Exhibit 10.1

EXECUTION VERSION

$250,000,000

CREDIT AGREEMENT

Dated as of March 7, 2011

among

CHINOS ACQUISITION CORPORATION,

which on the Effective Date shall be merged within and into

J. CREW GROUP, INC.,

with J. Crew Group, Inc. surviving such merger as the Borrower,

CHINOS INTERMEDIATE HOLDINGS B, INC.

as Holdings,

BANK OF AMERICA, N.A.,

as Administrative Agent and Issuer,

and

THE OTHER LENDERS AND ISSUERS PARTY HERETO

 

 

GOLDMAN SACHS BANK USA,

as Syndication Agent,

HSBC BANK USA, N.A.

SUNTRUST BANK

and

WELLS FARGO CAPITAL FINANCE, LLC,

as Co-Documentation Agents,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

and

GOLDMAN SACHS BANK USA

as Arrangers,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

and

GOLDMAN SACHS BANK USA,

as Joint Bookrunners

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TABLE OF CONTENTS

 

          Page   ARTICLE I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS     
2   

SECTION 1.1

  

Defined Terms

     2   

SECTION 1.2

  

Other Interpretive Provisions

     67   

SECTION 1.3

  

Accounting Terms

     68   

SECTION 1.4

  

Rounding

     68   

SECTION 1.5

  

[Reserved]

     68   

SECTION 1.6

  

References to Agreements, Laws, Etc.

     68   

SECTION 1.7

  

Times of Day

     68   

SECTION 1.8

  

Pro Forma Calculations

     69   

SECTION 1.9

  

Currency Equivalents Generally

     70   

SECTION 1.10

  

Exchange Rates; Currency Translation

     70   

SECTION 1.11

  

Change of Currency

     71   

ARTICLE II THE FACILITY

     72   

SECTION 2.1

  

The Revolving Credit Commitments

     72   

SECTION 2.2

  

Borrowing Procedures

     73   

SECTION 2.3

  

Swing Loans

     74   

SECTION 2.4

  

Letters of Credit

     76   

SECTION 2.5

  

Reduction and Termination of the Revolving Credit Commitments

     82   

SECTION 2.6

  

Repayment of Loans

     82   

SECTION 2.7

  

Evidence of Indebtedness

     82   

SECTION 2.8

  

Optional Prepayments

     84   

SECTION 2.9

  

Mandatory Prepayments

     84   

SECTION 2.10

  

Interest

     85   

SECTION 2.11

  

Conversion/Continuation Option

     86   

SECTION 2.12

  

Fees

     87   

SECTION 2.13

  

Payments and Computations

     88   

SECTION 2.14

  

Special Provisions Governing Eurocurrency Rate Loans and BA Rate Loans

     90   

SECTION 2.15

  

Revolving Commitment Increase

     90   

SECTION 2.16

  

Defaulting Lenders

     92   

SECTION 2.17

  

Extensions of Loans

     94   

ARTICLE III TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

     97   

SECTION 3.1

  

Taxes

     97   

SECTION 3.2

  

Illegality

     102   

SECTION 3.3

  

Inability to Determine Rates

     103   

SECTION 3.4

   Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurocurrency
Rate Loans and BA Rate Loans      104   

SECTION 3.5

  

Funding Losses

     105   

SECTION 3.6

  

Matters Applicable to All Requests for Compensation

     106   

SECTION 3.7

  

Replacement of Lenders under Certain Circumstances

     107   

 

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TABLE OF CONTENTS

(CONTINUED)

 

SECTION 3.8

  

Survival

     108    ARTICLE IV CONDITIONS PRECEDENT      108   

SECTION 4.1

  

Conditions Precedent to Effective Date

     108   

SECTION 4.2

  

Conditions Precedent to Each Loan and Letter of Credit

     112   

SECTION 4.3

  

Determinations of Effective Date Borrowing Conditions

     113    ARTICLE V REPRESENTATIONS AND WARRANTIES      113   

SECTION 5.1

  

Existence, Qualification and Power; Compliance with Laws

     113   

SECTION 5.2

  

Authorization; No Contravention

     113   

SECTION 5.3

  

Governmental Authorization

     114   

SECTION 5.4

  

Binding Effect

     114   

SECTION 5.5

  

Financial Statements; No Material Adverse Effect

     114   

SECTION 5.6

  

Litigation

     115   

SECTION 5.7

  

Labor Matters

     115   

SECTION 5.8

   Ownership of Property; Liens      115   

SECTION 5.9

  

Environmental Matters

     115   

SECTION 5.10

  

Taxes

     116   

SECTION 5.11

  

ERISA Compliance

     116   

SECTION 5.12

  

Subsidiaries

     116   

SECTION 5.13

  

Margin Regulations; Investment Company Act

     117   

SECTION 5.14

  

Disclosure

     117   

SECTION 5.15

  

Intellectual Property; Licenses, Etc.

     117   

SECTION 5.16

   Solvency      118   

SECTION 5.17

  

Subordination of Junior Financing

     118   

SECTION 5.18

  

USA PATRIOT Act

     118   

SECTION 5.19

  

Collateral Documents

     118   

ARTICLE VI FINANCIAL COVENANT

     119   

SECTION 6.1

  

Minimum Fixed Charge Coverage Ratio

     119   

ARTICLE VII REPORTING COVENANTS

     119   

SECTION 7.1

  

Financial Statements, Etc.

     119   

SECTION 7.2

   Certificates; Other Information      121   

SECTION 7.3

  

Notices

     123   

SECTION 7.4

  

Borrowing Base Certificate

     124   

ARTICLE VIII AFFIRMATIVE COVENANTS

     125   

SECTION 8.1

  

Preservation of Existence, Etc.

     125   

SECTION 8.2

  

Compliance with Laws, Etc.

     126   

SECTION 8.3

  

Designation of Subsidiaries

     126   

SECTION 8.4

  

Payment of Taxes, Etc.

     127   

SECTION 8.5

   Maintenance of Insurance      127   

SECTION 8.6

  

Inspection Rights

     127   

SECTION 8.7

  

Books and Records

     128   

 

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TABLE OF CONTENTS

(CONTINUED)

 

SECTION 8.8

  

Maintenance of Properties

     128   

SECTION 8.9

  

Use of Proceeds

     128   

SECTION 8.10

  

Compliance with Environmental Laws

     128   

SECTION 8.11

  

Covenant to Guarantee Obligations and Give Security

     128   

SECTION 8.12

  

Cash Receipts

     130   

SECTION 8.13

  

Further Assurances and Post-Closing Covenants

     132    ARTICLE IX NEGATIVE COVENANTS      133   

SECTION 9.1

  

Liens

     134   

SECTION 9.2

  

Investments

     137   

SECTION 9.3

  

Indebtedness

     140   

SECTION 9.4

  

Fundamental Changes

     144   

SECTION 9.5

  

Dispositions

     146   

SECTION 9.6

  

Restricted Payments

     149   

SECTION 9.7

  

Change in Nature of Business

     152   

SECTION 9.8

  

Transactions with Affiliates

     152   

SECTION 9.9

  

Burdensome Agreements

     154   

SECTION 9.10

  

[Reserved]

     156   

SECTION 9.11

  

Accounting Changes; Fiscal Year

     156   

SECTION 9.12

  

Prepayments, Etc. of Indebtedness

     156   

SECTION 9.13

  

[Reserved]

     157   

SECTION 9.14

  

Modification of Debt Agreements

     157   

SECTION 9.15

  

Holdings

     157    ARTICLE X EVENTS OF DEFAULT      157   

SECTION 10.1

  

Events of Default

     157   

SECTION 10.2

  

Remedies upon Event of Default

     161   

SECTION 10.3

  

Application of Funds

     162   

SECTION 10.4

  

Company’s Right to Cure

     163   

SECTION 10.5

  

Actions in Respect of Letters of Credit; Cash Collateral

     164    ARTICLE XI THE ADMINISTRATIVE AGENT      165   

SECTION 11.1

  

Appointment and Authorization

     165   

SECTION 11.2

  

Rights as a Lender

     166   

SECTION 11.3

  

Exculpatory Provisions

     166   

SECTION 11.4

  

Reliance by the Administrative Agent

     167   

SECTION 11.5

  

Delegation of Duties

     168   

SECTION 11.6

  

Resignation of Administrative Agent or Collateral Agent

     168   

SECTION 11.7

  

Non-Reliance on Administrative Agent and Other Lenders; Disclosure of
Information by Agents

     169   

SECTION 11.8

  

No Other Duties; Other Agents, Arrangers, Managers, Etc.

     170   

SECTION 11.9

  

Intercreditor Agreement

     170   

SECTION 11.10

  

Administrative Agent May File Proofs of Claim

     171   

SECTION 11.11

  

Collateral and Guaranty Matters

     171   

SECTION 11.12

  

[Reserved]

     173   

 

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TABLE OF CONTENTS

(CONTINUED)

 

SECTION 11.13

  

Secured Cash Management Agreements and Secured Hedge Agreements

     173   

SECTION 11.14

  

Indemnification of Agents

     174   

ARTICLE XII MISCELLANEOUS

     174   

SECTION 12.1

  

Amendments, Etc.

     174   

SECTION 12.2

  

Successors and Assigns

     177   

SECTION 12.3

  

Costs and Expenses

     183   

SECTION 12.4

  

Indemnities

     183   

SECTION 12.5

  

Limitation of Liability

     185   

SECTION 12.6

  

Right of Setoff

     185   

SECTION 12.7

  

Sharing of Payments

     186   

SECTION 12.8

  

Notices and Other Communications; Facsimile Copies

     186   

SECTION 12.9

  

No Waiver; Cumulative Remedies

     189   

SECTION 12.10

  

Judgment Currency

     189   

SECTION 12.11

  

Binding Effect

     189   

SECTION 12.12

  

[Reserved]

     189   

SECTION 12.13

  

Governing Law; Submission to Jurisdiction; Service of Process

     189   

SECTION 12.14

  

Waiver of Jury Trial

     190   

SECTION 12.15

  

Marshaling; Payments Set Aside

     191   

SECTION 12.16

  

[Reserved]

     191   

SECTION 12.17

  

Execution in Counterparts

     191   

SECTION 12.18

  

Electronic Execution of Assignments and Certain Other Documents

     191   

SECTION 12.19

  

Confidentiality

     192   

SECTION 12.20

  

Use of Name, Logo, etc.

     193   

SECTION 12.21

  

USA PATRIOT Act Notice

     193   

SECTION 12.22

  

Reserved

     193   

SECTION 12.23

  

No Advisory or Fiduciary Responsibility

     193   

SECTION 12.24

  

Severability

     194   

SECTION 12.25

  

Survival of Representations and Warranties

     194   

SECTION 12.26

  

Lender Action

     194   

SECTION 12.27

  

Interest Rate Limitation

     195   

SCHEDULES

 

Schedule I

  -    Revolving Credit Commitments

Schedule II

  -    Guarantors

Schedule 1.1A

  -    Certain Security Interests and Guarantees

Schedule 1.1D

  -    Mortgaged Properties

Schedule 1.1E

  -    Credit Card Agreements

Schedule 1.1F

  -    Existing Letters of Credit

Schedule 5.11(a)

  -    ERISA Compliance

Schedule 5.12

  -    Subsidiaries and Other Equity Investments

Schedule 8.12

  -    Deposit Accounts

Schedule 9.1(b)

  -    Existing Liens

 

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TABLE OF CONTENTS

(CONTINUED)

 

Schedule 9.2(f)

  -    Existing Investments

Schedule 9.3(b)

  -    Existing Indebtedness

Schedule 9.8

  -    Transactions with Affiliates

Schedule 9.9

  -    Burdensome Agreements

Schedule 12.8

  -    Administrative Agent’s Office, Certain Addresses for Notices

 

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TABLE OF CONTENTS

(CONTINUED)

 

EXHIBITS

 

Exhibit A

   -    Form of Assignment and Assumption

Exhibit B

   -    Form of Revolving Credit Note

Exhibit C

   -    Form of Notice of Borrowing

Exhibit D

   -    Form of Swing Loan Request

Exhibit E

   -    Form of Letter of Credit Request

Exhibit F

   -    Form of Notice of Conversion or Continuation

Exhibit G

   -    Form of Opinion of Ropes & Gray LLP, New York Counsel for the Loan
Parties

Exhibit H

   -    Form of Guaranty

Exhibit I

   -    Form of Security Agreement

Exhibit J

   -    Form of Borrowing Base Certificate

Exhibit K

   -    Form of Intercreditor Agreement

Exhibit L

   -    Form of Intercompany Subordination Agreement

Exhibit M

   -    Form of Solvency Certificate

Exhibit N

   -    [Reserved]

Exhibit O

   -    Form of Non-Bank Certificate

Exhibit P

   -    Form of Compliance Certificate

Exhibit Q

   -    [Reserved]

Exhibit R

   -    Form of Customs Broker Agreement

 

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This CREDIT AGREEMENT (“Agreement”) is entered into as of March 7, 2011, among
CHINOS ACQUISITION CORPORATION, a Delaware corporation (which on the Effective
Date shall be merged with and into J. CREW GROUP, INC., a Delaware corporation
(the “Company”), with the Company surviving such merger as the Borrower (the
“Borrower”)), CHINOS INTERMEDIATE HOLDINGS B, INC., a Delaware corporation
(“Holdings”), BANK OF AMERICA, N.A., as administrative agent (in such capacity,
including any successor thereto, the “Administrative Agent”) and as collateral
agent (in such capacity, including any successor thereto, the “Collateral
Agent”) under the Loan Documents, and each lender from time to time party hereto
(collectively, the “Lenders” and individually, a “Lender”).

PRELIMINARY STATEMENTS

Pursuant to the Merger Agreement (as this and other capitalized terms used in
these preliminary statements are defined in Section 1.1 below), Chinos
Acquisition Corporation, a Delaware corporation and a direct wholly owned
subsidiary of Holdings (“Merger Sub”), will merge (the “Merger”) with and into
the Company, with (i) subject to dissenters’ rights, the Merger Consideration
being paid, and (ii) the Company surviving as a wholly owned subsidiary of
Holdings.

The Borrower has requested that, substantially simultaneously with the
consummation of the Merger, (i) the Lenders extend credit to the Borrower in the
form of Loans on the Effective Date in an initial aggregate principal amount of
up to $250,000,000 pursuant to this Agreement, and (ii) certain other lenders
extend credit to the Borrower in the form of a Term Facility in an initial
aggregate principal amount of $1,200,000,000 pursuant to the Term Facility
Credit Agreement.

On the Effective Date, (i) a portion of the Borrower’s cash on hand,
(ii) borrowings under the Term Facility, (iii) the proceeds of the issuance of
the Senior Notes (or, if and to the extent the Borrower does not, or is unable
to, issue the Senior Notes generating gross proceeds of at least $400,000,000 on
or before the Effective Date, the proceeds of loans under a bridge facility in
the aggregate principal amount of at least $400,000,000, less the aggregate
gross proceeds of the Senior Notes, if any, issued on or before the Effective
Date) and (iv) the proceeds of the Equity Contribution will be used to finance
the repayment of all amounts outstanding under the Existing ABL Facility and
certain other existing Indebtedness of the Borrower and its Subsidiaries and pay
the Merger Consideration and the Transaction Expenses. The proceeds of Revolving
Loans made after the Effective Date will be used for working capital and other
general corporate purposes of the Borrower and its Subsidiaries, including the
financing of Permitted Acquisitions. Swing Loans and Letters of Credit will be
used for general corporate purposes of the Borrower and its Subsidiaries.

The applicable Lenders have indicated their willingness to lend, and the Issuers
have indicated their willingness to issue Letters of Credit, in each case, on
the terms and subject to the conditions set forth herein.

 

1

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In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and 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):

“Account” has the meaning given to such term in Article 9 of the UCC.

“Account Debtor” has the meaning given to such term in Article 9 of the UCC.

“ACH” means automated clearing house transfers.

“Acquisition” means the acquisition of the Company pursuant to the terms of the
Merger Agreement.

“Additional Lender” has the meaning specified in Section 2.15.

“Adjusted Eurocurrency Rate” means, with respect to any Eurocurrency Rate Loan
for any Interest Period, an interest rate per annum equal to the Eurocurrency
Rate for such Interest Period multiplied by the Statutory Reserve Rate. The
Adjusted Eurocurrency Rate will be adjusted automatically as to all Eurocurrency
Rate Loans then outstanding as of the effective date of any change in the
Statutory Reserve Rate.

“Adjustment Date” means the first day of each February, May, August and
November, as applicable.

“Administrative Agent” has the meaning specified in the introductory paragraph
to this Agreement. The Administrative Agent may from time to time designate one
or more of its Affiliates or branches to perform the functions of the
Administrative Agent in connection with Loans denominated in any currency other
than Dollars, in which case references herein to the “Administrative Agent”
shall, in connection with Loans denominated in any such currency, mean any
Affiliate or branch so designated.

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 12.8, or such other address or
account as the Administrative Agent may from time to time notify the Borrower
and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, with respect to any Person, another Person that directly or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether

 

2

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through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto. For the
avoidance of doubt, none of the Arrangers, the Agents or their respective
lending affiliates or any entity acting as an Issuer hereunder shall be deemed
to be an Affiliate of Holdings, the Borrower or any of their respective
Subsidiaries.

“Agent Parties” has the meaning specified in Section 12.8(d).

“Agent-Related Persons” means the Agents, together with their respective
Affiliates, and the officers, directors, employees, agents, attorney-in-fact,
partners, trustees and advisors of such Persons and of such Persons’ Affiliates.

“Agents” means, collectively, the Administrative Agent, the Collateral Agent,
the Syndication Agent, each Co-Documentation Agent and each co-agent or
sub-agent (if any) appointed by the Administrative Agent from time to time
pursuant to Section 11.5 and the Arrangers.

“Aggregate Commitments” means the Revolving Credit Commitments of all the
Lenders.

“Agreement” means this Credit Agreement, as amended, restated, modified or
supplemented from time to time in accordance with the terms hereof.

“Agreement Currency” has the meaning specified in Section 12.10.

“Alternative Currency” means Canadian Dollars or Euros, as applicable.

“Alternative Currency Equivalent” means, at any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Administrative Agent or the applicable
Issuer, as the case may be, at such time on the basis of the Spot Rate
(determined by the Administrative Agent in respect of the most recent
Revaluation Date) for the purchase of such Alternative Currency with Dollars.

“Annual Financial Statements” means the audited consolidated balance sheets of
the Company as of the Saturday closest to each of January 31, 2010, 2009 and
2008, and the related consolidated statements of operations, changes in
stockholders’ equity and cash flows for the Company for the Fiscal Years then
ended.

“Applicable Indebtedness” has the meaning specified in the definition of
“Weighted Average Life to Maturity”.

 

3

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“Applicable Margin” means a percentage per annum equal to (a) until the end of
the first Fiscal Quarter ending after the Effective Date, (i) for Eurocurrency
Rate Loans and BA Rate Loans, 2.50%, (ii) for Base Rate Loans or Canadian Prime
Rate Loans, 1.50% and (iii) for Letter of Credit fees, (i) in the case of
standby Letters of Credit, 2.50% and (ii) in the case of documentary Letters of
Credit, 1.25%, and (b) thereafter, the following percentages per annum, based
upon Average Historical Excess Availability as of the most recent Adjustment
Date:

 

Average Historical Excess Availability

  

Applicable Margin for
Eurocurrency Loans,
BA Rate Loans and
Letter of Credit Fees
(Standby Letters of
Credit)

  

Applicable Margin
for Base Rate
Loans and
Canadian Prime
Rate Loans

  

Letter of Credit Fees
(Documentary Letters
of Credit)

³ $145,000,000

   2.25%    1.25%    1.125%

< $145,000,000 but ³ $62,500,000

   2.50%    1.50%    1.250%

< $62,500,000

   2.75%    1.75%    1.375%

The Applicable Margin shall be adjusted quarterly in accordance with the table
above on each Adjustment Date for the period beginning on such Adjustment Date
based upon the Average Historical Excess Availability as the Administrative
Agent shall determine in good faith within ten (10) Business Days after such
Adjustment Date. Any increase or decrease in the Applicable Margin resulting
from a change in the Average Historical Excess Availability shall become
effective as of the first Business Day immediately following the Adjustment
Date.

“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Revolving Credit Commitment at such time, subject
to adjustment as provided in Section 2.16. If the commitment of each Lender to
make Loans and the obligation of the Issuers to make L/C Credit Extensions have
been terminated pursuant to Section 10.2 or if the Aggregate Commitments have
expired, then the Applicable Percentage of each Lender shall be determined based
on the Applicable Percentage of such Lender most recently in effect, giving
effect to any subsequent assignments. The initial Applicable Percentage of each
Lender is set forth opposite the name of such Lender on Schedule I or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.

“Applicable Unused Commitment Fee Rate” means, for any day, a percentage per
annum equal to (a) initially, 0.50% per annum and (b) following the end of the
first Fiscal Quarter ending after the Effective Date, the following percentages
per annum of the Aggregate Commitments, based upon Average Revolving Loan
Utilization as of the most recent Adjustment Date:

 

Average Revolving Loan Utilization

  

Unused Commitment Fee

< 50%

   0.50%

³ 50%

   0.375%

The Applicable Unused Commitment Fee Rate shall be adjusted quarterly on each
Adjustment Date for the period beginning on such Adjustment Date based upon the
Average Revolving Loan Utilization as the Administrative Agent shall determine
in good faith within ten (10) Business Days after such Adjustment Date in
accordance with the table above.

 

4

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“Appropriate Lender” means, at any time, with respect to Loans of any Class, the
Lenders of such Class.

“Approved Account Bank” means a financial institution at which the Borrower or a
Guarantor maintains an Approved Deposit Account.

“Approved Deposit Account” means each Deposit Account in respect of which a Loan
Party shall have entered into a Deposit Account Control Agreement.

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

“Approved Securities Account” means each Securities Account in respect of which
the Borrower or any Subsidiary Guarantor shall have entered into a Securities
Account Control Agreement.

“Approved Securities Intermediary” means a securities intermediary at which the
Borrower or a Subsidiary Guarantor maintains an Approved Securities Account.

“Arrangers” means Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman
Sachs Bank USA, each in its capacity as a joint lead arranger under this
Agreement.

“Asset Sale Proceeds Pledged Account” means an account held at, and subject to
the sole dominion and control of, the collateral agent under the Term Facility
Credit Agreement, in which the proceeds from any Disposition of non-Current
Asset Collateral is held pending reinvestment pursuant to the Term Facility
Credit Agreement.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of Exhibit A or any other form approved by the
Administrative Agent.

“Attorney Costs” means all reasonable fees, expenses and disbursements of any
law firm or other external legal counsel.

“Attributable Indebtedness” means, on any date, in respect of any Capitalized
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP.

“Availability Reserves” means, without duplication of any other reserves or
items that are otherwise addressed or excluded through eligibility criteria,
such reserves as the Administrative Agent from time to time determines in its
Permitted Discretion as being

 

5

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appropriate (a) to reflect the impediments to the Agents’ ability to realize
upon the Collateral, (b) to reflect claims and liabilities that the
Administrative Agent determines will need to be satisfied in connection with the
realization upon the Collateral or (c) to reflect criteria, events, conditions,
contingencies or risks which adversely affect any component of the Borrowing
Base, the Collateral or the validity or enforceability of this Agreement or the
other Loan Documents or any material remedies of the Secured Parties hereunder
or thereunder; provided that circumstances, conditions, events or contingencies
existing or arising prior to the Effective Date and, in each case, disclosed in
writing in any field examination or appraisal delivered to the Administrative
Agent in connection herewith prior to the Effective Date shall not be the basis
for any establishment of any reserves after the Effective Date, unless such
circumstances, conditions, events or contingencies shall have changed in a
material respect since the Effective Date. Without limiting the generality of
the foregoing, Availability Reserves may include reserves based on: (i) rent;
provided that such Availability Reserves shall be limited to an amount not to
exceed the sum of (x) past due rent for all of the Borrower and the Subsidiary
Guarantors’ leased locations plus (y) one (1) month’s rent for all of the
Borrower and the Subsidiary Guarantors’ leased locations (A) located in the
states of Washington, Virginia, Pennsylvania and all other Landlord Lien States
or (B) that are distribution centers or warehouses, other than, in each case,
such locations, distribution centers or warehouses with respect to which the
Administrative Agent has received a Collateral Access Agreement in form and
substance reasonably satisfactory to the Administrative Agent; (ii) customs
duties, and other costs to release Inventory which is being imported into the
United States; (iii) outstanding Taxes and other governmental charges,
including, ad valorem, real estate, personal property, sales, and other Taxes
which have priority over the interests of the Collateral Agent in the Current
Asset Collateral; (iv) salaries, wages and benefits due to employees of the
Borrower which have priority over the interests of the Collateral Agent in the
Current Asset Collateral, (v) Customer Credit Liabilities; (vi) warehousemen’s
or bailee’s charges and other Liens permitted under Section 9.1 which might have
priority over the interests of the Collateral Agent in the Current Asset
Collateral; (vii) reserves in respect of Cash Management Obligations, provided
that reserves of the type described in this clause (vii) in respect of such Cash
Management Obligations shall require the consent of the Borrower;
(viii) reserves in respect of Obligations in respect of Secured Hedge
Agreements, provided that, if such Obligations in respect of Secured Hedge
Agreements shall constitute Specified Secured Hedge Obligations, then reserves
of the type described in this clause (viii) shall require the consent of the
Borrower; and (ix) additional reserves in the Administrative Agent’s Permitted
Discretion.

“Average Historical Excess Availability” means, at any Adjustment Date, the
average daily Excess Availability for the three-month period immediately
preceding such Adjustment Date (or, in the case of the first Adjustment Date on
May 1, 2011, the period from and including the Effective Date through the date
immediately preceding such first Adjustment Date).

“Average Revolving Loan Utilization” means, at any Adjustment Date, the average
daily aggregate Revolving Credit Exposure (excluding any Revolving Credit
Exposure resulting from any outstanding Swing Loans) for the three-month period
immediately preceding such Adjustment Date (or, if less, the period from the
Effective Date to such Adjustment Date), divided by the Aggregate Commitments at
such time.

 

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“BA Rate” means, with respect to each Interest Period for a BA Rate Loan, the
rate per annum equal to the average offered rate for Canadian Dollar bankers’
acceptances having an identical term as the proposed BA Rate Loan displayed and
identified as such on the display referred to as the “CDOR Page” (or any display
substituted therefor) of Reuters Monitor Money Rates Service as at approximately
10:00 a.m. Toronto time on the first day of such Interest Period (or, if such
day is not a Business Day, as of 10:00 a.m. Toronto time on the immediately
preceding Business Day), provided that if such rate does not appear on the CDOR
Page at such time on such date, the rate for such date will be the annual
discount rate (rounded upward to the nearest whole multiple of 1/100 of 1%) as
of 10:00 a.m. Toronto time on such day at which a Canadian chartered bank listed
on Schedule 1 of the Bank Act (Canada) as selected by the Administrative Agent
is then offering to purchase Canadian Dollar Bankers’ Acceptances accepted by it
having such specified term.

“BA Rate Loan” means any Revolving Loan denominated in Canadian Dollars bearing
interest at a rate determined by reference to the BA Rate.

“Bank of America” means Bank of America, N.A., a national banking association,
acting in its individual capacity, and its successors and assigns.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest
of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its
“prime rate” and (c) the Adjusted Eurocurrency Rate on such day for an Interest
Period of one (1) month plus 1.00% (or, if such day is not a Business Day, the
immediately preceding Business Day). The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

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

“BBA LIBOR” has the meaning specified in the definition of “Eurocurrency Rate”.

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

“Borrower Materials” has the meaning specified in Section 7.2.

“Borrowing” means a borrowing consisting of Loans of the same Class and Type
made, converted or continued on the same date in the same currency and, in the
case of Eurocurrency Rate Loans and BA Rate Loans, having the same Interest
Period.

“Borrowing Base” means, at any time of calculation, an amount equal to:

(a) the face amount of Eligible Credit Card Receivables multiplied by the Credit
Card Advance Rate; plus

 

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(b) the face amount of Eligible Accounts multiplied by the Eligible Accounts
Advance Rate; plus

(c) the Net Recovery Percentage of Eligible Inventory, multiplied by the
Inventory Advance Rate multiplied by the Cost of Eligible Inventory, net of
Inventory Reserves attributable to Eligible Inventory; plus

(d) the Net Recovery Percentage of Eligible Letter of Credit Inventory
multiplied by the Letter of Credit Advance Rate, multiplied by the Cost of
Eligible Letter of Credit Inventory, net of Inventory Reserves attributable to
Eligible Letter of Credit Inventory; plus

(e) the Net Recovery Percentage of Eligible In-Transit Inventory multiplied by
the In-Transit Advance Rate, multiplied by the Cost of Eligible In-Transit
Inventory, net of Inventory Reserves attributable to Eligible In-Transit
Inventory; plus

(f) 100% of Qualified Cash; minus

(g) the then amount of all Availability Reserves.

The Borrowing Base at any time shall be determined by reference to the most
recent Borrowing Base Certificate delivered to the Administrative Agent pursuant
to Section 7.4, as adjusted to give effect to Reserves following such delivery;
provided, that such Reserves shall not be established or changed except upon not
less than three (3) Business Days’ notice to the Borrower (during which period
the Administrative Agent shall be available to discuss any such proposed Reserve
or change with the Borrower and the Borrower may take such action as may be
required so that the event, condition or matter that is the basis for such
Reserve or change no longer exists, in a manner and to the extent reasonably
satisfactory to the Administrative Agent); provided further that no such prior
notice shall be required for changes to any Reserves resulting solely by virtue
of mathematical calculations of the amount of the Reserves in accordance with
the methodology of calculation previously utilized (such as, but not limited to,
rent and Customer Credit Liabilities). The amount of any Reserve established by
the Administrative Agent, and any change in the amount of any Reserve, shall
have a reasonable relationship to the event, condition or other matter that is
the basis for such Reserve or such change. Notwithstanding anything herein to
the contrary, Reserves shall not duplicate eligibility criteria contained in the
definition of Eligible Account, Eligible Credit Card Receivables, Eligible
In-Transit Inventory, Eligible Inventory, Eligible Letter of Credit Inventory,
Qualified Cash or any other Reserve then established.

“Borrowing Base Certificate” means a certificate of the Borrower substantially
in the form of Exhibit J.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the jurisdiction where the Administrative Agent’s Office with respect
to Obligations is located and if such day relates to any interest rate settings
as to a Eurocurrency Rate Loan denominated in Dollars, any fundings,
disbursements, settlements and payments in Dollars in respect of any such
Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out
pursuant to this

 

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Agreement in respect of any such Eurocurrency Rate Loan, means any such day on
which dealings in deposits in Dollars are conducted by and between banks in the
London interbank Eurocurrency market; provided that when used in connection with
a Loan denominated in Euros, the term “Business Day” shall also exclude any day
on which commercial banks in the jurisdiction where the Administrative Agent’s
principal Euro lending Affiliate or branch is located are authorized or required
by law to remain closed; provided further that when used in connection with a
Loan denominated in Canadian Dollars, the term “Business Day” shall also exclude
any day on which commercial banks in the jurisdiction where the Administrative
Agent’s principal Canadian lending Affiliate or branch is located are authorized
or required by law to remain closed.

“Canadian Dollars” and “CDN$” means Canadian dollars, the lawful currency of
Canada.

