EXECUTION COPY

 

$725,000,000

TERM LOAN AGREEMENT

Dated as of August 17, 2007

among
COLLECTIVE BRANDS FINANCE, INC. 
as Borrower

and

THE LENDERS PARTY HERETO

and

CITICORP NORTH AMERICA, INC. 
as Administrative Agent and Collateral Agent

CITIGROUP GLOBAL MARKETS INC. and J.P. MORGAN SECURITIES INC.
as Joint Bookrunners and Joint Lead Arrangers

 

WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119

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TERM LOAN AGREEMENT, dated as of August 17, 2007, among COLLECTIVE BRANDS
FINANCE, INC., a Nevada corporation (formerly known as “Payless ShoeSource
Finance, Inc.”), COLLECTIVE BRANDS, INC., a Delaware corporation (the name
“Collective Brands, Inc.” to be changed on or prior to the Closing Date from
“Payless ShoeSource, Inc.”, the “Parent”), the Lenders (as defined below) and
CITICORP NORTH AMERICA, INC., as administrative agent and collateral agent for
the Lenders (in such capacity, the “Administrative Agent”).

WITNESSETH

WHEREAS, the Borrower has requested that the Lenders make term loans available
for the purposes specified in this Agreement; and

WHEREAS, the Lenders are willing to make available to the Borrower such term
loans upon the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

Section 1.1 Defined Terms

As used in this Agreement, the following terms have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

“Acquisition Subsidiary” means San Jose Acquisition Corp., a Massachusetts
corporation and a Wholly-Owned Subsidiary of the Parent.

“Administrative Agent” has the meaning specified in the preamble to this
Agreement.

“Affected Lender” has the meaning specified in Section 2.15 (Substitution of
Lenders).

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling or that is controlled by or is under common control with
such Person, each officer, director, general partner or joint-venturer of such
Person, and each Person that is the beneficial owner of 15% or more of any class
of Voting Stock of such Person; provided, however, “Affiliate” shall not include
any holder of a minority interest in any Subsidiary of the Parent. For the
purposes of this definition, “control” means the possession of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.

“Agent Affiliate” has the meaning specified in Section 10.3 (Posting of Approved
Electronic Communications).

“Agreement” means this Term Loan Agreement.

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TERM LOAN AGREEMENT
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“Alternative Currency” means any lawful currency other than Dollars that is
freely transferable into Dollars.

“Applicable Amount” shall mean, at any time (the “Reference Time”), an amount
equal to (a) the sum, without duplication, of:

(i) an amount equal to the greater of (x) zero and (y) 50% of cumulative
Consolidated Net Income for the period from the Closing Date until the last day
of the then most recent fiscal quarter for which Financial Statements have been
delivered pursuant to Section 6.1 (Financial Statements); provided that, the
amount in this clause (i) shall only be available if the Parent would be in
compliance with the financial covenant contained in Section 5.1 (Financial
Covenant) for the most recently ended Test Period, determined on a Pro Forma
Basis after giving effect to any Investment, Restricted Payment or Optional Debt
Prepayment actually made pursuant to Sections 8.3(j)(ii) (Investments),
8.5(d)(ii) (Restricted Payments) and Section 8.6(g)(ii) (Prepayment of
Indebtedness); and

(ii) the amount of any capital contributions (other than any such contribution
consisting of Disqualified Stock) made in cash to, or any proceeds of an Equity
Issuance received by, the Parent (and contributed as common equity to the
Borrower) from and including the Closing Date through and including the
Reference Time,

minus (b) the sum, without duplication, of:

(i) the aggregate amount of Investments made pursuant to Section 8.3(j)(ii)
(Investments) following the Closing Date and prior to the Reference Time;

(ii) the aggregate amount of Restricted Payments pursuant to Section 8.5(d)(ii)
(Restricted Payments) following the Closing Date and prior to the Reference
Time; and

(iii) the aggregate amount of Optional Debt Prepayments made pursuant to Section
8.6(g)(ii) (Prepayment of Indebtedness) following the Closing Date and prior to
the Reference Time.

“Applicable Lending Office” means, with respect to each Lender, its Domestic
Lending Office in the case of a Base Rate Loan, and its Eurodollar Lending
Office in the case of a Eurodollar Rate Loan.

“Applicable Margin” means (a) with respect to (i) Closing Date Term Loans
maintained as Base Rate Loans, a rate equal to 1.75% per annum and (ii) Closing
Date Term Loans maintained as Eurodollar Rate Loans, a rate equal to 2.75% per
annum and (b) with respect to Incremental Term Loans, at the rates per annum for
Base Rate Loans and Eurodollar Rate Loans to be agreed by the Administrative
Agent, the Incremental Term Loan Lenders providing such Incremental Term Loans
and the Borrower prior to the applicable Facility Increase Date.

“Approved Electronic Communications” means each notice, demand, communication,
information, document and other material that any Loan Party is obligated to, or
otherwise chooses to, provide to the Administrative Agent pursuant to any Loan
Document or the transactions contemplated therein, including (a) any supplement
to the Guaranty, any joinder to the Pledge and Security Agreement and any other
written Contractual Obligation delivered or required to be delivered in respect
of any Loan Document or the transactions contemplated therein and (b) any
Financial Statement, financial and other report, notice, request, certificate
and other information material; provided, however, that, “Approved Electronic
Communication” shall exclude (i) any Notice of Borrowing, Notice of Conversion
or Continuation, Facility Increase Notice and any other notice, demand,
communication, information, document and other material relating to a request
for a new, or a conversion of an existing, Borrowing, (ii) any notice pursuant
to Section 2.6 (Optional Prepayments) and Section 2.7 (Mandatory Prepayments)
and any other notice relating to the payment of any principal or other amount
due under any Loan Document prior to the scheduled date therefor, (iii) all
notices of any Default or Event of Default and (iv) any notice, demand,
communication, information, document and other material required to be delivered
to satisfy any of the conditions set forth in Article III (Conditions To Term
Loans) or any other condition to any Borrowing or other extension of credit
hereunder or any condition precedent to the effectiveness of this Agreement.
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TERM LOAN AGREEMENT
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“Approved Electronic Platform” has the meaning specified in Section 10.3
(Posting of Approved Electronic Communications).

“Approved Fund” means any Fund that is advised or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) an entity or Affiliate of an entity that
administers or manages a Lender.

“Approved Securities Intermediary” means a “securities intermediary” or
“commodity intermediary” (as such terms are defined in the UCC) selected or
reasonably approved by the Administrative Agent.

“Arrangers” means, collectively, Citigroup Global Markets Inc. and J.P. Morgan
Securities Inc., each in its capacity as joint lead arranger and joint
bookrunner.

“Asset Sale” has the meaning specified in Section 8.4 (Sale of Assets).

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of Exhibit A (Form of Assignment and Acceptance).

“Attributable Debt” in respect of a Permitted Sale Leaseback transaction, as at
the time of determination, the present value (discounted at the interest rate
then borne by the Term Loans, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale Leaseback transaction (including any period for which such lease
has been extended); provided, however, that if such Permitted Sale Leaseback
transaction results in a Capital Lease Obligation, the amount of Indebtedness
represented thereby will be determined in accordance with the definition of
“Capital Lease Obligations”.
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“Base Rate” means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall be equal at all
times to the higher of the following:

(a) the rate of interest announced publicly by Citibank in New York, New York,
from time to time, as Citibank’s base rate; and

(b) 0.5% per annum plus the Federal Funds Rate.

“Base Rate Loan” means any Term Loan during any period in which it bears
interest based on the Base Rate.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) subject to Title IV of ERISA for which any Group Member or ERISA
Affiliate of any Group Member has been an “employer” (as defined in Section 3(5)
of ERISA) within the past six years.

“Borrower” has the meaning specified in the preamble to this Agreement.

“Borrower’s Accountants” means Deloitte Touche LLP or other independent
nationally-recognized public accountants reasonably acceptable to the
Administrative Agent.

“Borrowing” means any Closing Date Term Loan Borrowing or any borrowing under
the Facility Increase, as the context may require.

“Business Day” means a day of the year on which banks are not required or
authorized to close in New York City and, if the applicable Business Day relates
to notices, determinations, fundings and payments in connection with the
Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in Dollar
deposits are also carried on in the London interbank market.

“Capital Expenditures” means, for any Person for any period, the aggregate of
amounts that would be reflected as capital expenditures on a statement of cash
flows of such Person prepared in conformity with GAAP.

“Capital Lease” means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, property by such Person as lessee that
would be accounted for as a capital lease on a balance sheet of such Person
prepared in conformity with GAAP.

“Capital Lease Obligations” means, with respect to any Person, the capitalized
amount of all Consolidated obligations of such Person or any of its Subsidiaries
under Capital Leases.

“Cash Equivalents” means, as of any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the federal government of the United States or (b) issued by
any agency of the United States in each case maturing within thirteen months
after such date; (ii) marketable direct obligations issued by any state of the
United States or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within thirteen months after such
date and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody’s; (iii) (a) commercial paper maturing
no more than thirteen months from the date of creation thereof and having, at
the time of the acquisition thereof, a rating of at least A-1 from S&P or at
least P-1 from Moody’s and (b) other corporate obligations maturing no more than
thirteen months from the acquisition thereof and having, at the time of the
acquisition thereof, a rating of at least AA from S&P or at least Aa2 from
Moody’s; (iv) variable rate demand notes and auction rate securities maturing no
more than thirteen months from the date of creation thereof; (v) certificates of
deposit or bankers’ acceptances maturing within thirteen months after such date
and issued or accepted by any Lender or by any commercial bank organized under
the laws of the United States or any state thereof or the District of Columbia
that (a) is at least “adequately capitalized” (as defined in the regulations of
its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000; and (vi) shares of any money
market mutual fund that (a) has substantially all of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500,000,000 and (c) has the highest
rating obtainable from either S&P or Moody’s.
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“Change of Control” means any event or circumstance after which (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Act of
1934, as amended) of more than 50% of the Voting Stock of the Parent, (b) a
majority of the board of directors of the Parent shall not be Continuing
Directors or (c) the Borrower shall cease to be a direct Wholly Owned Subsidiary
of the Parent.

“Citi” means Citicorp North America, Inc., a Delaware corporation.

“Citibank” means Citibank, N.A., a national banking association.

“Closing Date” means August 17, 2007.

“Closing Date Term Loan” has the meaning specified in Section 2.1(a) (The Term
Loans).

“Closing Date Term Loan Borrowing” means a borrowing consisting of Closing Date
Term Loans made on the Closing Date by the Lenders ratably according to their
respective Term Loan Commitments.

“Closing Date Term Loan Maturity Date” means the 7th anniversary of the Closing
Date.

“Code” means the U.S. Internal Revenue Code of 1986, as currently amended.

“Collateral” means all property and interests in property and proceeds thereof
now owned or hereafter acquired by any Loan Party in or upon which a Lien is
granted under any Collateral Document.

“Collateral Documents” means the Pledge and Security Agreement, other pledge or
security agreements (including those in respect of Intellectual Property), the
Mortgages, the Deposit Account Control Agreements, the Securities Account
Control Agreements and any other document executed and delivered by a Loan Party
granting a Lien on any of its property to secure payment of the Secured
Obligations.
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“Commitment Letter” shall mean the letter dated May 22, 2007 addressed to the
Borrower from the Arrangers and accepted by the Borrower on May 22, 2007, with
respect to certain terms and conditions of the Term Loan Facility.

“Compliance Certificate” has the meaning specified in Section 6.1(c) (Financial
Statements).

“Consolidated” means, with respect to any Person, the consolidation of accounts
of such Person and its Subsidiaries.

“Consolidated Current Assets” means, with respect to any Person at any date, the
total Consolidated current assets (other than cash and Cash Equivalents) of such
Person and its Subsidiaries at such date.

“Consolidated Current Liabilities” means, with respect to any Person at any
date, all liabilities of such Person and its Subsidiaries at such date that
should be classified as current liabilities on a Consolidated balance sheet of
such Person and its Subsidiaries, but excluding, in the case of the Parent the
sum of (a) the principal amount of any current portion of long-term Consolidated
Funded Indebtedness and (b) (without duplication of clause (a) above) the then
outstanding principal amount of the Term Loans.

“Consolidated EBITDA” means Consolidated EBITDAR minus the amount, if any, of
rental expense added to Consolidated Net Income in calculating Consolidated
EBITDAR.

“Consolidated EBITDAR” means, with respect to any Person for any period,
Consolidated Net Income for such Person and its Subsidiaries for such period,
plus (a) the sum of the following, without duplication and, in each case, to the
extent deducted in determining such Consolidated Net Income: (i) any provision
for income taxes, (ii) all interest expense (net of interest income), (iii)
depreciation, amortization and rental expense, (iv) extraordinary, unusual or
non-recurring charges, expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, losses on the sales of assets outside of the ordinary course of
business), (v) losses or charges resulting from hedging activities, including
but not limited to any decrease in the fair value of interest rate swap
agreements and any losses on foreign currency contracts not entered into for
speculative purposes, (vi) the amount of all non-cash charges for such period
(including any impairment or writeoff of goodwill or other intangible assets but
excluding any such non-cash charge, expense or loss to the extent that it
represents an accrual of or reserve for cash expenses in any future period or an
amortization of a prepaid cash expense that was paid in a prior period), (vii)
the amortization of any financing costs or fees or original issue discount
incurred in connection with any Indebtedness, (viii) any non-cash expenses due
to purchase accounting associated with the Transactions and any future Permitted
Acquisitions, (ix) any non-cash compensation charge or expense arising from any
grant of stock, stock options or other equity based awards and (x) to the extent
non-recurring and not capitalized, costs, fees, charges and expenses (including
legal and consulting fees) incurred in connection with or written off as a
result of (A) the Term Loan Facility, the Merger or the other Transactions, (B)
Permitted Acquisitions and other investments permitted under this Agreement, (C)
issuances of Stock or Stock Equivalents, and (D) disposition, incurrence or
refinancing of any Indebtedness, including in each case, all deferred financing
costs written off and premiums paid or other expenses incurred directly in
connection with any early extinguishment of Indebtedness and any net loss from
any write-off or forgiveness of Indebtedness; minus (b) the sum of the following
to the extent included in determining Consolidated Net Income (i) income tax
benefits for such period, (ii) any extraordinary, unusual or non-recurring
income or gains for such period (including, whether or not otherwise includable
as a separate item in the statement of such Consolidated Net Income for such
period, gains on the sales of assets outside of the ordinary course of business
and any net gain from any write-off or forgiveness of Indebtedness), (iii) other
non-cash income or gains (other than the accrual of revenue in the ordinary
course), and (iv) gains resulting from hedging activities, including but not
limited to any increase in the fair value of interest rate swap agreements and
any gains on foreign currency contracts not entered into for speculative
purpose.
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“Consolidated Funded Indebtedness” means, as of any date of determination, the
sum (without duplication) of (a) the aggregate principal amount of Indebtedness
of the Parent and the Restricted Subsidiaries outstanding as of such date, in
the amount that would be reflected on a balance sheet prepared as of such date
on a Consolidated basis in accordance with GAAP, and (b) the aggregate principal
amount of Indebtedness outstanding as of such date of Persons other than the
Parent or a Restricted Subsidiary, in the amount that would be reflected on a
balance sheet of any such Person prepared as of such date on a Consolidated
basis in accordance with GAAP, to the extent such Indebtedness is guaranteed by
the Parent or a Restricted Subsidiary. For purposes of determining the Senior
Secured Leverage Ratio and the Total Leverage Ratio for any Test Period,
Consolidated Funded Indebtedness in respect of Indebtedness outstanding under
the Revolving Credit Agreement shall be the average outstanding amount of such
Indebtedness during such Test Period.

“Consolidated Net Income” means, with respect to any Person and its
Subsidiaries, for any period, the net income (or loss) of such Person and its
Subsidiaries for such period, determined on a Consolidated basis in accordance
with GAAP; provided that there shall be excluded from the calculation of
Consolidated Net Income (a) except as otherwise provided in the credit
documentation with respect to calculations to be made on a Pro Forma Basis, the
net income (or loss) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person’s Subsidiaries, (b) the net income (or loss) of any Person that is an
Unrestricted Subsidiary or in which such Person has a minority ownership
interest, except to the extent any such income has actually been received by
such Person in the form of cash dividends or distributions, and (c) the
cumulative effect of a change in accounting principles.

“Constituent Documents” means, with respect to any Person, (a) the articles of
incorporation, certificate of incorporation, constitution or certificate of
formation (or the equivalent organizational documents) of such Person, (b) the
by-laws or operating agreement (or the equivalent governing documents) of such
Person and (c) any document setting forth the manner of election or duties of
the directors or managing members of such Person (if any) and the designation,
amount or relative rights, limitations and preferences of any class or series of
such Person’s Stock.

“Continuing Directors” shall mean the directors of the Parent on the Closing
Date and each other director of the Parent, if, in each case, such other
director’s nomination for election to the board of directors of the Parent is
recommended by at least 51% of the then Continuing Directors. 
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“Contractual Obligation” of any Person means any obligation, agreement,
undertaking or similar provision of any Security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument (excluding a Loan Document) to which such Person is a party or
by which it or any of its property is bound or to which any of its property is
subject.

“Corporate Chart” means a corporate organizational chart, list or other similar
document in each case in form reasonably acceptable to the Administrative Agent
and setting forth, for each Person that is a Loan Party, that is subject to
Section 7.11 (Additional Collateral and Guaranties) or that is a Subsidiary of
any of them, (a) the full legal name of such Person (and any trade name,
fictitious name or other name such Person may have had or operated under),
(b) the jurisdiction of organization, the organizational number (if any) and the
tax identification number (if any) of such Person, (c) the location of such
Person’s chief executive office (or sole place of business) and (d) the number
of shares of each class of such Person’s Stock authorized (if applicable), the
number outstanding as of the date of delivery and the number and percentage of
such outstanding shares for each such class owned (directly or indirectly) by
any Loan Party or any Subsidiary of any of them.

“Customary Permitted Liens” means, with respect to any Person, any of the
following Liens:

(a) Liens with respect to the payment of taxes, assessments or governmental
charges in each case that are not yet due or that are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained to the extent required by
GAAP;

(b) Liens of landlords arising by statute and liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens, in each
case (i) imposed by law or arising in the ordinary course of business, (ii) for
amounts not yet due or that are being contested in good faith by appropriate
proceedings and (iii) with respect to which adequate reserves or other
appropriate provisions are being maintained to the extent required by GAAP;

(c) deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance or other types of social security benefits
or to secure the performance of bids, tenders, sales, contracts (other than for
the repayment of borrowed money) and surety, appeal, customs or performance
bonds;

(d) encumbrances arising by reason of zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions
and other similar encumbrances on the use of real property not materially
detracting from the value of such real property or not materially interfering
with the ordinary conduct of the business conducted and proposed to be conducted
at such real property;

(e) encumbrances arising under leases or subleases of real property that do not,
in the aggregate, materially detract from the value of such real property or
interfere with the ordinary conduct of the business conducted and proposed to be
conducted at such real property; and
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(f) financing statements with respect to a lessor’s rights in and to personal
property leased to such Person in the ordinary course of such Person’s business
other than through a Capital Lease.

“Debt Issuance” means the incurrence of Indebtedness of the type specified in
clause (a) or (b) of the definition of “Indebtedness” by the Parent or any
Restricted Subsidiary.

“Default” means any event that, with the passing of time or the giving of notice
or both, would become an Event of Default.

“Deposit Account” has the meaning given to such term in the UCC.

“Deposit Account Bank” means a financial institution selected or approved by the
Administrative Agent.

“Deposit Account Control Agreement” has the meaning specified in the Pledge and
Security Agreement.

“Disqualified Stock” shall mean any Stock or Stock Equivalent which, by its
terms (or by the terms of any Security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (a) matures (excluding
any maturity as the result of an optional redemption by the issuer thereof) or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the Term Loan Maturity Date, (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any Stock or Stock Equivalent referred
to in clause (a) above, in each case at any time on or prior to the first
anniversary of the Term Loan Maturity Date, or (c) contains any repurchase
obligation which may come into effect prior to payment in full of all
Obligations; provided, however, that any Stock or Stock Equivalents that would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof (or the holders of any security into or for which such Stock or Stock
Equivalents is convertible, exchangeable or exercisable) the right to require
the issuer thereof to redeem such Stock or Stock Equivalents upon the occurrence
of a change in control or an asset sale occurring prior to the first anniversary
of the Term Loan Maturity Date shall not constitute Disqualified Stock if such
Stock or Stock Equivalents provide that the issuer thereof will not redeem any
such Stock or Stock Equivalents pursuant to such provisions prior to the
repayment in full of the Obligations; provided further, however, that any Stock
or Stock Equivalents owned by a Group Member in a Joint Venture shall not
constitute Disqualified Stock solely due to repurchase obligations triggered
upon such Group Member’s failure to make a required capital contribution.

“Dollar Equivalent” of any amount means, at the time of determination thereof,
(a) if such amount is expressed in Dollars, such amount, (b) if such amount is
expressed in an Alternative Currency, the equivalent of such amount in Dollars
determined by using the rate of exchange quoted by Citibank in New York, New
York at 11:00 a.m. (New York time) on the date of determination (or, if such
date is not a Business Day, the last Business Day prior thereto) to prime banks
in New York for the spot purchase in the New York foreign exchange market of
such amount of Dollars with such Alternative Currency and (c) if such amount is
denominated in any other currency, the equivalent of such amount in Dollars as
reasonably determined by the Administrative Agent using any method of
determination it deems appropriate.
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“Dollars” and the sign “$” each mean the lawful money of the United States of
America.

“Domestic Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Domestic Lending Office” opposite its name on
Schedule II (Applicable Lending Offices and Addresses for Notices) or on the
Assignment and Acceptance by which it became a Lender or such other office of
such Lender as such Lender may from time to time specify to the Borrower and the
Administrative Agent.

“Domestic Person” means any “United States person” under and as defined in
Section 770l(a)(30) of the Code.

“Domestic Subsidiary” means any Restricted Subsidiary of the Parent that was
formed under the laws of the United States or any state of the United States or
the District of Columbia.

“EDGAR” means the Electronic Data-Gathering, Analysis, and Retrieval System
maintained by the Securities and Exchange Commission.

“Eligible Assignee” means (a) a Lender or an Affiliate or Approved Fund of any
Lender, (b) a commercial bank having total assets whose Dollar Equivalent
exceeds $5,000,000,000, (c) a finance company, insurance company or any other
financial institution or Fund, in each case reasonably acceptable to the
Administrative Agent and regularly engaged in making, purchasing or investing in
loans and having a net worth, determined in accordance with GAAP, whose Dollar
Equivalent exceeds $250,000,000 (or, to the extent net worth is less than such
amount, a finance company, insurance company, other financial institution or
Fund, reasonably acceptable to the Administrative Agent and the Borrower) or (d)
a savings and loan association or savings bank organized under the laws of the
United States or any State thereof having a net worth, determined in accordance
with GAAP, whose Dollar Equivalent exceeds $250,000,000.

“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication, each, by or from any
Governmental Authority, or any third party involving (x) violations of
Environmental Laws or (y) releases of Hazardous Materials (a) from any assets,
properties, or businesses of any Group Member, or any of their predecessors in
interest, or (b) from or onto any facilities which received Hazardous Materials
generated by any Group Member, or any of their predecessors in interest.

“Environmental Laws” means all applicable Requirements of Law now or hereafter
in effect and as amended or supplemented from time to time, relating to
pollution or the regulation and protection of human or animal health, safety,
the environment or natural resources, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601
et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C. §
5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. § 136 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. § 6901 et seq.); the Toxic Substance Control Act, as amended
(15 U.S.C. § 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. § 7401 et
seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et
seq.); the Safe Drinking Water Act, as amended (42 U.S.C. § 300f et seq.); and
each of their state and local counterparts or equivalents and any transfer of
ownership notification or approval statute, including the Industrial Site
Recovery Act (N.J. Stat. Ann. § 13:1K-6 et seq.).
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Environmental Liabilities and Costs” means, with respect to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute and whether arising under any
Environmental Law, Permit, order or agreement with any Governmental Authority or
other Person, in each case relating to any environmental, health or safety
condition or to any Release or threatened Release and resulting from the past,
present or future operations of, or ownership of property by, such Person or any
of its Subsidiaries.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.

“Equity Issuance” means the issue or sale of any Stock of the Borrower, the
Parent, or any Restricted Subsidiary of the Parent to any Person other than the
Borrower, the Parent or any Restricted Subsidiary of the Parent.

“ERISA” means the United States Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control or treated as a single employer with any Group Member
within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” means (a) a reportable event described in Section 4043(b) or
4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Title IV
Plan or a Multiemployer Plan, (b) the withdrawal of the Borrower, the Parent,
any of the Restricted Subsidiaries or any ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA, (c) the
complete or partial withdrawal of the Borrower, the Parent, any of the
Restricted Subsidiaries or any ERISA Affiliate from any Multiemployer Plan, (d)
notice of reorganization or insolvency of a Multiemployer Plan, (e) the filing
of a notice of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA, (f) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC, (g)
the failure to timely make any required contribution to a Title IV Plan or
Multiemployer Plan, (h) the imposition of a lien under Section 412 of the Code
or Section 302 of ERISA on the Borrower, the Parent, any of the Restricted
Subsidiaries or any ERISA Affiliate, (i) any other event or condition that might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA or (j) the acceleration of an obligation to pay a pension shortfall with
respect to a Foreign Plan.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Eurodollar Base Rate” means, with respect to any Interest Period for any
Eurodollar Rate Loan, the offered rate for deposits in Dollars for the
applicable Interest Period appearing on the Reuters Screen LIBOR01 Page as of
11:00 a.m. (London time) on the second full Business Day next preceding the
first day of each Interest Period. In the event that such rate does not appear
on the Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen), the
Eurodollar Base Rate for the purposes of this definition shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be reasonably selected by the Administrative Agent, or,
in the absence of such availability, the Eurodollar Base Rate shall be the rate
of interest as reasonably determined by the Administrative Agent to be the rate
per annum at which deposits in Dollars are offered by the principal office of
Citibank in London to major banks in the London interbank market at 11:00 a.m.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to the Eurodollar Rate Loan of Citibank for a
period equal to such Interest Period.

“Eurodollar Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Eurodollar Lending Office” opposite its name on
Schedule II (Applicable Lending Offices and Addresses for Notices) or on the
Assignment and Acceptance by which it became a Lender (or, if no such office is
specified, its Domestic Lending Office) or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Administrative
Agent.

“Eurodollar Rate” means, with respect to any Interest Period for any Eurodollar
Rate Loan, an interest rate per annum equal to the rate per annum obtained by
dividing (a) the Eurodollar Base Rate by (b)(i) a percentage equal to 100% minus
(ii) the reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to which
the Eurodollar Rate is determined) having a term equal to such Interest Period.

“Eurodollar Rate Loan” means any Term Loan that, for an Interest Period, bears
interest based on the Eurodollar Rate.

“Event of Default” has the meaning specified in Section 9.1 (Events of Default).

“Excess Cash Flow” means, for the Borrower, the Parent and the Restricted
Subsidiaries for any period, (a) Consolidated EBITDAR of the Parent and the
Restricted Subsidiaries for such period plus (b) the excess, if any, of Working
Capital at the beginning of such period over Working capital at the end of such
period for the Borrower, the Parent and the Restricted Subsidiaries minus (c)
the sum of (without duplication) the following: (i) scheduled cash principal
payments on the Term Loans during such period and optional cash principal
payments on the Term Loans during such period, (ii) cash principal payments made
by the Borrower, the Parent or any Restricted Subsidiary during such period on
other Indebtedness to the extent such other Indebtedness and payments are
permitted hereunder (to the extent (x) not financed by the incurrence of
Indebtedness or an Equity Issuance and (y) in the case of optional cash payments
of loans made under the Revolving Credit Agreement, accompanied by permanent
reductions of commitments under the Revolving Credit Agreement in amounts
corresponding to such payments), (iii) payments made by the Borrower, the Parent
or any Restricted Subsidiary during such period on Capital Lease Obligations to
the extent such Capital Lease Obligations and payments are permitted hereunder
(to the extent not financed by the incurrence of Indebtedness or an Equity
Issuance), (iv) Capital Expenditures (to the extent not financed by the
incurrence of Indebtedness or an Equity Issuance) made by the Borrower, the
Parent or any Restricted Subsidiary during such period to the extent permitted
hereunder, (v) cash payments made by the Borrower, the Parent or any Restricted
Subsidiary to satisfy tax obligations, (vi) cash interest expense of the
Borrower, the Parent or any Restricted Subsidiary during such period, (vii)
rental expense of the Borrower, the Parent or any Restricted Subsidiary during
such period, and (vii) the excess, if any, of Working Capital at the end of such
period over Working Capital at the beginning of such period.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Excluded Assets” means (a) any lease, license, contract, property right or
agreement to which any Loan Party is a party or any of its rights or interests
thereunder if and to the extent that a security interest is prohibited by or in
violation of (i) any law, rule or regulation applicable to such Loan Party, or
(ii) a term, provision or condition of or under, any such lease, license,
contract, property right or agreement (unless in either clause (i) or (ii) above
such law, rule or regulation or such term, provision or condition would be
rendered unenforceable against the Term Loans pursuant to Sections 9-406, 9-407,
or 9-408 of the applicable Uniform Commercial Code); (b) any Stock or Stock
Equivalents representing more than 66% of the outstanding Voting Stock issued by
any Person that is not a “United States person” under and as defined in Section
7701(a)(30) of the IRC; (c) any assets of an Unrestricted Subsidiary or any
assets of or Stock or Stock Equivalents in any of an Unrestricted Subsidiary’s
direct or indirect subsidiaries; or (d) any assets of any Immaterial Subsidiary
that is not a Loan Party.

“Existing Agent” means Bank of America, N.A., in its capacity as administrative
agent under the Target Credit Agreement.

“Existing Revolving Credit Agreement” means that certain Loan, Guaranty and
Security Agreement, dated as of January 15, 2004 (as amended and otherwise
modified up to but not including the Closing Date), among the Borrower, the
institutions party thereto as lenders and Wells Fargo Retail Finance, LLC, as
administrative agent thereunder.

“Facility Increase” has the meaning specified in Section 2.1(b) (The Term
Loans).

“Facility Increase Date” has the meaning specified in Section 2.1(b) (The Term
Loans).

“Facility Increase Notice” means a notice from the Borrower to the
Administrative Agent requesting a Facility Increase, which may include any
proposed term and condition for such proposed Facility Increase but shall
include in any event the amount of such proposed Facility Increase.

“Fair Market Value” means (a) with respect to any asset or group of assets
(other than a marketable Security) at any date, the value of the consideration
obtainable in a sale of such asset at such date assuming a sale by a willing
seller to a willing purchaser dealing at arm’s length and arranged in an orderly
manner over a reasonable period of time having regard to the nature and
characteristics of such asset, determined by the Board of Directors or a
Responsible Officer of the Borrower or Parent or, if such asset shall have been
the subject of a relatively contemporaneous appraisal by an independent third
party appraiser, the basic assumptions underlying which have not materially
changed since its date, the value set forth in such appraisal and (b) with
respect to any marketable Security at any date, the closing sale price of such
Security on the Business Day next preceding such date, as appearing in any
published list of any national securities exchange or the NASDAQ Stock Market
or, if there is no such closing sale price of such Security, the final price for
the purchase of such Security at face value quoted on such Business Day by a
financial institution of recognized standing regularly dealing in Securities of
such type and selected by the Administrative Agent.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

“Federal Reserve Board” means the Board of Governors of the United States
Federal Reserve System, or any successor thereto.

“Fee Letter” shall mean (a) the letter dated May 22, 2007 addressed to the
Borrower from the Arrangers and accepted by the Borrower on May 22, 2007, with
respect to certain fees to be paid from time to time to the Arrangers and (b) if
applicable, any additional fee letter entered into as part of any Facility
Increase and executed by, among others, the Borrower and the Administrative
Agent.

“Financial Asset” has the meaning given to such term in the UCC.

