights of Agent. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Required Lenders; and Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
Lenders shall not have any right of action whatsoever against Agent as a result
of its acting or refraining from acting hereunder in accordance with the
instructions of Required Lenders.

14.6.    Reliance. Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, statement, certificate,
email, facsimile, telex, teletype or telecopier message, cablegram, order or
other document or telephone message believed by it to be genuine and correct and
to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Documents and its duties hereunder, upon advice of counsel selected by it. Agent
may employ agents and attorneys-in-fact and shall not be liable for the default
or misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.

14.7.    Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or Borrowing
Agent referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by Required Lenders;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of Lenders.

14.8.    Indemnification. To the extent Agent is not reimbursed and indemnified
by Borrowers, each Lender will reimburse and indemnify Agent in proportion to
its respective portion of the outstanding Advances and its respective
Participation Commitments in the outstanding Letters of Credit and outstanding
Swing Loans (or, if no Advances are outstanding, pro rata according to the
percentage that its Revolving Commitment Amount and FILO Commitment Amount, as
applicable, constitutes of the total aggregate Revolving Commitment Amounts and
FILO Commitment Amounts), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided,
that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment).

14.9.    Agent in its Individual Capacity. With respect to the obligation of
Agent to lend under this Agreement, the Advances made by it shall have the same
rights and powers hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein; and the term “Lender” or any similar term
shall, unless the context clearly otherwise indicates, include

 

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Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower or Guarantor as if it were not performing the duties specified
herein, and may accept fees and other consideration from any Borrower or
Guarantor for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.

14.10.    Delivery of Documents. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, 9.12 and 9.13 or Borrowing Base
Certificates from any Borrower pursuant to the terms of this Agreement which any
Borrower is not obligated to deliver to each Lender, Agent will promptly furnish
such documents and information to Lenders.

14.11.    Borrowers’ and Guarantors’ Undertaking to Agent. Without prejudice to
their respective obligations to Lenders under the other provisions of this
Agreement, each Borrower and each Guarantor hereby undertakes with Agent to pay
to Agent from time to time on demand all amounts from time to time due and
payable by it for the account of Agent or Lenders or any of them pursuant to
this Agreement to the extent not already paid. Any payment made pursuant to any
such demand shall pro tanto satisfy the relevant Borrower’s or Guarantor’s
obligations to make payments for the account of Lenders or the relevant one or
more of them pursuant to this Agreement.

14.12.    No Reliance on Agent’s Customer Identification Program. To the extent
the Advances or this Agreement is, or becomes, syndicated in cooperation with
other Lenders, each Lender acknowledges and agrees that neither such Lender, nor
any of its Affiliates, participants or assignees, may rely on Agent to carry out
such Lender’s, Affiliate’s, participant’s or assignee’s customer identification
program, or other obligations required or imposed under or pursuant to the USA
PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or
any other Anti-Terrorism Law, including any programs involving any of the
following items relating to or in connection with any of Borrowers, Guarantors,
their respective Affiliates, or their agents, the Other Documents or the
transactions hereunder or contemplated hereby: (i) any identity verification
procedures, (ii) any recordkeeping, (iii) comparisons with government lists,
(iv) customer notices or (v) other procedures required under the CIP Regulations
or such Anti-Terrorism Laws.

14.13.    Other Agreements. Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Borrower or any Guarantor
or any deposit accounts of any Borrower or any Guarantor now or hereafter
maintained with such Lender. Anything in this Agreement to the contrary
notwithstanding, each of the Lenders further agrees that it shall not, unless
specifically requested to do so by Agent, take any action to protect or enforce
its rights arising out of this Agreement or the Other Documents, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Other Documents shall be taken in concert and at the direction
or with the consent of Agent or Required Lenders.

14.14.    Co-Syndication Agents; Joint Lead Arrangers. Each of the
Co-Syndication Agents and Joint Lead Arrangers, each in such capacity, shall not
have any right, power, obligation, liability, responsibility, or duty under this
Agreement other than those applicable to it

 

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in its capacity as a Lender, as Agent, as Swing Loan Lender, or Issuer. Without
limiting the foregoing, each of the Co-Syndication Agents and Joint Lead
Arrangers, each in such capacity, shall not have or be deemed to have any
fiduciary relationship with any Lender or any Borrower or Guarantor. Each
Lender, Agent, Swing Loan Lender, Issuer, and each Borrower and Guarantor
acknowledges that it has not relied, and will not rely, on the Co-Syndication
Agents or the Joint Lead Arrangers in deciding to enter into this Agreement or
in taking or not taking action hereunder. Each of the Co-Syndication Agents and
Joint Lead Arrangers, each in such capacity, shall be entitled to resign at any
time by giving notice to Agent and Borrowers.

 

XV. BORROWING AGENCY.

15.1.    Borrowing Agency Provisions.

(a)    Each Borrower and each Guarantor hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity, whether verbally, in
writing or through electronic methods (including, without limitation, an
Approved Electronic Communication) to (i) borrow, (ii) request advances,
(iii) request the issuance of Letters of Credit, (iv) sign and endorse notes,
(v) execute and deliver all instruments, documents, applications, security
agreements, reimbursement agreements and letter of credit agreements for Letters
of Credit and all other certificates, notices, writings and further assurances
now or hereafter required hereunder, (vi) make elections regarding interest
rates, (vii) give instructions regarding Letters of Credit and agree with Issuer
upon any amendment, extension or renewal of any Letter of Credit and
(viii) otherwise take action under and in connection with this Agreement and the
Other Documents, all on behalf of and in the name of such Borrower or Guarantor,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.

(b)    The handling of this credit facility as a co-borrowing facility with a
borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and Guarantors and at their request. Neither Agent
nor any Lender shall incur liability to Borrowers or Guarantors as a result
thereof. To induce Agent and Lenders to do so and in consideration thereof, each
Borrower and each Guarantor hereby indemnifies Agent and each Lender and holds
Agent and each Lender harmless from and against any and all liabilities,
expenses, losses, damages and claims of damage or injury asserted against Agent
or any Lender by any Person arising from or incurred by reason of the handling
of the financing arrangements of Borrowers and Guarantors as provided herein,
reliance by Agent or any Lender on any request or instruction from Borrowing
Agent or any other action taken by Agent or any Lender with respect to this
Section 15.1 except due to willful misconduct or gross (not mere) negligence by
the indemnified party (as determined by a court of competent jurisdiction in a
final and non-appealable judgment).