“Canadian Prime Rate” means for any day a fluctuating rate per annum equal to
the highest of (a) the average offered rate for 30 day Canadian Dollar bankers’
acceptances that appears on the “CDOR Page” (or any display substituted
therefor) or Reuters Monitor Money Rates Service as at approximately 10:00 a.m.
(Toronto time) on that day, plus 0.50% per annum, and (b) the rate of interest
in effect for such day as publicly announced from time to time by the
Administrative Agent as its “prime rate” for loans in Canadian Dollars. The
“prime rate” is a rate set by the Administrative Agent based upon various
factors including its costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in such rate
announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change.

“Canadian Prime Rate Loan” means any Loan denominated in Canadian Dollars
bearing interest computed by reference to the Canadian Prime Rate.

“Capital Expenditures” means, for any period, the aggregate of (a) all amounts
that would be reflected as additions to property, plant or equipment on a
Consolidated statement of cash flows of the Borrower and its Restricted
Subsidiaries in accordance with GAAP and (b) the value of all assets under
Capitalized Leases incurred by the Borrower and its Restricted Subsidiaries
during such period; provided that the term “Capital Expenditures” shall not
include (i) expenditures made in connection with the replacement, substitution,
restoration or repair of assets to the extent financed with (x) insurance
proceeds paid on account of the loss of or damage to the assets being replaced,
substituted, restored or repaired or (y) awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced, (ii) the
purchase price of equipment that is purchased simultaneously with the trade-in
of existing equipment to the extent that the gross amount of such purchase price
is reduced by the credit granted by the seller of such equipment for the
equipment being traded in at such time, (iii) the purchase of plant, property or
equipment or software to the extent financed with the proceeds of Dispositions
that are not required to be applied to prepay the Loans pursuant to
Section 2.9(b), (iv) expenditures that are accounted for as capital expenditures
by the Borrower or any Restricted Subsidiary and that actually are paid for, or
reimbursed to the Borrower or any Restricted Subsidiary in cash or Cash
Equivalents, by a Person other than the Borrower or any Restricted Subsidiary
and for which neither the Borrower nor any Restricted Subsidiary has

 

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provided or is required to provide or incur, directly or indirectly, any
consideration or obligation (other than rent) in respect of such expenditures to
such Person or any other Person (whether before, during or after such period),
(v) expenditures to the extent constituting any portion of a Permitted
Acquisition, (vi) the purchase price of equipment purchased during such period
to the extent the consideration therefor consists of any combination of (A) used
or surplus equipment traded in at the time of such purchase and (B) the proceeds
of a concurrent sale of used or surplus equipment, in each case, in the ordinary
course of business, (vii) expenditures relating to the construction,
acquisition, replacement, reconstruction, development, refurbishment, renovation
or improvement of any property which has been transferred to a Person other than
the Borrower or a Restricted Subsidiary during the same Fiscal Year in which
such expenditures were made pursuant to a sale-leaseback transaction to the
extent of the cash proceeds received by the Borrower or such Restricted
Subsidiary pursuant to such sale-leaseback transaction or (viii) expenditures
financed with the proceeds of an issuance of Equity Interests of the Borrower or
a capital contribution to the Borrower or Indebtedness permitted to be incurred
hereunder.

“Capitalized Lease Obligation” means, at the time any determination thereof is
to be made, the amount of the liability in respect of a Capitalized Lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet (excluding the footnotes thereto) prepared in accordance with
GAAP.

“Capitalized Leases” means all leases that have been or are required to be, in
accordance with GAAP, recorded as capitalized leases; provided that for all
purposes hereunder the amount of obligations under any Capitalized Lease shall
be the amount thereof accounted for as a liability in accordance with GAAP.

“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Administrative Agent, an Issuer or
the Swing Loan Lender (as applicable) and the Lenders, as collateral for Letter
of Credit Obligations, Obligations in respect of Swing Loans, or obligations of
Lenders to fund participations in respect of either thereof (as the context may
require), cash (which the applicable Issuer may require to be in the same
currency as the relevant Letter of Credit) or deposit account balances or, if
the applicable Issuer or Swing Loan Lender benefitting from such collateral
shall agree in its sole discretion, other credit support, in each case in an
amount (taking into account potential currency fluctuations) and pursuant to
documentation in form and substance reasonably satisfactory to (a) the
Administrative Agent and (b) the applicable Issuer or the Swing Loan Lender (as
applicable). “Cash Collateral” shall have a meaning correlative to the foregoing
and shall include the proceeds of such cash collateral and other credit support.

“Cash Dominion Period” means (a) each period beginning on the date that Excess
Availability shall have been less than the greater of (x) 12.5% of the Maximum
Credit and (y) $25,000,000, in either case, for five (5) consecutive Business
Days, and ending on the date Excess Availability shall have been equal to or
greater than the greater of (x) 12.5% of the Maximum Credit and (y) $25,000,000,
in each case, for thirty (30) consecutive calendar days or (b) upon the
occurrence of a Specified Event of Default, the period that such Specified Event
of Default shall be continuing; provided that a Cash Dominion Period may not
deemed to have ended under this definition on more than three (3) occasions in
any period of 365 consecutive days.

 

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“Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Borrower or any Restricted Subsidiary:

(a) Dollars, Euros or Canadian Dollars;

(b) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such
local currencies held by it from time to time in the ordinary course of business
and not for speculation;

(c) readily marketable direct obligations issued or directly and fully and
unconditionally guaranteed or insured by the United States government or any
agency or instrumentality thereof the securities of which are unconditionally
guaranteed as a full faith and credit obligation of such government with
maturities of 12 months or less from the date of acquisition;

(d) certificates of deposit, time deposits and eurodollar time deposits with
maturities of one year or less from the date of acquisition, demand deposits,
bankers’ acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any domestic or foreign commercial bank having
capital and surplus of not less than $500,000,000;

(e) repurchase obligations for underlying securities of the types described in
clauses (c) and (d) above or clause (g) below entered into with any financial
institution meeting the qualifications specified in clause (d) above;

(f) commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P (or,
if at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another nationally recognized statistical rating agency)
and in each case maturing within 12 months after the date of creation thereof;

(g) marketable short-term money market and similar highly liquid funds having a
rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if
at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another nationally recognized statistical rating agency);

(h) readily marketable direct obligations issued by any state, commonwealth or
territory of the United States or any political subdivision or taxing authority
thereof having an Investment Grade Rating from either Moody’s or S&P (or, if at
any time neither Moody’s nor S&P shall be rating such obligations, an equivalent
rating from another nationally recognized statistical rating agency) with
maturities of 12 months or less from the date of acquisition;

(i) Investments with average maturities of 12 months or less from the date of
acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if
at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another nationally recognized statistical rating agency);
and

 

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(j) investment funds investing substantially all of their assets in securities
of the types described in clauses (a) through (i) above.

In the case of Investments by any Foreign Subsidiary that is a Restricted
Subsidiary or Investments made in a country outside the United States, Cash
Equivalents shall also include (i) investments of the type and maturity
described in clauses (a) through (j) above of foreign obligors, which
Investments or obligors (or the parents of such obligors) have ratings described
in such clauses or equivalent ratings from comparable foreign rating agencies
and (ii) other short-term investments utilized by Foreign Subsidiaries that are
Restricted Subsidiaries in accordance with normal investment practices for cash
management in investments analogous to the foregoing investments in clauses (a)
through (j) and in this paragraph.

Notwithstanding the foregoing, Cash Equivalents shall include amounts
denominated in currencies other than those set forth in clause (a) above,
provided that such amounts are converted into Dollars as promptly as practicable
and in any event within ten (10) Business Days following the receipt of such
amounts.

“Cash Management Bank” means, as of any date of determination, any Person that
is a Lender or an Affiliate of a Lender on such date.

“Cash Management Obligations” means obligations owed by the Borrower or any
Restricted Subsidiary to any Cash Management Bank in respect of or in connection
with any Cash Management Services and designated by the Cash Management Bank and
the Borrower in writing to the Administrative Agent as “Cash Management
Obligations”.

“Cash Management Services” means any agreement or arrangement to provide cash
management services, including treasury, depository, overdraft, credit card
processing, credit or debit card, purchase card, electronic funds transfer and
other cash management arrangements.

“Cash Receipts” shall have the meaning specified in Section 8.12.

“Cash Taxes” means, with respect to any Test Period, all taxes paid or payable
in cash by the Borrower and its Restricted Subsidiaries during such period.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty (excluding the taking effect after the date of this Agreement of a
law, rule, regulation or treaty adopted prior to the date of this Agreement),
(b) any change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof by any Governmental Authority or (c) the
making or issuance of any request, guideline or directive (whether or not having
the force of law) by any Governmental Authority. It is understood and agreed
that the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L.
111-203, H.R. 4173), all Laws relating thereto, all interpretations and
applications thereof and any compliance by a Lender with any request or
directive relating thereto, shall, for the purposes of this Agreement, be deemed
to be adopted subsequent to the date hereof.

 

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“Change of Control” means the earliest to occur of:

(a) (i) at any time prior to the consummation of a Qualifying IPO, the Permitted
Holders ceasing to own, in the aggregate, directly or indirectly, beneficially
and of record, at least a majority of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of Holdings; or

(ii) at any time upon or after the consummation of a Qualifying IPO (1) any
Person (other than a Permitted Holder) or (2) Persons (other than one or more
Permitted Holders) constituting a “group” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit
plan of such person and its Subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5
under such Act), directly or indirectly, of Equity Interests representing more
than thirty-five percent (35%) of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of Holdings and the
percentage of aggregate ordinary voting power so held is greater than the
percentage of the aggregate ordinary voting power represented by the Equity
Interests of Holdings beneficially owned, directly or indirectly, in the
aggregate by the Permitted Holders;

unless, in the case of either clause (a)(i) or (a)(ii) above, the Permitted
Holders have, at such time, the right or the ability by voting power, contract
or otherwise to elect or designate for election at least a majority of the board
of directors of Holdings; or

(b) any “Change of Control” (or any comparable term) in any document pertaining
to the Term Facility, the Senior Notes, the Senior Notes Indenture or any
indenture governing notes issued in a Permitted Refinancing of the Senior Notes;
or

(c) the Borrower ceases to be a direct wholly owned Subsidiary of Holdings (or
any successor of Holdings that (x) becomes the direct parent of the Borrower and
owns no other direct Subsidiaries and (y) has expressly assumed (and is in
compliance with) all the obligations of Holdings under this Agreement and the
other Loan Documents to which Holdings is a party pursuant to a supplement
hereto or thereto in form reasonably satisfactory to the Administrative Agent).

“Class” (a) when used with respect to commitments, refers to whether such
commitment is a Revolving Credit Commitment, an Extended Revolving Credit
Commitment of a given Extension Series or a New Revolving Credit Commitment,
(b) when used with respect to Loans or a Borrowing, refers to whether such
Loans, or the Loans comprising such Borrowing, are Revolving Loans, Loans under
Extended Revolving Credit Commitments of a given Extension Series or Loans under
New Revolving Credit Commitments and (c) when used with respect to Lenders,
refers to whether such Lenders has a Loan or commitment with respect to a
particular Class of Loans or commitments.

“Closing Date Material Adverse Effect” means any effect, change, event or
occurrence (whether or not constituting any breach of a representation,
warranty, covenant or agreement set forth in the Merger Agreement) that,
individually or in the aggregate with all other effects, changes, events or
occurrences (i) has a material adverse effect on the business, results of
operations, assets or financial condition of the Company and its Subsidiaries
taken as a whole, or (ii) would or would reasonably be expected to prevent or
materially impair or delay the

 

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consummation of the Transactions; provided, however, that none of the following,
and to the extent arising out of or resulting from the following, no other
effect, change, event or occurrence, shall constitute or be taken into account,
individually or in the aggregate, in determining whether a Closing Date Material
Adverse Effect has occurred or may occur: any effect, change, event or
occurrence (A) generally affecting (1) the industry in which the Company and its
Subsidiaries operate or (2) the economy, credit or financial or capital markets,
in the United States or elsewhere in the world, including changes in interest or
exchange rates, or (B) to the extent arising out of, resulting from or
attributable to (1) changes in Law or in generally accepted accounting
principles or in accounting standards after the date of the Merger Agreement or
prospective changes in Law or in generally accepted accounting principles or in
accounting standards, or any changes or prospective changes in the
interpretation or enforcement of any of the foregoing, or any changes or
prospective changes in general legal, regulatory or political conditions,
(2) the negotiation, execution or announcement of the Merger Agreement or the
consummation of the Transactions (other than for purposes of any representation
or warranty contained in Section 3.3(c) and Section 3.4 of the Merger
Agreement), including the impact thereof on relationships, contractual or
otherwise, with customers, suppliers, distributors, partners, employees or
regulators, or any litigation arising from allegations of breach of fiduciary
duty or violation of Law relating to the Merger Agreement or the transactions
contemplated by the Merger Agreement, (3) acts of war (whether or not declared),
sabotage or terrorism, or any escalation or worsening of any such acts of war
(whether or not declared), sabotage or terrorism, (4) pandemics, earthquakes,
hurricanes, tornados or other natural disasters, (5) any action taken by the
Company or its Subsidiaries that is described in, and permitted to be taken
without consent under, clauses (i) through (xviii) of Section 5.1(a) of the
Merger Agreement, that were taken at the Parent’s written request or upon its
advance written consent pursuant to Section 5.1 of the Merger Agreement (in each
case, with the consent of the Arrangers) or the failure by the Company or its
Subsidiaries to take any action that is prohibited by the Merger Agreement to
the extent Parent fails to give its consent thereto (and such failure is the
result of the Arrangers refusing to consent, after the request of the Parent, to
Parent giving such consent) after a written request therefor pursuant to
Section 5.1 of the Merger Agreement, (6) any change resulting or arising from
the identity of, or any facts or circumstances relating to, Parent, Merger Sub
or any of their respective Affiliates, (7) any change or prospective change in
the Company’s credit ratings, (8) any decline in the market price, or change in
trading volume, of the capital stock of the Company or (9) any failure to meet
any internal or public projections, forecasts, guidance, estimates, milestones,
budgets or internal or published financial or operating predictions of revenue,
earnings, cash flow or cash position (it being understood that the exceptions in
clauses (7), (8) and (9) shall not prevent or otherwise affect a determination
that the underlying cause of any such decline or failure referred to therein (if
not otherwise falling within any of the exceptions provided by clause (A) and
clauses (B)(1) through (6) hereof) is a Closing Date Material Adverse Effect);
provided further, however, that any effect, change, event or occurrence referred
to in clauses (A) or (B)(1), (3) or (4) may be taken into account in determining
whether or not there has been a Closing Date Material Adverse Effect to the
extent such effect, change, event or occurrence has a materially
disproportionate adverse affect on the Company and its Subsidiaries, taken as a
whole, as compared to other participants in the industry in which the Company
and its Subsidiaries operate (in which case the incremental materially
disproportionate impact or impacts may be taken into account in determining
whether or not there has been or may be a Closing Date Material Adverse Effect).
For purposes of this definition, “Company”, “Subsidiaries”, “Transactions”,
“Laws”, “Parent”, “Merger Sub” and “Affiliates” shall have the meanings assigned
to such terms in the Merger Agreement.

 

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“Co-Documentation Agents” means HSBC Bank USA, N.A., SunTrust Bank and Wells
Fargo Capital Finance, LLC, each as a Co-Documentation Agent under this
Agreement.

“Co-Investor” means any of (a) the assignees, if any, of the equity commitments
of any Sponsor who become holders of Equity Interests in the Borrower (or any of
the direct or indirect parent companies of the Borrower) on the Effective Date
in connection with the Acquisition and (b) the transferees, if any, that
acquire, within ninety (90) days of the Effective Date, any Equity Interests in
the Borrower (or any of the direct or indirect parent companies of the Borrower)
held by any Sponsor as of the Effective Date.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations thereunder.

“Collateral” means all the “Collateral” (or equivalent term) as defined in any
Collateral Document and shall include the Mortgaged Properties.

“Collateral Agent” has the meaning specified in the introductory paragraph to
this Agreement.

“Collateral Access Agreement” means an agreement reasonably satisfactory in form
and substance to the Administrative Agent executed by, as the case may be, (a) a
bailee or other Person in possession of Collateral, and (b) any landlord of any
premises leased by any Loan Party, pursuant to which such Person
(i) acknowledges the Collateral Agent’s Lien on the Collateral, (ii) releases or
subordinates such Person’s Liens in the Collateral held by such Person or
located on such premises, (iii) agrees to provide the Collateral Agent with
access to the Collateral held by such bailee or other Person or located in or on
such premises for the purpose of conducting field examinations, appraisals or
Liquidation and (iv) makes such other agreements with the Collateral Agent as
the Administrative Agent may reasonably require.

“Collateral and Guarantee Requirement” means, at any time, the requirement that:

(a) the Collateral Agent shall have received each Collateral Document required
to be delivered on the Effective Date pursuant to Section 4.1(a)(iv) or pursuant
to Section 8.11, Section 8.12 or Section 8.13 at such time, duly executed by
each Loan Party thereto;

(b) all Obligations shall have been unconditionally guaranteed by Holdings, each
Restricted Subsidiary of the Borrower that is a Wholly-Owned Subsidiary that is
a Material Domestic Subsidiary and not an Excluded Subsidiary, including those
Subsidiaries that are listed on Schedule II hereto (each such guarantor, a
“Guarantor”) and any Restricted Subsidiary of the Borrower that Guarantees the
Senior Notes, any Indebtedness incurred by the Borrower pursuant to the Term
Facility or any Junior Financing (or, in each case, any Permitted Refinancing
thereof) shall be a Guarantor hereunder;

 

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(c) the Obligations and the Guaranty shall have been secured by a perfected
first-priority security interest (subject only to non-consensual Liens permitted
by Section 9.1 and Liens permitted under Section 9.1 (including under clause
(w) thereof) securing Obligations (as defined under the Term Facility Credit
Agreement) or any Permitted Refinancing thereof (in each case, subject to the
terms of the Intercreditor Agreement)) in (i) all the Equity Interests of the
Borrower, (ii) all Equity Interests of each direct, Wholly-Owned Subsidiary that
is a Domestic Subsidiary (other than a Domestic Subsidiary described in the
following clause (iii)(A)) that is directly owned by the Borrower or any
Subsidiary Guarantor and (iii) 65% of the issued and outstanding Equity
Interests of (A) each Wholly-Owned Subsidiary that is a Domestic Subsidiary that
is directly owned by the Borrower or by any Subsidiary Guarantor and that is a
disregarded entity for United States Federal income tax purposes substantially
all of the assets of which consist of Equity Interests in one or more Foreign
Subsidiaries and (B) each Wholly-Owned Subsidiary that is a Foreign Subsidiary
that is directly owned by the Borrower or by any Subsidiary Guarantor;

(d) except to the extent otherwise provided hereunder, including subject to
Liens permitted by Section 9.1, or under any Collateral Document, the
Obligations and the Guaranty shall have been secured by a perfected
first-priority security interest (to the extent such security interest may be
perfected by delivering certificated securities, filing financing statements
under the UCC or making any necessary filings with the United States Patent and
Trademark Office or United States Copyright Office) in substantially all
tangible and intangible personal property of the Borrower and each Guarantor
(including accounts (other than deposit accounts except as required by
Section 8.12 of this Agreement, other bank or securities accounts or the Asset
Sale Proceeds Pledged Account), Inventory, equipment, investment property,
contract rights, applications and registrations of intellectual property filed
in the United States, other general intangibles, and proceeds of the foregoing),
in each case, with the priority required by the Collateral Documents, in each
case subject to exceptions and limitations otherwise set forth in this Agreement
and the Collateral Documents; provided that any such security interests in
Collateral shall be subject to the terms of the Intercreditor Agreement;

(e) the Collateral Agent shall have received (i) counterparts of a Mortgage with
respect to each Material Real Property listed on Schedule 1.1D or required to be
delivered pursuant to Sections 8.11 and 8.13(b) (the “Mortgaged Properties”)
duly executed and delivered by the record owner of such property, (ii) a policy
or policies of title insurance issued by a nationally recognized title insurance
company insuring the Lien of each such Mortgage as a valid Lien on the property
described therein, free of any other Liens except as expressly permitted by
Section 9.1, together with such endorsements, coinsurance and reinsurance as the
Collateral Agent may reasonably request, and (iii) such surveys, abstracts and
appraisals and such customary legal opinions and other documents as the
Collateral Agent may reasonably request with respect to any such Mortgaged
Property.

The foregoing definition shall not require the creation or perfection of pledges
of or security interests in, or the obtaining of title insurance, surveys,
abstracts or appraisals with respect to, particular assets if and for so long
as, in the reasonable judgment of the Collateral Agent and the Borrower, the
cost of creating or perfecting such pledges or security interests in such assets
or obtaining title insurance, surveys, abstracts or appraisals in respect of
such assets shall be excessive in view of the benefits to be obtained by the
Lenders therefrom.

 

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The Collateral Agent may grant extensions of time for the perfection of security
interests in or the obtaining of title insurance and surveys with respect to
particular assets (including extensions beyond the Effective Date for the
perfection of security interests in the assets of the Loan Parties on such date)
where it reasonably determines, in consultation with the Borrower, that
perfection cannot be accomplished without undue effort or expense by the time or
times at which it would otherwise be required by this Agreement or the
Collateral Documents.

“Collateral Documents” means, collectively, the Security Agreement, the
Intellectual Property Security Agreements, the Mortgages, each of the mortgages,
collateral assignments, the Security Agreement Supplements, security agreements,
pledge agreements or other similar agreements delivered to the Agents and the
Lenders pursuant to Section 4.1(a)(iv), Section 8.11, Section 8.12 or
Section 8.13, the Guaranty, each Lien Acknowledgment Agreement, the
Intercreditor Agreement and each of the other agreements, instruments or
documents that creates or purports to create a Lien or Guarantee in favor of the
Collateral Agent for the benefit of the Secured Parties.

“Company” has the meaning specified in the introductory paragraph to this
Agreement.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit P and which certificate shall in any event be a certificate of the chief
financial officer (a) certifying as to whether a Default has occurred and is
continuing and, if applicable, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (b) setting forth a
reasonably detailed calculation of the Fixed Charge Coverage Ratio for the most
recently completed Test Period, and (c) setting forth reasonably detailed
calculations, in the case of financial statements delivered under Section 7.1,
beginning with the financial statements for the Fiscal Year of the Borrower
ending January 28, 2012, of the Net Cash Proceeds received during the applicable
period by or on behalf of, Holdings or any of its Restricted Subsidiaries in
respect of any Disposition subject to prepayment pursuant to Section 2.9.

“Concentration Account” has the meaning specified in Section 8.12(b).

“Consolidated” means, with respect to any Person, the consolidation of accounts
of such Person and any other Person in accordance with GAAP.

“Consolidated Depreciation and Amortization Expense” means, with respect to any
Person for any period, the total amount of depreciation and amortization expense
of such Person, including the amortization of deferred financing fees or costs
for such period on a consolidated basis and otherwise determined in accordance
with GAAP.

“Consolidated EBITDA” means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period,

(a) increased by (without duplication):

(i) provision for taxes based on income or profits or capital, plus franchise or
similar taxes and foreign withholding taxes, of such Person for such period
deducted in computing Consolidated Net Income, plus

 

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(ii) (A) total interest expense of such Person for such period and (B) bank fees
and costs of surety bonds, in each case under this clause (B), in connection
with financing activities and, in each case under clauses (A) and (B), to the
extent the same was deducted in computing Consolidated Net Income, plus

(iii) Consolidated Depreciation and Amortization Expense of such Person for such
period to the extent such depreciation and amortization were deducted in
computing Consolidated Net Income, plus

(iv) any expenses or charges related to any issuance of Equity Interests,
Investment, acquisition, disposition, recapitalization or the incurrence or
repayment of Indebtedness permitted to be incurred hereunder including a
refinancing thereof (whether or not successful) and any amendment or
modification to the terms of any such transactions, including such fees,
expenses or charges related to the Transaction, in each case, deducted in
computing Consolidated Net Income; plus

(v) the amount of any restructuring charge or reserve deducted in such period in
computing Consolidated Net Income, including any one-time costs incurred in
connection with (A) Permitted Acquisitions after the Effective Date or (B) the
closing of any Stores or distribution centers after the Effective Date, plus

(vi) the amount of costs relating to pre-opening and opening costs for Stores,
signing, retention and completion bonuses, costs incurred in connection with any
strategic initiatives, transition costs, consolidation and closing costs for
Stores and costs incurred in connection with non-recurring product and
intellectual property development after the Effective Date, other business
optimization expenses (including costs and expenses relating to business
optimization programs), and new systems design and implementation costs and
project start-up costs in an aggregate amount for all items added pursuant to
this clause (vi) not to exceed $25,000,000 in any period of four-consecutive
Fiscal Quarters, plus

(vii) any other non-cash charges including any write-offs or write downs
reducing Consolidated Net Income for such period (provided that if any such
non-cash charges represent an accrual or reserve for potential cash items in any
future period, (1) the Borrower may determine not to add back such non-cash
charge in the current period and (2) to the extent the Borrower does decide to
add back such non-cash charge, the cash payment in respect thereof in such
future period shall be subtracted from Consolidated EBITDA to such extent, and
excluding amortization of a prepaid cash item that was paid in a prior period),
plus

(viii) the amount of any minority interest expense deducted in calculating
Consolidated Net Income, plus

(ix) the amount of management, monitoring, consulting and advisory fees
(including termination fees) and related indemnities and expenses paid or
accrued in such period under the Sponsor Management Agreement or otherwise to
the Sponsors to the extent permitted under Section 9.8 and deducted in such
period in computing Consolidated Net Income, plus

(x) the amount of net cost savings and synergies (other than any of the
foregoing related to Specified Transactions) projected by the Borrower in good
faith to result from actions taken or expected to be taken no later than twelve
(12) months after the end of such period (calculated on a pro forma basis as
though such cost savings and synergies had been realized on

 

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the first day of the period for which Consolidated EBITDA is being determined),
net of the amount of actual benefits realized during such period from such
actions; provided that (A) such cost savings and synergies are reasonably
identifiable and factually supportable and (B) the aggregate amount of cost
savings and synergies added pursuant to this clause (x) for any Test Period
shall not exceed, after the Effective Date, the greater of (x) $30,000,000 and
(y) 10% of Consolidated EBITDA for such Test Period (calculated prior to giving
effect to any adjustment pursuant to this clause (x)), plus

(xi) cash receipts (or any netting arrangements resulting in reduced cash
expenditures) not representing Consolidated EBITDA or Consolidated Net Income in
any period to the extent non-cash gains relating to such income were deducted in
the calculation of Consolidated EBITDA pursuant to paragraph (b) below for any
previous period and not added back, plus

(xii) any costs or expenses incurred by the Borrower or a Restricted Subsidiary
pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any stock subscription or
stockholders agreement, to the extent that such costs or expenses are funded
with cash proceeds contributed to the capital of the Borrower or net cash
proceeds of issuance of Equity Interests of the Borrower (other than
Disqualified Equity Interests);

(b) decreased by (without duplication);

(i) any non-cash gains increasing Consolidated Net Income of such Person for
such period, excluding any gains that represent the reversal of any accrual of,
or cash reserve for, anticipated cash charges in any prior period (other than
such cash charges that have been added back to Consolidated Net Income in
calculating Consolidated EBITDA in accordance with this definition); plus

(ii) any non-cash gains with respect to cash actually received in a prior period
unless such cash did not increase Consolidated EBITDA in such prior period.

“Consolidated Net Cash Interest Expense” means, with respect to the Borrower and
its Restricted Subsidiaries on a Consolidated basis for any period, determined
in accordance with GAAP, (a) total interest expense paid or payable in cash in
such period (including that attributable to obligations with respect to
Capitalized Leases in accordance with GAAP in effect on the Effective Date but
excluding any imputed interest as a result of purchase accounting) of the
Borrower and its Restricted Subsidiaries on a Consolidated basis and all
commissions, discounts and other fees and charges owed with respect to
Indebtedness of the Borrower and its Restricted Subsidiaries, but excluding
(i) any non-cash interest or deferred financing costs, (ii) any amortization or
write-down of deferred financing fees, debt issuance costs, discounted
liabilities, commissions, fees and expenses, (iii) any expensing of bridge,
commitment and other financing fees and (iv) penalties and interest related to
Taxes minus (b) interest income of the Borrower and its Restricted Subsidiaries
actually received in cash during such period. For purposes of the foregoing,
interest expense of the Borrower and its Restricted Subsidiaries shall be
determined after giving effect to any net payments made or received by such
Persons with respect to interest rate Swap Contracts.

 

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“Consolidated Net Income” means, with respect to any Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, and otherwise determined in accordance
with GAAP; provided, however, that, without duplication:

(a) any net after-tax extraordinary, non-recurring or unusual gains or losses
(less all fees and expenses relating thereto) or expenses, and Transaction
Expenses, relocation costs, integration costs, facility consolidation and
closing costs (other than with respect to Stores), severance costs and expenses
and one-time compensation charges, shall be excluded,

(b) the Net Income for such period shall not include the cumulative effect of a
change in accounting principles during such period, whether effected through a
cumulative effect adjustment or a retroactive application in each case in
accordance with GAAP,

(c) effects of adjustments (including the effect of such adjustments pushed down
to the Borrower and the Restricted Subsidiaries) in such Person’s consolidated
financial statements pursuant to GAAP (including in the inventory, property and
equipment, software, goodwill, intangible assets, in-process research and
development, deferred revenue and debt line items thereof) resulting from the
application of recapitalization accounting or purchase accounting, as the case
may be, in relation to the Transaction or any consummated acquisition or the
amortization or write-off of any amounts thereof, net of taxes, shall be
excluded,

(d) any net after-tax income (loss) from disposed or discontinued operations and
any net after-tax gains or losses on disposal of disposed or discontinued
operations shall be excluded,

(e) any net after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions or the sale or other disposition of
any Equity Interests of any Person other than in the ordinary course of
business, as determined in good faith by the Borrower, shall be excluded,

(f) the Net Income for such period of any Person that is not a Subsidiary, or is
an Unrestricted Subsidiary, or that is accounted for by the equity method of
accounting, shall be excluded; provided that Consolidated Net Income of the
Borrower shall be increased by the amount of dividends or distributions or other
payments that are actually paid in cash (or to the extent converted into cash)
to the referent Person or a Restricted Subsidiary thereof in respect of such
period,

(g) [reserved],

(h) (i) any net unrealized gain or loss (after any offset) resulting in such
period from obligations in respect of Swap Contracts and the application of
Financial Accounting Standards Board Accounting Standards Codification 815
(Derivatives and Hedging), (ii) any net gain or loss resulting in such period
from currency translation gains or losses related to currency remeasurements of
Indebtedness (including the net loss or gain (A) resulting from Swap Contracts
for currency exchange risk and (B) resulting from intercompany Indebtedness) and
all other foreign currency translation gains or losses to the extent such gain
or losses are non-cash items, and (iii) any net after-tax income (loss) for such
period attributable to the early extinguishment or conversion of
(A) Indebtedness, (B) obligations under any Swap Contracts or (C) other
derivative instruments, shall be excluded,

 

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(i) any impairment charge or asset write-off, including impairment charges or
asset write-offs or write-downs related to intangible assets, long-lived assets,
investments in debt and equity securities or as a result of a change in law or
regulation, in each case pursuant to GAAP, and the amortization of intangibles
arising pursuant to GAAP shall be excluded,

(j) any expenses, charges or losses that are covered by indemnification or other
reimbursement provisions in connection with any Investment, Permitted
Acquisition or any sale, conveyance, transfer or other disposition of assets
permitted under this Agreement, to the extent actually reimbursed, or, so long
as the Borrower has made a determination that a reasonable basis exists for
indemnification or reimbursement and only to the extent that such amount is in
fact indemnified or reimbursed within 365 days of such determination (with a
deduction in the applicable future period for any amount so added back to the
extent not so indemnified or reimbursed within such 365 days), shall be
excluded,

(k) to the extent covered by insurance and actually reimbursed, or, so long as
the Borrower has made a determination that there exists reasonable evidence that
such amount will in fact be reimbursed within 365 days of the date of such
determination (with a deduction in the applicable future period for any amount
so added back to the extent not so reimbursed within such 365 days), expenses,
charges or losses with respect to liability or casualty events or business
interruption shall be excluded, and

(l) any non-cash (for such period and all other periods) compensation charge or
expense, including any such charge or expense arising from the grants of stock
appreciation or similar rights, stock options, restricted stock or other rights
or equity incentive programs shall be excluded, and any cash charges associated
with the rollover, acceleration or payout of Equity Interests by, or to,
management of the Borrower or any of its Restricted Subsidiaries in connection
with the Transaction, shall be excluded.

