EXHIBIT 10.3

INTERCREDITOR AGREEMENT

by and among

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as ABL Agent,

and

GORDON BROTHERS FINANCE COMPANY,

as Term Agent,

and acknowledged by

STEIN MART, INC.,

as Lead Borrower,

THE OTHER BORROWERS SIGNATORY HERETO

and

THE GUARANTORS SIGNATORY HERETO

dated as of March 14, 2018

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TABLE OF CONTENTS

 

         Page No.  

ARTICLE 1. DEFINITIONS

     2  

Section 1.1.

  UCC Definitions      2  

Section 1.2.

  Other Definitions      2  

Section 1.3.

  Rules of Construction      18  

ARTICLE 2. LIEN PRIORITY

     18  

Section 2.1.

  Priority of Liens      18  

Section 2.2.

  Waiver of Right to Contest Liens      20  

Section 2.3.

  Remedies Standstill      21  

Section 2.4.

  Release of Liens      24  

Section 2.5.

  No New Liens      25  

Section 2.6.

  Waiver of Marshalling      26  

ARTICLE 3. ACTIONS OF THE PARTIES

     26  

Section 3.1.

  Certain Actions Permitted      26  

Section 3.2.

  Agent for Perfection      27  

Section 3.3.

  Sharing of Information and Access; Notices of Default      27  

Section 3.4.

  Insurance      28  

Section 3.5.

  No Additional Rights For the Loan Parties Hereunder      29  

Section 3.6.

  Inspection and Access Rights      29  

Section 3.7.

  Tracing of and Priorities in Proceeds      30  

Section 3.8.

  Payments Over      31  

Section 3.9.

  Legends      31  

ARTICLE 4. APPLICATION OF PROCEEDS

     33  

Section 4.1.

  Application of Proceeds      33  

Section 4.2.

  Specific Performance      35  

ARTICLE 5. INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

     35  

Section 5.1.

  Notice of Acceptance and Other Waivers      35  

Section 5.2.

  Modifications to ABL Documents and Term Documents      37  

Section 5.3.

  Reinstatement and Continuation of Agreement      40  

ARTICLE 6. INSOLVENCY PROCEEDINGS

     41  

Section 6.1.

  Enforceability      41  

Section 6.2.

  DIP Financing      41  

Section 6.3.

  Relief from Stay      42  

Section 6.4.

  No Contest; Adequate Protection      43  

 

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TABLE OF CONTENTS (Con’d)

 

         Page No.  

Section 6.5.

  Asset Sales      44  

Section 6.6.

  Allowance of Claims      45  

Section 6.7.

  Separate Grants of Security and Separate Classification      45  

Section 6.8.

  ABL Obligations Unconditional      45  

Section 6.9.

  Term Obligations Unconditional      46  

Section 6.10.

  Plan of Reorganization      46  

Section 6.11.

  Rights as Unsecured Creditors      46  

ARTICLE 7. PURCHASE OPTION

     46  

Section 7.1.

  Purchase Notice      46  

Section 7.2.

  Sale of ABL Obligations      47  

Section 7.3.

  Purchase Price      47  

Section 7.4.

  Limitation on Representations and Warranties by ABL Credit Parties      47  

Section 7.5.

  ABL Agent; L/C Issuer      48  

Section 7.6.

  Survival of ABL Obligations      48  

ARTICLE 8. MISCELLANEOUS

     48  

Section 8.1.

  Rights of Subrogation      48  

Section 8.2.

  Further Assurances      48  

Section 8.3.

  Representations      49  

Section 8.4.

  Amendments      49  

Section 8.5.

  Addresses for Notices      49  

Section 8.6.

  No Waiver; Remedies      50  

Section 8.7.

  Continuing Agreement, Transfer of Secured Obligations      50  

Section 8.8.

  Governing Law; Entire Agreement      50  

Section 8.9.

  Counterparts      50  

Section 8.10.

  No Third Party Beneficiaries      50  

Section 8.11.

  Headings      51  

Section 8.12.

  Severability      51  

Section 8.13.

  VENUE; JURY TRIAL WAIVER      51  

Section 8.14.

  Intercreditor Agreement      52  

Section 8.15.

  No Warranties or Liability      52  

Section 8.16.

  Conflicts      52  

Section 8.17.

  Information Concerning Financial Condition of the Loan Parties      52  

 

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INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (as amended, supplemented, restated or otherwise
modified from time to time pursuant to the terms hereof, this “Agreement”) is
entered into as of March 14, 2018, by and among (a) WELLS FARGO BANK, NATIONAL
ASSOCIATION, in its capacity as administrative agent (together with its
successors and assigns in such capacity, the “ABL Agent”) for (i) the financial
institutions party from time to time to the ABL Credit Agreement referred to
below (such financial institutions, together with their respective successors,
assigns and transferees, the “ABL Lenders”), (ii) the LC Issuer referred to in
the ABL Credit Agreement (the “L/C Issuer”), and (iii) any ABL Bank Product
Affiliates and ABL Cash Management Affiliates (each as defined below) (such ABL
Bank Product Affiliates and ABL Cash Management Affiliates, together with the
ABL Agent, the ABL Lenders and the L/C Issuer, the “ABL Credit Parties”), and
(b) GORDON BROTHERS FINANCE COMPANY, in its capacity as administrative agent
(together with its successors and assigns in such capacity, the “Term Agent”)
for the financial institutions party from time to time to the Term Loan
Agreement referred to below (such financial institutions, together with their
respective successors, assigns and transferees, the “Term Lenders” and together
with the Term Agent, the “Term Credit Parties”), and acknowledged by (c) STEIN
MART, INC., a Florida corporation (the “Lead Borrower”), and (d) each of the
Lead Borrower’s Subsidiaries which are signatories to this Agreement as
“Borrowers” or Guarantors”.

RECITALS

A. Pursuant to that certain Credit Agreement dated as of February 3, 2015, by,
among others, the ABL Borrowers (as hereinafter defined), the ABL Guarantors (as
hereinafter defined), the ABL Lenders and the ABL Agent (as amended by Amendment
No. 1 to Second Amended and Restated Credit Agreement, dated as of February 19,
2018 and Amendment No. 2 to Second Amended and Restated Credit Agreement, dated
as of the date hereof, and as may be further amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms hereof, the
“ABL Credit Agreement”), the ABL Lenders have agreed to make certain loans and
other financial accommodations to or for the benefit of the Lead Borrower and
Stein Mart Buying Corp., a Florida corporation (each individually, an “ABL
Borrower” and collectively, the “ABL Borrowers”) and the L/C Issuer has agreed
to issue certain letters of credit for the account of the ABL Borrowers.

B. Pursuant to the Guaranty, dated as of October 28, 2011 (as amended,
supplemented, restated or otherwise modified and in effect from time to time in
accordance with the terms hereof, the “ABL Guaranty”), by the ABL Guarantors in
favor of the ABL Credit Parties, the ABL Guarantors have agreed to guarantee,
inter alia, the payment and performance of the ABL Borrowers’ obligations under
the ABL Documents (as hereinafter defined) as provided in the ABL Guaranty.

C. To secure the obligations of the ABL Borrowers and the ABL Guarantors (the
ABL Borrowers, the ABL Guarantors and each direct or indirect subsidiary or
parent of the ABL Borrowers that is now or hereafter becomes a party to any ABL
Document, collectively, the “ABL Loan Parties”) under and in connection with the
ABL Documents, each of the ABL Loan Parties has granted to the ABL Agent (for
the benefit of the ABL Credit Parties) Liens on the Collateral (as hereinafter
defined).

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D. Pursuant to that certain Term Loan Agreement dated as of the date hereof, by
and among the Lead Borrower and Stein Mart Buying Corp., a Florida corporation
(each in its respective capacity as a borrower under such Term Loan Agreement, a
“Term Borrower”) and collectively, the “Term Borrowers”), the Term Guarantors
(as hereinafter defined), the Term Lenders and the Term Agent (as such agreement
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms hereof, the “Term Loan Agreement”), the Term
Lenders have agreed to make a term loan to the Term Borrowers in the principal
amount of $50,000,000.

E. Pursuant to any Guaranty (as amended, supplemented, restated or otherwise
modified and in effect from time to time in accordance with the terms hereof,
the “Term Guaranty”) required by the Term Loan Agreement, by the Term Guarantors
in favor of the Term Credit Parties, the Term Guarantors will have agreed to
guarantee, inter alia, the payment and performance of the Term Borrowers’
obligations under the Term Documents (as hereinafter defined) as provided in the
Term Guaranty.

F. To secure the obligations of the Term Borrowers and the Term Guarantors (the
Term Borrowers, the Term Guarantors and each direct or indirect subsidiary or
parent of the Term Borrowers that is now or hereafter becomes a party to any
Term Document, collectively, the “Term Loan Parties”) under and in connection
with the Term Documents, each of the Term Loan Parties has granted to the Term
Agent (for the benefit of the Term Credit Parties) Liens on the Collateral.

G. Each of the ABL Agent (on behalf of the ABL Credit Parties) and the Term
Agent (on behalf of the Term Credit Parties) and, by its acknowledgment hereof,
each of the ABL Loan Parties and the Term Loan Parties, desire to agree to the
relative priority of Liens on the Collateral and certain other rights,
priorities and interests as provided herein.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree
as follows:

ARTICLE 1.

DEFINITIONS

Section 1.1. UCC Definitions. The following terms which are defined in the
Uniform Commercial Code are used herein as so defined: Accounts, Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper,
Equipment, Financial Assets, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangibles,
Proceeds, Promissory Notes, Records, Securities Accounts, Security, Security
Entitlements, Supporting Obligations and Tangible Chattel Paper.

Section 1.2. Other Definitions. Subject to Section 1.1, as used in this
Agreement, the following terms shall have the meanings set forth below:

 

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“ABL Agent” shall have the meaning assigned to that term in the introduction to
this Agreement and shall include any successor thereto as well as any Person
designated as the “Agent”, “Administrative Agent” or “Collateral Agent” under
any ABL Credit Agreement.

“ABL Bank Product Affiliate” shall mean any ABL Agent, ABL Lender or any
Affiliate of any ABL Lender or ABL Agent (together with their respective
successors, assigns and transferees) that has entered into a Swap Contract or
other Bank Product with an ABL Loan Party with the obligations of such ABL Loan
Party thereunder being secured by one or more ABL Collateral Documents.

“ABL Borrowers” and “ABL Borrower” shall have the meaning assigned to such terms
in the recitals to this Agreement.

“ABL Borrowing Base” shall mean, as of any date of determination thereof, the
“Tranche A Borrowing Base” as defined in the ABL Credit Agreement.

“ABL Cash Management Affiliate” shall mean any ABL Agent, ABL Lender or any
Affiliate of an ABL Lender or ABL Agent (together with their respective
successors, assigns and transferees) that provides Cash Management Services to
any of the ABL Loan Parties with the obligations of such ABL Loan Parties
thereunder being secured by one or more ABL Collateral Documents.

“ABL Collateral Documents” shall mean all “Security Documents” as defined in the
ABL Credit Agreement, and all other security agreements, mortgages, deeds of
trust and other security documents executed and delivered in connection with the
ABL Documents, in each case as the same may be amended, supplemented, restated
or otherwise modified from time to time.

“ABL Credit Agreement” shall have the meaning assigned to such term in the
recitals to this Agreement and shall include any other agreement extending the
maturity of, consolidating, restructuring, refunding, replacing or refinancing
all or any portion of the ABL Obligations, in each case including pursuant to a
DIP Financing by any of the ABL Credit Parties, in accordance with the terms
hereof, whether by the same or any other agent, lender or group of lenders and
whether or not increasing the amount of any indebtedness that may be incurred
thereunder.

“ABL Credit Parties” shall have the meaning assigned to that term in the
introduction to this Agreement.

“ABL DIP Amount” means, after the commencement of an Insolvency Proceeding with
respect to any Loan Party, an amount not to exceed five percent (5.0%) of the
ABL Borrowing Base.

“ABL Documents” shall mean the ABL Credit Agreement, the ABL Guaranty, the ABL
Collateral Documents, all Swap Contracts and other Bank Products between any ABL
Loan Party and any ABL Bank Product Affiliate, all Cash Management Services
Agreements between any ABL Loan Party and any ABL Cash Management Affiliate,
those other ancillary agreements as to which any ABL Credit Party is a party or
a beneficiary and all other related agreements, instruments, documents and
certificates, now or hereafter executed by or on behalf of any ABL Loan Party or
any of its respective Subsidiaries or Affiliates, and delivered to the ABL Agent
or any other ABL Credit Party, in connection with any of the foregoing or any
ABL Credit Agreement, in each case as the same may be amended, supplemented,
renewed, replaced, refunded, refinanced, restated or otherwise modified from
time to time in accordance with the terms hereof.

 

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“ABL Event of Default” shall mean an Event of Default as defined in the ABL
Credit Agreement.

“ABL Guarantors” shall mean the collective reference to (i) the Persons
signatory hereto and designated as “Guarantors”, and (ii) any other Person who
becomes a guarantor of the ABL Obligations.

“ABL Guaranty” shall have the meaning assigned to that term in the recitals to
this Agreement and shall also include any further guaranty made by an ABL
Guarantor guaranteeing, inter alia, the payment and performance of the ABL
Obligations.

“ABL Lenders” shall have the meaning assigned to that term in the introduction
to this Agreement, as well as any Person designated as a “Lender” under any ABL
Credit Agreement.

“ABL Loan Parties” shall have the meaning assigned to that term in the recitals
to this Agreement.

“ABL Obligations” shall mean all obligations (including all “Obligations” under
and as defined in the ABL Credit Agreement) of every nature of each ABL Loan
Party from time to time owed to the ABL Credit Parties, or any of them, under
any ABL Document (including any DIP Financing provided by any of the ABL Credit
Parties), whether for principal, interest, reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Swap Contracts, amounts due
or to become due under any Bank Products or Cash Management Services, Letter of
Credit fees, commitment fees, early termination fees, agency fees and other
fees, expenses, indemnification obligations and all other amounts owing or due
under the terms of the ABL Documents (including interest, fees, expenses and
other amounts which, but for the filing of an Insolvency Proceeding with respect
to such ABL Loan Party, would have accrued or been payable on any ABL
Obligation, whether or not a claim is allowed or allowable against such ABL Loan
Party for such amount in the related Insolvency Proceeding).

“ABL Priority Collateral” shall mean all now owned or hereafter acquired
Collateral, together with the Proceeds thereof, that does not constitute Term
Priority Collateral or Proceeds of Term Priority Collateral.

“ABL Recovery” shall have the meaning set forth in Section 5.3(a).

“Affiliate” shall mean, any Person which, directly or indirectly, Controls, is
Controlled by or is under common Control with any Person.

“Agent(s)” means individually the ABL Agent or the Term Agent and collectively
means both the ABL Agent and the Term Agent.

 

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“Agreement” shall have the meaning assigned to that term in the introduction to
this Agreement.

“Bank Product” shall mean, collectively, (a) all “Bank Products”, as defined in
the ABL Credit Agreement as in effect on the date hereof, (b) the items
contained in clauses (c), (d), (e), (f) and (g) of the definition of “Cash
Management Services”, as set forth in the ABL Credit Agreement, as in effect on
the date hereof and (c) all “Factored Receivables”, as defined in the ABL Credit
Agreement.

“Bank Product Cap” shall mean, at any time of calculation, the aggregate amounts
due or to become due with respect to Bank Products, but in no event to exceed
the sum of (a) $3,000,000, plus (b) the aggregate amounts due or to become due
on account of Bank Products to the extent Bank Product Reserves (as defined in
the ABL Credit Agreement) in respect of such Bank Products have been established
and maintained by the ABL Agent.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as now or
hereafter in effect or any successor thereto.

“Borrower” shall mean any of the ABL Borrowers and the Term Borrowers.

“Borrowing Base Certificate” shall have the meaning assigned to that term in the
ABL Credit Agreement (as in effect on the date hereof).

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts or New York, New York are
authorized or required by law to remain closed (or are in fact closed).

“Carve Out” shall mean in connection with any Insolvency Proceeding any carve
out amount granted with respect to professional fees and expenses, court costs,
filing fees, and fees and costs of the Office of the United States Trustee as
granted by the court or as agreed to by the ABL Agent in its reasonable
discretion.

“Cash Management Services” shall mean those items set forth in clauses (a) and
(b) of the definition of “Cash Management Services”, as set forth in the ABL
Credit Agreement as in effect on the date hereof.

“Cash Management Services Agreement” shall mean any agreement pursuant to which
an ABL Cash Management Affiliate agrees to provide Cash Management Services.

“Collateral” shall mean all Property now owned or hereafter acquired by any
Borrower or any Guarantor in or upon which a Lien is granted or purported to be
granted to the ABL Agent or the Term Agent under any of the ABL Collateral
Documents or the Term Collateral Documents, together with all rents, issues,
profits, products and Proceeds thereof.

“Collateral Due Diligence” shall have the meaning set forth in Section 3.3(c).

 

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“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
(whether by contract or otherwise). The terms “Controlling” and “Controlled”
have meanings correlative thereto.

“Control Collateral” shall mean any Collateral consisting of any Certificated
Security (as defined in Section 8-102 of the Uniform Commercial Code),
Investment Property, Deposit Account, Instruments and any other Collateral
(a) as to which a Lien may be perfected through possession or control by the
secured party, or any agent therefor or (b) subject to a landlord waiver, bailee
waiver, freight forwarder agreement, or similar collateral agreement.

“Copyright License” shall mean any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Loan Party or that such Loan Party otherwise has the
right to license, or granting any right to any Loan Party under any Copyright
now or hereafter owned by any third party, and all rights of such Loan Party
under any such agreement.

“Copyrights” shall mean all of the following now owned or hereafter acquired by
or assigned to any Loan Party: (a) all copyright rights in any work subject to
the copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, whether registered or unregistered and
whether published or unpublished, (b) all registrations and applications for
registration of any such copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office and all
(i) rights and privileges arising under applicable law with respect to such Loan
Party’s use of such copyrights, (ii) reissues, renewals, continuations and
extensions thereof and amendments thereto, (iii) income, fees, royalties,
damages, claims and payments now or hereafter due and/or payable with respect
thereto, including damages and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to sue for past, present or future infringements thereof.

“Credit Documents” shall mean the ABL Documents and the Term Documents.

“Credit Parties” shall mean the ABL Credit Parties and the Term Credit Parties.

“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

“DIP Financing” means each of the following: (a) the provision of any financing
to any Loan Party under Section 364 of the Bankruptcy Code in any Insolvency
Proceeding of such Loan Party, and (b) the consent to the use of cash collateral
by any Loan Party under Section 363 of the Bankruptcy Code in any Insolvency
Proceeding of such Loan Party.