(c)    All Obligations shall be joint and several, and each Borrower and each
Guarantor shall make payment upon the maturity of the Obligations by
acceleration or otherwise, and such obligation and liability on the part of each
Borrower and each Guarantor shall in no way be affected by any extensions,
renewals and forbearance granted by Agent or any Lender to any Borrower or
Guarantor, failure of Agent or any Lender to give any Borrower or Guarantor
notice of borrowing or any other notice, any failure of Agent or any Lender to
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its rights against any Borrower or Guarantor, the release by Agent or any Lender
of any Collateral now or hereafter acquired from any Borrower or Guarantor, and
such agreement by each Borrower and each Guarantor to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or Guarantors or any Collateral for such
Borrower’s or Guarantor’s Obligations or the lack thereof. Each Borrower and
each Guarantor waives all suretyship defenses.

15.2.    Waiver of Subrogation. Each Borrower and each Guarantor expressly
waives any and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution of any other claim which such Borrower or Guarantor may now or
hereafter have against the other Borrowers and Guarantors or any other Person
directly or contingently liable for the Obligations hereunder, or against or
with respect to any other Borrowers’ or Guarantors’ property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until payment in full of the
Obligations.

 

XVI. MISCELLANEOUS.

16.1.    Governing Law. This Agreement and each Other Document (unless and
except to the extent expressly provided otherwise in any such Other Document),
and all matters relating hereto or thereto or arising herefrom or therefrom
(whether arising under contract law, tort law or otherwise) shall, in accordance
with Section 5-1401 of the General Obligations Law of the State of New York, be
governed by and construed in accordance with the laws of the State of New York.
Any judicial proceeding brought by or against any Borrower or Guarantor with
respect to any of the Obligations, this Agreement, the Other Documents or any
related agreement may be brought in any court of competent jurisdiction in the
State of New York, United States of America, and, by execution and delivery of
this Agreement, each Borrower and each Guarantor accepts for itself and in
connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. Each Borrower and
each Guarantor hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified or registered
mail (return receipt requested) directed to Borrowing Agent at its address set
forth in Section 16.6 and service so made shall be deemed completed five
(5) days after the same shall have been so deposited in the mails of the United
States of America, or, at Agent’s option, by service upon Borrowing Agent which
each Borrower and each Guarantor irrevocably appoints as such Borrower’s or
Guarantor’s agent for the purpose of accepting service within the State of New
York. Nothing herein shall affect the right to serve process in any manner
permitted by Law or shall limit the right of Agent or any Lender to bring
proceedings against any Borrower or Guarantor in the courts of any other
jurisdiction. Each Borrower and each Guarantor waives any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. Each Borrower and each Guarantor waives the right to remove any
judicial proceeding brought against such Borrower or Guarantor in any state
court to any federal court. Any judicial proceeding by any Borrower or Guarantor
against Agent or any Lender involving, directly or indirectly, any matter or
claim in any way arising out of, related to or connected with this Agreement or
any related agreement, shall be brought only in a federal or state court located
in the County of New York, State of New York.

 

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16.2.    Entire Understanding.

(a)    This Agreement and the documents executed concurrently herewith contain
the entire understanding between each Borrower, each Guarantor, Agent, Swing
Loan Lender, Issuer and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each
Borrower’s, each Guarantor’s, Agent’s, Swing Loan Lender’s, Issuer’s and each
Lender’s respective officers. Neither this Agreement nor any portion or
provisions hereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged. Notwithstanding the foregoing, Agent may modify this Agreement or any
of the Other Documents for the purposes of completing missing content or
correcting erroneous content of an administrative nature, without the need for a
written amendment; provided, that, the Agent shall send a copy of any such
modification to the Borrowers and Guarantors and each Lender (which copy may be
provided by electronic mail). Each Borrower and each Guarantor acknowledges that
it has been advised by counsel in connection with the execution of this
Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.

(b)    Required Lenders, Agent with the consent in writing of Required Lenders,
and Borrowers and Guarantors may, subject to the provisions of this
Section 16.2(b), from time to time enter into written supplemental agreements to
this Agreement or the Other Documents executed by Borrowers and Guarantors, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of Lenders, Agent, Issuer, Swing Loan
Lender, Borrowers, or Guarantors thereunder or the conditions, provisions or
terms thereof or waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that no such
supplemental agreement shall:

(i)    increase the Revolving Commitment Percentage or FILO Commitment
Percentage, as applicable, or the Maximum Revolving Commitment Amount or Maximum
FILO Commitment Amount, as applicable of any Lender without the consent of such
Lender directly affected thereby;

(ii)    whether or not any Advances are outstanding, extend the Term or the time
for payment of principal or interest of any Advance (excluding the due date of
any mandatory prepayment of an Advance), or any fee payable to any Lender, or
reduce the principal amount of or the rate of interest borne by any Advances or
reduce any fee payable to any Lender, without the consent of each Lender
directly affected thereby (except that Required Lenders may elect to waive or
rescind any imposition of the Default Rate under Section 3.1 or of default rates
of Letter of Credit fees under Section 3.2 (unless imposed by Agent));

(iii)    (x) except in connection with any increase pursuant to Section 2.24
hereof, increase the Maximum Revolving Advance Amount without the consent of
each Lender directly affected thereby, or (y) increase the Maximum FILO Advance
Amount without the consent of each Lender directly affected thereby;

 

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(iv)    alter the definitions of the terms “Required Lenders” or “Supermajority
Lenders”, or alter, amend or modify this Section 16.2(b) without the consent of
all Lenders;

(v)    alter, amend or modify the provisions of Sections 2.8 or 11.5 without the
consent of all Lenders;

(vi)    except in connection with a transaction expressly permitted hereby,
release all or substantially all of the Collateral without the consent of all
Lenders;

(vii)    change (A) the rights and duties of Agent without the consent of all
Lenders, (B) the rights and duties of Issuer without the consent of Issuer or
(C) the rights and duties of Swing Loan Lender without the consent of Swing Loan
Lender;

(viii)    subject to clause (e) below, permit any Revolving Advance to be made
if after giving effect thereto the total of Revolving Advances outstanding
hereunder would exceed the Formula Amount for more than thirty (30) consecutive
Business Days (unless a Liquidation is occurring) or exceed, when aggregated
with Protective Advances made pursuant to Section 16.2(f), one hundred and ten
percent (110%) of the Formula Amount without the consent of each Lender directly
affected thereby;