“Consolidated Total Debt” means, as of any date of determination, the aggregate
principal amount of Indebtedness of the Borrower and the Restricted Subsidiaries
outstanding on such date, determined on a consolidated basis in accordance with
GAAP (but excluding the effects of any discounting of Indebtedness resulting
from the application of purchase accounting in connection with the Transaction,
any Permitted Acquisition or any other Investment permitted hereunder),
consisting of Indebtedness for borrowed money, unreimbursed obligations in
respect of drawn letters of credit, obligations in respect of Capitalized Leases
and debt obligations evidenced by promissory notes or similar instruments;
provided that Consolidated Total Debt shall not include Indebtedness in respect
of (i) any letter of credit, except to the extent of unreimbursed obligations in
respect of drawn letters of credit (provided that any unreimbursed amount under
commercial letters of credit shall not be counted as Consolidated Total Debt
until three (3) Business Days after such amount is drawn (it being understood
that any borrowing, whether automatic or otherwise, to fund such reimbursement
shall be counted)) and (ii) obligations under Swap Contracts.

 

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“Constituent Documents” means (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“Cost” means the cost of purchases of Inventory determined according to the
accounting policies used in the preparation of the Borrower’s financial
statements.

“Covenant Trigger Event” means that Excess Availability on any day is less than
the greater of (i) $25,000,000 and (ii) 12.5% of the Maximum Credit. For
purposes hereof, the occurrence of a Covenant Trigger Event shall be deemed to
be continuing until Excess Availability is equal to or greater than the greater
of (i) $25,000,000 and (ii) 12.5% of the Maximum Credit, in each case, for
thirty (30) consecutive days, in which case a Covenant Trigger Event shall no
longer be deemed to be continuing for purposes of this Agreement.

“Credit Card Advance Rate” means 90%.

“Credit Card Agreements” means all agreements now or hereafter entered into by
the Borrower or any Guarantor for the benefit of the Borrower or a Subsidiary
Guarantor, in each case with any Credit Card Issuer or any Credit Card
Processor, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, including, but not
limited to, the agreements set forth on Schedule 1.1E hereto.

“Credit Card Issuer” means any Person (other than the Borrower or a Guarantor)
who issues or whose members issue credit cards, including MasterCard or VISA
bank credit or debit cards or other bank credit or debit cards issued through
MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and
American Express, Discover, Diners Club, Carte Blanche and other non-bank credit
or debit cards, including credit or debit cards issued by or through American
Express Travel Related Services Company, Inc., Novus Services, Inc. and the
J. Crew Card.

“Credit Card Notification” means, collectively, the notices to Credit Card
Issuers or Credit Card Processors who are parties to Credit Card Agreements in
substantially the form delivered under the Existing ABL Facility and which
Credit Card Notifications shall require the ACH or wire transfer no less
frequently than each Business Day (and whether or not there are then any
outstanding Obligations) to an Approved Deposit Account of all payments due from
Credit Card Processors.

 

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“Credit Card Processor” means any servicing or processing agent or any factor or
financial intermediary who facilitates, services, processes or manages the
credit authorization, billing transfer and/or payment procedures with respect to
the Borrower’s or any Guarantor’s sales transactions involving credit card or
debit card purchases by customers using credit cards or debit cards issued by
any Credit Card Issuer.

“Credit Card Receivables” means, collectively, (a) all present and future rights
of the Borrower or any Guarantor to payment from any Credit Card Issuer, Credit
Card Processor or other third party arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card and (b) all present and future rights of the Borrower or any
Guarantor to payment from any Credit Card Issuer, Credit Card Processor or other
third party in connection with the sale or transfer of Accounts arising pursuant
to the sale of goods or rendition of services to customers who have purchased
such goods or services using a credit card or a debit card, including, but not
limited to, all amounts at any time due or to become due from any Credit Card
Issuer or Credit Card Processor under the Credit Card Agreements or otherwise,
in each case above calculated net of prevailing interchange charges.

“Credit Extension” means each of the following: (a) a Borrowing and (b) a L/C
Credit Extension.

“Cure Amount” has the meaning specified in Section 10.4(b).

“Current Asset Collateral” means all the “ABL Priority Collateral” as defined in
the Intercreditor Agreement.

“Customer Credit Liabilities” means, at any time, the aggregate remaining
balance at such time of (a) outstanding gift certificates and gift cards of the
Borrower entitling the holder thereof to use all or a portion of the certificate
or gift card to pay all or a portion of the purchase price for any Inventory and
(b) outstanding merchandise credits of the Borrower, in each case, net of any
dormancy reserves maintained by the Company on its books and records in the
ordinary course of business consistent with past practices.

“Customs Broker Agreement” means an agreement in substantially the form attached
hereto as Exhibit R (or such other form as may be reasonably satisfactory to the
Administrative Agent) among a Loan Party, a customs broker, freight forwarder or
other carrier, and the Collateral Agent, in which the customs broker, freight
forwarder or other carrier acknowledges that it has control over and holds the
documents evidencing ownership of, or other shipping documents relating to, the
subject Inventory or other property for the benefit of the Collateral Agent, and
agrees, upon notice from the Collateral Agent (which notice shall be delivered
only upon the occurrence and during the continuance of an Event of Default), to
hold and dispose of the subject Inventory and other property solely as directed
by the Collateral Agent.

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

 

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“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would
constitute an Event of Default.

“Default Rate” means an interest rate equal to (a)(i) in the case of any amount
denominated in Dollars, the Base Rate, (ii) in the case of any amount
denominated in Canadian Dollars, the Canadian Prime Rate, or (iii) in the case
of any amount denominated in Euros, the Eurocurrency Rate, plus (b) 2.0% per
annum; provided that with respect to the outstanding principal amount of any
Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Margin) otherwise applicable to such Loan (giving
effect to Section 2.11) plus 2.0% per annum, in each case, to the fullest extent
permitted by applicable Laws.

“Defaulting Lender” means, subject to Section 2.16(b), any Lender that, as
determined by the Administrative Agent, (a) has failed to perform any of its
funding obligations hereunder, including in respect of its Loans or
participations in respect of Letters of Credit or Swing Loans, within three
(3) Business Days of the date required to be funded by it hereunder, (b) has
notified the Borrower or the Administrative Agent that it does not intend to
comply with its funding obligations or has made a public statement to that
effect with respect to its funding obligations hereunder or under other
agreements in which it commits to extend credit, (c) has failed, within three
Business Days after request by the Administrative Agent, to confirm in a manner
satisfactory to the Administrative Agent that it will comply with its funding
obligations (provided that any Lender that has failed to give such timely
confirmation shall cease to be a Defaulting Lender under this clause (c) upon
receipt of such confirmation by the Administrative Agent), or (d) has, or has a
direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, (ii) had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or a custodian
appointed for it, or (iii) taken any action in furtherance of, or indicated its
consent to, approval of or acquiescence in any such proceeding or appointment;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority.

“Deposit Account” means any checking or other demand deposit account maintained
by the Loan Parties, including any “deposit accounts” under Article 9 of the
UCC. All funds in such Deposit Accounts shall be conclusively presumed to be
Collateral and proceeds of Collateral and the Agent and the Lenders shall have
no duty to inquire as to the source of the amounts on deposit in the Deposit
Accounts, subject to the Security Agreement and the Intercreditor Agreement.

“Deposit Account Control Agreement” has the meaning specified in
Section 8.12(a).

 

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“Designated Non-Cash Consideration” means the fair market value of non-cash
consideration received by the Borrower or a Restricted Subsidiary in connection
with a Disposition pursuant to Section 9.5(j) that is designated as Designated
Non-Cash Consideration pursuant to a certificate of a Responsible Officer,
setting forth the basis of such valuation (which amount will be reduced by the
fair market value of the portion of the non-cash consideration converted to cash
within one-hundred eighty (180) days following the consummation of the
applicable Disposition).

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction and any sale or
issuance of Equity Interests in a Subsidiary) of any property by any Person,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or
by the terms of any security or other Equity Interests into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition (a) matures or is mandatorily redeemable (other than solely for
Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise
(except as a result of a change of control or asset sale so long as any rights
of the holders thereof upon the occurrence of a change of control or asset sale
event shall be subject to the prior repayment in full of the Loans and all other
Obligations that are accrued and payable and the termination of the Revolving
Credit Commitments and all outstanding Letters of Credit (unless the Outstanding
Amount of the Letter of Credit Obligations related thereto has been Cash
Collateralized or back-stopped by a letter of credit in form and substance
reasonably satisfactory to the applicable Issuer)), (b) is redeemable at the
option of the holder thereof (other than solely for Qualified Equity Interests),
in whole or in part, (c) provides for the scheduled payments of dividends in
cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or
any other Equity Interests that would constitute Disqualified Equity Interests,
in each case, prior to the date that is ninety-one (91) days after the Latest
Maturity Date of the Loans at the time of issuance; provided that if such Equity
Interests are issued pursuant to a plan for the benefit of employees of
Holdings, the Borrower or the Restricted Subsidiaries or by any such plan to
such employees, such Equity Interests shall not constitute Disqualified Equity
Interests solely because it may be required to be repurchased by Holdings, the
Borrower or the Restricted Subsidiaries in order to satisfy applicable statutory
or regulatory obligations.

“Document” has the meaning set forth in Article 9 of the UCC.

“Documentary Letter of Credit” means any Letter of Credit that is drawable upon
presentation of documents evidencing the sale or shipment of goods purchased by
the Borrower or a Guarantor in the ordinary course of its business.

“Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent or the applicable Issuer, as
the case may be, at such time on the basis of the Spot Rate (determined in
respect of the most recent Revaluation Date) for the purchase of Dollars with
such Alternative Currency.

 

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“Dollars” and “$” mean lawful money of the United States.

“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of
the United States, any state thereof or the District of Columbia.

“Effective Date” has the meaning specified in Section 4.1.

“Eligible Accounts” means, as of any date of determination thereof, the
aggregate amount of all Accounts due to the Borrower and each Subsidiary
Guarantor, except to the extent that (determined without duplication):

(a) such Account does not arise from the sale of goods or the performance of
services by the Borrower or Subsidiary Guarantor in the ordinary course of its
business;

(b) (i) the Borrower’s or Subsidiary Guarantor’s right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever
(other than the preparation and delivery of an invoice) or (ii) as to which such
Person is not able to bring suit or otherwise enforce its remedies against the
Account Debtor through judicial process;

(c) any defense, counterclaim, set-off or dispute exists as to such Account, but
only to the extent of such defense, counterclaim, set-off or dispute;

(d) such Account is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;

(e) an invoice, reasonably acceptable to the Administrative Agent in form and
substance or otherwise in the form otherwise required by any Account Debtor, has
not been sent to the applicable Account Debtor in respect of such Account on or
before the date as of which such Account is first included in the Borrowing Base
Certificate or otherwise reported to the Administrative Agent as Collateral;

(f) such Account (i) is not owned by the Borrower or Subsidiary Guarantor or
(ii) is not subject to the first priority, valid and perfected security interest
and Lien of Administrative Agent, for and on behalf of itself and the Lenders
(subject to Liens permitted under Section 9.1 having priority by operation of
applicable Law over the Liens of the Collateral Agent) or (iii) is subject to
any other Lien (other than (x) Liens permitted hereunder pursuant to
clauses (a), (c), (d), (h) and (aa) of Section 9.1 and (y) Liens permitted under
Section 9.1 (including clause (w) thereof) securing the Obligations (as defined
under the Term Facility Credit Agreement) (subject to the terms of the
Intercreditor Agreement)) (the foregoing clauses (ii) and (iii) (other than in
respect of the immediately foregoing clause (y)) not being intended to limit the
ability of the Administrative Agent to change, establish or eliminate any
Reserves in its Permitted Discretion on account of any such permitted Liens);

(g) such Account is the obligation of an Account Debtor that is (i) a director,
officer, other employee or Affiliate of the Borrower or Subsidiary Guarantor or
(ii) a natural person; provided that this clause (g) shall not exclude any
Account of an Account Debtor solely on the basis that it is a portfolio company
of any Sponsor;

 

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(h) such Account is the obligation of an Account Debtor that is any Governmental
Authority;

(i) Accounts subject to a partial payment plan;

(j) the Borrower or Subsidiary Guarantor is liable for goods sold or services
rendered by the applicable Account Debtor to the Borrower but only to the extent
of the potential offset;

(k) the Account is not paid on or prior to ninety (90) days following the
original invoice date;

(l) the Account is not paid on or prior to sixty (60) days following the date on
which such Account was due;

(m) such Account is the obligation of an Account Debtor from whom 50% or more of
the amount of all Accounts owing by that Account Debtor are ineligible under the
criteria set forth in this definition;

(n) any of the representations or warranties in the Loan Documents with respect
to such Account are untrue in any material respect with respect to such Account
(or, with respect to representations or warranties that are qualified by
materiality, any of such representations and warranties are untrue);

(o) such Account is evidenced by chattel paper or an instrument of any kind, or
has been reduced to judgment;

(p) such Account, together with all other Accounts owing by such Account Debtor
and its Affiliates as of any date of determination, exceeds the greater of
(i) 25% of all Eligible Accounts and (ii) 15% of the Borrowing Base (but, in
each case, only to the extent of such excess);

(q) such Account is payable in any currency other than Dollars or Canadian
Dollars;

(r) such Account has been redated, extended, compromised, settled or otherwise
modified or discounted, except discounts or modifications that are granted by
the Borrower or Subsidiary Guarantor in the ordinary course of business and that
are reflected in the calculation of the Borrowing Base;

(s) such Account is of an Account Debtor that is located in a state requiring
the filing of a notice of business activities report or similar report in order
to permit the Borrower or Subsidiary Guarantor to seek judicial enforcement in
such state of payment of such Account, unless the Borrower
or Subsidiary Guarantor has qualified to do business in such state or has filed
a notice of business activities report or equivalent report for the then-current
year or if such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;

 

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(t) such Account was acquired or originated by a Person acquired in a Permitted
Acquisition (until such time as the Administrative Agent has completed a
customary due diligence investigation as to such Accounts and such Person, which
investigation may, at the sole discretion of the Administrative Agent, include a
field examination, and the Administrative Agent is satisfied with the results
thereof in its Permitted Discretion);

(u) Account Debtor is subject to an event of the type described in
Section 10.1(f);

(v) such Account represents a sale on a bill-and-hold, guaranteed sale, sale and
return, sale on approval, consignment or other repurchase or return basis;

(w) the Account Debtor is organized or has its principal offices or assets
outside the United States or Canada, unless such Account is backed by a letter
of credit reasonably acceptable to the Administrative Agent (which is issued by
a bank reasonably acceptable to the Administrative Agent) and such letter of
credit is subject to a first priority perfected Lien in favor of the Collateral
Agent;

(x) [reserved];

(y) the portion, if any, of any Account that includes a billing for interest,
fees or late charges; or

(z) such Account constitutes a Credit Card Receivable.

“Eligible Accounts Advance Rate” means 85%.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 12.2(b)(iii) and (v) (subject to such consents, if any,
as may be required under Section 12.2(b)(ii)).

“Eligible Credit Card Receivables” means, as to the Borrower and each Subsidiary
Guarantor, Credit Card Receivables of such Person which satisfy the criteria set
forth below:

(a) such Credit Card Receivables arise from the actual and bona fide sale and
delivery of goods or rendition of services by such Person in the ordinary course
of the business of such Person;

(b) such Credit Card Receivables are not past due (beyond any stated applicable
grace period, if any, therefor) pursuant to the terms set forth in the Credit
Card Agreements with the Credit Card Issuer or Credit Card Processor of the
credit card or debit card used in the purchase which give rise to such Credit
Card Receivables;

(c) such Credit Card Receivables are not unpaid more than five (5) Business Days
after the date of the sale of Inventory giving rise to such Credit Card
Receivables;

 

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(d) the Credit Card Issuer or Credit Card Processor obligated in respect of such
Credit Card Receivable has not failed to remit any monthly payment in respect of
such Credit Card Receivable;

(e) the Credit Card Issuer or Credit Card Processor with respect to such Credit
Card Receivables has not asserted a counterclaim, defense or dispute against
such Credit Card Receivables (other than customary set-offs to fees and
chargebacks consistent with the practices of such Credit Card Issuer or Credit
Card Processor with such Person from time to time), but the portion of the
Credit Card Receivables owing by such Credit Card Issuer or Credit Card
Processor in excess of the amount owing by such Person to such Credit Card
Issuer or Credit Card Processor pursuant to such fees and chargebacks shall be
deemed Eligible Credit Card Receivables;

(f) the Credit Card Issuer or Credit Card Processor with respect to such Credit
Card Receivables has not set off against amounts otherwise payable by such
Credit Card Issuer or Credit Card Processor to such Person for the purpose of
establishing a reserve or collateral for obligations of such Person to such
Credit Card Issuer or Credit Card Processor (other than customary set-offs and
chargebacks consistent with the practices of such Credit Card Issuer or Credit
Card Processor from time to time) but the portion of the Credit Card Receivables
owing by such Credit Card Issuer or Credit Card Processor in excess of the
set-off amounts shall be deemed Eligible Credit Card Receivables;

(g) such Credit Card Receivables (x) are owned by the Borrower or a Subsidiary
Guarantor and such Person has a good title to such Credit Card Receivables,
(y) are subject to the first priority, valid and perfected security interest and
Lien of Administrative Agent (subject only to Liens permitted under Section 9.1
having priority by operation of applicable Law over the Liens of the Collateral
Agent), for and on behalf of itself and Lenders, as to such Credit Card
Receivables of such Person and (z) are not subject to any other Lien (other than
(1) Liens permitted hereunder pursuant to clauses (a), (c), (d), (h) and (aa) of
Section 9.1 and (2) Liens permitted under Section 9.1 (including clause (w)
thereof) securing the Obligations (as defined under the Term Facility Credit
Agreement) (subject to the terms of the Intercreditor Agreement)) (the foregoing
clauses (y) and (z) (other than in respect of the immediately foregoing
clause (2)) not being intended to limit the ability of the Administrative Agent
to change, establish or eliminate any Reserves in its Permitted Discretion on
account of any such permitted Liens);

(h) the Credit Card Issuer or Credit Card Processor with respect to such Credit
Card Receivables is not subject to an event of the type described in
Section 10.1(f);

(i) no event of default has occurred under the Credit Card Agreement of such
Person with the Credit Card Issuer or Credit Card Processor who has issued the
credit card or debit card or handles payments under the credit card or debit
card used in the sale which gave rise to such Credit Card Receivables which
event of default gives such Credit Card Issuer or Credit Card Processor the
right to cease or suspend payments to such Person;

 

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(j) the customer using the credit card or debit card giving rise to such Credit
Card Receivable shall not have returned the merchandise purchased giving rise to
such Credit Card Receivable;

(k) to the extent required by Section 8.12(b), the Credit Card Receivables are
subject to Credit Card Notifications;

(l) the Credit Card Processor is organized and has its principal offices or
assets within the United States or Canada or is otherwise acceptable to the
Administrative Agent in its Permitted Discretion;

(m) such Credit Card Receivables are not evidenced by chattel paper or an
instrument of any kind, and have not been reduced to judgment;

(n) the portion of such Credit Card Receivables that does not include a billing
for interest, fees or late charges; and

(o) in the case of a Credit Card Receivable due from a Credit Card Processor
(other than Bank of America, Paymentech, LLC, First Data, Alliance Data or any
of their respective Affiliates), the Administrative Agent has not notified the
Borrower that the Administrative Agent has determined in its Permitted
Discretion that such Credit Card Receivable is unlikely to be collected.

Credit Card Receivables which would otherwise constitute Eligible Credit Card
Receivables pursuant to this Section will not be deemed ineligible solely by
virtue of the Credit Card Agreements with respect thereto having been entered
into by any Guarantor, for the benefit of Borrower. Any Credit Card Receivables
which are not Eligible Credit Card Receivables shall nevertheless be part of the
Collateral.

“Eligible In-Transit Inventory” means, as of any date of determination, without
duplication of other Eligible Inventory or Eligible Letter of Credit Inventory,
Inventory of the Borrower or a Subsidiary Guarantor which meets the following
criteria:

(a) such Inventory has been shipped from any foreign location to a United States
or Canadian location for receipt by the Borrower or a Subsidiary Guarantor
within sixty (60) days of the date of determination and has not yet been
received by the Borrower or a Subsidiary Guarantor,

(b) the purchase order for such Inventory is in the name of the Borrower or a
Subsidiary Guarantor and title has passed to the Borrower or a Subsidiary
Guarantor,

(c) either (i) such Inventory is subject to a negotiable document of title, in
form reasonably satisfactory to the Administrative Agent, which shall, except as
otherwise agreed by the Administrative Agent in its Permitted Discretion, have
been endorsed to the Administrative Agent or an agent acting on its behalf or
(ii) such Inventory is evidenced by a non-negotiable document of title in form
reasonably acceptable to the Administrative Agent, or other shipping document
reasonably acceptable to the Administrative Agent, which names the Borrower or a
Subsidiary Guarantor as consignee,

 

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(d) during the continuation of any In-Transit Trigger Period, (i) each relevant
freight carrier, freight forwarder, customs broker, shipping company or other
Person in possession of such Inventory and/or the documents relating to such
Inventory, in each case, as reasonably requested by Administrative Agent, shall
have entered into a Customs Broker Agreement and (ii) as reasonably requested by
the Administrative Agent, the documents relating to such Inventory shall be in
the possession of the Administrative Agent or an agent (or sub-agent) acting on
its behalf,

(e) such Inventory is insured in accordance with the provisions of this
Agreement and the other Loan Documents, including marine cargo insurance,

(f) such Inventory is subject, to the reasonable satisfaction of the
Administrative Agent, to a first priority perfected security interest in and
lien upon such Inventory in favor of the Administrative Agent (except for any
possessory lien upon such goods in the possession of a freight carrier or
shipping company securing only the freight charges for the transportation of
such goods to the Borrower or Subsidiary Guarantor), and

(g) such Inventory is not excluded from the definition of Eligible Inventory
(except solely pursuant to clauses (f), (j), (o), (p), (x) and (y) thereof);
provided that the Administrative Agent may, in its Permitted Discretion and upon
notice to the Borrower, exclude any particular Inventory from the definition of
“Eligible In-Transit Inventory” in the event that the Administrative Agent
determines in its Permitted Discretion and upon notice to the Borrower that such
Inventory is subject to any Person’s right or claim which is (or is capable of
being) senior to, or pari passu with, the Lien of the Collateral Agent (such as,
without limitation, a right of reclamation or stoppage in transit), as
applicable, or may otherwise adversely impact the ability of the Collateral
Agent to realize upon such Inventory.

Eligible In-Transit Inventory shall not include Inventory accounted for as “in
transit” by the Borrower by virtue of such Inventory’s being in transit between
the Loan Parties’ locations or in storage trailers at Loan Parties’ locations;
rather such Inventory shall be treated as “Eligible Inventory” if it satisfies
the conditions therefor.

“Eligible Inventory” means, as to the Borrower and each Subsidiary Guarantor,
Inventory consisting of finished goods merchantable and readily saleable to the
public in the ordinary course of the business of such Person but shall not
include:

(a) work-in-process;

(b) raw materials;

(c) spare parts for equipment;

(d) packaging and shipping materials;

 

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(e) supplies used or consumed in such Person’s business;

(f) Inventory (other than In-Transit Inventory as described in clause (x) below)
located at premises owned and operated by a Person other than, and not leased
by, the Borrower or any Subsidiary Guarantor, if the Administrative Agent shall
not have received a Collateral Access Agreement from the owner and operator with
respect to such location, duly authorized, executed and delivered by such owner
and operator (or the Administrative Agent shall determine to accept a Collateral
Access Agreement that does not include all required provisions or provisions in
the form otherwise required by the Administrative Agent), unless the
Administrative Agent has, at its option, established such Availability Reserves
in respect of amounts at any time due or to become due to the owner and operator
thereof as the Administrative Agent shall determine in its Permitted Discretion;

(g) [reserved];

(h) bill and hold goods;

(i) obsolete, unmerchantable, “seconds”, used, unfit for sale or slow moving
Inventory;

(j) Inventory (i) which is not subject to the first priority, valid and
perfected security interest of the Collateral Agent (subject only to Liens
permitted under Section 9.1 having priority by operation of applicable Law over
the Liens of the Collateral Agent) or (ii) which is subject to any other Lien
(other than (x) Liens permitted hereunder pursuant to clauses (a), (c), (d),
(h), (q) and (aa) of Section 9.1 and (y) Liens permitted under Section 9.1
(including clause (w) thereof) securing the Obligations (as defined under the
Term Facility Credit Agreement) (subject to the terms of the Intercreditor
Agreement)) (the foregoing clauses (i) and (ii) (other than in respect of the
immediately foregoing clause (y)) not being intended to limit the ability of the
Administrative Agent to change, establish or eliminate any Reserves in its
Permitted Discretion on account of any such permitted Liens);

(k) damaged and/or defective Inventory;

(l) returned Inventory which is not held for sale in the ordinary course of
business;

(m) Inventory purchased or sold on consignment;

(n) Inventory acquired in a Permitted Acquisition, unless (i) such Inventory
otherwise meets the requirements of Eligible Inventory and (ii) the
Administrative Agent has completed or received (A) an appraisal of such
Inventory from appraisers reasonably satisfactory to the Administrative Agent,
and established Inventory Reserves (if applicable) therefor and (B) such other
due diligence as the Administrative Agent may require in its Permitted
Discretion, all of the results of the foregoing to be satisfactory to the
Administrative Agent in its Permitted Discretion (provided, it is agreed that so
long as the Administrative Agent has received reasonable prior notice of such
Permitted

 

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Acquisition and the Loan Parties reasonably cooperate (and cause the Person
being acquired to reasonably cooperate) with the Administrative Agent, the
Administrative Agent shall use reasonable best efforts to complete such due
diligence and a related appraisal on or prior to the closing date of such
Permitted Acquisition);

(o) Inventory that is not solely owned by the applicable Loan Party or the
applicable Loan Party does not have good and valid title thereto;

(p) Inventory that is not located in the United States (excluding territories or
possessions of the United States) or Canada; provided that Inventory located in
Canada shall not account for more than 10% of Eligible Inventory at any time (or
such greater percentage as the Administrative Agent in its Permitted Discretion
may establish in consultation with the Borrower pursuant to its receipt of a
recent appraisal thereof from an appraiser and in form and detail reasonably
acceptable to the Administrative Agent);

(q) custom items;

(r) spare parts, promotional, marketing, packaging and shipping materials or
supplies used or consumed in a Loan Party’s business;

(s) samples, labels, bags, packaging, and other similar non-merchandise
categories;

(t) are not in material compliance with all standards imposed by any
Governmental Authority having regulatory authority over such Inventory, its use
or sale;

(u) Inventory that is not insured in compliance with this Agreement;

(v) Inventory that has been sold but not yet delivered or as to which the
Borrower has accepted a deposit;

(w) Inventory that is subject to any licensing, patent, royalty, trademark,
trade name or copyright agreement with any third party from which the Borrower
or any of its Subsidiaries has received notice of a dispute in respect of any
such agreement (but ineligibility shall be limited to the amount of such
dispute);

(x) In-Transit Inventory and Letter of Credit Inventory; and

(y) Except as otherwise agreed by the Administrative Agent in its Permitted
Discretion, Inventory that represents goods that do not conform in all material
respects to the representations and warranties contained in this Agreement or
any of the Collateral Documents.

Any Inventory which is not Eligible Inventory shall nevertheless be part of the
Collateral.

“Eligible Letter of Credit Inventory” means Letter of Credit Inventory owned or
to be owned by the Borrower or any Subsidiary Guarantor and which is (a) when
applicable,

 

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fully insured and subject to the first priority, valid and perfected security
interest and Lien of the Collateral Agent, for and on behalf of itself and the
Lenders, (b) subject to a Letter of Credit with an expiry date that is not more
than sixty (60) days from the date of the most recently delivered Borrowing Base
Certificate and (c) Inventory that, when received, would otherwise satisfy all
of the requirements of Eligible Inventory hereunder. For the avoidance of doubt,
Eligible Letter of Credit Inventory is without duplication of Eligible
In-Transit Inventory.

“EMU Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

“Entitlement Holder” has the meaning given to such term in Article 8 of the UCC.

“Entitlement Order” has the meaning given to such term in Article 8 of the UCC.

“Environmental Claim” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by any Loan
Party or any of its Subsidiaries (a) in the ordinary course of such Person’s
business or (b) as required in connection with a financing transaction or an
acquisition or disposition of real estate) or proceedings with respect to any
Environmental Liability (hereinafter “Claims”), including (i) any and all Claims
by governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any Environmental Law
and (ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief pursuant to
any Environmental Law.

“Environmental Laws” means any and all Laws relating to the protection of the
environment or, to the extent relating to exposure to Hazardous Materials, human
health.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities) of any Loan Party or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

“Equity Contribution” means, collectively, (a) the contribution by the Sponsors,
the Co-Investors and the Management Stockholders of an aggregate amount of cash,
which, together with any rollover equity, will constitute an aggregate amount
(together with any amounts otherwise paid to existing equity holders for Equity
Interests in the Borrower in connection with the Transaction) sufficient, after
taking into account the proceeds of the Facility and any Senior Notes received
on the Effective Date and cash on hand of the Borrower, to fund the total amount
required to finance the Transaction to Holdings or one or more direct or
indirect holding company parents of Holdings, and (b) the further contribution
to Merger Sub of any portion of such cash contribution proceeds not directly
received by Merger Sub or used by Holdings to pay Transaction Expenses.

 

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“Equity Interests” means, with respect to any Person, all of the shares,
interests, rights, participations or other equivalents (however designated) of
capital stock of (or other ownership or profit interests or units in) such
Person and all of the warrants, options or other rights for the purchase,
acquisition or exchange from such Person of any of the foregoing (including
through convertible securities).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
together with any Loan Party is treated as a single employer within the meaning
of Section 414 of the Code or Section 4001 of ERISA.

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Loan Party or any of their respective ERISA Affiliates from a
Pension 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) or a
cessation of operations that is treated as a termination under Section 4062(e)
of ERISA; (c) a complete or partial withdrawal by any Loan Party or any of their
respective ERISA Affiliates from a Multiemployer Plan, written notification of
any Loan Party or any of their respective ERISA Affiliates concerning the
imposition of Withdrawal Liability or written notification that a Multiemployer
Plan is insolvent or is in reorganization within the meaning of Title IV of
ERISA; (d) the filing under Section 4041(c) of ERISA of a notice of intent to
terminate a Pension Plan, the treatment of a Pension Plan or Multiemployer Plan
amendment as a termination under Sections 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) the imposition of any liability under Title IV of ERISA
with respect to the termination of any Pension Plan or Multiemployer Plan, other
than for the payment of plan contributions or PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon any Loan Party or any of their
respective ERISA Affiliates, (f) the application for a minimum funding waiver
under Section 302(c) of ERISA with respect to a Pension Plan, (g) the imposition
of a lien under Section 303(k) of ERISA with respect to any Pension Plan or
(h) a determination that any Pension Plan is in “at risk” status (within the
meaning of Section 303 of ERISA).