 

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“Discharge of ABL Obligations” shall mean (a) the payment in full in cash of all
outstanding ABL Obligations excluding contingent indemnity obligations with
respect to then unasserted claims but including, with respect to (i) amounts
available to be drawn under outstanding Letters of Credit issued thereunder (or
indemnities or other undertakings issued pursuant thereto in respect of
outstanding Letters of Credit), the cancellation of such Letters of Credit or
the delivery or provision of money or backstop letters of credit in respect
thereof in compliance with the terms of any ABL Credit Agreement, and (ii) all
Bank Products and Cash Management Services, the termination of such Bank
Products and Cash Management Services and payment of all amounts due thereunder
or the delivery or provision of cash collateral in respect thereof as the
applicable ABL Bank Product Affiliate or ABL Cash Management Affiliate may
require, and (b) the termination of all commitments to extend credit under the
ABL Documents. If the Loan Parties enter into any refinancing of the ABL
Obligations (including, without limitation by the provision of DIP Financing in
any Insolvency Proceeding of the Loan Parties), then the Discharge of ABL
Obligations shall automatically be deemed not to have occurred for all purposes
of this Agreement.

“Discharge of Term Obligations” shall mean the payment in full in cash of all
outstanding Term Obligations (other than contingent indemnity obligations with
respect to then unasserted claims). If the Loan Parties enter into any
refinancing of the Term Obligations (including, without limitation by the
provision of DIP Financing in any Insolvency Proceeding of the Loan Parties),
then the Discharge of Term Obligations shall automatically be deemed not to have
occurred for all purposes of this Agreement.

“Domain Names” shall mean all Internet domain names and associated URL addresses
in or to which any Loan Party now or hereafter has any right, title or interest.

“Enforcement Notice” shall mean a written notice delivered by either the ABL
Agent or the Term Agent to the other announcing that an Enforcement Period has
commenced.

“Enforcement Period” shall mean the period of time following the receipt by
either the ABL Agent or the Term Agent of an Enforcement Notice from the other
and continuing until the earliest of (a) in case of an Enforcement Period
commenced by the Term Agent, the Discharge of Term Obligations, (b) in the case
of an Enforcement Period commenced by the ABL Agent, the Discharge of ABL
Obligations, or (c) the ABL Agent or the Term Agent (as applicable) terminates,
or agrees in writing to terminate, the Enforcement Period.

“Event of Default” shall mean an Event of Default as defined in the ABL Credit
Agreement or the Term Loan Agreement, as applicable.

“Excess ABL Obligations” shall mean ABL Obligations constituting (a) the
aggregate outstanding principal amount of loans and outstanding amount of
Letters of Credit made, issued or incurred pursuant to the ABL Documents in
excess of the Maximum ABL Facility Amount and any interest, fees or
reimbursement obligations accrued on or with respect to such excess amounts,
(b) Obligations on account of Bank Products in excess of the Bank Product Cap,
(c) if any of the ABL Credit Parties furnish DIP Financing or do not object to
any use of cash collateral in any Insolvency Proceeding of the Loan Parties, any
portion of any Carve Out for which the ABL Agent has not established an
Availability Reserve (as such term is defined in the ABL Credit Agreement, as in
effect on the date hereof) in connection with such DIP Financing, and (d) any
loans or letters of credit made, issued or incurred pursuant to the ABL
Documents during a Financial Covenant Default Period, other than (x) Protective
Advances (other than those consisting of payroll) within the limits of clause
(ii) of the defined term “Maximum ABL Facility Amount” and (y) Protective
Advances consisting of up to two (2) weeks of payroll obligations of the
Borrowers.

 

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“Excess Term Obligations” shall mean Term Obligations constituting the aggregate
outstanding principal amount of loans made pursuant to the Term Documents in
excess of the Maximum Term Loan Facility Amount and any interest, fees or
reimbursement obligations accrued on or with respect to such excess amounts.

“Exercise of Any Secured Creditor Remedies” or “Exercise of Secured Creditor
Remedies” shall mean, except as otherwise provided in the final sentence of this
definition:

(a) the taking by any Credit Party of any action to enforce or realize upon any
Lien in the Collateral, including, without limitation, the institution of any
foreclosure proceedings, whether judicial or non-judicial, under applicable law
relating to the foreclosure of mortgages, deeds of trust or personal property
Liens, or the noticing of any public or private sale pursuant to Article 9 of
the Uniform Commercial Code or other applicable law or;

(b) the exercise by any Credit Party of any right or remedy provided to a
secured creditor on account of a Lien in the Collateral under any of the Credit
Documents, under applicable law, in an Insolvency Proceeding or otherwise,
including the election to retain any of the Collateral in satisfaction of a
Lien;

(c) the taking of any action by any Credit Party or the exercise of any right or
remedy by any Credit Party in respect of the collection on, set off against,
marshaling of, injunction respecting or foreclosure on the Collateral or the
Proceeds thereof, except ordinary course netting and setoff arrangements in
connection with periodic settlements but not termination payments with respect
to Swap Contracts between any ABL Loan Party and any ABL Bank Product Affiliate
and ordinary course offsets of fees and expenses of account banks, chargebacks
and collections of checks and similar arrangements in connection with Cash
Management Services Agreements between any ABL Loan Party and any ABL Cash
Management Affiliate;

(d) the appointment on the application of a Credit Party of a receiver or Person
having similar duties of all or part of the Collateral;

(e) the sale, lease, license, or other disposition of all or any portion of the
Collateral by private or public sale conducted by a Credit Party or any other
means at the direction of a Credit Party permissible under applicable law; and

(f) the exercise of any other right of a secured creditor under Part 6 of
Article 9 of the Uniform Commercial Code or under provisions of similar effect
under other applicable law in respect of the Collateral.

 

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For the avoidance of doubt, none of the following shall be deemed to constitute
an Exercise of Secured Creditor Remedies: (i) acceleration by the relevant
Credit Parties of the maturity of the ABL Obligations or the Term Obligations,
as the case may be, (ii) the filing of a proof of claim in any Insolvency
Proceeding or seeking adequate protection, (iii) the maintenance of cash
dominion by the ABL Agent or the exercise of rights by the ABL Agent in
connection therewith each as provided in the ABL Credit Agreement, including,
without limitation, the notification of account debtors, depository institutions
or any other Person to deliver Proceeds of Collateral to the ABL Agent, (iv) the
consent by the ABL Agent or the Term Agent to a store closing sale, going out of
business sale or other disposition by any Loan Party of any of the Collateral,
(v) the reduction of advance rates or sub-limits by the ABL Agent and the ABL
Lenders, (vi) the imposition of Availability Reserves (as defined in the ABL
Credit Agreement) by the ABL Agent or other limitations on availability provided
under the ABL Credit Agreement, or (v) the imposition of Availability Reserves
(as defined in the Term Loan Agreement) by the Term Agent or other limitations
on availability provided under the Term Loan Agreement.

“Financial Covenant Default” means an ABL Event of Default and Term Event of
Default resulting from the Borrowers failure to comply with the financial
covenants set forth in Section 7.15 of the ABL Credit Agreement or Section 7.15
of the Term Loan Agreement, for so long as such ABL Event of Default and Term
Event of Default are continuing and not otherwise waived by the ABL Lenders and
the Term Lenders (in accordance with the terms of the ABL Credit Agreement and
the Term Loan Agreement, as applicable).

“Financial Covenant Default Period” means any date on which a Financial Covenant
Default has occurred and is continuing, without the cure or waiver thereof by
the ABL Lenders and the Term Lenders.

“Governmental Authority” shall mean the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

“Guarantor” shall mean any of the ABL Guarantors or Term Guarantors.

“Inadvertent Overadvance Amounts” shall mean the aggregate amount of all
Overadvances resulting from any and all Inadvertent Overadvances.

“Inadvertent Overadvances” shall mean the funding of any loan or advance under
the ABL Credit Agreement or the issuance, renewal or amendment of a Letter of
Credit by the L/C Issuer which did not result in an Overadvance when made based
upon the most recent Borrowing Base Certificate received by the ABL Agent prior
to such funding or issuance, renewal or amendment of a Letter of Credit but
which has, on the relevant date of determination, become an Overadvance as the
result of circumstances beyond the reasonable control of the ABL Agent or the
other ABL Credit Parties (including as the result of the entry of an adverse
order for use of cash collateral by the United States Bankruptcy Court as to
which the ABL Agent, on behalf of the ABL Credit Parties, has contested in good
faith), including (i) a decline in the value of the Collateral included in the
ABL Borrowing Base, (ii) errors or fraud on a Borrowing Base Certificate,
(iii) components of the ABL Borrowing Base on any date thereafter being deemed
ineligible, (iv) the return of uncollected checks or other items of payment
applied to the

 

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reduction of Loans (as defined in the ABL Credit Agreement) or other similar
involuntary or unintentional actions, (v) the imposition of any Reserve or a
reduction in advance rates after the funding of any Loan or the issuance,
renewal or amendment of a Letter of Credit by the L/C Issuer or (vi) any other
circumstance beyond the reasonable control of the ABL Agent or the other ABL
Credit Parties which reduces Availability (as such term is defined in the ABL
Credit Agreement as in effect on the date hereof), provided that any repayments
with respect to any ABL Obligations shall be applied first to Inadvertent
Overadvances.

“Insolvency Proceeding” shall mean (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, administration, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case covered by clauses (a) and (b) undertaken under any
Debtor Relief Laws.

“Intellectual Property” shall mean all intellectual and similar property of
every kind and nature now owned or hereafter acquired by any Loan Party,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, Trade
Secrets, Domain Names, confidential and proprietary information, including,
without limitation, all trade secrets, technology, ideas, know-how, formulae and
customer lists, any and all intellectual property rights in computer software
and computer software products (including, without limitation, source codes,
object codes, data and related documentation), any and all design rights owned
or used by such Loan Party, all other intellectual property rights of every
description as set forth in the ABL Documents or the Term Documents as in effect
as of the date hereof. For the avoidance of doubt, any Collateral to which
Intellectual Property is affixed or applied but does not otherwise constitute
intellectual property in accordance with this definition shall not be deemed to
be Intellectual Property.

“L/C Issuer” shall have the meaning assigned to the term “LC Issuer” in the ABL
Credit Agreement.

“Lead Borrower” shall have the meaning assigned to that term in the introduction
to this Agreement.

“Lender(s)” means individually, the ABL Lenders or the Term Lenders and
collectively means all of the ABL Lenders and the Term Lenders.

“Letter of Credit” shall have the meaning assigned to that term in the ABL
Credit Agreement.

“License” means any Patent License, Trade Secret License, Trademark License,
Copyright License or other license or sublicense agreement to which any Loan
Party is a party.

“Lien” shall mean, with respect to any asset, any mortgage, deed of trust,
security interest, charge, pledge, hypothecation, assignment, attachment,
deposit arrangement, encumbrance, lien (statutory, judgment or otherwise), or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale) or other title retention agreement,
any capitalized lease, any synthetic lease, any financing lease involving
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction in respect of the foregoing.

 

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“Lien Priority” shall mean with respect to any Lien of the ABL Credit Parties or
the Term Credit Parties in the Collateral, the order of priority of such Lien as
specified in Section 2.1.

“Loan Parties” shall mean the ABL Loan Parties and the Term Loan Parties.

“Maximum ABL Facility Amount” shall mean, on any date of determination thereof,
the principal amount equal to the sum of (i) the lesser of (A) $236,250,000
(provided, however, that the amount described in this clause (A) shall be
reduced on a dollar-for-dollar basis for all permanent reductions of the
commitments to extend credit under the ABL Documents and for permanent
reductions of such commitments required hereunder, so long as any repayments to
be made in connection with such commitment reductions have been made), and
(B) the ABL Borrowing Base plus (ii) Protective Advances (other than those
consisting of payroll) in an aggregate amount not to exceed five percent (5.0%)
of the ABL Borrowing Base, plus (iii) Protective Advances consisting of up to
two (2) weeks of payroll obligations of the Borrowers, plus (iv) any Inadvertent
Overadvance Amounts, plus (v) after the occurrence and during the continuance of
an Insolvency Proceeding solely in connection with DIP Financing in compliance
with Section 6.2(a) hereof, the ABL DIP Amount minus all then outstanding
Protective Advances.

“Maximum Term Loan Facility Amount” shall mean the sum of (a) principal amount
of $50,000,000 minus the amount of any principal repayment of the Term
Obligations made after the date hereof, plus (b) protective advances which the
Term Agent in its reasonable business judgment determines to be necessary or
desirable to, directly or indirectly, protect or preserve the value of the Term
Priority Collateral, including for the payment of insurance premiums and real
estate taxes, up to an aggregate amount with respect to all of the foregoing
under this clause (b) not to exceed $2,500,000, plus (c) any interest, fees, and
expenses paid in kind and added to the principal balance of the Term Loan.

“Overadvance” shall have the meaning assigned to that term in the ABL Credit
Agreement.

“Party” shall mean the ABL Agent or the Term Agent, and “Parties” shall mean
both the ABL Agent and the Term Agent.

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Loan Party or that any Loan Party
otherwise has the right to license, is in existence, or granting to any Loan
Party any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any third party, is in existence, and all rights of any Loan
Party under any such agreement.

 

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“Patents” shall mean all of the following now owned or hereafter acquired by any
Loan Party: (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country and (b)(i) rights and privileges arising under
applicable law with respect to such Loan Party’s use of any patents,
(ii) inventions and improvements described and claimed therein, (iii) reissues,
divisions, continuations, renewals, extensions and continuations-in-part thereof
and amendments thereto, (iv) income, fees, royalties, damages, claims and
payments now or hereafter due and/or payable thereunder and with respect thereto
including damages and payments for past, present or future infringements
thereof, (v) rights corresponding thereto throughout the world and (vi) rights
to sue for past, present or future infringements thereof.

“Person” shall mean an individual, corporation, limited liability company,
partnership, limited liability partnership, trust, other unincorporated
association, business, or other legal entity, and any Governmental Authority.

“Priority Collateral” shall mean the ABL Priority Collateral or the Term
Priority Collateral, as applicable.

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

“Protective Advances” shall mean any loan or other extension of credit
(including an Overadvance) which the ABL Agent in its reasonable business
judgment in the performance of its duties under the ABL Credit Agreement,
determines to be necessary or desirable to, directly or indirectly,
(i) maintain, protect or preserve the value of the Collateral and/or the ABL
Agent’s rights therein as determined in the discretion of the ABL Agent,
including to preserve the Loan Parties’ business assets and infrastructure (such
as the payment of insurance premiums, taxes, necessary suppliers, rent and
payroll), (ii) commence the Exercise of Any Secured Creditor Remedies,
(iii) fund an orderly liquidation or wind-down of the Loan Parties’ assets or
business or an Insolvency Proceeding (whether or not occurring prior to or after
the commencement of an Insolvency Proceeding), or (iv) enhance the likelihood
of, or maximize the amount of, repayment of the ABL Obligations.

“Purchase Notice” shall have the meaning set forth in Section 7.1.

“Remedy Standstill Period” shall mean, whether or not an Insolvency Proceeding
has been commenced by or against any Loan Party, (a) with respect to a Term Loan
Event of Default, the period commencing on the date of the ABL Agent’s receipt
of written notice from the Term Agent that a Term Loan Event of Default has
occurred and is continuing and that the Term Agent intends to commence the
Exercise of Secured Creditor Remedies, and ending on earliest to occur of
(i) (A) in the event of the commencement of an Insolvency Proceeding by or
against any Loan Party thirty (30) days after the commencement of such
Insolvency Proceeding, (B) in the event of an Event of Default under
Section 8.01(a) the Term Loan Agreement, the date which is thirty (30) days
after the receipt of such notice and (C) with respect to any other Event of
Default under the Term Loan Agreement, the date which is sixty (60) days after
receipt of such notice and (ii) the date on which the Discharge of ABL
Obligations has occurred, and (b) with respect to an ABL Event of Default, the
period commencing on the date of the Term Agent’s receipt of written notice from
the ABL Agent that an ABL Event of Default has

 

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occurred and is continuing and that the ABL Agent intends to commence the
Exercise of Secured Creditor Remedies, and ending on the earliest to occur of
(i) (A) in the event of the commencement of an Insolvency Proceeding by or
against any Loan Party thirty (30) days after the commencement of such
Insolvency Proceeding, (B) in the event of an Event of Default under
Section 8.01(a) the ABL Credit Agreement, the date which is thirty (30) days
after the receipt of such notice (C) with respect to any other Event of Default
under the ABL Credit Agreement, the date which is sixty (60) days after receipt
of such notice and (ii) the date on which the Discharge of Term Obligations has
occurred. Such written notice from the Term Agent to the ABL Agent, or from the
ABL Agent to the Term Agent, as the case may be, shall reference this Agreement,
declare a “Remedy Standstill Period” to commence and certify whether (i) the
“Obligations” under and as defined in the Term Loan Agreement or the ABL Credit
Agreement, as the case may be, are then due and payable in full (whether as a
result of acceleration thereof or otherwise) in accordance with the terms of the
Term Loan Agreement or the ABL Credit Agreement, as the case may be, and the
Term Agent or the ABL Agent, as the case may be, intends to commence the
Exercise of Secured Creditor Remedies or (ii) the Term Agent or the ABL Agent,
as the case may be, intends to commence the Exercise of Secured Creditor
Remedies. Notwithstanding the foregoing, a Remedy Standstill Period shall be
deemed to be continuing if prior to the expiration of the Remedy Standstill
Period, the Agent with the Lien Priority on such Collateral is diligently
pursuing in good faith the exercise of its enforcement rights and remedies
against all or a material portion of the ABL Priority Collateral or the Term
Priority Collateral, as applicable.

“Subsidiary” shall mean with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with generally accepted accounting principles as of such
date, as well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.

“Swap Contract” shall have the meaning assigned to that term in the ABL Credit
Agreement.

“Term Agent” shall have the meaning assigned to that term in the introduction to
this Agreement and shall include any successor thereto as well as any Person
designated as the “Agent”, “Administrative Agent” or “Collateral Agent” under
any Term Loan Agreement.

“Term Borrower” and “Term Borrowers” shall have the meaning assigned to such
terms in the recitals to this Agreement.

“Term Collateral Documents” shall mean all “Security Documents” as defined in
the Term Loan Agreement, and all other security agreements, mortgages, deeds of
trust and other security documents executed and delivered in connection with any
Term Loan Agreement, in each case as the same may be amended, supplemented,
restated or otherwise modified from time to time.

 

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“Term Credit Parties” shall have the meaning assigned to that term in the
introduction to this Agreement.

“Term Documents” shall mean the Term Loan Agreement, the Term Guaranty, the Term
Collateral Documents, those other ancillary agreements as to which any Term
Credit Party is a party or a beneficiary and all other related agreements,
instruments, documents and certificates, now or hereafter executed by or on
behalf of any Term Loan Party or any of its respective Subsidiaries or
Affiliates, and delivered to the Term Agent, in connection with any of the
foregoing or any Term Loan Agreement, in each case as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms hereof.