“Financial Statements” means the financial statements of the Parent and its
Subsidiaries delivered in accordance with Section 4.4 (Financial Statements) and
Section 6.1 (Financial Statements).

“Foreign Plan” means any defined benefit pension plan maintained by the
Borrower, the Parent or any of the Restricted Subsidiaries that is mandated or
governed by any law, rule or regulation of any Government Authority other than
the United States, any state thereof or any other political subdivision thereof.

“Foreign Subsidiary” means any Subsidiary of the Parent that is not organized
under the laws of any state of the United States of America or the District of
Columbia.

“Fund” means any Person (other than a natural Person) that is or will be engaged
in making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, that are applicable to the circumstances as of the date of
determination.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Governmental Authority” means any nation, sovereign or government, any state or
other political subdivision thereof and any entity or authority exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any central bank or stock exchange.

“Group Members” means, collectively, the Borrower, the Parent and each
Restricted Subsidiary.

“Guarantor” means Parent and each Wholly Owned Domestic Subsidiary of the Parent
that is a Restricted Subsidiary or any Restricted Subsidiary of the Parent that
guarantees or otherwise provides direct credit support for any Indebtedness of
the Parent of the type listed in clause (a) or (b) of the definition of
Indebtedness, each party to the Guaranty.

“Guaranty” means the guaranty, in substantially the form of Exhibit F (Form of
Guaranty), executed by the Guarantors.

“Guaranty Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
Indebtedness of another Person, if the purpose or intent of such Person in
incurring the Guaranty Obligation is to provide assurance to the obligee of such
Indebtedness that such Indebtedness will be paid or discharged, that any
agreement relating thereto will be complied with, or that any holder of such
Indebtedness will be protected (in whole or in part) against loss in respect
thereof, including (a) the direct or indirect guaranty, endorsement (other than
for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of Indebtedness
of another Person and (b) any liability of such Person for Indebtedness of
another Person through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such Indebtedness or any security therefor or to
provide funds for the payment or discharge of such Indebtedness (whether in the
form of a loan, advance, stock purchase, capital contribution or otherwise),
(ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar
payments, if required, regardless of non-performance by any other party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss or (v) to supply funds to, or in any other manner
invest in, such other Person (including to pay for property or services
irrespective of whether such property is received or such services are
rendered), if in the case of any agreement described under clause (b)(i), (ii),
(iii), (iv) or (v) above the primary purpose or intent thereof is to provide
assurance that Indebtedness of another Person will be paid or discharged, that
any agreement relating thereto will be complied with or that any holder of such
Indebtedness will be protected (in whole or in part) against loss in respect
thereof. The amount of any Guaranty Obligation shall be equal to the amount of
the Indebtedness so guaranteed or otherwise supported.

“Hazardous Materials” means any material, substance or waste that is classified,
regulated or otherwise characterized under any Environmental Law as hazardous,
toxic, a contaminant or a pollutant or by other words of similar meaning or
regulatory effect, including any petroleum or petroleum-derived substance or
waste, asbestos and polychlorinated biphenyls.

“Hedging Contracts” means all Interest Rate Contracts, foreign exchange
contracts, currency swap or option agreements, forward contracts, commodity
swap, purchase or option agreements, other commodity price hedging arrangements
and all other similar agreements or arrangements designed to alter the risks of
any Person arising from fluctuations in interest rates, currency values or
commodity prices.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Immaterial Subsidiary” means any Domestic Subsidiary of the Parent designated
in writing by the Borrower to the Administrative Agent whose total assets or
revenues (in each case on a Consolidated basis with its Subsidiaries) are less
than 3% of the total assets or revenues of the Parent and the Restricted
Subsidiaries, taken as a whole; provided, however, that the aggregate total
assets or revenues of all such subsidiaries designated as “Immaterial
Subsidiaries” (on a Consolidated basis with their Subsidiaries), shall not
exceed 5% of the total assets or revenue of the Parent and the Restricted
Subsidiaries, taken as a whole.

“Incremental Term Loan” has the meaning set forth in Section 2.1(b) (The Term
Loans). 

“Incremental Term Loan Lender” has the meaning set forth in Section 2.1(b) (The
Term Loans).

“Incremental Term Loan Maturity Date” the date that is agreed to for such
Incremental Term Loan by the Administrative Agent and the Borrower at the time
the applicable Facility Increase becomes effective; provided, that no such date
shall be earlier than the Closing Date Term Loan Maturity Date.

“Included Asset Sale” means any Asset Sale by the Parent or any of the
Restricted Subsidiaries other than Asset Sales permitted pursuant to clauses (a)
through (i), (l) and (n) of Section 8.4 (Sale of Assets).

“Indebtedness” means, without duplication, (a) all obligations for borrowed
money, (b) all obligations evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations in respect of
letters of credit, bankers acceptances, interest rate swaps, or other financial
products, (c) all obligations as a lessee under Capital Leases, (d) all
obligations or liabilities of others secured by a Lien on any asset of a Person
or its Subsidiaries, irrespective of whether such obligation or liability is
assumed, (e) all obligations to pay the deferred purchase price of assets (other
than trade payables incurred in the ordinary course of business), (f) all
Attributable Debt in respect of Sale Leaseback transactions, (g) all obligations
owing under Hedging Contracts, and (h) any obligation guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (g) above.

“Indemnified Matter” has the meaning specified in Section 11.4 (Indemnities).

“Indemnitee” has the meaning specified in Section 11.4 (Indemnities).

“Intellectual Property” has the meaning given such term in the Pledge and
Security Agreement.

“Intercreditor Agreement” means an agreement, in substantially the form of
Exhibit H (Form of Intercreditor Agreement), among the Administrative Agent, the
Revolving Credit Agent and each Loan Party.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Interest Period” means, in the case of any Eurodollar Rate Loan, (a) initially,
the period commencing on the date such Eurodollar Rate Loan is made or on the
date of conversion of a Base Rate Loan to such Eurodollar Rate Loan and ending
one, two, three or six months thereafter, as selected by the Borrower in its
Notice of Borrowing or Notice of Conversion or Continuation given to the
Administrative Agent pursuant to Section 2.2 (Borrowing Procedures) or Section
2.9 (Conversion/Continuation Option) and (b) thereafter, if such Term Loan is
continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section
2.9 (Conversion/Continuation Option), a period commencing on the last day of the
immediately preceding Interest Period therefor and ending one, two, three or six
months thereafter, as selected by the Borrower in its Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.9
(Conversion/Continuation Option); provided, however, that all of the foregoing
provisions relating to Interest Periods in respect of Eurodollar Rate Loans are
subject to the following:

(a) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day,
unless the result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
a calendar month; and

(c) the Borrower may not select any Interest Period that ends after the date of
a scheduled principal payment on the Term Loans as set forth in Article II (The
Term Loan Facility) unless, after giving effect to such selection, the aggregate
unpaid principal amount of the Term Loans for which Interest Periods end after
such scheduled principal payment shall be equal to or less than the principal
amount to which the Term Loans are required to be reduced after such scheduled
principal payment is made.

“Interest Rate Contracts” means all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and interest rate insurance.

“Inventory” has the meaning given to such term in the UCC.

“Investment” means, with respect to any Person, (a) any purchase or other
acquisition by such Person of (i) any Security issued by, (ii) a beneficial
interest in any Security issued by, or (iii) any other equity ownership interest
in, any other Person, (b) any purchase by such Person of all or a significant
part of the assets of a business conducted by any other Person, or all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any other Person, (c) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable and similar items made or incurred in the ordinary
course of business as presently conducted) or capital contribution by such
Person to any other Person, including all Indebtedness of any other Person to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business, and (d) any Guaranty Obligation incurred by
such Person in respect of Indebtedness of any other Person. For purposes of
determining the value of any Investment outstanding for purposes of any
subclause of Section 8.3 (Investments), such amount, when aggregated with the
amount of all other Investments made pursuant to such subclause, shall deemed to
be the amount of all such Investments when made, purchased or acquired less any
returns on such Investments (not to exceed the aggregate of the original amounts
invested pursuant to such subclause).
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“IRS” means the Internal Revenue Service of the United States or any successor
thereto.

“Joint Venture” means a corporation, limited liability company, joint venture or
similar limited liability legal entity formed in order to conduct a common
venture or enterprise between two or more Persons.

“Land” of any Person means all of those plots, pieces or parcels of land now
owned, leased or hereafter acquired or leased or purported to be owned, leased
or hereafter acquired or leased (including, in respect of the Loan Parties, as
reflected in the most recent Financial Statements) by such Person.

“Lender” means each financial institution or other entity that (a) is listed on
the signature pages hereof as a “Lender”, (b) from time to time becomes a party
hereto by execution of an Assignment and Acceptance or (c) from time to time
becomes a party hereto in connection with a Facility Increase by execution of an
assumption agreement, in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever intended to assure payment of any
Indebtedness or the performance of any other obligation, including any
conditional sale or other title retention agreement, the interest of a lessor
under a Capital Lease and any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction naming the owner
of the asset to which such Lien relates as debtor.

“Loan Documents” means, collectively, this Agreement, the Notes (if any), the
Intercreditor Agreement, the Guaranty, the Fee Letter, each Hedging Contract
between any Loan Party and any Person that was a Lender or an Affiliate of a
Lender at the time it entered into such Hedging Contract, the Collateral
Documents and each certificate, agreement or document executed by a Loan Party
and delivered to the Administrative Agent or any Lender in connection with or
pursuant to any of the foregoing.

“Loan Party” means each of the Borrower, each Guarantor and each other
Subsidiary of the Parent that executes and delivers a Loan Document.

“Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of the Borrower, the Parent and the Restricted Subsidiaries taken
as a whole, (b) a material impairment of the Loan Parties’ ability to perform
their obligations under the Loans Documents to which they are parties or of the
Administrative Agent or the Lenders to enforce the Obligations or realize upon
the Collateral or (c) a material impairment of the enforceability or priority of
the Administrative Agent’s Liens with respect to the Collateral as a result of
an action or failure to act on the part of any Loan Party.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Material Adverse Effect” means an effect that results in or causes, or would
reasonably be expected to result in or cause, a Material Adverse Change.

“Merger” means the merger of the Acquisition Subsidiary with and into the
Target, with the Target being the surviving corporation, whereupon the
outstanding shares of the Target will be converted into the right to receive the
purchase price, in cash, and on terms and conditions otherwise set forth in the
Merger Agreement.

“Merger Agreement” means that certain Agreement and Plan of Merger dated as of
May 22, 2007 among the Borrower, the Acquisition Subsidiary and the Target.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage Supporting Documents” means, with respect to any Mortgage for a parcel
of owned Real Property, each document (including title policies or marked-up
unconditional insurance binders (in each case, together with copies of all
documents referred to therein), maps, ALTA or TLTA, if applicable, as-built
surveys, in form and as to date that is sufficiently acceptable to the title
insurer issuing title insurance to the Administrative Agent for such title
insurer to deliver endorsements to such title insurance as reasonably requested
by the Administrative Agent, environmental assessments and reports and evidence
regarding recording and payment of fees, insurance premium and taxes) that the
Administrative Agent may reasonably request, to create, register, perfect,
maintain, evidence the existence, substance, form or validity of or enforce a
valid and enforceable first priority Lien on such parcel of owned Real Property
in favor of the Administrative Agent for the benefit of the Secured Parties,
subject only to such Liens as the Administrative Agent may approve.

“Mortgages” means the mortgages, deeds of trust or other real estate security
documents made or required herein to be made by the Borrower or any other Loan
Party, each in form and substance reasonably satisfactory to the Administrative
Agent.

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 400l(a)(3) of ERISA, to which any Group Member or any ERISA Affiliate
has any obligation or liability, contingent or otherwise.

“Net Cash Proceeds” means (a) with respect to any Included Asset Sale or
Recovery Event, in each case, of Term Priority Collateral, the proceeds thereof
received by any Group Member in the form of cash and Cash Equivalents (including
any such proceeds subsequently received (as and when received) in respect of
noncash consideration initially received) not reinvested in assets used or
useful in the business of any Group Member within 365 days of receipt, net of
(i) selling, recovery or other transactional expenses payable by any Group
Member in connection with obtaining such proceeds (including reasonable and
customary broker’s or investment banker’s fees or commissions, legal fees,
transfer and similar taxes incurred in connection therewith and the Borrower’s
good faith estimate of income taxes paid or payable in connection with such sale
or other transaction), (ii) amounts provided as a reserve, in accordance with
GAAP, against any liabilities under any indemnification obligations or purchase
price adjustment associated with such Included Asset Sale or Recovery Event
(provided that, to the extent and at the time any such amounts are released from
such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the
principal amount, premium or penalty, if any, interest and other amounts on any
Indebtedness for borrowed money which is secured by the asset sold in such
Included Asset Sale or involved in such Recovery Event and which is repaid with
such proceeds (other than, in connection with an Included Asset Sale, any such
Indebtedness assumed by the purchaser of such asset) or (b) with respect to any
Debt Issuance, the proceeds received by any Group Member in cash or Cash
Equivalents, net of reasonable and customary broker’s or advisor’s fees and
other costs and expenses (including attorneys’ fees) incurred in connection
therewith (including, if applicable, the cost of any Note Hedge Transaction
entered into in connection with such Debt Issuance).
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Non-Consenting Lender” has the meaning specified in Section 11.1(c)
(Amendments, Waivers, Etc.).

“Non-U.S. Lender” means each Lender (or the Administrative Agent) that is a
Non-U.S. Person.

“Non-U.S. Person” means any Person that is not a Domestic Person.

“Note” means a promissory note of the Borrower payable to the order of any
Lender in a principal amount equal to the amount of the Term Loan owing to such
Lender.

“Note Hedge Transaction” means any note hedge transaction entered into in
connection with the issuance of Qualified Refinancing Indebtedness and which
shall be paid for with the proceeds of such Qualified Refinancing Indebtedness.

“Notice of Borrowing” has the meaning specified in Section 2.2(a) (Borrowing
Procedures).

“Notice of Conversion or Continuation” has the meaning specified in Section 2.9
(Conversion/Continuation Option).

“Obligations” means the Term Loans and all other amounts, obligations, covenants
and duties owing by any Loan Party to the Administrative Agent, any Lender any
Affiliate of any of them or any Indemnitee, of every type and description
(whether by reason of an extension of credit or payment of any draft drawn or
other payment thereunder, loan, guaranty, indemnification, foreign exchange or
currency swap transaction, interest rate hedging transaction or otherwise),
present or future, arising under this Agreement, any other Loan Document,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired and whether or not evidenced by any note, guaranty or other instrument
or for the payment of money, including all fees, interest, charges, expenses,
attorneys’ fees and disbursements and other sums chargeable to the Loan Parties
under this Agreement and any other Loan Document (including Hedging Contracts
that are Loan Documents).

“Optional Debt Prepayment” has the meaning specified in Section 8.6 (Prepayment
of Indebtedness). 

“Parent” has the meaning specified in the preamble to this Agreement.

“Patriot Act” means the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.).

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Permit” means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Requirement of Law.

“Permitted Acquisition” means any Proposed Acquisition subject to the
satisfaction of each of the following conditions at or prior to the consummation
of the Proposed Acquisition:

(a) the Administrative Agent shall receive prior written notice of such Proposed
Acquisition, which notice shall include, without limitation, a reasonably
detailed description of such Proposed Acquisition;

(b) the Investment in such Permitted Acquisition is permitted under clause (i)
or (j) of Section 8.3 (Investments);

(c) the Borrower (or the Parent or the Subsidiary making such Proposed
Acquisition) and the Proposed Acquisition Target shall have executed such
documents and taken such actions as may be required under Section 7.11
(Additional Collateral and Guaranties);

(d) the Administrative Agent shall have received copies of the agreements,
related contracts, instruments and all opinions, certificates, lien search
results and other documents, in each case to the extent actually received by any
Loan Party (and subject to agreement to such additional confidentiality
requirements as may be required to permit such Loan Party to deliver such
copies), in each case reasonably requested by the Administrative Agent; and

(e) at the time of such Proposed Acquisition and after giving effect thereto,
(i) no Default or Event of Default shall have occurred and be continuing and
(ii) all representations and warranties contained in Article IV (Representations
and Warranties) and in the other Loan Documents shall be true and correct in all
material respects and (iii) the Parent would be in compliance with the financial
covenant contained in Section 5.1 (Financial Covenant) for the most recently
ended Test Period, determined on a Pro Forma Basis after giving effect to such
Proposed Acquisition (and the transactions contemplated thereby, including the
incurrence or assumption of any Indebtedness in connection therewith).

“Permitted Payment Restriction” means any consensual encumbrance or restriction
(each, a “restriction”) on the ability of any Restricted Subsidiary to (a) pay
dividends or make any other distributions on its Stock or Stock Equivalent to
the Borrower, the Parent or a Restricted Subsidiary or pay any Indebtedness owed
to the Parent or a Restricted Subsidiary or (b) make any loans or advances to
the Parent or a Restricted Subsidiary, which restriction (i) satisfies all of
the following conditions: (x) such restriction becomes effective only upon the
occurrence of (1) specified events under its charter or (2) a default by such
Restricted Subsidiary in the payment of principal of or interest, a bankruptcy
default, a default on any financial covenant or any other material default, in
each case on Indebtedness that was incurred by such Restricted Subsidiary in
compliance with Section 8.1 (Indebtedness) and (y) such restriction would not
materially impair the Borrower’s ability to make scheduled payments of cash
interest and to make required principal payments on the Term Loans, as
determined in good faith by a Responsible Officer of the Parent or the Borrower
or (ii) represents customary provisions of a Joint Venture and relates solely to
the assets, revenues and business of such Joint Venture.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Permitted Refinancing” means Indebtedness constituting a refinancing or
extension of Indebtedness permitted under this Agreement that (a) has an
aggregate outstanding principal amount not greater than the aggregate principal
amount of such Indebtedness outstanding at the time of such refinancing or
extension, (b) has a weighted average maturity (measured as of the date of such
refinancing or extension) no shorter than that of such Indebtedness, (c) has a
maturity date no earlier than the stated maturity of such Indebtedness;
provided, however, that the maturity date of any Permitted Refinancing of the
Subordinated Notes shall have a maturity date no earlier than the Term Loan
Maturity Date at the time of such refinancing or extension, (d) has Lien and
payment subordinated terms, if applicable, that are no less favorable to the
Lenders, in each case, than the corresponding terms of such Indebtedness and (e)
is otherwise on terms, taken as a whole, no less favorable to the Group Members
than those of such Indebtedness, other than market interest rates and fees. 

“Permitted Sale Leaseback” shall mean any Sale Leaseback consummated by the
Borrower or any of the Restricted Subsidiaries with any Person that is not an
Affiliate of the Borrower after the Closing Date; provided that (i) after giving
effect to such Sale Leaseback, no Default or Event of Default shall have
occurred and be continuing and (ii) any such Sale Leaseback shall be consummated
for fair value as determined at the time of consummation in good faith by a
Responsible Officer of the Borrower or the Parent.

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, estate, trust, limited liability company,
unincorporated association, joint venture or other entity or a Governmental
Authority.

“Pledge and Security Agreement” means an agreement, in substantially the form of
Exhibit G (Form of Pledge and Security Agreement), executed by the Borrower and
each Guarantor.

“Pledged Debt Instruments” has the meaning specified in the Pledge and Security
Agreement.

“Pledged Stock” has the meaning specified in the Pledge and Security Agreement.

“Proceeds” has the meaning given to such term in the UCC.

“Pro Forma Basis” means, as to any Person, for any events as described in
clauses (i) and (ii) below that occur subsequent to the commencement of a period
for which the financial effect of such events is being calculated, and giving
effect to the events for which such calculation is being made, such calculation
as will give pro forma effect to such events as if such events occurred on the
first day of the applicable Test Period:

(i) in making any determination of Consolidated EBITDA or Consolidated EBITDAR,
pro forma effect shall be given to any Asset Sale and to any Permitted
Acquisition (or to any similar transaction or transactions that require a waiver
or consent of the Required Lenders pursuant to Section 8.3 (Investments) or
8.4 (Asset Sales)), in each case that occurred during the Test Period (or, in
the case of determinations made pursuant to the definition of “Permitted
Acquisition” occurring during the Test Period or thereafter and through and
including the date upon which the respective Permitted Acquisition is
consummated); and
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

(ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness
(including Indebtedness incurred or assumed and for which the financial effect
is being calculated, whether incurred under this Agreement or otherwise incurred
or permanently repaid during the Test Period (or, in the case of determinations
made pursuant to the definition of “Permitted Acquisition”, occurring during the
Test Period and through and including the date upon which the respective
Permitted Acquisition is consummated) shall be deemed to have been incurred or
repaid at the beginning of such period (if such Indebtedness was incurred under
the Revolving Credit Agreement, such Indebtedness shall be deemed to be
outstanding for the entire Test Period for purposes of determining the Senior
Secured Leverage Ratio and the Total Leverage Ratio) and (y) interest expense of
such Person attributable to interest on any Indebtedness, for which pro forma
effect is being given as provided in preceding clause (x), bearing floating
interest rates shall be computed on a pro forma basis as if the rates that would
have been in effect during the period for which pro forma effect is being given
had been actually in effect during such periods.

Pro forma calculations made pursuant to the definition of “Pro Forma Basis”
shall be determined in good faith by a Responsible Officer of the Borrower and,
for any fiscal period ending on or prior to the first anniversary of a Permitted
Acquisition or Asset Sale (or any similar transaction or transactions that
require a waiver or consent of the Required Lenders pursuant to Section 8.3
(Investments) or 8.4 (Asset Sales)), may include adjustments to reflect
operating expense reductions and other operating improvements or synergies
implemented or planned to be implemented and reasonably expected to result from
such Permitted Acquisition, Asset Sale or other similar transaction, to the
extent that the Borrower delivers to the Administrative Agent (i) a certificate
of the Borrower signed by a Responsible Officer setting forth such operating
expense reductions and other operating improvements or synergies and (ii)
information and calculations supporting in reasonable detail such estimated
operating expense reductions and other operating improvements or synergies.

“Projections” means the then most recent financial projections of the Parent,
the Target and their respective Subsidiaries (on a combined basis) through the
fiscal year ending 2014, prepared for each fiscal quarter through the end of
fiscal year ending 2007 (and annually thereafter), to be delivered to the
Lenders by the Borrower.

“Proposed Acquisition” means the proposed acquisition by the Borrower, the
Parent or any of the Restricted Subsidiaries of all or substantially all of the
assets or Stock of any Proposed Acquisition Target, or the merger of any
Proposed Acquisition Target with or into the Borrower, the Parent or any
Subsidiary of the Parent (and, in the case of a merger with the Borrower, with
the Borrower being the surviving corporation).

“Proposed Acquisition Target” means any Person or group of Persons engaged in a
particular line of business or any operating division thereof subject to a
Proposed Acquisition.

“Purchasing Lender” has the meaning specified in Section 11.7 (Sharing of
Payments, Etc.).

“Qualified Capital Stock” of any Person shall mean any Stock or Stock
Equivalents of such Person that is not Disqualified Stock.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Qualified Refinancing Indebtedness” means Indebtedness incurred pursuant to
Section 8.1(m) (Indebtedness) to refinance, in part, the Obligations, in an
aggregate principal amount not to exceed $450,000,000.

“Qualified Restricted Subsidiary” means any Restricted Subsidiary that is not a
Loan Party and that satisfies each of the following requirements: (i) except for
Permitted Payment Restrictions, there are no restrictions, directly or
indirectly, on the ability of such Restricted Subsidiary to pay dividends or
make distributions to the holders of its Stock and Stock Equivalents; and (ii)
the Stock and Stock Equivalents of such Restricted Subsidiary consist of Stock
and Stock Equivalents majority owned by the Parent and its Qualified Restricted
Subsidiaries.

“Ratable Portion” or (other than in the expression “equally and
ratably”) “ratably” means, with respect to any Lender, the percentage obtained
by dividing (a) the Term Loan Commitment of such Lender by (b) the aggregate
Term Loan Commitments of all Lenders (or, at any time after the funding of the
Closing Date Term Loans, the percentage obtained by dividing the principal
amount of such Lender’s Term Loans by the aggregate Term Loans of all Lenders).

“Real Property” of any Person means the Land of such Person, together with the
right, title and interest of such Person, if any, in and to the streets, the
Land lying in the bed of any streets, roads or avenues, opened or proposed, in
front of, the air space and development rights pertaining to the Land and the
right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land and any fixtures appurtenant thereto.

“Recovery Event” means any settlement of or payment in respect of any property
or casualty insurance claim or any taking under power of eminent domain or by
condemnation or similar proceeding of or relating to any property or asset of
the Parent or any of the Restricted Subsidiaries other than any settlement,
payment, taking or proceeding that results in cash consideration of less than
$1,000,000, individually.

“Register” has the meaning specified in Section 2.5(b) (Evidence of Debt).

“Regulation S-X” means Regulation S-X under the Securities Act of 1933, as
amended from time to time, and any successor statute.

“Related Documents” means the Merger Agreement, the Subordinated Notes
Indenture, the Revolving Credit Agreement and each other document and instrument
executed with respect to any of the foregoing.

“Release” means, with respect to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration, in each case, of any Hazardous Material into the indoor or outdoor
environment or into or out of any property owned, leased or operated by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Remedial Action” means all actions required to (a) clean up, remove, treat or
in any other way address any Hazardous Material in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release so that a Hazardous Material does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.

“Requirement of Law” means, with respect to any Person, the common law and all
federal, state, local and foreign laws, treaties, rules and regulations, orders,
judgments, decrees and other determinations of, concessions, grants, franchises,
licenses and other Contractual Obligations with, any Governmental Authority or
arbitrator, applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

“Requisite Lenders” means, collectively, Lenders having more than 50% of the
aggregate outstanding amount of the Term Loan Commitments or, after the funding
of the Closing Date Term Loans, more than fifty percent (50%) of the principal
amount of all Term Loans then outstanding.

“Responsible Officer” means, with respect to any Person, any of the principal
executive officers, managing members or general partners of such Person but, in
any event, with respect to financial matters, the chief financial officer,
treasurer or controller of such Person.

“Restricted Payment” means (a) any dividend, distribution or any other payment
whether direct or indirect, on account of any Stock or Stock Equivalent of the
Borrower, the Parent or any Restricted Subsidiary now or hereafter outstanding
and (b) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any Stock or Stock
Equivalent of the Borrower, the Parent or any Restricted Subsidiary now or
hereafter outstanding.

“Restricted Subsidiary” means each direct and indirect Subsidiary of the Parent
other than one that has been designated as an Unrestricted Subsidiary by the
Parent in accordance with the terms of this Agreement.

“Revolving Credit Agent” means Wells Fargo Retail Finance, LLC, in its capacity
as administrative agent under the Revolving Credit Agreement.

“Revolving Credit Agreement” means that certain Amended and Restated Loan and
Guaranty Agreement, dated as of the date hereof, among the Borrower, the
institutions party thereto as lenders, the Revolving Credit Agent, and Citigroup
Global Markets Inc., as co-lead arranger thereunder.

“Revolving Credit Loan Documents” means, collectively, the Revolving Credit
Agreement, all guaranties, pledges, security agreements and similar agreements
entered into in connection therewith to guaranty or secure any Revolving Credit
Obligations and each other certificate, agreement and other document entered
into in connection therewith (other than the Intercreditor Agreement).

“Revolving Credit Obligations” means the “Obligations” under and as defined in
the Revolving Credit Agreement.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“S&P” means Standard & Poor’s Rating Services.

“Sale Leaseback” shall mean any transaction or series of related transactions
pursuant to which the Borrower or any of the Restricted Subsidiaries (i) sells,
transfers or otherwise disposes of any property, real or personal, whether now
owned or hereafter acquired, and (ii) as part of such transaction, thereafter
rents or leases such property or other property that it intends to use for
substantially the same purpose or purposes as the property being sold,
transferred or disposed.

“Sarbanes-Oxley Act” means the United States Sarbanes-Oxley Act of 2002.

“Secured Obligations” means, in the case of the Borrower, the Obligations and,
in the case of any other Loan Party, the obligations of such Loan Party under
the Guaranty and the other Loan Documents to which it is a party.

“Secured Parties” means the Lenders, the Administrative Agent and any other
holder of any Secured Obligation.

“Securities Account” has the meaning given to such term in the UCC.

“Securities Account Control Agreement” has the meaning specified in the Pledge
and Security Agreement.

“Security” means any Stock, Stock Equivalent, voting trust certificate, bond,
debenture, note or other evidence of Indebtedness, whether secured, unsecured,
convertible or subordinated, or any certificate of interest, share or
participation in, any temporary or interim certificate for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing, but shall not include any evidence of the Obligations.

“Selling Lender” has the meaning specified in Section 11.7 (Sharing of Payments,
Etc.).

“Senior Secured Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness of the Parent and the Restricted
Subsidiaries that is secured by Liens outstanding as of such date (minus the
cash and Cash Equivalents of the Loan Parties that are not subject to any Lien
securing Indebtedness other than the Obligations or Revolving Credit
Obligations) to (b) the aggregate amount of Consolidated EBITDA of the Parent
and the Restricted Subsidiaries for the most recently ended Test Period.

“Solvent” means, with respect to any Person as of any date of determination,
that, as of such date, (a) the value of the assets of such Person (both at fair
value and present fair saleable value) is greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person,
(b) such Person is able to pay all liabilities of such Person as such
liabilities mature and (c) such Person does not have unreasonably small capital.
In computing the amount of contingent or unliquidated liabilities at any time,
such liabilities shall be computed at the amount that, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

“Special Purpose Vehicle” means any special purpose funding vehicle identified
as such in writing by any Lender to the Administrative Agent.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Stock” means shares of capital stock (whether denominated as common stock or
preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity,
whether voting or non-voting.

“Stock Equivalents” means all securities convertible into or exchangeable for
Stock and all warrants, options or other rights to purchase or subscribe for any
Stock, whether or not presently convertible, exchangeable or exercisable.

“Subordinated Notes” means the 8.25% Senior Subordinated Notes due 2013 issued
pursuant to the Subordinated Notes Indenture.

“Subordinated Notes Indenture” means the Indenture, dated as of July 28, 2003,
between the Borrower and Wells Fargo Bank Minnesota, National Association, as
trustee.

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company or other business entity of which an aggregate of 50%
or more of the outstanding Voting Stock is, at the time, directly or indirectly,
owned or controlled by such Person or one or more Subsidiaries of such Person.

“Substitute Institution” has the meaning specified in Section 2.15 (Substitution
of Lenders).

“Substitution Notice” has the meaning specified in Section 2.15 (Substitution of
Lenders).

“Target” means The Stride Rite Corporation, a Massachusetts corporation.

“Target Credit Agreement” means that certain Credit Agreement, dated as of
September 16, 2005, among the Target, the institutions party thereto as lenders
and Bank of America, N.A. as administrative agent thereunder, among others.

“Tax Affiliate” means, with respect to any Person, (a) any Subsidiary of such
Person and (b) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns; provided, that
when used with respect the Borrower or Parent, the term “Tax Affiliate” shall
not include any Unrestricted Subsidiary.

“Tax Return” has the meaning specified in Section 4.8(a) (Taxes).

“Taxes” has the meaning specified in Section 2.14(a) (Taxes).

“Term Loans” means, collectively, the Closing Date Term Loans and the
Incremental Term Loans.

“Term Loan Commitment” means, with respect to each Lender, (a) the commitment of
such Lender to make its Term Loans to the Borrower in the aggregate principal
amount not to exceed the amount set forth opposite such Lender’s name on
Schedule I (Term Loan Commitments) under the caption “Term Loan Commitment” as
amended to reflect each Assignment and Acceptance executed by such Lender and as
such amount may be reduced pursuant to this Agreement, and (b) any commitment by
such Lender that is included as part of a Facility Increase to make its
Incremental Term Loans to the Borrower on any Facility Increase Date, as such
amount may be reduced pursuant to this Agreement. “Term Loan Commitments” means
the aggregate Term Loan Commitments of all Lenders.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“Term Loan Facility” means the Term Loan Commitments, the facility described in
Section 2.1(a) (The Term Loans) providing for Closing Date Term Loans to the
Borrower by the Lenders on the Closing Date in an aggregate principal amount of
$725,000,000 and the facility described in Section 2.1(b) (The Term Loans)
providing for one or more Incremental Term Loans to the Borrower by the
Incremental Term Loan Lenders in an aggregate principal amount not to exceed
$200,000,000.