“Euro”, “Euros”, “EUR” or “€” shall mean the lawful currency of the
Participating Member States introduced in accordance with the EMU Legislation.

“Eurocurrency Rate” means:

(a) for any Interest Period with respect to a Eurocurrency Rate Loan, the rate
per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two (2) Business Days prior to
the commencement of such Interest Period, for deposits in the relevant currency
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period. If such rate is not available at such time for any
reason, then the “Eurocurrency Rate” for such Interest Period shall be the rate
per annum determined by the

 

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Administrative Agent to be the rate at which deposits in the relevant currency
for delivery on the first day of such Interest Period in Same Day Funds in the
approximate amount of the Eurocurrency Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch (or other Bank of America
branch or Affiliate) to major banks in the London or other offshore interbank
market for such currency at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period; and

(b) for any interest calculation with respect to a Base Rate Loan on any date,
the rate per annum equal to (i) BBA LIBOR, at approximately 11:00 a.m., London
time determined two (2) Business Days prior to such date for Dollar deposits
being delivered in the London interbank market for a term of one (1) month
commencing that day or (ii) if such published rate is not available at such time
for any reason, the rate per annum determined by the Administrative Agent to be
the rate at which deposits in Dollars for delivery on the date of determination
in same day funds in the approximate amount of the Base Rate Loan being made or
maintained and with a term equal to one (1) month would be offered by Bank of
America’s London Branch (or other Bank of America branch or Affiliate) to major
banks in the London interbank Eurodollar market at their request at the date and
time of determination.

“Eurocurrency Rate Loan” means a Loan that bears interest at a rate based on
clause (a) of the definition of Eurocurrency Rate. Eurocurrency Rate Loans may
be denominated in Dollars or in Euros.

“Event of Default” has the meaning specified in Section 10.1.

“Excess Availability” means, at any time, (a) the Maximum Credit at such time
minus (b) the aggregate Revolving Credit Outstandings at such time.

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

“Excluded Subsidiary” means (a) any Subsidiary that is not a wholly owned
Subsidiary of the Borrower or a Guarantor, (b) any Foreign Subsidiary of the
Borrower or of any direct or indirect Domestic Subsidiary or Foreign Subsidiary,
(c) any Domestic Subsidiary that is a disregarded entity for United States
Federal income tax purposes substantially all of the assets of which consist of
Equity Interests in one or more Foreign Subsidiaries, (d) any Domestic
Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary,
(e) any Subsidiary that is prohibited or restricted by applicable Law from
providing a Guaranty or if such Guaranty would require governmental (including
regulatory) consent, approval, license or authorization, (f) any special purpose
securitization vehicle (or similar entity), (g) any Subsidiary that is a
not-for-profit organization, (h) any other Subsidiary with respect to which, in
the reasonable judgment of the Administrative Agent (confirmed in writing by
notice to the Borrower), the cost or other consequences (including any adverse
tax consequences) of providing the Guaranty shall be excessive in view of the
benefits to be obtained by the Lenders therefrom and (i) each Unrestricted
Subsidiary.

“Existing ABL Facility” means the credit facility under that certain Second
Amended and Restated Credit Agreement, dated as of May 4, 2007, by and among J.
Crew Operating Corp., J. Crew Inc., Grace Holmes, Inc. d/b/a J. Crew Retail,
H.F.D. No. 55, Inc. d/b/a J. Crew Factory, and Madewell, Inc., as borrowers, the
Company and J. Crew International, Inc., as guarantors, Citicorp USA, Inc., as
administrative agent and collateral agent, and the lenders, other agents and
issuers from time to time party thereto.

 

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“Existing Letter of Credit” means any letter of credit previously issued for the
account of the Company or any Subsidiary Guarantor by Wells Fargo Bank, National
Association, for so long as Wells Fargo Bank, National Association is a Lender
or an Affiliate of a Lender, that is (a) outstanding on the Effective Date and
(b) listed on Schedule 1.1F.

“Existing Revolver Tranche” has the meaning specified in Section 2.17(a).

“Extended Revolving Credit Commitments” has the meaning specified in
Section 2.17(a).

“Extending Revolving Credit Lender” has the meaning specified in
Section 2.17(b).

“Extension” means any establishment of Extended Revolving Credit Commitments
pursuant to Section 2.17 and the applicable Extension Amendment.

“Extension Amendment” has the meaning specified in Section 2.17(c).

“Extension Election” has the meaning specified in Section 2.17(b).

“Extension Request” has the meaning specified in Section 2.17(a).

“Extension Series” has the meaning specified in Section 2.17(a).

“Facility” means the Revolving Credit Commitments and the provisions herein
related to the Revolving Loans, Swing Loans and Letters of Credit, Loans under
Extended Revolving Credit Commitments and Loans under New Revolving Credit
Commitments.

“FATCA” means Sections 1471 through 1474 of the Code as in effect on the date
hereof or any successor provision that is substantively the equivalent thereof
(and, in each case, any regulations promulgated thereunder or official
interpretations thereof).

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative
Agent on such day on such transactions as determined by the Administrative
Agent.

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

 

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“Fee Letter” means the Fee Letter dated November 23, 2010, among Merger Sub,
Bank of America and the Arrangers.

“Field Examination” has the meaning specified in Section 7.4(d).

“Financial Asset” has the meaning given to such term in Article 8 of the UCC.

“Financial Statements” means the financial statements of the Borrower and its
Subsidiaries delivered in accordance with Sections 7.1(a) and 7.1(b).

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of the Borrower and its Subsidiaries ending
on the Saturday closest to January 31 in the following calendar year.

“Fixed Charge Coverage Ratio” means, with respect to any Person for any Test
Period, the ratio of (a) (i) Consolidated EBITDA of such Person for such period
minus (ii) Capital Expenditures minus (iii) Cash Taxes, in each case in this
clause (a), for such Test Period, to (b) the Fixed Charges of such Person for
such period.

“Fixed Charges” means, with respect to any Person for any Test Period, the sum,
determined on a Consolidated basis, of (a) the Consolidated Net Cash Interest
Expense of such Person and its Subsidiaries for such period plus (b) scheduled
payments of principal on Indebtedness for borrowed money of such Person and its
Subsidiaries due and payable during such period.

“Foreign Lender” has the meaning specified in Section 3.1(b).

“Foreign Plan” means any material employee benefit plan, program or agreement
maintained or contributed to by, or entered into with, Holdings or any
Subsidiary of Holdings with respect to employees employed outside the United
States (other than benefit plans, programs or agreements that are mandated by
applicable Laws).

“Foreign Subsidiary” means any direct or indirect Restricted Subsidiary of the
Borrower that is not a Domestic Subsidiary.

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with
respect to an Issuer, such Defaulting Lender’s Applicable Percentage of the
outstanding Letter of Credit Obligations to the extent that such Defaulting
Lender’s Applicable Percentage of such outstanding Letter of Credit Obligations
has not been reallocated pursuant to Section 2.16(a)(iv) or Cash Collateralized
pursuant to Section 2.16(c), and (b) with respect to the Swing Loan Lender, such
Defaulting Lender’s Applicable Percentage of Swing Loans to the extent that such
Defaulting Lender’s Applicable Percentage of Swing Loans has not been
reallocated pursuant to Section 2.16(a)(iv) or Cash Collateralized pursuant to
Section 2.16(c).

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

 

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“GAAP” means generally accepted accounting principles in the United States, as
in effect from time to time; provided, however, that if the Borrower notifies
the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Effective Date in GAAP or in the application thereof (including through the
adoption of IFRS) on the operation of such provision (or if the Administrative
Agent notifies the Borrower that the Requisite Lenders request an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof
(including through the adoption of IFRS), then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

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

“Granting Lender” has the meaning specified in Section 12.2(g).

“Guarantee” means, as to any Person, without duplication, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other monetary obligation, (ii) to purchase or
lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or monetary other obligation of the payment or
performance of such Indebtedness or other monetary obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or other monetary obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other monetary obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other monetary obligation of any other Person, whether or not
such Indebtedness or monetary other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien); provided that the term “Guarantee” shall not include endorsements
for collection or deposit, in either case in the ordinary course of business, or
customary and reasonable indemnity obligations in effect on the Effective Date
or entered into in connection with any acquisition or disposition of assets
permitted under this Agreement (other than such obligations with respect to
Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a
verb has a corresponding meaning.

 

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“Guarantors” has the meaning specified in the definition of “Collateral and
Guarantee Requirement”. For avoidance of doubt, the Borrower may cause any
Restricted Subsidiary that is not a Guarantor to Guarantee the Obligations by
causing such Restricted Subsidiary to execute a supplement to the Guaranty in
substantially the form attached thereto, and any such Restricted Subsidiary
shall be a Guarantor hereunder and thereunder for all purposes.

“Guaranty” means (a) the guaranty made by Holdings and the other Guarantors in
favor of the Administrative Agent on behalf of the Secured Parties pursuant to
clause (b) of the definition of “Collateral and Guarantee Requirement,”
substantially in the form of Exhibit H, and (b) each other guaranty and guaranty
supplement delivered pursuant to Section 8.11.

“Hazardous Materials” means all explosive or radioactive substances or wastes,
all hazardous or toxic substances, and all wastes or pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas and infectious or medical wastes regulated
pursuant to any Environmental Law.

“Hedge Bank” means, with respect to any Swap Contract, as of any date of
determination, (a) any Person that is a Lender or an Affiliate of a Lender on
such date or (b) any Person who (i) was a Lender or an Affiliate of a Lender at
the time such Swap Contract was entered into and who is no longer a Lender or an
Affiliate of a Lender, (ii) is, and at all times remains, in compliance with the
provisions of Section 11.13(b)(i) and (iii) agrees in writing that the Agents
and the other Secured Parties shall have no duty to such Person (other than the
payment of any amounts to which such Person may be entitled under Section 10.3)
and acknowledges that the Agents and the other Secured Parties may deal with the
Loan Parties and the Collateral as they deem appropriate (including the release
of any Loan Party or all or any portion of the Collateral) without notice or
consent from such Person, whether or not such action impairs the ability of such
Person to be repaid Obligations owing to it in respect of the Secured Hedge
Agreements to which it is a party) and agrees to be bound by
Section 11.13(b)(ii).

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

“IFRS” means international accounting standards within the meaning of the IAS
Regulation 1606/2002 to the extent applicable to the relevant financial
statements.

“In-Transit Advance Rate” means 85%.

“In-Transit Inventory” means Inventory located outside of the United States or
Canada or in transit within or outside of the United States or Canada to the
Borrower or any Subsidiary Guarantor from vendors and suppliers that has not yet
been received into a distribution center or store of such Person.

“In-Transit Trigger Period” means the period beginning on the date on which the
Borrower has failed to maintain Excess Availability at least equal to the
greater of (a) twenty-five percent (25%) of the Maximum Credit or
(b) $40,000,000, in either case, for five (5) consecutive Business Days, and
ending on the date Excess Availability shall have been equal to or greater than
the greater of (x) 25% of the Maximum Credit and (y) $40,000,000, in each case,
for thirty (30) consecutive calendar days.

 

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“Incremental Amendment” has the meaning specified in Section 2.15.

“Incremental Availability” has the meaning specified in Section 2.15(a).

“Incremental Facility Effective Date” has the meaning specified in Section 2.15.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) the maximum amount (after giving effect to any prior drawings or reductions
that may have been reimbursed) of all letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds, performance
bonds and similar instruments issued or created by or for the account of such
Person;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than (i) trade accounts and accrued expenses payable
in the ordinary course of business, (ii) any earn-out obligation until such
obligation is not paid after becoming due and payable and (iii) accruals for
payroll and other liabilities accrued in the ordinary course of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements and mortgage,
industrial revenue bond, industrial development bond and similar financings),
whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;

(f) all Attributable Indebtedness;

(g) all obligations of such Person in respect of Disqualified Equity Interests;
and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include (A) the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Person’s
liability for such Indebtedness is otherwise limited and only to the extent such
Indebtedness would be included in the calculation of Consolidated Total Debt and
(B) in the case of Restricted Subsidiaries that are not Loan Parties, exclude
loans and advances made by Loan Parties having a term not exceeding 364 days
(inclusive of any roll over or extensions of terms) and made in the ordinary
course of business solely to the extent that

 

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such intercompany loans and advances are evidenced by one or more notes in form
and substance reasonably satisfactory to the Administrative Agent and pledged as
Collateral. The amount of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date. The
amount of Indebtedness of any Person for purposes of clause (e) shall be deemed
to be equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value (as determined by such Person in
good faith) of the property encumbered thereby as determined by such Person in
good faith.

“Indemnified Liabilities” has the meaning specified in Section 12.4(a).

“Indemnitees” has the meaning specified in Section 12.4(a).

“Independent Financial Advisor” means an accounting, appraisal, investment
banking firm or consultant of nationally recognized standing that is, in the
good faith judgment of the Borrower, qualified to perform the task for which it
has been engaged and that is independent of the Borrower and its Affiliates.

“Information” has the meaning specified in Section 12.19.

“Initial Inventory Appraisal” means that certain report prepared by Great
American Group for the Arrangers and the Administrative Agent dated January
2011.

“Intellectual Property” has the meaning specified in the Security Agreement.

“Intellectual Property Security Agreements” has the meaning specified in the
Security Agreement.

“Intercompany Subordination Agreement” means an agreement executed by each
Restricted Subsidiary of the Borrower, in substantially the form of Exhibit L.

“Intercreditor Agreement” means the intercreditor agreement dated as of the date
hereof among Holdings, the Borrower, the Administrative Agent, the Collateral
Agent and the Term Facility Administrative Agent, substantially in the form
attached as Exhibit K, as amended, restated, supplemented or otherwise modified
from time to time in accordance therewith and herewith.

“Interest Period” means, as to each Eurocurrency Rate Loan or any BA Rate Loan,
the period commencing on the date such Eurocurrency Rate Loan or BA Rate Loan is
disbursed or converted to or continued as a Eurocurrency Rate Loan or BA Rate
Loan and ending on the date one, two, three or six months thereafter, or to the
extent consented to by each applicable Lender, nine or twelve months (or such
period of less than one month as may be consented to by each applicable Lender),
as selected by the Borrower in its Notice of Borrowing or Notice of Conversion
or Continuation; provided that:

(a) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;

 

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(b) any Interest Period (other than an Interest Period having a duration of less
than one month) 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 the
calendar month at the end of such Interest Period; and

(c) no Interest Period shall extend beyond the applicable Scheduled Termination
Date of the Class of Loans of which the Eurocurrency Rate Loan is a part.

“Inventory” has the meaning given to such term in Article 9 of the UCC.

“Inventory Advance Rate” (a) during the period from August 1 of any Fiscal Year
through and including December 31 of such Fiscal Year, 92.5% and (b) at all
other times, 90%.

“Inventory Reserves” means (a) such reserves as may be established from time to
time by the Administrative Agent, in its Permitted Discretion, with respect to
changes in the determination of the saleability, at retail, of the Eligible
Inventory or which reflect such other factors as negatively affect the market
value of the Eligible Inventory and (b) Shrink Reserves.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition (including without limitation by merger or otherwise) of Equity
Interests or debt or other securities of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of Indebtedness of, or purchase
or other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person (excluding, in the case of the Borrower and its Restricted
Subsidiaries, intercompany loans, advances, or Indebtedness having a term not
exceeding 364 days (inclusive of any roll-over or extensions of terms) and made
in the ordinary course of business) or (c) the purchase or other acquisition (in
one transaction or a series of transactions, including without limitation by
merger or otherwise) of all or substantially all of the property and assets or
business of another Person or assets constituting a business unit, line of
business or division of such Person. For purposes of covenant compliance, the
amount of any Investment at any time shall be the amount actually invested
(measured at the time made), without adjustment for subsequent changes in the
value of such Investment, net of any return representing a return of capital
with respect to such Investment.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s and BBB (or the equivalent) by S&P, or an equivalent
rating by any other nationally recognized statistical rating agency selected by
the Borrower.

“IP Rights” has the meaning specified in Section 5.15.

“IRS” means the Internal Revenue Service of the United States.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

 

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“Issue” means, with respect to any Letter of Credit, to issue, extend the expiry
of, amend, renew or increase the maximum face amount (including by deleting or
reducing any scheduled decrease in such maximum face amount) of, such Letter of
Credit. The terms “Issued”, “Issuing” and “Issuance” shall have a corresponding
meaning.

“Issuer” means Bank of America and each other Lender or Affiliate of a Lender
that (a) is listed on the signature pages hereof as an “Issuer”, (b) hereafter
becomes an Issuer with the approval of the Administrative Agent and the Borrower
by agreeing pursuant to an agreement with and in form and substance satisfactory
to the Administrative Agent and the Borrower to be bound by the terms hereof
applicable to Issuers (and in the case of any resignation, subject to and in
accordance with Section 12.2(h)) and (c) solely with respect to any Existing
Letter of Credit, Wells Fargo Bank, National Association.

“Issuer Documents” means, with respect to any Letter of Credit, the Letter of
Credit Request, and any other document, agreement and instrument entered into by
an Issuer and the Borrower (or any of its Subsidiaries) or in favor of such
Issuer and relating to such Letter of Credit.

“J. Crew Card” means the private label credit card issued by World Financial
Network National Bank pursuant to the Credit Card Agreement of the Borrower with
such bank (or any subsequent Credit Card Issuer with respect to such private
label credit card) to customers or prospective customers of the Borrower or a
Subsidiary Guarantor.

“Joint Bookrunner” means each of Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman Sachs Bank USA.

“Joint Venture” means (a) any Person which would constitute an “equity method
investee” of the Borrower or any of the Restricted Subsidiaries and (b) any
Person in whom the Borrower or any of the Restricted Subsidiaries beneficially
owns any Equity Interest that is not a Restricted Subsidiary (other than an
Unrestricted Subsidiary).

“Judgment Currency” has the meaning specified in Section 12.10.

“Junior Financing” means the Senior Notes or any other Indebtedness of a Loan
Party (other than Holdings) that is unsecured or subordinated to the Obligations
expressly by its terms (other than Indebtedness among the Borrower and its
Restricted Subsidiaries).

“Junior Financing Documentation” means any documentation governing any Junior
Financing.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

“Landlord Lien State” means any state in which, at any time, a landlord’s claim
for rent has priority notwithstanding any contractual provision to the contrary
by operation of applicable Law over the lien of the Collateral Agent in any of
the Collateral.

 

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“Latest Maturity Date” means, at any date of determination, the latest Scheduled
Termination Date applicable to any Loan or Revolving Credit Commitment hereunder
at such time, including the latest termination date of any Extended Revolving
Credit Commitment or New Revolving Credit Commitment, as applicable, as extended
in accordance with this Agreement from time to time.

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities and executive orders,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority.

“Leases” means, with respect to any Person, all of those leasehold estates in
Real Property of such Person, as lessee, as such may be amended, supplemented or
otherwise modified from time to time.

“Lender” means the Swing Loan Lender, Revolving Credit Lender and each other
financial institution or other entity that (a) is listed on the signature pages
hereof as a “Lender” or (b) from time to time becomes a party hereto by
execution of an Assignment and Assumption or, in connection with a Revolving
Commitment Increase, an Incremental Amendment or, in connection with an Extended
Revolving Credit Commitment or a New Revolving Credit Commitment, an Extension
Amendment.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

“Letter of Credit” means any letter of credit Issued (or deemed Issued) pursuant
to Section 2.4 and any Existing Letter of Credit. A Letter of Credit may be a
Documentary Letter of Credit or a Standby Letter of Credit.

“Letter of Credit Advance Rate” means 85%.

“Letter of Credit Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit that has not been reimbursed on the
applicable Reimbursement Date or refinanced as a Revolving Loan.

“Letter of Credit Fee” has the meaning specified in Section 2.12(b).

“Letter of Credit Inventory” means Inventory the purchase of which is financed
with Letters of Credit hereunder, (a) which Inventory does not constitute
Eligible Inventory or Eligible In-Transit Inventory and for which no document of
title has been issued and (b) which Inventory, when purchased, would otherwise
constitute Eligible In-Transit Inventory.

“Letter of Credit Obligations” means, at any time, the Dollar Equivalent of the
aggregate of all liabilities at such time of any Loan Party to all Issuers with
respect to Letters of Credit, whether or not any such liability is contingent,
including, without duplication, the sum of (a) the Reimbursement Obligations at
such time and (b) the Letter of Credit Undrawn Amounts at such time.

 

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“Letter of Credit Reimbursement Agreement” has the meaning specified in
clause (v) of the proviso to clause (a) of Section 2.4.

“Letter of Credit Request” has the meaning specified in Section 2.4(c).

“Letter of Credit Undrawn Amounts” means, at any time, the aggregate undrawn
face amount of all Letters of Credit outstanding at such time.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing); provided, that in no event shall an operating
lease in and of itself be deemed a Lien.

“Lien Acknowledgment Agreement” means each Collateral Access Agreement and
Customs Broker Agreement.

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

“Loan” means any loan made by any Lender pursuant to this Agreement, including
Swing Loans and any Loans made in respect of any Revolving Commitment Increase.

“Loan Documents” means, collectively, (a) this Agreement, (b) the Revolving
Credit Notes, (c) any Incremental Amendment and any Extension Amendment, (d) the
Guaranty, (e) the Fee Letter, (f) each Letter of Credit Reimbursement Agreement,
(g) the Collateral Documents and (h) the Issuer Documents.

“Loan Parties” means, collectively, (a) Holdings, (b) the Borrower and (c) each
other Guarantor.

“Madewell Business” means any business conducted by Madewell, Inc., a Delaware
corporation and wholly owned subsidiary of the Borrower, and its Subsidiaries on
the Effective Date and any business or other activities that are reasonably
similar, ancillary, complementary or related to, or a reasonable extension,
development or expansion of, the businesses conducted by Madewell, Inc. on the
Effective Date, including any trademarks or trade names exclusively used in the
Madewell Business now or in the future but excluding for the avoidance of doubt
any trademarks or trade names owned by the Borrower or any of its Subsidiaries
(other than Madewell, Inc. and its Subsidiaries) on the Effective Date.

 

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“Management Stockholders” means the members of management of Holdings or any of
its Subsidiaries who are investors in Holdings or any direct or indirect parent
thereof.

“Margin Stock” has the meaning set forth in Regulation U of the Board of
Governors of the United States Federal Reserve System, or any successor thereto.

“Master Agreement” has the meaning specified in the definition of “Swap
Contract.”

“Material Adverse Effect” means any event, circumstance or condition that has
had a materially adverse effect on (a) the business, operations, assets,
liabilities (actual or contingent) or financial condition of Holdings and its
Subsidiaries, taken as a whole, (b) the ability of the Loan Parties (taken as a
whole) to perform their respective payment obligations under any Loan Document
to which any of the Loan Parties is a party or (c) the rights and remedies of
the Lenders, the Collateral Agent or the Administrative Agent under any Loan
Document.

“Material Bank Accounts” has the meaning specified in Section 8.12.

“Material Domestic Subsidiary” means, at any date of determination, each of the
Borrower’s Domestic Subsidiaries (a) whose total assets at the last day of the
most recent Test Period for which financial statements have been or are required
to have been delivered pursuant to Section 7.1(a) or (b) were equal to or
greater than 2.5% of Total Assets at such date or (b) whose gross revenues for
such Test Period were equal to or greater than 2.5% of the consolidated gross
revenues of the Borrower and the Restricted Subsidiaries for such period, in
each case determined in accordance with GAAP; provided that if, at any time and
from time to time after the Effective Date, Domestic Subsidiaries that are not
Guarantors solely because they do not meet the thresholds set forth in
clauses (a) or (b) comprise in the aggregate more than 5.0% of Total Assets as
of the end of the most recently ended Fiscal Quarter of the Borrower for which
financial statements have been delivered pursuant to Section 7.1 or more than
5.0% of the consolidated gross revenues of the Borrower and the Restricted
Subsidiaries for the period of four consecutive Fiscal Quarters ending as of the
last day of such Fiscal Quarter, then the Borrower shall, not later than
forty-five (45) days after the date by which financial statements for such
quarter are required to be delivered pursuant to this Agreement (or such longer
period as may be agreed by the Administrative Agent in its reasonable
discretion), (i) designate in writing to the Administrative Agent one or more of
such Domestic Subsidiaries as “Material Domestic Subsidiaries” to the extent
required such that the foregoing condition ceases to be true and (ii) comply
with the provisions of Sections 8.11, 8.12 and 8.13 applicable to such
Subsidiary.

“Material Foreign Subsidiary” means, at any date of determination, each of the
Borrower’s Foreign Subsidiaries (a) whose total assets at the last day of the
most recent Test Period for which financial statements have been or are required
to have been delivered pursuant to Section 7.1(a) or (b) were equal to or
greater than 2.5% of Total Assets at such date or (b) whose gross revenues for
such Test Period were equal to or greater than 2.5% of the consolidated gross
revenues of the Borrower and the Restricted Subsidiaries for such period, in
each case determined in accordance with GAAP.

 

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“Material Indebtedness” means Indebtedness having an aggregate outstanding
principal amount of $35,000,000 or more.

“Material Real Property” means any real property owned by any Loan Party with a
fair market value in excess of $5,000,000.

“Material Subsidiary” means any Material Domestic Subsidiary or any Material
Foreign Subsidiary.

“Maximum Credit” means, at any time, the lesser of (i) the Revolving Credit
Commitments in effect at such time and (ii) the Borrowing Base at such time.

“Maximum Rate” has the meaning specified in Section 12.27.

“Merger” has the meaning specified in the preliminary statements to this
Agreement.

“Merger Agreement” means the Agreement and Plan of Merger dated as of
November 23, 2010, as amended by Amendment No. 1 dated January 18, 2011, among
Chinos Holdings, Inc., Merger Sub and the Company.

“Merger Consideration” means an amount equal to the total funds required to pay
to (i) the holder of each share of issued and outstanding common stock
(including shares of restricted stock) of the Borrower immediately prior to the
consummation of the Merger (subject to certain exceptions as set forth in the
Merger Agreement) an aggregate amount of $43.50 per share in cash and (ii) the
holders of certain outstanding options, with respect to any share of common
stock of the Borrower issuable under a particular option, an aggregate amount in
cash equal to the excess, if any, of (x) $43.50 per share and (y) the applicable
exercise price payable in respect of such share of common stock of the Borrower
issuable under such option.

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

“Monthly Borrowing Base Certificate” shall have the meaning specified in
Section 7.4(a).

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Mortgage Policies” has the meaning specified in Section 8.13(b)(ii) hereof.

“Mortgaged Properties” has the meaning specified in paragraph (e) of the
definition of “Collateral and Guarantee Requirement”.

“Mortgages” means, collectively, the deeds of trust, trust deeds, hypothecs and
mortgages made by the Loan Parties in favor or for the benefit of the Collateral
Agent on behalf of the Lenders in form and substance reasonably satisfactory to
the Collateral Agent, and any other mortgages executed and delivered pursuant to
Sections 8.11, 8.12 or 8.13.

 

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“Multiemployer Plan” means any multiemployer plan as defined in
Section 4001(a)(3) of ERISA and subject to Title IV of ERISA, to which any Loan
Party or any of their respective ERISA Affiliates makes or is obligated to make
contributions, or during the preceding five plan years has made or been
obligated to make contributions.

“Net Cash Proceeds”

(a) with respect to the Disposition of any asset by the Borrower or any of the
Restricted Subsidiaries, the excess, if any, of (i) the sum of cash and Cash
Equivalents received in connection with such Disposition (including any cash and
Cash Equivalents received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) over (ii) the sum of (A) the principal amount, premium or penalty, if
any, interest and other amounts on any Indebtedness that is secured by the asset
subject to such Disposition and that is required to be repaid in connection with
such Disposition (other than Indebtedness under the Loan Documents or the Term
Facility Documentation or any Permitted Refinancing of the Indebtedness under
the Term Facility Documentation), (B) the out-of-pocket fees and expenses
(including attorneys’ fees, investment banking fees, survey costs, title
insurance premiums, and related search and recording charges, transfer taxes,
deed or mortgage recording taxes, other customary expenses and brokerage,
consultant and other customary fees) actually incurred by the Borrower or such
Restricted Subsidiary in connection with such Disposition, (C) taxes or
distributions made pursuant to Section 9.6(g)(i) or (g)(ii) paid or reasonably
estimated to be payable in connection therewith (including taxes imposed on the
distribution or repatriation of any such Net Cash Proceeds), (D) in the case of
any Disposition by a non-wholly owned Restricted Subsidiary, the pro rata
portion of the Net Cash Proceeds thereof (calculated without regard to this
clause (D)) attributable to minority interests and not available for
distribution to or for the account of the Borrower or a wholly owned Restricted
Subsidiary as a result thereof, and (E) any reserve for adjustment in respect of
(x) the sale price of such asset or assets established in accordance with GAAP
and (y) any liabilities associated with such asset or assets and retained by the
Borrower or any Restricted Subsidiary after such sale or other disposition
thereof, including pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction, it being understood that “Net Cash
Proceeds” shall include the amount of any reversal (without the satisfaction of
any applicable liabilities in cash in a corresponding amount) of any reserve
described in this clause (E); and

(b) (i) with respect to the incurrence or issuance of any Indebtedness by the
Borrower or any Restricted Subsidiary or any Permitted Equity Issuance by the
Borrower or any direct or indirect parent of the Borrower, the excess, if any,
of (A) the sum of the cash and Cash Equivalents received in connection with such
incurrence or issuance over (B) the investment banking fees, underwriting
discounts, commissions, costs and other out-of-pocket expenses and other
customary expenses, incurred by the Borrower or such Restricted Subsidiary in
connection with such incurrence or issuance and (ii) with respect to any
Permitted Equity Issuance by any direct or indirect parent of the Borrower, the
amount of cash from such Permitted Equity Issuance contributed to the capital of
the Borrower.

 

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“Net Income” means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends.

“Net Recovery Percentage” means the fraction, expressed as a percentage, (a) the
numerator of which is the amount equal to the recovery on the aggregate amount
of the Inventory at such time on a “going out of business sale” basis as set
forth in the most recent appraisal of Inventory received by the Administrative
Agent in accordance with Section 7.4, net of operating expenses, liquidation
expenses and commissions, and (b) the denominator of which is the applicable
original cost of the aggregate amount of the Inventory subject to appraisal. The
Net Recovery Percentage for any category of Inventory used in determining the
Borrowing Base shall be based on the applicable percentage in the most recent
appraisal conducted as set forth in Section 7.4.

“New Revolving Commitment Lenders” has the meaning specified in Section 2.17(c).

“Non-Bank Certificate” has the meaning specified in Section 3.1(b).

“Non-Consenting Lender” has the meaning specified in Section 3.7.

“Non-Core Business Segment” means any business segment or separate department of
the Loan Parties which contributed less than 5% of Consolidated EBITDA of the
Loan Parties as of the Fiscal Year immediately prior to the date of such
calculation.

“Non-Loan Party” means any Subsidiary of the Borrower that is not a Loan Party.

“Notice of Borrowing” has the meaning specified in Section 2.2.

“Notice of Conversion or Continuation” has the meaning specified in
Section 2.11(a).

“Notice of Intent to Cure” has the meaning specified in Section 7.2.