(ix)    except in connection with a transaction expressly permitted hereby,
(x) release any Borrower or any Guarantor, or (y) limit the liability of any
Borrower or any Guarantor under this Agreement or any Other Document, in either
case without the consent of all Lenders;

(x)    increase the Advance Rates above the Advance Rates in effect on the
Closing Date without the consent of the Supermajority Lenders;

(xi)    change the definition of the terms “Formula Amount” or “FILO Formula
Amount” or any component definition of either of the foregoing if as a result
thereof the amounts available to be borrowed by Borrowers would be increased
without the written consent of the Supermajority Lenders, provided, that, the
foregoing shall not limit the discretion of Agent to change, establish or
eliminate any Reserves or to exercise its Permitted Discretion in accordance
with the terms hereof; or

(xii)    as to any Lender, alter, amend, or modify any provision of this
Agreement in a manner that would alter the pro rata sharing of payments required
thereby, without the consent of such Lender.

(c)    Any such supplemental agreement shall apply equally to each Lender and
shall be binding upon Borrowers, Guarantors, Lenders, Issuer, Swing Lender and
Agent and all future holders of the Obligations. In the case of any waiver,
Borrowers, Guarantors, Agent, Issuer, Swing Lender and Lenders shall be restored
to their former positions and rights, and any Event of Default waived shall be
deemed to be cured and not continuing, but no waiver of a specific Event of
Default shall extend to any subsequent Event of Default (whether or not the
subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.

 

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(d)    In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such consent is denied, then Agent may, at its option, require
such Lender to assign its interest in the Advances to Agent or to another Lender
or to any other Person designated by Agent (the “Designated Lender”), for a
price equal to (i) the then outstanding principal amount thereof plus
(ii) accrued and unpaid interest and fees due such Lender, which interest and
fees shall be paid when collected from Borrowers. In the event Agent elects to
require any Lender to assign its interest to Agent or to the Designated Lender,
Agent will so notify such Lender in writing within forty five (45) days
following such Lender’s denial, and such Lender will assign its interest to
Agent or the Designated Lender no later than five (5) days following receipt of
such notice pursuant to a Commitment Transfer Supplement executed by such
Lender, Agent or the Designated Lender, as appropriate, and Agent.

(e)    Notwithstanding (i) the existence of a Default or an Event of Default,
(ii) that any of the other applicable conditions precedent set forth in
Section 8.2 hereof have not been satisfied or the commitments of Lenders to make
Revolving Advances or FILO Advances hereunder have been terminated for any
reason, or (iii) any other contrary provision of this Agreement, Agent may at
its discretion and without the consent of any Lender, voluntarily permit the
outstanding Revolving Advances at any time to exceed the Formula Amount by, when
aggregated with Protective Advances made pursuant to Section 16.2(f), up to ten
percent (10%) of the Formula Amount for up to thirty (30) consecutive Business
Days (which time limit shall not apply if a Liquidation is then occurring) (the
“Out-of-Formula Loans”). If Agent is willing in its sole and absolute discretion
to permit such Out-of-Formula Loans, Lenders holding the Revolving Commitments
shall be obligated to fund such Out-of-Formula Loans in accordance with their
respective Revolving Commitment Percentages, and such Out-of-Formula Loans shall
be payable on demand and shall bear interest at the Default Rate for Revolving
Advances consisting of Domestic Rate Loans; provided, that, if Agent does permit
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have
changed the limits of Section 2.1(a) nor shall any Lender be obligated to fund
Revolving Advances in excess of its Revolving Commitment Amount. For purposes of
this paragraph, the discretion granted to Agent hereunder shall not preclude
involuntary overadvances that may result from time to time due to the fact that
the Formula Amount was unintentionally exceeded for any reason, including, but
not limited to, Collateral previously deemed to be either “Eligible
Receivables”, “Eligible Credit Card Receivables”, “Eligible Inventory”, or
“Eligible Domestic In-Transit Inventory”, as applicable, becomes ineligible,
collections of Receivables or Credit Card Receivables applied to reduce
outstanding Revolving Advances or FILO Advances are thereafter returned for
insufficient funds or overadvances are made to protect or preserve the
Collateral. In the event Agent involuntarily permits the outstanding Revolving
Advances to exceed the Formula Amount by more than ten percent (10%) (when
aggregated with Protective Advances made pursuant to Section 16.2(f)), Agent
shall use its efforts to have Borrowers decrease such excess in as expeditious a
manner as is practicable under the circumstances and not inconsistent with the
reason for such excess. Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.
To the extent any Out-of-Formula Loans are not actually funded by the other
Lenders as provided for in this Section 16.2(a), Agent may elect in its
discretion to fund such Out-of-Formula Loans and any such Out-of-Formula Loans
so funded by Agent shall be deemed to be Revolving Advances made by and owing to
Agent, and Agent shall be entitled to all rights (including accrual of interest)
and remedies of a Lender holding a Revolving Commitment under this Agreement and
the Other Documents with respect to such Revolving Advances.

 

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(f)    In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, Agent is hereby authorized by
Borrowers and Lenders, at any time in Agent’s sole discretion, regardless of
(i) the existence of a Default or an Event of Default, (ii) whether any of the
other applicable conditions precedent set forth in Section 8.2 hereof have not
been satisfied or the commitments of Lenders to make Revolving Advances
hereunder have been terminated for any reason, or (iii) any other contrary
provision of this Agreement, to make Revolving Advances (“Protective Advances”)
to Borrowers on behalf of Lenders which Agent, in its Permitted Discretion,
deems necessary or desirable (a) to preserve or protect the Collateral, or any
portion thereof, (b) to enhance the likelihood of, or maximize the amount of,
repayment of the Advances and other Obligations, or (c) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement; provided, that,
the Protective Advances made hereunder shall not, when aggregated with
Out-Of–Formula Loans made pursuant to Section 16.2(e), exceed ten percent (10%)
of the Formula Amount in the aggregate; provided, further, that at any time
after giving effect to any such Protective Advances, the outstanding Revolving
Advances (including, without limitation, Swing Loans and the Maximum Undrawn
Amount of all outstanding Letters of Credit) do not exceed the Maximum Revolving
Advance Amount. Lenders holding the Revolving Commitments shall be obligated to
fund such Protective Advances and effect a settlement with Agent therefor upon
demand of Agent in accordance with their respective Revolving Commitment
Percentages. To the extent any Protective Advances are not actually funded by
the other Lenders as provided for in this Section 16.2(f), any such Protective
Advances funded by Agent shall be deemed to be Revolving Advances made by and
owing to Agent, and Agent shall be entitled to all rights (including accrual of
interest) and remedies of a Lender holding a Revolving Commitment under this
Agreement and the Other Documents with respect to such Revolving Advances.