“Term Guarantors” shall mean the collective reference to (i) the Persons
signatory hereto and designated as “Guarantors”, and (ii) any other Person who
becomes a guarantor of the Term Obligations.

“Term Guaranty” shall have the meaning assigned to that term in the recitals to
this Agreement and shall also include any further guaranty made by a Term
Guarantor guaranteeing, inter alia, the payment and performance of the Term
Obligations.

“Term Lenders” shall have the meaning assigned to that term in the introduction
to this Agreement, as well as any Person designated as a “Lender” under any Term
Loan Agreement.

“Term Loan Agreement” shall have the meaning assigned to that term in the
recitals to this Agreement and shall include any other agreement extending the
maturity of, consolidating, restructuring, refunding, replacing or refinancing
all or any portion of the Term Obligations in accordance with the terms hereof,
whether by the same or any other agent, lender or group of lenders and whether
or not increasing the amount of any indebtedness that may be incurred
thereunder.

“Term Loan Cash Proceeds Notice” shall mean a written notice delivered by the
Term Agent or any Term Credit Party to the ABL Agent (a) stating that an Event
of Default has occurred and is continuing under the Term Loan Agreement and
specifying the relevant Event of Default and (b) stating that certain cash
proceeds which may be deposited in the Concentration Account (as defined in the
ABL Credit Agreement) constitute proceeds of Term Priority Collateral, and
reasonably identifying the amount of such proceeds and specifying the origin
thereof.

“Term Loan Event of Default” shall mean an Event of Default as defined in the
Term Loan Agreement.

“Term Loan Parties” shall have the meaning assigned to that term in the recitals
to this Agreement.

“Term Loan Priority Accounts” means any Deposit Accounts that are intended to
solely contain Proceeds of the Term Priority Collateral (it being understood
that any property in such Deposit Accounts which is not Term Priority Collateral
or Proceeds of Term Priority Collateral shall not be Term Priority Collateral
solely by virtue of being on deposit in any such Deposit Account).

 

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“Term Loan Push Down Reserve” shall mean the “Term Loan Push-Down Reserve” as
defined in the Term Loan Agreement.

“Term Obligations” shall mean all obligations (including all “Obligations” as
defined in the Term Loan Agreement) of every nature of each Term Loan Party from
time to time owed to the Term Credit Parties or any of them, under any Term
Document, whether for principal, interest (including interest which, but for the
filing of a petition in bankruptcy with respect to such Term Loan Party, would
have accrued on any Term Obligation, whether or not a claim is allowed or
allowable against such Term Loan Party for such interest in the related
bankruptcy proceeding), fees, expenses, indemnification or otherwise, and all
other amounts owing or due under the terms of the Term Documents, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.

“Term Priority Collateral” shall mean all Collateral consisting of the following
(including for the avoidance of doubt, any such assets that, but for the
application of Section 552 of the Bankruptcy Code (or any similar provision of
any foreign Debtor Relief Laws) would be Term Priority Collateral):

(1) all Equipment and Fixtures;

(2) all leasehold interests in Real Property;

(3) all Intellectual Property;

(4) the Term Loan Priority Accounts and deposits therein; provided that subject
to Section 3.2, to the extent that identifiable Proceeds of ABL Priority
Collateral are deposited in any such Term Loan Priority Accounts, such
identifiable Proceeds shall be treated as ABL Priority Collateral;

(5) all Accounts and Payment Intangibles arising under contracts of sale of any
of the items referred to in the preceding clauses (1) through (4) (other than
Accounts and Payment Intangibles which constitute identifiable proceeds of ABL
Priority Collateral);

(6) to the extent evidencing, governing, securing or otherwise related to any of
the items referred to in the preceding clauses (1) through (5), all General
Intangibles, all Chattel Paper, Commercial Tort Claims, Documents, Instruments,
all rights under contracts (including contracts for sale), all Investment
Property, all Supporting Obligations securing or supporting such items in the
preceding clauses (1) through (5), and Letter-of-Credit Rights securing or
supporting such items in the preceding clauses (1) through (5); provided that to
the extent any of the foregoing also relates to ABL Priority Collateral only
that portion related to the items referred to in the preceding clauses
(1) through (5) shall be included in the Term Priority Collateral;

 

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(7) all books, Records and information, and all rights of access to such books,
Records, and information evidencing, governing, securing or otherwise relating
to the items referred to in the preceding clauses (1) through (6) (including all
books, databases, and Records, whether tangible or electronic, which contain any
information relating to any of the items referred to in the preceding clauses
(1) through (6)); provided that to the extent any of the foregoing also relates
to ABL Priority Collateral only that portion related to the items referred to in
the preceding clauses (1) through (6) shall be included in the Term Priority
Collateral; and

(8) all rights, remedies, privileges, and insurance policies and certificates
with respect to any of the foregoing, all products, Proceeds (other than
identifiable proceeds of ABL Priority Collateral), substitutions, and accessions
of or to any of the foregoing and all cash, cash equivalents, checks, negotiable
instruments, money, insurance proceeds, Instruments, Accounts, Payment
Intangibles, Chattel Paper, Securities, Securities Entitlements, and Financial
Assets, in each case, received as Proceeds of any of the foregoing and not
constituting ABL Priority Collateral or identifiable proceeds of ABL Priority
Collateral (such Proceeds, “Term Priority Proceeds”).

“Term Recovery” shall have the meaning set forth in Section 5.3(b).

“Trade Secret License” shall mean any and all agreements, whether written or
oral, providing for the grant by or to any Loan Party of any right in or to
Trade Secrets, to the extent that a grant of a security interest in such Trade
Secret License is not prohibited by applicable law or the applicable Trade
Secret License.

“Trade Secrets” shall mean with respect to any Loan Party, all of such Loan
Party’s right, title and interest in and to all United States and foreign trade
secrets, including know how, processes, formulae, compositions, designs, and
confidential business and technical information, and all rights of any kind
whatsoever accruing thereunder or pertaining thereto, including (a) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including payments under all licenses, non disclosure
agreements and memoranda of understanding entered into in connection therewith,
and damages and payments for past or future misappropriations thereof, and
(b) the right to sue or otherwise recover for past, present or future
misappropriations thereof.

“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Loan Party or that any Loan Party otherwise has the right
to license, or granting to any Loan Party any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Loan Party under any
such agreement.

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Loan Party: (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted, acquired or
assigned to, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration

 

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applications in the United States Patent and Trademark Office or any similar
offices in any State of the United States or any other country or any political
subdivision thereof, and all extensions or renewals thereof and (b) any and all
(i) rights and privileges arising under applicable law with respect to such Loan
Party’s use of any trademarks, (ii) reissues, continuations, extensions and
renewals thereof and amendments thereto, (iii) income, fees, royalties, damages
and payments now and hereafter due and/or payable thereunder and with respect
thereto, including damages, claims and payments for past, present or future
infringements thereof, (iv) all goodwill associated therewith and all assets,
rights and interests that uniquely reflect or embody such goodwill, (v) rights
corresponding thereto throughout the world and (vi) rights to sue for past,
present and future infringements thereof.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of New York; provided that to
the extent that the Uniform Commercial Code is used to define any term in any
security document and such term is defined differently in differing Articles of
the Uniform Commercial Code, the definition of such term contained in Article 9
shall govern; provided, further, that, to the extent that personal property
security laws as enacted and in effect in any foreign jurisdiction contains and
is used to define terms which are defined in the Uniform Commercial Code and
mentioned in Section 1.1 hereof, and such term is defined differently in such
foreign personal property security laws, the definition of such term contained
in the Uniform Commercial Code shall govern to the extent of any conflict or
inconsistency; and provided further that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection,
publication or priority of, or remedies with respect to, Liens of any Party is
governed by the Uniform Commercial Code or foreign personal property security
laws as enacted and in effect in a jurisdiction other than the State of New
York, the term “Uniform Commercial Code” will mean the Uniform Commercial Code
or such foreign personal property security laws as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.

“Use Period” means the period commencing on the earlier of (i) the date that the
ABL Agent (or an ABL Loan Party acting with the consent of the ABL Agent)
commences the liquidation and sale of the ABL Priority Collateral in a manner as
provided in Section 3.6 (having theretofore furnished the Term Agent with an
Enforcement Notice) or (ii) the date which is fifteen (15) days after receipt by
the ABL Agent of written notice from the Term Agent of the acceleration of the
Term Obligations and the intent of the Term Agent to commence the Exercise of
Secured Creditor Remedies, and, in each case, ending 120 days thereafter.
Notwithstanding the foregoing, the Use Period for any particular store
liquidation shall terminate, as to such location, upon completion of the
liquidation and sale of the ABL Priority Collateral at such location. If any
stay or other order that prohibits any of the ABL Agent, the other ABL Credit
Parties or any ABL Loan Party (with the consent of the ABL Agent) from
commencing and continuing the Exercise of Any Secured Creditor Remedies or to
liquidate and sell the ABL Priority Collateral has been entered by a court of
competent jurisdiction, such 120-day period shall be tolled during the pendency
of any such stay or other order and the Use Period shall be so extended.

“Wells Fargo” shall mean Wells Fargo Bank, National Association, and its
successors and assigns.

 

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Section 1.3. Rules of Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term “including” is not limiting and shall
be deemed to be followed by the phrase “without limitation,” and the term “or”
has, except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Article, section, subsection,
clause, schedule and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement to any agreement,
instrument, or document shall include all alterations, amendments, changes,
restatements, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, restatements, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein); provided that any terms used herein which are defined by
reference to the ABL Credit Agreement or the Term Loan Agreement and are subject
to the modification restrictions set forth in Section 5.2 of this Agreement
shall mean such terms as defined in the ABL Credit Agreement as of the date
hereof or the Term Loan Agreement as of the date hereof, as the case may be,
without giving effect to any modifications or amendments thereto except to the
extent that such definitions have been modified or amended in accordance with
this Agreement; and provided further that any such modifications or amendments
shall be deemed to be automatically incorporated herein by reference. Any
reference herein to any Person shall be construed to include such Person’s
successors and assigns. Any reference herein to the repayment in full of an
obligation shall mean the payment in full in cash of such obligation, or in such
other manner as may be approved in writing by the requisite holders or
representatives in respect of such obligation.

ARTICLE 2.

LIEN PRIORITY

Section 2.1. Priority of Liens.

(a) Notwithstanding (i) the date, time, method, manner, or order of grant,
attachment, or perfection of any Liens granted to the ABL Agent or the other ABL
Credit Parties in respect of all or any portion of the Collateral or of any
Liens granted to the Term Agent or the other Term Credit Parties in respect of
all or any portion of the Collateral and regardless of how any such Lien was
acquired (whether by grant, statute, operation of law, subrogation or
otherwise), (ii) the order or time of filing or recordation of any document or
instrument for perfecting the Liens in favor of the ABL Agent or the Term Agent
(or the other ABL Credit Parties or the other Term Credit Parties) in any
Collateral, (iii) whether the ABL Agent or the Term Agent, in each case, either
directly or through agents, holds possession of, or has control over, all or any
part of the Collateral, (iv) the date on which the ABL Obligations or the Term
Obligations are advanced or made available to the Loan Parties, (v) any
provision of the Uniform Commercial Code, Debtor Relief Laws or any other
applicable law, or (vi) the fact that any such Liens in favor of the ABL Agent
or the other ABL Credit Parties or the Term Agent or the other Term Credit
Parties securing any of the ABL Obligations or Term Obligations, respectively,
are contractually subordinated to any Lien securing any obligation of any Loan
Party other than the Term Obligations or the ABL Obligations, respectively, the
ABL Agent, on behalf of itself and the other ABL Credit Parties, and the Term
Agent, on behalf of itself and the other Term Credit Parties, hereby agree that:

 

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(1) any Liens in respect of all or any portion of the ABL Priority Collateral
shall have the following Lien Priority:

First, in favor of the ABL Agent or any other ABL Credit Party that secures all
or any portion of the ABL Obligations (other than the Excess ABL Obligations);

Second, in favor of the Term Agent or any other Term Credit Party that secures
all or any portion of the Term Obligations (other than Excess Term Obligations);

Third, in favor of the ABL Agent or any other ABL Credit Party that secures the
Excess ABL Obligations; and

Fourth, in favor of the Term Agent or any other Term Credit Party that secures
the Excess Term Obligations.

(2) any Liens in respect of all or any portion of the Term Priority Collateral
shall have the following Lien Priority:

First, in favor of the Term Agent or any other Term Credit Party that secures
all or any portion of the Term Obligations (other than the Excess Term
Obligations);

Second, in favor of the ABL Agent or any other ABL Credit Party that secures all
or any portion of the ABL Obligations (other than Excess ABL Obligations);

Third, in favor of the Term Agent or any other Term Credit Party that secures
the Excess Term Obligations; and

Fourth, in favor of the ABL Agent or any other ABL Credit Party that secures the
Excess ABL Obligations.

(b) The Term Agent, for and on behalf of itself and the other Term Credit
Parties, acknowledges and agrees that, prior to or concurrently herewith, the
ABL Agent, for the benefit of itself and the other ABL Credit Parties, has been,
or may be, granted Liens upon all of the Collateral in which the Term Agent has
been granted Liens and the Term Agent hereby consents thereto. The ABL Agent,
for and on behalf of itself and the other ABL Credit Parties, acknowledges and
agrees that, concurrently herewith, the Term Agent, for the benefit of itself
and the other Term Credit Parties, has been, or may be, granted Liens upon all
of the Collateral in which the ABL Agent has been granted Liens and the ABL
Agent hereby consents thereto. The subordination of Liens by the Term Agent and
the ABL Agent in favor of one another as set forth herein shall not be deemed to
subordinate the Term Agent’s Liens or the ABL Agent’s Liens to the Liens of any
other Person nor be affected by the subordination of such Liens to any other
Lien.

 

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(c) The Lien subordination provisions contained herein relate solely to the
priority of Liens granted to the ABL Agent and the Term Agent by the Loan
Parties and shall apply only to the extent that the Liens of the ABL Agent and
the Term Agent are valid, perfected, and enforceable. It is the ABL Agent’s
responsibility to ensure the validity, perfection and enforceability of the
Liens granted by the Credit Parties to the ABL Agent for the benefit of itself
and the ABL Credit Parties. It is the Term Agent’s responsibility to ensure the
validity, perfection and enforceability of the Liens granted by the Loan Parties
to the Term Agent for the benefit of itself and the Term Credit Parties.

Section 2.2. Waiver of Right to Contest Liens.

(a) The Term Agent, for and on behalf of itself and the other Term Credit
Parties, agrees that it and they shall not (and hereby waives any right to) take
any action to contest or challenge (or assist or support any other Person in
contesting or challenging), directly or indirectly, whether or not in any
proceeding (including in any Insolvency Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the ABL Agent and the other ABL
Credit Parties in respect of the Collateral or the provisions of this Agreement.
The Term Agent, for itself and on behalf of the other Term Credit Parties,
agrees that none of the Term Agent or the other Term Credit Parties will take
any action that would interfere with any Exercise of Secured Creditor Remedies
undertaken by the ABL Agent or any other ABL Credit Party under the ABL
Documents with respect to the ABL Priority Collateral. The Term Agent, for
itself and on behalf of the other Term Credit Parties, hereby waives any and all
rights it or the other Term Credit Parties may have as a junior lien creditor or
otherwise to contest, protest, object to, or interfere with the manner in which
the ABL Agent or any ABL Lender seeks to enforce its Liens in any ABL Priority
Collateral. The foregoing shall not be construed to prohibit the Term Agent from
enforcing the provisions of this Agreement.

(b) The ABL Agent, for and on behalf of itself and the other ABL Credit Parties,
agrees that it and they shall not (and hereby waives any right to) take any
action to contest or challenge (or assist or support any other Person in
contesting or challenging), directly or indirectly, whether or not in any
proceeding (including in any Insolvency Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the Term Agent or the other Term
Credit Parties in respect of the Collateral or the provisions of this Agreement.
Except to the extent expressly set forth in this Agreement, the ABL Agent, for
itself and on behalf of the other ABL Credit Parties, agrees that none of the
ABL Agent or the ABL Credit Parties will take any action that would interfere
with any Exercise of Secured Creditor Remedies undertaken by the Term Agent or
any Term Credit Party under the Term Documents with respect to the Term Priority
Collateral. The ABL Agent, for itself and on behalf of the ABL Credit Parties,
hereby waives any and all rights it or the ABL Credit Parties may have as a
junior lien creditor or otherwise to contest, protest, object to, or interfere
with the manner in which the Term Agent or any Term Credit Party seeks to
enforce its Liens in any Term Priority Collateral. The foregoing shall not be
construed to prohibit the ABL Agent from enforcing the provisions of this
Agreement.

 

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(c) Notwithstanding anything to the contrary herein contained, none of the
Parties hereto waives any claim that it may have against a Credit Party on the
grounds that any sale, transfer or other disposition or any collection by the
Credit Party was not commercially reasonable in every respect as required by the
Uniform Commercial Code.

Section 2.3. Remedies Standstill.

(a) Following the occurrence of any Term Loan Event of Default and until the
expiration of the Remedy Standstill Period, the Term Agent may not commence or
continue the Exercise of Any Secured Creditor Remedies in respect of the ABL
Priority Collateral provided, however, nothing contained herein shall impair the
Term Agent’s and the Term Credit Parties’ rights to take, in the event that the
ABL Agent has declined to take such protective actions within a reasonable time
period after the written request by the Term Agent to the ABL Agent to do so,
any actions (including the commencement of legal proceedings) that the Term
Agent or such Term Credit Party deems necessary to protect and preserve, but not
to realize or foreclose on, the ABL Priority Collateral. After the expiration of
the Remedy Standstill Period, and upon five (5) Business Days prior written
notice to the ABL Agent (which notice may be delivered to the ABL Agent during
the Remedy Standstill Period but in no event more than ten (10) days prior to
the expiration thereof), the Term Agent may take, for the benefit of the Term
Credit Parties, one or more of the following actions in respect of the Term Loan
Event of Default that was the subject of the notice giving rise to such Remedy
Standstill Period at the same or different times:

(1) the Exercise of Any Secured Creditor Remedies with respect to the ABL
Priority Collateral (including, without limitation, foreclosure upon and taking
possession of the ABL Priority Collateral); provided, however, that until the
date on which the Discharge of ABL Obligations has occurred, the Term Agent will
not commence or continue the Exercise of Any Secured Creditor Remedies or seek
or continue remedies under the Term Documents on account of the ABL Priority
Collateral so long as the ABL Agent is diligently pursuing in good faith the
exercise of its enforcement rights and remedies against all or a material
portion of the ABL Priority Collateral; and

(2) exercise any and all other remedies under the Term Documents and applicable
law available to the Term Credit Parties with respect to the ABL Priority
Collateral, including the notification of account debtors or other Persons
obligated on ABL Priority Collateral of the assignment of any Loan Party’s
accounts receivable to the ABL Agent and the Term Agent, all subject to the
first proviso in Section 2.3(a)(1) above.