“Obligations” means all (a) advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding, (b) obligations of any Loan Party arising under any Secured
Hedge Agreement, and (c) Cash Management Obligations. Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under the Loan
Documents (and any of their Subsidiaries to the extent they have obligations
under the Loan Documents) include the obligation (including guarantee
obligations) to pay principal, interest, Letter of Credit, reimbursement
obligations, charges, expenses, fees, Attorney Costs, indemnities and other
amounts payable by any Loan Party under any Loan Document.

 

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“OFAC” has the meaning specified in Section 5.18.

“OID” means original issue discount.

“Other Taxes” has the meaning specified in Section 3.1.

“Outstanding Amount” means (a) with respect to the Revolving Loans and Swing
Loans on any date, the Dollar Equivalent thereof after giving effect to any
borrowings and prepayments or repayments of Revolving Loans (including any
refinancing of Letter of Credit Obligations as a Revolving Loan) and Swing
Loans, as the case may be, occurring on such date; and (b) with respect to any
Letter of Credit Obligations on any date, the Dollar Equivalent thereof on such
date after giving effect to any related extension of any Letter of Credit
occurring on such date and any other changes thereto as of such date, including
as a result of any reimbursements of outstanding Letter of Credit Obligations
(including any refinancing of outstanding Letter of Credit Obligations under
related Letters of Credit or related extensions of any Letters of Credit as a
Revolving Loan) or any reductions in the maximum amount available for drawing
under related Letters of Credit taking effect on such date.

“Overnight Rate” means, for any day, the greater of (a) the Federal Funds Rate
and (b) an overnight rate determined by the Administrative Agent, an Issuer, or
the Swing Loan Lender, as applicable, in accordance with banking industry rules
on interbank compensation.

“Participant” has the meaning specified in Section 12.2(d).

“Participant Register” has the meaning specified in Section 12.2(e).

“Participating Member State” means each state so described in any EMU
Legislation.

“Payment Conditions” means, at any time of determination, that (a) no Event of
Default exists or would arise as a result of the making of the subject Specified
Payment, (b) after giving Pro Forma Effect to such Specified Payment and
projected for the succeeding six (6) months following such Specified Payment,
Excess Availability shall be greater than the greater of (i) 15% of the Maximum
Credit and (ii) $30,000,000 and (c) the Fixed Charge Coverage Ratio as of the
end of the most recently ended Test Period for which financial statements have
been or are required to have been delivered pursuant to Section 7.1(a) or (b)
shall be greater than or equal to 1.0 to 1.0 after giving Pro Forma Effect to
such Specified Payment as if such Specified Payment (if applicable to such
calculation) had been made as of the first day of such period, and, in each
case, the Borrower shall have delivered, in accordance with Section 7.2(f)
hereof, to the Administrative Agent evidence reasonably satisfactory to the
Administrative Agent that the conditions contained in the foregoing clauses (a),
(b) and (c) have been satisfied.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or
any of their respective ERISA

 

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Affiliates or to which any Loan Party or any of their respective ERISA
Affiliates contributes or has an obligation to contribute, or in the case of a
multiple employer or other plan described in Section 4064(a) of ERISA, has made
contributions in the preceding five plan years.

“Permitted Acquisition” means the purchase or other acquisition by Holdings or
any of its Restricted Subsidiaries of property and assets or businesses of any
Person or of assets constituting a business unit, a line of business or division
of such Person, a Store or Equity Interests in a Person that, upon the
consummation thereof, will be a wholly owned Restricted Subsidiary of the
Borrower (including as a result of a merger or consolidation); provided that,
with respect to each such purchase or other acquisition:

(i) the property, assets and businesses acquired in such purchase or other
acquisition shall constitute Collateral and each applicable Loan Party and any
newly created or acquired Subsidiary (and, to the extent required under the
Collateral and Guarantee Requirement, the Subsidiaries of such created or
acquired Subsidiary) shall be Guarantors and shall have complied with the
requirements of Section 8.11 and 8.12, within the times specified therein (for
the avoidance of doubt, this clause (i) shall not override any provisions of the
Collateral and Guarantee Requirement, subject to the limit in clause
(iii) below);

(ii) the Borrower shall have delivered to the Administrative Agent (and the
Borrower shall have used commercially reasonable efforts to deliver no later
than five (5) Business Days before the date on which any such purchase or other
acquisition is consummated), on behalf of the Lenders, a certificate of a
Responsible Officer, in form and substance reasonably satisfactory to the
Administrative Agent, certifying that all of the requirements set forth in this
definition have been satisfied or will be satisfied on or prior to the
consummation of such purchase or other acquisition;

(iii) except with respect to (A) any Foreign Subsidiary and (B) Domestic
Subsidiaries up to an acquisition amount not to exceed $50,000,000 in the
aggregate for all such Domestic Subsidiaries, to the extent such Investments are
made in Persons that do not become Loan Parties, the RP Conditions shall have
been satisfied; and

(iv) the Borrower is in compliance, on a pro forma basis after giving effect to
such transaction, with the Payment Conditions.

“Permitted Discretion” means a determination made by the Administrative Agent or
the Collateral Agent (as applicable) in good faith in the exercise of its
reasonable (from the perspective of an asset-based lender) business judgment.

“Permitted Equity Issuance” means any sale or issuance of any Qualified Equity
Interests of the Borrower or any direct or indirect parent of the Borrower (in
which case the Net Cash Proceeds have been received by the Borrower as cash
common equity), in each case to the extent permitted hereunder.

“Permitted Holder” means any of (a) the Sponsor, (b) the Management Stockholders
and (c) the Co-Investors, provided that for purposes of the definition of
“Change of Control”, (i) in each of clause (a)(i), the final reference to
Permitted Holders in clause (a)(ii) and

 

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the proviso to clause (a), the Co-Investors shall not constitute Permitted
Holders at any time that they hold voting power equal to more than 20% of the
ordinary voting power of all Equity Interests collectively held by the Sponsor,
the Management Stockholders and the Co-Investors, (ii) in the final reference to
Permitted Holders in clause (a)(ii), the Co-Investors shall not constitute
Permitted Holders if they are part of the “group” referred to in clause
(a)(ii)(2) of the definition of “Change of Control” and (iii) in the
parenthetical in each of clauses (a)(ii)(1) and (2), the Co-Investors shall not
constitute Permitted Holders.

“Permitted Refinancing” means, with respect to any Person, any modification,
refinancing, refunding, renewal or extension of any Indebtedness of such Person;
provided that (a) the principal amount (or accreted value, if applicable)
thereof does not exceed the principal amount (or accreted value, if applicable)
of the Indebtedness so modified, refinanced, refunded, renewed or extended
except by an amount equal to unpaid accrued interest and premium (including
tender premiums) thereon, plus reasonable OID and upfront fees plus other fees
and expenses reasonably incurred, in connection with such modification,
refinancing, refunding, renewal or extension and by an amount equal to any
existing commitments unutilized thereunder, (b) other than with respect to a
Permitted Refinancing in respect of Indebtedness permitted pursuant to
Sections 9.3(b) and (e), such modification, refinancing, refunding, renewal or
extension has a final maturity date equal to or later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being modified,
refinanced, refunded, renewed or extended, (c) other than with respect to a
Permitted Refinancing in respect of Indebtedness permitted pursuant to
Sections 9.3(e), at the time thereof, no Event of Default shall have occurred
and be continuing, (d) if such Indebtedness being modified, refinanced,
refunded, renewed, replaced or extended is Junior Financing, (i) to the extent
such Indebtedness being modified, refinanced, refunded, renewed, replaced or
extended is subordinated in right of payment to the Obligations, such
modification, refinancing, refunding, renewal, replacement or extension is
subordinated in right of payment to the Obligations on terms at least as
favorable to the Lenders as those contained in the documentation governing the
Indebtedness being modified, refinanced, refunded, renewed or extended, (ii) the
terms and conditions (including, if applicable, as to collateral but excluding
as to subordination, pricing, premiums and optional prepayment or redemption
provisions) of any such modified, refinanced, refunded, renewed or extended
Indebtedness, taken as a whole, are not materially less favorable to the Loan
Parties or the Lenders than the terms and conditions of the Indebtedness being
modified, refinanced, refunded, renewed or extended; provided that a certificate
of a Responsible Officer delivered to the Administrative Agent at least five
(5) Business Days prior to the incurrence of such Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Indebtedness or drafts of the documentation relating thereto, stating that the
Borrower has determined in good faith that such terms and conditions satisfy the
foregoing requirement shall be conclusive evidence that such terms and
conditions satisfy the foregoing requirement unless the Administrative Agent
notifies the Borrower within such five Business Day period that it disagrees
with such determination (including a description of the basis upon which it
disagrees) and (iii) such modification, refinancing, refunding, renewal or
extension is incurred by the Person who is the obligor of the Indebtedness being
modified, refinanced, refunded, renewed or extended and no additional obligors
become liable for such Indebtedness, and (e) in the case of any Permitted
Refinancing in respect of the Term Facility, such Permitted Refinancing is
secured only by assets pursuant to one or more security agreements permitted by

 

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and subject to the Intercreditor Agreement (or another intercreditor agreement
containing terms that are at least as favorable to the Secured Parties as those
contained in the Intercreditor Agreement).

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any material “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA), other than a Foreign Plan, established by any Loan Party
or, with respect to any such plan that is subject to Section 412 of the Code or
Title IV of ERISA, any of their respective ERISA Affiliates.

“Platform” has the meaning specified in Section 7.2.

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

“Pledged Equity” has the meaning specified in the Security Agreement.

“Pro Forma Balance Sheet” has the meaning specified in Section 5.5.

“Pro Forma Basis” and “Pro Forma Effect” mean, with respect to compliance with
any test or covenant or calculation hereunder, the determination or calculation
of such test, covenant or ratio (including in connection with Specified
Transactions) in accordance with Section 1.8.

“Pro Forma Financial Statements” has the meaning specified in Section 5.5.

“Proceeds” has the meaning given to such term in Article 9 of the UCC.

“Projections” shall have the meaning specified in Section 7.1(d).

“Protective Advances” means an overadvance made or deemed to exist by the
Administrative Agent, in its discretion, which:

(a) is made to maintain, protect or preserve the Collateral and/or the Loan
Parties’ rights under the Loan Documents or which is otherwise for the benefit
of the Loan Parties; or

(b) is made to enhance the likelihood of, or to maximize the amount of,
repayment of any Obligation; or

(c) is made to pay any other amount chargeable to any Loan Party hereunder; and

(d) together with all other Protective Advances then outstanding, shall not
(i) exceed five percent (5%) of the Borrowing Base at any time or (ii) unless a
Liquidation is taking place, remain outstanding for more than forty-five
(45) consecutive Business Days, unless in each case, the Requisite Lenders
otherwise agree.

“Public Lender” has the meaning specified in Section 7.2.

 

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“Qualified Cash” means unrestricted cash or Cash Equivalents of the Borrower or
any Subsidiary Guarantor that are subject to the valid, enforceable and first
priority perfected security interest of the Collateral Agent in a Qualified Cash
Securities Account, and which cash and Cash Equivalents are not subject to any
other Lien, claim or interest (other than (A) Liens permitted hereunder pursuant
to clauses (c), (d) or (h) of Section 9.1, (B) Liens permitted under Section 9.1
(including clause (w) thereof) securing the Obligations (as defined under the
Term Facility Credit Agreement) (subject to the terms of the Intercreditor
Agreement), (C) any other Lien having priority by operation of applicable Law
over the Liens of the Collateral Agent, or (D) customary Liens or rights of
setoff of the institution maintaining such accounts permitted hereunder solely
in its capacity as a depository; provided that, for purposes of the amount of
Qualified Cash included in the calculation of Borrowing Base, such amount may be
reduced, at the Administrative Agent’s option, by any obligations owing to any
lienholder in respect of the Liens referred to in the foregoing clauses (A),
(C) and (D), and the Borrower shall provide such information with respect to
such obligations as the Administrative Agent may from time to time reasonably
request).

“Qualified Cash Securities Account” means any Approved Securities Account that
permits the Administrative Agent to deliver a notice of exclusive control and
become the sole Entitlement Holder and the only Person authorized to give
Entitlement Orders with respect thereto during the continuation of any Qualified
Cash Trigger Period and during any Cash Dominion Period.

“Qualified Cash Trigger Period” means a period beginning on the date that Excess
Availability shall have been less than the greater of (i) $40,000,000 and
(ii) 25% of the Maximum Credit, in either case, for five (5) consecutive
Business Days, and ending on the date Excess Availability shall have been equal
to or greater than the greater of (x) $40,000,000 and (y) 25% of the Maximum
Credit, in each case, for thirty (30) consecutive calendar days; provided that a
Qualified Cash Trigger Period may not deemed to have ended under this definition
on more than three (3) occasions in any period of 365 consecutive days.

“Qualified Equity Interests” means any Equity Interests that are not
Disqualified Equity Interests.

“Qualified Holding Company Debt” means unsecured Indebtedness of Holdings
(A) that is not subject to any Guarantee by any Subsidiary of Holdings, (B) that
will not mature prior to the date that is six (6) months after the Latest
Maturity Date in effect on the date of issuance or incurrence thereof, (C) that
has no scheduled amortization or scheduled payments of principal and is not
subject to mandatory redemption, repurchase, prepayment or sinking fund
obligation (it being understood that such Indebtedness may have mandatory
prepayment, repurchase or redemption provisions satisfying the requirements of
clause (E) below), (D) that does not require any payments in cash of interest or
other amounts in respect of the principal thereof prior to the earlier to occur
of (1) the date that is four (4) years from the date of the issuance or
incurrence thereof and (2) the date that is ninety-one (91) days after the
Latest Maturity Date in effect on the date of such issuance or incurrence, and
(E) that has mandatory prepayment, repurchase or redemption, covenant, default
and remedy provisions customary for senior discount notes of an issuer that is
the parent of a borrower under senior secured credit facilities, and in any
event, with respect to covenant, default and remedy provisions, no more

 

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restrictive (taken as a whole) than those set forth in this Agreement (other
than provisions customary for senior discount notes of a holding company);
provided that the Borrower shall have delivered a certificate of a Responsible
Officer to the Administrative Agent at least five (5) Business Days prior to the
incurrence of such Indebtedness, together with a reasonably detailed description
of the material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that the Borrower has determined in good
faith that such terms and conditions satisfy the foregoing requirement (and such
certificate shall be conclusive evidence that such terms and conditions satisfy
the foregoing requirement unless the Administrative Agent notifies the Borrower
within such five (5) Business Day period that it disagrees with such
determination (including a description of the basis upon which it disagrees));
provided further that any such Indebtedness shall constitute Qualified Holding
Company Debt only if immediately after giving effect to the issuance or
incurrence thereof and the use of proceeds thereof, no Event of Default shall
have occurred and be continuing.

“Qualifying IPO” means the issuance by Holdings or any direct or indirect parent
of Holdings of its common Equity Interests in an underwritten primary public
offering (other than a public offering pursuant to a registration statement on
Form S-8) pursuant to an effective registration statement filed with the SEC in
accordance with the Securities Act (whether alone or in connection with a
secondary public offering).

“Quarterly Financial Statements” means the unaudited condensed consolidated
balance sheets and related statements of income and cash flows of the Company
and its Subsidiaries for the most recent Fiscal Quarters after the date of the
Annual Financial Statements and ended at least forty-five (45) days before the
Effective Date.

“Ratable Portion”, “Pro Rata Share”, “ratable share” or (other than in the
expression “equally and ratably”) “ratably” means, with respect to any Lender,
the percentage obtained by dividing (a) the Revolving Credit Commitment of such
Class of such Lender by (b) the aggregate Revolving Credit Commitments of all
Lenders of such Class (or, at any time after the Revolving Credit Termination
Date, the percentage obtained by dividing the aggregate outstanding principal
balance of the Revolving Credit Outstandings of such Class owing to such Lender
by the aggregate outstanding principal balance of the Revolving Credit
Outstandings owing to all Lenders of such Class).

“Register” has the meaning specified in Section 12.2(c).

“Registered Equivalent Notes” means, with respect to any notes originally issued
in a Rule 144A or other private placement transaction under the Securities Act,
substantially identical notes (having the same Guarantees) issued in a
dollar-for-dollar exchange therefor pursuant to an exchange offer registered
with the SEC.

“Reimbursement Date” has the meaning specified in Section 2.4(h).

“Reimbursement Obligations” means, as and when matured, the obligation of any
Loan Party to pay, on the date payment is made or scheduled to be made to the
beneficiary under each such Letter of Credit (or at such other date as may be
specified in the applicable Letter of Credit Reimbursement Agreement) and in the
currency drawn (or in such other currency as may

 

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be specified in the applicable Letter of Credit Reimbursement Agreement), all
amounts of each drafts and other requests for payments drawn under Letters of
Credit, and all other matured reimbursement or repayment obligations of any Loan
Party to any Issuer with respect to amounts drawn under Letters of Credit.

“Related Indemnified Person” of an Indemnitee means (a) any controlling person
or controlled affiliate of such Indemnitee, (b) the respective directors,
officers, or employees of such Indemnitee or any of its controlling persons or
controlled affiliates and (c) the respective agents of such Indemnitee or any of
its controlling persons or controlled affiliates, in the case of this
clause (c), acting at the instructions of such Indemnitee, controlling person or
such controlled affiliate; provided that each reference to a controlled
affiliate or controlling person in this definition shall pertain to a controlled
affiliate or controlling person involved in the negotiation or syndication of
the Facility, the Term Facility or the Senior Notes.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees and advisors
of such Person and of such Person’s Affiliates.

“Reportable Event” means, with respect to any Pension Plan, any of the events
set forth in Section 4043(c) of ERISA or the regulations issued thereunder,
other than events for which the thirty (30) day notice period has been waived.

“Requisite Class Lenders” shall mean, with respect to any Class on any date of
determination, Lenders having more than 50% of (i) the aggregate outstanding
amount of the Revolving Credit Commitments of such Class or, after the Revolving
Credit Termination Date, more than fifty percent (50%) of the aggregate
Revolving Credit Outstandings of such Class; provided that the unused Revolving
Credit Commitment of, and the portion of the Loans and outstanding Letters of
Credit held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Requisite Class Lenders.

“Requisite Lenders” means, collectively, Lenders having more than fifty percent
(50%) of the aggregate outstanding amount of the Revolving Credit Commitments
or, after the Revolving Credit Termination Date, more than fifty percent
(50%) of the aggregate Revolving Credit Outstandings; provided that the unused
Revolving Credit Commitment of, and the portion of the Loans and outstanding
Letters of Credit held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Requisite Lenders.

“Reserves” means any Inventory Reserves and Availability Reserves.

“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, treasurer or assistant treasurer or other
similar officer or Person performing similar functions of a Loan Party and, as
to any document delivered on the Effective Date, any secretary or assistant
secretary of a Loan Party. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party. Unless otherwise specified,
all references herein to a “Responsible Officer” shall refer to a Responsible
Officer of the Borrower.

 

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“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest of the
Borrower or any of its Restricted Subsidiaries, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, defeasance, acquisition,
cancellation or termination of any such Equity Interest, or on account of any
return of capital to the Borrower’s or Holdings’ stockholders, partners or
members (or the equivalent Persons thereof).

“Restricted Subsidiary” means any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.

“Revaluation Date” means (a) with respect to any Loan, each of the following:
(i) each date of a Borrowing of a Loan denominated in an Alternative Currency,
(ii) each date of a continuation of a Eurocurrency Rate Loan denominated in an
Alternative Currency pursuant to Section 2.11, and (iii) such additional dates
as the Administrative Agent shall reasonably determine or the Requisite Lenders
shall reasonably require; and (b) with respect to any Letter of Credit, each of
the following: (i) each date of issuance of a Letter of Credit denominated in an
Alternative Currency, (ii) each date of an amendment of any such Letter of
Credit having the effect of increasing the amount thereof (solely with respect
to the increased amount), (iii) each date of any payment by the Issuer under any
Letter of Credit denominated in an Alternative Currency, (iv) each date of
determination of Excess Availability hereunder and (v) such additional dates as
the Administrative Agent or the Issuer shall reasonably determine or the
Requisite Lenders shall reasonably require.

“Revolving Commitment Increase” has the meaning specified in Section 2.15.

“Revolving Commitment Increase Lender” has the meaning specified in
Section 2.15.

“Revolving Credit Commitment” means, with respect to each Lender, the commitment
of such Lender to make Loans and acquire interests in other Revolving Credit
Outstandings expressed as an amount representing the maximum principal amount of
the Loans to be made by such Lender under this Agreement, as such commitment may
be (a) reduced from time to time pursuant to this Agreement and (b) reduced or
increased from time to time pursuant to (i) assignments by or to such Lender
pursuant to an Assignment and Assumption, (ii) a Revolving Commitment Increase,
(iii) a New Revolving Credit Commitment or (iv) an Extension. The initial amount
of each Lender’s Revolving Credit Commitment is set forth on Schedule I under
the caption “Revolving Credit Commitment,” as amended to reflect each Assignment
and Assumption, Incremental Agreement or Extension Amendment, in each case
executed by such Lender. The initial aggregate amount of the Revolving Credit
Commitments is $250,000,000.

 

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“Revolving Credit Exposure” means, as to each Lender, the sum of the Outstanding
Amount of such Lender’s Revolving Loans, its Pro Rata Share of the Letter of
Credit Obligations and its Pro Rata Share of the Swing Loan Obligations at such
time.

“Revolving Credit Lender” means each Lender that (a) has a Revolving Credit
Commitment, (b) holds a Revolving Loan or (c) participates in any Letter of
Credit.

“Revolving Credit Note” means a promissory note of the Borrower payable to the
order of any Revolving Credit Lender in a principal amount equal to the amount
of such Lender’s Revolving Credit Commitment evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Loans of a given
Class owing to such Lender.

“Revolving Credit Outstandings” means, at any particular time, the sum of
(a) the principal amount of the Loans outstanding at such time, (b) the Letter
of Credit Obligations outstanding at such time and (c) the principal amount of
the Swing Loans outstanding at such time.

“Revolving Credit Termination Date” means the earliest of (a) the Scheduled
Termination Date, (b) the date of termination of all of the Revolving Credit
Commitments pursuant to Section 2.5 and (c) the date on which the Obligations
become due and payable pursuant to Section 10.2.

“Revolving Loan” has the meaning specified in Section 2.1(a).

“RP Conditions” means, at any time of determination, that (a) no Event of
Default exists or would arise as a result of the subject Specified Payment,
(b) after giving Pro Forma Effect to such Specified Payment and projected for
the succeeding six (6) months following such Specified Payment, Excess
Availability shall be greater than the greater of (i) 20% of the Maximum Credit
and (ii) $40,000,000 and (c) the Fixed Charge Coverage Ratio as of the end of
the most recently ended Test Period for which financial statements have been or
are required to have been delivered pursuant to Section 7.1(a) or (b) shall be
greater than or equal to 1.1 to 1.0 after giving Pro Forma Effect to such
Specified Payment as if such Specified Payment (if applicable to such
calculation) had been made as of the first day of such period, and, in each
case, the Borrower shall have delivered, in accordance with Section 7.2(f)
hereof, to the Administrative Agent evidence reasonably satisfactory to the
Administrative Agent that the conditions contained in the foregoing clauses (a),
(b) and (c) have been satisfied.

“S&P” means Standard & Poor’s Rating Services and any successor thereto.

“Same Day Funds” means disbursements and payments in immediately available
funds.

“Scheduled Termination Date” means the date that is five (5) years after the
Effective Date, as may be extended pursuant to Section 12.1(b) or Section 2.17
hereof; provided that if such day is not a Business Day, the Scheduled
Termination Date shall be the Business Day immediately preceding such day.

 

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“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between any Loan Party (or entered into by Merger Sub and
existing at the time of the Merger) and any Cash Management Bank.

“Secured Hedge Agreement” means any Swap Contract permitted under Section 9.3(f)
that is entered into by and between any Loan Party (or entered into by Merger
Sub and existing at the time of the Merger) or any Restricted Subsidiary and any
Hedge Bank and designated in writing by the Hedge Bank and the Borrower to the
Administrative Agent as a “Secured Hedge Agreement.” Such designation in writing
by the Hedge Bank and the Borrower (or any subsequent written notice by the
Hedge Bank to the Administrative Agent) may further designate any Obligations
under such Secured Hedge Agreement as being “Specified Secured Hedge
Obligations” as defined under this Agreement.

“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, collectively, the Lenders, the Issuers, the
Administrative Agent, the Collateral Agent, each Hedge Bank, each Cash
Management Bank and each co-agent or sub-agent (if any) appointed by the
Administrative Agent from time to time pursuant to Section 11.5.

“Securities Account” means all securities accounts of any Loan Party, including
“securities accounts” within the meaning given to such term in Article 8 of the
UCC.

“Securities Account Control Agreement” means an effective securities account
control agreement with an Approved Securities Intermediary, in each case in the
form set forth in Exhibit VII to the Security Agreement or otherwise in form and
substance reasonably satisfactory to the Administrative Agent.

“Securities Act” means the Securities Act of 1933, as amended.

“Security” means any Equity Interest, 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.

“Security Agreement” means, collectively, the Security Agreement executed by the
Loan Parties, substantially in the form of Exhibit I, together with each
Security Agreement Supplement executed and delivered pursuant to Section 8.11.

“Security Agreement Supplement” has the meaning specified in the Security
Agreement.

 

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“Senior Notes” means up to $400,000,000 in aggregate principal amount of the
Borrower’s senior unsecured notes due 2019 and any Registered Equivalent Notes
having substantially identical terms and issued pursuant to the Senior Notes
Indenture in exchange for the initial, unregistered senior unsecured notes.

“Senior Notes Indenture” means the Indenture for the Senior Notes, dated
March 7, 2011, between the Borrower and Wells Fargo Bank, National Association,
as trustee, as the same may be amended, modified, supplemented, replaced or
refinanced to the extent not prohibited by this Agreement.

“Shrink Reserve” means an amount reasonably estimated by the Administrative
Agent to be equal to that amount which is required in order that the shrink
reflected in current books and records of the Borrower and its Subsidiaries
would be reasonably equivalent to the shrink calculated as part of the
Borrower’s most recent physical Inventory (it being understood and agreed that
no Shrink Reserve established by the Administrative Agent shall be duplicative
of any shrink as so reflected in the current books and records of the Borrower
and its Subsidiaries or estimated by the Borrower for purposes of computing the
Borrowing Base).

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the assets of such Person
exceeds its debts and liabilities, subordinated, contingent or otherwise,
(b) the present fair saleable value of the property of such Person is greater
than the amount that will be required to pay the probable liability of its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured, (c) such Person is able to pay
its debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured and (d) such Person is not engaged in,
and is not about to engage in, business for which it has unreasonably small
capital. The amount of any contingent liability at any time shall be computed as
the amount that would reasonably be expected to become an actual and matured
liability.

“SPC” has the meaning specified in Section 12.2(g).

“Specified Event of Default” means any Event of Default (a) of the type
described in Section 10.1(a), 10.1(b)(i)(A), 10.1(b)(ii), 10.1(b)(iii), 10.1(c)
(solely in respect of any misrepresentation of the Borrowing Base or breach of
Section 8.12), 10.1(d) (with respect to any Borrowing Base Certificate) or
10.1(f).

“Specified Payment” means any Investment, incurrence of Indebtedness, Restricted
Payment or payment made pursuant to Section 9.12 that in each case is subject to
the satisfaction of the Payment Conditions or the RP Conditions.

“Specified Representations” shall mean those representations and warranties made
by the Borrower in Sections 5.1(a) (with respect to organizational existence
only), 5.1(b)(ii), 5.2(a), 5.2(b)(i), 5.2(b)(iii), 5.4, 5.13, 5.16, 5.18 and
5.19.

“Specified Secured Hedge Obligations” means Obligations under any Secured Hedge
Agreement which provides by its terms that such Obligations shall only be
payable pursuant to Section 10.3 pursuant to clause “Eighth” thereof. Any
applicable Hedge Bank may

 

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designate or cancel such designation of Obligations under any applicable Secured
Hedge Agreement as “Specified Secured Hedge Obligations” by delivering notice in
writing to the Administrative Agent of such designation or cancellation of
designation.

“Specified Transaction” means any Investment that results in a Person becoming a
Restricted Subsidiary, any designation of a Subsidiary as a Restricted
Subsidiary or an Unrestricted Subsidiary, any Permitted Acquisition, any
Disposition that results in a Restricted Subsidiary ceasing to be a Subsidiary
of the Borrower, any Investment constituting an acquisition of assets
constituting a business unit, line of business or division of another Person or
a Store or any Disposition of a business unit, line of business or division or a
Store of the Borrower or a Restricted Subsidiary, in each case whether by
merger, consolidation, amalgamation or otherwise, or any incurrence or repayment
of Indebtedness (other than Indebtedness incurred or repaid under any revolving
credit facility in the ordinary course of business for working capital
purposes), Restricted Payment or Incremental Loan that by the terms of this
Agreement requires such test to be calculated on a “Pro Forma Basis” or after
giving “Pro Forma Effect.”

“Sponsor” means any of TPG Capital, L.P., TPG Chinos Co-Invest, L.P. (for so
long as TPG Capital, L.P. or any of its Affiliates retains control of the voting
power thereof), Leonard Green & Partners, L.P., LGP Chino Coinvest LLC (for so
long as Leonard Green & Partners, L.P. or any of its Affiliates retains control
of the voting power thereof) and any of their respective Affiliates and funds or
partnerships managed or advised by any of them or any of their respective
Affiliates but not including, however, any portfolio company of any of the
foregoing.

“Sponsor Management Agreement” means the management services agreement by and
among TPG Capital, L.P. and Leonard Green & Partners, L.P. or certain of the
management companies associated with each of them or their advisors and Chinos
Holdings, Inc., Chinos Intermediate Holdings A, Inc., Holdings and the Borrower,
as the same may be amended, modified, supplemented or otherwise modified from
time to time in accordance with its terms, but only to the extent that any such
amendment, modification, supplement or other modification does not, directly or
indirectly, increase the obligation of Holdings, the Borrower or any of its
Restricted Subsidiaries to make any payments thereunder.

“Sponsor Termination Fees” means the one-time payment under the Sponsor
Management Agreement of a termination fee to one or more of the Sponsors in the
event of either a Change of Control or the completion of a Qualifying IPO.

“Spot Rate” for a currency means the rate determined by the Administrative Agent
or the applicable Issuer, as applicable, to be the rate quoted by the Person
acting in such capacity as the spot rate for the purchase by such Person of such
currency with another currency through its principal foreign exchange trading
office at approximately 11:00 a.m. on the date two (2) Business Days prior to
the date as of which the foreign exchange computation is made; provided that the
Administrative Agent or the applicable Issuer may obtain such spot rate from
another financial institution designated by the Administrative Agent or the
Issuer if the Person acting in such capacity does not have as of the date of
determination a spot buying rate for any such currency; and provided further
that the applicable Issuer may use such spot rate quoted on the date as of which
the foreign exchange computation is made in the case of any Letter of Credit
denominated in an Alternative Currency.

 

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“Standby Letter of Credit” means any Letter of Credit that is not a Documentary
Letter of Credit.

“Statutory Reserve Rate” means, with respect to any currency, a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by any Governmental Authority of
the United States or of the jurisdiction of such currency or any jurisdiction in
which Loans in such currency are made to which banks in such jurisdiction are
subject for any category of deposits or liabilities customarily used to fund
loans in such currency or by reference to which interest rates applicable to
Loans in such currency are determined. Such reserve percentages shall include
those imposed pursuant to such Regulation D. Eurocurrency Rate Loans shall be
deemed to constitute eurodollar funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

“Store” means any retail store (which includes any real property, fixtures,
equipment, Inventory and other property related thereto) operated, or to be
operated, by the Borrower or any Restricted Subsidiary.