16.3.    Successors and Assigns; Participations; New Lenders.

(a)    This Agreement shall be binding upon and inure to the benefit of
Borrowers, Guarantors, Agent, each Lender, Issuer, Swing Loan Lender, all future
holders of the Obligations and their respective successors and assigns, except
that no Borrower or Guarantor may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of Agent and
each Lender.

(b)    Each Borrower and each Guarantor acknowledges that in the regular course
of commercial banking business any Lender may at any time and from time to time
sell participating interests in its Advances (other than Swing Loans) to other
financial institutions (other than any Defaulting Lender) (each such purchaser
of a participating interest, a “Participant”) pursuant to a participation
agreement in form and substance satisfactory to such Lender; 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) Borrowers, Guarantors, Agent,
Swing Loan Lender, Issuer and Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participating interest shall provide that such Lender shall

 

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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, modification or waiver
described in Section 16.2(b)(ii), (iv), (v), (vi) or (ix) that affects such
Participant. Each Participant may exercise all rights of payment (including
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Participant were the
direct holder thereof; provided, that, (i) Borrowers and Guarantors shall not be
required to pay to any Participant more than the amount which they would have
been required to pay to Lender which granted an interest in its Advances or
other Obligations payable hereunder to such Participant had such Lender retained
such interest in the Advances hereunder or other Obligations payable hereunder
unless the sale of the participation to such Participant is made with Borrowers’
prior written consent, (ii) in no event shall Borrowers or Guarantors be
required to pay any such amount arising from the same circumstances and with
respect to the same Advances or other Obligations payable hereunder to both such
Lender and such Participant, and (iii) such Participant agrees to be subject to
the provisions of Sections 3.10 and 3.11 as if it were an assignee under this
Section 16.3. Each Borrower and each Guarantor hereby grants to any Participant
a continuing security interest in any deposits, moneys or other property
actually or constructively held by such Participant as security for the
Participant’s interest in the Advances. Each Lender that sells a participation
agrees, at a Borrower’s request, to use reasonable efforts to cooperate with the
Borrowers to effectuate the provisions of Section 3.11 with respect to any
Participant. Each Lender that sells a participation shall, acting solely for
this purpose as a non-fiduciary agent of Borrowers, 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 Obligations under
this Agreement and the Other 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,
letters of credit or its other obligations under this Agreement or any Other
Document) to any Person except to the extent that such disclosure is necessary
to establish that such commitment, loan, letter of credit 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, Agent (in its capacity as Agent) shall have no responsibility for
maintaining a Participant Register.

(c)    Any Lender, with the consent of Agent and, to the extent required by the
provisos in the last sentence of this subsection (c), Borrowers and Guarantors,
may sell, assign or transfer all or any part of its rights and obligations under
or relating to Revolving Advances and/or FILO Advances under this Agreement and
the Other Documents to one or more additional Persons and one or more additional
Persons may commit to make Advances hereunder (each a “Purchasing Lender”), in
minimum amounts of not less than $5,000,000, pursuant to a Commitment Transfer
Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent
and delivered to Agent for recording. Upon such execution, delivery, acceptance
and recording, from and after the transfer effective date determined pursuant to
such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender

 

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hereunder with a Revolving Commitment Percentage and/or FILO Commitment
Percentage, as applicable, as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Revolving Commitment Percentages and/or FILO
Commitment Percentages, as applicable, arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Each Borrower
and each Guarantor (x) hereby consents to the addition of such Purchasing Lender
and the resulting adjustment of the Revolving Commitment Percentages and/or FILO
Commitment Percentages, as applicable, arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents, and (y) shall
execute and deliver such further documents and do such further acts and things
in order to effectuate the foregoing; provided, however, that the consent of
Borrowers and Guarantors (each such consent not to be unreasonably withheld or
delayed) shall be required unless (x) an Event of Default has occurred and is
continuing at the time of such sale, assignment or transfer or (y) such sale,
assignment or transfer is to a Permitted Assignee; provided, further, Borrowers
and Guarantors shall be deemed to have consented to any such sale, assignment or
transfer unless they shall object thereto by written notice to Agent within five
(5) Business Days after having received prior notice thereof.

(d)    Any Lender, with the consent of Agent which shall not be unreasonably
withheld or delayed, may directly or indirectly sell, assign or transfer all or
any portion of its rights and obligations under or relating to Revolving
Advances and/or FILO Advances under this Agreement and the Other Documents to an
entity, whether a corporation, partnership, trust, limited liability company or
other entity that (i) is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
of its business and (ii) is administered, serviced or managed by the assigning
Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each
Participant and Purchasing Lender, each a “Transferee” and collectively the
“Transferees”), pursuant to a Commitment Transfer Supplement modified as
appropriate to reflect the interest being assigned (“Modified Commitment
Transfer Supplement”), executed by any intermediate purchaser, the Purchasing
CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for
recording. Upon such execution and delivery, from and after the transfer
effective date determined pursuant to such Modified Commitment Transfer
Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the
extent provided in such Modified Commitment Transfer Supplement, have the rights
and obligations of a Lender hereunder and (ii) the transferor Lender thereunder
shall, to the extent provided in such Modified Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Modified Commitment
Transfer Supplement creating a novation for that purpose. Such Modified
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO. Each Borrower and each Guarantor hereby consents to the addition
of such Purchasing CLO. Borrowers and Guarantors shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.

 

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(e)    Agent shall maintain at its address a copy of each Commitment Transfer
Supplement and Modified Commitment Transfer Supplement delivered to it and a
register (the “Register”) for the recordation of the names and addresses of each
Lender and the outstanding principal, accrued and unpaid interest and other fees
due hereunder. The entries in the Register shall be conclusive, in the absence
of manifest error, and each Borrower, each Guarantor, Agent and Lenders may
treat each Person whose name is recorded in the Register as the owner of the
Advance recorded therein for the purposes of this Agreement. The Register shall
be available for inspection by Borrowing Agent or any Lender at any reasonable
time and from time to time upon reasonable prior notice. Agent shall receive a
fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or
Purchasing CLO upon the effective date of each transfer or assignment (other
than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing
CLO.