“Term Loan Maturity Date” means (i) with respect to the Closing Date Term Loan,
the Closing Date Term Loan Maturity Date and (ii) with respect to each
Incremental Term Loan, the Incremental Term Loan Maturity Date.

“Test Period” shall mean, for any determination under this Agreement, the period
of the most recently ended four consecutive fiscal quarters of the Parent for
which Financial Statements have been delivered to the Administrative Agent
pursuant to Section 6.1 (Financial Statements).

“Title IV Plan” means a pension plan, other than a Multiemployer Plan, covered
by Title IV of ERISA and to which any Group Member or any ERISA Affiliate has
any obligation or liability, contingent or otherwise.

“Total Assets” means the total amount of all assets of the Borrower, the Parent
and the Restricted Subsidiaries, determined on a Consolidated basis as shown on
the most recent balance sheet of the Parent.

“Total Leverage Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness of the Parent and the Restricted Subsidiaries
outstanding as of such date (minus the cash and Cash Equivalents of the Loan
Parties that are not subject to any Lien securing Indebtedness other than the
Obligations or Revolving Credit Obligations) to (b) the aggregate amount of
Consolidated EBITDA of the Parent and the Restricted Subsidiaries for the most
recently ended Test Period.

“Total Liabilities” of any Person means, at any date, all obligations that would
be included in determining total liabilities as shown on the liabilities side of
a Consolidated balance sheet of such Person and its Subsidiaries at such date;
provided, however, that, regardless of whether the same would be so shown,
“Total Liabilities” of any Person shall include all Indebtedness of such Person
or any of its Subsidiaries at such date (other than intercompany Indebtedness)
and shall exclude the greater of the liquidation preference and the redemption
price of any outstanding Disqualified Stock of such Person at such date.

“Transactions” means, collectively, the transactions contemplated in the Merger
Agreement, the amendment and restatement of the Existing Revolving Credit
Agreement pursuant to Revolving Credit Agreement, the refinancing in full of the
Target Credit Agreement, the Borrowing of the Closing Date Term Loans under this
Agreement and the payment of related fees and expenses.

“UCC” has the meaning specified in the Pledge and Security Agreement.
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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

“United States” means the United States of America.

“Unrestricted Subsidiary” means each direct and indirect Subsidiary of the
Parent that is designated by the board of directors of the Parent as an
Unrestricted Subsidiary pursuant to a Section 7.12 (Designation of Subsidiaries)
on or after the Closing Date and any Subsidiary of such Unrestricted Subsidiary.

“U.S. Lender” means each Lender (or the Administrative Agent) that is a Domestic
Person.

“Voting Stock” means Stock of any Person having ordinary power to vote in the
election of members of the board of directors, managers, trustees or other
controlling Persons, of such Person (irrespective of whether, at the time, Stock
of any other class or classes of such entity shall have or might have voting
power by reason of the happening of any contingency).

“Wholly-Owned” means, with respect to a Subsidiary of any Person, any Subsidiary
of such Person, all of the Stock of which (other than director’s qualifying
shares, as may be required by law) is owned by such Person, either directly or
indirectly through one or more Wholly-Owned Subsidiaries of such Person.

“Withdrawal Liability” means, with respect to the Parent or any of the
Restricted Subsidiaries at any time, the aggregate liability incurred (whether
or not assessed) with respect to all Multiemployer Plans pursuant to Section
4201 of ERISA or for increases in contributions required to be made pursuant to
Section 4243 of ERISA.

“Working Capital” means, for any Person at any date, the amount, if any, by
which the Consolidated Current Assets of such Person at such date exceeds the
Consolidated Current Liabilities of such Person at such date.
 
Section 1.2 Computation of Time Periods

In this Agreement, in the computation of periods of time from a specified date
to a later specified date, the word “from” means “from and including” and the
words “to” and “until” each mean “to but excluding” and the word “through” means
“to and including.”

Section 1.3 Accounting Terms and Principles

(a) Except as set forth below, all accounting terms not specifically defined
herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.

(b) If any change in the accounting principles used in the preparation of the
most recent Financial Statements referred to in Section 6.1 (Financial
Statements) is hereafter required or permitted by the rules, regulations,
pronouncements and opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or any successors thereto)
and such change is adopted by the Borrower with the agreement of the Borrower’s
Accountants and results in a change in any of the calculations required by
Article VIII (Negative Covenants) that would not have resulted had such
accounting change not occurred, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably reflect such
change such that the criteria for evaluating compliance with such covenants by
the Borrower shall be the same after such change as if such change had not been
made; provided, however, that no change in GAAP that would affect a calculation
that measures compliance with any covenant contained in Article VIII (Negative
Covenants) shall be given effect until such provisions are amended to reflect
such changes in GAAP.
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Section 1.4 Conversion of Foreign Currencies

(a) Consolidated Funded Indebtedness. Consolidated Funded Indebtedness
denominated in any currency other than Dollars shall be calculated using the
Dollar Equivalent thereof as of the date of the Financial Statements on which
such Consolidated Funded Indebtedness is reflected.

(b) Dollar Equivalents. The Administrative Agent shall reasonably determine the
Dollar Equivalent of any amount as required hereby, and a determination thereof
by the Administrative Agent shall be conclusive absent manifest error. The
Administrative Agent may, but shall not be obligated to, rely on any
determination made by any Loan Party in any document delivered to the
Administrative Agent. The Administrative Agent may determine or redetermine the
Dollar Equivalent of any amount on any date either in its own discretion or upon
the request of any Lender.

(c) Rounding-Off. The Administrative Agent may set up appropriate rounding off
mechanisms or otherwise round-off amounts hereunder to the nearest higher or
lower amount in whole Dollar or cent to ensure amounts owing by any party
hereunder or that otherwise need to be calculated or converted hereunder are
expressed in whole Dollars or in whole cents, as may be reasonably necessary or
appropriate.

Section 1.5 Certain Terms

(a) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms
refer to this Agreement as a whole and not to any particular Article, Section,
subsection or clause in, this Agreement.

(b) Unless otherwise expressly indicated herein, (i) references in this
Agreement to an Exhibit, Schedule, Article, Section, clause or sub-clause refer
to the appropriate Exhibit or Schedule to, or Article, Section, clause or
sub-clause in this Agreement and (ii) the words “above” and “below”, when
following a reference to a clause or a sub-clause of any Loan Document, refer to
a clause or sub-clause within, respectively, the same Section or clause.

(c) Each agreement defined in this ARTICLE I shall include all appendices,
exhibits and schedules thereto. Unless the prior written consent of the
Requisite Lenders or the Administrative Agent is required hereunder or under the
Intercreditor Agreement for an amendment, restatement, supplement or other
modification to any such agreement and such consent is not obtained, references
in this Agreement to such agreement shall be to such agreement as so amended,
restated, supplemented or modified.

(d) References in this Agreement to any statute shall be to such statute as
amended or modified from time to time and to any successor legislation thereto,
in each case as in effect at the time any such reference is operative.
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(e) The term “including” when used in any Loan Document means “including without
limitation” except when used in the computation of time periods.

(f) The terms “Lender” and “Administrative Agent” include, without limitation,
their respective successors.

(g) Upon the appointment of any successor Administrative Agent pursuant to
Section 10.7 (Successor Administrative Agent), references to Citi in Section
10.4 (The Administrative Agent Individually) and to Citibank in the definitions
of Base Rate, Dollar Equivalent, and Eurodollar Rate shall be deemed to refer to
the financial institution then acting as the Administrative Agent or one of its
Affiliates if it so designates.

ARTICLE II

THE TERM LOAN FACILITY

Section 2.1 The Term Loans

(a) Closing Date Term Loans. On the terms and subject to the conditions
contained in this Agreement, each Lender severally agrees to make a loan (each a
“Closing Date Term Loan”) in Dollars to the Borrower on the Closing Date, in an
amount not to exceed such Lender’s Term Loan Commitment. No amount of the
Closing Date Term Loan repaid or prepaid by the Borrower may be reborrowed
hereunder, and no Borrowing under the Term Loan Facility shall be allowed other
than the advance set forth in the first sentence of this Section 2.1(a) and any
Incremental Term Loan advanced as part of any Facility Increase.

(b) Incremental Term Loans.

(i) The Borrower shall have the right to send to the Administrative Agent, after
the Closing Date but on or prior to the Closing Date Term Loan Maturity Date, a
Facility Increase Notice to request an increase in the aggregate principal
amount of the Term Loan Facility (each a “Facility Increase”) to be effectuated
by the disbursement of one or more additional Term Loans (each an “Incremental
Term Loan”) in excess of the Closing Date Term Loans, in a principal amount not
to exceed $200,000,000 in the aggregate for all such requests. The
Administrative Agent shall promptly notify each Lender of the proposed Facility
Increase and of the proposed terms and conditions therefor agreed between the
Borrower and the Administrative Agent. Each such Lender (and each of their
Affiliates and Approved Funds) may, in its sole discretion, commit to
participate in such Facility Increase by forwarding its commitment therefor to
the Administrative Agent in form and substance reasonably satisfactory to the
Administrative Agent. The Administrative Agent shall allocate, in its discretion
(after consultation with the Borrower) but in amounts not to exceed for each
such Lender the commitment received from such Lender, Affiliate or Approved
Fund, the Term Loan Commitments to be made as part of the Facility Increase to
the Lenders from which it has received such written commitments; provided,
however, the Administrative Agent shall be entitled, after consultation with the
Borrower, to allocate to any Eligible Assignee any amount of such Facility
Increase whether or not it has obtained commitments from existing Lenders. Each
Facility Increase shall become effective on a date agreed by the Borrower and
the Administrative Agent (each a “Facility Increase Date”), which shall be in
any case on or after the date of satisfaction of the conditions precedent set
forth in Section 3.2 (Conditions Precedent to Incremental Term Loans). The
Administrative Agent shall notify the Lenders and the Borrower, on or before
1:00 p.m. (New York time) on the day following the Facility Increase Date of the
effectiveness of the Facility Increase on the Facility Increase Date and shall
record in the Register all applicable additional information in respect of such
Facility Increase.
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(ii) (A) The Incremental Term Loans and Term Loan Commitments extended pursuant
to any Facility Increase shall rank pari passu in right of payment with all
other Term Loans and Term Loan Commitments, (B) the weighted average life to
maturity of the Incremental Term Loans shall not be shorter than the remaining
average life to maturity of the Term Loans prior to giving effect to such
Facility Increase, (C) the Incremental Term Loan Maturity Date for such
Incremental Term Loans shall not be earlier than the Closing Date Term Loan
Maturity Date, (D) the interest rate margins or yield to maturity applicable to
such Incremental Term Loans shall not be more than 0.50% per annum higher than
the interest rate margins or yield to maturity applicable to the Term Loans
prior to giving effect to such Facility Increase, unless the interest rate
margins or yield to maturity with respect to the Term Loans are increased by an
amount equal to the difference between the interest rate margins or yield to
maturity with respect to the Incremental Term Loans and the corresponding
interest rate margins or yield to maturity for the Term Loans minus 0.50%, (E)
all other terms of such Incremental Term Loans, if not consistent with the terms
of the existing Term Loan Facility, shall be as agreed between the Borrower and
the Lenders providing such Incremental Term Loans, and (F) after giving effect
to such Facility Increase, the Senior Secured Leverage Ratio, determined on a
Pro Forma Basis, shall be less than 3.0 to 1.

(iii) Any Facility Increase will be effected in accordance with procedures
reasonably satisfactory to the Administrative Agent. Nothing in this Agreement
shall be construed to obligate any Lender to negotiate for (whether or not in
good faith), solicit, provide or consent to any increase in the Term Loan
Commitments, and any such increase may be subject to changes in any term of this
Agreement reasonably acceptable to the Administrative Agent and the Borrower.

Section 2.2 Borrowing Procedures

(a) Each Borrowing shall be made on notice given by the Borrower to the
Administrative Agent not later than 11:00 a.m. (New York time) (i) one Business
Day, in the case of a Borrowing of Base Rate Loans and (ii) three Business Days,
in the case of a Borrowing of Eurodollar Rate Loans, prior to the date of the
proposed Borrowing. Each such notice shall be in substantially the form of
Exhibit C (Form of Notice of Borrowing) (a “Notice of Borrowing”), specifying,
(A) the date of such proposed Borrowing (which, in the case of the Closing Date
Term Loan Borrowing, shall be the Closing Date), (B) the aggregate amount of
such proposed Borrowing, (C) whether any portion of the proposed Borrowing will
be of Base Rate Loans or Eurodollar Rate Loans and (D) for each Eurodollar Rate
Loan, the initial Interest Period or Periods thereof. Term Loans shall be made
as Base Rate Loans unless, subject to Section 2.12 (Special Provisions Governing
Eurodollar Rate Loans), the Notice of Borrowing specifies that all or a portion
thereof shall be Eurodollar Rate Loans.
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(b) The Administrative Agent shall give to each Lender prompt notice of the
Administrative Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate
Loans are properly requested in such Notice of Borrowing, the applicable
interest rate determined pursuant to Section 2.12(a) (Determination of Interest
Rate). Each Lender shall, before 11:00 am. (New York time) on the date of the
proposed Borrowing, make available to the Administrative Agent at its address
referred to in Section 11.8 (Notices, Etc.), in immediately available funds,
such Lender’s Ratable Portion of such proposed Borrowing. Upon fulfillment (or
due waiver in accordance with Section 11.1 (Amendments, Waivers, Etc.)) (i) on
the Closing Date, of the applicable conditions set forth in Section
3.1 (Conditions Precedent to Closing Date Term Loans) and (ii) at any time
(including the Closing Date), of the applicable conditions set forth in Section
3.2 (Conditions Precedent to Incremental Term Loans), and after the
Administrative Agent’s receipt of such funds, the Administrative Agent shall
make such funds available to the Borrower.

(c) Unless the Administrative Agent shall have received notice from a Lender
prior to the date of any proposed Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s Ratable Portion of such
Borrowing (or any portion thereof), the Administrative Agent may assume that
such Lender has made such Ratable Portion available to the Administrative Agent
on the date of such Borrowing in accordance with this Section 2.2 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such Ratable Portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to the Term Loans comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate for the first Business Day and thereafter at the
interest rate applicable at the time to the Term Loans comprising such
Borrowing. If such Lender shall repay to the Administrative Agent such
corresponding amount, such corresponding amount so repaid shall constitute such
Lender’s Term Loan as part of such Borrowing for purposes of this Agreement. If
the Borrower shall repay to the Administrative Agent such corresponding amount,
such payment shall not relieve such Lender of any obligation it may have
hereunder to the Borrower.

(d) The failure of any Lender to make on the date specified any Term Loan or any
payment required by it shall not relieve any other Lender of its obligations to
make such Term Loan or payment on such date but no such other Lender shall be
responsible for the failure of any Lender to make a Term Loan or payment
required under this Agreement.

Section 2.3 Reduction and Termination of the Term Loan Commitments

(a) Any unused Term Loan Commitment (other than with respect to a Facility
Increase) shall terminate on the Closing Date.

Section 2.4 Repayment of Term Loans

(a) The Borrower promises to repay the Closing Date Term Loans at the dates and
in the amounts set forth below:
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DATE
AMOUNT
December 31, 2007
$1,812,500
   
March 31, 2008
$1,812,500
June 30, 2008
$1,812,500
September 30, 2008
$1,812,500
December 31, 2008
$1,812,500
   
March 31, 2009
$1,812,500
June 30, 2009
$1,812,500
September 30, 2009
$1,812,500
December 31, 2009
$1,812,500
   
March 31, 2010
$1,812,500
June 30, 2010
$1,812,500
September 30, 2010
$1,812,500
December 31, 2010
$1,812,500
   
March 31, 2011
$1,812,500
June 30, 2011
$1,812,500
September 30, 2011
$1,812,500
December 31, 2011
$1,812,500
   
March 31, 2012
$1,812,500
June 30, 2012
$1,812,500
September 30, 2012
$1,812,500
December 31, 2012
$1,812,500
   
March 31, 2013
$1,812,500
June 30, 2013
$1,812,500
September 30, 2013
$1,812,500
December 31, 2013
$1,812,500
   
March 31, 2014
$1,812,500
June 30, 2014
$1,812,500
   
Term Loan Maturity Date
$676,062,500;

provided, however, that the Borrower shall repay the entire unpaid principal
amount of the Term Loans on the Closing Date Term Loan Maturity Date.

(b) The Borrower promises to repay the Incremental Term Loans on the dates and
in the amounts to be agreed by the Administrative Agent and the Borrower prior
to the applicable Facility Increase Date; provided, however, that the Borrower
shall repay the entire unpaid principal amount of each such Incremental Term
Loan on the Incremental Term Loan Maturity Date.

(c) Payless ShoeSource, Inc., a Missouri corporation, and Payless ShoeSource
Distribution, Inc., a Kansas corporation, hereby agree that, in addition to and
without limitation to the obligations of such parties as Guarantors pursuant to
the Guaranty, such parties hereby agree, in respect to the Obligations, to be
jointly and severally liable with the Borrower as if such parties were borrowers
hereunder.
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Section 2.5 Evidence of Debt

(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing Indebtedness of the Borrower to such Lender resulting
from each Term Loan of such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.

(b) (i) The Administrative Agent, acting as agent of the Borrower solely for
this purpose and for tax purposes, shall establish and maintain at its address
referred to in Section 11.8 (Notices, Etc.) a record of ownership (the
“Register”) in which the Administrative Agent agrees to register by book entry
the Administrative Agent’s, each Lender’s interest in each Term Loan and in the
right to receive any payments hereunder and any assignment of any such interest
or rights. In addition, the Administrative Agent, acting as agent of the
Borrower solely for this purpose and for tax purposes, shall establish and
maintain accounts in the Register in accordance with its usual practice in which
it shall record (i) the names and addresses of the Lenders, (ii) the Term Loan
Commitments of each Lender from time to time, (iii) the amount of each Term Loan
made and, if a Eurodollar Rate Loan, the Interest Period applicable thereto,
(iv) the amount of any principal or interest due and payable, and paid, by the
Borrower to, or for the account of, each Lender hereunder and (v) the amount of
any sum received by the Administrative Agent hereunder from the Borrower,
whether such sum constitutes principal or interest (and the type of Term Loan to
which it applies), fees, expenses or other amounts due under the Loan Documents
and each Lender’s share thereof, if applicable.

(i) Notwithstanding anything to the contrary contained in this Agreement, the
Term Loans (including the Notes evidencing such Term Loans) are registered
obligations and the right, title, and interest of the Lenders and their
assignees in and to such Term Loans, as the case may be, shall be transferable
only upon notation of such transfer in the Register. A Note shall only evidence
the Lender’s or a registered assignee’s right, title and interest in and to the
related Term Loan. This Section 2.5(b) and Section 11.2 (Assignments and
Participations) shall be construed so that the Term Loans are at all times
maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2)
and 881(c)(2) of the Code and any related regulations (or any successor
provisions of the Code or such regulations).

(c) The entries made in the Register and in the accounts therein maintained
pursuant to clauses (a) and (b) above shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrower to repay the Term Loans
in accordance with their terms. In addition, the Loan Parties, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender for all purposes of this Agreement.
Information contained in the Register with respect to any Lender shall be
available for inspection by the Borrower, the Administrative Agent or such
Lender at any reasonable time and from time to time upon reasonable prior
notice.

(d) Notwithstanding any other provision of the Agreement, in the event that any
Lender requests that the Borrower execute and deliver a promissory note or notes
payable to such Lender in order to evidence the Indebtedness owing to such
Lender by the Borrower hereunder, the Borrower shall promptly execute and
deliver a Note or Notes to such Lender evidencing any Term Loans of such Lender,
substantially in the forms of Exhibit B (Form of Term Note).
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Section 2.6 Optional Prepayments

(a) The Borrower may, upon at least three Business Days’ prior notice to the
Administrative Agent stating the proposed date and aggregate principal amount of
the prepayment, prepay the outstanding principal amount of the Term Loans, in
whole or in part, together with accrued interest to the date of such prepayment
on the principal amount prepaid; provided, however, that if any prepayment of
any Eurodollar Rate Loan is made by the Borrower other than on the last day of
an Interest Period for such Term Loan, the Borrower shall also pay any amounts
owing pursuant to Section 2.12(e) (Breakage Costs); and, provided, further, that
each partial prepayment shall be in an aggregate amount not less than $1,000,000
or integral multiples of $500,000 in excess thereof and that any such partial
prepayment shall be applied to reduce ratably the remaining installments of such
outstanding principal amount of the Term Loans in the stated order of their
maturities. Upon the giving of such notice of prepayment, the principal amount
of the Term Loans specified to be prepaid shall become due and payable on the
date specified for such prepayment.

(b) The Borrower shall have no right to prepay the principal amount of any Term
Loan other than as provided in this Section 2.6.

Section 2.7 Mandatory Prepayments

(a) Upon receipt by the Borrower, the Parent or any of the Restricted
Subsidiaries of Net Cash Proceeds arising from an Included Asset Sale, Recovery
Event or Debt Issuance (other than (i) a Debt Issuance permitted pursuant to
clauses (a) through (l) of Section 8.1 (Indebtedness) and (ii) any Debt Issuance
permitted pursuant to clause (m) of Section 8.1 (Indebtedness) in excess of the
first $450,000,000 in principal amount thereof) the Borrower shall prepay the
Term Loans. Any such mandatory prepayment shall be applied in accordance with
clause (c) below.

(b) The Borrower shall prepay the Term Loans within 120 days after the last day
of each fiscal year (beginning with the fiscal year ended January 31, 2009), in
an amount equal to 25% of Excess Cash Flow for such fiscal year; provided, that
the amount of such prepayment shall be reduced to 0% of such Excess Cash Flow if
the Total Leverage Ratio of the Borrower at the end of such fiscal year is less
than 2.0 to 1. Any such mandatory prepayment shall be applied in accordance with
clause (c) below.

(c) Subject to the provisions of Section 2.11(g) (Payments and Computations),
any prepayments made by the Borrower required to be applied in accordance with
this clause (c) shall be applied to reduce ratably the remaining installments of
such outstanding principal amount of the Term Loans on a pro rata basis.

Section 2.8 Interest

(a) Rate of Interest. All Term Loans and the outstanding amount of all other
Obligations (other than pursuant to Hedging Contracts that are Loan Documents,
to the extent such Hedging Contracts provide for the accrual of interest on
unpaid obligations) shall bear interest, in the case of Term Loans, on the
unpaid principal amount thereof from the date such Term Loans are made and, in
the case of such other Obligations, from the date such other Obligations are due
and payable until, in all cases, paid in full, except as otherwise provided in
clause (c) below, as follows:
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(i) if a Base Rate Loan or such other Obligation, at a rate per annum equal to
the sum of (A) the Base Rate as in effect from time to time and (B) the
Applicable Margin in effect from time to time; and

(ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum of (A) the
Eurodollar Rate determined for the applicable Interest Period and (B) the
Applicable Margin in effect from time to time during such Eurodollar Interest
Period.

(b) Interest Payments. (i) Interest accrued on each Base Rate Loan shall be
payable in arrears (A) on the first Business Day of each calendar month,
commencing on the first such day following the making of such Base Rate Loan,
(B) upon the payment or prepayment thereof in full or in part and (C) if not
previously paid in full, at maturity (whether by acceleration or otherwise) of
such Base Rate Loan, (ii) interest accrued on each Eurodollar Rate Loan shall be
payable in arrears (A) on the last day of each Interest Period applicable to
such Eurodollar Rate Loan and, if such Interest Period has a duration of more
than three months, on each date during such Interest Period occurring every
three months from the first day of such Interest Period, (B) upon the payment or
prepayment thereof in full or in part and (C) if not previously paid in full, at
maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan and
(iii) interest accrued on the amount of all other Obligations shall be payable
on demand from and after the time such Obligation becomes due and payable
(whether by acceleration or otherwise).

(c) Default Interest. Notwithstanding the rates of interest specified in
clause (a) above or elsewhere herein, if the Borrower shall default in the
payment of the principal of or interest on any Term Loan or any other amount
becoming due hereunder, by acceleration or otherwise, the Borrower shall on
demand from time to time pay interest on such defaulted amount up to (but not
including) the date of actual payment (after as well as before judgment) at a
rate that is two percent per annum in excess of the rate of interest applicable
to such Term Loan or other Obligation from time to time. Such interest shall be
payable on the date that would otherwise be applicable to such interest pursuant
to clause (b) above or otherwise on demand.

Section 2.9 Conversion/Continuation Option

(a) The Borrower may elect (i) at any time on any Business Day to convert Base
Rate Loans or any portion thereof to Eurodollar Rate Loans and (ii) at the end
of any applicable Interest Period, to convert Eurodollar Rate Loans or any
portion thereof into Base Rate Loans or to continue such Eurodollar Rate Loans
or any portion thereof for an additional Interest Period; provided, however,
that the aggregate amount of the Eurodollar Rate Loans for each Interest Period
must be in the amount of at least $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. Each conversion or continuation shall be allocated
among the Term Loans of each Lender in accordance with such Lender’s Ratable
Portion. Each such election shall be in substantially the form of Exhibit D
(Form of Notice of Conversion or Continuation) (a “Notice of Conversion or
Continuation”) and shall be made by giving the Administrative Agent at least
three Business Days’ prior written notice specifying (A) the amount and type of
Term Loan being converted or continued, (B) in the case of a conversion to or a
continuation of Eurodollar Rate Loans, the applicable Interest Period and (C) in
the case of a conversion, the date of such conversion.
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(b) The Administrative Agent shall promptly notify each Lender of its receipt of
a Notice of Conversion or Continuation and of the options selected therein.
Notwithstanding the foregoing, no conversion in whole or in part of Base Rate
Loans to Eurodollar Rate Loans and no continuation in whole or in part of
Eurodollar Rate Loans upon the expiration of any applicable Interest Period
shall be permitted at any time at which (A) a Default or an Event of Default
shall have occurred and be continuing or (B) the continuation of, or conversion
into, a Eurodollar Rate Loan would violate any provision of Section 2.12
(Special Provisions Governing Eurodollar Rate Loans). If, within the time period
required under the terms of this Section 2.9, the Administrative Agent does not
receive a Notice of Conversion or Continuation from the Borrower containing a
permitted election to continue any Eurodollar Rate Loans for an additional
Interest Period or to convert any such Term Loans, then, upon the expiration of
the applicable Interest Period, such Term Loans shall be automatically converted
to Base Rate Loans. Each Notice of Conversion or Continuation shall be
irrevocable.

Section 2.10 Fees

The Parent has agreed to pay to the Administrative Agent and the Arrangers
additional fees, the amount and dates of payment of which are embodied in the
Fee Letter.

Section 2.11 Payments and Computations

(a) The Borrower shall make each payment hereunder (including fees and expenses)
not later than 11:00 a.m. (New York time) on the day when due, in the currency
specified herein (or, if no such currency is specified, in Dollars) to the
Administrative Agent at its address referred to in Section 11.8 (Notices, Etc.)
in immediately available funds without set-off or counterclaim. The
Administrative Agent shall promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal, interest or
fees to the Lenders, in accordance with the application of payments set forth in
clause (f) or (g) below, as applicable, for the account of their respective
Applicable Lending Offices; provided, however, that amounts payable pursuant to
Section 2.13 (Capital Adequacy), Section 2.14 (Taxes) or Section 2.12(c) or
(d) (Special Provisions Governing Eurodollar Rate Loans) shall be paid only to
the affected Lender or Lenders. Payments received by the Administrative Agent
after 11:00 a.m. (New York time) shall be deemed to be received on the next
Business Day.

(b) All computations of interest and of fees shall be made by the Administrative
Agent on the basis of a year of 360 days (or, in the case of Term Loans bearing
interest based on Citibank’s base rate, 365 days), in each case for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest and fees are payable. Each determination by
the Administrative Agent of a rate of interest hereunder shall be conclusive and
binding for all purposes, absent manifest error.

(c) Each payment by the Borrower of any Term Loan (including interest or fees in
respect thereof) and each reimbursement of various costs, expenses or other
Obligation shall be made in the currency in which such Term Loan was made or
such cost, expense or other Obligation was incurred; provided, however, that
other than for payments in respect of a Term Loan, Loan Documents duly executed
by the Administrative Agent or any Hedging Contract may specify other currencies
of payment for Obligations created by or directly related to such Loan Document
or Hedging Contract.
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(d) Whenever any payment hereunder shall be stated to be due on a day other than
a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the immediately preceding Business Day. All
repayments of any Term Loans shall be applied as follows: first, to repay such
Term Loans outstanding as Base Rate Loans and then, to repay such Term Loans
outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans having
earlier expiring Eurodollar Interest Periods being repaid prior to those having
later expiring Eurodollar Interest Periods.

(e) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due hereunder that the Borrower will
not make such payment in full, the Administrative Agent may assume that the
Borrower has made such payment in full to the Administrative Agent on such date
and the Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent that the Borrower shall not have made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
together with interest thereon (at the Federal Funds Rate for the first Business
Day and thereafter, at the rate applicable to Base Rate Loans) for each day from
the date such amount is distributed to such Lender until the date such Lender
repays such amount to the Administrative Agent.

(f) Except for payments and other amounts received by the Administrative Agent
and applied in accordance with the provisions of clause (g) below (or required
to be applied in accordance with Section 2.7(c) (Mandatory Prepayments)), all
payments and any other amounts received by the Administrative Agent from or for
the benefit of the Borrower shall be applied as follows: first, to pay principal
of, and interest on, any portion of the Term Loans the Administrative Agent may
have advanced pursuant to the express provisions of this Agreement on behalf of
any Lender, for which the Administrative Agent has not then been reimbursed by
such Lender or the Borrower, second, to pay all other Obligations then due and
payable and third, as the Borrower so designates. Payments in respect of the
Term Loans received by the Administrative Agent shall be distributed to each
Lender in accordance with such Lender’s Ratable Portion of the Term Loans and
all payments of fees and all other payments in respect of any other Obligation
shall be allocated among such of the Lenders as are entitled thereto and, for
such payments allocated to the Lenders, in proportion to their respective
Ratable Portions.

(g) The Borrower hereby irrevocably waives the right to direct the application
of any and all payments in respect of the Obligations and any proceeds of
Collateral after the occurrence and during the continuance of an Event of
Default and agrees that, notwithstanding the provisions of Section 2.7(c)
(Mandatory Prepayments) and clause (f) above, the Administrative Agent may, and,
upon either (A) the written direction of the Requisite Lenders or (B) the
acceleration of the Obligations pursuant to Section 9.2 (Remedies) shall,
subject to the provisions of the Intercreditor Agreement, apply all payments in
respect of any Obligations and all other proceeds of Collateral in the following
order:
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(i) first, to pay Secured Obligations in respect of any expense reimbursements
or indemnities then due to the Administrative Agent;

(ii) second, to pay Secured Obligations in respect of any expense reimbursements
or indemnities then due to the Lenders;

(iii) third, to pay Secured Obligations in respect of any fees then due to the
Administrative Agent and the Lenders;

(iv) fourth, to pay interest then due and payable in respect of the Term Loans;

(v) fifth, to pay or prepay principal amounts on the Term Loans, ratably to the
aggregate principal amount of such Term Loans;

(vi) sixth, to pay amounts owing with respect to Hedging Contracts, ratable to
the aggregate principal amount of such Obligations owing with respect to Hedging
Contracts; and

(vii) seventh, to the ratable payment of all other Secured Obligations;

provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any Secured Obligation described in any of
clauses (i), (ii), (iii), (iv), (v), (vi) and (vi) above, the available funds
being applied with respect to any such Secured Obligation (unless otherwise
specified in such clause) shall be allocated to the payment of such Secured
Obligation ratably, based on the proportion of the Administrative Agent’s and
each Lender’s interest in the aggregate outstanding Secured Obligations
described in such clauses. The order of priority set forth in clauses (i), (ii),
(iii), (iv), (v), (vi) and (vi) above may at any time and from time to time be
changed by the agreement of the Requisite Lenders without necessity of notice to
or consent of or approval by the Borrower, any Secured Party that is not a
Lender or by any other Person that is not a Lender. The order of priority set
forth in clauses (i), (ii) and (iii) above may be changed only with the prior
written consent of the Administrative Agent in addition to that of the Requisite
Lenders.