“Store Accounts” means Deposit Accounts established for the purposes of
receiving store receipts from a retail store location of a Loan Party.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity (excluding, for the avoidance
of doubt, charitable foundations) of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise specified, all references herein to a “Subsidiary” or
to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

“Subsidiary Guarantor” means any Guarantor other than Holdings.

“Successor Borrower” has the meaning specified in Section 9.4(d).

“Supermajority Lenders” means, as of any date of determination, Lenders having
66.67% or more of the sum of the (a) Revolving Credit Outstandings (with the
aggregate principal amount of each Lender’s risk participation and funded
participation in Letter of Credit Obligations and Swing Loans being deemed
“held” by such Lender for purposes of this definition) and (b) aggregate unused
Revolving Credit Commitments; provided that the unused Revolving Credit
Commitment of, and the portion of the Loans and outstanding Letters of Credit
held or deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Supermajority Lenders.

 

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“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

“Swing Loan” has the meaning specified in Section 2.3(a).

“Swing Loan Lender” means Bank of America in its capacity as the Swing Loan
Lender hereunder.

“Swing Loan Obligations” means, as at any date of determination, the aggregate
Outstanding Amount of all Swing Loans.

“Swing Loan Request” has the meaning specified in Section 2.3(b).

“Swing Loan Sublimit” means the lesser of (a) $25,000,000 and (b) the aggregate
principal amount of the Revolving Credit Commitments. The Swing Loan Sublimit is
part of, and not in addition to, the Revolving Credit Commitments.

“Syndication Agent” means Goldman Sachs Bank USA, as syndication agent under
this Agreement.

“Taxes” has the meaning specified in Section 3.1(a).

 

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“Term Facility” means the credit facilities under the Term Facility Credit
Agreement.

“Term Facility Administrative Agent” means Bank of America in its capacity as
administrative agent and collateral agent under the Term Facility Credit
Agreement, or any successor administrative agent and collateral agent under the
Term Facility Credit Agreement.

“Term Facility Credit Agreement” means that certain credit agreement dated as of
the date hereof, among the Borrower, Holdings, the guarantors party thereto, the
lenders party thereto and Bank of America, as administrative agent and
collateral agent, as the same may be amended, restated, modified, supplemented,
extended, renewed, refunded, replaced or refinanced from time to time in one or
more agreements (in each case with the same or new lenders, institutional
investors or agents), including any agreement extending the maturity thereof or
otherwise restructuring all or any portion of the Indebtedness thereunder or
increasing the amount loaned or issued thereunder or altering the maturity
thereof, in each case as and to the extent permitted by this Agreement and the
Intercreditor Agreement.

“Term Facility Documentation” means the Term Facility Credit Agreement and all
security agreements, guarantees, pledge agreements and other agreements or
instruments executed in connection therewith.

“Term Facility Lenders” means the lenders from time to time party to the Term
Facility Credit Agreement.

“Test Period” in effect at any time means the most recent period of four
consecutive Fiscal Quarters of the Borrower ended on or prior to such time
(taken as one accounting period). A Test Period may be designated by reference
to the last day thereof (i.e., the “January 29, 2011 Test Period” refers to the
period of four consecutive Fiscal Quarters of the Borrower ended January 29,
2011), and a Test Period shall be deemed to end on the last day thereof.

“Total Assets” means the total assets of the Borrower and the Restricted
Subsidiaries on a consolidated basis in accordance with GAAP, as shown on the
most recent balance sheet of the Borrower delivered pursuant to Sections 7.1(a)
or 7.1(b) or, for the period prior to the time any such statements are so
delivered pursuant to Sections 7.1(a) or 7.1(b), the Pro Forma Financial
Statements.

“Total Leverage Ratio” means, with respect to any Test Period for which
financial statements have been or are required to have been delivered pursuant
to Section 7.1(a) or (b), the ratio of (a) Consolidated Total Debt as of the
last day of such Test Period to (b) Consolidated EBITDA of the Borrower for such
Test Period; provided that, prior to the first date that financial statements
have been or are required to be delivered pursuant to Sections 7.1(a) or (b),
the Test Period in effect for purposes of this definition shall be the period of
four consecutive Fiscal Quarters of the Borrower ended October 30, 2010.

“Transaction” means, collectively, (a) the Equity Contribution, (b) the Merger,
(c) the issuance of the Senior Notes, if any, (d) the funding of the loans under
the Term Facility Credit Agreement, (e) the execution and delivery of this
Agreement and the funding of the Loans

 

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on the Effective Date, if any, (f) the repayment of the Existing ABL Facility on
the Effective Date, (g) the funding of the loans under the senior bridge
facility on the Effective Date, if any, (h) the consummation of any other
transactions in connection with the foregoing, (i) the repayment of the Existing
Credit Agreement and (j) the payment of the fees and expenses incurred in
connection with any of the foregoing.

“Transaction Expenses” means any fees or expenses incurred or paid by Holdings
or any of its Subsidiaries in connection with the Transaction, this Agreement
and the other Loan Documents and the transactions contemplated hereby and
thereby.

“Type” means, with respect to a Loan, its character as a Base Rate Loan, a
Eurocurrency Rate Loan, a BA Rate Loan or a Canadian Prime Rate Loan.

“UCC” means the Uniform Commercial Code or any successor provision thereof as
the same may from time to time be in effect in the State of New York or the
Uniform Commercial Code or any successor provision thereof (or similar code or
statute) of another jurisdiction, to the extent it may be required to apply to
any item or items of Collateral.

“United States” and “U.S.” mean the United States of America.

“Unrestricted Subsidiary” means any Subsidiary of the Borrower designated by the
board of directors of the Borrower as an Unrestricted Subsidiary pursuant to
Section 8.3 subsequent to the date hereof, in each case, until such Person
ceases to be an Unrestricted Subsidiary of the Borrower in accordance with
Section 8.3 or ceases to be a Subsidiary of the Borrower.

“Unused Commitment Fee” has the meaning specified in Section 2.12(a).

“Updated Inventory Appraisal” has the meaning specified in Section 7.4.

“U.S. Lender” has the meaning specified in Section 3.1.

“USA PATRIOT Act” means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended
or modified from time to time.

“Weekly Monitoring Event” means (a) a Specified Event of Default has occurred
and is continuing or (b) the Borrower has failed to maintain, for five
(5) consecutive Business Days, Excess Availability of the greater of
(i) $25,000,000 and (ii) 12.5% of the Maximum Credit; provided that a Weekly
Monitoring Event shall be deemed continuing until the date on which, as
applicable, in the case of the foregoing clause (a), such Specified Event of
Default is cured or waived in accordance with Section 12.1, or, in the case of
the foregoing clause (b), Excess Availability has been greater than or equal to
the greater of (i) $25,000,000 and (ii) 12.5% of the Maximum Credit, in each
case under clauses (i) and (ii), for at least thirty (30) consecutive days.

 

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“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing: (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment by (b) the then outstanding principal amount of such
Indebtedness; provided, that for purposes of determining the Weighted Average
Life to Maturity of any Indebtedness that is being modified, refinanced,
refunded, renewed, replaced or extended (the “Applicable Indebtedness”), the
effects of any prepayments made on such Applicable Indebtedness prior to the
date of the applicable modification, refinancing, refunding, renewal,
replacement or extension shall be disregarded.

“Wholly-Owned Subsidiary” of a Person means a Subsidiary of such Person, all of
the outstanding Equity Interests of which (other than (x) director’s qualifying
shares and (y) nominal shares issued to foreign nationals to the extent required
by applicable Law) are owned by such Person and/or by one or more Wholly-Owned
Subsidiaries of such Person.

“Withdrawal Liability” means the liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such term
is defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.2 Other Interpretive Provisions.

With reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

(ii) References in this Agreement to an Exhibit, Schedule, Article, Section,
clause or sub-clause refer (A) to the appropriate Exhibit or Schedule to, or
Article, Section, clause or sub-clause in this Agreement or (B) to the extent
such references are not present in this Agreement, to the Loan Document in which
such reference appears,

(iii) The term “including” is by way of example and not limitation, subject, in
the case of computations of time periods, to clause (f) below,

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form, and

 

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(v) Unless otherwise expressly indicated herein, 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) The terms “Lender,” “Issuer” and “Administrative Agent” include, without
limitation, their respective successors.

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

(e) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

SECTION 1.3 Accounting Terms.

All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP, except as otherwise
specifically prescribed herein.

SECTION 1.4 Rounding.

Any financial ratios required to be satisfied in order for a specific action to
be permitted under this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number)

SECTION 1.5 [Reserved].

SECTION 1.6 References to Agreements, Laws, Etc. Unless otherwise expressly
provided herein, (a) references to Constituent Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all appendices, exhibits and schedules thereto and all subsequent amendments,
restatements, extensions, supplements and other modifications thereto (but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are permitted by any Loan Document); and (b) references to
any Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

SECTION 1.7 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

 

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SECTION 1.8 Pro Forma Calculations.

(a) Notwithstanding anything to the contrary herein, the Total Leverage Ratio
and the Fixed Charge Coverage Ratio shall be calculated in the manner prescribed
by this Section 1.8; provided that, notwithstanding anything to the contrary in
this Section 1.8, when calculating the Consolidated Fixed Charge Coverage Ratio
for purposes of determining actual compliance (and not compliance on a Pro Forma
Basis) with Section 6.1, the events described in this Section 1.8 that occurred
subsequent to the end of the applicable Test Period shall not be given pro forma
effect.

(b) For purposes of calculating the Total Leverage Ratio and the Fixed Charge
Coverage Ratio, Specified Transactions (and the incurrence or repayment of any
Indebtedness in connection therewith) that have been made (i) during the
applicable Test Period or (ii) subsequent to such Test Period and prior to or
simultaneously with the event for which the calculation of any such ratio is
made shall be calculated on a pro forma basis assuming that all such Specified
Transactions (and any increase or decrease in Consolidated EBITDA and the
component financial definitions used therein attributable to any Specified
Transaction) had occurred on the first day of the applicable Test Period. If
since the beginning of any applicable Test Period any Person that subsequently
became a Restricted Subsidiary or was merged, amalgamated or consolidated with
or into the Borrower or any of its Restricted Subsidiaries since the beginning
of such Test Period shall have made any Specified Transaction that would have
required adjustment pursuant to this Section 1.8, then the Total Leverage Ratio
and the Fixed Charge Coverage Ratio shall be calculated to give pro forma effect
thereto in accordance with this Section 1.8.

(c) In the event that the Borrower or any Restricted Subsidiary incurs
(including by assumption or guarantees) or repays (including by redemption,
repayment, retirement or extinguishment) any Indebtedness included in the
calculations of the Total Leverage Ratio and the Fixed Charge Coverage Ratio, as
the case may be (in each case, other than Indebtedness incurred or repaid under
any revolving credit facility in the ordinary course of business for working
capital purposes), (i) during the applicable Test Period or (ii) subsequent to
the end of the applicable Test Period and prior to or simultaneously with the
event for which the calculation of any such ratio is made, then the Total
Leverage Ratio and the Fixed Charge Coverage Ratio shall be calculated giving
pro forma effect to such incurrence or repayment of Indebtedness, to the extent
required, as if the same had occurred on the last day of the applicable Test
Period.

(d) Whenever pro forma effect is to be given to a Specified Transaction, the pro
forma calculations shall be made in good faith by a responsible financial or
accounting officer of the Borrower and may include, for the avoidance of doubt,
the amount of cost savings and synergies projected by the Borrower in good faith
to be realized as a result of specified actions taken, committed to be taken or
expected to be taken (calculated on a pro forma basis as though such cost
savings and synergies had been realized on the first day of such period and as
if such cost savings and synergies were realized during the entirety of such
period) relating to such Specified Transaction, net of the amount of actual
benefits realized during such period from such actions; provided, that (A) such
amounts are reasonably identifiable, quantifiable and factually supportable in
the good faith judgment of the Borrower, (B) such actions are taken, committed
to be taken or expected to be taken no later than twelve (12) months after the
date of such Specified Transaction, (C) no amounts shall be added pursuant to
this clause (d) to the extent duplicative

 

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of any amounts that are otherwise added back in computing Consolidated EBITDA,
whether through a pro forma adjustment or otherwise, with respect to such period
and (D) the aggregate amount of cost savings and synergies added pursuant to
this clause (d) for any such period after the Effective Date shall not exceed
the greater of (x) $30,000,000 and (y) 10% of Consolidated EBITDA for such Test
Period (giving pro forma effect to the relevant Specified Transaction (but not
to any cost savings or synergies)).

(e) If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of the event for which the calculation of the Fixed
Charge Coverage Ratio is made had been the applicable rate for the entire period
(taking into account any hedging obligations applicable to such Indebtedness).
Interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by a responsible financial or accounting
officer of the Company to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP. Interest on Indebtedness that may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurodollar interbank offered rate, or other rate, shall be
determined to have been based upon the rate actually chosen, or if none, then
based upon such optional rate chosen as the Company may designate.

SECTION 1.9 Currency Equivalents Generally.

(a) For purposes of determining compliance with Sections 9.1, 9.2 and 9.3 with
respect to any amount of Indebtedness or Investment in a currency other than
Dollars, no Default shall be deemed to have occurred solely as a result of
changes in rates of currency exchange occurring after the time such Indebtedness
or Investment is incurred (so long as such Indebtedness or Investment, at the
time incurred, made or acquired, was permitted hereunder); provided that, for
the avoidance of doubt, the below provisions of Section 1.10 shall otherwise
apply to such Sections, including with respect to determining whether any
Investment or Indebtedness may be incurred or made at any time under such
Sections.

(b) For purposes of determining the Total Leverage Ratio and the Fixed Charge
Coverage Ratio, amounts denominated in a currency other than Dollars will be
converted to Dollars at the currency exchange rates used in preparing the
Borrower’s financial statements corresponding to the Test Period with respect to
the applicable date of determination and will, in the case of Indebtedness,
reflect the currency translation effects, determined in accordance with GAAP, of
Swap Contracts permitted hereunder for currency exchange risks with respect to
the applicable currency in effect on the date of determination of the Dollar
Equivalent of such Indebtedness; provided that, notwithstanding anything to the
contrary herein, Loans and Letter of Credit Obligations denominated in a
currency other than Dollars will be converted to Dollars at the Spot Rate.

SECTION 1.10 Exchange Rates; Currency Translation.

(a) The Administrative Agent or the applicable Issuer, as applicable, shall
determine the Spot Rates as of each Revaluation Date to be used for calculating
Dollar Equivalent amounts of Loans and Outstanding Amounts denominated in
Alternative Currencies. Such Spot Rates shall become effective as of such
Revaluation Date and shall be the Spot Rates

 

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employed in converting any amounts between the applicable currencies until the
next Revaluation Date to occur. Except for purposes of financial statements
delivered by Loan Parties hereunder or calculating financial covenants hereunder
(including baskets related thereto, as applicable) or except as otherwise
provided herein, the applicable amount of any currency (other than Dollars) for
purposes of the Loan Documents shall be such Dollar Equivalent amount as so
determined by the Administrative Agent or the applicable Issuer, as applicable.

(b) Wherever in this Agreement in connection with a Borrowing, conversion,
continuation or prepayment of a Eurocurrency Rate Loan, BA Rate Loan or the
issuance, amendment or extension of a Letter of Credit, an amount, such as a
required minimum or multiple amount, is expressed in Dollars, but such
Borrowing, Eurocurrency Rate Loan, BA Rate Loan or Letter of Credit is
denominated in an Alternative Currency, such amount shall be the relevant
Alternative Currency Equivalent of such Dollar amount (rounded to the nearest
unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as
determined by the Administrative Agent or the applicable Issuer, as the case may
be.

(c) Notwithstanding the foregoing, for purposes of any determination under
Article VIII, Article IX or Article X or any determination under any other
provision of this Agreement expressly requiring the use of a currency exchange
rate, all amounts incurred, outstanding or proposed to be incurred or
outstanding in currencies other than Dollars shall be translated into Dollars at
the Spot Rate.

SECTION 1.11 Change of Currency.

(a) Each obligation of the Borrowers to make a payment denominated in the
national currency unit of any member state of the European Union that adopts the
Euro as its lawful currency after the date hereof shall be redenominated into
Euro at the time of such adoption (in accordance with the EMU Legislation). If,
in relation to the currency of any such member state, the basis of accrual of
interest expressed in this Agreement in respect of that currency shall be
inconsistent with any convention or practice in the London interbank market for
the basis of accrual of interest in respect of the Euro, such expressed basis
shall be replaced by such convention or practice with effect from the date on
which such member state adopts the Euro as its lawful currency; provided that if
any Borrowing in the currency of such member state is outstanding immediately
prior to such date, such replacement shall take effect, with respect to such
Borrowing, at the end of the then current Interest Period.

(b) Each provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time specify to be
appropriate to reflect the adoption of the Euro by any member state of the
European Union and any relevant market conventions or practices relating to the
Euro.

(c) Each provision of this Agreement also shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect a change in currency of any other country
and any relevant market conventions or practices relating to the change in
currency.

 

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ARTICLE II

THE FACILITY

SECTION 2.1 The Revolving Credit Commitments.

(a) On the terms and subject to the conditions contained in this Agreement, each
Lender severally agrees to make loans in Dollars, Canadian Dollars or Euros
(each, a “Revolving Loan”) to the Borrower from time to time on any Business Day
during the period from the Effective Date until the Revolving Credit Termination
Date in an aggregate principal amount at any time outstanding for all such loans
by such Lender not to exceed such Lender’s Revolving Credit Commitment;
provided, however, that at no time shall any Lender be obligated to make a
Revolving Loan in excess of such Lender’s Ratable Portion of the Maximum Credit.
Within the limits of the Revolving Credit Commitment of each Lender, amounts of
Loans repaid may be reborrowed under this Section 2.1.

(b) Subject to the limitations set forth below (and notwithstanding anything to
the contrary in Section 4.2), the Administrative Agent is authorized by the
Borrower and the Lenders, from time to time in the Administrative Agent’s sole
discretion (but shall have absolutely no obligation), to make Revolving Loans to
the Borrower, on behalf of all Lenders at any time that any condition precedent
set forth in Section 4.2 has not been satisfied or waived, which the
Administrative Agent, in its Permitted Discretion, deems necessary or desirable
for the purposes specified in the definition of “Protective Advances”. Any
Protective Advance may be made in a principal amount that would cause the
aggregate Revolving Credit Exposure to exceed the Borrowing Base; provided that
the aggregate amount of outstanding Protective Advances plus the aggregate of
all other Revolving Credit Exposure shall not exceed the Aggregate Commitments.
Protective Advances may be made even if the conditions precedent set forth in
Section 4.2 have not been satisfied or waived. Each Protective Advance shall be
secured by the Liens in favor of the Collateral Agent in and to the Collateral
and shall constitute Obligations hereunder. The Administrative Agent’s
authorization to make Protective Advances may be revoked at any time by the
Requisite Lenders. Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent’s receipt thereof. The
making of a Protective Advance on any one occasion shall not obligate the
Administrative Agent to make any Protective Advance on any other occasion. At
any time that the conditions precedent set forth in Section 4.2 have been
satisfied or waived, the Administrative Agent may request the Lenders to make a
Revolving Loan to repay a Protective Advance. At any other time, the
Administrative Agent may require the Lenders to fund their risk participations
described in Section 2.1(c).

(c) Upon the making of a Protective Advance by the Administrative Agent (whether
before or after the occurrence of a Default), each Lender shall be deemed,
without further action by any party hereto, unconditionally and irrevocably to
have purchased from the Administrative Agent without recourse or warranty, an
undivided interest and participation in such Protective Advance in proportion to
its Applicable Percentage. From and after the date, if any, on which any Lender
is required to fund its participation in any Protective Advance purchased
hereunder, the Administrative Agent shall promptly distribute to such Lender,
such Lender’s Applicable Percentage of all payments of principal and interest
and all proceeds of Collateral received by the Administrative Agent in respect
of such Protective Advance.

 

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(d) Each (i) Borrowing denominated in Dollars shall be comprised entirely of
Base Rate Loans or Eurocurrency Rate Loans as the Borrower may request in
accordance herewith, (ii) Borrowing denominated in Euros shall be comprised
entirely of Eurocurrency Rate Loans and (iii) each Borrowing denominated in CDN$
shall be comprised of Canadian Prime Rate Loans or BA Rate Loans. Each Lender at
its option may make any Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.

SECTION 2.2 Borrowing Procedures.

(a) Each Borrowing shall be made on notice given by the Borrower to the
Administrative Agent not later than (i) 11:00 a.m. on the same Business Day, in
the case of a Borrowing of Base Rate Loans, (ii) 12:00 noon one (1) Business
Day, in the case of a Borrowing of Canadian Prime Rate Loans, (iii) 12:00 noon
three (3) Business Days, in the case of a Borrowing of Eurocurrency Rate Loans
denominated in Dollars, (iv) 12:00 noon two (2) Business Days, in the case of a
Borrowing of BA Rate Loans, or (v) 12:00 noon four (4) Business Days, in the
case of a Borrowing of Eurocurrency Rate Loans denominated in Euros, in each
case prior to the date of the proposed Borrowing. Each such notice shall be in
substantially the form of Exhibit C (a “Notice of Borrowing”), specifying
(A) the date of such proposed Borrowing, which shall be a Business Day, (B) the
currency and aggregate amount of such proposed Borrowing, (C) whether any
portion of the proposed Borrowing will be of Base Rate Loans, Canadian Prime
Rate Loans, Eurocurrency Rate Loans or BA Rate Loans, (D) the initial Interest
Period or Interest Periods for any Eurocurrency Rate Loans or BA Rate Loans, as
the case may be, (E) the Class of such proposed Borrowing, (F) whether the
proposed Borrowing will be denominated in Dollars, Canadian Dollars, or Euros
and (G) with respect to any Borrowing the proceeds of which will be used to fund
a Restricted Payment subject to the satisfaction of the RP Conditions, an
additional solvency representation and warranty of the Borrower and its
Subsidiaries (taken as a whole) after giving effect to such Borrowing and the
use of proceeds thereof. The Loans shall be made as Base Rate Loans or, to the
extent the currency proposed in the Notice of Borrowing is Canadian Dollars,
Canadian Prime Rate Loans, unless, subject to Section 2.14, the Notice of
Borrowing specifies that all or a portion thereof shall be Eurocurrency Rate
Loans or BA Rate Loans. Each Borrowing shall be in an aggregate amount of not
less than $500,000 or an integral multiple of $100,000 in excess thereof.

(b) The Administrative Agent shall give to each Appropriate Lender prompt notice
of the Administrative Agent’s receipt of a Notice of Borrowing, of the currency
of the proposed Borrowings, and, if Eurocurrency Rate Loans or BA Rate Loans are
properly requested in such Notice of Borrowing, the applicable interest rate
determined pursuant to Section 2.14(a). Each Lender shall, before 1:00 p.m. on
the date of the proposed Borrowing, make available to the Administrative Agent
at its address referred to in Section 12.8, in Same Day Funds in the applicable
currency, such Lender’s Ratable Portion of such proposed Borrowing. Upon
fulfillment (or due waiver in accordance with Section 12.1) (i) on the Effective
Date, of the applicable conditions set forth in Section 4.1 and (ii) at any time
(including the Effective Date),

 

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of the applicable conditions set forth in Section 4.2, and, subject to
clause (c) below, after the Administrative Agent’s receipt of such funds, the
Administrative Agent shall make such funds available to the Borrower as promptly
as reasonably practicable.

(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 Loans comprising such Borrowing and (ii) in the case of such Lender,
(A) if such Borrowing is denominated in Dollars, the Federal Funds Rate for the
first Business Day and thereafter at the interest rate applicable at the time to
the Loans comprising such Borrowing and (B) if such Borrowing is denominated in
Canadian Dollars or Euros, the rate reasonably determined by the Administrative
Agent to be its cost of funding such amount. If such Lender shall repay to the
Administrative Agent such corresponding amount, such corresponding amount so
repaid shall constitute such Lender’s 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 Defaulting Lender to make on the date specified any Loan
or any payment required by it, including any payment in respect of its
participation in Swing Loans and Letter of Credit Obligations, shall not relieve
any other Lender of its obligations to make such Loan or payment on such date
but, except to the extent otherwise provided herein, no such other Lender shall
be responsible for the failure of any Defaulting Lender to make a Loan or
payment required under this Agreement.

(e) After giving effect to all Borrowings, all conversions of Loans from one
Type to the other, and all continuations of Loans as the same Type, there shall
not be more than ten (10) Interest Periods in effect unless otherwise agreed
between the Borrower and the Administrative Agent; provided that after the
establishment of any new Class of Loans pursuant to an Extension Amendment, the
number of Interest Periods otherwise permitted by this Section 2.2(e) shall
increase by three (3) Interest Periods for each applicable Class so established.

SECTION 2.3 Swing Loans.

(a) On the terms and subject to the conditions contained in this Agreement, the
Swing Loan Lender shall make, in Dollars, loans (each, a “Swing Loan”) otherwise
available to the Borrower under the Facility from time to time on any Business
Day during the period from the Effective Date until the Revolving Credit
Termination Date in an aggregate principal amount at any time outstanding
(together with the aggregate outstanding principal amount of any other

 

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Loan made by the Swing Loan Lender hereunder in its capacity as the Swing Loan
Lender) not to exceed the Swing Loan Sublimit; provided, however, that at no
time shall the Swing Loan Lender make any Swing Loan to the extent that, after
giving effect to such Swing Loan, the aggregate Revolving Credit Outstandings
would exceed the Maximum Credit; provided further that in the event that the
Swing Loan Lender and the Administrative Agent are not the same Person, then the
Swing Loan Lender shall only make a Swing Loan after having given prior notice
thereof to the Administrative Agent; provided further that the Swing Loan Lender
shall not be required to make any Swing Loan to the extent that such Swing Loan
Lender reasonably believes that any Lender is a Defaulting Lender, unless after
giving effect to the requested Swing Loans, there would exist no Fronting
Exposure (in the good faith determination of the Swing Loan Lender). Each Swing
Loan shall be a Base Rate Loan and must be repaid in full in Dollars within
seven (7) days after its making or, if sooner, upon any Borrowing hereunder and
shall in any event mature no later than the Revolving Credit Termination Date
(without giving effect to any extensions of the type referred to in the proviso
to Section 12.1(b) hereof). Within the limits set forth in the first sentence of
this clause (a), amounts of Swing Loans repaid may be reborrowed under this
clause (a).

(b) In order to request a Swing Loan, the Borrower shall telecopy (or forward by
electronic mail or similar means) to the Administrative Agent a duly completed
request in substantially the form of Exhibit D, setting forth the requested
amount and date of such Swing Loan (a “Swing Loan Request”), to be received by
the Administrative Agent not later than 1:00 p.m. on the day of the proposed
borrowing. The Administrative Agent shall promptly notify the Swing Loan Lender
of the details of the requested Swing Loan. Subject to the terms of this
Agreement, the Swing Loan Lender shall make a Swing Loan available to the
Administrative Agent and, in turn, the Administrative Agent shall make such
amounts available to the Borrower as promptly as reasonably practicable on the
date set forth in the relevant Swing Loan Request. The Swing Loan Lender shall
not make any Swing Loan (other than a Protective Advance) in the period
commencing on the first Business Day after it receives written notice from the
Administrative Agent or any Lender that one or more of the conditions precedent
contained in Section 4.2 shall not on such date be satisfied, and ending when
such conditions are satisfied. The Swing Loan Lender shall not otherwise be
required to determine that, or take notice whether, the conditions precedent set
forth in Section 4.2 have been satisfied in connection with the making of any
Swing Loan.

(c) The Swing Loan Lender may demand at any time that each Lender pay to the
Administrative Agent, for the account of the Swing Loan Lender, in the manner
provided in clause (d) below, such Lender’s Ratable Portion of all or a portion
of the outstanding Swing Loans, which demand shall be made through the
Administrative Agent, shall be in writing and shall specify the outstanding
principal amount of Swing Loans demanded to be paid.

(d) The Administrative Agent shall forward each demand referred to in clause (c)
above to each Lender on the day such notice or such demand is received by the
Administrative Agent (except that any such notice or demand received by the
Administrative Agent after 2:00 p.m. on any Business Day or any such notice or
demand received on a day that is not a Business Day shall not be required to be
forwarded to the Lenders by the Administrative Agent until the next succeeding
Business Day), together with a statement prepared by the Administrative Agent
specifying the amount of each Lender’s Ratable Portion of the aggregate

 

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principal amount of the Swing Loans stated to be outstanding in such notice or
demanded to be paid pursuant to such demand, and, notwithstanding whether or not
the conditions precedent set forth in Sections 4.2 and 2.1 shall have been
satisfied (which conditions precedent the Lenders hereby irrevocably waive),
each Lender shall, before 11:00 a.m. on the Business Day next succeeding the
date of such Lender’s receipt of such notice or demand, make available to the
Administrative Agent, in Same Day Funds in Dollars, for the account of the Swing
Loan Lender, the amount specified in such statement. Upon such payment by a
Lender, such Lender shall, except as provided in clause (e) below, be deemed to
have made a Revolving Loan to the Borrower in the amount of such payment. The
Administrative Agent shall use such funds to repay the Swing Loans to the Swing
Loan Lender.

(e) Upon the occurrence of a Default under Section 10.1(f), each Lender shall
acquire, without recourse or warranty, an undivided participation in each Swing
Loan otherwise required to be repaid by such Lender pursuant to clause (d)
above, which participation shall be in a principal amount equal to such Lender’s
Ratable Portion of such Swing Loan, by paying to the Swing Loan Lender on the
date on which such Lender would otherwise have been required to make a payment
in respect of such Swing Loan pursuant to clause (d) above, in Same Day Funds,
an amount equal to such Lender’s Ratable Portion of such Swing Loan. If all or
part of such amount is not in fact made available by such Lender to the Swing
Loan Lender on such date, the Swing Loan Lender shall be entitled to recover any
such unpaid amount on demand from such Lender together with interest accrued
from such date at the Federal Funds Rate for the first Business Day after such
payment was due and thereafter at the rate of interest then applicable to Base
Rate Loans.

(f) From and after the date on which any Lender (i) is deemed to have made a
Revolving Loan pursuant to clause (d) above with respect to any Swing Loan or
(ii) purchases an undivided participation interest in a Swing Loan pursuant to
clause (e) above, the Swing Loan Lender shall promptly distribute to such Lender
such Lender’s Ratable Portion of all payments of principal and interest received
by the Swing Loan Lender on account of such Swing Loan other than those received
from a Lender pursuant to clause (d) or (e) above.

SECTION 2.4 Letters of Credit.