(b) Following the occurrence of any ABL Event of Default and until the
expiration of the Remedy Standstill Period, the ABL Agent may not commence or
continue the Exercise of Any Secured Creditor Remedies in respect of the Term
Priority Collateral provided, however, nothing contained herein shall impair the
ABL Agent’s and the ABL Credit Parties’ rights to take, in the event that the
Term Agent has declined to take such protective actions within a reasonable time
period after the written request by the ABL Agent to the Term Agent to do so,
any actions (including the commencement of legal proceedings, but excluding the
commencement of an involuntary bankruptcy proceeding against any Loan Party)
that the ABL Agent or such ABL Credit Party deems necessary to protect and
preserve, but not to realize or foreclose on, the Term Priority Collateral.
After the expiration of the Remedy Standstill Period,

 

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and upon five (5) Business Days prior written notice to the Term Agent (which
notice may be delivered to the Term Agent during the Remedy Standstill Period
but in no event more than ten (10) days prior to the expiration thereof), the
ABL Agent may take, for the benefit of the ABL Credit Parties, one or more of
the following actions in respect of the ABL Event of Default that was the
subject of the notice giving rise to such Remedy Standstill Period at the same
or different times:

(1) the Exercise of Any Secured Creditor Remedies with respect to the Term
Priority Collateral (including, without limitation, foreclosure upon and taking
possession of the Term Priority Collateral); provided, however, that until the
date on which the Discharge of Term Obligations has occurred, the ABL Agent will
not commence or continue the Exercise of Any Secured Creditor Remedies or seek
or continue remedies under the ABL Documents on account of the Term Priority
Collateral so long as the Term Agent is diligently pursuing in good faith the
exercise of its enforcement rights and remedies against all or a material
portion of the Term Priority Collateral; and

(2) the exercise of any and all other remedies under the ABL Documents and
applicable law available to the ABL Credit Parties with respect to the Term
Priority Collateral, including the notification of account debtors or other
Persons obligated on Term Priority Collateral of the assignment of any Loan
Party’s accounts receivable to the Term Agent and the ABL Agent, all subject to
the proviso in Section 2.3(b)(1) above.

(c) All Proceeds of ABL Priority Collateral received by the Term Agent shall be
turned over to the ABL Agent for prompt application in accordance with
Section 4.1(b) hereof, or, to the extent that the Term Agent is entitled to
apply such Proceeds to the Term Obligations pursuant to the terms of this
Agreement, applied promptly by the Term Agent in accordance with Section 4.1(b).
This Section 2.3 shall not be construed to in any way limit or impair the rights
of the Term Agent to join (but not control or object to in any way) any
foreclosure or other Exercise of Secured Creditor Remedies with respect to the
Collateral initiated by the ABL Agent, so long as it does not delay or interfere
in any material respect with the exercise by the ABL Credit Parties of their
respective rights as provided in this Agreement.

(d) All Proceeds of Term Priority Collateral received by the ABL Agent shall be
turned over to the Term Agent for prompt application in accordance with
Section 4.1(c) hereof, or, to the extent that the ABL Agent is entitled to apply
such Proceeds to the ABL Obligations pursuant to the terms of this Agreement,
applied promptly by the ABL Agent in accordance with Section 4.1(c). This
Section 2.3 shall not be construed to in any way limit or impair the rights of
the ABL Agent to join (but not control or object to in any way) any foreclosure
or other Exercise of Secured Creditor Remedies with respect to the Collateral
initiated by the Term Agent, so long as it does not delay or interfere in any
material respect with the exercise by the Term Credit Parties of their
respective rights as provided in this Agreement.

(e) Nothing contained herein shall impair the Term Agent’s or any Term Credit
Party’s rights (i) to exercise any remedies against any of the Loan Parties or
the Collateral (other than any remedies against any ABL Priority Collateral)
pursuant to the Term Documents; (ii) to accelerate any of the Term Obligations;
(iii) to make demand upon any Loan Party or any other Person liable on the Term
Obligations; (iv) to institute a lawsuit to collect its debt,

 

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including the filing, or participation in a filing, of any involuntary
bankruptcy petition in respect to any Loan Party; (v) to exercise any of its
rights or remedies with respect to the ABL Priority Collateral as and when
permitted by Section 2.3(a), (vi) to file a claim or statement of interest with
respect to the Term Obligations; (vii) to take any action (not adverse to the
priority and perfection status of, and validity and value of, the Liens of the
ABL Agent, or the rights of the ABL Agent to exercise remedies in respect
thereof) in order to create, perfect, preserve or protect its Lien on the
Collateral subject to the other terms of this Agreement; (viii) to file any
necessary responsive or defensive pleadings in opposition to any motion, claim,
adversary proceeding or other pleading made by any Person objecting to or
otherwise seeking the disallowance of the claims of the Term Credit Parties,
including, without limitation, any claims secured by the Collateral, if any, in
each case not otherwise in contravention of the terms of this Agreement; (ix) to
exercise any rights or remedies available to unsecured creditors or file any
pleadings, objections, motions or agreements which assert rights or interests
available to unsecured creditors of the Loan Parties arising under the Term
Documents, any Insolvency Proceeding or applicable non-bankruptcy law, in each
case, not inconsistent with the terms of this Agreement; and (x) to vote on any
plan of reorganization, arrangement or compromise or any proposal, file any
proof of claim, make other filings and make any arguments and motions in any
Insolvency Proceeding that are, in each case, not otherwise prohibited by the
terms of this Agreement.

(f) Nothing contained herein shall impair the ABL Agent’s or any ABL Credit
Party’s rights (i) to exercise any remedies against any of the Loan Parties or
the Collateral (other than any remedies against any Term Priority Collateral)
pursuant to the ABL Documents; (ii) to accelerate any of the ABL Obligations;
(iii) to make demand upon any Loan Party or any other Person liable on the ABL
Obligations; (iv) to institute a lawsuit to collect its debt, including the
filing, or participation in a filing, of any involuntary bankruptcy petition in
respect to any Loan Party; (v) to exercise any of its rights or remedies with
respect to the Term Priority Collateral as and when permitted by Section 2.3(b),
(vi) to file a claim or statement of interest with respect to the ABL
Obligations; (vii) to take any action (not adverse to the priority and
perfection status of, and validity and value of, the Liens of the Term Agent, or
the rights of the Term Agent to exercise remedies in respect thereof) in order
to create, perfect, preserve or protect its Lien on the Collateral subject to
the other terms of this Agreement; (viii) to file any necessary responsive or
defensive pleadings in opposition to any motion, claim, adversary proceeding or
other pleading made by any Person objecting to or otherwise seeking the
disallowance of the claims of the ABL Credit Parties, including, without
limitation, any claims secured by the Collateral, if any, in each case not
otherwise in contravention of the terms of this Agreement; (ix) to exercise any
rights or remedies available to unsecured creditors or file any pleadings,
objections, motions or agreements which assert rights or interests available to
unsecured creditors of the Loan Parties arising under the ABL Documents, any
Insolvency Proceeding or applicable non-bankruptcy law, in each case, not
inconsistent with the terms of this Agreement; and (x) to vote on any plan of
reorganization, arrangement or compromise or any proposal, file any proof of
claim, make other filings and make any arguments and motions in any Insolvency
Proceeding that are, in each case, not otherwise prohibited by the terms of this
Agreement.

 

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Section 2.4. Release of Liens.

(a) In the event of (A) any private or public sale of all or any portion of the
ABL Priority Collateral in connection with any Exercise of Secured Creditor
Remedies by the ABL Agent or by any of the Loan Parties with the consent of the
ABL Agent after the occurrence and during the continuance of an Event of Default
under the ABL Documents, or (B) any sale, transfer or other disposition of all
or any portion of the ABL Priority Collateral (other than in connection with a
refinancing as described in Section 5.2(c)), so long as such sale, transfer or
other disposition is then permitted by the ABL Documents or consented to by the
requisite ABL Lenders (and, so long as no Event of Default under the ABL
Documents has occurred and is continuing, is permitted by the Term Documents,
without giving effect to any amendments thereof which are more restrictive than
those provisions in effect on the date hereof (other than amendments which
conform to amendments to the ABL Documents or which are otherwise consented to
by the ABL Agent)), the Term Agent agrees, on behalf of itself and the Term
Lenders that such sale, transfer or other disposition will be free and clear of
the Liens on such ABL Priority Collateral securing the Term Obligations, and the
Term Agent’s and the Term Credit Parties’ Liens with respect to the ABL Priority
Collateral so sold, transferred, or disposed shall terminate and be
automatically released without further action concurrently with, and to the same
extent as, the release of the ABL Credit Parties’ Liens on such ABL Priority
Collateral; provided that, the ABL Agent shall have furnished the Term Agent
with ten (10) days notice of any such disposition; provided further that for the
avoidance of doubt, the Term Credit Parties’ Liens in respect of the Proceeds of
such ABL Priority Collateral so sold, transferred, or disposed shall continue to
exist to the same extent, and with the same relative priorities, as the ABL
Credit Parties’ Liens on such Proceeds; and provided, further, that to the
extent Proceeds are required to repay obligations, such Proceeds shall be
applied in accordance with Section 4.1(b). In furtherance of, and subject to,
the foregoing, the Term Agent agrees that it will promptly execute any and all
Lien releases or other documents reasonably requested by the ABL Agent in
connection therewith. The Term Agent hereby appoints the ABL Agent and any
officer or duly authorized person of the ABL Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power of attorney to be exercised if the Term Agent does not take such action
within five (5) days after written notice, in the place and stead of the Term
Agent and in the name of the Term Agent or in the ABL Agent’s own name, from
time to time, in the ABL Agent’s sole discretion, for the purposes of carrying
out the terms of this paragraph, to take any and all appropriate action and to
execute and deliver any and all documents and instruments as may be necessary or
desirable to accomplish the purposes of this paragraph, including any financing
statements, endorsements, assignments, releases or other documents or
instruments of transfer (which appointment, being coupled with an interest, is
irrevocable).

(b) In the event of (A) any private or public sale of all or any portion of the
Term Priority Collateral in connection with any Exercise of Secured Creditor
Remedies by or with the consent of the Term Agent after the occurrence and
during the continuance of an Event of Default under the Term Documents, or
(B) any sale, transfer or other disposition of all or any portion of the Term
Priority Collateral (other than in connection with a refinancing as described in
Section 5.2(c)), so long as such sale, transfer or other disposition is then
permitted by the Term Documents or consented to by the requisite Term Lenders
(and, so long as no Event of Default under the Term Documents has occurred and
is continuing, is permitted by the ABL Documents, without giving effect to any
amendments thereof which are more restrictive than

 

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those provisions in effect on the date hereof (other than amendments which
conform to amendments to the Term Documents or which are otherwise consented to
by the Term Agent)), the ABL Agent agrees, on behalf of itself and the ABL
Lenders, that such sale, transfer or disposition will be free and clear of the
Liens on such Term Priority Collateral securing the ABL Obligations and the ABL
Agent’s and the ABL Credit Parties’ Liens with respect to the Term Priority
Collateral so sold, transferred, or disposed shall terminate and be
automatically released without further action concurrently with, and to the same
extent as, the release of the Term Credit Parties’ Liens on such Term Priority
Collateral; provided that, the Term Agent shall have furnished the ABL Agent
with ten (10) days notice of any such disposition; provided further that for the
avoidance of doubt, the ABL Agent’s and the ABL Credit Parties’ Liens in respect
of the Proceeds of such Term Priority Collateral so sold, transferred, or
disposed shall continue to exist to the same extent, and with the same relative
priorities, as the Term Credit Parties’ Liens on such Proceeds; and provided,
further, that to the extent Proceeds are required to repay obligations, such
Proceeds shall be applied in accordance with Section 4.1(c). In furtherance of,
and subject to, the foregoing, the ABL Agent agrees that it will promptly
execute any and all Lien releases or other documents reasonably requested by the
Term Agent in connection therewith. The ABL Agent hereby appoints the Term Agent
and any officer or duly authorized person of the Term Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power of attorney to be exercised if the ABL Agent does not take such action
within five (5) days after written notice, in the place and stead of the ABL
Agent and in the name of the ABL Agent or in the Term Agent’s own name, from
time to time, in the Term Agent’s sole discretion, for the purposes of carrying
out the terms of this paragraph, to take any and all appropriate action and to
execute and deliver any and all documents and instruments as may be necessary or
desirable to accomplish the purposes of this paragraph, including any financing
statements, endorsements, assignments, releases or other documents or
instruments of transfer (which appointment, being coupled with an interest, is
irrevocable).

Section 2.5. No New Liens. (a) Until the date upon which the Discharge of ABL
Obligations shall have occurred, the parties hereto agree that it is the
anticipation of the parties, none of Term Agent or any Term Credit Party shall
acquire or hold any Lien on any assets securing any Term Obligations which
assets are not also subject to the Lien of ABL Agent under the ABL Documents. If
any of Term Agent or Term Credit Party shall nonetheless acquire or hold any
Lien on any assets of any Loan Party securing any Term Obligations which assets
are not also subject to the Lien of ABL Agent under the ABL Documents, then Term
Agent (or the relevant Term Credit Party) shall, without the need for any
further consent of any other Term Credit Party or any Loan Party and
notwithstanding anything to the contrary in any other Term Document, be deemed
to also hold and have held such Lien as agent or bailee for the benefit of ABL
Agent and the other ABL Credit Parties as security for the ABL Obligations
(subject to the lien priority set forth in Section 2.1 and the other terms
hereof) and shall promptly notify ABL Agent in writing of the existence of such
Lien upon becoming aware thereof.

(b) Until the date upon which the Discharge of Term Obligations shall have
occurred, the parties hereto agree that it is the anticipation of the parties,
none of ABL Agent or any ABL Credit Party shall acquire or hold any Lien on any
assets securing any ABL Obligations which assets are not also subject to the
Lien of Term Agent under the Term Documents. If any of ABL Agent or ABL Credit
Party shall nonetheless acquire or hold any Lien on any assets of any Loan Party
securing any ABL Obligations which assets are not also

 

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subject to the Lien of Term Agent under the Term Documents, then ABL Agent (or
the relevant ABL Credit Party) shall, without the need for any further consent
of any other ABL Credit Party or any Loan Party and notwithstanding anything to
the contrary in any other ABL Document, be deemed to also hold and have held
such Lien as agent or bailee for the benefit of Term Agent and the other Term
Credit Parties as security for the Term Obligations (subject to the lien
priority set forth in Section 2.1 and the other terms hereof) and shall promptly
notify Term Agent in writing of the existence of such Lien upon becoming aware
thereof.

(c) To effectuate the foregoing sharing of Liens, each of ABL Agent and Term
Agent agrees that the documentation evidencing or perfecting the Collateral
granted to it in which the other Agent has not received a direct grant of a Lien
shall explicitly include provisions granting each Agent a Lien thereon, and,
with respect to any ABL Priority Collateral, furnishing the ABL Agent with
“control” (as defined in the UCC), to the extent applicable.

Section 2.6. Waiver of Marshalling.

(a) Until the Discharge of ABL Obligations, the Term Agent, on behalf of itself
and the Term Credit Parties, agrees not to assert and hereby waives, to the
fullest extent permitted by law, any right to demand, request, plead or
otherwise assert or otherwise claim the benefit of, any marshalling, appraisal,
valuation or other similar right that may otherwise be available under
applicable law with respect to the ABL Priority Collateral or any other similar
rights a junior secured creditor may have under applicable law.

(b) Until the Discharge of Term Obligations, the ABL Agent, on behalf of itself
and the ABL Credit Parties, agrees not to assert and hereby waives, to the
fullest extent permitted by law, any right to demand, request, plead or
otherwise assert or otherwise claim the benefit of, any marshalling, appraisal,
valuation or other similar right that may otherwise be available under
applicable law with respect to the Term Priority Collateral or any other similar
rights a junior secured creditor may have under applicable law.

ARTICLE 3.

ACTIONS OF THE PARTIES

Section 3.1. Certain Actions Permitted. The Term Agent and the ABL Agent may
make such demands or file such claims in respect of the Term Obligations or the
ABL Obligations, as applicable, as are necessary to prevent the waiver or bar of
such claims under applicable statutes of limitations or other statutes, court
orders, or rules of procedure at any time. Nothing in this Agreement shall
prohibit the receipt by the Term Agent or any Term Credit Party of the payments
of interest, principal and other amounts owed in respect of the Term Obligations
so long as such receipt is not the direct or indirect result of the exercise by
the Term Agent or any Term Credit Party of rights or remedies as a secured
creditor (including set-off) with respect to ABL Priority Collateral or
enforcement in contravention of this Agreement of any Lien held by any of them.
Nothing in this Agreement shall prohibit the receipt by the ABL Agent or any ABL
Credit Party of the payments of interest, principal and other amounts owed in
respect of the ABL Obligations so long as such receipt is not the direct or
indirect result of the exercise by the ABL Agent or any ABL Credit Party of
rights or remedies as a secured creditor (including set-off) with respect to
Term Priority Collateral or enforcement in contravention of this Agreement of
any Lien held by any of them.

 

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Section 3.2. Agent for Perfection. The ABL Agent, for and on behalf of itself
and each ABL Credit Party, and the Term Agent, for and on behalf of itself and
each Term Credit Party, as applicable, each acknowledge and agree to hold all
Control Collateral in its respective possession, custody, or control (or in the
possession, custody, or control of agents or bailees for either, including,
without limitation, landlords, freight forwarders and other bailees) as agent
for the benefit of, and on behalf of, the other solely for the purpose of
perfecting the security interest granted to each in such Collateral, subject to
the terms and conditions of this Section 3.2. None of the ABL Agent, the ABL
Credit Parties, the Term Agent, or the Term Credit Parties, as applicable, shall
have any obligation whatsoever to the others to assure that the Collateral is
genuine or owned by any relevant Borrower, any Guarantor, or any other Person or
to preserve rights or benefits of any Person. The duties or responsibilities of
the ABL Agent and the Term Agent under this Section 3.2 are and shall be limited
solely to holding or maintaining control of the Control Collateral as agent for
the other Party for purposes of perfecting the Lien held by the Term Agent or
the ABL Agent, as applicable. The ABL Agent is not and shall not be deemed to be
a fiduciary of any kind for the Term Credit Parties or any other Person. Without
limiting the generality of the foregoing, the ABL Credit Parties shall not be
obligated to see to the application of any Proceeds of the Term Priority
Collateral deposited into any Deposit Account or be answerable in any way for
the misapplication thereof. The Term Agent is not and shall not be deemed to be
a fiduciary of any kind for the ABL Credit Parties, or any other Person.