Section 2.12 Special Provisions Governing Eurodollar Rate Loans

(a) Determination of Interest Rate

The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be
determined by the Administrative Agent pursuant to the procedures set forth in
the definition of “Eurodollar Rate.” The Administrative Agent’s determination
shall be presumed to be correct absent manifest error and shall be binding on
the Borrower.

(b) Interest Rate Unascertainable, Inadequate or Unfair

In the event that (i) the Administrative Agent determines that adequate and fair
means do not exist for ascertaining the applicable interest rates by reference
to which the Eurodollar Rate then being determined is to be fixed or (ii) the
Requisite Lenders notify the Administrative Agent that the Eurodollar Rate for
any Interest Period will not adequately reflect the cost to the Lenders of
making or maintaining such Term Loans for such Interest Period, the
Administrative Agent shall forthwith so notify the Borrower and the Lenders,
whereupon each Eurodollar Rate Loan shall automatically, on the last day of the
current Interest Period for such Term Loan, convert into a Base Rate Loan and
the obligations of the Lenders to make Eurodollar Rate Loans or to convert Base
Rate Loans into Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower that the Requisite Lenders have
determined that the circumstances causing such suspension no longer exist.
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(c) Increased Costs

If at any time any Lender determines that the introduction of, or any change in
or in the interpretation of, any law, treaty or governmental rule, regulation or
order (other than any change by way of imposition or increase of reserve
requirements included in determining the Eurodollar Rate) or the compliance by
such Lender with any guideline, request or directive from any central bank or
other Governmental Authority (whether or not having the force of law), shall
have the effect of increasing the cost to such Lender of agreeing to make or
making, funding or maintaining any Eurodollar Rate Loans, then the Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand
to the Administrative Agent), pay to the Administrative Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to the Borrower and the Administrative Agent by such Lender, shall be conclusive
and binding for all purposes, absent manifest error. For the avoidance of any
doubt, this clause (c) shall not apply to any increased costs attributable to
Taxes, which shall be governed by this Section 2.14 (Taxes).

(d) Illegality

Notwithstanding any other provision of this Agreement, if any Lender determines
that the introduction of, or any change in or in the interpretation of, any law,
treaty or governmental rule, regulation or order after the date of this
Agreement shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to make Eurodollar Rate Loans or to continue to fund or maintain
Eurodollar Rate Loans, then, on notice thereof and demand therefor by such
Lender to the Borrower through the Administrative Agent, (i) the obligation of
such Lender to make or to continue Eurodollar Rate Loans and to convert Base
Rate Loans into Eurodollar Rate Loans shall be suspended, and each such Lender
shall make a Base Rate Loan as part of any requested Borrowing of Eurodollar
Rate Loans and (ii) if the affected Eurodollar Rate Loans are then outstanding,
the Borrower shall immediately convert each such Term Loan into a Base Rate
Loan. If, at any time after a Lender gives notice under this clause (d), such
Lender determines that it may lawfully make Eurodollar Rate Loans, such Lender
shall promptly give notice of that determination to the Borrower and the
Administrative Agent, and the Administrative Agent shall promptly transmit the
notice to each other Lender. The Borrower’s right to request, and such Lender’s
obligation, if any, to make Eurodollar Rate Loans shall thereupon be restored.

(e) Breakage Costs

In addition to all amounts required to be paid by the Borrower pursuant to
Section 2.8 (Interest), the Borrower shall compensate each Lender, upon demand,
for all losses, expenses and liabilities (including any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Lender’s Eurodollar Rate Loans to the
Borrower but excluding any loss of the Applicable Margin on the relevant Term
Loans) that such Lender may sustain (i) if for any reason a proposed Borrowing,
conversion into or continuation of Eurodollar Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of Conversion or
Continuation given by the Borrower or in a telephonic request by it for
borrowing or conversion or continuation or a successive Interest Period does not
commence after notice therefor is given pursuant to Section 2.9
(Conversion/Continuation Option), (ii) if for any reason any Eurodollar Rate
Loan is prepaid (including mandatorily pursuant to Section 2.7 (Mandatory
Prepayments)) on a date that is not the last day of the applicable Interest
Period, (iii) as a consequence of a required conversion of a Eurodollar Rate
Loan to a Base Rate Loan as a result of any of the events indicated in clause
(d) above or (iv) as a consequence of any failure by the Borrower to repay
Eurodollar Rate Loans when required by the terms hereof. The Lender making
demand for such compensation shall deliver to the Borrower concurrently with
such demand a written statement as to such losses, expenses and liabilities, and
this statement shall be conclusive as to the amount of compensation due to such
Lender, absent manifest error.
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Section 2.13 Capital Adequacy

If at any time any Lender determines that (a) the adoption of, or any change in
or in the interpretation of, any law, treaty or governmental rule, regulation or
order after the date of this Agreement regarding capital adequacy, (b)
compliance with any such law, treaty, rule, regulation or order or (c)
compliance with any guideline or request or directive from any central bank or
other Governmental Authority (whether or not having the force of law) shall have
the effect of reducing the rate of return on such Lender’s (or any corporation
controlling such Lender’s) capital as a consequence of its obligations hereunder
to a level below that which such Lender or such corporation could have achieved
but for such adoption, change, compliance or interpretation, then, upon demand
from time to time by such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to the Administrative Agent for
the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender for such reduction. A
certificate as to such amounts submitted to the Borrower and the Administrative
Agent by such Lender shall be conclusive and binding for all purposes absent
manifest error.

Section 2.14 Taxes

(a) Except as otherwise provided in this Section 2.14, any and all payments by
any Loan Party under each Loan Document shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) in the case of each Lender and the Administrative Agent (A) taxes
measured by its net income, and franchise taxes imposed on it, and similar taxes
imposed by a jurisdiction (or any political subdivision thereof) under the laws
of which such Lender or the Administrative Agent (as the case may be) is
organized, does business, or has an office, and (B) any U.S. withholding taxes
payable with respect to payments under the Loan Documents under laws (including
any statute, treaty or regulation) in effect on the Closing Date (or, in the
case of (x) an Eligible Assignee, the date of the Assignment and Acceptance, (y)
a successor Administrative Agent, the date of the appointment of such
Administrative Agent or (z) a Lender that changes its Applicable Lending Office,
the date of such change) applicable to such Lender or the Administrative Agent,
as the case may be, but not excluding any U.S. withholding taxes payable as a
result of any change in such laws occurring after the Closing Date (or the date
of such Assignment and Acceptance or the date of such appointment of such
Administrative Agent or the date of such change of the Applicable Lending Office
of a Lender) and (ii) in the case of each Lender or the Administrative Agent,
taxes measured by its net income, and franchise taxes imposed on it as a result
of a present or former connection between such Lender or the Administrative
Agent and the jurisdiction of the Governmental Authority imposing such tax or
any taxing authority thereof or therein (other than any such connection arising
solely from such Lender or the Administrative Agent having executed, delivered
or performed its obligations or received a payment under, or having been a party
or havng enforced this Agreement or other Loan Document) (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”). If any Taxes shall be required by law to be
deducted from or in respect of any sum payable under any Loan Document to any
Lender or the Administrative Agent (w) the sum payable shall be increased as may
be necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14, such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (x) the relevant
Loan Party shall make such deductions, (y) the relevant Loan Party shall pay the
full amount deducted to the relevant taxing authority or other authority in
accordance with applicable law and (z) the relevant Loan Party shall deliver to
the Administrative Agent evidence of such payment.
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(b) In addition, each Loan Party agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction, and all liabilities with respect thereto, in
each case arising from any payment made under any Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, any Loan
Document (collectively, “Other Taxes”).

(c) Each Loan Party shall, jointly and severally, indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including any
Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.14) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including for penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor. Notwithstanding the foregoing, no Loan Party shall be
required to indemnify any Lender or the Administrative Agent for amounts paid by
such Lender or the Administrative Agent for Taxes to the extent such amounts are
attributable to such Lender’s or the Administrative Agent’s failure to comply
with the requirements of Section 2.14(f).

(d) Within 30 days after the date of any payment of Taxes or Other Taxes by any
Loan Party, the Borrower shall furnish to the Administrative Agent, at its
address referred to in Section 11.8 (Notices, Etc.), the original or a certified
copy of a receipt evidencing payment thereof.

(e) Without prejudice to the survival of any other agreement of any Loan Party
hereunder or under the Guaranty, the agreements and obligations of such Loan
Party contained in this Section 2.14 shall survive the payment in full of the
Obligations.
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(f) (i) Each Non-U.S. Lender that is entitled to an exemption from
U.S. withholding tax, or that is subject to such tax at a reduced rate under an
applicable tax treaty, shall (v) on or prior to the Closing Date in the case of
each Non-U.S. lender that is a signatory hereto, (w) on or prior to the date of
the Assignment and Acceptance pursuant to which such Non-U.S. Lender becomes a
Lender or the date a successor Administrative Agent becomes the Administrative
Agent hereunder, (x) on or prior to the date on which any such form or
certification expires or becomes obsolete, (y) after the occurrence of any event
requiring a change in the most recent form or certification previously delivered
by it to the Borrower and the Administrative Agent, and (z) from time to time if
requested by the Borrower or the Administrative Agent, provide the
Administrative Agent and the Borrower with two completed originals of each of
the following, as applicable:

(A) Form W-8ECI (claiming exemption from U.S. withholding tax because the income
is effectively connected with a U.S. trade or business) or any successor form;

(B) Form W-8BEN (claiming exemption from, or a reduction of, U.S. withholding
tax under an income tax treaty) or any successor form;

(C) in the case of a Non-U.S. Lender claiming exemption under Sections 871(h) or
881(c) of the Code, a Form W-8BEN (claiming exemption from U.S. withholding tax
under the portfolio interest exemption) or any successor form; or

(D) any other applicable form, certificate or document prescribed by the IRS
certifying as to such Non-U.S. Lender’s entitlement to such exemption from U.S.
withholding tax or reduced rate with respect to all payments to be made to such
Non-U.S. Lender under the Loan Documents.

Unless the Borrower and the Administrative Agent have received forms or other
documents satisfactory to them indicating that payments under any Loan Document
to or for a Non-U.S. Lender are not subject to U.S. withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the Loan
Parties and the Administrative Agent shall withhold amounts required to be
withheld by applicable Requirements of Law from such payments at the applicable
statutory rate.

(ii) Each U.S. Lender shall (v) on or prior to the Closing Date in the case of
each U.S. Lender that is a signatory hereto, (w) on or prior to the date of the
Assignment and Acceptance pursuant to which such U.S. Lender becomes a Lender or
on or prior to the date a successor Administrative Agent becomes the
Administrative Agent hereunder, (x) on or prior to the date on which any such
form or certification expires or becomes obsolete, (y) after the occurrence of
any event requiring a change in the most recent form or certification previously
delivered by it to the Borrower and the Administrative Agent, and (z) from time
to time if requested by the Borrower or the Administrative Agent, provide the
Administrative Agent and the Borrower with two completed originals of Form W-9
(certifying that such U.S. Lender is entitled to an exemption from U.S. backup
withholding tax) or any successor form. Solely for purposes of this Section
2.14(f), a U.S. Lender shall not include a Lender or an Administrative Agent
that may be treated as an exempt recipient based on the indicators described in
Treasury Regulation section 1.6049-4(c)(1)(ii).
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(g) Any Lender claiming any additional amounts payable pursuant to this Section
2.14 shall use its reasonable efforts (consistent with its internal policies and
Requirements of Law) to change the jurisdiction of its Applicable Lending Office
if the making of such a change would avoid the need for, or reduce the amount
of, any such additional amounts that would be payable or may thereafter accrue
and would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.

Section 2.15 Substitution of Lenders

(a) In the event that (i)(A) any Lender makes a claim under Section 2.12(c)
(Increased Costs) or Section 2.13 (Capital Adequacy), (B) it becomes illegal for
any Lender to continue to fund or make any Eurodollar Rate Loan and such Lender
notifies the Borrower pursuant to Section 2.12(d) (Illegality) or (C) any Loan
Party is required to make any payment pursuant to Section 2.14 (Taxes) that is
attributable to a particular Lender, (ii) in the case of clause (i)(A) above, as
a consequence of increased costs in respect of which such claim is made, the
effective rate of interest payable to such Lender under this Agreement with
respect to its Term Loans materially exceeds the effective average annual rate
of interest payable to the Requisite Lenders under this Agreement and (iii) in
the case of clauses (i)(A), (B) and (C) above, Lenders holding at least 75% of
the Term Loans are not subject to such increased costs or illegality, payment or
proceedings (any such Lender, an “Affected Lender”), the Borrower may substitute
any Lender and, if reasonably acceptable to the Administrative Agent, any other
Eligible Assignee (a “Substitute Institution”) for such Affected Lender
hereunder, after delivery of a written notice (a “Substitution Notice”) by the
Borrower to the Administrative Agent and the Affected Lender within a reasonable
time (in any case not to exceed 90 days) following the occurrence of any of the
events described in clause (i) above that the Borrower intends to make such
substitution; provided, however, that, if more than one Lender claims increased
costs, illegality or right to payment arising from the same act or condition and
such claims are received by the Borrower within 30 days of each other, then the
Borrower may substitute all, but not (except to the extent the Borrower has
already substituted one of such Affected Lenders before the Borrower’s receipt
of the other Affected Lenders’ claim) less than all, Lenders making such claims.

(b) If the Substitution Notice was properly issued under this Section 2.15, the
Affected Lender shall sell, and the Substitute Institution shall purchase, all
rights and claims of such Affected Lender under the Loan Documents and the
Substitute Institution shall assume, and the Affected Lender shall be relieved
of all prior unperformed obligations of the Affected Lender under the Loan
Documents (other than in respect of any damages (which pursuant to Section
11.5 (Limitation on Liability) do not include exemplary or punitive damages, to
the extent permitted by applicable law) in respect of any such unperformed
obligations). Such purchase and sale (and the corresponding assignment of all
rights and claims hereunder) shall be recorded in the Register maintained by the
Administrative Agent and shall be effective on (and not earlier than) the later
of (i) the receipt by the Affected Lender of its Ratable Portion of the Term
Loans, together with any other Obligations owing to it, (ii) the receipt by the
Administrative Agent of an agreement in form and substance reasonably
satisfactory to it and the Borrower whereby the Substitute Institution shall
agree to be bound by the terms hereof and (iii) the payment in full to the
Affected Lender in cash of all fees, unreimbursed costs and expenses and
indemnities accrued and unpaid through such effective date. Upon the
effectiveness of such sale, purchase and assumption, the Substitute Institution
shall become a “Lender” hereunder for all purposes of this Agreement having a
Term Loan Commitment in the amount of such Affected Lender’s Term Loan
Commitment assumed by it and such Term Loan Commitment of the Affected Lender
shall be terminated; provided, however, that all indemnities under the Loan
Documents shall continue in favor of such Affected Lender.
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(c) Each Lender agrees that, if it becomes an Affected Lender and its rights and
claims are assigned hereunder to a Substitute Institution pursuant to this
Section 2.15, it shall execute and deliver to the Administrative Agent an
Assignment and Acceptance to evidence such assignment, together with any Note
(if such Term Loans are evidenced by a Note) evidencing the Term Loans subject
to such Assignment and Acceptance; provided, however, that the failure of any
Affected Lender to execute an Assignment and Acceptance shall not render such
assignment invalid.

ARTICLE III

CONDITIONS TO TERM LOANS

Section 3.1 Conditions Precedent to Closing Date Term Loans

The obligation of each Lender to make the Closing Date Term Loans requested to
be made by it on the Closing Date is subject to the satisfaction or due waiver
in accordance with Section 11.1 (Amendments, Waivers, Etc.) of each of the
following conditions precedent on or prior to the Closing Date:

(a) Certain Documents. The Administrative Agent shall have received (and, to the
extent any Borrowing of any Eurodollar Rate Loans is requested to be made on the
Closing Date, in respect of the Notice of Borrowing for such Eurodollar Rate
Loans, at least three Business Days prior to the Closing Date) each of the
following, each dated the Closing Date unless otherwise indicated or agreed to
by the Administrative Agent in its reasonable discretion, in form and substance
reasonably satisfactory to the Administrative Agent and in sufficient copies for
each Lender:

(i) this Agreement, duly executed and delivered by the Borrower and, for the
account of each Lender requesting the same, a Note of the Borrower conforming to
the requirements set forth herein;

(ii) the Intercreditor Agreement, duly executed and delivered by the Revolving
Credit Agent and each Loan Party party thereto;

(iii) the Guaranty, duly executed and delivered by each Guarantor;

(iv) except as set forth on Schedule 7.13 (Post-Closing Covenants) and subject
to the proviso in Section 7.11 (Additional Collateral and Guarantees), the
Pledge and Security Agreement, duly executed and delivered by the Borrower and
each Guarantor, together with each of the following:

(A) evidence reasonably satisfactory to the Administrative Agent that, upon the
filing and recording of instruments delivered on or before the Closing Date, the
Administrative Agent (for the benefit of the Secured Parties) shall have a valid
and perfected security interest (having the priority set forth in the
Intercreditor Agreement) in the Collateral, including (x) the filing of
financing statements under the UCC, (y) copies of UCC search reports as of a
recent date listing all effective financing statements that name any Loan Party
as debtor, together with copies of such financing statements, none of which
shall cover the Collateral except for those that shall be terminated on the
Closing Date or are otherwise permitted hereunder and (z) such other such
documents duly executed by each Loan Party as the Administrative Agent may
reasonably request with respect to the perfection of its security interests in
the Collateral (including patent, trademark and copyright security agreements
suitable for filing with the Patent and Trademark Office or the Copyright
Office, as the case may be, and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens created by the Pledge and
Security Agreement);
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(B) all certificates, instruments and other documents representing all Pledged
Stock being pledged pursuant to such Pledge and Security Agreement and stock
powers for such certificates, instruments and other documents executed in blank;

(C) to the extent delivered in connection with the Revolving Credit Agreement on
the Closing Date or within such other time period as provided therein, all
Deposit Account Control Agreements, duly executed by the corresponding Deposit
Account Bank and the applicable Loan Party; and

(D) to the extent delivered in connection with the Revolving Credit Agreement on
the Closing Date or within such other time period as provided therein,
Securities Account Control Agreements, duly executed by the applicable Loan
Party and (1) all “securities intermediaries” (as defined in the UCC) with
respect to all Securities Accounts and securities entitlements of the Borrower
and each Guarantor and (2) all “commodities intermediaries” (as defined in the
UCC) with respect to all commodities contracts and commodities accounts held by
the Borrower and each Guarantor;

(v) except as set forth on Schedule 7.13 (Post-Closing Covenants) and subject to
the proviso in Section 7.11 (Additional Collateral and Guarantees), Mortgages
for all of the Real Property of the Loan Parties identified on Schedule
4.19 (Real Property) (except as may be agreed to by the Administrative Agent),
together with all Mortgage Supporting Documents relating thereto;

(vi) a favorable opinion of (A) Sullivan & Cromwell LLP, counsel to the Loan
Parties, in substantially the form of Exhibit E (Form of Opinion of counsel for
the Loan Parties), (B) counsel to the Borrower in Nevada, (C) counsel to Payless
ShoeSource, Inc., a Missouri corporation, in Missouri and (D) counsel to Payless
ShoeSource Worldwide, Inc. and Payless ShoeSource Distribution, Inc. each in
Kansas, in each case addressed to the Administrative Agent and the Lenders and
addressing such other matters as any Lender through the Administrative Agent may
reasonably request;

(vii) a copy of each Related Document certified as being complete and correct by
a Responsible Officer of the Borrower or other Loan Party as the case may be;
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(viii) a copy of the articles or certificate of incorporation (or equivalent
Constituent Document) of each Loan Party, certified as of a recent date by the
Secretary of State of the state of organization of such Loan Party, together
with certificates of such official attesting to the good standing of each such
Loan Party;

(ix) a certificate of the Secretary or an Assistant Secretary of each Loan Party
certifying (A) the names and true signatures of each officer of such Loan Party
that has been authorized to execute and deliver any Loan Document or other
document required hereunder to be executed and delivered by or on behalf of such
Loan Party, (B) the by-laws (or equivalent Constituent Document) of such Loan
Party as in effect on the date of such certification, (C) the resolutions of
such Loan Party’s Board of Directors (or equivalent governing body) approving
and authorizing the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party and (D) that there have been no
changes in the certificate of incorporation (or equivalent Constituent Document)
of such Loan Party from the certificate of incorporation (or equivalent
Constituent Document) delivered pursuant to clause (viii) above;

(x) a certificate of a Responsible Officer of the Borrower, stating that the
Borrower is Solvent immediately before and after giving effect to the Closing
Date Term Loans, the application of the proceeds thereof in accordance with
Section 7.9 (Application of Proceeds), the payment of all estimated legal,
accounting and other fees related hereto and thereto and the other Transactions;
and

(xi) evidence reasonably satisfactory to the Administrative Agent that the
insurance policies required by Section 7.5 (Maintenance of Insurance) and any
Collateral Document are in full force and effect, together with, unless
otherwise agreed by the Administrative Agent, endorsements naming the
Administrative Agent, on behalf of the Secured Parties, as an additional insured
or loss payee under all insurance policies to be maintained with respect to the
properties of the Borrower and each other Loan Party.

(b) Fee and Expenses Paid. There shall have been paid to the Administrative
Agent, for the account of the Administrative Agent and the Lenders, as
applicable, all fees and expenses (including reasonable fees and expenses of
counsel) invoiced at least two Business Days prior to the Closing Date and due
and payable on or before the Closing Date (including all such fees described in
the Fee Letter).

(c) Refinancing of Target Credit Agreement. (i) The Administrative Agent shall
have received a payoff letter duly executed and delivered by the Target and the
Existing Agent or other evidence of such termination in each case in form and
substance reasonably satisfactory to the Administrative Agent; (ii)
all obligations under the Target Credit Agreement shall have been repaid in full
and (iii) the Target Credit Agreement, all Loan Documents (as defined therein)
and all Liens granted in connection therewith shall have been terminated and
released on terms reasonably acceptable to the Administrative Agent.

(d) Amendment and Restatement of Existing Revolving Credit Agreement. All
obligations and Liens under the Existing Revolving Credit Agreement and any
other Loan Documents (as defined therein) shall, through an amendment and
restatement of such documents, become obligations and Liens under the Revolving
Credit Loan Documents substantially on the terms set forth in that certain
commitment letter dated May 22, 2007 addressed to the Borrower from Wells Fargo
Retail Finance, LLC.
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(e) Related Documents. The Administrative Agent shall be satisfied (i) that the
terms and conditions of the Merger Agreement shall not have been amended, waived
or modified without the approval of the Administrative Agent (other than (A)
with the prior written consent, not to be unreasonably withheld, of the
Arrangers and the Administrative Agent or (B) amendments, waivers and
modifications to such terms that do not, individually or in the aggregate,
materially and adversely affect the interests of the Lenders), (ii) that the
Merger Agreement and the other Related Documents shall have been approved by all
corporate action of the Borrower and each of the other parties thereto, shall
have been executed and delivered by each such party and shall be in full force
and effect, (iii) that subject only to the funding of the Closing Date Term
Loans hereunder, all conditions precedent to the consummation of the Merger
shall have been satisfied or waived as set forth in clause (i) above, and
(iv) that subject only to the funding of the Closing Date Term Loans hereunder,
the Merger shall have been consummated in accordance with the Merger Agreement
and all applicable Requirements of Law and all representations and warranties
made by the Target in the Merger Agreement as are material to the interests of
the Lenders (but only to the extent that the Borrower and/or the Acquisition
Subsidiary has the right to terminate its obligations under the Merger Agreement
as a result of a breach of such representations and warranties in the Merger
Agreement), shall be true and correct in all material respects on the Closing
Date.

(f) No Material Adverse Effect. Since May 22, 2007, there shall not have
occurred any change, event, circumstances or development that has had, or would
reasonably be expected to have, a Material Adverse Effect (as defined in the
Merger Agreement as in effect on May 22, 2007).

(g) Consents, Etc. All requisite material Governmental Authorities shall have
approved or consented to the Transactions to the extent required on or prior to
the Closing Date, all applicable governmental filings have been made and all
applicable waiting periods shall have expired without, in either case, any
action being taken by any competent authority, all applicable appeal periods
shall have expired and there shall be no action by any Governmental Authority
that would reasonably be expected to restrain, prevent or impose burdensome
conditions on such Transactions.

(h) Financial Statements of the Parent. The Lenders shall have received from the
Parent a Consolidated balance sheet as of May 5, 2007 and related statements of
income and cash flows of the Parent and its Subsidiaries on the Closing Date as
of February 3, 2007 and May 5, 2007 and the trailing four quarters ended on May
5, 2007, each on a Pro Forma Basis after giving effect to each of the
Transactions, together with a certificate of the chief financial officer of the
Parent and its Subsidiaries on the Closing Date in accordance with GAAP and
Regulation S-X.

(i) Projections. The Borrower shall have delivered to the Lenders the
Projections.

(j) Request for Borrowing. With respect to the Closing Date Term Loans, the
Administrative Agent shall have received a duly executed Notice of Borrowing.
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(k) Representations and Warranties; No Defaults. Both before and after giving
effect thereto and to the application of the proceeds thereof, (i) the
representations and warranties set forth in Sections 4.1, 4.2, 4.6, 4.10,
4.12, 4.20(a)(iv) and (c) and Section 3.2 of the Pledge and Security Agreement
shall be true and correct on and as of the Closing Date and (ii) no Default or
Event of Default shall have occurred and be continuing.

(l) No Legal Impediments. The making of the Closing Date Term Loans does not
violate any Requirement of Law on the date of or immediately following such
Closing Date Term Loan and is not enjoined, temporarily, preliminarily or
permanently.

Section 3.2 Conditions Precedent to Incremental Term Loans

(a) Certain Documents. The Administrative Agent shall have received on or prior
to the Facility Increase Date for such Facility Increase each of the following,
each dated such Facility Increase Date unless otherwise indicated or agreed to
by the Administrative Agent and each in form and substance reasonably
satisfactory to the Administrative Agent:

(i) written commitments duly executed by the applicable Incremental Term Loan
Lenders in an aggregate amount equal to the amount of the proposed Facility
Increase (as agreed between the Borrower and the Administrative Agent but in any
case not to exceed, in the aggregate for all such Facility Increases, the
maximum amount set forth in Section 2.1(b) (The Term Loans)) and, in the case of
each Incremental Term Loan Lender that is not an existing Lender at the time of
the applicable Facility Increase, an assumption agreement in form and substance
reasonably satisfactory to the Administrative Agent and the Borrower and duly
executed by the Borrower, the Administrative Agent and such Incremental Term
Loan Lender;

(ii) an amendment to this Agreement, effective as of the Facility Increase Date
and executed by the Borrower, the Administrative Agent and the applicable
Incremental Term Loan Lenders, to the extent necessary to implement the terms
and conditions of the Facility Increase (including interest rates, fees and
scheduled repayment dates and maturity), as agreed by the Borrower and the
Administrative Agent but, which, in any case, except for interest, fees,
scheduled repayment dates and maturity, shall not be applied materially
differently to the Facility Increase and the existing Term Loan Facility;

(iii) certified copies of resolutions of the Board of Directors (or equivalent
governing body) of each Loan Party approving the consummation of such Facility
Increase and the execution, delivery and performance of the corresponding
amendments to this Agreement and the other Loan Documents to be executed in
connection therewith;

(iv) a favorable opinion of (A) counsel to the Loan Parties that is reasonably
acceptable to Administrative Agent, in substantially the form of Exhibit E (Form
of Opinion of counsel for the Loan Parties), (B) counsel to the Borrower in
Nevada, (C) counsel to Payless ShoeSource, Inc. in Missouri and (D) counsel to
Payless ShoeSource Worldwide, Inc. and Payless ShoeSource Distribution, Inc.
each in Kansas, in each case addressed to the Administrative Agent and the
Lenders and addressing such other matters as any Lender through the
Administrative Agent may reasonably request; and
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(v) such other documents as the Administrative Agent may reasonably request or
as any Incremental Term Loan Lender participating in such Facility Increase may
reasonably require as a condition to its commitment in such Facility Increase.

(b) Fees and Expenses Paid. There shall have been paid to the Administrative
Agent, for the account of the Administrative Agent and the Lenders (including
any Person becoming a Lender as part of such Facility Increase on such Facility
Increase Date), as applicable, all fees and expenses (including attorney costs
of the Administrative Agent) due and payable on or before the Facility Increase
Date (including all such fees described in the Fee Letters).

(c) Other Conditions. As of the Facility Increase Date for such Facility
Increase, such Facility Increase shall be made on the terms and conditions set
forth in Section 2.1(b) (The Term Loans).

(d) Representations and Warranties; Events of Default. Both before and after
giving effect to any Incremental Term Loan and to the application of the
proceeds thereof, (i) the representations and warranties set forth in Article IV
(Representations and Warranties) and in the other Loan Documents shall be true
and correct in all material respects on and as of the date on which such
Incremental Term Loan is made with the same effect as though made on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects as of such earlier
date and (ii) no Default or Event of Default shall have occurred and be
continuing.

(e) Request for Borrowing. With respect to any Incremental Term Loan, the
Administrative Agent shall have received a duly executed Notice of Borrowing.

(f) No Legal Impediments. The making of the Incremental Term Loans on such date
does not violate any Requirement of Law on the date of or immediately following
such Incremental Term Loan and is not enjoined, temporarily, preliminarily or
permanently.

Each submission by the Borrower to the Administrative Agent of a Notice of
Borrowing and the acceptance by the Borrower of the proceeds of each Incremental
Term Loan requested therein shall be deemed to constitute a representation and
warranty by the Borrower as to the matters specified in clause (e) above on the
date of the making of such Incremental Term Loan.

Section 3.3 Determinations of Borrowing Conditions

For purposes of determining compliance with the conditions specified in Section
3.1 (Conditions Precedent to Closing Date Term Loans) and Section 3.2
(Conditions Precedent to Incremental Term Loans), each Lender shall be deemed to
have consented to, approved, accepted or be satisfied with, each document or
other matter required thereunder to be consented to or approved by or reasonably
acceptable or reasonably satisfactory to the Lenders unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender prior to the applicable
Term Loan Borrowing hereunder specifying its objection thereto and such Lender
shall not have made available to the Administrative Agent such Lender’s Ratable
Portion of such Term Loan Borrowing.
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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Lenders and the Administrative Agent to enter into this Agreement,
the Borrower represents and warrants each of the following to the Lenders and
the Administrative Agent, on and as of the Closing Date and after giving effect
to the Merger and the making of the Term Loans on the Closing Date and on and as
of each date as required by Section 3.2 (Conditions Precedent to Incremental
Term Loans):

Section 4.1 Corporate Existence; Compliance with Law

Each Group Member (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) is duly qualified to
do business as a foreign entity and in good standing under the laws of each
jurisdiction where such qualification is necessary, except where the failure to
be so qualified or in good standing would not, in the aggregate, have a Material
Adverse Effect, (c) has all requisite power and authority and the legal right to
own, pledge, mortgage and operate its properties, to lease the property it
operates under lease and to conduct its business as now or currently proposed to
be conducted, except where the failure to have such power, authority and legal
right would not, in the aggregate, have a Material Adverse Effect, (d) is in
compliance with its Constituent Documents, (e) is in compliance with all
applicable Requirements of Law except where the failure to be in compliance
would not, in the aggregate, have a Material Adverse Effect and (f) has all
necessary Permits from or by, has made all necessary filings with, and has given
all necessary notices to, each Governmental Authority having jurisdiction, to
the extent required for such ownership, operation and conduct, except for
Permits or filings that can be obtained or made by the taking of ministerial
action to secure the grant or transfer thereof or the failure to obtain or make
would not, in the aggregate, have a Material Adverse Effect.