(f)    Each Borrower and each Guarantor authorizes each Lender to disclose,
subject to the confidentiality provisions set forth in Section 16.15, to any
Transferee and any prospective Transferee any and all financial information in
such Lender’s possession concerning such Borrower or Guarantor which has been
delivered to such Lender by or on behalf of such Borrower or Guarantor pursuant
to this Agreement or in connection with such Lender’s credit evaluation of such
Borrower or Guarantor; provided, that, any prospective Transferee has been
advised and has agreed in writing to keep such information confidential in
accordance with Section 16.15 hereof or in accordance with other customary
confidentiality terms generally consistent with Section 16.15.

(g)    Notwithstanding anything to the contrary contained in this Agreement, any
Lender may at any time and from time to 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.

16.4.    Application of Payments. Agent shall have the continuing and exclusive
right to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations. To the extent that any Borrower or
Guarantor makes a payment or Agent or any Lender receives any payment or
proceeds of the Collateral for any Borrower’s or Guarantor’s benefit, which are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver, custodian
or any other party under any bankruptcy law, common law or equitable cause,
then, to such extent, the Obligations or part thereof intended to be satisfied
shall be revived and continue as if such payment or proceeds had not been
received by Agent or such Lender.

16.5.    Indemnity.

(a)    Each Borrower and each Guarantor shall defend, protect, indemnify, pay
and save harmless Agent, Issuer, each Lender and each of their respective
officers, directors, Affiliates, advisors (including, without limitation,
attorneys), employees and agents (each an “Indemnified Party”) for and from and
against any and all claims, demands, liabilities, obligations, losses, damages,
penalties, fines, actions, judgments, suits, costs, charges, expenses

 

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and disbursements of any kind or nature whatsoever (including reasonable and
documented fees and disbursements of counsel (including allocated costs of
internal counsel)) (collectively, “Claims”) which may be imposed on, incurred
by, or asserted against any Indemnified Party arising out of or in any way
relating to or as a consequence, direct or indirect, of: (i) this Agreement, the
Other Documents, the Advances and other Obligations and/or the transactions
contemplated hereby including the Transactions, (ii) any action or failure to
act or action taken only after delay or the satisfaction of any conditions by
any Indemnified Party in connection with and/or relating to the negotiation,
execution, delivery or administration of this Agreement and the Other Documents,
the credit facilities established hereunder and thereunder and/or the
transactions contemplated hereby including the Transactions, (iii) any
Borrower’s or any Guarantor’s failure to observe, perform or discharge any of
its covenants, obligations, agreements or duties under or breach of any of the
representations or warranties made in this Agreement and the Other Documents,
(iv) the enforcement of any of the rights and remedies of Agent, Issuer or any
Lender under this Agreement and the Other Documents, (v) any threatened or
actual imposition of fines or penalties, or disgorgement of benefits, for
violation of any Anti-Terrorism Law by any Borrower, any Affiliate or Subsidiary
of any Borrowers, or any Guarantor, and (vi) any claim, litigation, proceeding
or investigation instituted or conducted by any Governmental Body or
instrumentality, any Borrower, any Affiliate or Subsidiary of any Borrowers, or
any Guarantor, or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent or any Lender is a party
thereto. Without limiting the generality of any of the foregoing, each Borrower
and each Guarantor shall defend, protect, indemnify, pay and save harmless each
Indemnified Party from (x) any Claims which may be imposed on, incurred by, or
asserted against any Indemnified Party arising out of or in any way relating to
or as a consequence, direct or indirect, of the issuance of any Letter of Credit
hereunder, and (y) any Claims which may be imposed on, incurred by, or asserted
against any Indemnified Party under any Environmental Laws with respect to or in
connection with the Real Property, any Hazardous Discharge, the presence of any
Hazardous Materials affecting the Real Property (whether or not the same
originates or emerges from the Real Property or any contiguous real estate),
including any Claims consisting of or relating to the imposition or assertion of
any Lien on any of the Real Property under any Environmental Laws and any loss
of value of the Real Property as a result of the foregoing except to the extent
such loss, liability, damage and expense is attributable to any Hazardous
Discharge resulting from actions on the part of Agent or any Lender. Borrowers’
and Guarantors’ obligations under this Section 16.5 shall arise upon the
discovery of the presence of any Hazardous Materials at the Real Property,
whether or not any federal, state, or local environmental agency has taken or
threatened any action in connection with the presence of any Hazardous
Materials, in each such case except to the extent that any of the foregoing
arises out of the gross negligence or willful misconduct of the Indemnified
Party (as determined by a court of competent jurisdiction in a final and
non-appealable judgment). Without limiting the generality of the foregoing, this
indemnity shall extend to any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including reasonable and documented fees and
disbursements of counsel) asserted against or incurred by any of the Indemnified
Parties by any Person under any Environmental Laws or similar laws by reason of
any Borrower’s, any Guarantor’s, or any other Person’s failure to comply with
laws applicable to solid or hazardous waste materials, including Hazardous
Materials and Hazardous Waste, or

 

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other Toxic Substances. This Section 16.5 shall not apply with respect to Taxes
or Charges other than any Taxes or Charges that represent losses, claims,
damages or liabilities arising from any non-Tax or non-Charge claim (it being
understood and agreed that Section 3.10 shall apply with respect to Taxes and
Charges).

(b)    The foregoing in clause (a) above to the contrary notwithstanding, no
Borrower or Guarantor shall have any obligation to any Indemnified Party under
this Section 16.5 with respect to any Claim (i) that a court of competent
jurisdiction finally determines pursuant to a non-appealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnified
Party or its officers, directors, employees, advisors, or agents, (ii) resulting
from a claim brought by a Borrower or Guarantor against an Indemnified Party for
breach in bad faith of such Indemnified Party’s obligations under this Agreement
or the Other Documents, if such Borrower or Guarantor has obtained a final and
non-appealable judgment in its favor on such claim by a court of competent
jurisdiction or (iii) resulting from (x) disputes solely between or among the
Secured Parties that do not involve any acts or omissions of any Borrower or any
Guarantor, or (y) disputes solely between or among Indemnified Parties other
than claims against Agent or any other Indemnified Person in its capacity or in
fulfilling its role as arranger or agent or similar role hereunder (so long as
such dispute does not involve, or result from, an action or inaction by a
Borrower, any Guarantor, or any Affiliate, advisor or related party of any of
the foregoing).