Section 3.3. Sharing of Information and Access; Notices of Default.

(a) In the event that the ABL Agent shall, in the exercise of its rights under
the ABL Collateral Documents or otherwise, receive possession or control of any
books and records of any Term Loan Party which contain information identifying
or pertaining to the Term Priority Collateral, the ABL Agent shall, upon request
from the Term Agent and as promptly as practicable thereafter, either make
available to the Term Agent such books and records for inspection and
duplication or provide to the Term Agent copies thereof. In the event that the
Term Agent shall, in the exercise of its rights under the Term Collateral
Documents or otherwise, receive possession or control of any books and records
of any ABL Loan Party which contain information identifying or pertaining to any
of the ABL Priority Collateral, the Term Agent shall, upon request from the ABL
Agent and as promptly as practicable thereafter, either make available to the
ABL Agent such books and records for inspection and duplication or provide the
ABL Agent copies thereof.

(b) Each Agent shall give to the other Agent concurrently with the giving
thereof to any Loan Party (a) a copy of any written notice by such Agent of an
ABL Event of Default or a Term Loan Event of Default, as the case may be, or a
written notice of demand for payment from any Loan Party and (b) a copy of any
written notice sent by such Agent to any Loan Party stating such Agent’s
intention to exercise any material enforcement rights or remedies against such
Loan Party, including written notice pertaining to any foreclosure on all or any
material part of its Liens or other judicial or non-judicial remedy in respect
thereof, and any legal process served or filed in connection therewith; provided
that the failure of any Agent to give such required notice shall not result in
any liability to such Agent or affect the enforceability

 

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of any provision of this Agreement, including the relative priorities of the
Liens of the Agents and Credit Parties as provided herein, and shall not affect
the validity or effectiveness of any such notice as against any Loan Party or of
any action taken pursuant to such notice or in relation to the events giving
rise thereto; provided, further, that the foregoing shall not in any way impair
any claims that any Agent may have against the other Agent as a result of any
failure of such Agent to provide any notice in connection with a foreclosure
against the Collateral by such Agent as required under applicable law.

(c) Each Agent shall promptly provide to the other Agent copies of all
collateral reports, appraisals, results of commercial finance examinations and
physical inventories that it receives (the “Collateral Due Diligence”).
Notwithstanding anything to the contrary contained in the Term Documents, as
long as the ABL Agent undertakes the inventory appraisals and commercial finance
examinations as provided in Section 6.10 of the ABL Credit Agreement and
promptly shares the results of such with the Term Agent, the Term Agent shall
not conduct inventory appraisals or undertake commercial finance examinations;
provided that to the extent that the ABL Agent does not undertake the inventory
appraisals or commercial finance examinations at the times, and with the
frequency, permitted under the ABL Credit Agreement (other than inventory
appraisals and commercial finance examinations which may be undertaken at the
expense of the ABL Credit Parties), the Term Agent may engage the most recent
appraiser or examiner (or another appraiser or examiner reasonably satisfactory
to the ABL Agent (such approval not to be unreasonably withheld or delayed)), as
applicable, to do so, and the net orderly liquidation value set forth in such
inventory appraisal, if lower than that contained in the most recent inventory
appraisal obtained by the ABL Agent, shall thereafter be utilized in calculating
the ABL Borrowing Base and the Term Loan Borrowing Base until a subsequent
inventory appraisal is completed.

(d) Notwithstanding anything to the contrary contained in the ABL Documents, as
long as the Term Agent undertakes the Equipment appraisals as provided in
Section 6.10 of the Term Loan Agreement and promptly shares the results of such
with the ABL Agent, the ABL Agent shall not conduct Equipment appraisals;
provided that to the extent that the Term Agent does not undertake the Equipment
appraisals at the times, and with the frequency, permitted under the Term Loan
Agreement (other than Equipment appraisals which may be undertaken at the
expense of the Term Loan Parties), the ABL Agent may engage the most recent
appraiser (or another appraiser reasonably satisfactory to the Term Agent (such
approval not to be unreasonably withheld or delayed)), as applicable, to do so.

Section 3.4. Insurance. Proceeds of Collateral include insurance proceeds and,
therefore, the Lien Priority shall govern the ultimate disposition of casualty
insurance proceeds. The ABL Agent and the Term Agent shall each be named as
additional insured or loss payee, as applicable, with respect to all insurance
policies relating to the Collateral, as their respective interests may appear.
Prior to the Discharge of ABL Obligations, the ABL Agent shall have the sole and
exclusive right, as against the Term Agent, to adjust settlement of insurance
claims in a commercially reasonable manner in the event of any covered loss,
theft or destruction of ABL Priority Collateral. Prior to the Discharge of Term
Obligations, the Term Agent shall have the sole and exclusive right, as against
the ABL Agent, to adjust settlement of insurance claims in a commercially
reasonable manner in the event of any covered loss, theft or destruction of Term
Priority Collateral. If any insurance claim includes both ABL Priority
Collateral and Term

 

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Priority Collateral, the insurer will not settle such claim separately with
respect to ABL Priority Collateral and Term Priority Collateral, and if the
Parties are unable after negotiating in good faith to agree on the settlement
for such claim, either Party may apply to a court of competent jurisdiction to
make a determination as to the settlement of such claim, and the court’s
determination shall be binding upon the Parties. All Proceeds of such insurance
shall be remitted to the ABL Agent or the Term Agent, as the case may be, and
each of the Term Agent and ABL Agent shall cooperate (if necessary) in a
reasonable manner in effecting the payment of insurance proceeds in accordance
with Section 4.1 hereof.

Section 3.5. No Additional Rights For the Loan Parties Hereunder. Except as
provided in Section 3.6, if any ABL Credit Party or Term Credit Party shall
enforce its rights or remedies in violation of the terms of this Agreement, the
Loan Parties shall not be entitled to use such violation as a defense to any
action by any ABL Credit Party or Term Credit Party, nor to assert such
violation as a counterclaim or basis for set off or recoupment against any ABL
Credit Party or Term Credit Party.

Section 3.6. Inspection and Access Rights. (a) Without limiting any rights the
ABL Agent or any other ABL Credit Party may otherwise have under applicable law
or by agreement, in the event of any liquidation (including, without limitation,
by means of a sale pursuant to Section 363 of the Bankruptcy Code) of the ABL
Priority Collateral (or any other Exercise of Any Secured Creditor Remedies by
the ABL Agent) and whether or not the Term Agent or any other Term Credit Party
has commenced and is continuing the Exercise of Any Secured Creditor Remedies of
the Term Agent, the ABL Agent or any other Person (including any ABL Loan Party)
acting with the consent, or on behalf, of the ABL Agent, shall have the right
(i) during normal business hours on any Business Day, to access ABL Priority
Collateral that (x) is stored or located in or on, or (y) has become an
accession with respect to (within the meaning of Section 9-335 of the Uniform
Commercial Code), and (ii) during the Use Period shall have the right to use,
the Term Priority Collateral (including, without limitation, Equipment, and
Fixtures, but excluding cash proceeds of Term Priority Collateral), each of the
foregoing in order to assemble, inspect, copy or download information stored on,
take actions to perfect its Lien on, complete a production run of Inventory
involving, take possession of, move, prepare and advertise for sale, sell (by
public auction, private sale or a “store closing”, “going out of business” or
similar sale, whether in bulk, in lots or to customers in the ordinary course of
business or otherwise and which sale may include augmented Inventory of the same
type sold in any ABL Loan Party’s business), store or otherwise deal with the
ABL Priority Collateral, in each case, without the involvement of or
interference by any Term Credit Party or liability to any Term Credit Party. In
the event that any ABL Credit Party has commenced and is continuing the Exercise
of Any Secured Creditor Remedies with respect to any ABL Priority Collateral or
any other sale or liquidation of the ABL Priority Collateral has been commenced
by an ABL Loan Party (with the consent of the ABL Agent), the Term Agent may not
sell, assign or otherwise transfer the related Term Priority Collateral prior to
the expiration of the Use Period, unless the purchaser, assignee or transferee
thereof agrees to be bound by the provisions of this Section 3.6.

(b) During the period of use and/or control by the ABL Credit Parties and/or the
ABL Agent (or their respective employees, agents, advisers and representatives)
of any Term Priority Collateral, the ABL Credit Parties and the ABL Agent shall
be obligated to repair at their expense any physical damage (but not any
diminution in value) to such Term Priority

 

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Collateral resulting directly from such use or control, and to leave such Term
Priority Collateral in substantially the same condition as it was at the
commencement of such occupancy, use or control, ordinary wear and tear excepted.
Without limiting the rights granted in this Section 3.6, the ABL Credit Parties
and the ABL Agent shall cooperate with the Term Credit Parties and/or the Term
Agent in connection with any efforts made by the Term Credit Parties and/or the
Term Agent to sell the Term Priority Collateral.

(c) The ABL Agent and the ABL Credit Parties shall not be obligated to pay any
amounts to the Term Agent or the Term Credit Parties (or any person claiming by,
through or under the Term Credit Parties, including any purchaser of the Term
Priority Collateral) or to the ABL Loan Parties, for or in respect of the use by
the ABL Agent and the ABL Credit Parties of the Term Priority Collateral prior
to the termination of the Use Period.

(d) The ABL Credit Parties shall (i) use the Term Priority Collateral in
accordance with applicable law; (ii) insure for damage to property and liability
to persons, including property and liability insurance for the benefit of the
Term Credit Parties; and (iii) indemnify the Term Credit Parties from any claim,
loss, damage, cost or liability arising directly from the ABL Credit Parties’
use of the Term Priority Collateral (except for those arising from the gross
negligence or willful misconduct of any Term Credit Party).

(e) The Term Agent and the other Term Credit Parties shall use commercially
reasonable efforts to not hinder or obstruct the ABL Agent and the other ABL
Credit Parties from exercising the rights described in Section 3.6(a) hereof.

(f) Subject to the terms hereof, the Term Agent may advertise and conduct public
auctions or private sales of the Term Priority Collateral without notice (except
as required by applicable law) to any ABL Credit Party, the involvement of or
interference by any ABL Credit Party or liability to any ABL Credit Party as
long as, in the case of an actual sale, the respective purchaser assumes and
agrees to the obligations of the Term Agent and the Term Credit Parties under
this Section 3.6.

(g) In the event that ABL Priority Collateral shall include real estate
interests and Term Priority Collateral is stored or located in or on or has
become an accession to such ABL Priority Collateral, the ABL Agent shall provide
the Term Agent with reasonable use and access to such ABL Priority Collateral in
order to access, inspect, remove and sell such Term Priority Collateral.

Section 3.7. Tracing of and Priorities in Proceeds. The ABL Agent, for itself
and on behalf of the ABL Credit Parties, and the Term Agent, for itself and on
behalf of the Term Credit Parties, further agree that any Proceeds of
Collateral, whether or not deposited in Deposit Accounts subject to control
agreements, which are used by any Loan Party to acquire other property which is
Collateral shall not (solely as between the Agents and the Credit Parties) be
treated as Proceeds of Collateral for purposes of determining the relative
priorities in the Collateral which was so acquired. Unless and until all
Obligations shall have been paid in full, (a) any payment received in
contravention of this Agreement or (b) any Collateral or proceeds thereof not
constituting its Priority Collateral received by any Agent in connection with
the Exercise of Secured Creditor Remedies shall be segregated and held in trust
and forthwith paid

 

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over to the applicable Agent in accordance with the provisions of Section 2.1,
in the same form as received, with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct. Notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, the ABL Agent
is hereby permitted to deem all collections and payments deposited in any
Deposit Account (other than Term Loan Priority Account or any Agent Payment
Account (as defined in the Term Loan Agreement)), lockbox, securities accounts,
commodity accounts, Blocked Accounts or the Concentration Account to be proceeds
of ABL Priority Collateral and no such funds credited to any such account shall
be subject to disgorgement or be deemed to be held in trust by the ABL Agent for
the benefit of the Term Agent and other Term Credit Parties; provided that with
respect to any such funds that are proceeds of Term Priority Collateral credited
to any such account (i) which funds are known by a loan officer of the ABL Agent
to be proceeds of Term Priority Collateral prior to the application of such
funds by the ABL Agent to the ABL Obligations and a subsequent credit extension
under the ABL Credit Agreement, or (ii) which are identified in a Term Loan Cash
Proceeds Notice (which shall be effective with respect to the cash proceeds
identified therein) received by the ABL Agent prior to the application of such
funds by the ABL Agent to the ABL Obligations and a subsequent credit extension
under the ABL Credit Agreement, to the extent permitted by applicable law, the
ABL Agent shall turn over any misdirected proceeds of the Term Priority
Collateral to the Term Agent.

Section 3.8. Payments Over.

(a) So long as the Discharge of Term Obligations has not occurred, any Term
Priority Collateral or Proceeds thereof not constituting ABL Priority Collateral
received by the ABL Agent or any other ABL Credit Party in connection with the
exercise of any right or remedy (including set off) relating to the Term
Priority Collateral shall be segregated and held in trust and forthwith paid
over to the Term Agent for the benefit of the Term Credit Parties in the same
form as received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct. The Term Agent is hereby authorized to make
any such endorsements as agent for the ABL Agent or any such other ABL Credit
Parties. This authorization is coupled with an interest and is irrevocable until
such time as this Agreement is terminated in accordance with its terms.

(b) So long as the Discharge of ABL Obligations has not occurred, any ABL
Priority Collateral or Proceeds thereof not constituting Term Priority
Collateral received by the Term Agent or any Term Credit Parties in connection
with the exercise of any right or remedy (including set off) relating to the ABL
Priority Collateral shall be segregated and held in trust and forthwith paid
over to the ABL Agent for the benefit of the ABL Credit Parties in the same form
as received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct. The ABL Agent is hereby authorized to make
any such endorsements as agent for the Term Agent or any such Term Credit
Parties. This authorization is coupled with an interest and is irrevocable until
such time as this Agreement is terminated in accordance with its terms.

Section 3.9. Legends. The ABL Agent acknowledges with respect to the ABL
Collateral Documents, on the one hand, and the Term Agent acknowledges with
respect to the Term Collateral Documents, on the other hand, that such documents
will contain the following legend:

 

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Intercreditor Agreement. The Loan Parties, the [Lender][Agent] and the other
Credit Parties acknowledge that the exercise of certain of the
[Lender’s][Agent’s] rights and remedies hereunder may be subject to, and
restricted by, the provisions of the Intercreditor Agreement. In the event of
any conflict between the terms of the Intercreditor Agreement and this
Agreement, the terms of the Intercreditor Agreement shall control. The
[Lender][Agent], on behalf of itself and the other Credit Parties, acknowledges
and agrees that it and the other Credit Parties shall be bound by the terms and
conditions of the Intercreditor Agreement.

Section 3.10. Term Loan Push Down Reserve. For the purposes of determining the
Term Loan Push Down Reserve under the ABL Credit Agreement, each of the Term
Agent and the Loan Parties agrees that the ABL Agent shall be entitled to rely
solely on the calculation thereof made by the Borrowers as reflected in the most
recent Borrowing Base Certificate delivered by the Borrowers to the ABL Agent,
unless the ABL Agent is notified in writing by the Term Agent that such
calculation is inaccurate and provides the ABL Agent with the correct
calculation of the Term Loan Push Down Reserve (“Term Loan Reserve Correction
Notice”), and, in such event, the ABL Agent shall be entitled to rely solely on
the calculation of the Term Loan Push Down Reserve made by the Term Agent as
reflected in the Term Loan Reserve Correction Notice. Each of the Term Agent and
the Loan Parties agrees that neither the ABL Agent nor the ABL Credit Parties
shall have any liability for relying on the calculation of the Term Loan Push
Down Reserve as set forth in a Borrowing Base Certificate delivered by the
Borrowers or in the Term Loan Reserve Correction Notice delivered by the Term
Agent, as the case may be. Each of the Term Agent and the Loan Parties agrees
that in the event of any discrepancy or dispute between the Term Agent and the
Loan Parties as to the amount of the Term Loan Push Down Reserve, the ABL Agent
shall be entitled to rely solely on the calculation of the Term Loan Push Down
Reserve as determined by the Term Agent and shall have no liability to any
Person for doing so. In all cases, the Borrowing Base shall be calculated based
upon the most recent Borrowing Base Certificate received by ABL Agent pursuant
to the ABL Credit Agreement prior to funding of loans or advances by an ABL
Lender or the issuance, renewal or amendment of a Letter of Credit by the L/C
Issuer (it being understood and agreed that the use of cash collateral in an
Insolvency or Liquidation Proceeding shall not constitute a funding of a loan or
other advance).

Section 3.11. Agreement of ABL Agent and ABL Lenders. The ABL Agent, for itself
and on behalf of the ABL Lenders, agrees that it shall not make, issue or incur
any loans or letters of credit under the ABL Credit Agreement during a Financial
Covenant Default Period (other than Protective Advances within the limits of
clauses (ii) and (iii) of the defined term “Maximum ABL Facility Amount”).

 

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ARTICLE 4.

APPLICATION OF PROCEEDS

Section 4.1. Application of Proceeds.

(a) Revolving Nature of ABL Obligations. The Term Agent, for and on behalf of
itself and the Term Credit Parties, expressly acknowledges and agrees that
(i) the ABL Credit Agreement includes a revolving commitment, that in the
ordinary course of business the ABL Agent and the ABL Lenders will apply
payments and make advances thereunder, and that no application of any Collateral
or the release of any Lien pursuant to Section 2.4 by the ABL Agent upon any
portion of the ABL Priority Collateral in connection with a permitted
disposition by the ABL Loan Parties under any ABL Credit Agreement shall
constitute the Exercise of Secured Creditor Remedies under this Agreement;
(ii) the amount of the ABL Obligations that may be outstanding at any time or
from time to time may be increased or reduced and subsequently reborrowed, and
that the terms of the ABL Obligations may be (subject to the terms of this
Agreement) modified, extended or amended from time to time, and that the
aggregate amount of the ABL Obligations may be (subject to the terms of this
Agreement) increased, replaced or refinanced (up to the Maximum ABL Facility
Amount), in each event, without notice to or consent by the Term Credit Parties
and without affecting the provisions hereof; and (iii) all ABL Priority
Collateral received by the ABL Agent may be applied, reversed, reapplied,
credited, or reborrowed, in whole or in part, to the ABL Obligations at any
time; provided, however, that from and after the date on which the ABL Agent (or
any ABL Credit Party) or the Term Agent (or any Term Credit Party) commences the
Exercise of Any Secured Creditor Remedies, all amounts received by the ABL Agent
or any ABL Lender shall be applied as specified in this Section 4.1. The Lien
Priority shall not be altered or otherwise affected by any such amendment,
modification, supplement, extension, repayment, reborrowing, increase,
replacement, renewal, restatement or refinancing of either the ABL Obligations
or the Term Obligations, or any portion thereof.