Section 4.2 Corporate Power; Authorization; Enforceable Obligations

(a) The execution, delivery and performance by each Loan Party of the Loan
Documents to which it is a party and the consummation of the transactions
contemplated thereby:

(i) are within such Loan Party’s corporate, limited liability company,
partnership or other powers;

(ii) have been or, at the time of delivery thereof pursuant to Article
III (Conditions To Term Loans) will have been duly authorized by all necessary
action, including the consent of shareholders, partners and members where
required;

(iii) do not and will not (A) contravene or violate such Loan Party’s respective
Constituent Documents, (B) violate any other Requirement of Law applicable to
such Loan Party (including Regulations T, U and X of the Federal Reserve Board),
or any order or decree of any Governmental Authority or arbitrator applicable to
such Loan Party, (C) conflict with or result in the breach of, or constitute a
default under, or result in or permit the termination or acceleration of, any
Related Document or any other material Contractual Obligation of such Loan Party
or (D) result in the creation or imposition of any Lien upon any property of
such Loan Party, other than those in favor of the Secured Parties pursuant to
the Collateral Documents; and
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(iv) do not require the consent of, authorization by, approval of, notice to, or
filing or registration with, any Governmental Authority or any other Person,
other than those listed on Schedule 4.2 (Consents) and that have been or will
be, prior to the Closing Date, obtained or made, copies of which have been or
will be delivered to the Administrative Agent pursuant to Section 3.1
(Conditions Precedent to Closing Date Term Loans), and each of which on the
Closing Date will be in full force and effect and, with respect to the
Collateral, filings required to perfect the Liens created by the Collateral
Documents.

(b) This Agreement has been, and each of the other Loan Documents will have been
upon delivery thereof pursuant to the terms of this Agreement, duly executed and
delivered by each Loan Party party thereto. This Agreement is, and the other
Loan Documents will be, when delivered hereunder, the legal, valid and binding
obligation of each Loan Party party thereto, enforceable against such Loan Party
in accordance with its terms.

Section 4.3 Ownership of Subsidiaries

Set forth on Schedule 4.3 (Ownership of Subsidiaries) is a complete and accurate
list showing, as of the Closing Date, all Subsidiaries owned (directly or
indirectly) by the Parent and, as to each such Subsidiary, the jurisdiction of
its organization, the number of shares of each class of Stock authorized (if
applicable), the number outstanding on the Closing Date and the number and
percentage of the outstanding shares of each such class owned (directly or
indirectly) by the Parent. No Stock of any Subsidiary owned (directly or
indirectly) by the Parent is subject to any outstanding option, warrant, right
of conversion or purchase of any similar right. All of the outstanding Stock of
each owned (directly or indirectly) by the Parent has been validly issued, is
fully paid and non-assessable (to the extent applicable) and is owned by the
Parent or a Subsidiary of the Parent, free and clear of all Liens (other than
the Lien in favor of the Secured Parties created pursuant to the Pledge and
Security Agreement and the Revolving Credit Loan Documents), options, warrants,
rights of conversion or purchase or any similar rights.

Section 4.4 Financial Statements

(a) All Financial Statements relating to the Group Members that have been
provided by Borrower to the Administrative Agent or the Lenders pursuant to
Section 3.1(h) (Conditions Precedent to Closing Date Term Loans) and Section 6.1
(Financial Statements) have been prepared in accordance with GAAP (except, in
the case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, the financial condition of the Borrower, the Parent and its
Subsidiaries as of the date thereof and results of operations for the period
then ended.

(b) The Projections have been prepared by the Parent in light of the past
operations of its business, and reflect projections for the seven year period
beginning on February 4, 2007, on a quarterly basis through the end of the
fiscal year ending 2007 and on a year by year basis thereafter. The Projections
are based upon estimates and assumptions stated therein, all of which the Parent
believes to be reasonable and fair in light of current conditions and current
facts known to the Parent and, as of the Closing Date, reflect the Parent’s good
faith and reasonable estimates of the future financial performance of the Parent
and its Subsidiaries and of the other information projected therein for the
periods set forth therein.
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(c) The consolidated balance sheet as of May 5, 2007 and the related statements
of income and cash flows of the Borrower and its Subsidiaries on the Closing
Date as of February 3, 2007 and May 5, 2007 and the trailing four quarters ended
on May 5, 2007, in each case delivered to the Administrative Agent pursuant to
Section 3.1(h) (Conditions Precedent to Closing Date Term Loans), reflects as of
such date, on a Pro Forma Basis, the Consolidated financial condition of the
Borrower and its Subsidiaries, and the assumptions expressed therein were
reasonable based on the information available to the Borrower at the time so
furnished and on the Closing Date.

Section 4.5 Material Adverse Change

Since May 5, 2007, there has been no Material Adverse Change and there have been
no events or developments that, in the aggregate, have had a Material Adverse
Effect.

Section 4.6 Solvency

Both before and after giving effect to (a) the Term Loans to be made on the
Closing Date or such other date as Term Loans requested hereunder are made, (b)
the disbursement of the proceeds of such Term Loans pursuant to the instructions
of the Borrower, (c) the Merger and the consummation of the other financing
transactions contemplated hereby and (d) the payment and accrual of all
transaction costs in connection with the foregoing, each Group Member is
Solvent.

Section 4.7 Litigation

Except as set forth on Schedule 4.7 (Litigation), there are no pending or, to
the knowledge of the Borrower, threatened actions, investigations or proceedings
affecting any of the Group Members before any court, Governmental Authority or
arbitrator other than those that, individually or when considered in the
aggregate with other related actions, investigations or proceedings, would not
have a Material Adverse Effect. The performance of any action by any Group
Member required or contemplated by any Loan Document or any Related Document is
not restrained or enjoined (either temporarily, preliminarily or permanently).

Section 4.8 Taxes

(a) All material federal, state, local and foreign income and franchise and
other material tax returns, reports and statements (collectively, the “Tax
Returns”) required to be filed by the Borrower or any of its Tax Affiliates have
been filed with the appropriate Governmental Authorities in all jurisdictions in
which such Tax Returns are required to be filed, all such Tax Returns are true
and correct in all material respects, and all material taxes, charges and other
impositions reflected therein or otherwise due and payable have been paid prior
to the date on which any material fine, penalty, interest, late charge or loss
may be added thereto for non-payment thereof except where contested in good
faith and by appropriate proceedings if adequate reserves therefor have been
established on the books of the Borrower or such Tax
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Affiliate in conformity with GAAP. [Except as disclosed on Schedule 4.8,]1 no
Tax Return is under audit or examination by any Governmental Authority and no
written, and to the knowledge of the Borrower oral, notice of such an audit or
examination or any assertion of any claim for Taxes has been received by the
Borrower or any of its Tax Affiliates. Proper amounts have been withheld by the
Borrower and each of its Tax Affiliates from their respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable Requirements of Law and such
withholdings have been timely paid to the respective Governmental Authorities,
except those that, in the aggregate, would not result in a Material Adverse
Effect.
 
(b) None of the Borrower or any of its Tax Affiliates has (i) executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for the filing of any
Tax Return or the assessment or collection of any charges, (ii) incurred any
obligation under any tax sharing agreement or arrangement other than those of
which the Administrative Agent has received a copy prior to the date hereof,
(iii) been a member of an affiliated, combined or unitary group other than the
group of which the Borrower (or its Tax Affiliate) is the common parent or (iv)
participated in a “listed transaction” within the meaning of Treasury Regulation
section 1.6011-4((6)).

Section 4.9 Full Disclosure

The information prepared or furnished by or on behalf of the Borrower in
connection with this Agreement or the Related Documents or the consummation of
the transactions contemplated hereunder and thereunder taken as a whole, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein or herein not misleading
in any material respect at such time in light of the circumstances under which
such information was provided.

Section 4.10 Margin Regulations

The Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U of
the Federal Reserve Board), and no proceeds of any Term Loan will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock in contravention of
Regulation T, U or X of the Federal Reserve Board.

Section 4.11 No Burdensome Restrictions; No Defaults

(a) No Group Member (i) is a party to any Contractual Obligation the compliance
with one or more of which would have, in the aggregate, a Material Adverse
Effect or the performance of which by any thereof, either unconditionally or
upon the happening of an event, would result in the creation of a Lien (other
than a Lien permitted under Section 8.2 (Liens, Etc.)) on the assets of any
thereof or (ii) is subject to one or more charter or corporate restrictions that
would, in the aggregate, have a Material Adverse Effect.

(b) No Group Member is in default under or with respect to any Contractual
Obligation owed by it and, to the knowledge of the Borrower, no other party is
in default under or with respect to any Contractual Obligation owed to any of
the Group Members, other than, in either case, those defaults that, in the
aggregate, would not have a Material Adverse Effect.
______________________
1Under discussion with S&C.
 
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(c) No Default or Event of Default has occurred and is continuing.

(d) To the best knowledge of the Borrower, there are no Requirements of Law
applicable to any of the Group Members the compliance with which by such Group
Member, as the case may be, would, in the aggregate, have a Material Adverse
Effect.

Section 4.12 Investment Company Act

No Group Member is an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended.

Section 4.13 Use of Proceeds

(a) The proceeds of the Closing Date Term Loans are being used by the Borrower
(and, to the extent distributed to them by the Borrower, each other Group
Member) solely (a) to refinance all Indebtedness and other obligations
outstanding under the Target Credit Agreement, (b) to finance the Merger and for
the payment of related transaction costs, fees and expenses and (c) for the
payment of transaction costs, fees and expenses incurred in connection with this
Agreement, the Revolving Credit Agreement and the transactions contemplated
hereby.

(b) The proceeds of any Incremental Term Loans shall be used (a) to finance
working capital needs and (b) for general corporate purposes.

Section 4.14 Insurance

Each of the Group Members maintains in full force and effect such policies of
insurance, including policies of life, fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity, workers’
compensation and employee health and welfare insurance, of a nature and provide
such coverage as is customarily carried by businesses of the size and character
of such Person, except to the extent that any failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect.

Section 4.15 Labor Matters

(a) There are no strikes, work stoppages, slowdowns or lockouts pending or
threatened against or involving the Group Members, other than those that, in the
aggregate, would not have a Material Adverse Effect.

(b) There are no unfair labor practices, grievances, complaints or arbitrations
pending, or, to the Borrower’s knowledge, threatened, against or involving any
Group Members, nor are there any arbitrations or grievances threatened involving
any of the Group Members, other than those that, in the aggregate, would not
have a Material Adverse Effect.
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(c) Except as set forth on Schedule 4.15 (Labor Matters), as of the Closing
Date, there is no collective bargaining agreement covering any material number
of employees of any Group Member.

Section 4.16 ERISA

(a) Schedule 4.16 (List of Plans) separately identifies all Title IV Plans, all
Multiemployer Plans and all of the employee benefit plans within the meaning of
Section 3(3) of ERISA to which any Group Member has any obligation or liability,
contingent or otherwise.

(b) Each employee benefit plan of the Group Members intended to qualify under
Section 401 of the Code does so qualify, and any trust created thereunder is
exempt from tax under the provisions of Section 501 of the Code, except where
such failures, in the aggregate, would not have a Material Adverse Effect.

(c) Each Title IV Plan is in compliance in all material respects with applicable
provisions of ERISA, the Code and other Requirements of Law except for
noncompliances that, in the aggregate, would not have a Material Adverse Effect.

(d) There has been no, nor is there reasonably expected to occur, any ERISA
Event other than those that, in the aggregate, would not have a Material Adverse
Effect.

(e) Except to the extent set forth on Schedule 4.16 (List of Plans), none of the
Group Members or any ERISA Affiliate would have any Withdrawal Liability as a
result of a complete withdrawal as of the date hereof from any Multiemployer
Plan.

Section 4.17 Environmental Matters

(a) The operations of the Group Members have been and are in compliance with all
Environmental Laws, including obtaining and complying with all required
environmental, health and safety Permits, other than non-compliances that, in
the aggregate, would not have a reasonable likelihood of the Group Members
incurring Environmental Liabilities and Costs after the date hereof that would
have a Material Adverse Effect.

(b) None of the Group Members or any Real Property currently or, to the
knowledge of the Borrower, previously owned, operated or leased by or for any of
the Group Members is subject to any pending or, to the knowledge of the
Borrower, threatened, claim, order, agreement, notice of violation, notice of
potential liability or is the subject of any pending or threatened proceeding or
governmental investigation under or pursuant to Environmental Laws other than
those that, in the aggregate, are not reasonably likely to result in the Group
Members incurring Environmental Liabilities and Costs that would have a Material
Adverse Effect.

(c) There are no facts, circumstances or conditions arising out of or relating
to the operations or ownership of the Borrower or of Real Property owned,
operated or leased by any of the Group Members that are not specifically
included in the financial information furnished to the Lenders other than those
that, in the aggregate, would not have a reasonable likelihood of the Group
Members incurring Environmental Liabilities and Costs that would have a Material
Adverse Effect.
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(d) The Group Members have provided the Lenders with copies of all material
environmental, health or safety audits, studies, assessments, inspections,
investigations or other environmental health and safety reports relating to the
operations of the Group Members or any Real Property of any of them that are in
the possession, custody or control of the Group Members.

(e) Except for other matters that would not reasonably be expected to result in
a Material Adverse Effect, (i) no owned Real Property of any Group Member has
ever been used by any Group Member or, to each Group Member’s knowledge, by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such production,
storage, handling, treatment, release or transport was in violation of or in a
manner likely to give rise to liability under any Environmental Law, (ii) no
Group Member’s owned Real Property and, to each Group Member’s knowledge, any
leased Real Property has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (iii) no Group Member has received notice that a Lien arising
under any Environmental Law has attached to any revenues or to any Real Property
owned or operated by any Group Member, and (iv) no Group Member has received a
summons, citation, notice, or directive from the U.S. Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by any Group Member resulting in the releasing or disposing of
Hazardous Materials into the environment in violation of or in a manner likely
to give rise to liability under any Environmental Law.

Section 4.18 Intellectual Property

Except as disclosed on Schedule 4.18 (Intellectual Property), the Group Members
own or license or otherwise have the continuing right to use all licenses,
permits, patents, patent applications, trademarks, trademark applications,
servicemarks, trade names, copyrights, copyright applications, Internet domain
names, franchises, authorizations and other intellectual property rights
(including all Intellectual Property) that are reasonably necessary for the
operations of their respective businesses, without infringement upon,
misappropriation of, or conflict with the rights of any other Person with
respect thereto, including all trade names associated with any private label
brands of the Group Members, except where such failure to own or license,
individually or in the aggregate, would not have a Material Adverse Effect. To
the Borrower’s knowledge no license, permit, patent, patent application,
trademark, trademark application, servicemark, tradename, copyright, copyright
application, Internet domain name, franchise authorization, other intellectual
property right (including all Intellectual Property), slogan or other
advertising device, product, process, method, substance, part or component, or
other material now employed, by any of the Group Members infringes upon,
misappropriates, or conflicts with any rights owned by any other Person, in any
manner that would have a Material Adverse Effect and no claim or litigation
regarding any of the foregoing is pending or threatened, except (i) that which
would not otherwise have a Material Adverse Effect and (ii) as disclosed on
Schedule 4.7 (Litigation).

Section 4.19 Title; Real Property

(a) Each Group Member has good and marketable title to, or valid leasehold
interests in, all Real Property and good title to, or valid leasehold interests
in, all personal property, in each case that is purported to be owned or leased
by it, including those reflected on the most recent Financial Statements
delivered by the Borrower, and none of such properties and assets is subject to
any Lien; except (i) for Liens permitted under Section 8.2 (Liens, Etc.), and
(ii) where the loss thereof would not, individually or in the aggregate, result
in a Material Adverse Effect.. The Group Members have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents in respect of, and have duly
effected all recordings, filings and other actions necessary to establish,
protect and perfect, such Group Member’s right, title and interest in and to all
such property, except where the lack thereof would not, individually or in the
aggregate, result in a Material Adverse Effect.
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(b) Set forth on Schedule 4.19 (Real Property) is a complete and accurate list
of all Real Property of each Loan Party, except for owned and leased Real
Property the primary use of which is as a retail store, and showing, as of the
Closing Date, the current street address (including, where applicable, county,
state and other relevant jurisdictions), record owner and, where applicable,
lessee thereof.

(c) All Permits required to have been issued or appropriate to enable all Real
Property of the Group Members to be lawfully occupied and used for all of the
purposes for which they are currently occupied and used have been lawfully
issued and are in full force and effect, other than those that, in the
aggregate, would not have a Material Adverse Effect.

(d) No Group Member has received any notice, or has any knowledge, of any
pending, threatened or contemplated condemnation proceeding affecting any Real
Property of any Group Member or any part thereof, except those that, in the
aggregate, would not have a Material Adverse Effect.

Section 4.20 Related Documents

(a) The execution, delivery and performance by each Group Member of the Related
Documents to which it is a party and the consummation of the transactions
contemplated thereby by such Group Member:

(i) are within such Group Member’s respective corporate, limited liability
company, partnership or other powers;

(ii) on or prior to the Closing Date will have been duly authorized by all
necessary corporate or other action, including the consent of stockholders where
required;

(iii) do not and will not (A) contravene or violate such Group Member’s
Constituent Documents, (B) violate any other Requirement of Law applicable to
such Group Member, or any order or decree of any Governmental Authority or
arbitrator, except to the extent that, in the aggregate, such violation would
not have a Material Adverse Effect, (C) conflict with or result in the breach
of, constitute a default under, or result in or permit the termination or
acceleration of, any Contractual Obligation of such Group Member, except for
those that, in the aggregate, would not have a Material Adverse Effect or (D)
result in the creation or imposition of any Lien upon any property of such Group
Member (or any other Group Member) other than a Lien permitted under Section 8.2
(Liens, Etc.); and
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(iv) do not require the consent of, authorization by, approval of, notice to, or
filing or registration with, any Governmental Authority or any other Person,
other than those that (A) will have been obtained at the Closing Date, each of
which will be in full force and effect on the Closing Date, none of which will
on the Closing Date impose materially adverse conditions upon the exercise of
control by the Borrower over any Group Members and (B) in the aggregate, if not
obtained, would not have a Material Adverse Effect.

(b) None of the Related Documents has been amended or modified in any respect
and no provision therein has been waived, except in each case to the extent
permitted by Section 8.12 (Modification of Related Documents).

(c) The Obligations constitute “Senior Debt” as defined in the Subordinated
Notes Indenture.

ARTICLE V

The Borrower agrees with the Lenders and the Administrative Agent to each of the
following as long as any Obligation remains outstanding and, in each case,
unless the Requisite Lenders otherwise consent in writing:

Section 5.1 Maximum Total Leverage Ratio

The Borrower shall maintain, on the last day of each fiscal quarter set forth
below, a Total Leverage Ratio of not more than the maximum ratio set forth below
opposite such fiscal quarter:
 
FISCAL QUARTER ENDING ON OR ABOUT
MAXIMUM LEVERAGE RATIO
October 31, 2007, January 31, 2008, April 30, 2008, July 31, 2008, October 31,
2008 and January 31, 2009
4.7 to 1
April 30, 2009, July 31, 2009, October 31, 2009 and January 31, 2010
4.2 to 1
April 30, 2010 and each fiscal quarter thereafter
4.0 to 1

 
ARTICLE VI

REPORTING COVENANTS

The Borrower agrees with the Lenders and the Administrative Agent to each of the
following, as long as any Obligation remains outstanding and, in each case,
unless the Requisite Lenders otherwise consent in writing:

Section 6.1 Financial Statements

The Borrower shall furnish to the Administrative Agent each of the following:

(a) Quarterly Reports. Within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, financial information regarding the Parent
and its Subsidiaries consisting of Consolidated unaudited balance sheets as of
the close of such quarter and the related statements of income and cash flow for
such quarter and that portion of the fiscal year ending as of the close of such
quarter, setting forth in comparative form the figures for the corresponding
period in the prior year, in each case certified by the chief financial officer
of the Borrower as fairly presenting the Consolidated financial condition of the
Parent and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance with GAAP
(subject to the absence of footnote disclosure and normal year-end audit
adjustments).
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(b) Annual Reports. Within 90 days after the end of each fiscal year, financial
information regarding the Parent and its Subsidiaries consisting of Consolidated
balance sheets of the Parent and its Subsidiaries as of the end of such year and
related statements of income and cash flows of the Parent and its Subsidiaries
for such fiscal year, all prepared in conformity with GAAP and certified without
qualification as to the scope of the audit or as to the Borrower being a going
concern by the Borrower’s Accountants, together with the report of such
accounting firm stating that (i) such Financial Statements fairly present the
Consolidated financial condition of the Parent and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except for changes with which the Borrower’s Accountants shall
concur and that shall have been disclosed in the notes to the Financial
Statements) and (ii) the examination by the Borrower’s Accountants in connection
with such Consolidated Financial Statements has been made in accordance with
generally accepted auditing standards, and accompanied by a certificate stating
that in the course of the regular audit of the business of the Parent and its
Subsidiaries such accounting firm has obtained no knowledge that a Default or
Event of Default has occurred and is continuing, or, if in the opinion of such
accounting firm, a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.

(c) Compliance Certificate. Together with each delivery of any Financial
Statement pursuant to clause (a) or (b) above, a certificate of a Responsible
Officer of the Borrower (each, a “Compliance Certificate”) (i) showing in
reasonable detail the calculations used in determining (A) the Total Leverage
Ratio, (B) the Senior Secured Leverage Ratio, (C) the Applicable Amount, (D)
Excess Cash Flow (but only in connection with Financial Statements delivered
pursuant to clause (b) above for the preceding four fiscal quarters) and (E)
compliance with the financial covenant contained in Article V (Financial
Covenant) and in Section 8.3 (Investments) (as applicable) and (ii) stating that
no Default or Event of Default has occurred and is continuing or, if a Default
or an Event of Default has occurred and is continuing, stating the nature
thereof and the action that the Borrower proposes to take with respect thereto.

(d) Other Collateral Updates. Together with each delivery of any Financial
Statement pursuant to clause (a) or (b) above, a certificate of a Responsible
Officer of the Borrower in form and substance reasonably satisfactory to the
Administrative Agent that, to the knowledge of the Borrower, all certificates,
statements, updates and other documents (including updated schedules) required
to be delivered pursuant to the Pledge and Security Agreement by any Loan Party
in the preceding fiscal quarter have been delivered thereunder (or such delivery
requirement was otherwise duly waived or extended). The reporting requirements
set forth in this clause (d) are in addition to, and are not intended to and
shall not replace or otherwise modify, any obligation of any Loan Party under
any Loan Document (including other notice or reporting requirements). Compliance
with the reporting obligations in this clause (d) shall only provide notice to
the Administrative Agent and shall not, by itself, modify any obligation of any
Loan Party under any Loan Document, update any Schedule to this Agreement or any
schedule to any other Loan Document or cure, or otherwise modify in any way, any
failure to comply with any covenant, or any breach of any representation or
warranty, contained in any Loan Document or any other Default or Event of
Default.
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(e) Business Plan. As soon as approved by the board of directors of Parent and
not later than 60 days after the end of each fiscal year, and containing
substantially the types of financial information contained in the Projections,
(i) the annual business plan of the Borrower, the Parent and its Subsidiaries
for the next succeeding fiscal year approved by the Board of Directors of the
Parent and (ii) forecasts prepared by management of the Parent for each of the
succeeding fiscal years through the fiscal year in which the Term Loan Maturity
Date is scheduled to occur, including, in each instance described in clauses (i)
and (ii) above, (x) a projected year-end Consolidated balance sheet and income
statement and statement of cash flows and (y) a statement of all of the material
assumptions on which such forecasts are based.

Section 6.2 Default Notices

As soon as practicable, and in any event within five Business Days after a
Responsible Officer of the Parent or the Borrower has actual knowledge of the
existence of any Default, Event of Default or other event having had a Material
Adverse Effect, the Borrower shall give the Administrative Agent notice
specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given by telephone,
shall be promptly confirmed in writing on the next Business Day.

Section 6.3 Litigation

Within 30 days after the later of (i) the service of process with respect
thereto on any Loan Party or (ii) such time as exposure of the Loan Party could
be reasonably determined, the Borrower shall give the Administrative Agent
written notice of the commencement of all actions, suits and proceedings before
any domestic or foreign Governmental Authority or arbitrator affecting any of
the Group Members that (i) seeks injunctive or similar relief that could
reasonably be expected to have a Material Adverse Effect or (ii) in the
reasonable judgment of such Group Member, expose any of the Group Members to
liability in an amount that, if adversely determined, would have a Material
Adverse Effect.

Section 6.4 SEC Filings; Press Releases

Promptly after the sending or filing thereof, the Borrower shall send notices to
the Administrative Agent of (a) all reports and registration statements that the
Borrower, the Parent or any of its Subsidiaries files with the Securities and
Exchange Commission or any national or foreign securities exchange or the
National Association of Securities Dealers, Inc. on Form 10-K, 10-Q or 8-K, and
(b) all other statements concerning material changes or developments in the
business of the Group Members made available by any Group Member to the public
or its other creditors generally, provided, however, that the Borrower shall
provide copies to the Administrative Agent of all (i) all documents listed in
clauses (a) and (b) above that are not publicly available or (ii) each document
listed in clauses (a) and (b) above upon the request of the Administrative
Agent.
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Section 6.5 Insurance

As soon as is practicable and in any event within 90 days after the end of each
fiscal year, the Borrower shall furnish the Administrative Agent (in sufficient
copies for each of the Lenders) with (a) a report in form and substance
reasonably satisfactory to the Administrative Agent and the Lenders outlining
all material insurance coverage maintained as of the date of such report by any
Loan Party and the duration of such coverage and (b) an insurance broker’s
statement that all premiums then due and payable with respect to such coverage
have been paid and confirming, with respect to any insurance maintained by any
Loan Party, that the Administrative Agent has been named as loss payee or
additional insured, as applicable.

Section 6.6 ERISA Matters

The Borrower shall furnish the Administrative Agent (with sufficient copies for
each of the Lenders) each of the following:

(a) promptly and in any event within 30 days after any Group Member or any ERISA
Affiliate knows or has reason to know that any ERISA Event has occurred, written
notice describing such event;

(b) promptly and in any event within 30 days after any Group Member or any ERISA
Affiliate knows or has reason to know that a request for a minimum funding
waiver under Section 412 of the Code has been filed with respect to any Title IV
Plan or Multiemployer Plan, a written statement of a Responsible Officer of the
Borrower describing such ERISA Event or waiver request and the action, if any,
the Group Members and ERISA Affiliates propose to take with respect thereto and
a copy of any notice filed with the PBGC or the IRS pertaining thereto; and

(c) promptly and in any event within 5 days after the date that any Group Member
or any ERISA Affiliate files a notice of intent to terminate any Title IV Plan,
if such termination would require material additional contributions in order to
be considered a standard termination within the meaning of Section 4041(b) of
ERISA, a copy of each notice.

Section 6.7 Environmental Matters

The Borrower shall provide the Administrative Agent promptly and in any event
within 10 days after any Group Member learning of any of the following, written
notice of each of the following:

(a) that an Environmental Lien has been filed against any of the real or
personal property of any Group Member;

(b) commencement of any Environmental Action or notice that an Environmental
Action will be filed against any Group Member;

(c) the discovery by any Group Member of any condition that would reasonably be
expected to result in collective Environmental Liabilities and costs whose
Dollar Equivalent would have a Material Adverse Effect;
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(d) any proposed acquisition of stock, assets or real estate, any proposed
leasing of property or any other action by any Group Member other than those the
consequences of which, in the aggregate, have reasonable likelihood of
subjecting the Group Members collectively to Environmental Liabilities and Costs
that would have a Material Adverse Effect;

(e) any proposed action by any Group Member or any proposed change in
Environmental Laws that, in the aggregate, have a reasonable likelihood of
requiring the Group Members to obtain additional environmental, health or safety
Permits or make additional capital improvements to obtain compliance with
Environmental Laws that, in the aggregate, would have a Material Adverse Effect
or that shall subject the Group Members to additional Environmental Liabilities
and Costs that would have a Material Adverse Effect;

(f) notice of any violation citation or other administrative order received by
any Loan Party that, in the aggregate, would have a Material Adverse Effect; and

(g) upon written request by any Lender through the Administrative Agent, a
report providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or report
delivered pursuant to this Agreement.

Section 6.8 Other Information

The Borrower shall provide the Administrative Agent, or any Lender making a
request through the Administrative Agent, with such other information respecting
the business, properties, condition, financial or otherwise, or operations of
the Borrower, the Parent or any Restricted Subsidiary as the Administrative
Agent or such Lender through the Administrative Agent may from time to time
reasonably request, including a Corporate Chart. Documents or notices required
to be delivered pursuant to this clauses (a) and (b) of Section 6.1 (Financial
Statements) and Section 6.3 (Litigation), which are made available via EDGAR, or
any successor system of the Securities and Exchange Commission, in an annual or
quarterly report of the Parent on Form 10-K or 10-Q or in a current report of
the Parent on Form 8-K, shall be deemed delivered to the Lenders on the date
such documents are made so available; provided that, (i) the Parent shall have
provided notice to the Administrative Agent that such document or notice is
publicly available and (ii) upon the request of the Administrative Agent, the
Borrower shall deliver paper copies (or in any other manner approved pursuant to
Section 11.8 (Notices, Etc.) of such documents or notices to the Administrative
Agent.

ARTICLE VII

AFFIRMATIVE COVENANTS

Each of the Parent and the Borrower agrees with the Lenders and the
Administrative Agent to each of the following, as long as any Obligation remains
outstanding and, in each case, unless the Requisite Lenders otherwise consent in
writing:
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Section 7.1 Preservation of Corporate Existence, Etc.

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, preserve and maintain its legal existence, rights (charter and
statutory) and franchises, except as permitted by Sections 8.4 (Sale of Assets),
8.7 (Restriction on Fundamental Changes) and Section 8.11 (Modification of
Constituent Documents) and, in the case of statutory rights and franchises, for
those that would not, in the aggregate, have a Material Adverse Effect..

Section 7.2 Compliance with Laws, Etc.

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, comply with all applicable Requirements of Law, Contractual
Obligations and Permits, except where the failure so to comply would not, in the
aggregate, have a Material Adverse Effect.

Section 7.3 Conduct of Business

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, (a) conduct its business in the ordinary course and (b) use its
reasonable efforts, in the ordinary course and consistent with past practice, to
preserve its business and the goodwill and business of the customers,
advertisers, suppliers and others having business relations with the Borrower,
the Parent or any Restricted Subsidiary, except in each case where the failure
to comply with the covenants in each of clauses (a) and (b) above would not, in
the aggregate, have a Material Adverse Effect.

Section 7.4 Payment of Taxes, Etc.

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, pay and discharge before the same shall become delinquent, all
lawful governmental claims, taxes, assessments, charges and levies, except (i)
where contested in good faith, by proper proceedings and adequate reserves
therefor have been established on the books of the Borrower, the Parent or the
appropriate Restricted Subsidiary in conformity with GAAP or (ii) where the
failure to do so, individually or in the aggregate, would not result in a
Material Adverse Effect.