16.6.    Notice. Any notice or request hereunder may be given to Borrowing Agent
or any Borrower or Guarantor or to Agent, Issuer, Swing Loan Lender or any
Lender at their respective addresses set forth below or at such other address as
may hereafter be specified in a notice designated as a notice of change of
address under this Section. Any notice, request, demand, direction or other
communication (for purposes of this Section 16.6 only, a “Notice”) to be given
to or made upon any party hereto under any provision of this Agreement shall be
given or made by telephone or in writing (which includes by means of electronic
transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such
Notice on a website to which Borrowers and Guarantors are directed (an “Internet
Posting”) if Notice of such Internet Posting (including the information
necessary to access such site) has previously been delivered to the applicable
parties hereto by another means set forth in this Section 16.6) in accordance
with this Section 16.6. Any such Notice must be delivered to the applicable
parties hereto at the addresses and numbers set forth under their respective
names in this Section 16.6 or in accordance with any subsequent unrevoked Notice
from any such party that is given in accordance with this Section 16.6. Any
Notice shall be effective:

(a)    In the case of hand-delivery, when delivered;

(b)    If given by mail, four (4) days after such Notice is deposited with the
United States Postal Service, with first-class postage prepaid, return receipt
requested;

(c)    In the case of a telephonic Notice, when a party is contacted by
telephone, if delivery of such telephonic Notice is confirmed no later than the
next Business Day by hand delivery, a facsimile or electronic transmission, an
Internet Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);

 

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(d)    In the case of a facsimile transmission, when sent to the applicable
party’s facsimile machine’s telephone number, if the party sending such Notice
receives confirmation of the delivery thereof from its own facsimile machine;

(e)    In the case of electronic transmission, when actually received;

(f)    In the case of an Internet Posting, upon delivery of a Notice of such
posting (including the information necessary to access such site) by another
means set forth in this Section 16.6; and

(g)    If given by any other means (including by overnight courier), when
actually received.

Any Lender, Issuer or Swing Loan Lender giving a Notice to Borrowing Agent or
any Borrower or Guarantor shall concurrently send a copy thereof to Agent, and
Agent shall promptly notify the other Lenders of its receipt of such Notice.

(A)    If to Agent or PNC (in any capacity hereunder) at:

PNC Bank, National Association

11405 North Pennsylvania Street, Suite 200

Carmel, Indiana 46032

Attention:       Jay Danforth

Telephone:      (317) 660-1711

with a copy to:

PNC Bank, National Association

PNC Agency Services

PNC Firstside Center

500 First Avenue (Mailstop: P7-PFSC-04-1)

Pittsburgh, Pennsylvania 15219

Attention: Lori Killmeyer

Telephone: (412) 807.7002

Facsimile: (412) 762-8672

with an additional copy to:

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attention: Donald E. Rothman, Esq.

Telephone: (617) 523-9000

Facsimile: (617) 692-3556

(B)    If to a Lender or Issuer other than Agent, as specified on the signature
pages hereof, and

 

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(C)    If to Borrowing Agent or any Borrower or Guarantor:

The Finish Line, Inc.

3308 North Mitthoeffer Road

Indianapolis, Indiana 46235

Attention: Edward W. Wilhelm, Chief Financial Officer

Telephone: (317) 899-1022

Facsimile: (317) 613-6914

with a copy to:

JD Sports Fashion plc

Edinburgh House, Hollinsbrook Way,

Pilsworth, Bury, Lancashire BL9 8RR

Attention: Neil Greenhalgh, Group Financial Controller

Telephone: +44 (0)161 767 1775

Email: Neil.Greenhalgh@jdplc.com

with an additional copy to:

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, New York 10004

Attention: Steven J. Greene, Esq.

Telephone: (212) 837-6270

Facsimile: (212) 299-6270

16.7.    Survival. The obligations of Borrowers and Guarantors under Sections
2.2(g), 2.2(h), 2.2(i), 3.7, 3.8, 3.9, 3.10, 16.5 and 16.9 and the obligations
of Lenders under Sections 2.2, 2.15(b), 2.16, 2.18, 2.19, 14.8 and 16.5, shall
survive payment in full of the Obligations or the occurrence of any event
comprising such term. All representations and warranties of such Borrower and
such Guarantor contained in this Agreement and the Other Documents to which it
is a party shall survive the execution, delivery and acceptance thereof by the
parties thereto and the closing of the transactions described therein or related
thereto.

16.8.    Severability. If any part of this Agreement is contrary to, prohibited
by, or deemed invalid under Applicable Laws, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.

16.9.    Expenses. Borrowers and Guarantors shall pay (i) all reasonable and
documented out-of-pocket expenses incurred by Agent and its Affiliates
(including the reasonable and documented fees, charges and disbursements of one
primary counsel to Agent and one local counsel to Agent in each reasonably
necessary or advisable jurisdiction), in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution,

 

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delivery and administration of this Agreement and the Other 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), (ii) all reasonable and documented out-of-pocket expenses incurred
by Issuer in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) all reasonable
and documented out-of-pocket expenses incurred by Agent, any Lender or Issuer
(including the reasonable and documented fees, charges and disbursements of one
primary counsel to Agent and one primary counsel to the Lenders, one local
counsel to Agent in each reasonably necessary or advisable jurisdiction, and one
additional counsel to Lenders in the case of an actual or potential conflict of
interest), in connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the Other Documents, including its rights
under this Section, or (B) in connection with the Advances made or Letters of
Credit issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Advances or
Letters of Credit, and (iv) all reasonable and documented out-of-pocket expenses
of Agent’s regular employees and agents engaged periodically to perform audits
of any Borrower’s, any Guarantor’s, or any Borrower’s or Guarantor’s Affiliate’s
or Subsidiary’s books, records and business properties.

16.10.    Injunctive Relief. Each Borrower and each Guarantor recognizes that,
in the event any Borrower or Guarantor fails to perform, observe or discharge
any of its obligations or liabilities under this Agreement, or threatens to fail
to perform, observe or discharge such obligations or liabilities, any remedy at
law may prove to be inadequate relief to Lenders; therefore, to the fullest
extent permitted by Applicable Law, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.