(b) Application of Proceeds of ABL Priority Collateral. Subject to the
provisions of Section 2.1(c), the ABL Agent and the Term Agent hereby agree that
all ABL Priority Collateral, ABL Priority Proceeds and all other Proceeds
thereof, received by either of them (i) in connection with any Exercise of
Secured Creditor Remedies with respect to the ABL Priority Collateral, (ii) in
connection with the exercise of any right or remedy (including set off) relating
to the ABL Priority Collateral, or (iii) following the commencement of any
Insolvency Proceeding, in each case, shall be applied,

first, to the payment of reasonable costs and expenses of the ABL Agent in
connection with the administration of its financing arrangements with Loan
Parties and/or the Exercise of Secured Creditor Remedies,

second, to the payment of the ABL Obligations (other than the Excess ABL
Obligations) in accordance with the ABL Documents until the Discharge of ABL
Obligations (other than the Excess ABL Obligations) shall have occurred,

 

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third, to the payment of the Term Obligations (other than the Excess Term
Obligations) in accordance with the Term Documents until the Discharge of Term
Obligations (other than the Excess Term Obligations) shall have occurred,

fourth, to the payment of the Excess ABL Obligations in accordance with the ABL
Documents until the Discharge of ABL Obligations shall have occurred,

fifth, to the payment of the Excess Term Obligations in accordance with the Term
Documents until the Discharge of Term Obligations shall have occurred, and

sixth, the balance, if any, to the Loan Parties or as a court of competent
jurisdiction may direct.

(c) Application of Proceeds of Term Priority Collateral. Subject to the
provisions of Section 2.1(c), the ABL Agent and the Term Agent hereby agree that
all Term Priority Collateral, Term Priority Proceeds and all other Proceeds
thereof, received by either of them (i) in connection with any Exercise of
Secured Creditor Remedies with respect to the Term Priority Collateral, (ii) in
connection with the exercise of any right or remedy (including set off) relating
to the Term Priority Collateral, or (iii) following the commencement of any
Insolvency Proceeding, in each case, shall be applied,

first, to the payment of reasonable costs and expenses of the Term Agent in
connection with the administration of its financing arrangements with Loan
Parties and/or such Exercise of Secured Creditor Remedies,

second, to the payment of the Term Obligations (other than the Excess Term
Obligations) in accordance with the Term Documents until the Discharge of Term
Obligations (other than the Excess Term Obligations) shall have occurred,

third, to the payment of the ABL Obligations (other than the Excess ABL
Obligations) in accordance with the ABL Documents until the Discharge of ABL
Obligations (other than the Excess ABL Obligations) shall have occurred,

fourth, to the payment of the Excess Term Obligations in accordance with the
Term Documents until the Discharge of Term Obligations shall have occurred,

fifth, to the payment of the Excess ABL Obligations in accordance with the ABL
Documents until the Discharge of ABL Obligations shall have occurred, and

sixth, the balance, if any, to the Loan Parties or as a court of competent
jurisdiction may direct.

(d) Limited Obligation or Liability. In exercising remedies, whether as a
secured creditor or otherwise, the ABL Agent shall have no obligation or
liability to the Term Agent or to any Term Credit Party, and the Term Agent
shall have no obligation or liability to the ABL Agent or any ABL Credit Party,
regarding the adequacy of any Proceeds or for any action or omission, except
solely for an action or omission that breaches the express obligations
undertaken by each Party under the terms of this Agreement. Notwithstanding
anything to the contrary herein contained, none of the Parties hereto waives any
claim that it may have against a Credit Party on the grounds that any sale,
transfer or other disposition or any collection by the Credit Party was not
commercially reasonable in every respect as required by the Uniform Commercial
Code.

 

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(e) Turnover of Collateral After Discharge. Upon the Discharge of ABL
Obligations, the ABL Agent shall deliver to the Term Agent or shall execute such
documents as the Term Agent may reasonably request (at the expense of the Term
Borrowers) to enable the Term Agent to have control over any Control Collateral
still in the ABL Agent’s possession, custody, or control in the same form as
received with any necessary endorsements, or as a court of competent
jurisdiction may otherwise direct. Upon the Discharge of Term Obligations, the
Term Agent shall deliver to the ABL Agent or shall execute such documents as the
ABL Agent may reasonably request (at the expense of the relevant Loan Parties)
to enable the ABL Agent to have control over any Control Collateral still in the
Term Agent’s possession, custody or control in the same form as received with
any necessary endorsements, or as a court of competent jurisdiction may
otherwise direct.

Section 4.2. Specific Performance. Each of the ABL Agent and the Term Agent is
hereby authorized to demand specific performance of this Agreement, whether or
not any relevant Borrower or any Guarantor shall have complied with any of the
provisions of any of the Credit Documents, at any time when the other Party
shall have failed to comply with any of the provisions of this Agreement
applicable to it. Each of the ABL Agent, for and on behalf of itself and the ABL
Credit Parties, and the Term Agent, for and on behalf of itself and the Term
Credit Parties, hereby irrevocably waives any defense based on the adequacy of a
remedy at law that might be asserted as a bar to such remedy of specific
performance.

ARTICLE 5.

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

Section 5.1. Notice of Acceptance and Other Waivers.

(a) All ABL Obligations at any time made or incurred by any Borrower or any
Guarantor shall be deemed to have been made or incurred in reliance upon this
Agreement, and the Term Agent, on behalf of itself and the Term Credit Parties,
hereby waives notice of acceptance, or proof of reliance by the ABL Agent or any
ABL Credit Party of this Agreement, and notice of the existence, increase,
renewal, extension, accrual, creation, or non-payment of all or any part of the
ABL Obligations. All Term Obligations at any time made or incurred by any
Borrower or any Guarantor shall be deemed to have been made or incurred in
reliance upon this Agreement, and the ABL Agent, on behalf of itself and the ABL
Credit Parties, hereby waives notice of acceptance, or proof of reliance, by the
Term Agent or any Term Credit Party of this Agreement, and notice of the
existence, increase, renewal, extension, accrual, creation, or non-payment of
all or any part of the Term Obligations.

(b) None of the ABL Agent, any ABL Credit Party, or any of their respective
Affiliates, directors, officers, employees, or agents shall be liable for
failure to demand, collect, or realize upon any of the Collateral or any
Proceeds, or for any delay in doing so, or shall be under any obligation to sell
or otherwise dispose of any Collateral or Proceeds thereof or to take

 

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any other action whatsoever with regard to the Collateral or any part or
Proceeds thereof, except as specifically provided in this Agreement. If the ABL
Agent or any ABL Credit Party honors (or fails to honor) a request by any
Borrower for an extension of credit pursuant to any ABL Credit Agreement or any
of the other ABL Documents, whether the ABL Agent or any ABL Credit Party has
knowledge that the honoring of (or failure to honor) any such request would
constitute a default under the terms of any Term Loan Agreement or any other
Term Document or an act, condition, or event that, with the giving of notice or
the passage of time, or both, would constitute such a default, or if the ABL
Agent or any ABL Credit Party otherwise should exercise any of its contractual
rights or remedies under any ABL Documents (subject to the terms and conditions
hereof), neither the ABL Agent nor any ABL Credit Party shall have any liability
whatsoever to the Term Agent or any Term Credit Party as a result of such
action, omission, or exercise (so long as any such exercise does not breach the
terms and provisions of this Agreement). The ABL Agent and the ABL Credit
Parties shall be entitled to manage and supervise their loans and extensions of
credit under any ABL Credit Agreement and any of the other ABL Documents as they
may, in their sole discretion, deem appropriate, and may manage their loans and
extensions of credit without regard to any rights or interests that the Term
Agent or any of the Term Credit Parties have in the Collateral, except as
otherwise expressly set forth in this Agreement. The Term Agent, on behalf of
itself and the Term Credit Parties, agrees that neither the ABL Agent nor any
ABL Credit Party shall incur any liability as a result of a sale, lease,
license, application, or other disposition of all or any portion of the
Collateral or Proceeds thereof, pursuant to the ABL Documents, so long as such
disposition is conducted in accordance with mandatory provisions of applicable
law and does not breach the provisions of this Agreement.

(c) None of the Term Agent, any Term Credit Party or any of their respective
Affiliates, directors, officers, employees, or agents shall be liable for
failure to demand, collect, or realize upon any of the Collateral or any
Proceeds, or for any delay in doing so, or shall be under any obligation to sell
or otherwise dispose of any Collateral or Proceeds thereof or to take any other
action whatsoever with regard to the Collateral or any part or Proceeds thereof,
except as specifically provided in this Agreement. If the Term Agent or any Term
Credit Party honors (or fails to honor) a request by any Borrower for an
extension of credit pursuant to any Term Loan Agreement or any of the other Term
Documents, whether the Term Agent or any Term Credit Party has knowledge that
the honoring of (or failure to honor) any such request would constitute a
default under the terms of any ABL Credit Agreement or any other ABL Document or
an act, condition, or event that, with the giving of notice or the passage of
time, or both, would constitute such a default, or if the Term Agent or any Term
Credit Party otherwise should exercise any of its contractual rights or remedies
under the Term Documents (subject to the terms and conditions hereof), neither
the Term Agent nor any Term Credit Party shall have any liability whatsoever to
the ABL Agent or any ABL Credit Party as a result of such action, omission, or
exercise (so long as any such exercise does not breach the terms and provisions
of this Agreement). The Term Agent and the Term Credit Parties shall be entitled
to manage and supervise their loans under the Term Documents as they may, in
their sole discretion, deem appropriate, and may manage their loans without
regard to any rights or interests that the ABL Agent or any ABL Credit Party has
in the Collateral, except as otherwise expressly set forth in this Agreement.
The ABL Agent, on behalf of itself and the ABL Credit Parties, agrees that none
of the Term Agent or the Term Credit Parties shall incur any liability as a
result of a sale, lease, license, application, or other disposition of the
Collateral or any part or Proceeds thereof, pursuant to the Term Documents, so
long as such disposition is conducted in accordance with mandatory provisions of
applicable law and does not breach the provisions of this Agreement.

 

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Section 5.2. Modifications to ABL Documents and Term Documents.

(a) The ABL Agent and the ABL Credit Parties may at any time and from time to
time and without the consent of or notice to the Term Agent or any Term Credit
Party, without incurring any liability to the Term Agent or any Term Credit
Party and without impairing or releasing any rights or obligations hereunder or
otherwise, amend, restate, supplement, modify, waive, substitute, renew,
refinance, or replace any or all of the ABL Documents; provided, however, that
without the consent of the Term Agent, the ABL Credit Parties shall not amend,
restate, supplement, modify, waive, substitute, renew, refinance or replace any
or all of the ABL Documents to:

(1) increase the rates of interest set forth in the definition of “Applicable
Margin” as defined in the ABL Credit Agreement by more than 2.00% per annum at
any level of the pricing grid applicable thereto (other than any increase
occurring because of fluctuations in underlying rate indices or the imposition
of the Default Rate (as defined in the ABL Credit Agreement) in accordance with
the terms of the ABL Credit Agreement), or increase the percentage set forth in
the definition of “Default Rate” set forth in the ABL Credit Agreement by more
than 2.00% per annum above the rate applicable thereto (other than any increase
occurring because of fluctuations in underlying rate indices), or increase the
percentage set forth in Section 2.09(a) (“Commitment Fee”) of the ABL Credit
Agreement by more than 0.75% per annum above the rate applicable thereto (other
than any increase occurring because of fluctuations in underlying rate indices);

(2) shorten the scheduled maturity of the ABL Obligations;

(3) change any conditions, covenants, defaults or events of default thereunder
that expressly restricts any Loan Party from making payments of the Term
Obligations that would otherwise be permitted under the ABL Credit Agreement as
in effect on the date hereof (other than as expressly provided herein);

(4) increase the sum of the then outstanding aggregate principal amount of the
loans and outstanding Letters of Credit made, issued or incurred under the ABL
Credit Agreement and any DIP Financing in excess of the amount of the Maximum
ABL Facility Amount;

(5) change the definitions of “Excess Availability”, “Tranche A Borrowing Base”
or “Combined Borrowing Base” contained in the ABL Credit Agreement and any
component definition thereof (including, without limitation, “Borrowing Base”
and “Term Loan Borrowing Base” and any component definition thereof), or the
definitions of “Overadvance,” “Permitted Overadvance”, “Inadvertent
Overadvance”, “Borrowing Base Certificate”, “Availability Reserves” or “Term
Loan Push-Down Reserve” or any component definition of any thereof, each as set
forth in the ABL Credit Agreement, in a manner which would effect an increase in
the ABL Borrowing Base or any component thereof or otherwise result in more
credit being available to the Loan Parties;

 

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(6) fail to establish and maintain (i) any Availability Reserve in effect on the
date hereof or (ii) the Term Loan Push-Down Reserve as and when required under
the ABL Credit Agreement as in effect on the date hereof; provided that, in each
case the amount of such Availability Reserves (other than the Term Loan
Push-Down Reserve) may be adjusted based on changes in the facts or
circumstances that gave rise thereto (as long as the methodology for the
calculation thereof is not modified), and the foregoing shall not limit the
discretion of the ABL Agent to establish, eliminate and adjust the amount of any
other Availability Reserves (other than the Term Loan Push-Down Reserve) not in
effect on the date hereof;

(7) (i) amend or modify the definition of “Covenant Compliance Event”, “Fixed
Charge Coverage Ratio” or any component definition thereof, or the terms of
Section 7.15 of the ABL Credit Agreement, or (ii) waive any Financial Covenant
Default;

(8) extend the dates on which Borrowing Base Certificates are required to be
delivered by the Borrower or waive the delivery of any Borrowing Base
Certificates required to be delivered by the Borrower (including, in each case,
by forbearance relative to any ABL Event of Default arising from such failure),
provided that the foregoing shall not limit the discretion of the ABL Agent to
require more frequent reporting; or

(9) amend, modify or waive the definition of “Eligible Assignee” or the
provisions of Section 10.06 of the ABL Credit Agreement in a manner which would
modify or waive the restrictions on assignments or participations of ABL
Obligations to the ABL Loan Parties or their Affiliates; or

(10) amend the ABL Documents in any manner which would have the effect of
contravening the terms of this Agreement;

provided, however, the provisions of this Section 5.2(a) shall not limit,
restrict or impair the discretionary rights and ability of the ABL Agent to
(1) modify, reduce, increase or eliminate any and all other Reserves (other than
the Term Loan Push-Down Reserve), or (2) determine the eligibility of Collateral
for inclusion in the calculation of the ABL Borrowing Base, in each case, as
provided in the ABL Credit Agreement; provided, that the ABL Agent agrees at all
times to impose a methodology no less restrictive than that used as of the date
hereof in determining Availability Reserves and eligibility criteria. For the
avoidance of doubt, the Loan Parties and ABL Agent, on behalf of the ABL Secured
Parties, acknowledges and agrees that the “Tranche A-1 Revolving Loan
Commitments” under and as defined in the ABL Credit Agreement have been
terminated on the date hereof and all of the “Tranche A-1 Revolving Loans” and
related obligations have been repaid in full on the date hereof, and no other
“Tranche A-1 Revolving Loan Commitments” shall be established, and no other
“Tranche A-1 Revolving Loans” shall be advanced to the Loan Parties, under the
ABL Credit Agreement (it being understood that the provisions relating to the
“Tranche A-1 Revolving Loan Commitments” and “Tranche A-1 Revolving Loans” and
the related facility under the ABL Credit Agreement are historical only and are
not operative).

 

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(b) The Term Agent and the Term Credit Parties may at any time and from time to
time and without consent of or notice to the ABL Credit Parties, without
incurring any liability to the ABL Credit Parties and without impairing or
releasing any rights or obligations hereunder or otherwise, amend, restate,
supplement, modify, waive, substitute, renew, refinance or replace any or all of
the Term Documents; provided, however, that without the consent of the ABL
Agent, the Term Agent and the Term Credit Parties shall not amend, restate,
supplement, modify, waive, substitute, renew, refinance or replace any or all of
the Term Documents to:

(1) increase the aggregate outstanding principal amount of the Term Obligations
to an amount in excess of the Maximum Term Loan Facility Amount;

(2) modify the definition of “Applicable Margin” or increase the rate of
interest set forth in Section 2.08 of the Term Loan Agreement by more than 2.00%
per annum (other than any increase occurring because of fluctuations in
underlying rate indices or the imposition of the Default Rate (as defined in the
Term Loan Agreement)) modify the definition of “Default Rate” or increase the
percentage with respect to the default rate set forth in Section 2.08 of the
Term Loan Agreement by more than 2.00% per annum above the rate applicable
thereto on the date hereof (other than any increase occurring because of
fluctuations in underlying rate indices);

(3) shorten the scheduled maturity of the Term Obligations;

(4) require any mandatory prepayments or scheduled repayments of the Term
Obligations except as provided in the Term Documents as in effect on the date
hereof or require that any payment on the Term Obligations be made earlier than
the date originally scheduled for such payment;

(5) amend or modify the definition of “Covenant Trigger Event”, “Fixed Charge
Coverage Ratio” and any component definition thereof, or the terms of
Section 7.15 of the Term Loan Agreement;

(6) change the definition of “Revolving Excess Availability”, or “Borrowing
Base” or “Combined Borrowing Base” contained in the Term Loan Agreement and any
component definition thereof in a manner which would effect a decrease in the
ABL Borrowing Base or Excess Availability under the ABL Credit Agreement;

(7) change any conditions, covenants, defaults or events of default thereunder
that expressly restricts any Loan Party from making payments of the ABL
Obligations that would otherwise be permitted under the Term Documents as in
effect on the date hereof; or

(8) amend the Term Documents in any manner which would have the effect of
contravening the terms of this Agreement.

(c) Subject to Sections 5.2(a) and (b) above, the ABL Obligations and the Term
Obligations may be refinanced, in whole or in part, in each case, without notice
to, or the consent (except to the extent a consent is required to permit the
refinancing transaction under any ABL Document or any Term Document) of the ABL
Agent, the ABL Credit Parties, the Term Agent or the Term Credit Parties, as the
case may be, all without affecting the Lien Priorities provided for herein or
the other provisions hereof, provided, however, that the holders of such
refinancing indebtedness (or an authorized agent or trustee on their behalf)
execute and deliver to the ABL Agent or the Term Agent, as the case may be, an
intercreditor agreement in form and substance reasonably acceptable to the ABL
Agent or the Term Agent, as the case may be, and any such refinancing
transaction shall be in accordance with any applicable provisions of both the
ABL Documents and the Term Documents (to the extent such documents survive the
refinancing).

 

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Section 5.3. Reinstatement and Continuation of Agreement.