Section 7.5 Maintenance of Insurance

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, (a) maintain insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower, the Parent or such Restricted
Subsidiary operates, and such other insurance as may be required by any
Collateral Document and (b) cause all such insurance relating to the Borrower,
the Parent or any Loan Party to name the Administrative Agent on behalf of the
Secured Parties as additional insured or loss payee, as appropriate, and to
provide that no cancellation, material addition in amount or material change in
coverage shall be effective until after 30 days’ written notice thereof to the
Administrative Agent.
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Section 7.6 Access

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, from time to time permit the Administrative Agent and the
Lenders, or any agents or representatives thereof, within five Business Days
after written notification of the same (except that during the continuance of an
Event of Default, no such notice shall be required) to (a) examine and make
copies of and abstracts from the records and books of account of the Borrower,
the Parent and each Restricted Subsidiary, (b) visit the properties of the
Borrower, the Parent and each Restricted Subsidiary, (c) discuss the affairs,
finances and accounts of the Borrower, the Parent and each Restricted Subsidiary
with any of their respective officers or directors and (d) communicate directly
with any of its certified public accountants (including the Borrower’s
Accountants), if any. The Borrower, the Parent and each Restricted Subsidiary
shall authorize its certified public accountants (including the Borrower’s
Accountants), if any, to disclose to the Administrative Agent or any Lender any
and all financial statements and other information of any kind, as the
Administrative Agent or any Lender reasonably requests and that such accountants
may have with respect to the business, financial condition, results of
operations or other affairs of the Borrower, the Parent and each Restricted
Subsidiary.

Section 7.7 Keeping of Books

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, keep proper books of record and account, in which full and
correct entries shall be made in conformity with GAAP of all financial
transactions and the assets and business of the Borrower, the Parent and each
Restricted Subsidiary.

Section 7.8 Maintenance of Properties, Etc.

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, maintain and preserve (a) in good working order and condition all
of its properties necessary in the conduct of its business, (b) all rights,
permits, licenses, approvals and privileges (including all Permits) used or
useful or necessary in the conduct of its business and (c) all registered
patents, trademarks, trade names, copyrights and service marks with respect to
its business, except where failure to so maintain and preserve the items set
forth in clauses (a), (b) and (c) above would not, in the aggregate, have a
Material Adverse Effect.

Section 7.9 Application of Proceeds

The Borrower (and, to the extent distributed to them by the Borrower, the Parent
and each Restricted Subsidiary) shall use the entire amount of the proceeds of
the Term Loans as provided in Section 4.13 (Use of Proceeds).

Section 7.10 Environmental

The Borrower and Parent each shall, and Parent shall cause each Restricted
Subsidiary to, comply in all material respects with Environmental Laws and,
without limiting the foregoing, the Borrower shall, at its sole cost and
expense, upon receipt of any notification or otherwise obtaining knowledge of
any Release or other event that has any reasonable likelihood of any of the
Borrower, the Parent or any Restricted Subsidiary incurring Environmental
Liabilities and Costs that would have a Material Adverse Effect, (a) conduct, or
pay for consultants to conduct, tests or assessments of environmental conditions
at such operations or properties, including the investigation and testing of
subsurface conditions and (b) take such Remedial Action and undertake such
investigation or other action as required by Environmental Laws or as any
Governmental Authority requires or as is appropriate and consistent with good
business practice to address the Release or event and otherwise ensure
compliance with Environmental Laws.
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Section 7.11 Additional Collateral and Guaranties

Unless otherwise agreed by the Administrative Agent in its reasonable
discretion, subject to Section 7.13 (Post-Closing Covenants), to the extent not
delivered to the Administrative Agent on or before the Closing Date (including
in respect of after-acquired property and any Person (other than an Immaterial
Subsidiary) that becomes a Wholly-Owned Domestic Subsidiary of any Loan Party
after the Closing Date), the Borrower and Parent each agree promptly to do, or
cause each other Group Member to do, each of the following (including in respect
of any after-acquired property) in form and substance reasonably satisfactory to
the Administrative Agent:

(a) except for any Immaterial Subsidiary (other than with respect to its Stock
or Stock Equivalents under clause (B)(1) below), cause such Group Member to (A)
become a party to a Guaranty and applicable Collateral Documents or enter into
new Collateral Documents and (B) take such other actions necessary or, in the
reasonable judgment of the Administrative Agent, advisable to grant to the
Administrative Agent for the benefit of the Secured Parties, subject only to the
Liens permitted under Section 8.2 (Liens, Etc.), a valid and enforceable
perfected first-priority security interest in (1) all of the Stock and Stock
Equivalents of such Borrower, the Parent or Restricted Subsidiary and (2) all
property and assets of such Borrower, the Parent or Restricted Subsidiary,
including, if applicable, the filing of UCC financing statements (or the
applicable equivalent) and perfection (including, if applicable, the delivery of
all certificates, together with undated powers or endorsements in blank) of
security interest on Stock, Stock Equivalents, intercompany notes or debt
Securities in such jurisdictions as may be required by the Collateral Documents,
by any Requirement of Law or as may be reasonably requested by the
Administrative Agent;

(b) upon written request of the Administrative Agent, execute and deliver to the
Administrative Agent, for the benefit of the Secured Parties, promptly and in
any event not later than 60 days after receipt of such notice, a Mortgage (or
similar security document) on any owned Real Property of any Loan Party with a
fair market value of $10,000,000 or more, together with, if requested by the
Administrative Agent, all Collateral Documents (including any Mortgage
Supporting Documents) necessary or, in the reasonable judgment of the
Administrative Agent, appropriate in the applicable jurisdiction to obtain the
equivalent in such jurisdiction of a valid and enforceable perfected
first-priority Lien on such Real Property, subject only to the Liens permitted
under Section 8.2 (Liens, Etc.);

(c) to take such other actions necessary or, in the reasonable judgment of the
Administrative Agent, advisable to ensure the validity or continuing validity of
the guaranties or to create, maintain or perfect the security interest required
to be granted pursuant to clauses (a) and (b) above, including such actions as
may be required by the Collateral Documents or by any Requirement of Law or
reasonably requested by the Administrative Agent; and
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(d) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent;

provided, however, that notwithstanding anything to the contrary contained in
this Section 7.11 or in Section 3.1 (Conditions Precedent to Closing Date Term
Loans), (i) any security interest required to be granted under the Loan
Documents on any assets of a Group Member shall be subject to the Intercreditor
Agreement and any Liens permitted under Section 8.2 (Liens, Etc.), (ii) the Loan
Documents shall not require any Group Member to enter into any control agreement
for the perfection of security interests in Cash, Cash Equivalents or Securities
in a deposit or securities account (other than any Cash Collateral Account)
except to the extent the same is required under the terms of the Revolving
Credit Agreement and (iii) the Loan Documents shall not require the creation or
perfection of, pledges of or security interests in, or the obtaining of title
insurance or legal opinions with respect to, any Excluded Assets or any
leaseholds, commercial tort claims, motor vehicles or any other asset subject to
certificates of title or letter of credit rights (other than any such rights
constituting “supporting obligations” as defined in the UCC). Nothing herein
shall restrict any Group Member that is not a Loan Party on the Closing Date
from becoming a Loan Party; provided, however, that such Group Member shall have
complied with the provisions of this Section 7.11 as if it were a new Restricted
Subsidiary.

Section 7.12 Designation of Subsidiaries

The board of directors of the Parent may at any time designate any Restricted
Subsidiary (other than the Borrower) as an Unrestricted Subsidiary or any
Unrestricted Subsidiary as a Restricted Subsidiary; provided that (a)
immediately before and after such designation, no Default or Event of Default
shall have occurred and be continuing, (b) no Restricted Subsidiary may be
designated an Unrestricted Subsidiary if it previously had been designated as an
Unrestricted Subsidiary, (c) any such designation shall be deemed to be an
Investment requiring compliance with Section 8.3 (Investments) (or reduction in
an outstanding Investment, in the case of a designation of an Unrestricted
Subsidiary as a Restricted Subsidiary), on the date of such designation in an
amount equal to the sum of (i) the Parent’s direct or indirect equity ownership
percentage of the net worth of such designated Restricted Subsidiary immediately
prior to such designation (such net worth to be calculated without regard to any
guarantee provided by such designated Restricted Subsidiary of the Parent’s,
Borrower’s or another Restricted Subsidiary’s Indebtedness) and (ii) without
duplication, the aggregate principal amount of any Indebtedness owed by such
designated Restricted Subsidiary to the Parent, Borrower or any other Restricted
Subsidiary immediately prior to such designation, all calculated, except as set
forth in the parenthetical to clause (i) above, on a Consolidated basis in
accordance with GAAP, and (c) no Subsidiary may be designated as an Unrestricted
Subsidiary if it is a “Restricted Subsidiary” for the purpose of any other
Indebtedness of the Parent. The designation of any Unrestricted Subsidiary as a
Restricted Subsidiary shall constitute the incurrence at the time of designation
of any Indebtedness or Liens of such Subsidiary existing at such time.

Section 7.13 Post-Closing Covenants

Each of the Parent and the Borrower shall, and Parent shall cause each other
Group Member to, comply with the terms and conditions set forth on Schedule 7.13
(Post-Closing Covenants).
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ARTICLE VIII

NEGATIVE COVENANTS

Each of the Parent and the Borrower agrees with the Lenders and the
Administrative Agent to each of the following, as long as any Obligation or any
Term Loan Commitment remains outstanding and, in each case, unless the Requisite
Lenders otherwise consent in writing:

Section 8.1 Indebtedness

The Parent shall not, nor shall it permit the Borrower or any Restricted
Subsidiary to, directly or indirectly create, incur, assume or otherwise become
or remain directly or indirectly liable with respect to any Indebtedness or
Disqualified Stock, except for the following:

(a) the Secured Obligations (other than in respect of Hedging Contracts not
permitted to be incurred pursuant to clause (i) below) and Guaranty Obligations
in respect thereto and Permitted Refinancings thereof;

(b) the Revolving Credit Obligations and Permitted Refinancings thereof;

(c) Indebtedness existing on the date of this Agreement and disclosed on
Schedule 8.1 (Existing Indebtedness) and Permitted Refinancings thereof;

(d) Guaranty Obligations incurred by the Borrower or any Guarantor in respect of
Indebtedness of the Borrower or any Guarantor that is otherwise permitted by
this Section 8.1 (other than clause (a) above);

(e) Capital Lease Obligations, purchase money Indebtedness or other Indebtedness
in respect of industrial revenue or similar bonds, in each case incurred by the
Parent or a Restricted Subsidiary to finance the acquisition, construction or
improvement of fixed assets and Permitted Refinancings thereof; provided,
however, that the aggregate outstanding principal amount of all such Capital
Lease Obligations, purchase money or other Indebtedness and Permitted
Refinancings thereof at the date such Capital Lease Obligation, purchase money
or other Indebtedness is incurred, and after giving effect thereto, shall not
exceed the greater of (i) $50,000,000 and (ii) 2.0% of the Total Assets of the
Borrower, the Parent and the Restricted Subsidiaries taken as a whole;

(f) Attributable Debt incurred by the Parent or any Restricted Subsidiary
pursuant to Permitted Sale Leaseback transactions; provided, however, that the
aggregate principal amount all such of Attributable Debt outstanding at the date
such Permitted Sale Leaseback transaction is consummated, and after giving
effect thereto, shall not exceed the greater of (i) $50,000,000 and (ii) 2.0% of
Total Assets of the Borrower and the Restricted Subsidiaries taken as a whole at
any time;

(g) Indebtedness arising from intercompany loans (i) among Loan Parties, (ii)
among Qualified Restricted Subsidiaries, (iii) among Restricted Subsidiaries
that are not Qualified Restricted Subsidiaries or Guarantors, (iv) from any
Restricted Subsidiary to any Loan Party; provided, however, any such loans shall
be subordinated to the Obligations on terms that expressly prohibit payment of
any amount thereof (including interest thereon) at any time an Event of Default
has occurred and is continuing, (v) from any Loan Party to any Qualified
Restricted Subsidiary, (vi) from any Loan Party or Qualified Restricted
Subsidiary to any Restricted Subsidiary that is not a Loan Party or Qualified
Restricted Subsidiary or to any Unrestricted Subsidiary and (vii) from any
Restricted Subsidiary that is not a Qualified Restricted Subsidiary or a
Guarantor to any Unrestricted Subsidiary; provided, however, that, in the case
of clauses (v), (vi) and (vii) above, the Investment in such intercompany loan
to such Subsidiary is permitted under Section 8.3 (Investments);
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(h) Indebtedness of the Borrower and the Restricted Subsidiaries arising under
any performance or surety bond entered into in the ordinary course of business;

(i) Obligations under Hedging Contracts permitted under Section 8.15 (No
Speculative Transactions);

(j) other Indebtedness of the Parent and the Restricted Subsidiaries in an
aggregate principal amount not to exceed $100,000,000 at any time outstanding;
provided, however, that Indebtedness of Persons which are not Loan Parties
pursuant to this clause (j) shall not exceed an aggregate principal amount of
$50,000,000 at any time outstanding;

(k) Indebtedness of any Person that becomes a Restricted Subsidiary after the
Closing Date in connection with a Permitted Acquisition and any Permitted
Refinancing thereof; provided, that (i) such Indebtedness exists at the time
such Person becomes a Restricted Subsidiary and is not created in contemplation
of or in connection with such Person becoming a Restricted Subsidiary, (ii)
after giving effect to the assumption of such Indebtedness (A) the Parent would
be in compliance with the financial covenant contained in Section 5.1 (Financial
Covenant) for the most recently ended Test Period, determined on a Pro Forma
Basis, and (B) if such Indebtedness is secured by a Lien on any assets of such
Person, the Senior Secured Leverage Ratio would be less than 3.0 to 1 on a Pro
Forma Basis, (iii) such Indebtedness is not guaranteed in any respect by the
Borrower, any Guarantor or any Restricted Subsidiary (other than by any such
Person that so becomes a Restricted Subsidiary or is the survivor of a merger
with such Person or any of its Subsidiaries) and (iv) except for Indebtedness
consisting of Capital Lease Obligations, revenue bonds, purchase money
Indebtedness or mortgages or other Liens on specific assets no portion of such
Indebtedness matures prior to the Term Loan Maturity Date;

(l) Indebtedness of the Borrower or the Restricted Subsidiaries arising from the
issuance, for use in the ordinary course of business, of letters of credit in an
aggregate amount not to exceed at any one time outstanding $75,000,000; and

(m) Indebtedness of the Loan Parties not otherwise permitted under this Section
8.1 and Permitted Refinancings thereof; provided, however, that after giving
effect to the occurrence of such Indebtedness (A) no Default or Event of Default
shall have occurred and be continuing and (B) the Parent would be in compliance
with the financial covenant contained in Section 5.1 (Financial Covenant) for
the most recently ended Test Period, determined on a Pro Forma Basis after
giving effect to the incurrence of such Indebtedness.
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Section 8.2 Liens, Etc.

The Parent shall not, nor shall it permit any Restricted Subsidiary to, create
or suffer to exist, any Lien upon or with respect to any of their respective
properties or assets, whether now owned or hereafter acquired, or assign, or
permit any Restricted Subsidiary to assign, any right to receive income, except
for the following:

(a) Liens created pursuant to the Loan Documents;

(b) Liens created pursuant to the Revolving Credit Loan Documents securing the
Revolving Credit Obligations, subject to the terms of the Intercreditor
Agreement;

(c) Liens existing on the date of this Agreement and disclosed on Schedule 8.2
(Existing Liens);

(d) Customary Permitted Liens on the assets of the Borrower and the Restricted
Subsidiaries;

(e) purchase money Liens or Liens in favor of any Governmental Authority or a
Subsidiary thereof granted by the Borrower or any of the Restricted Subsidiaries
(including the interest of a lessor under a Capital Lease and purchase money
Liens or Liens in favor of such Governmental Authority or Subsidiary thereof to
which any property is subject at the time, on or after the date hereof, of the
Borrower’s or such Restricted Subsidiary’s acquisition thereof) securing
Indebtedness permitted under Section 8.1(e) (Indebtedness) and limited in each
case to the property purchased, constructed or improved with the proceeds of
such purchase money or other Indebtedness or subject to such Capital Lease;

(f) any Lien securing the renewal, extension, refinancing or refunding of any
Indebtedness secured by any Lien permitted by clause (c) or (e) above or this
clause (f) without any change in the assets subject to such Lien and to the
extent such renewal, extension, refinancing or refunding is permitted by clause
(c) or (e) of Section 8.1(Indebtedness);

(g) Liens in favor of lessors securing operating leases or, to the extent such
transactions create a Lien hereunder, a Permitted Sale Leaseback, in each case
to the extent such operating leases or Permitted Sale Leasebacks are permitted
hereunder;

(h) Liens existing on the assets of any Person that becomes a Restricted
Subsidiary (or is a Restricted Subsidiary that survives a merger with such
Person), or existing on assets acquired, pursuant to a Permitted Acquisition to
the extent the Liens on such assets secure Indebtedness permitted by Section
8.1(k) (Indebtedness); provided that such Liens attach at all times only to the
same assets to which such Liens attached (and after-acquired property that is
affixed or incorporated into the property covered by such Lien), and secure only
the same Indebtedness or obligations that such Liens secured, immediately prior
to such Permitted Acquisition and any Permitted Refinancing thereof; and

(i) Liens not otherwise permitted by the foregoing clauses of this Section 8.2
securing obligations or other liabilities of any Restricted Subsidiary;
provided, however, that the Dollar Equivalent of the aggregate outstanding
amount of all such obligations and liabilities shall not exceed $50,000,000 at
any time.
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Section 8.3 Investments

The Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
to make or maintain, directly or indirectly, any Investment except for the
following:

(a) Investments existing on the date of this Agreement and disclosed on Error!
Reference source not found.3 (Existing Investments);

(b) Investments in cash and Cash Equivalents;

(c) Investments in payment intangibles, chattel paper (each as defined in the
UCC) and Accounts, notes receivable and similar items arising or acquired in the
ordinary course of business consistent with the past practice of the Group
Members;

(d) Investments received in settlement of amounts due to any Group Member
effected in the ordinary course of business;

(e) Investments (i) among Loan Parties, (ii) among Qualified Restricted
Subsidiaries, (iii) among Restricted Subsidiaries that are not Qualified
Restricted Subsidiaries or Guarantors, (iv) from any Restricted Subsidiary to
any Loan Party, (v) from any Loan Party to any Qualified Restricted Subsidiary;
provided, however, that at the date of, and after giving effect to any such
Investment made pursuant to this clause (v) or clause (i)(B) below, the Parent
would be in compliance with the financial covenant contained in Section
5.1 (Financial Covenant) for the most recently ended Test Period, determined on
a Pro Forma Basis, and provided further, that, the aggregate outstanding amount
of all such Investments permitted pursuant to this clause (v), together with all
such Investments in Permitted Acquisitions permitted pursuant to clause (i)(B)
below, shall not exceed $250,000,000;

(f) Investments in respect of (i) Hedging Contracts permitted under Section 8.15
(No Speculative Transactions) and (ii) any Note Hedge Transaction;

(g) loans or advances to employees of the Borrower or any Restricted Subsidiary
in the ordinary course of business as presently conducted other than any loans
or advances that would be in violation of Section 402 of the Sarbanes-Oxley Act;
provided, however, that the Dollar Equivalent of the aggregate principal amount
of all loans and advances permitted pursuant to this clause (g) shall not exceed
$10,000,000 at any time;

(h) Guaranty Obligations permitted by Section 8.1 (Indebtedness);

(i) Investments in any Person that becomes a Loan Party or a Qualified
Restricted Subsidiary or in any assets that are acquired by a Loan Party or a
Qualified Restricted Subsidiary, in each case, in connection with any Permitted
Acquisition consummated after the Closing Date; provided, however, that at the
date of, and after giving effect to any such Investment made pursuant to this
clause (i), the Parent would be in compliance with the financial covenant
contained in Section 5.1 (Financial Covenant) for the most recently ended Test
Period, determined on a Pro Forma Basis, and provided further, that, (A) the
fair market value (determined in good faith by the Borrower) of such Investments
(or portion thereof) in Persons that become Loan Parties or in assets that are
acquired by Loan Parties shall not exceed $500,000,000 in the aggregate, except
for any such Investment to the extent the consideration for which consists of
Qualified Capital Stock of the Parent and (B) the fair market value (determined
in good faith by the Borrower) of such Investments (or portion thereof) in
Persons that become Qualified Restricted Subsidiaries or in assets that are
acquired by Qualified Restricted Subsidiaries shall not, together with all such
Investments permitted pursuant to clause (e)(v) above, exceed $250,000,000 in
the aggregate (it being understood that additional Investments in connection
with Permitted Acquisitions, including Investments in Restricted Subsidiaries
that are not Loan Parties or Qualified Restricted Subsidiaries, may be made in
reliance on clause (j) below); and
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(j) Investments in an amount not to exceed at the date of, and after giving
effect to such Investment, the sum of (i) the greater of (a) $75,000,000 and (b)
2.5% of the Total Assets of the Borrower and the Restricted Subsidiaries taken
as a whole at such time and (ii) the Applicable Amount in the aggregate at any
time outstanding.

Section 8.4 Sale of Assets

The Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
to, sell, convey, transfer, lease or otherwise dispose of, any of their
respective assets or any interest therein (including the sale or factoring at
maturity or collection of any accounts) to any Person, or permit or suffer any
other Person to acquire any interest in any of their respective assets or,
except in the case of the Borrower, issue or sell any shares of their Stock or
any Stock Equivalents (any such disposition being an “Asset Sale”), except for
the following:

(a) the sale or disposition of Cash Equivalents, Inventory or other assets, in
each case in the ordinary course of business;

(b) the sale or disposition of equipment that has become obsolete, damaged,
surplus or otherwise no longer used or useful in the ordinary course of business
or is replaced in the ordinary course of business;

(c) any Recovery Event (without giving effect to the limitations in the
definition thereof);

(d) sales or other dispositions without recourse and in the ordinary course of
business of overdue accounts receivable in connection with the compromise or
collection thereof;

(e) the licensing, sublicensing or other similar ordinary course transfers (but
not sales) of intellectual property rights (on an exclusive or non-exclusive
basis) to the extent that the foregoing occurs on an arms-length basis;

(f) the settlement, release or surrender of tort or other litigation claims;

(g) asset contributions for no cash consideration (or its equivalent) to the
extent constituting an Investment permitted by Section 8.3(e) (Investments);

(h) Assets Sales (i) among the Loan Parties, (ii) among Qualified Restricted
Subsidiaries, and (iii) among Restricted Subsidiaries that are not Qualified
Restricted Subsidiaries or Loan Parties;
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(i) a true lease or sublease of Real Property not constituting Indebtedness and
not constituting a Sale Leaseback;

(j) dispositions of property pursuant to a Permitted Sale Leaseback; provided,
however, that with respect to any such Asset Sale pursuant to this clause (j),
an amount equal to all Net Cash Proceeds of such Asset Sale are applied to the
payment of the Obligations as set forth in, and to the extent required by,
Section 2.7 (Mandatory Prepayments);

(k) as long as no Default or Event of Default is continuing or would result
therefrom, any other Asset Sale for Fair Market Value, 75% of which shall be
payable in cash upon such sale; provided, however, that with respect to any such
Asset Sale pursuant to this clause (k), (i) the Dollar Equivalent of the
aggregate consideration received during any fiscal year for all such Asset Sales
shall not exceed 2.0% of the Total Assets of the Borrower and the Restricted
Subsidiaries taken as a whole at any time outstanding and (ii) an amount equal
to all Net Cash Proceeds of such Asset Sale are applied to the payment of the
Obligations as set forth in, and to the extent required by, Section 2.7
(Mandatory Prepayments);

(l) any other sale or transfer or series of related sales or transfers that
result in cash consideration of less than $1,000,000;

(m) termination, sale or closure of up to 500 stores, subleases and franchises
per annum, net of those acquired or opened; provided, however, that at no time
shall the aggregate number of stores owned or franchised by the Group Members be
less than 3,500;

(n) transfers to insurers as part of insurance settlements for losses to
governmental authority for condemned property; and

(o) dispositions listed on Schedule 8.4 (Asset Sales).

Section 8.5 Restricted Payments

The Parent shall not, and shall not permit Borrower or any Restricted Subsidiary
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Payment except for the following:

(a) Restricted Payments by any Subsidiary of the Parent to any Loan Party;

(b) dividends and distributions declared and paid on the common Stock of the
Parent and payable only in common Stock of the Parent;

(c) (i) payments of cash upon conversion, redemption, repayment, prepayment or
repurchase of any Indebtedness to the extent such payments would be permitted
under Section 8.6(e) (Prepayment of Indebtedness), (ii) deliveries of the
Borrower’s common stock upon conversion of any Qualified Refinancing
Indebtedness to equity, (iii) payments of cash in respect of any interest
payments due on any Qualified Refinancing Indebtedness, (iv) Restricted Payments
in respect of any Note Hedge Transaction (including, but not limited to, the
purchase and exercise of such Note Hedge Transaction), and (v) Restricted
Payments in respect of any warrant transaction entered into concurrently with
any Note Hedge Transaction;
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(d) as long as no Default or Event of Default has occurred and is continuing or
would result therefrom, Restricted Payments in an amount not to exceed, together
with any payment made pursuant to clause (g) of Section 8.6 (Prepayment of
Indebtedness), the sum of (i) $50,000,000 and (ii) the Applicable Amount in the
aggregate at any time outstanding;

(e) repurchases of Parent stock in connection with the exercise of employee
stock options in the ordinary course of business on a basis that is “net of
taxes” or any equivalent gross exercise and repurchase to fund tax liabilities
to the extent required under applicable employee contractual arrangements; and

(f) dividends or distributions by Restricted Subsidiaries to another Restricted
Subsidiary and to minority investors in such Restricted Subsidiary, in each case
to the extent of their interest therein, provided, however, that any such
Restricted Payment shall be made pro rata among all such investors.

Section 8.6 Prepayment of Indebtedness

The Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
to, prepay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any manner, or make any payment in violation of
any subordination terms of, any Indebtedness (each an “Optional
Debt Prepayment”); provided, however, that the Borrower, the Parent, and each
Restricted Subsidiary may (a) prepay the Obligations in accordance with the
terms of this Agreement, (b) prepay Indebtedness under the Target Credit
Agreement with the proceeds of the Closing Date Term Loans hereunder, (c) prepay
any intercompany Indebtedness permitted under Section 8.1(g) and (j)
(Indebtedness), (d) enter into any Permitted Refinancing permitted under Section
8.1 (Indebtedness), (e) as long as no Default or Event of Default has occurred
and is continuing or would result therefrom, repay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any matter any
senior unsecured, senior subordinated or other subordinated Indebtedness in an
aggregate principal amount not to exceed $450,000,000; provided that, after
giving effect to such payment, (i) the Senior Secured Leverage Ratio would not
be greater than 2.0 to 1 on a Pro Forma Basis, and (ii) the Parent would be in
compliance with the financial covenant contained in Section 5.1 (Financial
Covenant) for the most recently ended Test Period, determined on a Pro Forma
Basis, (f) to the extent not otherwise permitted hereby and as long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, prepay Indebtedness of any Foreign Subsidiary in an amount not to
exceed in the aggregate $10,000,000, and (g) to the extent not otherwise
permitted hereby and as long as no Default or Event of Default has occurred and
is continuing or would result therefrom, prepay Indebtedness in an amount not to
exceed, together with any Restricted Payment made pursuant to Section 8.5(d)
(Restricted Payments), the sum of (i) $50,000,000 and (ii) the Applicable Amount
in the aggregate at any time outstanding.

Section 8.7 Restriction on Fundamental Changes

Except in connection with Investments in Permitted Acquisitions made pursuant to
Section 8.3 (Investments) and Asset Sales expressly permitted under Section 8.4
(Sale of Assets), the Parent shall not, nor shall it permit Borrower or any
Restricted Subsidiary to, enter into any transaction of merger or consolidation,
or liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
exchange, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, assets or property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, or acquire by purchase or otherwise
(other than purchases or other acquisitions of inventory, materials and
equipment and Capital Expenditures in the ordinary course of business) the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business or other business
unit of any Person, except:
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(a) any Loan Party may be merged with or into any other Loan Party, or be
liquidated, wound up or dissolved, or all or any part of its business, property
or assets may be conveyed, sold, leased, transferred or otherwise disposed of,
in one transaction or a series of transactions, to any other Loan Party;
provided, in the case of such a merger, the continuing or surviving Person shall
remain a Loan Party, provided, however, that if the Borrower is merged into
another Loan Party, the Borrower must be the surviving entity;

(b) any Restricted Subsidiary that is not a Loan Party may be merged with or
into any other Restricted Subsidiary that is not a Loan Party or into any Loan
Party, or be liquidated, wound up or dissolved, or all or any part of its
business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to any
other Restricted Subsidiary that is not a Loan Party or to a Loan Party; and

(c) in the case of either clause (a) or (b) above, prior to and after giving
effect to any proposed transaction, no Default or Event of Default shall occur
or be continuing.

Section 8.8 Change in Nature of Business

(a) The Parent shall not, and shall not permit Borrower or any of the Restricted
Subsidiaries to, make any material change in the nature or conduct of its
business as carried on at the date hereof, whether in connection with a
Permitted Acquisition or otherwise.

(b) The Parent shall not engage in any business (but may incur liabilities) or
hold any assets; provided, however, the Parent may (i) hold shares of Stock of
the Borrower or Unrestricted Subsidiaries and (ii) have employees and hold
assets used to provide administrative and operational support.

Section 8.9 Transactions with Affiliates

Other than as set forth on Schedule 8.9, the Parent shall not, nor shall it
permit Borrower or any Restricted Subsidiary to effect any transaction with any
of its respective Affiliates that is not a Restricted Subsidiary on a basis less
favorable to the Borrower or such Restricted Subsidiary than would at the time
be obtainable for a comparable transaction in arms-length dealing with an
unrelated third party.

Section 8.10 Limitations on Restrictions on Subsidiary Distributions; No New
Negative Pledge

Except pursuant to the Loan Documents and any agreements governing purchase
money Indebtedness or Capital Lease Obligations permitted by Section 8.1(c) or
(e) (Indebtedness) (in the case of agreements permitted by such clauses, any
prohibition or limitation shall only be effective against the assets financed
thereby), the Parent shall not, and shall not permit the Borrower or any of the
Restricted Subsidiaries to, (a) agree to enter into or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of such Restricted Subsidiary, other than customary provisions in Joint Venture
agreements and other similar agreements relating solely to the securities,
assets and revenues of such Joint Venture, to pay dividends or make any other
distribution or transfer of funds or assets or make loans or advances to or
other Investments in, or pay any Indebtedness owed to, the Borrower or any other
Restricted Subsidiary or (b) enter into or suffer to exist or become effective
any agreement prohibiting or limiting the ability of any Restricted Subsidiary,
other than customary provisions in Joint Venture agreements and other similar
agreements relating solely to the securities, assets and revenues of such Joint
Venture, to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, to secure
the Obligations, including any agreement requiring any other Indebtedness or
Contractual Obligation to be equally and ratably secured with the Obligations.
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Section 8.11 Modification of Constituent Documents

The Parent shall not, nor shall it permit any Restricted Subsidiary to, change
its capital structure (including in the terms of its outstanding Stock) or
otherwise amend its Constituent Documents, except for changes and amendments
that do not materially affect the rights and privileges of any Restricted
Subsidiary and do not materially affect the interests of the Secured Parties
under the Loan Documents or in the Collateral.

Section 8.12 Modification of Related Documents

The Parent shall not, nor shall it permit any Restricted Subsidiary to, alter,
rescind, terminate, amend, supplement, waive or otherwise modify any provision
of any Related Document (except for modifications that do not materially affect
the rights and privileges of any Restricted Subsidiary under such Related
Document and that do not materially affect the interests of the Secured Parties
under the Loan Documents or in the Collateral).

Section 8.13 Accounting Changes; Fiscal Year

The Parent shall not, nor shall it permit the Borrower to, change its (a)
accounting treatment and reporting practices or tax reporting treatment, except
as required by GAAP or any Requirement of Law and disclosed to the Lenders and
the Administrative Agent or (b) fiscal year, in each case other than as set
forth on Schedule 8.13 (Accounting Changes; Fiscal Year).

Section 8.14 Margin Regulations

The Parent shall not, nor shall it permit any Restricted Subsidiary to, use all
or any portion of the proceeds of any credit extended hereunder to purchase or
carry margin stock (within the meaning of Regulation U of the Federal Reserve
Board) in contravention of Regulation U of the Federal Reserve Board.