(a) Subject to the terms and subject to the conditions contained in this
Agreement, each Issuer agrees to Issue at the request of the Borrower, for the
account of the Borrower or a Restricted Subsidiary (provided that any Letter of
Credit issued for the benefit of any Restricted Subsidiary that is not the
Borrower shall be issued naming the Borrower as the account party on any such
Letter of Credit but such Letter of Credit may contain a statement that it is
being issued for the benefit of such Restricted Subsidiary), one or more Letters
of Credit from time to time on any Business Day during the period commencing on
the Effective Date and ending on the earlier of the Revolving Credit Termination
Date and five (5) Business Days prior to the Scheduled Termination Date (without
giving effect to any extension of the type referred to in the proviso to
Section 12.1(b) hereof) (or, if such day is not a Business Day, the next
preceding Business Day), or such later date as agreed to by the Administrative
Agent in its sole discretion; provided, however, that no Issuer shall be under
any obligation to Issue (and, upon the occurrence of any of the events described
in clauses (ii), (iii), (iv) and (v)(A) below, shall not Issue) any Letter of
Credit upon the occurrence of any of the following:

(i) any order, judgment or decree of any Governmental Authority or arbitrator
having binding powers shall purport by its terms to enjoin or restrain such
Issuer from Issuing such Letter of Credit or any Law applicable to such Issuer
or any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuer shall prohibit, or
request that such Issuer refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon such
Issuer with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which such Issuer is not otherwise compensated) not in
effect on the Effective Date or result in any unreimbursed loss, cost or expense
that was not applicable, in effect or known to such Issuer as of the Effective
Date and that such Issuer in good faith deems material to it (for which such
Issuer is not otherwise compensated);

 

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(ii) such Issuer shall have received any written notice of the type described in
clause (d) below;

(iii) after giving effect to the Issuance of such Letter of Credit, (A) the
aggregate Revolving Credit Outstandings would exceed the Maximum Credit at such
time or (B) the Revolving Credit Outstandings of any Lender would exceed such
Lender’s Revolving Credit Commitment;

(iv) such Letter of Credit is requested to be denominated in any currency other
than Dollars, Canadian Dollars or Euros, except as may be approved by the
Administrative Agent and such Issuer, each in their sole discretion;

(v) (A) any fees due in connection with a requested Issuance have not been paid,
(B) such Letter of Credit is requested to be Issued in a form that is not
acceptable to such Issuer or (C) the Issuer for such Letter of Credit shall not
have received, in form and substance reasonably acceptable to it and, if
applicable, duly executed by the Borrower, applications, agreements and other
documentation (collectively, a “Letter of Credit Reimbursement Agreement”) such
Issuer generally employs in the ordinary course of its business for the Issuance
of letters of credit of the type of such Letter of Credit;

(vi) any Lender is at that time a Defaulting Lender, unless (i) after giving
effect to the requested Issuance, there would exist no Fronting Exposure (in the
good faith determination of the applicable Issuer) or (ii) the applicable Issuer
has entered into arrangements, including the delivery of Cash Collateral,
satisfactory to the applicable Issuer (in its good faith determination) with the
Borrower or such Lender to eliminate such Issuer’s actual or potential Fronting
Exposure (after giving effect to Section 2.16(a)(iv)) with respect to the
Defaulting Lender arising from either the Letter of Credit then proposed to be
issued or any other Letter of Credit Obligations as to which such Issuer has
actual or potential Fronting Exposure, as it may elect in its sole discretion.

 

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None of the Lenders (other than the Issuers in their capacity as such) shall
have any obligation to Issue any Letter of Credit. Any Letter of Credit which
has been or deemed Issued hereunder may be amended at any time to reduce the
amount outstanding thereunder.

(b) In no event shall the expiration date of any Letter of Credit be more than
one (1) year after the date of issuance thereof; provided, however, that any
Letter of Credit with a term less than or equal to one (1) year may provide for
the renewal thereof for additional periods less than or equal to one (1) year,
as long as, on or before the expiration of each such term and each such period,
the Borrower and the Issuer of such Letter of Credit shall have the option to
prevent such renewal; provided further, that, for any Letter of Credit having an
expiration date after the Scheduled Termination Date, the Borrower agrees to
deliver to the applicable Issuer on or prior to the date that occurs five
(5) Business Days prior to the Scheduled Termination Date a letter of credit or
letters of credit in form and substance reasonably acceptable to the
Administrative Agent and the applicable Issuer issued by a bank acceptable to
the Administrative Agent and the applicable Issuer, in each case in their sole
discretion, and/or cash collateral in an amount equal to 101% of the maximum
drawable amount of any such Letter of Credit.

(c) In connection with the Issuance of each Letter of Credit, the Borrower shall
give the relevant Issuer and the Administrative Agent at least two (2) Business
Days’ prior written notice, in substantially the form of Exhibit E (or in such
other written or electronic form as is acceptable to such Issuer), of the
requested Issuance of such Letter of Credit (a “Letter of Credit Request”). Such
notice shall specify the Issuer of such Letter of Credit, the face amount and
currency of the Letter of Credit requested, the date on which such Letter of
Credit is to expire (which date shall be a Business Day) and, in the case of an
issuance, the Person for whose benefit the requested Letter of Credit is to be
issued. Such notice, to be effective, must be received by the relevant Issuer
and the Administrative Agent not later than 11:00 a.m. on the last Business Day
on which such notice can be given under the first sentence of this clause (c);
provided that the relevant Issuer and the Administrative Agent may agree in a
particular instance in their sole discretion to a later time and date.

(d) Subject to the satisfaction of the conditions set forth in this Section 2.4,
the relevant Issuer shall, on the requested date, Issue a Letter of Credit on
behalf of the Borrower in accordance with such Issuer’s usual and customary
business practices. No Issuer shall Issue any Letter of Credit in the period
commencing on the first Business Day after it receives written notice from any
Lender that one or more of the conditions precedent contained in Section 4.2 or
clause (a) above (other than those conditions set forth in clauses (a)(i),
(a)(v)(B) and (C) above and, to the extent such clause relates to fees owing to
the Issuer of such Letter of Credit and its Affiliates, clause (a)(v)(A) above)
are not on such date satisfied or duly waived and ending when such conditions
are satisfied or duly waived. No Issuer shall otherwise be required to determine
that, or take notice whether, the conditions precedent set forth in Section 4.2
have been satisfied in connection with the Issuance of any Letter of Credit.

(e) The Borrower agrees that, if requested by the Issuer of any Letter of Credit
prior to the issuance of a Letter of Credit, it shall execute a Letter of Credit
Reimbursement Agreement in respect to any Letter of Credit Issued hereunder. In
the event of any conflict between the terms of any Letter of Credit
Reimbursement Agreement and this Agreement, the terms of this Agreement shall
govern.

 

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(f) Each Issuer shall comply with the following:

(i) give the Administrative Agent written notice (or telephonic notice confirmed
promptly thereafter in writing), which writing may be a telecopy or electronic
mail, of the Issuance of any Letter of Credit Issued by it (including the
applicable currency), all drawings under any Letter of Credit Issued by it and
of the payment (or the failure to pay when due) by the Borrower of any
Reimbursement Obligation when due (which notice the Administrative Agent shall
promptly transmit by telecopy, electronic mail or similar transmission to each
Lender);

(ii) upon the request of any Lender, furnish to such Lender copies of any Letter
of Credit Reimbursement Agreement to which such Issuer is a party and such other
documentation as may reasonably be requested by such Lender; and

(iii) on the first Business Day of each calendar week, provide to the
Administrative Agent (and the Administrative Agent shall provide a copy to each
Lender requesting the same) and the Borrower separate schedules for Documentary
Letters of Credit and Standby Letters of Credit issued by it, in form and
substance reasonably satisfactory to the Administrative Agent, setting forth the
aggregate Letter of Credit Obligations and applicable currencies, in each case
outstanding at the end of each month, and any information requested by the
Borrower or the Administrative Agent relating thereto.

(g) Immediately upon the issuance by an Issuer of a Letter of Credit in
accordance with the terms and conditions of this Agreement, such Issuer shall be
deemed to have sold and transferred to each Lender, and each Lender shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Lender’s Ratable Portion, in such Letter of Credit and the
obligations of the Borrower with respect thereto (including all Letter of Credit
Obligations with respect thereto) and any security therefor and guaranty
pertaining thereto.

(h) The Borrower agrees to pay to the Issuer of any Letter of Credit, in each
case in the same currency and in an equivalent amount, and, to the extent so
financed, all Reimbursement Obligations owing to such Issuer under any Letter of
Credit issued for its account no later than (x) on the same Business Day that
the Borrower receives written notice from such Issuer that payment has been made
under such Letter of Credit in accordance with its terms if such notice is
received by the Borrower by 11:00 a.m. and (y) on the next succeeding Business
Day after which the Borrower receives written notice from such Issuer that
payment has been made under such Letter of Credit in accordance with its terms
if such notice is received by the Borrower after 11:00 a.m. (such date described
in clause (x) or (y) above, the “Reimbursement Date”), irrespective of any
claim, set-off, defense or other right that the Borrower may have at any time
against such Issuer or any other Person. In the event that any Issuer makes any
payment under any Letter of Credit in accordance with its terms and the Borrower
shall not have repaid such amount to such Issuer pursuant to this clause (h)
(directly or by application of the deemed Loans described below in this
clause (h) or by virtue of the penultimate sentence of this clause (h)) or any
such payment by the Borrower is rescinded or set

 

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aside for any reason, such Reimbursement Obligation shall be payable in the
applicable currency on demand with interest thereon computed (i) from the date
on which such Reimbursement Obligation arose to the Reimbursement Date, at the
rate of interest applicable during such period to Loans that are in the same
currency which, in the case of Letters of Credit denominated in Dollars, shall
be Base Rate Loans, and, in the case of Letters of Credit denominated in
Canadian Dollars, shall be Canadian Prime Rate Loans, and (ii) from the
Reimbursement Date until the date of repayment in full, at the rate of interest
applicable during such period to past due Loans that are, in the case of Letters
of Credit denominated in Dollars, Base Rate Loans, in the case of Letters of
Credit denominated in Canadian Dollars, Canadian Prime Rate Loans, or in the
case of Letters of Credit denominated in Euros, Eurocurrency Rate Loans, and
such Issuer shall promptly notify the Administrative Agent, which shall promptly
notify each Lender of such failure, and each Lender shall promptly and
unconditionally pay to the Administrative Agent for the account of such Issuer
the amount of such Lender’s Ratable Portion of such payment in Same Day Funds in
the applicable currency. If the Administrative Agent so notifies such Lender
prior to 11:00 a.m. on any Business Day, such Lender shall make available to the
Administrative Agent for the account of such Issuer its Ratable Portion of the
amount of such payment on such Business Day in Same Day Funds in the applicable
currency. Upon such payment by a Lender, such Lender shall, except during the
continuance of a Default or Event of Default under Section 10.1(f) and
notwithstanding whether or not the conditions precedent set forth in Section 4.2
shall have been satisfied (which conditions precedent the Lenders hereby
irrevocably waive), be deemed to have made a Revolving Loan to the Borrower in
the principal amount of such payment. Whenever any Issuer receives from the
Borrower a payment of a Reimbursement Obligation as to which the Administrative
Agent has received for the account of such Issuer any payment from a Lender
pursuant to this clause (h), such Issuer shall pay over to the Administrative
Agent any amount received in excess of such Reimbursement Obligation and, upon
receipt of such amount, the Administrative Agent shall promptly pay over to each
Lender, in Same Day Funds in the applicable currency, an amount equal to such
Lender’s Ratable Portion of the amount of such payment adjusted, if necessary,
to reflect the respective amounts the Lenders have paid in respect of such
Reimbursement Obligation. (A) In the absence of written notice to the contrary
from the Borrower, and subject to the other provisions of this Agreement (but
without regard to the conditions to borrowing set forth in Section 4.2),
Reimbursement Obligations shall be financed when due with Swing Loans or, in the
case of Letters of Credit denominated in Dollars, Base Rate Loans, in the case
of Letters of Credit denominated in Canadian Dollars, Canadian Prime Rate Loans,
in each case to the Borrower in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting Base Rate Loan, Canadian Prime Rate Loan or Swing
Loan, as the case may be, and (B) in the event that the Borrower has notified
the Administrative Agent that it will not so finance any such payments, the
Borrower will make payment directly to the applicable Issuer when due. The
Administrative Agent shall promptly remit the proceeds from any Loans made
pursuant to clause (A) above in reimbursement of a draw under a Letter of Credit
to the applicable Issuer.

(i) Each Defaulting Lender agrees to pay to the Administrative Agent for the
account of such Issuer forthwith on demand any such unpaid amount together with
interest thereon, for the first Business Day after payment was first due at the
Federal Funds Rate and, thereafter, until such amount is repaid to the
Administrative Agent for the account of such Issuer, at a rate per annum equal
to the rate applicable to, in the case of Letters of Credit denominated in

 

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Dollars, Base Rate Loans, in the case of Letters of Credit denominated in
Canadian Dollars, Canadian Prime Rate Loans, or in the case of Letters of Credit
denominated in Euros, Eurocurrency Rate Loans, in each case under the Facility.

(j) The Borrower’s obligations to pay each Reimbursement Obligation and the
obligations of the Lenders to make payments to the Administrative Agent for the
account of the Issuers with respect to Letters of Credit shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement, under any and all circumstances whatsoever,
including the occurrence of any Default or Event of Default, and irrespective of
any of the following:

(i) any lack of validity or enforceability of any Letter of Credit or any Loan
Document, or any term or provision therein;

(ii) any amendment or waiver of or any consent to departure from all or any of
the provisions of any Letter of Credit or any Loan Document;

(iii) the existence of any claim, set-off, defense or other right that the
Borrower, any other party guaranteeing, or otherwise obligated with, the
Borrower, any Subsidiary or other Affiliate thereof or any other Person may at
any time have against the beneficiary under any Letter of Credit, any Issuer,
the Administrative Agent or any Lender or any other Person, whether in
connection with this Agreement, any other Loan Document or any other related or
unrelated agreement or transaction;

(iv) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;

(v) payment by the Issuer under a Letter of Credit against presentation of a
draft or other document that does not strictly comply, but that does
substantially comply, with the terms of such Letter of Credit; and

(vi) any other act or omission to act or delay of any kind of any Issuer, the
Lenders, the Administrative Agent or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.4, constitute a legal or
equitable discharge of the Borrower’s obligations hereunder.

Any action taken or omitted to be taken by the relevant Issuer under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not result in any liability of
such Issuer to the Borrower or any Lender. In determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof, the Issuers may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary and, in making any payment under any
Letter of Credit, the Issuers may rely exclusively on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or

 

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not any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever,
and any noncompliance in any immaterial respect of the documents presented under
such Letter of Credit with the terms thereof shall, in each case, be deemed not
to constitute willful misconduct or gross negligence of the applicable Issuer.

(k) Applicability of ISP and UCP. Unless otherwise expressly agreed by the
relevant Issuer and the Borrower when a Letter of Credit is issued (including
any such agreement applicable to a Letter of Credit in respect of the Existing
ABL Facility), (i) the rules of the ISP shall apply to each Standby Letter of
Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce at
the time of issuance, shall apply to each Documentary Letter of Credit

(l) All Existing Letters of Credit shall be deemed to have been issued pursuant
hereto, and from and after the Effective Date shall be subject to and governed
by the terms and conditions hereof.

SECTION 2.5 Reduction and Termination of the Revolving Credit Commitments.

The Borrower may, upon at least three (3) Business Days’ prior notice to the
Administrative Agent, terminate in whole or reduce in part ratably the unused
portions of any Class of Revolving Credit Commitments of the Lenders without
premium or penalty other than any amount required to be paid by the Borrower
pursuant to Section 3.5; provided, however, that each partial reduction shall be
in an aggregate amount of not less than $1,000,000 or an integral multiple of
$500,000 in excess thereof; provided, further, that no reduction or termination
of Commitments having a later maturity shall be permitted on a greater than pro
rata basis with commitments having an earlier maturity. Notwithstanding the
foregoing, the Borrower may rescind or postpone any notice of termination of the
Revolving Credit Commitments if such termination would have resulted from a
refinancing of all of the applicable Facility, which refinancing shall not be
consummated or otherwise shall be delayed.

SECTION 2.6 Repayment of Loans.

The Borrower promises to repay to the Administrative Agent for the ratable
account of the Lenders the aggregate unpaid principal amount of the Loans
(including any Letter of Credit Borrowings) and the Swing Loans on the Revolving
Credit Termination Date or earlier, if otherwise required by the terms hereof.

SECTION 2.7 Evidence of Indebtedness.

(a) The Loans made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and evidenced by one or more entries in the
Register maintained by the Administrative Agent, acting solely for purposes of
Treasury Regulation Section 5f.103-1(c), as agent for the Borrower, in each case
in the ordinary course of business. The accounts or records maintained by the
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shall be prima facie evidence absent manifest error of the amount of the Loans
made by the Lenders to the Borrower and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

(b) (i) Entries made in good faith by the Administrative Agent in the Register
pursuant to Sections 2.7(a) and by each Lender in its account or accounts
pursuant to Section 2.7a) shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement and the other Loan
Documents, absent manifest error; provided that the failure of the
Administrative Agent or such Lender to make an entry, or any finding that an
entry is incorrect, in the Register or such account or accounts shall not limit
or otherwise affect the obligations of the Borrower under this Agreement and the
other Loan Documents.

(ii) Notwithstanding anything to the contrary contained in this Agreement, the
Loans (including the Revolving Credit Notes evidencing such Loans) and the drawn
Letters of Credit are registered obligations and the right, title, and interest
of the Lenders and the Issuers and their assignees in and to such Loans or drawn
Letters of Credit, as the case may be, shall be transferable only upon notation
of such transfer in the Register. A Revolving Credit Note shall only evidence
the Lender’s or a registered assignee’s right, title and interest in and to the
related Loan, and in no event is any such Revolving Credit Note to be considered
a bearer instrument or obligation. This Section 2.7(b) and Section 12.2 shall be
construed so that the Loans and drawn Letters of Credit 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 and Section 12.2 hereof 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 Loans in accordance with their terms. In addition, the Loan Parties, the
Administrative Agent, the Lenders and the Issuers shall treat each Person whose
name is recorded in the Register as a Lender or as an Issuer, as applicable, for
all purposes of this Agreement. Information contained in the Register with
respect to any Lender or Issuer shall be available for inspection by the
Borrower, the Administrative Agent, such Lender or such Issuer 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 Revolving Credit Note or Revolving Credit Notes to such Lender
evidencing the Loans of such Lender, substantially in the

 

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form of Exhibit B. Each Lender may attach schedules to its Revolving Credit Note
and endorse thereon the date, Type (if applicable), amount and maturity of its
Loans and payments with respect thereto; provided that the failure to do so
shall in no way affect the obligations of the Borrower or any other Loan Party
under any Loan Document.

SECTION 2.8 Optional Prepayments.

The Borrower may prepay, in the applicable currency, the outstanding principal
amount of the Loans and Swing Loans in whole or in part at any time; provided,
however, that if any prepayment of any Eurocurrency Rate Loan or BA Rate Loan is
made by the Borrower other than on the last day of an Interest Period for such
Loan, the Borrower shall also pay any amount owing pursuant to Section 3.5.

SECTION 2.9 Mandatory Prepayments.

(a) If at any time, the aggregate principal amount of Revolving Credit
Outstandings exceeds the aggregate Maximum Credit at such time (including as a
result of any currency fluctuation), the Borrower shall forthwith, upon
notification by the Administrative Agent, prepay, in the applicable currency,
the Swing Loans first and then the other Loans then outstanding in an amount
equal to such excess. If any such excess remains after repayment in full of the
aggregate outstanding Swing Loans and the other Loans, the Borrower shall Cash
Collateralize the Letter of Credit Obligations in the manner set forth in
Section 10.5 in an amount equal to the Dollar Equivalent of 101% of such excess.

(b) If (x) at any time during a Cash Dominion Period or (y) in respect of any
Disposition that would result in the occurrence of a Cash Dominion Period, any
Loan Party or any of its Subsidiaries receives any Net Cash Proceeds arising
from any Disposition in respect of any Current Asset Collateral outside of the
ordinary course of business (other than any Current Asset Collateral that is
part of any Disposition permitted by Section 9.5(m)), subject to the
Intercreditor Agreement, the Borrower shall promptly (but in any event within
five (5) Business Days of such receipt) prepay the Loans in an amount equal to
100% of such Net Cash Proceeds (and, to the extent such Net Cash Proceeds exceed
the aggregate principal amount of Loans outstanding, Cash Collateralize Letters
of Credit in an amount equal to up to 101% of the aggregate maximum drawable
amount of such Letters of Credit).

(c) Subject to Section 3.5 hereof, all such payments in respect of the Loans
pursuant to this Section 2.9 shall be without premium or penalty. All interest
accrued on the principal amount of the Loans paid pursuant to this Section 2.9
shall be paid, or may be charged by the Administrative Agent to any loan
account(s) of the Borrower, at the Administrative Agent’s option, on the date of
such payment. Interest shall accrue and be due, until the next Business Day, if
the amount so paid by the Borrower to the bank account designated by the
Administrative Agent for such purpose is received in such bank account after
3:00 p.m.

(d) At all times after the occurrence and during the continuance of Cash
Dominion Period and notification thereof by the Administrative Agent to the
Borrower (subject to the provisions of Section 10.3 and to the terms of the
Security Agreement), on each Business Day, at or before 1:00 p.m., the Agent
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Concentration Account and all amounts received pursuant to Section 2.9(b), first
to pay any fees or expense reimbursements then due to the Administrative Agent,
the Issuers and the Lenders (other than in connection with Cash Management
Obligations, Obligations in respect of Secured Hedge Agreements or any Revolving
Commitment Increases), pro rata, second to pay interest due and payable in
respect of any Loans (including Swing Loans) and any Protective Advances that
may be outstanding, pro rata, third to prepay the principal of any Protective
Advances that may be outstanding, pro rata, and fourth to prepay the principal
of the Loans (including Swing Loans) and to Cash Collateralize outstanding
Letter of Credit Obligations, pro rata.

SECTION 2.10 Interest.

(a) Rate of Interest. All Loans and the outstanding amount of all other
Obligations owing under the Loan Documents shall bear interest, in the case of
any Class of Loans, on the unpaid principal amount thereof from the date such
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:

(i) if a Base Rate Loan or such other Obligation (except as otherwise provided
in this Section 2.10(a)), 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 for Base Rate
Loans;

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

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

(iv) if a Canadian Prime Rate Loan, at a rate per annum equal to the sum of
(A) the Canadian Prime Rate as in effect from time to time and (B) the
Applicable Margin for Canadian Prime Rate Loans.

(b) Interest Payments. (i) Interest accrued on each Base Rate Loan or Canadian
Prime Rate Loans (in each case, other than Swing Loans) shall be payable in
arrears (A) on the first Business Day of each February, May, August and
November, commencing on the first such day following the making of such Base
Rate Loan or Canadian Prime Rate Loan, as applicable and (B) if not previously
paid in full, at maturity (whether by acceleration or otherwise) of such Base
Rate Loan or Canadian Prime Rate Loan, as applicable, (ii) interest accrued on
Swing Loans shall be payable in arrears on the first Business Day of the
immediately succeeding calendar month, (iii) interest accrued on each
Eurocurrency Rate Loan or BA Rate Loan shall be payable in arrears (A) on the
last day of each Interest Period applicable to such Loan and, if such Interest
Period has a duration of more than three (3) months, on each date during such
Interest Period occurring every three (3) 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 Eurocurrency Rate Loan

 

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or BA Rate Loan and (iv) 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. The Borrower shall pay interest on past due amounts
hereunder at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.

SECTION 2.11 Conversion/Continuation Option.

(a) The Borrower may elect (i) at any time on any Business Day, to convert Base
Rate Loans or Canadian Prime Rate Loans (in each case, other than Swing Loans)
or any portion thereof to Eurocurrency Rate Loans or BA Rate Loans, as
applicable, and (ii) at the end of any applicable Interest Period, to convert
Eurocurrency Rate Loans or BA Rate Loans or any portion thereof into Base Rate
Loans or Canadian Prime Rate Loans, as applicable, or to continue such
Eurocurrency Rate Loans or BA Rate Loans, as applicable, or any portion thereof
for an additional Interest Period; provided, however, that the aggregate amount
of the Eurocurrency Rate Loans or BA Rate Loans for each Interest Period must be
in the amount of at least $500,000 or an integral multiple of $100,000 in excess
thereof. Each conversion or continuation shall be allocated among the Loans of
each Lender in accordance with such Lender’s Ratable Portion. Each such election
shall be in substantially the form of Exhibit F (a “Notice of Conversion or
Continuation”) and shall be made by giving the Administrative Agent at least two
(2) Business Days’ prior written notice specifying (A) the amount and type of
Loan being converted or continued, (B) in the case of a conversion to or a
continuation of Eurocurrency Rate Loans or BA Rate Loans, the applicable
Interest Period and (C) in the case of a conversion, the date of such
conversion.

(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, the Administrative Agent or the Requisite Lenders
may require by notice to the Borrower that no conversion in whole or in part of
Base Rate Loans or Canadian Prime Rate Loans, as applicable, to Eurocurrency
Rate Loans or BA Rate Loans, as applicable, and no continuation in whole or in
part of Eurocurrency Rate Loans (other than Eurocurrency Rate Loans denominated
in Euros) or BA Rate Loans upon the expiration of any applicable Interest Period
shall be permitted at any time at which (A) an Event of Default shall have
occurred and be continuing or (B) the continuation of, or conversion into, a
Eurocurrency Rate Loan (other than Eurocurrency Rate Loans denominated in Euros)
or BA Rate Loans would violate any provision of Section 2.14; provided that,
notwithstanding anything herein to the contrary, during any time at which (x) an
Event of Default shall have occurred and be continuing or (y) the continuation
of a Eurocurrency Rate Loan denominated in Euros would violate any provision of
Section 2.14, the Administrative Agent or the Requisite Lenders may require by
notice to the Borrower that all Eurocurrency Rate Loans denominated in Euros
shall convert to, or be continued as, as the case may be, Eurocurrency Rate
Loans denominated in Euros with an Interest Period of one (1) month. If, within
the time period required under the terms of this Section 2.11, the
Administrative Agent does not receive a Notice of Conversion or Continuation
from the Borrower containing a permitted election to continue any Eurocurrency
Rate Loans

 

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(other than Eurocurrency Rate Loans denominated in Euros) or BA Rate Loans for
an additional Interest Period or to convert any such Loans, then, upon the
expiration of the applicable Interest Period, such Loans shall be automatically
converted to Base Rate Loans or Canadian Prime Rate Loans, as applicable. Each
Notice of Conversion or Continuation shall be irrevocable.

SECTION 2.12 Fees.

(a) Unused Commitment Fee. The Borrower agrees to pay in Same Day Funds in
Dollars to the Administrative Agent for the account of each Lender a commitment
fee (the “Unused Commitment Fee”) on the average daily amount by which the
Revolving Credit Commitment of such Lender exceeds such Lender’s Ratable Portion
of the sum of (i) the aggregate outstanding principal amount of Loans for the
applicable Class and (ii) the outstanding amount of the aggregate Letter of
Credit Undrawn Amounts from the Effective Date through the Revolving Credit
Termination Date at the Applicable Unused Commitment Fee Rate, payable in
arrears (x) on the first Business Day of each calendar quarter, commencing on
the first such Business Day following the Effective Date and (y) on the
Revolving Credit Termination Date. For the avoidance of doubt, any Swing Loans
outstanding shall reduce the Revolving Credit Commitment of the Swing Loan
Lender in its capacity as a Lender.

(b) Letter of Credit Fees. The Borrower agrees to pay the following amounts with
respect to Letters of Credit issued by any Issuer:

(i) to the Administrative Agent for the account of each Issuer of a Letter of
Credit, with respect to each Letter of Credit issued by such Issuer, an issuance
fee equal to 0.125% per annum of the Dollar Equivalent of the average daily
maximum undrawn face amount of such Letter of Credit for the immediately
preceding calendar quarter (or portion thereof), payable in arrears (A) on the
first Business Day of each calendar quarter, commencing on the first such
Business Day following the issuance of such Letter of Credit and (B) on the
Revolving Credit Termination Date;

(ii) to the Administrative Agent for the ratable benefit of the Lenders, with
respect to each Letter of Credit, a fee accruing in Dollars at a rate per annum
equal to (x) in the case of each Standby Letter of Credit, the Applicable Margin
for Eurocurrency Rate Loans and (y) in the case of each Documentary Letter of
Credit, 50% of the Applicable Margin for Eurocurrency Rate Loans (each such fee,
a “Letter of Credit Fee”), in each case multiplied by the Dollar Equivalent
average daily maximum undrawn face amount of such Letter of Credit for the
immediately preceding calendar quarter (or portion thereof), payable in arrears
(A) on the first Business Day of each calendar quarter, commencing on the first
such Business Day following the issuance of such Letter of Credit and (B) on the
Revolving Credit Termination Date; provided, however, that any Letter of Credit
Fees otherwise payable for the account of a Defaulting Lender with respect to
any Letter of Credit as to which such Defaulting Lender has not provided Cash
Collateral satisfactory to the applicable Issuer pursuant to Section 2.4 shall
be payable, to the maximum extent permitted by applicable Law, to the other
Lenders in accordance with the upward adjustments in their respective Applicable
Percentages allocable to such Letter of Credit pursuant to Section 2.16(a)(iv),
with the balance of such fee, if any, payable to the applicable Issuer for its
own account; and

 

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(iii) to the Issuer of any Letter of Credit, with respect to the issuance,
amendment or transfer of each Letter of Credit and each drawing made thereunder,
customary documentary and processing charges in accordance with such Issuer’s
standard schedule for such charges in effect at the time of issuance, amendment,
transfer or drawing, as the case may be.

(c) Additional Fees. The Borrower 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 2.13 Payments and Computations.

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. The Borrower
shall make each payment and prepayment hereunder (including fees and expenses)
not later than 2:00 p.m. on the day when due, (i) in the case of Loans, in the
currency in which such Loan is denominated, (ii) in the case of Reimbursement
Obligations, in the currency of the applicable Letter of Credit, (iii) in the
case of any accrued interest payable on a Loan or Reimbursement Obligation, in
the currency of such Loan or Reimbursement Obligation, as applicable, and
(iv) in the case of all other payments under each Loan Document, in Dollars
except as otherwise expressly provided herein or therein, in each case to the
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the applicable Administrative Agent’s Office for payment and
in Same Day Funds without condition or deduction for any defense, recoupment,
set-off or counterclaim. The Administrative Agent will promptly distribute to
each Lender its Pro Rata Share (or other applicable share as provided herein) of
such payment in like funds as received by wire transfer to such Lender’s Lending
Office. All payments received by the Administrative Agent after 2:00 p.m. shall,
in each case be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue.

(b) All computations of interest for Base Rate Loans and Canadian Prime Rate
Loans shall be made on the basis of a year of 365 days or 366 days, as the case
may be, and actual days elapsed. All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a 365-day year). Interest shall accrue on each Loan for the day on
which the Loan is made, and shall not accrue on a Loan, or any portion thereof,
for the day on which the Loan or such portion is paid; provided that any Loan
that is repaid on the same day on which it is made shall bear interest for one
(1) day. Each determination by the Administrative Agent of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.

(c) [reserved]

(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 Eurocurrency Rate Loan or BA Rate Loan to be

 

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made in the next calendar month, such payment shall be made on the immediately
preceding Business Day. All repayments of any Loans shall be applied as follows:
first, to repay any such Loans outstanding as Base Rate Loans and Canadian Prime
Rate Loans and then, to repay any such Loans outstanding as Eurocurrency Rate
Loans and BA Rate Loans, with those Eurocurrency Rate Loans or BA Rate Loans, as
applicable, having earlier expiring Interest Periods being repaid prior to those
having later expiring Interest Periods.

(e) Unless the Administrative Agent shall have received notice from the Borrower
to the Lenders 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 (but shall not be so required to), 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 to the Administrative
Agent in Same Day Funds in the applicable currency, then each Lender shall repay
to the Administrative Agent forthwith on demand the portion of such assumed
payment that was made available to such Lender in Same Day Funds in the
applicable currency, together with interest thereon in respect of each day from
and including the date such amount was made available to such Lender to the date
such amount is repaid to the Administrative Agent in Same Day Funds in the
applicable currency at the applicable Overnight Rate from time to time in
effect.