16.11.    Consequential Damages. No Indemnified Party shall be liable for any
special, indirect, consequential, exemplary, or punitive damages arising from
any breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Obligations or as a result of any
transaction contemplated under this Agreement or any Other Document. None of any
Borrower, any Guarantor, or any of their respective Affiliates shall be liable
for any special, indirect, consequential, exemplary, or punitive damages arising
from any breach of contract, tort or other wrong relating to or as a result of
any transaction contemplated under this Agreement or any Other Document, except
for any such special, indirect, consequential, exemplary, or punitive damages
included in any third party claim against an Indemnified Party as to which claim
such Indemnified Party is entitled to indemnification hereunder.

16.12.    Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.

16.13.    Counterparts; Electronic Signatures. This Agreement may be executed in
any number of and by different parties hereto on separate counterparts, all of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. Any signature delivered by a party
by facsimile or other electronic transmission (including email transmission of a
PDF image) shall be deemed to be an original signature hereto.

 

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16.14.    Construction. The parties acknowledge that each party and its counsel
have reviewed this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

16.15.    Confidentiality; Sharing Information.

(a)    Agent, each Lender, Swing Loan Lender, Issuer and each Transferee shall
hold all Information obtained by Agent, such Lender, Swing Loan Lender, Issuer
or such Transferee pursuant to the requirements of this Agreement in accordance
with Agent’s, such Lender’s, Swing Loan Lender’s, Issuer’s and such Transferee’s
customary procedures for handling confidential information of this nature;
provided, however, Agent, each Lender, Swing Loan Lender, Issuer and each
Transferee may disclose such Information (a) to its examiners, Affiliates,
outside auditors, counsel and other professional advisors (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 at all times in accordance with this Agreement), (b) to Agent, any
Lender, Swing Loan Lender, Issuer or any prospective Transferees (provided,
that, any prospective Transferee has been advised and has agreed in writing to
keep such information confidential in accordance herewith or in accordance with
other customary confidentiality terms generally consistent with this
Section 16.15), (c) as required or requested by any Governmental Body or
representative thereof or pursuant to legal process, (d) to the extent
reasonably necessary or advisable in connection with the exercise of any
remedies hereunder or under any Other Document or the enforcement of rights
hereunder or thereunder, (e) with the consent of Borrowing Agent, which consent
may be withheld in the Borrowing Agent’s sole discretion, and (f) to the extent
such Information (x) becomes lawfully publicly available other than as a result
of a breach of this Section or (y) becomes lawfully available to Agent, any
Lender, Swing Loan Lender, Issuer or any of their respective Affiliates on a
non-confidential basis from a source (other than any Borrower or Guarantor)
known to Agent, such Lender, Swing Loan Lender, Issuer or such Affiliate not to
be subject to any confidentiality agreement or undertaking in favor of any
Borrower, any Guarantor or any of their respective Subsidiaries or Affiliates;
provided, further, that (i) unless specifically prohibited by Applicable Law,
Agent, each Lender, Swing Loan Lender, Issuer and each Transferee shall use its
reasonable best efforts prior to disclosure thereof, to notify the applicable
Borrower or Guarantor of the applicable request for disclosure of such
Information (A) by a Governmental Body or representative thereof (other than any
such request in connection with an examination of the financial condition of a
Lender, Swing Loan Lender, Issuer or a Transferee by such Governmental Body) or
(B) pursuant to legal process and (ii) in no event shall Agent, any Lender,
Swing Loan Lender, Issuer or any Transferee be obligated to return any materials
furnished by any Borrower or Guarantor other than those documents and
instruments in possession of Agent or any Lender in order to perfect its Lien on
the Collateral once the Obligations have been paid in full.

(b)    For purposes of this Section, “Information” means all information
received from any Borrower, any Guarantor or any of their respective Affiliates
(including, without limitation, Holdings) relating to any Borrower or Guarantor
or their respective businesses, other than any such information that is
available to Agent, any Lender, Swing Loan Lender, Issuer or any of their
respective Affiliates on a non-confidential basis prior to disclosure

 

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by any Borrower, any Guarantor or any of their respective Affiliates, provided,
that, in the case of information received from any Borrower, any Guarantor or
any of their respective Affiliates 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.

(c)    Each Borrower and each Guarantor acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to such Borrower or Guarantor or one or more of its respective
Affiliates (in connection with this Agreement or otherwise) by any Lender or by
one or more Subsidiaries or Affiliates of such Lender and each Borrower and each
Guarantor hereby authorizes each Lender to share any Information delivered to
such Lender by such Borrower or Guarantor and its respective Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such Subsidiary or Affiliate of such Lender,
it being understood that any such Subsidiary or Affiliate of any Lender
receiving such information shall be bound by the provisions of this
Section 16.15 as if it were a Lender hereunder. Such authorization shall survive
the repayment of the Obligations. Notwithstanding any non-disclosure agreement
or similar document executed by Agent in favor of any Borrower or Guarantor or
any Affiliates of any of the foregoing, the provisions of this Agreement shall
supersede such agreements.

16.16.    Publicity. Agent, Lenders, Swing Loan Lender and Issuer shall not be
permitted to use information related to the syndication and arrangement of the
credit facilities set forth in this Agreement in connection with marketing,
press releases or other transactional announcements or updates provided to
investor or trade publications, including, but not limited to, the placement of
“tombstone” advertisements in publications of their choice at their own expense,
without the prior written consent of Borrowing Agent (such consent not to be
unreasonably withheld or delayed); provided, that, (i) notwithstanding anything
to the contrary herein, Agent, Lenders, Swing Loan Lender and Issuer may include
references to such credit facilities in their marketing materials without the
prior written consent of Borrowing Agent so long as such references shall be
limited to: (A) a description of the transactions contemplated by this
Agreement, including industry type; (B) a reproduction of any Borrower’s logo;
(C) a description of Agent’s, Lenders’, Swing Loan Lender’s or Issuer’s in such
transactions (e.g., agent, arranger, lender, issuing bank); (D) the date and
amount of such credit facilities; and (E) the names of Borrowers and Guarantors,
and (ii) upon the consent by Borrowing Agent, Agent and Lenders may make and
distribute reproductions of such consented-to marketing, press releases or other
transactional announcements or updates.