Section 8.15 No Speculative Transactions

The Parent shall not, nor shall it permit any Restricted Subsidiary to, engage
in any speculative transaction or in any transaction involving Hedging Contracts
except for the sole purpose of hedging in the normal course of business and
consistent with industry practices; provided, for the avoidance of doubt, the
provisions of this Section 8.15 shall not apply to (a) any Note Hedge
Transaction or (b) any warrant transaction entered into concurrently with any
Note Hedge Transaction.
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Section 8.16 Compliance with ERISA

The Parent shall not, nor shall it permit any Restricted Subsidiary or any ERISA
Affiliate to, cause or permit to occur an ERISA Event (a) that could result in
the imposition of a Lien that is not permitted by Section 8.2(i) (Liens) or (b)
that would have a Material Adverse Effect in the aggregate.

ARTICLE IX

EVENTS OF DEFAULT

Section 9.1 Events of Default

Each of the following events shall be an Event of Default:

(a) the Borrower shall fail to pay any principal of any Term Loan when the same
becomes due and payable; or

(b) the Borrower shall fail to pay any interest on any Term Loan, any fee under
any of the Loan Documents or any other Obligation (other than one referred to in
clause (a) above) and such non-payment continues for a period of three Business
Days after the due date therefor; or

(c) any representation or warranty made or deemed made by any Loan Party in any
Loan Document or by any Loan Party (or any of its officers) in connection with
any Loan Document shall prove to have been incorrect in any material respect
when made or deemed made; or

(d) any Loan Party shall fail to perform or observe (i) any term, covenant or
agreement contained in Sections 6.2 (Default Notices), 7.1 (Preservation of
Corporate Existence, Etc.), 7.6 (Access), 7.9 (Application of Proceeds), 7.11
(Additional Collateral and Guaranties), 7.12 (Designation of Subsidiaries) or
Article VIII (Negative Covenants), (ii) any term, covenant or agreement
contained in Section 6.1 (Financial Statements) if such failure under this
clause (ii) shall remain unremedied for 15 days after the earlier of (A) the
date on which a Responsible Officer of the Borrower becomes aware of such
failure and (B) the date on which written notice thereof shall have been given
to the Borrower by the Administrative Agent or any Lender or (iii) any other
term, covenant or agreement contained in this Agreement or in any other Loan
Document if such failure under this clause (iii) shall remain unremedied for 30
days after the earlier of (A) the date on which a Responsible Officer of the
Borrower becomes aware of such failure and (B) the date on which written notice
thereof shall have been given to the Borrower by the Administrative Agent or any
Lender; or

(e) (i) the Borrower, the Parent or any Restricted Subsidiary shall fail to make
any payment on any Indebtedness of the Borrower, the Parent or any such
Restricted Subsidiary (other than the Obligations) or any Guaranty Obligation in
respect of Indebtedness of any other Person, and, in each case, such failure
relates to Indebtedness having a principal amount of $25,000,000 or more, when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), (ii) any other event shall occur
or condition shall exist under any agreement or instrument relating to any such
Indebtedness, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness or (iii) any such
Indebtedness shall become or be declared to be due and payable, or be required
to be prepaid or repurchased (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; provided, that other than
with respect to payments defaults, any default under the Revolving Credit
Agreement shall remain unremedied for 30 days; or
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(f) (i) the Borrower, the Parent or any Restricted Subsidiary shall generally
not pay its debts as such debts become due, shall admit in writing its inability
to pay its debts generally or shall make a general assignment for the benefit of
creditors, (ii) any proceeding shall be instituted by or against the Borrower,
the Parent or any Restricted Subsidiary seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts, under any
Requirement of Law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a custodian, receiver, trustee or other similar official for it
or for any substantial part of its property; provided, however, that, in the
case of any such proceedings instituted against the Borrower, the Parent or any
Restricted Subsidiary (but not instituted by the Borrower, the Parent or any
Restricted Subsidiary) either such proceedings shall remain undismissed or
unstayed for a period of 60 days or more or any action sought in such
proceedings shall occur or (iii) the Borrower, the Parent or any Restricted
Subsidiary shall take any corporate action to authorize any action set forth in
clauses (i) and (ii) above; or

(g) any money judgment, writ or warrant of attachment or similar process
involving individually or in the aggregate, an amount in excess of $25,000,000
to the extent not adequately covered by insurance shall be entered or filed
against the Borrower, the Parent or any of the Restricted Subsidiaries or any of
their respective assets and shall remain unpaid, undischarged, unvacated,
unbonded or unstayed for a period of sixty days; or

(h) an ERISA Event shall occur and the Dollar Equivalent of the amount of all
liabilities and deficiencies resulting therefrom, whether or not assessed,
exceeds $25,000,000 in the aggregate; or

(i) any provision of any Loan Document after delivery thereof shall for any
reason fail or cease to be valid and binding on, or enforceable against, any
Loan Party party thereto, or any Loan Party shall so state in writing; or

(j) any Collateral Document shall for any reason fail or cease to create a valid
and enforceable Lien on any Collateral purported to be covered thereby or,
except as permitted by the Loan Documents, such Lien shall fail or cease to be a
perfected Lien having the priority set forth in the Intercreditor Agreement, or
any Loan Party shall so state in writing; or

(k) there shall occur any Change of Control.
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Section 9.2 Remedies

During the continuance of any Event of Default, the Administrative Agent
(a) may, and, at the request of the Requisite Lenders, shall, by notice to the
Borrower declare that all or any portion of the Term Loan Commitments be
terminated, whereupon the obligation of each Lender to make any Term Loan shall
immediately terminate and (b) may and, at the request of the Requisite Lenders,
shall, by notice to the Borrower, declare the Term Loans, all interest thereon
and all other amounts and Obligations payable under this Agreement to be
forthwith due and payable, whereupon the Term Loans, all such interest and all
such amounts and Obligations shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of the Events of Default specified in Section 9.1(f) (Events of
Default), (x) the Term Loan Commitments of each Lender to make Term Loans shall
each automatically be terminated and (y) the Term Loans, all such interest and
all such amounts and Obligations shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower. In addition to the remedies
set forth above, the Administrative Agent may exercise any remedies provided for
by the Collateral Documents in accordance with the terms thereof or any other
remedies provided by applicable law.

Section 9.3 Rescission

If at any time after termination of the Term Loan Commitments or acceleration of
the maturity of the Term Loans, the Borrower shall pay all arrears of interest
and all payments on account of principal of the Term Loans that shall have
become due otherwise than by acceleration (with interest on principal and, to
the extent permitted by law, on overdue interest, at the rates specified herein)
and all Events of Default and Defaults (other than non-payment of principal of
and accrued interest on the Term Loans due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 11.1 (Amendments,
Waivers, Etc.), then upon the written consent of the Requisite Lenders and
written notice to the Borrower, the termination of the Term Loan Commitments or
the acceleration and their consequences may be rescinded and annulled; provided,
however, that such action shall not affect any subsequent Event of Default or
Default or impair any right or remedy consequent thereon. The provisions of the
preceding sentence are intended merely to bind the Lenders to a decision that
may be made at the election of the Requisite Lenders, and such provisions are
not intended to benefit the Borrower and do not give the Borrower the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.

ARTICLE X

THE ADMINISTRATIVE AGENT

Section 10.1 Authorization and Action

(a) Each Lender hereby appoints Citi as the Administrative Agent hereunder and
each Lender authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Administrative Agent under such agreements and
to exercise such powers as are reasonably incidental thereto. Without limiting
the foregoing, each Lender hereby authorizes the Administrative Agent to execute
and deliver, and to perform its obligations under, each of the Loan Documents to
which the Administrative Agent is a party, to exercise all rights, powers and
remedies that the Administrative Agent may have under such Loan Documents and,
in the case of the Collateral Documents, to act as agent for the Lenders and the
other Secured Parties under such Collateral Documents.
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(b) As to any matters not expressly provided for by this Agreement and the other
Loan Documents (including enforcement or collection), the Administrative Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite
Lenders, and such instructions shall be binding upon all Lenders; provided,
however, that the Administrative Agent shall not be required to take any action
that (i) the Administrative Agent in good faith believes exposes it to personal
liability unless the Administrative Agent receives an indemnification reasonably
satisfactory to it from the Lenders with respect to such action or (ii) is
contrary to this Agreement or applicable law. The Administrative Agent agrees to
give to each Lender prompt notice of each notice given to it by any Loan Party
pursuant to the terms of this Agreement or the other Loan Documents.

(c) In performing its functions and duties hereunder and under the other Loan
Documents, the Administrative Agent is acting solely on behalf of the Lenders
except to the limited extent provided in Section 2.5(b), and its duties are
entirely administrative in nature. The Administrative Agent does not assume and
shall not be deemed to have assumed any obligation other than as expressly set
forth herein and in the other Loan Documents or any other relationship as the
agent, fiduciary or trustee of or for any Lender or other holder of any
Obligation. The Administrative Agent may perform any of its duties under any
Loan Document by or through its agents or employees.

(d) The Arranger shall have no obligations or duties whatsoever in such capacity
under this Agreement or any other Loan Document and shall incur no liability
hereunder or thereunder in such capacity.

Section 10.2 Administrative Agent’s Reliance, Etc.

None of the Administrative Agent, any of its Affiliates or any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Loan Documents, except for its, his,
her or their own gross negligence or willful misconduct. Without limiting the
foregoing, the Administrative Agent (a) may rely on the Register to the extent
set forth in Section 2.5 (Evidence of Debt), (b) may consult with legal counsel
(including counsel to the Borrower or any other Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts, (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made by or on behalf of the Borrower,
the Parent or any of its Subsidiaries in or in connection with this Agreement or
any other Loan Document, (d) shall not have any duty to ascertain or to inquire
either as to the performance or observance of any term, covenant or condition of
this Agreement or any other Loan Document, as to the financial condition of any
Loan Party or as to the existence or possible existence of any Default or Event
of Default, (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
attachment, perfection or priority of any Lien created or purported to be
created under or in connection with, this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto and (f)
shall incur no liability under or in respect of this Agreement or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which writing may be a telecopy or electronic mail) or any telephone
message believed by it to be genuine and signed or sent by the proper party or
parties.
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Section 10.3 Posting of Approved Electronic Communications

(a) Each of the Lenders, the Parent and the Borrower agree, and the Parent shall
cause each Guarantor to agree, that the Administrative Agent may, but shall not
be obligated to, make the Approved Electronic Communications available to the
Lenders by posting such Approved Electronic Communications on IntraLinks™ or a
substantially similar electronic platform chosen by the Administrative Agent to
be its electronic transmission system (the “Approved Electronic Platform”).

(b) Although the Approved Electronic Platform and its primary web portal are
secured with generally-applicable security procedures and policies implemented
or modified by the Administrative Agent from time to time (including, as of the
Closing Date, a dual firewall and a User ID/Password Authorization System) and
the Approved Electronic Platform is secured through a single-user-per-deal
authorization method whereby each user may access the Approved Electronic
Platform only on a deal-by-deal basis, each of the Lenders, the Parent and the
Borrower acknowledges and agrees, and the Parent shall cause each Guarantor to
acknowledge and agree, that the distribution of material through an electronic
medium is not necessarily secure and that there are confidentiality and other
risks associated with such distribution. In consideration for the convenience
and other benefits afforded by such distribution and for the other consideration
provided hereunder, the receipt and sufficiency of which is hereby acknowledged,
each of the Lenders, the Parent and the Borrower hereby approves, and the Parent
shall cause each Guarantor to approve, distribution of the Approved Electronic
Communications through the Approved Electronic Platform and understands and
assumes, and the Parent shall cause each Guarantor to understand and assume, the
risks of such distribution.

(c) The Approved Electronic Platform and the Approved Electronic Communications
are provided “as is” and “as available”. None of the Administrative Agent or any
of its Affiliates or any of their respective officers, directors, employees,
agents, advisors or representatives (the “Agent Affiliates”) warrant the
accuracy, adequacy or completeness of the Approved Electronic Communications or
the Approved Electronic Platform and each expressly disclaims liability for
errors or omissions in the Approved Electronic Platform and the Approved
Electronic Communications. No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Agent Affiliates in
connection with the Approved Electronic Platform or the Approved Electronic
Communications.

(d) Each of the Lenders, the Parent and the Borrower agree, and the Parent shall
cause each Guarantor to agree, that the Administrative Agent may, but (except as
may be required by applicable law) shall not be obligated to, store the Approved
Electronic Communications on the Approved Electronic Platform in accordance with
the Administrative Agent’s generally-applicable document retention procedures
and policies.
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Section 10.4 The Administrative Agent Individually

With respect to its Ratable Portion, Citi shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms “Lenders”, “Requisite Lenders” and any similar terms shall, unless the
context clearly otherwise indicates, include, without limitation, the
Administrative Agent in its individual capacity as a Lender or as one of the
Requisite Lenders. Citi and its Affiliates may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or other business with,
any Loan Party as if Citi were not acting as the Administrative Agent.

Section 10.5 Lender Credit Decision

Each Lender acknowledges that it shall, independently and without reliance upon
the Administrative Agent or any other Lender, conduct its own independent
investigation of the financial condition and affairs of the Borrower and each
other Loan Party in connection with the making and continuance of the Term
Loans. Each Lender also acknowledges that it shall, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and other Loan Documents. Except for the documents expressly required
by any Loan Document to be transmitted by the Administrative Agent to the
Lenders, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial or other condition or
creditworthiness of any Loan Party or any Affiliate of any Loan Party that may
come into the possession of the Administrative Agent or any Affiliate thereof or
any employee or agent of any of the foregoing.

Section 10.6 Indemnification

Each Lender agrees to indemnify the Administrative Agent and each of its
Affiliates, and each of their respective directors, officers, employees, agents
and advisors (to the extent not reimbursed by the Borrower), from and against
such Lender’s aggregate Ratable Portion of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements (including fees, expenses and disbursements of financial and legal
advisors) of any kind or nature whatsoever that may be imposed on, incurred by,
or asserted against, the Administrative Agent or any of its Affiliates,
directors, officers, employees, agents and advisors in any way relating to or
arising out of this Agreement or the other Loan Documents or any action taken or
omitted by the Administrative Agent under this Agreement or the other Loan
Documents; provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent’s or such Affiliate’s gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including fees, expenses and disbursements of financial and legal advisors)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of its rights or responsibilities under, this Agreement or the
other Loan Documents, to the extent that the Administrative Agent is not
reimbursed for such expenses by the Borrower or another Loan Party.
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Section 10.7 Successor Administrative Agent

The Administrative Agent may resign at any time by giving written notice thereof
to the Lenders and the Borrower. Upon any such resignation, the Requisite
Lenders shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Requisite
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent’s giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, selected from among the Lenders. In either case, such
appointment shall be subject to the prior written approval of the Borrower
(which approval may not be unreasonably withheld and shall not be required upon
the occurrence and during the continuance of an Event of Default). Upon the
acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall succeed to, and
become vested with, all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. Prior to any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the retiring Administrative Agent shall take
such action as may be reasonably necessary to assign to the successor
Administrative Agent its rights as Administrative Agent under the Loan
Documents. After such resignation, the retiring Administrative Agent shall
continue to have the benefit of this Article X as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this Agreement
and the other Loan Documents.

Section 10.8 Concerning the Collateral and the Collateral Documents; Releases

(a) Each Lender agrees that any action taken by the Administrative Agent or the
Requisite Lenders (or, where required by the express terms of this Agreement, a
greater proportion of the Lenders) in accordance with the provisions of this
Agreement or of the other Loan Documents, and the exercise by the Administrative
Agent or the Requisite Lenders (or, where so required, such greater proportion)
of the powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon all of
the Lenders and other Secured Parties. Without limiting the generality of the
foregoing, the Administrative Agent shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for the Lenders with
respect to all payments and collections arising in connection herewith and with
the Collateral Documents, (ii) execute and deliver each Collateral Document and
accept delivery of each such agreement delivered by any of the Group Members,
(iii) act as collateral agent for the Lenders and the other Secured Parties for
purposes of the perfection of all security interests and Liens created by such
agreements and all other purposes stated therein, provided, however, that the
Administrative Agent hereby appoints, authorizes and directs each Lender to act
as collateral sub-agent for the Administrative Agent and the Lenders for
purposes of the perfection of all security interests and Liens with respect to
the Collateral, including any Deposit Accounts maintained by a Loan Party with,
and cash and Cash Equivalents held by, such Lender, (iv) manage, supervise and
otherwise deal with the Collateral, (v) take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and
Liens created or purported to be created by the Collateral Documents and (vi)
except as may be otherwise specifically restricted by the terms hereof or of any
other Loan Document, exercise all remedies given to the Administrative Agent,
the Lenders, and the other Secured Parties with respect to the Collateral under
the Loan Documents relating thereto, applicable law or otherwise.
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(b) Each of the Lenders hereby consents to the release and hereby directs, in
accordance with the terms hereof, the Administrative Agent to release (or, in
the case of clause (ii) below, release or subordinate) any Lien held by the
Administrative Agent for the benefit of the Lenders against any of the
following:

(i) all of the Collateral and all Loan Parties, upon termination of the Term
Loan Commitments and payment and satisfaction in full of all Term Loans and all
other Obligations that the Administrative Agent has been notified in writing are
then due and payable;

(ii) any assets that are subject to a Lien permitted by Section 8.2(e) or (f)
(Liens, Etc.);

(iii) any part of the Collateral sold or disposed of by a Loan Party if such
sale or disposition is permitted by this Agreement (or permitted pursuant to a
waiver of or consent to a transaction otherwise prohibited by this Agreement);

(iv) any Guarantor from its obligations under the Guaranty if in connection with
the sale or other disposition of such Guarantor (or all or substantially all of
its assets) permitted by this Agreement (or permitted pursuant to a waiver or
consent of a transaction otherwise prohibited by this Agreement); and

(v) any Guarantor from its obligations under the Guaranty if such Person ceases
to be a Restricted Subsidiary as a result of a transaction or designation
permitted hereunder.

(c) Each of the Lenders hereby directs the Administrative Agent to execute and
deliver the Intercreditor Agreement and to execute and deliver or file such
termination and partial release statements and do such other things as are
necessary to release Liens and/or guarantees to be released pursuant to this
Section 10.8 or subordinated in accordance with, and subject to the terms and
conditions of, the Intercreditor Agreement promptly upon the effectiveness of
any such release.

Section 10.9 Collateral Matters Relating to Related Obligations

The benefit of the Loan Documents and of the provisions of this Agreement
relating to the Collateral shall extend to and be available in respect of any
Secured Obligation arising under any Hedging Contract or that is otherwise owed
to Persons other than the Administrative Agent, the Lenders (collectively,
“Related Obligations”) solely on the condition and understanding, as among the
Administrative Agent and all Secured Parties, that (a) the Related Obligations
shall be entitled to the benefit of the Loan Documents and the Collateral to the
extent expressly set forth in this Agreement and the other Loan Documents and to
such extent the Administrative Agent shall hold, and have the right and power to
act with respect to, the Guaranty and the Collateral on behalf of and as agent
for the holders of the Related Obligations, but the Administrative Agent is
otherwise acting solely as agent for the Lenders and shall have no fiduciary
duty, duty of loyalty, duty of care, duty of disclosure or other obligation
whatsoever to any holder of Related Obligations, (b) all matters, acts and
omissions relating in any manner to the Guaranty, the Collateral, or the
omission, creation, perfection, priority, abandonment or release of any Lien,
shall be governed solely by the provisions of this Agreement and the other Loan
Documents and no separate Lien, right, power or remedy shall arise or exist in
favor of any Secured Party under any separate instrument or agreement or in
respect of any Related Obligation, (c) each Secured Party shall be bound by all
actions taken or omitted, in accordance with the provisions of this Agreement
and the other Loan Documents, by the Administrative Agent and the Requisite
Lenders, each of whom shall be entitled to act at its sole discretion and
exclusively in its own interest given its own Term Loan Commitments and its own
interest in the Term Loans and other Obligations to it arising under this
Agreement or the other Loan Documents, without any duty or liability to any
other Secured Party or as to any Related Obligation and without regard to
whether any Related Obligation remains outstanding or is deprived of the benefit
of the Collateral or becomes unsecured or is otherwise affected or put in
jeopardy thereby, (d) no holder of Related Obligations and no other Secured
Party (except the Administrative Agent and the Lenders, to the extent set forth
in this Agreement) shall have any right to be notified of, or to direct, require
or be heard with respect to, any action taken or omitted in respect of the
Collateral or under this Agreement or the Loan Documents and (e) no holder of
any Related Obligation shall exercise any right of setoff, banker’s lien or
similar right except to the extent provided in Section 11.6 (Right of Set-off)
and then only to the extent such right is exercised in compliance with Section
11.7 (Sharing of Payments, Etc.).
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ARTICLE XI

MISCELLANEOUS

Section 11.1 Amendments, Waivers, Etc.

(a) No amendment or waiver of any provision of this Agreement or any other Loan
Document nor consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be in writing and (x) in the case of
any such waiver or consent, signed by the Requisite Lenders (or by the
Administrative Agent with the consent of the Requisite Lenders), (y) in the case
of any amendment necessary to implement the terms of a Facility Increase in
accordance with the terms hereof, by the Borrower, the Parent, the
Administrative Agent and the Incremental Term Loan Lenders providing such
Facility Increase, and (z) in the case of any other amendment, by the Requisite
Lenders (or by the Administrative Agent with the consent of the Requisite
Lenders), the Borrower and the Parent and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender directly affected thereby, in
addition to the Requisite Lenders (or the Administrative Agent with the consent
thereof), do any of the following:

(i) waive any condition specified in Section 3.1 (Conditions Precedent to
Closing Date Term Loans) or 3.2 (Conditions Precedent to Incremental Term
Loans), except with respect to a condition based upon another provision hereof,
the waiver of which requires only the concurrence of the Requisite Lenders and,
in the case of the conditions specified in Section 3.1 (Conditions Precedent to
Closing Date Term Loans) and 3.2 (Conditions Precedent to Incremental Loans),
subject to the provisions of Section 3.3 (Determinations of Borrowing
Conditions);
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(ii) except pursuant to a Facility Increase, increase the Term Loan Commitment
of such Lender or subject such Lender to any additional obligation;

(iii) extend the scheduled final maturity of any Term Loan owing to such Lender,
or waive, reduce or postpone any scheduled date fixed for the payment or
reduction of principal or interest of any such Term Loan or fees owing to such
Lender (it being understood that Section 2.7 (Mandatory Prepayments) does not
provide for scheduled dates fixed for payment) or for the reduction of such
Lender’s Term Loan Commitment;

(iv) reduce, or release the Borrower from its obligations to repay, the
principal amount of any Term Loan owing to such Lender (other than by the
payment or prepayment thereof);

(v) reduce the rate of interest on any Term Loan outstanding and owing to such
Lender or any fee payable hereunder to such Lender;

(vi) postpone any scheduled date fixed for payment of interest or fees owing to
such Lender or waive any such payment;

(vii) change the aggregate Ratable Portions of Lenders required for any or all
Lenders to take any action hereunder;

(viii) release all or substantially all of the Collateral except as provided
in Section 8 (Release of Collateral) of the Intercreditor Agreement and except
as provided in Section 10.8(b) (Concerning the Collateral and the Collateral
Documents; Releases) or release the Borrower from its payment obligation to such
Lender under this Agreement or the Notes owing to such Lender (if any) or
release any Guarantor from its obligations under the Guaranty except as provided
in Section 10.8(b) (Concerning the Collateral and the Collateral
Documents; Releases); or

(ix) amend, Section 10.8(b) (Concerning the Collateral and the Collateral
Documents; Releases), Section 11.7 (Sharing of Payments, Etc.), this Section
11.1 or either definition of the terms “Requisite Lenders” or “Ratable Portion”;

(x) amend, Section 8 (Release of Collateral) of the Intercreditor Agreement;

and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or the other Loan Documents; and
provided, further, that the Administrative Agent may, with the consent of the
Borrower, amend, modify or supplement this Agreement to cure any ambiguity,
omission, defect or inconsistency, so long as such amendment, modification or
supplement does not adversely affect the rights of any Lender.
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(b) The Administrative Agent may, but shall have no obligation to, with the
written concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of such Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.

(c) If, in connection with any proposed amendment, modification, waiver or
termination requiring the consent of all Lenders, the consent of Requisite
Lenders is obtained but the consent of any Lender whose consent is required is
not obtained (any such Lender whose consent is not obtained as described in this
Section 11.1 being referred to as a “Non-Consenting Lender”), then, as long as
the Lender acting as the Administrative Agent is not a Non-Consenting Lender, at
the Borrower’s request, an Eligible Assignee reasonably acceptable to the
Administrative Agent shall have the right with the Administrative Agent’s
consent and in the Administrative Agent’s sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting
Lender agrees that it shall, upon the Administrative Agent’s request, sell and
assign to the Lender acting as the Administrative Agent or such Eligible
Assignee, all of the Term Loans of such Non-Consenting Lender for an amount
equal to the principal balance of all such Term Loans held by the Non-Consenting
Lender and all accrued and unpaid interest and fees with respect thereto through
the date of sale; provided, however, that such purchase and sale shall be
recorded in the Register maintained by the Administrative Agent and not be
effective until (x) the Administrative Agent shall have received from such
Eligible Assignee an agreement in form and substance reasonably satisfactory to
the Administrative Agent and the Borrower whereby such Eligible Assignee shall
agree to be bound by the terms hereof and (y) such Non-Consenting Lender shall
have received payments of all Term Loans held by it and all accrued and unpaid
interest and fees with respect thereto through the date of the sale. Each Lender
agrees that, if it becomes a Non-Consenting Lender, it shall execute and deliver
to the Administrative Agent an Assignment an Acceptance to evidence such sale
and purchase and shall deliver to the Administrative Agent any Note (if the
assigning Lender’s Term Loans are evidenced by Notes) subject to such Assignment
and Acceptance; provided, however, that the failure of any Non-Consenting Lender
to execute an Assignment and Acceptance shall not render such sale and purchase
(and the corresponding assignment) invalid and such assignment shall be recorded
in the Register.

Section 11.2 Assignments and Participations

(a) Each Lender may sell, transfer, negotiate or assign to one or more Eligible
Assignees all or a portion of its rights and obligations hereunder (including
all of its rights and obligations with respect to the Term Loans); provided,
however, that (i) if any such assignment shall be of the assigning Lender’s Term
Loans and Term Loan Commitment, such assignment shall cover the same percentage
of such Lender’s Term Loans and Term Loan Commitment, (ii) the aggregate amount
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
(if less than the Assignor’s entire interest) be less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof, except, in either case, (A)
with the consent of the Borrower and the Administrative Agent or (B) if such
assignment is being made to a Lender or an Affiliate or Approved Fund of such
Lender, and (iii) if such Eligible Assignee is not, prior to the date of such
assignment, a Lender or an Affiliate or Approved Fund of a Lender, such
assignment shall be subject to the prior consent of the Administrative Agent and
the Borrower (which consents shall not be unreasonably withheld or delayed); and
provided, further, that, notwithstanding any other provision of this Section
11.2, the consent of the Borrower shall not be required for any assignment
occurring when any Event of Default shall have occurred and be continuing.
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(b) The parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note (if the assigning Lender’s
Term Loans are evidenced by a Note) subject to such assignment. Upon the
execution, delivery, acceptance and recording in the Register of any Assignment
and Acceptance and, other than in respect of assignments made pursuant to
Section 2.15 (Substitution of Lenders) and Section 11.1(c) (Amendments, Waivers,
Etc.), the receipt by the Administrative Agent from the assignee of an
assignment fee in the amount of $3,500 from and after the effective date
specified in such Assignment and Acceptance, (i) the assignee thereunder shall
become a party hereto and, to the extent that rights and obligations under the
Loan Documents have been assigned to such assignee pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender, (ii) the Notes (if
any) corresponding to the Term Loans assigned thereby shall be transferred to
such assignee by notation in the Register and (iii) the assignor thereunder
shall, to the extent that rights and obligations under this Agreement have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except for those surviving the payment in full of the Obligations) and be
released from its obligations under the Loan Documents, other than those
relating to events or circumstances occurring prior to such assignment (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under the Loan Documents, such
Lender shall cease to be a party hereto).

(c) The Administrative Agent shall maintain at its address referred to in
Section 11.8 (Notices, Etc.) a copy of each Assignment and Acceptance delivered
to and accepted by it and shall record in the Register the names and addresses
of the Lenders and the principal amount of the Term Loans owing to each Lender
from time to time and the Term Loan Commitments of each Lender. Any assignment
pursuant to this Section 11.2 shall not be effective until such assignment is
recorded in the Register.

(d) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, the Administrative Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record or cause to be recorded the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall, if
requested by such assignee, execute and deliver to the Administrative Agent new
Notes to the order of such assignee in an amount equal to the Term Loan
Commitments and Term Loans assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has surrendered any Note for exchange in
connection with the assignment and has retained Term Loan Commitments or Term
Loans hereunder, new Notes to the order of the assigning Lender in an amount
equal to the Term Loan Commitments and Term Loans retained by it hereunder. Such
new Notes shall be dated the same date as the surrendered Notes and be in
substantially the form of Exhibit B (Form of Term Note).

(e) In addition to the other assignment rights provided in this Section 11.2,
each Lender may do each of the following:
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(i) grant to a Special Purpose Vehicle the option to make all or any part of any
Term Loan that such Lender would otherwise be required to make hereunder and the
exercise of such option by any such Special Purpose Vehicle and the making of
Term Loans pursuant thereto shall satisfy (once and to the extent that such Term
Loans are made) the obligation of such Lender to make such Term Loans
thereunder; provided, however, that (x) nothing herein shall constitute a
commitment or an offer to commit by such a Special Purpose Vehicle to make Term
Loans hereunder and no such Special Purpose Vehicle shall be liable for any
indemnity or other Obligation (other than the making of Term Loans for which
such Special Purpose Vehicle shall have exercised an option, and then only in
accordance with the relevant option agreement) and (y) such Lender’s obligations
under the Loan Documents shall remain unchanged, such Lender shall remain
responsible to the other parties for the performance of its obligations under
the terms of this Agreement and shall remain the holder of the Obligations for
all purposes hereunder; and

(ii) may at any time pledge or assign a security interest in all or any portion
of its rights under this Agreement to secure obligations of such Lender,
including without limitation any pledge or assignment to secure obligations to
(A) a Federal Reserve Bank, (B) any holder of, or trustee for the benefit of,
the holders of such Lender’s Securities and (C) any Special Purpose Vehicle to
which such Lender has granted an option pursuant to clause (i) above;

provided, however, that no such assignment or grant shall release such Lender
from any of its obligations hereunder except as expressly provided in clause (i)
above and except, in the case of a subsequent foreclosure pursuant to an
assignment as collateral, if such foreclosure is made in compliance with the
other provisions of this Section 11.2 other than this clause (e) or clause (f)
below. Each party hereto acknowledges and agrees that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any such Special Purpose Vehicle, such party shall
not institute against, or join any other Person in instituting against, any
Special Purpose Vehicle that has been granted an option pursuant to this clause
(e) any bankruptcy, reorganization, insolvency or liquidation proceeding (such
agreement shall survive the payment in full of the Obligations). The terms of
the designation of, or assignment to, such Special Purpose Vehicle shall not
restrict such Lender’s ability to, or grant such Special Purpose Vehicle the
right to, consent to any amendment or waiver to this Agreement or any other Loan
Document or to the departure by the Borrower from any provision of this
Agreement or any other Loan Document without the consent of such Special Purpose
Vehicle except, as long as the Administrative Agent and the Lenders, Issuers and
other Secured Parties shall continue to, and shall be entitled to continue to,
deal solely and directly with such Lender in connection with such Lender’s
obligations under this Agreement, to the extent any such consent would reduce
the principal amount of, or the rate of interest on, any Obligations, amend this
clause (e) or postpone any scheduled date of payment of such principal or
interest. Each Special Purpose Vehicle shall be entitled to the benefits of
Sections 2.13 (Capital Adequacy) and 2.14 (Taxes) and of 2.12(d) (Illegality) as
if it were such Lender; provided, however, that anything herein to the contrary
notwithstanding, no Borrower shall, at any time, be obligated to make under
Section 2.13 (Capital Adequacy), 2.14 (Taxes) or 2.12(d) (Illegality) to any
such Special Purpose Vehicle and any such Lender any payment in excess of the
amount the Borrower would have been obligated to pay to such Lender in respect
of such interest if such Special Purpose Vehicle had not been assigned the
rights of such Lender hereunder; and provided, further, that such Special
Purpose Vehicle shall have no direct right to enforce any of the terms of this
Agreement against the Borrower, the Administrative Agent or the other Lenders.
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(f) Each Lender may sell participations to one or more Persons in or to all or a
portion of its rights and obligations under the Loan Documents (including all
its rights and obligations with respect to the Term Loans). The terms of such
participation shall not, in any event, require the participant’s consent to any
amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights such Lender may
have under or in respect of the Loan Documents (including the right to enforce
the obligations of the Loan Parties), except if any such amendment, waiver or
other modification or consent would (i) reduce the amount, or postpone any date
fixed for, any amount (whether of principal, interest or fees) payable to such
participant under the Loan Documents, to which such participant would otherwise
be entitled under such participation or (ii) result in the release of all or
substantially all of the Collateral other than in accordance with Section
10.8(b) (Concerning the Collateral and the Collateral Documents; Releases). In
the event of the sale of any participation by any Lender, (w) such Lender’s
obligations under the Loan Documents shall remain unchanged, (x) such Lender
shall remain solely responsible to the other parties for the performance of such
obligations, (y) such Lender shall remain the holder of such Obligations for all
purposes of this Agreement and (z) the Borrower, the Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Each
participant shall be entitled to the benefits of Sections 2.13 (Capital
Adequacy) and 2.14 (Taxes) and of 2.12(d) (Illegality) as if it were a Lender;
provided, however, that anything herein to the contrary notwithstanding, the
Borrower shall not, at any time, be obligated to make under Section 2.13
(Capital Adequacy), 2.14 (Taxes) or 2.12(d) (Illegality) to the participants in
the rights and obligations of any Lender (together with such Lender) any payment
in excess of the amount the Borrower would have been obligated to pay to such
Lender in respect of such interest had such participation not been sold and
provided, further, that such participant in the rights and obligations of such
Lender shall have no direct right to enforce any of the terms of this Agreement
against the Borrower, the Administrative Agent or the other Lenders.