(a) If the ABL Agent or any ABL Credit Party is required in any Insolvency
Proceeding or otherwise to turn over or otherwise pay to the estate of any
Borrower, any Guarantor, or any other Person any payment made in satisfaction of
all or any portion of the ABL Obligations (an “ABL Recovery”), then the ABL
Obligations shall be reinstated to the extent of such ABL Recovery. If this
Agreement shall have been terminated prior to such ABL Recovery, this Agreement
shall be reinstated in full force and effect in the event of such ABL Recovery,
and such prior termination shall not diminish, release, discharge, impair, or
otherwise affect the obligations of the Parties from such date of reinstatement,
but such reinstatement shall not impose an obligation on the Term Agent or Term
Credit Parties to disgorge payments previously made, including from the Proceeds
of ABL Priority Collateral. All rights, interests, agreements, and obligations
of the ABL Agent, the Term Agent, the ABL Credit Parties, and the Term Credit
Parties under this Agreement shall remain in full force and effect and shall
continue irrespective of the commencement of, or any discharge, confirmation,
conversion, or dismissal of, any Insolvency Proceeding by or against any
Borrower or any Guarantor or any other circumstance which otherwise might
constitute a defense available to, or a discharge of any Borrower or any
Guarantor in respect of the ABL Obligations or the Term Obligations. No priority
or right of the ABL Agent or any ABL Credit Party shall at any time be
prejudiced or impaired in any way by any act or failure to act on the part of
any Borrower or any Guarantor or by the noncompliance by any Person with the
terms, provisions, or covenants of any of the ABL Documents, regardless of any
knowledge thereof which the ABL Agent or any ABL Credit Party may have.

(b) If the Term Agent or any Term Credit Party is required in any Insolvency
Proceeding or otherwise to turn over or otherwise pay to the estate of any
Borrower, any Guarantor, or any other Person any payment made in satisfaction of
all or any portion of the Term Obligations (a “Term Recovery”), then the Term
Obligations shall be reinstated to the extent of such Term Recovery. If this
Agreement shall have been terminated prior to such Term Recovery, this Agreement
shall be reinstated in full force and effect in the event of such Term Recovery,
and such prior termination shall not diminish, release, discharge, impair, or
otherwise affect the obligations of the Parties from such date of reinstatement,
but such reinstatement shall not impose an obligation on the ABL Agent or ABL
Credit Parties to disgorge payments previously made, including from Proceeds of
Term Priority Collateral. All rights, interests, agreements, and obligations of
the ABL Agent, the Term Agent, the ABL Credit Parties, and the Term Credit
Parties under this Agreement shall remain in full force and effect and shall
continue irrespective of the commencement of, or any discharge, confirmation,
conversion, or dismissal of, any Insolvency Proceeding by or against any
Borrower or any Guarantor or any other circumstance which otherwise might
constitute a defense available to, or a discharge of any Borrower or any
Guarantor in respect of the ABL Obligations or the Term Obligations. No priority
or right of the Term Agent or any Term Credit Party shall at any time be
prejudiced or impaired in any way by any act or failure to act on the part of
any Borrower or any Guarantor or by the noncompliance by any Person with the
terms, provisions, or covenants of any of the Term Documents, regardless of any
knowledge thereof which the Term Agent or any Term Credit Party may have.

 

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ARTICLE 6.

INSOLVENCY PROCEEDINGS

Section 6.1. Enforceability. This Agreement shall be applicable, as to
Collateral and the proceeds thereof in existence before the commencement of any
Insolvency Proceeding, both before and after the commencement of any Insolvency
Proceeding and all converted or succeeding cases in respect thereof. The
relative rights of the Credit Parties in or to any distributions from or in
respect of any such Collateral or proceeds of such Collateral, shall continue
after the commencement of any Insolvency Proceeding. Accordingly, the provisions
of this Agreement are intended to be and shall be enforceable as a subordination
agreement within the meaning of Section 510 of the Bankruptcy Code. All Liens
granted to the ABL Agent or the Term Agent in any Insolvency Proceeding, whether
as adequate protection or otherwise, are intended by the Parties to be and shall
be deemed to be subject to the Lien Priority and the other terms and conditions
of this Agreement.

Section 6.2. DIP Financing.

(a) If any Loan Party shall be subject to any Insolvency Proceeding at any time
prior to the Discharge of ABL Obligations, and the ABL Agent or any of the ABL
Credit Parties shall seek to provide any Loan Party with, or consent to a third
party providing, any financing under Section 364 of the Bankruptcy Code or
consent to any order for the use of cash collateral constituting ABL Priority
Collateral under Section 363 of the Bankruptcy Code (or any similar provision of
any foreign Debtor Relief Laws or under a court order in respect of measures
granted with similar effect under any foreign Debtor Relief Laws) (each, a “DIP
Financing”), with such DIP Financing to be secured by all or any portion of the
Collateral (including assets that, but for the application of Section 552 of the
Bankruptcy Code (or any similar provision of any foreign Debtor Relief Laws)
would be Collateral), then the Term Agent, on behalf of itself and the Term
Credit Parties, agrees that it will raise no objection and will not support any
objection to such DIP Financing or use of cash collateral or to the Liens
securing the same on the grounds of a failure to provide “adequate protection”
for the Liens of the Term Agent securing the Term Obligations (and will not
request any adequate protection solely as a result of such DIP Financing or use
of cash collateral that is ABL Priority Collateral except as permitted by
Section 6.3(c)(i)) or on any other basis, so long as (i) the Term Agent retains
its Lien on the Collateral to secure the Term Obligations (in each case,
including Proceeds thereof arising after the commencement of the case under any
Debtor Relief Laws) and, as to the Term Priority Collateral only, such Lien has
the same priority as existed prior to the commencement of the case under the
subject Debtor Relief Laws and any Lien on the Term Priority Collateral securing
such DIP Financing is junior and subordinate to the Lien of the Term Agent on
the Term Priority Collateral, (ii) all Liens on ABL Priority Collateral securing
any such DIP Financing shall be senior to or on a parity with the Liens of the
ABL Agent and the ABL Credit Parties securing the ABL Obligations on ABL
Priority Collateral, (iii) the ABL Agent and the ABL Lenders implement and
maintain an Availability Reserve (as such term is defined in the ABL Credit
Agreement, as in effect on the date hereof) in connection with such DIP
Financing in an amount

 

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of the Carve Out in any such Insolvency Proceeding, (iv) the aggregate principal
amount of loans and letter of credit accommodations outstanding under any such
DIP Financing (including, without limitation, in respect of any ABL DIP Amount),
together with the aggregate outstanding principal amount of loans and
outstanding amount of letters of credit made, issued or incurred pursuant to the
ABL Documents, does not exceed the sum of (x) the Maximum ABL Facility Amount,
plus (y) any Carve Out allowed in such Insolvency Proceeding, and (v) such DIP
Financing shall not require the Loan Parties to seek confirmation of a specific
plan of reorganization or arrangement for which all or substantially all of the
material terms are set forth in the documentation evidencing such DIP Financing.

(b) The Term Agent and the Term Credit Parties hereby agree that they shall not
offer, and shall not permit any Affiliate of any of them to offer, to provide
any DIP Financing to the Loan Parties in any Insolvency Proceeding or endorse
the provision of any DIP Financing to the Loan Parties in any Insolvency
Proceeding pursuant to which Liens that are senior or pari passu in priority to
the Liens securing the ABL Obligations are granted on the ABL Priority
Collateral. The ABL Agent and the ABL Credit Parties hereby agree that they
shall not offer, and shall not permit any Affiliate of any of them to offer, to
provide any DIP Financing to the Loan Parties in any Insolvency Proceeding or
endorse the provision of any DIP Financing to the Loan Parties in any Insolvency
Proceeding pursuant to which Liens that are senior or pari passu in priority to
the Liens securing the Term Obligations are granted on the Term Priority
Collateral.

(c) The Term Agent and the Term Credit Parties hereby agree that they shall not
offer, and shall not permit any Affiliate of any of them to offer, to provide
any DIP Financing to the Loan Parties in any Insolvency Proceeding or endorse
the provision of any DIP Financing to the Loan Parties in any Insolvency
Proceeding in competition with any DIP Financing provided by or consented to by
the ABL Agent and the ABL Credit Parties. No Term Credit Party shall offer or
provide any DIP Financing in an Insolvency Proceeding to any Loan Party secured
by any ABL Priority Collateral securing the ABL Obligations except to the extent
that (i) the Liens securing such DIP Financing are subordinated in all respects
to Liens on the ABL Priority Collateral securing the ABL Obligations and
(ii) such DIP Financing is not in competition with any DIP Financing offered or
provided to the Loan Parties by any ABL Credit Party.

Section 6.3. Relief From Stay. Until the Discharge of ABL Obligations has
occurred, the Term Agent, on behalf of itself and the Term Credit Parties,
agrees not to seek relief from the automatic stay or any other stay in any
Insolvency Proceeding in respect of any portion of the ABL Priority Collateral
without the ABL Agent’s express written consent. Until the Discharge of Term
Obligations has occurred, the ABL Agent, on behalf of itself and the ABL Credit
Parties, agrees not to seek relief from the automatic stay or any other stay in
any Insolvency Proceeding in respect of any portion of the Term Priority
Collateral without the Term Agent’s express written consent. In addition,
neither the Term Agent nor the ABL Agent shall seek any relief from the
automatic stay with respect to any Collateral without providing three (3) days’
prior written notice to the other, unless such period is agreed by both the ABL
Agent and the Term Agent to be modified or unless the ABL Agent or Term Agent,
as applicable, makes a good faith determination that either (A) the ABL Priority
Collateral or the Term Priority Collateral, as applicable, will decline speedily
in value or (B) the failure to take any action will have a reasonable likelihood
of endangering the ABL Agent’s or the Term Agent’s ability to realize upon its
Collateral.

 

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Section 6.4. No Contest; Adequate Protection.

(a) The Term Agent, on behalf of itself and the Term Credit Parties, agrees
that, prior to the Discharge of ABL Obligations, none of them shall contest (or
support any other Person contesting) (i) any request by the ABL Agent or any ABL
Credit Party for adequate protection of its interest in the Collateral in
compliance with the terms of this Agreement, (ii) any proposed provision of DIP
Financing by the ABL Agent and some or all of the ABL Credit Parties consistent
with Section 6.2, or (iii) any objection by the ABL Agent or any ABL Secured
Party to any motion, relief, action, or proceeding based on a claim by the ABL
Agent or any ABL Credit Party that its interests in the Collateral are not
adequately protected (or any other similar request under any law applicable to
an Insolvency Proceeding), so long as (x) any Liens granted to the ABL Agent as
adequate protection of its interests are subject to this Agreement and (y) any
payments with respect to such adequate protection are not made with the Proceeds
of Term Priority Collateral.

(b) The ABL Agent, on behalf of itself and the ABL Credit Parties, agrees that,
prior to the Discharge of Term Obligations, none of them shall contest (or
support any other Person contesting) (i) any request by the Term Agent or any
Term Credit Party for adequate protection of its interest in the Collateral
(unless in contravention of Section 6.2(a) above) or (ii) any objection by the
Term Agent or any Term Credit Party to any motion, relief, action or proceeding
based on a claim by the Term Agent or any Term Credit Party that its interests
in the Collateral (unless in contravention of Section 6.2(a) above) are not
adequately protected (or any other similar request under any law applicable to
an Insolvency Proceeding), so long as (x) any Liens granted to the Term Agent as
adequate protection of its interests are subject to this Agreement and (y) any
payments with respect to such adequate protection are not made with the Proceeds
of ABL Priority Collateral. Nothing contained herein shall preclude the Term
Agent or any Term Credit Party from requesting (which request may be contested
or objected to by ABL Agent), adequate protection payments in an amount not to
exceed interest on the Term Obligations at the “default rate” and reasonable
fees and expenses of the Term Agent from Proceeds of ABL Priority Collateral so
long as: (w) such payments are approved by a final order of the bankruptcy court
approving DIP Financing or the use of cash collateral consented to by the ABL
Agent, (x) the ABL Secured Parties are also receiving adequate protection
payments covering their interest and fees and expenses, (y) the amount of such
payments is added to the Maximum ABL Facility Amount, and (z) the Term Agent and
Term Credit Parties agree, to the extent such adequate protection payments were
made other than pursuant to a DIP Financing provided by any of the ABL Credit
Parties under Section 364 of the Bankruptcy Code, to pay over an amount not to
exceed the payments so received if the ABL Obligations are not paid in full in
such Insolvency Proceeding.

(c) Notwithstanding the foregoing provisions in this Section 6.4, in any
Insolvency Proceeding:

 

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(i) in the event that the ABL Agent, on behalf of itself or any of the ABL
Credit Parties, is granted adequate protection with respect to the ABL Priority
Collateral in the form of additional collateral (even if such collateral is not
of a type which would otherwise have constituted ABL Priority Collateral), then
the ABL Agent, on behalf of itself and the ABL Credit Parties, agrees that the
Term Agent, on behalf of itself or any of the Term Credit Parties, may seek or
request (and the ABL Credit Parties will not oppose such request) adequate
protection with respect to its interests in such Collateral in the form of a
Lien on the same additional collateral, which Lien will be subordinated to the
Liens securing the ABL Obligations on the same basis as the other Liens of the
Term Agent on ABL Priority Collateral; and

(ii) in the event that the Term Agent, on behalf of itself or any of the Term
Credit Parties, is granted adequate protection in respect of Term Priority
Collateral in the form of additional collateral (even if such collateral is not
of a type which would otherwise have constituted Term Priority Collateral), then
the Term Agent, on behalf of itself and the Term Credit Parties, agrees that the
ABL Agent on behalf of itself or any of the ABL Credit Parties, may seek or
request (and the Term Credit Parties will not oppose such request) adequate
protection with respect to its interests in such Collateral in the form of a
Lien on the same additional collateral, which Lien will be subordinated to the
Liens securing the Term Obligations on the same basis as the other Liens of the
ABL Agent on Term Priority Collateral.

(iii) except as otherwise expressly set forth in Section 6.2 or in connection
with the exercise of remedies with respect to (A) the ABL Priority Collateral,
nothing herein shall limit the rights of the Term Agent or the Term Credit
Parties from seeking adequate protection with respect to their rights in the
Term Priority Collateral in any Insolvency Proceeding (including adequate
protection in the form of a cash payment, periodic cash payments or otherwise)
or (B) the Term Priority Collateral, nothing herein shall limit the rights of
the ABL Agent or the ABL Credit Parties from seeking adequate protection with
respect to their rights in the ABL Priority Collateral in any Insolvency
Proceeding (including adequate protection in the form of a cash payment,
periodic cash payments or otherwise).

Section 6.5 Asset Sales. The Term Agent agrees, on behalf of itself and the Term
Secured Parties, that it will not oppose any sale consented to by the ABL Agent
of any ABL Priority Collateral pursuant to Section 363(f) of the Bankruptcy Code
(or any similar provision under the law applicable to any Insolvency Proceeding
or under a court order in respect of measures granted with similar effect under
any foreign Debtor Relief Laws) so long as the Proceeds of such sale are applied
in accordance with this Agreement. The ABL Agent agrees, on behalf of itself and
the ABL Secured Parties, that it will not oppose any sale consented to by the
Term Agent of any Term Priority Collateral pursuant to Section 363(f) of the
Bankruptcy Code (or any similar provision under the law applicable to any
Insolvency Proceeding or under a court order in respect of measures granted with
similar effect under any foreign Debtor Relief Laws) so long as the Proceeds of
such sale are applied in accordance with this Agreement. If such sale of
Collateral includes both ABL Priority Collateral and Term Priority Collateral,
the parties agree that they will support the debtor in obtaining a bid from a
nationally recognized liquidator as a stalking horse bid. The allocation of
purchase price contained in any purchase agreement relating to such sale shall
not control such allocation, unless agreed to by the ABL Agent and the Term
Agent.

 

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Section 6.6 Allowance of Claims.

(a) Neither the Term Agent nor any Term Credit Party shall oppose or seek to
challenge any claim by the ABL Agent or any ABL Credit Party for allowance in
any Insolvency Proceeding of ABL Obligations consisting of post-petition
interest, fees or expenses to the extent of the value of the Lien securing any
ABL Credit Party’s claim, without regard to the existence of the Lien of the
Term Agent on behalf of the Term Credit Parties on the ABL Priority Collateral.

(b) Neither the ABL Agent nor any other ABL Credit Party shall oppose or seek to
challenge any claim by the Term Agent or any Term Credit Party for allowance in
any Insolvency Proceeding of Term Obligations consisting of post-petition
interest, fees or expenses to the extent of the value of the Lien securing any
Term Credit Party’s claim, without regard to the existence of the Lien of the
ABL Agent on behalf of the ABL Credit Parties on the Term Priority Collateral.

Section 6.7 Separate Grants of Security and Separate Classification. Each Term
Credit Party and each ABL Credit Party acknowledges and agrees that (i) the
grants of Liens pursuant to the ABL Collateral Documents and the Term Collateral
Documents constitute two separate and distinct grants of Liens and (ii) because
of, among other things, their differing rights in the Collateral, the Term
Obligations are fundamentally different from the ABL Obligations and must be
separately classified in any plan of reorganization (or other plan of similar
effect under any Debtor Relief Laws) proposed or adopted in an Insolvency
Proceeding. To further effectuate the intent of the parties as provided in the
immediately preceding sentence, if it is held that the claims of the ABL Credit
Parties and the Term Credit Parties in respect of the Collateral constitute only
one secured claim (rather than separate classes of senior and junior secured
claims), then the ABL Credit Parties and the Term Credit Parties hereby
acknowledge and agree that all distributions shall be made as if there were
separate classes of ABL Obligation claims and Term Obligation claims against the
Loan Parties, with the effect being that, to the extent that the aggregate value
of the ABL Priority Collateral or Term Priority Collateral is sufficient (for
this purpose ignoring all claims held by the other Credit Parties), the ABL
Credit Parties or the Term Credit Parties, respectively, shall be entitled to
receive, in addition to amounts distributed to them in respect of principal,
pre-petition interest and other claims, all amounts owing in respect of
post-petition interest that is available from each pool of Priority Collateral
for each of the ABL Credit Parties and the Term Credit Parties, respectively,
before any distribution is made in respect of the claims held by the other
Credit Parties from such Priority Collateral, with such other Credit Parties
hereby acknowledging and agreeing to turn over to the ABL Credit Parties and the
Term Credit Parties, as the case may be, amounts otherwise received or
receivable by them to the extent necessary to effectuate the intent of this
sentence, even if such turnover has the effect of reducing the aggregate
recoveries.