16.17.    Certifications From Banks and Participants; USA PATRIOT Act.

(a)    Each Lender or assignee or participant of a Lender that is not
incorporated under the Laws of the United States of America or a state thereof
(and is not excepted from the certification requirement contained in Section 313
of the USA PATRIOT Act and the applicable regulations because it is both (i) an
affiliate of a depository institution or foreign bank that maintains a physical
presence in the United States or foreign country, and (ii) subject to
supervision by a banking authority regulating such affiliated depository
institution or foreign

 

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bank) shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA PATRIOT Act and the
applicable regulations: (1) within ten (10) days after the Closing Date, and
(2) as such other times as are required under the USA PATRIOT Act.

(b)    The USA PATRIOT Act requires all financial institutions to obtain, verify
and record certain information that identifies individuals or business entities
which open an “account” with such financial institution. Consequently, any
Lender may from time to time request, and each Borrower and each Guarantor shall
provide to such Lender, such Borrower’s or Guarantor’s name, address, tax
identification number and/or such other identifying information as shall be
necessary for such Lender to comply with the USA PATRIOT Act and any other
Anti-Terrorism Law.

16.18.    Anti-Terrorism Laws.

(a)    Each Borrower and each Guarantor represents and warrants as follows:

(i)    No Borrower, Guarantor, or Subsidiary is in violation of any Sanctions.
No Borrower, Guarantor, or Subsidiary nor, to the knowledge of each such
Borrower and Guarantor, any director, officer, employee, agent or Affiliate of
such Borrower, Guarantor, or Subsidiary (each Person described in this sentence
being referred to herein as a “Covered Entity”) (a) is a Sanctioned Person or a
Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or
(c) does business in or with, or derives revenues from investments in, or
transactions with, Sanctioned Persons or Sanctioned Entities. Each of the
Borrowers, Guarantors, and Subsidiaries has implemented and maintains in effect
policies and procedures designed to ensure compliance with all Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Borrowers,
Guarantors, and Subsidiaries, and to the knowledge of each such Borrower and
Guarantor, each other Covered Entity, is in compliance with all Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws. No proceeds of any Advance
will be used to fund any operations in, finance any investments or activities
in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or
otherwise used in any manner that would result in a violation of any Sanction,
Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any
Lender, provider of Cash Management Products and Services, provider of any
Interest Rate Hedge or Foreign Currency Hedge, or other individual or entity
participating in any transaction).

(b)    Each Borrower and each Guarantor covenants and agrees as follows:

(i)    Each Borrower and each Guarantor shall, and shall cause each of its
Subsidiaries to, comply with all applicable Sanctions, Anti-Corruption Laws and
Anti-Money Laundering Laws. Each Borrower and each Guarantor shall, and shall
cause each of its Subsidiaries to, implement and maintain in effect policies and
procedures designed to ensure compliance by Borrowers, Guarantors, Subsidiaries,
and each other Covered Entity with all Sanctions, Anti-Corruption Laws and
Anti-Money Laundering Laws. Each Borrower and each Guarantor shall, and shall
cause each of its Subsidiaries to, comply with all Sanctions, Anti-Corruption
Laws and Anti-Money Laundering Laws.

 

159

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(ii)    Borrowers and Guarantors shall promptly notify Agent in writing upon the
occurrence of a Reportable Compliance Event.

16.19.    Acknowledgment and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in this Agreement or any Other Document
or in any other agreement, arrangement or understanding among any such parties
hereto, each party hereto acknowledges that any liability of any Lender that is
an EEA Financial Institution arising under this Agreement or any Other Document,
to the extent such liability is unsecured, may be subject to the Write-Down and
Conversion Powers of an EEA Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:

(a)    the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

(b)    the effects of any Bail-in Action on any such liability, including, if
applicable:

(i)    a reduction in full or in part or cancellation of any such liability;

(ii)    a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any Other Document; or

(iii)    the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of any EEA Resolution
Authority.

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IN WITNESS WHEREOF, each of the parties has signed this Agreement as of the day
and year first above written.

 

GENESIS MERGER SUB, INC., as a Borrower and, until the consummation of the
Transactions, as Borrowing Agent By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Executive Vice President, Chief Financial Officer

GENESIS HOLDINGS, INC., as a Guarantor By:  

/s/ Brian Small

Name:  

Brian Small

Title:  

Chief Financial Officer

 

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Immediately upon consummation of the Transactions, each of the Persons below
shall be deemed to be a Borrower: THE FINISH LINE, INC., as a Borrower and as
Borrowing Agent By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Executive Vice President, Chief Financial Officer

THE FINISH LINE USA, INC., as a Borrower By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Vice President and Treasurer

THE FINISH LINE DISTRIBUTION, INC., as a Borrower By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Vice President and Treasurer

FINISH LINE TRANSPORTATION CO., INC., as a Borrower By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Vice President and Treasurer

SPIKE’S HOLDING, LLC, as a Borrower By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Vice President and Treasurer

 

Signature Page to Revolving Credit and Security Agreement

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Immediately upon consummation of the Transactions, the Person below shall be
deemed to be a Guarantor: THE FINISH LINE MA, INC., as a Guarantor By:  

/s/ Edward W. Wilhelm

Name:  

Edward W. Wilhelm

Title:  

Vice President and Treasurer

 

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PNC BANK, NATIONAL ASSOCIATION, as Lender, Swing Loan Lender, Issuer, and as
Agent By:  

/s/ Joshua D. Stehlin

Name:  

Joshua D. Stehlin

Title:  

Senior Vice President

PNC Bank, National Association

11405 North Pennsylvania St., Suite 200

Carmel, Indiana 46032

Attention: Jay Danforth

Telephone: (317) 660-1711

 

Signature Page to Revolving Credit and Security Agreement

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WELLS FARGO BANK,

NATIONAL ASSOCIATION

By:  

/s/ Scott Klebanoff

Name:  

Scott Klebanoff

Title:  

Assistant Vice President

One Boston Place, 19th Floor

Boston, MA 02108

Address

 

BANK OF AMERICA, N. A. By:  

/s/ Brian Lindblom

Name:  

Brian Lindblom

Title:  

Senior Vice President

100 Federal Street

MA5-100-09-12

Boston, MA 02110

FIFTH THIRD BANK By:  

/s/ Mark Pienkos

Name:  

Mark Pienkos

Title:  

Managing Director

222 Riverside Plaza

Chicago, IL 60606

KEYBANK NATIONAL ASSOCIATION By:  

/s/ Katherine Meadows

Name:  

Katherine Meadows

Title:  

Senior Vice President

127 Public Square, Cleveland, OH 44114,

Mailcode: OH-01-27-0533

 

Signature Page to Revolving Credit and Security Agreement