Section 11.3 Costs and Expenses

(a) The Borrower agrees, so long as no Default or Event of Default has occurred
and is continuing, within fifteen (15) days of receiving an invoice therefor and
otherwise upon demand, to pay, or reimburse the Administrative Agent for, all of
the Administrative Agent’s reasonable internal and external audit, legal,
appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other reasonable out-of-pocket costs and
expenses of every type and nature (including the reasonable fees, expenses and
disbursements of the Administrative Agent’s counsel, Weil, Gotshal & Manges LLP,
local legal counsel, auditors, accountants, appraisers, printers, insurance and
environmental advisors, and other consultants and agents) incurred by the
Administrative Agent in connection with any of the following: (i) the
Administrative Agent’s audit and investigation of the Borrower, the Parent and
any of its Subsidiaries in connection with the preparation, negotiation or
execution of any Loan Document or the Administrative Agent’s periodic audits of
the Borrower, the Parent or any of its Subsidiaries, as the case may be, (ii)
the preparation, negotiation, execution or interpretation of this Agreement
(including, without limitation, the satisfaction or attempted satisfaction of
any condition set forth in Article III (Conditions To Term Loans), any Loan
Document or any proposal letter or commitment letter issued in connection
therewith, or the making of the Term Loans hereunder, (iii) the creation,
perfection or protection of the Liens under any Loan Document (including any
reasonable fees, disbursements and expenses for local counsel in various
jurisdictions), (iv) the ongoing administration of this Agreement and the Term
Loans, including consultation with attorneys in connection therewith and with
respect to the Administrative Agent’s rights and responsibilities hereunder and
under the other Loan Documents, (v) the protection, collection or enforcement of
any Obligation or the enforcement of any Loan Document, (vi) the commencement,
defense or intervention in any court proceeding relating in any way to the
Obligations, any Loan Party, any of the Parent’s Subsidiaries, the Merger, the
Related Documents, this Agreement or any other Loan Document, (vii) the response
to, and preparation for, any subpoena or request for document production with
which the Administrative Agent is served or deposition or other proceeding in
which the Administrative Agent is called to testify, in each case, relating in
any way to the Obligations, any Loan Party, any of the Parent’s Subsidiaries,
the Merger, the Related Documents, this Agreement or any other Loan Document or
(viii) any amendment, consent, waiver, assignment, restatement, or supplement to
any Loan Document or the preparation, negotiation and execution of the same.
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(b) The Borrower further agrees to pay or reimburse the Administrative Agent and
each of the Lenders, so long as no Default or Event of Default has occurred and
is continuing, within fifteen (15) days of receiving an invoice therefor and
otherwise upon demand, for all out-of-pocket costs and expenses, including
reasonable attorneys’ fees (including allocated costs of internal counsel and
costs of settlement), incurred by the Administrative Agent or such Lenders in
connection with any of the following: (i) in enforcing any Loan Document or
Obligation or any security therefor or exercising or enforcing any other right
or remedy available by reason of an Event of Default, (ii) in connection with
any refinancing or restructuring of the credit arrangements provided hereunder
in the nature of a “work-out” or in any insolvency or bankruptcy proceeding,
(iii) in commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal proceeding
relating to the Obligations, any Loan Party, any of the Parent’s Subsidiaries
and related to or arising out of the transactions contemplated hereby or by any
other Loan Document or Related Document or (iv) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described in
clause (i), (ii) or (iii) above.

Section 11.4 Indemnities

(a) The Borrower agrees to indemnify and hold harmless the Administrative Agent
and each Lender (including each Person obligated on a Hedging Contract that is a
Loan Document if such Person was a Lender at the time of it entered into such
Hedging Contract) and each of their respective Affiliates, and each of the
directors, officers, employees, agents, trustees, representatives, attorneys,
consultants and advisors of or to any of the foregoing (including those retained
in connection with the satisfaction or attempted satisfaction of any condition
set forth in Article III (Conditions To Term Loans) (each such Person being an
“Indemnitee”) from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses, joint or several, of any kind or nature (including fees,
disbursements and expenses of financial and legal advisors to any such
Indemnitee) that may be imposed on, incurred by or asserted against any such
Indemnitee in connection with or arising out of any investigation, litigation or
proceeding, whether or not such investigation, litigation or proceeding is
brought by any such indemnitee or any of its directors, security holders or
creditors or any such Indemnitee, director, security holder or creditor is a
party thereto, whether direct, indirect, or consequential and whether based on
any federal, state or local law or other statutory regulation, securities or
commercial law or regulation, or under common law or in equity, or on contract,
tort or otherwise, in any manner relating to or arising out of this Agreement,
any other Loan Document, any Obligation, any Related Document, or any act, event
or transaction related or attendant to any thereof, or the use or intended use
of the proceeds of the Term Loans or in connection with any investigation of any
potential matter covered hereby (collectively, the “Indemnified Matters”);
provided, however, that the Borrower shall not have any liability under this
Section 11.4 to an Indemnitee with respect to any Indemnified Matter that has
resulted primarily from the gross negligence or willful misconduct of that
Indemnitee, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order. Without limiting the foregoing, “Indemnified
Matters” include (i) all Environmental Liabilities and Costs arising from or
connected with the past, present or future operations of the Borrower, the
Parent or any of its Subsidiaries involving any property subject to a Collateral
Document, or damage to real or personal property or natural resources or harm or
injury alleged to have resulted from any Release of Hazardous Materials on, upon
or into such property or any contiguous real estate, (ii) any costs or
liabilities incurred in connection with any Remedial Action concerning the
Borrower, the Parent or any of its Subsidiaries, (iii) any costs or liabilities
incurred in connection with any Environmental Lien and (iv) any costs or
liabilities incurred in connection with any other matter under any Environmental
Law and applicable state property transfer laws, whether, with respect to any
such matter, such Indemnitee is a mortgagee pursuant to any leasehold mortgage,
a mortgagee in possession, the successor in interest to the Borrower, the Parent
or any of its Subsidiaries, or the owner, lessee or operator of any property of
the Borrower, the Parent or any of its Subsidiaries by virtue of foreclosure,
except, with respect to those matters referred to in clauses (i), (ii), (iii)
and (iv) above, to the extent (x) incurred following foreclosure by the
Administrative Agent or any Lender, or the Administrative Agent or any Lender
having become the successor in interest to the Borrower, the Parent or any of
its Subsidiaries and (y) attributable solely to acts of the Administrative
Agent, such Lender or any agent on behalf of the Administrative Agent or such
Lender.
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(b) The Borrower shall indemnify the Administrative Agent and the Lenders for,
and hold the Administrative Agent and the Lenders harmless from and against, any
and all claims for brokerage commissions, fees and other compensation made
against the Administrative Agent and the Lenders for any broker, finder or
consultant with respect to any agreement, arrangement or understanding made by
or on behalf of any Loan Party or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement.

(c) The Borrower, at the request of any Indemnitee, shall have the obligation to
defend against any investigation, litigation or proceeding or requested Remedial
Action, in each case contemplated in clause (a) above, and the Borrower, in any
event, may participate in the defense thereof with legal counsel of the
Borrower’s choice. In the event that such indemnitee requests the Borrower to
defend against such investigation, litigation or proceeding or requested
Remedial Action, the Borrower shall promptly do so and such Indemnitee shall
have the right to have legal counsel of its choice participate in such defense.
No action taken by legal counsel chosen by such Indemnitee in defending against
any such investigation, litigation or proceeding or requested Remedial Action,
shall vitiate or in any way impair the Borrower’s obligation and duty hereunder
to indemnify and hold harmless such Indemnitee.

(d) The Borrower agrees that any indemnification or other protection provided to
any Indemnitee pursuant to this Agreement (including pursuant to this Section
11.4) or any other Loan Document shall (i) survive payment in full of the
Obligations and (ii) inure to the benefit of any Person that was at any time an
Indemnitee under this Agreement or any other Loan Document.
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Section 11.5 Limitation of Liability

(a) The Borrower agrees that no Indemnitee shall have any liability (whether in
contract, tort or otherwise) to any Loan Party or any of their respective
Subsidiaries or any of their respective equity holders or creditors for or in
connection with the transactions contemplated hereby and in the other Loan
Documents and Related Documents, except to the extent such liability is
determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from such Indemnitee’s gross negligence
or willful misconduct. In no event, however, shall any Indemnitee be liable on
any theory of liability for any special, indirect, consequential or punitive
damages (including, without limitation, any loss of profits, business or
anticipated savings). The Borrower hereby waives, releases and agrees (each for
itself and on behalf of its Subsidiaries) not to sue upon any such claim for any
special, indirect, consequential or punitive damages, whether or not accrued and
whether or not known or suspected to exist in its favor.

(b) IN NO EVENT SHALL ANY AGENT AFFILIATE HAVE ANY LIABILITY TO ANY LOAN PARTY,
LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN TORT OR CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY OR ANY
AGENT AFFILIATE’S TRANSMISSION OF APPROVED ELECTRONIC COMMUNICATIONS THROUGH THE
INTERNET OR ANY USE OF THE APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE EXTENT
SUCH LIABILITY OF ANY AGENT AFFILIATE IS FOUND IN A FINAL NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FORM
SUCH AGENT AFFILIATE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

Section 11.6 Right of Set-off

Upon the occurrence and during the continuance of any Event of Default each
Lender and each Affiliate of a Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Lender or its
Affiliates to or for the credit or the account of the Borrower against any and
all of the Obligations now or hereafter existing whether or not such Lender
shall have made any demand under this Agreement or any other Loan Document and
even though such Obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender
or its Affiliates; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application. Each Lender agrees that
it shall not, without the express consent of the Requisite Lenders (and that, it
shall, to the extent lawfully entitled to do so, upon the request of the
Requisite Lenders) exercise its set-off rights under this Section 11.6 against
any deposit accounts of the Loan Parties and their Subsidiaries maintained with
such Lender or any Affiliate thereof. The rights of each Lender under this
Section 11.6 are in addition to the other rights and remedies (including other
rights of set-off) that such Lender may have.
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Section 11.7 Sharing of Payments, Etc.

(a) If any Lender (directly or through an Affiliate thereof) obtains any payment
(whether voluntary, involuntary, through the exercise of any right of set-off
(including pursuant to Section 11.6 (Right of Set-off)) or otherwise) of the
Term Loans owing to it, any interest thereon, fees in respect thereof or amounts
due pursuant to Section 11.3 (Costs and Expenses) or 11.4 (Indemnities) (other
than payments pursuant to Section 2.12 (Special Provisions Governing Eurodollar
Rate Loans), 2.13 (Capital Adequacy) or 2.14 (Taxes) or otherwise receives any
Collateral or any “Proceeds” (as defined in the Pledge and Security Agreement)
of Collateral (other than payments pursuant to Section 2.12 (Special Provisions
Governing Eurodollar Rate Loans), 2.13 (Capital Adequacy) or 2.14 (Taxes)) (in
each case, whether voluntary, involuntary, through the exercise of any right of
set-off (including pursuant to Section 11.6 (Right of Set-off)) or otherwise) in
excess of its Ratable Portion of all payments of such Obligations obtained by
all the Lenders, such Lender (a “Purchasing Lender”) shall forthwith purchase
from the other Lenders (each, a “Selling Lender”) such participations in their
Term Loans or other Obligations as shall be necessary to cause such Purchasing
Lender to share the excess payment ratably with each of them.

(b) If all or any portion of any payment received by a Purchasing Lender is
thereafter recovered from such Purchasing Lender, such purchase from each
Selling Lender shall be rescinded and such Selling Lender shall repay to the
Purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Selling Lender’s ratable share (according to the
proportion of (i) the amount of such Selling Lender’s required repayment in
relation to (ii) the total amount so recovered from the Purchasing Lender) of
any interest or other amount paid or payable by the Purchasing Lender in respect
of the total amount so recovered.

(c) The Borrower agrees that any Purchasing Lender so purchasing a participation
from a Selling Lender pursuant to this Section 11.7 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.

Section 11.8 Notices, Etc.

(a) Addresses for Notices. All notices, demands, requests, consents and other
communications provided for in this Agreement shall be given in writing, or by
any telecommunication device capable of creating a written record (including
electronic mail), and addressed to the party to be notified as follows:

 
(i)
if to the Borrower:

 
Payless ShoeSource, Inc.
3231 Southeast Sixth Avenue
Topeka, Kansas 66607-2207
 
95

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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.
 
Attention: Rick Porzig, Chief Financial Officer
Copy: Michael Massey, General Counsel
Telecopy no: (785) 233-5171
E-Mail Addresses:
rick_porzig@payless.com;michael_massey@payless.com

(ii) if to any Lender, at its Domestic Lending Office specified opposite its
name on Schedule II (Applicable Lending Offices and Addresses for Notices) or on
the signature page of any applicable Assignment and Acceptance;
 

 
(iii)
if to the Administrative Agent:

 
CITICORP NORTH AMERICA, INC.
388 Greenwich Street, 20th Floor
New York, New York 10013
Attention: Jeffrey Nitz
Telecopy no: (212) 816-7845
E-Mail Address: jeffrey.nitz@citigroup.com

with a copy to:

CITCORP NORTH AMERICA, INC. - LOAN ADMINISTRATION
2 Penns Way - Suite 100
New Castle, Delaware 19720
Attention: Lisa Rodriguez
Telecopy no: (302) 894-6070
E-Mail Address: oploanswebadmin@citi.com

WEIL, GOTSHAL& MANGES LLP
767 Fifth Avenue
New York, New York 10153-0119
Attention: Daniel S. Dokos
Telecopy no: (212) 310-8007
E-Mail Address: daniel.dokos@weil.com

or at such other address as shall be notified in writing (x) in the case of the
Borrower and the Administrative Agent, to the other parties and (y) in the case
of all other parties, to the Borrower and the Administrative Agent.
 
(b) Effectiveness of Notices. All notices, demands, requests, consents and other
communications described in clause (a) above shall be effective (i) if delivered
by hand, including any overnight courier service, upon personal delivery, (ii)
if delivered by mail, when deposited in the mails, (iii) if delivered by posting
to an Approved Electronic Platform (to the extent permitted by Section 10.3 to
be delivered thereunder), an Internet website or a similar telecommunication
device requiring a user prior access to such Approved Electronic Platform,
website or other device (to the extent permitted by Section 10.3 to be delivered
thereunder), when such notice, demand, request, consent and other communication
shall have been made generally available on such Approved Electronic Platform,
Internet website or similar device to the class of Person being notified
(regardless of whether any such Person must accomplish, and whether or not any
such Person shall have accomplished, any action prior to obtaining access to
such items, including registration, disclosure of contact information,
compliance with a standard user agreement or undertaking a duty of
confidentiality) and such Person has been notified that such communication has
been posted to the Approved Electronic Platform and (iv) if delivered by
electronic mail or any other telecommunications device, when transmitted to an
electronic mail address (or by another means of electronic delivery) as provided
in clause (a) above; provided, however, that notices and communications to the
Administrative Agent pursuant to Article II (The Term Loan Facility) or Article
X (The Administrative Agent) shall not be effective until received by the
Administrative Agent.
96

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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.
 
(c) Use of Electronic Platform. Notwithstanding clause (a) and (b) above (unless
the Administrative Agent requests that the provisions of clause (a) and (b)
above be followed) and any other provision in this Agreement or any other Loan
Document providing for the delivery of any Approved Electronic Communication by
any other means the Loan Parties shall deliver all Approved Electronic
Communications to the Administrative Agent by properly transmitting such
Approved Electronic Communications in an electronic/soft medium in a format
reasonably acceptable to the Administrative Agent to oploanswebadmin@Citi.com or
such other electronic mail address (or similar means of electronic delivery) as
the Administrative Agent may notify the Borrower. Nothing in this clause (c)
shall prejudice the right of the Administrative Agent or any Lender to deliver
any Approved Electronic Communication to any Loan Party in any manner authorized
in this Agreement or to request that the Borrower effect delivery in such
manner.
 
Section 11.9 No Waiver; Remedies
 
No failure on the part of any Lender or the Administrative Agent 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 such right 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 11.10 Binding Effect
 
This Agreement shall become effective when it shall have been executed by the
Borrower and the Administrative Agent and when the Administrative Agent shall
have been notified by each Lender that such Lender has executed it and
thereafter shall be binding upon and inure solely to the benefit of the
Borrower, the Administrative Agent and each Lender and, in each case, their
respective successors and assigns; provided, however, that the Borrower shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Lenders.
 
Section 11.11 Governing Law
 
This Agreement and the rights and obligations of the parties hereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.
97

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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.
 
Section 11.12 Submission to Jurisdiction; Service of Process
 
(a) Any legal action or proceeding with respect to this Agreement or any other
Loan Document may be brought in the courts of the State of New York located in
the City of New York or of the United States of America for the Southern
District of New York, and, by execution and delivery of this Agreement, the
Borrower hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, that any of them may now
or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
 
(b) The Borrower hereby irrevocably consents to the service of any and all legal
process, summons, notices and documents in any suit, action or proceeding
brought in the United States of America arising out of or in connection with
this Agreement or any other Loan Document by the mailing (by registered or
certified mail, postage prepaid) or delivering of a copy of such process to the
Borrower at its address specified in Section 11.8 (Notices, Etc.). The Borrower
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.
 
(c) Nothing contained in this Section 11.12 shall affect the right of the
Administrative Agent or any Lender to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against the
Borrower or any other Loan Party in any other jurisdiction.
 
(d) If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder in Dollars into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase Dollars with such other
currency at the spot rate of exchange quoted by the Administrative Agent at
11:00 a.m. (New York time) on the Business Day preceding that on which final
judgment is given, for the purchase of Dollars, for delivery two Business Days
thereafter.
 
Section 11.13 Waiver of Jury Trial
 
EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE PARENT AND THE BORROWER
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
 
Section 11.14 Marshaling; Payments Set Aside
 
None of the Administrative Agent or any Lender shall be under any obligation to
marshal any assets in favor of the Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that the Borrower makes
a payment or payments to the Administrative Agent or the Lenders or any such
Person receives payment from the proceeds of the Collateral or exercise their
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
right and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
98

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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.
 
Section 11.15 Section Titles
 
The section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto, except when used to reference a Section.
Any reference to the number of a clause, sub-clause or subsection hereof
immediately followed by a reference in parenthesis to the title of the Section
containing such clause, sub-clause or subsection is a reference to such clause,
sub-clause or subsection and not to the entire Section; provided, however, that,
in case of direct conflict between the reference to the title and the reference
to the number of such Section, the reference to the title shall govern absent
manifest error. If any reference to the number of a Section (but not to any
clause, sub-clause or subsection thereof) is followed immediately by a reference
in parenthesis to the title of a Section, the title reference shall govern in
case of direct conflict absent manifest error.
 
Section 11.16 Execution in Counterparts
 
This Agreement may be executed in any number of counterparts and by different
parties in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are attached to the same document. Delivery of an executed signature page of
this Agreement by facsimile transmission, electronic mail or by posting on the
Approved Electronic Platform shall be as effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement signed by all
parties shall be lodged with the Borrower and the Administrative Agent.
 
Section 11.17 Entire Agreement
 
This Agreement, together with all of the other Loan Documents and all
certificates and documents delivered hereunder or thereunder, embodies the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. In the event of any
conflict between the terms of this Agreement and any other Loan Document, the
terms of this Agreement shall govern.
 
Section 11.18 Confidentiality
 
Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below) and not to use or disclose
such Information, except that Information may be used or disclosed (a) to its
Affiliates and to its and its Affiliates’ respective managers, administrators,
trustees, partners, directors, officers, employees, agents, advisors and other
representatives (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any Eligible Assignee of or Participant in, or any prospective
Eligible Assignee of or Participant in, any of its rights or obligations under
this Agreement or (ii) any actual or party (or its managers, administrators,
trustees, partners, directors, officers, employees, agents, advisors and other
representatives) to any swap or derivative or similar transaction under which
payments are to be made by reference to the Borrower and its Obligations, this
Agreement or payments hereunder, (iii) any rating agency (it being understood
that, prior to any such disclosure, such rating agency shall undertake to
preserve the confidentiality of any Information relating to the Loan Parties
received by it from such Lender), or (iv) the CUSIP Service Bureau or any
similar organization, (g) with the written consent of the Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to the Administrative Agent,
any Lender, or any of their respective Affiliates on a nonconfidential basis
from a source other than the Borrower.
99

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TERM LOAN AGREEMENT
COLLECTIVE BRANDS FINANCE, INC.

For purposes of this Section, “Information” means all information received from
the Parent or any of its Subsidiaries relating to the Parent or any of its
Subsidiaries or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Parent or any of its
Subsidiaries, provided that, in the case of information received from the Parent
or any of its Subsidiaries after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

Section 11.19 Patriot Act Notice.
 
Each Lender subject to the Patriot Act hereby notifies the Borrower that,
pursuant to Section 326 of the Patriot Act, it is required to obtain, verify and
record information that identifies the Borrower, including the name and address
of the Borrower and other information that will allow such Lender to identify
the Borrower in accordance with the Patriot Act.
 
[Signature Pages Follow]
100

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

COLLECTIVE BRANDS FINANCE, INC.
(formerly known as Payless ShoeSource Finance, Inc.),
as Borrower

By:  /s/ Ullrich E. Porzig        
Name: Ullrich E. Porzig
Title: President
 
COLLECTIVE BRANDS, INC.

(formerly known as Payless ShoeSource, Inc.)
as a Loan Party

By:  /s/ Ullrich E. Porzig        
Name: Ullrich E. Porzig
Title: Senior Vice President
 
PAYLESS SHOESOURCE, INC., a Missouri corporation
as a Loan Party

By:  /s/ Ullrich E. Porzig        
Name: Ullrich E. Porzig
Title: Senior Vice President
 
PAYLESS SHOESOURCE DISTRIBUTION, INC.
as a Loan Party

By:  /s/ Ullrich E. Porzig        
Name: Ullrich E. Porzig
Title: Vice President

[SIGNATURE PAGE TO TERM LOAN AGREEMENT]

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

CITICORP NORTH AMERICA, INC.,
as Administrative Agent and Lender
 
By:  /s/ Michael M. Schadt
Name: Michael M. Schadt
Title: Director
 
 
 
 
 
 

[SIGNATURE PAGE TO TERM LOAN AGREEMENT]

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

J.P. MORGAN CHASE BANK, N.A.,
as Lender
 
By:  /s/ Patrick J. Fravel
Name: Patrick J. Fravel
Title: Vice President
 
 
 
 
 
 
[SIGNATURE PAGE TO TERM LOAN AGREEMENT]

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

 
TABLE OF CONTENTS

Section 1.1
Defined Terms
1
Section 1.2
Computation of Time Periods
29
Section 1.3
Accounting Terms and Principles
29
Section 1.4
Conversion of Foreign Currencies
30
Section 1.5
Certain Terms
30
ARTICLE II
THE TERM LOAN FACILITY
31
Section 2.1
The Term Loans
31
Section 2.2
Borrowing Procedures
33
Section 2.3
Reduction and Termination of the Term Loan Commitments
34
Section 2.4
Repayment of Term Loans
34
Section 2.5
Evidence of Debt
35
Section 2.6
Optional Prepayments
36
Section 2.7
Mandatory Prepayments
37
Section 2.8
Interest
38
Section 2.9
Conversion/Continuation Option
39
Section 2.10
Fees
39
Section 2.11
Payments and Computations
39
Section 2.12
Special Provisions Governing Eurodollar Rate Loans
42
Section 2.13
Capital Adequacy
43
Section 2.14
Taxes
44
Section 2.15
Substitution of Lenders
46
ARTICLE III
CONDITIONS TO TERM LOANS
47
Section 3.1
Conditions Precedent to Closing Date Term Loans
47
Section 3.2
Conditions Precedent to Incremental Term Loans
51
Section 3.3
Determinations of Borrowing Conditions
53
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
53
Section 4.1
Corporate Existence; Compliance with Law
54
Section 4.2
Corporate Power; Authorization; Enforceable Obligations
54
Section 4.3
Ownership of Subsidiaries
55
Section 4.4
Financial Statements
55
Section 4.5
Material Adverse Change
56

 
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TABLE OF CONTENTS
(continued)
Page
 
Section 4.6
Solvency
56
Section 4.7
Litigation
56
Section 4.8
Taxes
57
Section 4.9
Full Disclosure
57
Section 4.10
Margin Regulations
57
Section 4.11
No Burdensome Restrictions; No Defaults
58
Section 4.12
Investment Company Act
58
Section 4.13
Use of Proceeds
58
Section 4.14
Insurance
59
Section 4.15
Labor Matters
59
Section 4.16
ERISA
59
Section 4.17
Environmental Matters
60
Section 4.18
Intellectual Property
60
Section 4.19
Title; Real Property
61
Section 4.20
Related Documents
62
ARTICLE V
FINANCIAL COVENANT
63
Section 5.1
Maximum Leverage Ratio
63
ARTICLE VI
REPORTING COVENANTS
63
Section 6.1
Financial Statements
63
Section 6.2
Default Notices
64
Section 6.3
Litigation
65
Section 6.4
SEC Filings; Press Releases
65
Section 6.5
Insurance
65
Section 6.6
ERISA Matters
65
Section 6.7
Environmental Matters
66
Section 6.8
Other Information
67
ARTICLE VII
AFFIRMATIVE COVENANTS
67
Section 7.1
Preservation of Corporate Existence, Etc
67
Section 7.2
Compliance with Laws, Etc
68
Section 7.3
Conduct of Business
68
Section 7.4
Payment of Taxes, Etc
68
Section 7.5
Maintenance of Insurance
68

 
ii

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TABLE OF CONTENTS
(continued)
Page
 
Section 7.6
Access
68
Section 7.7
Keeping of Books
69
Section 7.8
Maintenance of Properties, Etc
69
Section 7.9
Application of Proceeds
69
Section 7.10
Environmental
69
Section 7.11
Additional Collateral and Guaranties
69
Section 7.12
Designation of Subsidiaries
71
ARTICLE VIII
NEGATIVE COVENANTS
72
Section 8.1
Indebtedness
72
Section 8.2
Liens, Etc
73
Section 8.3
Investments
74
Section 8.4
Sale of Assets
75
Section 8.5
Restricted Payments
75
Section 8.6
Prepayment of Indebtedness
76
Section 8.7
Restriction on Fundamental Changes
76
Section 8.8
Change in Nature of Business
76
Section 8.9
Transactions with Affiliates
77
Section 8.10
Limitations on Restrictions on Subsidiary Distributions; No New Negative Pledge
77
Section 8.11
Modification of Constituent Documents
77
Section 8.12
Modification of Related Documents
77
Section 8.13
Accounting Changes; Fiscal Year
78
Section 8.14
Margin Regulations
78
Section 8.15
No Speculative Transactions
79
Section 8.16
Compliance with ERISA
79
ARTICLE IX
EVENTS OF DEFAULT
79
Section 9.1
Events of Default
79
Section 9.2
Remedies
81
Section 9.3
Rescission
82
ARTICLE X
THE ADMINISTRATIVE AGENT
82
Section 10.1
Authorization and Action
82
Section 10.2
Administrative Agent’s Reliance, Etc
83

 
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TABLE OF CONTENTS
(continued)
Page
 
Section 10.3
Posting of Approved Electronic Communications
84
Section 10.4
The Administrative Agent Individually
85
Section 10.5
Lender Credit Decision
85
Section 10.6
Indemnification
85
Section 10.7
Successor Administrative Agent
86
Section 10.8
Concerning the Collateral and the Collateral Documents; Releases
86
Section 10.9
Collateral Matters Relating to Related Obligations
87
ARTICLE XI
MISCELLANEOUS
88
Section 11.1
Amendments, Waivers, Etc
88
Section 11.2
Assignments and Participations
90
Section 11.3
Costs and Expenses
92
Section 11.4
Indemnities
93
Section 11.5
Limitation of Liability
94
Section 11.6
Right of Set-off
95
Section 11.7
Sharing of Payments, Etc
95
Section 11.8
Notices, Etc
96
Section 11.9
No Waiver; Remedies
97
Section 11.10
Binding Effect
98
Section 11.11
Governing Law
98
Section 11.12
Submission to Jurisdiction; Service of Process
98
Section 11.13
Waiver of Jury Trial
99
Section 11.14
Marshaling; Payments Set Aside
99
Section 11.15
Section Titles
99
Section 11.16
Execution in Counterparts
99
Section 11.17
Entire Agreement
100
Section 11.18
Confidentiality
100
Section 11.19
Patriot Act Notice.
100

 
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TABLE OF CONTENTS
(continued)
 
Schedules
 
Schedule I
–
Term Loan Commitments
Schedule II
–
Applicable Lending Offices and Addresses for Notices
Schedule 4.2
–
Consents
Schedule 4.3
–
Ownership of Subsidiaries
Schedule 4.7
–
Litigation
Schedule 4.15
–
Labor Matters
Schedule 4.16
–
List of Plans
Schedule 4.17
–
Environmental Matters
Schedule 4.18
–
Intellectual Property
Schedule 4.19
–
Real Property
Schedule 7.13
–
Post-Closing Covenants
Schedule 8.1
–
Existing Indebtedness
Schedule 8.2
–
Existing Liens
Schedule 8.3
–
Existing Investments
Schedule 8.4
–
Asset Sales
Schedule 8.13
–
Accounting Change; Fiscal Year

Exhibits
 
Exhibit A
–
Form of Assignment and Acceptance
Exhibit B
–
Form of Term Note
Exhibit C
–
Form of Notice of Borrowing
Exhibit D
–
Form of Notice of Conversion or Continuation
Exhibit E
–
Form of Opinion of counsel for the Loan Parties
Exhibit F
–
Form of Guaranty
Exhibit G
–
Form of Pledge and Security Agreement
Exhibit H
–
Form of Intercreditor Agreement

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