Section 6.8 ABL Obligations Unconditional. All rights of the ABL Agent
hereunder, and all agreements and obligations of the Term Agent and the Loan
Parties (to the extent applicable) hereunder, shall remain in full force and
effect irrespective of any change in the time, place or manner of payment of, or
in any other term of, all or any portion of the ABL Obligations, or any
amendment, waiver or other modification, whether by course of conduct or
otherwise, or any refinancing, replacement, refunding or restatement of any ABL
Document in accordance with the terms hereof.

 

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Section 6.9 Term Obligations Unconditional. All rights of the Term Agent
hereunder, all agreements and obligations of the ABL Agent and the Loan Parties
(to the extent applicable) hereunder, shall remain in full force and effect
irrespective of any change in the time, place or manner of payment of, or in any
other term of, all or any portion of the Term Obligations, or any amendment,
waiver or other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding or restatement of any Term Document in
accordance with the terms hereof.

Section 6.10 Plan of Reorganization. Subject to the ability of the ABL Credit
Parties and the Term Credit Parties, as applicable, to support or oppose
confirmation or approval of any plan of reorganization as provided herein, if,
in any Insolvency Proceeding, debt obligations of the reorganized debtor secured
by Liens upon any property of the reorganized debtor are distributed pursuant to
a plan of reorganization, both on account of ABL Obligations and on account of
Term Obligations, then, to the extent the debt obligations distributed on
account of the ABL Obligations and on account of the Term Obligations are
secured by Liens upon the same property, the provisions of this Agreement will
survive the distribution of such debt obligations pursuant to such plan and will
apply with like effect to the debt obligations so distributed, to the Liens
securing such debt obligations and the distribution of Proceeds thereof. Each of
the ABL Agent (for itself and on behalf of the other ABL Credit Parties) and the
Term Agent (for itself and on behalf of the other Term Credit Parties) agrees
that none of the ABL Credit Parties or the Term Credit Parties shall propose or
support any plan of reorganization that is inconsistent with the priorities or
other provisions of this Agreement.

Section 6.11 Rights as Unsecured Creditors. To the extent not inconsistent with
the terms of this Agreement, nothing contained herein shall affect the rights or
claims of any Agent or any Credit Party as an unsecured creditor in any
Insolvency Proceeding, and the Agents and the Credit Parties shall retain all
such rights and claims.

ARTICLE 7.

PURCHASE OPTION

Section 7.1. Purchase Notice. If (i) all of the ABL Obligations shall have been
accelerated, (ii) the ABL Agent delivers a notice of its intent to Exercise of
Any Secured Creditor Remedies with respect to all or a material portion of the
ABL Priority Collateral, or (iii) an Insolvency Proceeding occurs with respect
to any of the Loan Parties, then, in any such case, any one or more of Term
Credit Parties (acting in their individual capacity or through one or more
affiliates) shall have the right, but not the obligation (each Term Credit Party
having a ratable right to make the purchase, with each Term Credit Party’s right
to purchase being automatically proportionately increased by the amount not
purchased by another Term Credit Party), upon five (5) Business Days’ advance
written notice from such Term Credit Party (a “Purchase Notice”) to the ABL
Agent, for the benefit of the ABL Credit Parties, to acquire from the ABL Credit
Parties all (but not less than all) of the right, title, and interest of the ABL
Credit Parties in and to the ABL Obligations and the ABL Documents. The Purchase
Notice, if given, shall be irrevocable. Upon receipt of such notice, the ABL
Agent and the Term Agent shall not Exercise Any Secured Creditor Remedies (or
shall discontinue the exercise of such remedies), shall not release its Liens on
any Collateral, or consent to any Disposition (as defined in the ABL Credit
Agreement).

 

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Section 7.2. Sale of ABL Obligations. On the date specified by the Term Agent in
the Purchase Notice (which shall not be more than five (5) Business Days after
the receipt by the ABL Agent of the Purchase Notice), the ABL Credit Parties
shall sell to the purchasing Term Credit Parties and the purchasing Term Credit
Parties shall purchase from the ABL Credit Parties, the ABL Obligations.

Section 7.3. Purchase Price. On the date of such purchase and sale, the
purchasing Term Credit Parties shall (i) pay to the ABL Agent, for the benefit
of ABL Credit Parties, as the purchase price therefor the full amount of all the
ABL Obligations (excluding any Excess ABL Obligations and excluding ABL
Obligations cash collateralized in accordance with clause (ii) below) then
outstanding and unpaid, (ii) furnish cash collateral to the ABL Agent in such
amounts as the ABL Agent determines is reasonably necessary to secure the ABL
Agent and the other ABL Credit Parties in connection with (A) any outstanding
L/C Obligations (as defined in the ABL Credit Agreement) (but not in any event
in an amount greater than 105% of the aggregate Outstanding Amount (as defined
in the ABL Credit Agreement) of such L/C Obligations, (B) to the extent not
terminated and paid in cash, Obligations with respect to Bank Products (other
than amounts in excess of the Bank Product Cap) and Cash Management Services,
and (C) any indemnity obligations for claims that have been asserted at the time
of purchase, and (iii) agree to reimburse the ABL Agent and the other ABL Credit
Parties for all expenses thereafter incurred by any of them and not included in
the ABL Obligations at the time of purchase, but only to the extent such would
have been due and payable in accordance with the ABL Documents (including,
without limitation, the reimbursement of reasonable legal expenses, commercial
finance examination expenses, and appraisal fees). Interest shall be calculated
to but excluding the Business Day on which such purchase and sale shall occur if
the amounts so paid by the purchasing Term Credit Parties to the bank account
designated by the ABL Agent are received in such bank account prior to 2:00
p.m., Boston time, and interest shall be calculated to and including such
Business Day if the amounts so paid by purchasing Term Credit Parties to the
bank account designated by the ABL Agent are received in such bank account later
than 2:00 p.m., Boston time. Notwithstanding anything to the contrary, in the
event that, within one (1) year following the date of such purchase and sale,
the ABL Obligations are refinanced or the Aggregate Commitments (as defined in
the ABL Credit Agreement) are terminated or permanently reduced (or have been
terminated or reduced at the time of the purchase and sale), the purchasing Term
Credit Parties shall remit any payments in respect of any Excess ABL Obligations
received by any of them to the ABL Agent, for the benefit of the ABL Credit
Parties, as additional consideration for the purchase of the ABL Obligations
described herein.

Section 7.4. Limitation on Representations and Warranties by ABL Credit Parties.
Such purchase shall be expressly made without representation or warranty of any
kind by the ABL Agent and the other ABL Credit Parties as to the ABL Obligations
so purchased or otherwise and without recourse to the ABL Agent or any other ABL
Credit Party, except that each ABL Credit Party shall represent and warrant:
(i) that the amount quoted by such ABL Credit Party as its portion of the
purchase price represents the amount shown as owing with respect to the claims
transferred as reflected on its books and records, (ii) it owns, or has the
right to transfer to the purchasing Term Credit Parties, the rights being
transferred, and (iii) such transfer will be free and clear of Liens.

 

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Section 7.5. ABL Agent; L/C Issuer. In the event that any one or more of the
Term Credit Parties exercises and consummates the purchase option set forth in
this Article 7, (i) the ABL Agent and the L/C Issuer shall have the right, but
not the obligation, to immediately resign under the ABL Credit Agreement, and
(ii) the purchasing Term Credit Parties shall have the right, but not the
obligation, to require the ABL Agent and the L/C Issuer to immediately resign
under the ABL Credit Agreement.

Section 7.6. Survival of ABL Obligations. Notwithstanding the foregoing purchase
of the ABL Obligations by the purchasing Term Credit Parties, the ABL Credit
Parties shall retain the right to indemnification from the Loan Parties under
Section 10.04 of the ABL Credit Agreement and other obligations of the Loan
Parties under the ABL Documents which by their express terms would survive any
repayment of the ABL Obligations.

ARTICLE 8.

MISCELLANEOUS

Section 8.1. Rights of Subrogation. The Term Agent, for and on behalf of itself
and the Term Credit Parties, agrees that no payment to the ABL Agent or any ABL
Credit Party pursuant to the provisions of this Agreement shall entitle the Term
Agent or any Term Credit Party to exercise any rights of subrogation in respect
thereof until the Discharge of ABL Obligations shall have occurred. Following
the Discharge of ABL Obligations, the ABL Agent agrees to execute such
documents, agreements, and instruments as the Term Agent or any Term Credit
Party may reasonably request to evidence the transfer by subrogation to any such
Person of an interest in the ABL Obligations resulting from payments to the ABL
Agent by such Person, so long as all costs and expenses (including all
reasonable legal fees and disbursements) incurred in connection therewith by the
ABL Agent are paid by such Person upon request for payment thereof. The ABL
Agent, for and on behalf of itself and the ABL Credit Parties, agrees that no
payment to the Term Agent or any Term Credit Party pursuant to the provisions of
this Agreement shall entitle the ABL Agent or any ABL Credit Party to exercise
any rights of subrogation in respect thereof until the Discharge of Term
Obligations shall have occurred. Following the Discharge of Term Obligations,
the Term Agent agrees to execute such documents, agreements, and instruments as
the ABL Agent or any ABL Credit Party may reasonably request to evidence the
transfer by subrogation to any such Person of an interest in the Term
Obligations resulting from payments to the Term Agent by such Person, so long as
all costs and expenses (including all reasonable legal fees and disbursements)
incurred in connection therewith by the Term Agent are paid by such Person upon
request for payment thereof.

Section 8.2. Further Assurances. The Parties will, at their own expense and at
any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that either Party may reasonably request, in order to protect any
right or interest granted or purported to be granted hereby or to enable the ABL
Agent or the Term Agent to exercise and enforce its rights and remedies
hereunder; provided, however, that no Party shall be required to pay over any
payment or distribution, execute any instruments or documents, or take any other
action referred to in this

 

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Section 8.2, to the extent that such action would contravene any law, order or
other legal requirement or any of the terms or provisions of this Agreement, and
in the event of a controversy or dispute, such Party may interplead any payment
or distribution in any court of competent jurisdiction, without further
responsibility in respect of such payment or distribution under this
Section 8.2.

Section 8.3. Representations. The Term Agent represents and warrants to the ABL
Agent that it has the requisite power and authority under the Term Documents to
enter into, execute, deliver, and carry out the terms of this Agreement on
behalf of itself and the Term Credit Parties and that this Agreement shall be
binding obligations of the Term Agent and the Term Credit Parties, enforceable
against the Term Agent and the Term Credit Parties in accordance with its terms.
The ABL Agent represents and warrants to the Term Agent that it has the
requisite power and authority under the ABL Documents to enter into, execute,
deliver, and carry out the terms of this Agreement on behalf of itself and the
ABL Credit Parties and that this Agreement shall be binding obligations of the
ABL Agent and the ABL Credit Parties, enforceable against the ABL Agent and the
ABL Credit Parties in accordance with its terms.

Section 8.4. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Party hereto shall be effective
unless it is in a written agreement executed by the Term Agent and the ABL Agent
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that this
Agreement may be amended from time to time, without the consent of either Agent,
to add additional Loan Parties, whereupon such Person will be bound by the terms
hereof to the same extent as if it had executed and delivered this Agreement as
of the date hereof.

Section 8.5. Addresses for Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, sent
electronically in pdf or similar format or sent by overnight express courier
service or United States mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy or
electronic transmission or five (5) days after deposit in the United States mail
(certified, with postage prepaid and properly addressed). For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section) shall be as set forth below or, as to
each party, at such other address as may be designated by such party in a
written notice to all of the other parties.

ABL Agent:    Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention:

Email:

Term Agent:   Gordon Brothers Finance Company

Prudential Tower, 800 Boylston Street

27th Floor

Boston, MA 02199

Attention: David Vega

Email: DVega@gbfinco.com

 

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Section 8.6. No Waiver; Remedies. No failure on the part of any Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

Section 8.7. Continuing Agreement, Transfer of Secured Obligations. This
Agreement is a continuing agreement and shall (a) remain in full force and
effect until the Discharge of ABL Obligations and the Discharge of Term
Obligations shall have occurred, (b) be binding upon the Parties and their
successors and assigns, and (c) inure to the benefit of and be enforceable by
the Parties and their respective successors, transferees and assigns. Nothing
herein is intended, or shall be construed to give, any other Person any right,
remedy or claim under, to or in respect of this Agreement or any Collateral. All
references to any Loan Party shall, to the extent legally permissible, include
any Loan Party as debtor-in-possession and any receiver or trustee for such Loan
Party in any Insolvency Proceeding. Without limiting the generality of the
foregoing clause (c), the ABL Agent, any ABL Credit Party, the Term Agent, or
any Term Credit Party may assign or otherwise transfer all or any portion of the
ABL Obligations or the Term Obligations, as applicable, to any other Person
(other than any Borrower, any Guarantor or any Affiliate of any Borrower or any
Guarantor and any Subsidiary of any Borrower or any Guarantor), and such other
Person shall thereupon become vested with all the rights and obligations in
respect thereof granted to the ABL Agent, the Term Agent, any ABL Credit Party,
or any Term Credit Party, as the case may be, herein or otherwise. The ABL
Credit Parties and the Term Credit Parties may continue, at any time and without
notice to the other parties hereto, to extend credit and other financial
accommodations, lend monies and provide indebtedness to, or for the benefit of,
any Loan Party on the faith hereof.

Section 8.8. Governing Law; Entire Agreement. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. This Agreement constitutes the
entire understanding among the Parties relating to the subject matter hereof and
supersedes any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof.

Section 8.9. Counterparts. This Agreement may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy, .pdf or other electronic transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.

Section 8.10. No Third Party Beneficiaries. This Agreement is solely for the
benefit of the ABL Agent, the ABL Credit Parties, the Term Agent and the Term
Credit Parties. No other Person (including any Borrower, any Guarantor or any
Affiliate of any Borrower or any Guarantor, or any Subsidiary of any Borrower or
any Guarantor) shall be deemed to be a third party beneficiary of this
Agreement.

 

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Section 8.11. Headings. Section headings herein are included for convenience of
reference only and shall not affect the interpretation of this Agreement.

Section 8.12. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement shall not be affected or impaired
thereby and (b) the Lien Priorities of application of Proceeds and other
priorities set forth in this Agreement shall not be affected or impaired
thereby. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

Section 8.13. VENUE; JURY TRIAL WAIVER.

(a) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, ANY BANKRUPTCY COURT IN THE CASE OF
ANY INSOLVENCY PROCEEDING, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE
COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT ANY ABL CREDIT PARTY OR ANY TERM CREDIT PARTY MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY
TERM DOCUMENTS, OR ANY ABL DOCUMENTS AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

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(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 8.5. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW.

Section 8.14. Intercreditor Agreement. This Agreement is the “Intercreditor
Agreement” referred to in the ABL Credit Agreement and the Term Loan Agreement.
Nothing in this Agreement shall be deemed to subordinate the obligations due to
(i) any ABL Credit Party to the obligations due to any Term Credit Party or
(ii) any Term Credit Party to the obligations due to any ABL Credit Party (in
each case, whether before or after the occurrence of an Insolvency Proceeding),
it being the intent of the Parties that this Agreement shall effectuate a
subordination of Liens but not a subordination of the payment of the ABL
Obligations or the Term Obligations.

Section 8.15. No Warranties or Liability. The Term Agent and the ABL Agent
acknowledge and agree that neither has made any representation or warranty with
respect to the execution, validity, legality, completeness, collectability or
enforceability of any other ABL Document or any Term Document. Except as
otherwise provided in this Agreement, the Term Agent and the ABL Agent will be
entitled to manage and supervise their respective extensions of credit to any
Loan Party in accordance with law and their usual practices, modified from time
to time as they deem appropriate.

Section 8.16. Conflicts. In the event of any conflict between the provisions of
this Agreement and the provisions of any ABL Document or any Term Document, the
provisions of this Agreement shall govern.

Section 8.17. Information Concerning Financial Condition of the Loan Parties.
Each of the Term Agent and the ABL Agent hereby assumes responsibility for
keeping itself informed of the financial condition of the Loan Parties and all
other circumstances bearing upon the risk of nonpayment of the ABL Obligations
or the Term Obligations. The Term Agent and the ABL Agent hereby agree that no
party shall have any duty to advise any other party of information known to it
regarding such condition or any such circumstances. In the event the Term Agent
or the ABL Agent, in its sole discretion, undertakes at any time or from time to
time to provide any information to any other party to this Agreement, (a) it
shall be under no obligation (i) to provide any such information to such other
party or any other party on any subsequent occasion except as required pursuant
to Section 3.3, (ii) to undertake any investigation not a part of its regular
business routine, or (iii) to disclose any other information, or (b) it makes no
representation as to the accuracy or completeness of any such information and
shall not be liable for any information contained therein, and (c) the Party
receiving such information hereby to hold the other Party harmless from any
action the receiving Party may take or conclusion the receiving Party may reach
or draw from any such information, as well as from and against any and all
losses, claims, damages, liabilities, and expenses to which such receiving Party
may become subject arising out of or in connection with the use of such
information.

 

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IN WITNESS WHEREOF, the ABL Agent, for and on behalf of itself and the ABL
Credit Parties, and the Term Agent, for and on behalf of itself and the Term
Credit Parties, have caused this Agreement to be duly executed and delivered as
of the date first above written.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as the ABL Agent By:  

/s/ Maggie Townsend

  Name:  Maggie Townsend   Title:    Vice President

 

Signature Page to Intercreditor Agreement

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GORDON BROTHERS FINANCE COMPANY, in its capacity as the Term Agent By:  

/s/ David Vega

  Name:  David Vega   Title:    Managing Director

 

Signature Page to Intercreditor Agreement

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ACKNOWLEDGMENT

Each Borrower and each Guarantor hereby acknowledges that it has received a copy
of this Agreement and consents thereto, agrees to recognize all rights granted
thereby to the ABL Agent, the ABL Credit Parties, the Term Agent, and the Term
Credit Parties and will not do any act or perform any obligation which is not in
accordance with the agreements set forth in this Agreement. Each Borrower and
each Guarantor further acknowledges and agrees that it is not an intended
beneficiary or third party beneficiary under this Agreement and (i) as between
the ABL Credit Parties, the Borrowers and the Guarantors, the ABL Documents
remain in full force and effect as written and are in no way modified hereby,
and (ii) as between the Term Credit Parties, the Borrowers and the Guarantors,
the Term Documents remain in full force and effect as written and are in no way
modified hereby.

 

BORROWERS STEIN MART, INC. By:  

/s/ Gregory W. Kleffner

Name:  

Gregory W. Kleffner

Title:  

Chief Financial Officer,

Executive Vice President and Secretary

STEIN MART BUYING CORP. By:  

/s/ Gregory W. Kleffner

Name:  

Gregory W. Kleffner

Title:   Vice President and Secretary GUARANTOR STEIN MART HOLDING CORP. By:  

/s/ Gregory W. Kleffner

Name:  

Gregory W. Kleffner

Title:   Vice President and Secretary

Acknowledgment Page to Intercreditor Agreement