(f) Except for payments and other amounts received by the Administrative Agent
and applied in accordance with the provisions of Section 10.2(b) below (or
required to be applied in accordance with Section 2.9), 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 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 Swing Loans
received by the Administrative Agent shall be distributed to the Swing Loan
Lender; payments in respect of Loans received by the Administrative Agent shall
be distributed to each Lender in accordance with such Lender’s Ratable Portion;
and all payments of fees and all other payments in respect of any other
Obligation shall be allocated among such of the Lenders and Issuers as are
entitled thereto and, for such payments allocated to the Lenders, in proportion
to their respective Ratable Portions.

(g) At the option of the Administrative Agent, principal on the Swing Loans,
Reimbursement Obligations, interest, fees, expenses and other sums due and
payable in respect of the Loans and Protective Advances may be paid from the
proceeds of Swing Loans or the Revolving Loans unless the Borrower makes such
payments on the next succeeding Business Day after the Borrower receives written
notice from the Administrative Agent requesting such payments. The Borrower
hereby authorizes the Swing Loan Lender to make such Swing Loans pursuant to
Section 2.3(a) and the Lenders to make such Loans pursuant to Section 2.2(a)
from time to time in the amounts of any and all principal payable with respect
to the Swing Loans, Reimbursement Obligations, interest, fees, expenses and
other sums payable in respect of the Loans and Protective Advances, and further
authorizes the Administrative Agent to give the

 

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Lenders notice of any Borrowing with respect to such Swing Loans and the
Revolving Loans and to distribute the proceeds of such Swing Loans and the
Revolving Loans to pay such amounts. The Borrower agrees that all such Swing
Loans and the Revolving Loans so made shall be deemed to have been requested by
it (irrespective of the satisfaction of the conditions in Section 4.2, which
conditions the Lenders irrevocably waive) and directs that all proceeds thereof
shall be used to pay such amounts.

(h) No Loan may be converted into or continued as a Loan denominated in a
different currency, but instead must be repaid or prepaid in the original
currency of such Loan and reborrowed in the other currency.

SECTION 2.14 Special Provisions Governing Eurocurrency Rate Loans and BA Rate
Loans.

(a) Determination of Interest Rate.

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

(b) Interest Rate Unascertainable, Inadequate or Unfair.

In the event that (i) the Administrative Agent reasonably determines that
adequate and fair means do not exist for ascertaining the applicable interest
rates by reference to which the Eurocurrency Rate or BA Rate then being
determined is to be fixed or (ii) the Requisite Lenders reasonably determine and
notify the Administrative Agent that the Eurocurrency Rate or BA Rate for any
Interest Period will not adequately reflect the cost to the Lenders of making or
maintaining such Loans for such Interest Period, the Administrative Agent shall
forthwith so notify the Borrower and the Lenders, whereupon each Eurocurrency
Rate Loan denominated in Dollars or BA Rate Loan shall automatically, on the
last day of the current Interest Period for such Loan, convert into a Base Rate
Loan or Canadian Prime Rate Loan, as applicable, and the obligations of the
Lenders to make Eurocurrency Rate Loans or BA Rate Loans, as applicable, or to
convert Base Rate Loans or Canadian Prime Rate Loans, as applicable, into
Eurocurrency Rate Loans denominated in Dollars or BA Rate Loans, as applicable,
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.

SECTION 2.15 Revolving Commitment Increase.

(a) The Borrower may at any time or from time to time after the Effective Date,
by notice to the Administrative Agent (whereupon the Administrative Agent shall
promptly deliver a copy to each of the Lenders), request one or more increases
in the amount of any Class of Revolving Credit Commitments (each such increase,
a “Revolving Commitment Increase”); provided that upon the effectiveness of any
Incremental Amendment referred to below, no Default or Event of Default shall
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in an aggregate principal amount that is not less than $25,000,000 (provided
that such amount may be less than $25,000,000 if such amount represents all
remaining availability under the limit set forth in the next sentence).
Notwithstanding anything to the contrary herein, the aggregate amount of the
Revolving Commitment Increases shall not exceed $75,000,000 (the “Incremental
Availability”). Each notice from the Borrower pursuant to this Section shall set
forth the requested amount and proposed terms of the relevant Revolving
Commitment Increases. Revolving Commitment Increases may be provided by any
existing Lender (it being understood that no existing Lender will have an
obligation to provide a portion of any Revolving Commitment Increase), in each
case on terms permitted in this Section 2.15 and otherwise on terms reasonably
acceptable to the Administrative Agent or by any other bank or other financial
institution or institutional lender or investor (any such other bank or other
financial institution or institutional lender or investor being called an
“Additional Lender”), provided that the Administrative Agent, each Issuer and
the Swing Loan Lender shall have consented (in each case, such consent not to be
unreasonably withheld) to such Lender’s or Additional Lender’s providing such
Revolving Commitment Increases if such consent by the Administrative Agent, the
applicable Issuer and the Swing Loan Lender, as the case may be, would be
required under Section 12.2(b) for an assignment of Loans or Revolving Credit
Commitments to such Lender or Additional Lender. Revolving Credit Commitments in
respect of Revolving Commitment Increases shall become Revolving Credit
Commitments (or in the case of a Revolving Commitment Increase to be provided by
an existing Lender, an increase in such Lender’s applicable Revolving Credit
Commitment) under this Agreement pursuant to an amendment (an “Incremental
Amendment”) to this Agreement and, as appropriate, the other Loan Documents,
executed by Holdings, the Borrower, each Lender agreeing to provide such
Revolving Credit Commitment, if any, each Additional Lender, if any, and the
Administrative Agent. The Incremental Amendment may, without the consent of any
other Lenders, effect such amendments to this Agreement and the other Loan
Documents as may be necessary or appropriate, in the reasonable opinion of the
Administrative Agent and the Borrower, to effect the provisions of this Section.
The effectiveness of any Incremental Amendment shall be subject to the
satisfaction on the date thereof (each, an “Incremental Facility Effective
Date”) of each of the conditions set forth in Section 4.2 (it being understood
that all references to “the date of such Loan or Issuance” or similar language
in such Section 4.2 shall be deemed to refer to the effective date of such
Incremental Amendment) and such other conditions as the parties thereto shall
agree. Any Revolving Commitment Increase shall be documented as an increase to
the Facility and shall be on terms identical to those applicable to the
Facility, except with respect to any commitment, arrangement, upfront or similar
fees that may be agreed to among the Borrower and the lenders agreeing to
participate in such Revolving Commitment Increase. The Borrower shall use
Revolving Commitment Increases for any purpose not prohibited by this Agreement.
Upon each increase in the Revolving Credit Commitments pursuant to this
Section 2.15, (x) each Lender of the applicable Class immediately prior to such
increase will automatically and without further act be deemed to have assigned
to each Lender providing a portion of the Revolving Commitment Increase of the
applicable Class (each a “Revolving Commitment Increase Lender”) in respect of
such increase, and each such Revolving Commitment Increase Lender will
automatically and without further act be deemed to have assumed, a portion of
such Lender’s participations hereunder in outstanding Letters of Credit and
Swing Loans such that, after giving effect to each such deemed assignment and
assumption of participations, the percentage of the aggregate outstanding
(i) participations hereunder in Letters of Credit, (ii) participations hereunder
in

 

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Swing Loans held by each Lender of the applicable Class and (iii) participations
in Protective Advances held by each Lender of the applicable Class (including
each such Revolving Commitment Increase Lender) will equal the percentage of the
aggregate Revolving Credit Commitments of all Lenders of such Class represented
by such Lender’s Revolving Credit Commitment and (y) if, on the date of such
increase, there are any Revolving Loans of such Class outstanding, such
Revolving Loans shall on or prior to the effectiveness of such Revolving
Commitment Increase be prepaid from the proceeds of additional Revolving Loans
of such Class made hereunder (reflecting such increase in Revolving Credit
Commitments of such Class), which prepayment shall be accompanied by accrued
interest on the Revolving Loans of such Class being prepaid and any costs
incurred by any Lender in accordance with Section 3.5. The Administrative Agent
and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and
pro rata payment requirements contained elsewhere in this Agreement shall not
apply to the transactions effected pursuant to the immediately preceding
sentence.

(b) This Section 2.15 shall supersede any provisions in Section 12.1 or
Section 12.7 to the contrary.

SECTION 2.16 Defaulting Lenders.

(a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:

(i) Waivers and Amendments. That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in Section 12.1.

(ii) Reallocation of Payments. Any payment of principal, interest, fees or other
amounts received by the Administrative Agent for the account of that Defaulting
Lender (whether voluntary or mandatory, at maturity, pursuant to Article X or
otherwise, and including any amounts made available to the Administrative Agent
by that Defaulting Lender pursuant to Section 12.6), shall be applied at such
time or times as may be determined by the Administrative Agent as follows:
first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder; second, to the payment on a pro rata basis of
any amounts owing by that Defaulting Lender to any Issuer or the Swing Loan
Lender hereunder; third, if so determined by the Administrative Agent or
requested by any Issuer or the Swing Loan Lender, to be held as cash collateral
for future funding obligations of that Defaulting Lender of any participation in
any Swing Loan or Letter of Credit; fourth, as the Borrower may request (so long
as no Default or Event of Default exists), to the funding of any Loan in respect
of which that Defaulting Lender has failed to fund its portion thereof as
required by this Agreement, as determined by the Administrative Agent; fifth, if
so determined by the Administrative Agent and the Borrower, to be held in a
non-interest bearing deposit account and released in order to satisfy
obligations of that Defaulting Lender to fund Loans under this Agreement; sixth,
to the payment of any amounts owing to the Lenders, any Issuer or the Swing Loan
Lender as a result of any judgment of a court of competent jurisdiction obtained
by any Lender, any Issuer or the Swing Loan Lender against that Defaulting
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that Defaulting Lender’s breach of its obligations under this Agreement;
seventh, so long as no Default or Event of Default exists, to the payment of any
amounts owing to the Borrower as a result of any judgment of a court of
competent jurisdiction obtained by the Borrower against that Defaulting Lender
as a result of that Defaulting Lender’s breach of its obligations under this
Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a
court of competent jurisdiction; provided that if (x) such payment is a payment
of the principal amount of any Loans or Letter of Credit Borrowings in respect
of which that Defaulting Lender has not fully funded its appropriate share and
(y) such Loans or Letter of Credit Borrowings were made at a time when the
conditions set forth in Section 4.2 were satisfied or waived, such payment shall
be applied solely to pay the Loans of, and Letter of Credit Borrowings owed to,
all non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Loans of, or Letter of Credit Borrowings owed to, that Defaulting
Lender. Any payments, prepayments or other amounts paid or payable to a
Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting
Lender or to post cash collateral pursuant to this Section 2.16(a)(ii) shall be
deemed paid to and redirected by that Defaulting Lender, and each Lender
irrevocably consents hereto.

(iii) Certain Fees. That Defaulting Lender (x) shall not be entitled to receive
any commitment fee pursuant to Section 2.12(a) for any period during which that
Lender is a Defaulting Lender (and the Borrower shall not be required to pay any
such fee that otherwise would have been required to have been paid to that
Defaulting Lender for such period) and (y) shall be limited in its right to
receive Letter of Credit Fees as provided in Section 2.12(b).

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. During
any period in which there is a Defaulting Lender, for purposes of computing the
amount of the obligation of each non-Defaulting Lender to acquire, refinance or
fund participations in Letters of Credit or Swing Loans pursuant to Sections 2.3
and 2.4, the “Applicable Percentage” of each non-Defaulting Lender shall be
computed without giving effect to the Revolving Credit Commitment of that
Defaulting Lender; provided that (i) each such reallocation shall be given
effect only if, at the date the applicable Lender becomes a Defaulting Lender,
no Default or Event of Default exists; and (ii) the aggregate obligation of each
non-Defaulting Lender to acquire, refinance or fund participations in Letters of
Credit and Swing Loans shall not exceed the positive difference, if any, of
(1) the Revolving Credit Commitment of that non-Defaulting Lender minus (2) the
aggregate Outstanding Amount of the Revolving Loans of that Lender.

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent, Swing
Loan Lender and the Issuers agree in writing in their sole discretion that a
Defaulting Lender should no longer be deemed to be a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase that portion of outstanding
Loans of the other Lenders or take such other actions as the Administrative
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Revolving Loans and funded and unfunded participations in Letters of Credit and
Swing Loans to be held on a pro rata basis by the Lenders in accordance with
their Applicable Percentages (without giving effect to Section 2.16(a)(iv)),
whereupon that Lender will cease to be a Defaulting Lender; provided that no
adjustments will be made retroactively with respect to fees accrued or payments
made by or on behalf of the Borrower for the period that such Lender was a
Defaulting Lender; and provided further that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

(c) Cash Collateral. At any time that there shall exist a Defaulting Lender,
immediately upon the request of the Administrative Agent, the applicable Issuer
or the Swing Loan Lender, the Borrower shall deliver to the Administrative Agent
Cash Collateral in an amount sufficient to cover all Fronting Exposure (after
giving effect to Section 2.16(a)(iv) and any Cash Collateral provided by the
Defaulting Lender).

SECTION 2.17 Extensions of Loans.

(a) Extension of Revolving Credit Commitments. The Borrower may at any time and
from time to time request that all or a portion of the Revolving Credit
Commitments of a given Class (each, an “Existing Revolver Tranche”) be amended
to extend the Scheduled Termination Date with respect to all or a portion of any
principal amount of such Revolving Credit Commitments (any such Revolving Credit
Commitments which have been so amended, “Extended Revolving Credit Commitments”)
and to provide for other terms consistent with this Section 2.17; provided that
there shall be no more than three (3) Classes of Loans and Commitments
outstanding at any time. In order to establish any Extended Revolving Credit
Commitments, the Borrower shall provide a notice to the Administrative Agent
(who shall provide a copy of such notice to each of the Lenders under the
applicable Existing Revolver Tranche) (each, a “Extension Request”) setting
forth the proposed terms (which shall be determined in consultation with the
Administrative Agent) of the Extended Revolving Credit Commitments to be
established, which shall (x) be identical as offered to each Lender under such
Existing Revolver Tranche (including as to the proposed interest rates and fees
payable) and offered pro rata to each Lender under such Existing Revolver
Tranche and (y) be identical to the Revolving Credit Commitments under the
Existing Revolver Tranche from which such Extended Revolving Credit Commitments
are to be amended, except that: (i) the Scheduled Termination Date of the
Extended Revolving Credit Commitments shall be later than the Scheduled
Termination Date of the Revolving Credit Commitments of such Existing Revolver
Tranche, (ii) the Extension Amendment may provide for other covenants and terms
that apply solely to any period after the Latest Maturity Date that is in effect
on the effective date of the Extension Amendment (immediately prior to the
establishment of such Extended Revolving Credit Commitments); and (iii) all
borrowings under the Revolving Credit Commitments and repayments thereunder
shall be made on a pro rata basis (except for (I) payments of interest and fees
at different rates on Extended Revolving Credit Commitments (and related
outstandings) and (II) repayments required upon the Revolving Credit Termination
Date of the non-extending Revolving Credit Commitments); provided, further, that
(A) the conditions precedent to a Borrowing set forth in Section 4.2 shall be
satisfied as of the date of such Extension Amendment and at the time when any
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Commitment, (B) in no event shall the final maturity date of any Extended
Revolving Credit Commitments of a given Extension Series at the time of
establishment thereof be earlier than the then Latest Maturity Date of any other
Revolving Credit Commitments hereunder, (C) any such Extended Revolving Credit
Commitments (and the Liens securing the same) shall be permitted by the terms of
the Intercreditor Agreements (to the extent any Intercreditor Agreement is then
in effect) and (D) all documentation in respect of the such Extension Amendment
shall be consistent with the foregoing. Any Extended Revolving Credit
Commitments amended pursuant to any Extension Request shall be designated a
series (each, a “Extension Series”) of Extended Revolving Credit Commitments for
all purposes of this Agreement; provided that any Extended Revolving Credit
Commitments amended from an Existing Revolver Tranche may, to the extent
provided in the applicable Extension Amendment, be designated as an increase in
any previously established Extension Series with respect to such Existing
Revolver Tranche. Each Extension Series of Extended Revolving Credit Commitments
incurred under this Section 2.17 shall be in an aggregate principal amount equal
to not less than $50,000,000.

(b) Extension Request. The Borrower shall provide the applicable Extension
Request at least five (5) Business Days (or such shorter period as may be agreed
by the Administrative Agent) prior to the date on which Lenders under the
Existing Revolver Tranche are requested to respond, and shall agree to such
procedures, if any, as may be established by, or acceptable to, the
Administrative Agent, in each case acting reasonably, to accomplish the purposes
of this Section 2.17. No Lender shall have any obligation to agree to provide
any Extended Revolving Credit Commitment pursuant to any Extension Request. Any
Revolving Credit Lender (each, an “Extending Revolving Credit Lender”) wishing
to have all or a portion of its Revolving Credit Commitments under the Existing
Revolver Tranche subject to such Extension Request amended into Extended
Revolving Credit Commitments shall notify the Administrative Agent (each, an
“Extension Election”) on or prior to the date specified in such Extension
Request of the amount of its Revolving Credit Commitments under the Existing
Revolver Tranche which it has elected to request be amended into Extended
Revolving Credit Commitments (subject to any minimum denomination requirements
imposed by the Administrative Agent). In the event that the aggregate principal
amount of Revolving Credit Commitments under the Existing Revolver Tranche in
respect of which applicable Revolving Credit Lenders shall have accepted the
relevant Extension Request exceeds the amount of Extended Revolving Credit
Commitments requested to be extended pursuant to the Extension Request,
Revolving Credit Commitments subject to Extension Elections shall be amended to
reflect allocations of the Extended Revolving Credit Commitments, which Extended
Revolving Credit Commitments shall be allocated as agreed by Administrative
Agent and the Borrower.

(c) New Revolving Commitment Lenders. Following any Extension Request made by
the Borrower in accordance with Sections 2.17(a) and 2.17(b), if the Lenders
shall have declined to agree during the period specified in Section 2.17(b)
above to provide Extended Revolving Credit Commitments in an aggregate principal
amount equal to the amount requested by the Borrower in such Extension Request,
the Borrower may request that banks, financial institutions or other
institutional lenders or investors other than the Lenders or Extended Revolving
Credit Lenders (the “New Revolving Commitment Lenders”), which New Revolving
Commitment Lenders may elect to provide an Extended Revolving Credit Commitment
hereunder; provided that such Extended Revolving Credit Commitments of such New
Revolving Commitment Lenders (i) shall be in an aggregate principal amount for
all such New Revolving

 

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Commitment Lenders not to exceed the aggregate principal amount of Extended
Revolving Credit Commitments so declined to be provided by the existing Lenders
and (ii) shall be on identical terms to the terms applicable to the terms
specified in the applicable Extension Request (and any Extended Revolving Credit
Commitments provided by existing Lenders in respect thereof); provided further
that, as a condition to the effectiveness of any Extended Revolving Credit
Commitment of any New Revolving Commitment Lender, the Administrative Agent,
each Issuer and the Swing Loan Lender shall have consented (such consent not to
be unreasonably withheld) to each New Revolving Commitment Lender if such
consent would be required under Section 12.2(b)(iii) for an assignment of
Revolving Credit Commitments to such Person. Notwithstanding anything herein to
the contrary, any Extended Revolving Credit Commitment provided by New Revolving
Commitment Lenders shall be pro rata to each New Revolving Commitment Lender.
Upon effectiveness of the Extension Amendment to which each such New Revolving
Commitment Lender is a party, (a) the Revolving Credit Commitments of all
existing Revolving Credit Lenders of each Class specified in the Extension
Amendment in accordance with this Section 2.17 will be permanently reduced pro
rata by an aggregate amount equal to the aggregate principal amount of the
Extended Revolving Credit Commitments of such New Revolving Commitment Lenders
and (b) the Revolving Credit Commitment of each such New Revolving Commitment
Lender will become effective. The Extended Revolving Credit Commitments of New
Revolving Commitment Lenders will be incorporated as Revolving Credit
Commitments hereunder in the same manner in which Extended Revolving Credit
Commitments of existing Lenders are incorporated hereunder pursuant to this
Section 2.17, and for the avoidance of doubt, all Borrowings and repayments of
Revolving Loans from and after the effectiveness of such Extension Amendment
shall be made pro rata across all Classes of Revolving Credit Commitments
including such New Revolving Commitment Lenders (based on the outstanding
principal amounts of the respective Classes of Revolving Credit Commitments)
except for (x) payments of interest and fees at different rates for each Class
of Revolving Credit Commitments (and related Outstanding Amounts) and
(y) repayments required on the Revolving Credit Termination Date for any
particular Class of Revolving Credit Commitments. Upon the effectiveness of each
New Revolving Credit Commitment pursuant to this Section 2.17(c), (a) each
Revolving Credit Lender of all applicable existing Classes of Revolving Credit
Commitments immediately prior to such effectiveness will automatically and
without further act be deemed to have assigned to each New Revolving Commitment
Lender, and each such New Revolving Commitment Lender will automatically and
without further act be deemed to have assumed, a portion of such Revolving
Credit Lender’s participations hereunder in outstanding Letters of Credit and
Swing Loans such that, after giving effect to each such deemed assignment and
assumption of participations, subject to Section 2.16, the percentage of the
outstanding (i) participations hereunder in Letters of Credit and
(ii) participations hereunder in Swing Loans held by each Revolving Credit
Lender of each Class of Revolving Credit Commitments (including each such New
Revolving Commitment Lender) will equal the percentage of the aggregate
Revolving Credit Commitments of all Classes of Revolving Credit Lenders
represented by such Revolving Credit Lender’s Revolving Credit Commitment and
(b) if, on the date of such effectiveness, there are any Revolving Loans
outstanding, such Revolving Loans shall on or prior to the effectiveness of such
New Revolving Credit Commitment be prepaid from the proceeds of Loans
outstanding after giving effect to such New Revolving Credit Commitments, which
prepayment shall be accompanied by accrued interest on the Revolving Loans being
prepaid and any costs incurred by any Lender in accordance with Section 3.5. The

 

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Administrative Agent and the Lenders hereby agree that the minimum borrowing,
pro rata borrowing and pro rata payment requirements contained elsewhere in this
Agreement shall not apply to the transactions effected pursuant to the
immediately preceding sentence.

(d) Extension Amendment. Extended Revolving Credit Commitments and New Revolving
Credit Commitments shall be established pursuant to an amendment (each, an
“Extension Amendment”) to this Agreement among the Borrower, the Administrative
Agent and each Extending Revolving Credit Lender and each New Revolving
Commitment Lender, if any, providing an Extended Revolving Credit Commitment or
a New Revolving Credit Commitment, as applicable, thereunder, which shall be
consistent with the provisions set forth in Sections 2.17(a), (b) and (c) above
(but which shall not require the consent of any other Lender). The effectiveness
of any Extension Amendment shall be subject to the satisfaction on the date
thereof of each of the conditions set forth in Sections 4.2(a) and (b) and, to
the extent reasonably requested by the Administrative Agent, receipt by the
Administrative Agent of (i) legal opinions, board resolutions and officers’
certificates consistent with those delivered on the Effective Date other than
changes to such legal opinion resulting from a Change in Law, change in fact or
change to counsel’s form of opinion reasonably satisfactory to the
Administrative Agent and (ii) reaffirmation agreements and/or such amendments to
the Collateral Documents as may be reasonably requested by the Collateral Agent
in order to ensure that the Extended Revolving Credit Commitments or the New
Revolving Credit Commitments, as the case may be, are provided with the benefit
of the applicable Loan Documents. The Administrative Agent shall promptly notify
each Lender as to the effectiveness of each Extension Amendment. Each of the
parties hereto hereby agrees that this Agreement and the other Loan Documents
may be amended pursuant to an Extension Amendment, without the consent of any
other Lenders, to the extent (but only to the extent) necessary to (i) reflect
the existence and terms of the Extended Revolving Credit Commitments or the New
Revolving Credit Commitments, as the case may be, incurred pursuant thereto,
(ii) make such other changes to this Agreement and the other Loan Documents
(without the consent of the Requisite Lenders) and (iii) effect such other
amendments to this Agreement and the other Loan Documents as may be necessary or
appropriate, in the reasonable opinion of the Administrative Agent and the
Borrower, to effect the provisions of this Section, and the Requisite Lenders
hereby expressly authorize the Administrative Agent to enter into any such
Extension Amendment.

(e) No conversion of Loans pursuant to any Extension in accordance with this
Section 2.17 shall constitute a voluntary or mandatory payment or prepayment for
purposes of this Agreement.

ARTICLE III

TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

SECTION 3.1 Taxes.

(a) Except as required by law, any and all payments by the Borrower (the term
“Borrower” under this Article III being deemed to include any Subsidiary for
whose account a Letter of Credit is issued) or any Guarantor to or for the
account of any Agent or any Lender under any Loan Document shall be made free
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and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities
(including additions to tax, penalties and interest) with respect thereto,
excluding, in the case of each Agent and each Lender, (i) taxes imposed on or
measured by net income (however denominated, and including branch profits and
similar taxes), and franchise or similar taxes, imposed by the United States,
the jurisdiction under the laws of which it is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (ii) taxes imposed by reason of any
connection between such Agent or Lender and any taxing jurisdiction other than a
connection arising solely by executing or entering into any Loan Document,
receiving payments thereunder or having been a party to, performed its
obligations under, or enforced, any Loan Documents, (iii) subject to
Section 3.1(e), any U.S. federal tax that is (or would be) required to be
withheld with respect to amounts payable hereunder in respect of an Eligible
Assignee (pursuant to an assignment under Section 12.2) on the date it becomes
an Eligible Assignee to the extent such tax is in excess of the tax that would
have been applicable had such assigning Lender not assigned its interest arising
under any Loan Document (unless such assignment is at the express written
request of the Borrower), (iv) any U.S. federal withholding taxes imposed as a
result of the failure of any Agent or Lender to comply with the provisions of
Sections 3.1(b) and 3.1(c) (in the case of any Foreign Lender, as defined below)
or the provisions of Section 3.1(d) (in the case of any U.S. Lender, as defined
below), (v) any taxes imposed on any amount payable to or for the account of any
Agent or Lender as a result of the failure of such recipient to satisfy the
applicable requirements under FATCA, to establish that such payment is exempt
from withholding under FATCA, (vi) amounts excluded pursuant to Section 3.1(e)
hereto, and (vii) penalties and interest on the foregoing amounts (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges and liabilities being hereinafter referred to as
“Taxes”). If the Borrower or a Guarantor is required to deduct any Taxes or
Other Taxes (as defined below) from or in respect of any sum payable under any
Loan Document to any Agent or any Lender, (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.1(a)), each of such
Agent and such Lender receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower or Guarantor shall make such
deductions, (iii) the Borrower or Guarantor shall pay the full amount deducted
to the relevant taxing authority, and (iv) within thirty (30) days after the
date of such payment (or, if receipts or evidence are not available within
thirty (30) days, as soon as practicable thereafter), the Borrower or Guarantor
shall furnish to such Agent or Lender (as the case may be) the original or a
facsimile copy of a receipt evidencing payment thereof to the extent such a
receipt has been made available to the Borrower or Guarantor (or other evidence
of payment reasonably satisfactory to the Administrative Agent). If the Borrower
or Guarantor fails to pay any Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to any Agent or any Lender the required
receipts or other required documentary evidence that has been made available to
the Borrower or Guarantor, the Borrower or Guarantor shall indemnify such Agent
and such Lender for any incremental Taxes that may become payable by such Agent
or such Lender arising out of such failure.

(b) To the extent it is legally able to do so, each Agent or Lender (including
an Eligible Assignee to which a Lender assigns its interest in accordance with
Section 12.2) that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (each, a “Foreign Lender”) agrees to complete
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on or prior to the date on which the Agent or Lender (or Eligible Assignee)
becomes a party hereto, two (2) accurate, complete and original signed copies of
whichever of the following is applicable: (i) IRS Form W-8BEN certifying that it
is entitled to benefits under an income tax treaty to which the United States is
a party; (ii) IRS Form W-8ECI certifying that the income receivable pursuant to
any Loan Document is effectively connected with the conduct of a trade or
business in the United States; (iii) if the Foreign Lender is not (A) a bank
described in Section 881(c)(3)(A) of the Code, (B) a 10-percent shareholder
described in Section 871(h)(3)(B) of the Code, or (C) a controlled foreign
corporation related to the Borrower within the meaning of Section 864(d) of the
Code, a certificate to that effect in substantially the form attached hereto as
Exhibit O (a “Non-Bank Certificate”) and an IRS Form W-8BEN, certifying that the
Foreign Lender is not a United States person; (iv) to the extent a Lender is not
the beneficial owner for U.S. federal income tax purposes, IRS Form W-8IMY (or
any successor forms) of the Lender, accompanied by, as and to the extent
applicable, a Form W-8BEN, Form W-8ECI, Non-Bank Certificate, Form W-9, Form
W-8IMY (or other successor forms) and any other required supporting information
from each beneficial owner (it being understood that a Lender need not provide
certificates or supporting documentation from beneficial owners if (x) the
Lender is a “qualified intermediary” or “withholding foreign partnership” for
U.S. federal income tax purposes and (y) such Lender is as a result able to
establish, and does establish, that payments to such Lender are, to the extent
applicable, entitled to an exemption from or, if an exemption is not available,
a reduction in the rate of, U.S. federal withholding taxes without providing
such certificates or supporting documentation); or (v) any other form prescribed
by applicable requirements of U.S. federal income tax law as a basis for
claiming exemption from or a reduction in U.S. federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable requirements of law to permit the Borrower and the Administrative
Agent to determine the withholding or deduction required to be made.

(c) In addition, each such Lender shall, to the extent it is legally entitled to
do so, (i) promptly submit to the Borrower and the Administrative Agent two
(2) accurate, complete and original signed copies of such other or additional
forms or certificates (or such successor forms or certificates as shall be
adopted from time to time by the relevant taxing authorities) as may then be
applicable or available to secure an exemption from or reduction in the rate of
U.S. federal withholding tax (A) on or before the date that such Lender’s most
recently delivered form, certificate or other evidence expires or becomes
obsolete or inaccurate in any material respect, (B) after the occurrence of a
change in the Foreign Lender’s circumstances requiring a change in the most
recent form, certificate or evidence previously delivered by it to the Borrower
and the Administrative Agent, and (C) from time to time thereafter if reasonably
requested by the Borrower or the Administrative Agent, and (ii) promptly notify
the Borrower and the Administrative Agent of any change in the Foreign Lender’s
circumstances which would modify or render invalid any claimed exemption or
reduction.

(d) Each Agent or Lender that is a “United States person” (within the meaning of
Section 7701(a)(3) of the Code) (each a “U.S. Lender”) agrees to complete and
deliver to the Borrower and the Administrative Agent two (2) original copies of
accurate, complete and signed IRS Form W-9 or successor form certifying that
such Agent or Lender is not subject to United States backup withholding tax
(i) on or prior to the Effective Date (or on or prior to the date it becomes a
party to this Agreement), (ii) on or before the date that such form expires or
becomes obsolete or inaccurate in any material respect, (iii) after the
occurrence of a change in the

 

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Agent’s or Lender’s circumstances requiring a change in the most recent form
previously delivered by it to the Borrower and the Administrative Agent, and
(iv) from time to time thereafter if reasonably requested by the Borrower or the
Administrative Agent.

(e) Notwithstanding anything else herein to the contrary (but subject to the
succeeding sentence), if a Lender, Eligible Assignee or Agent is subject to any
U.S. federal tax that is (or would be) required to be withheld with respect to
amounts payable hereunder at a rate in excess of zero percent at the time such
Lender, Eligible Assignee or Agent becomes a party to this Agreement or
otherwise acquires an interest in the Loan, or pursuant to a law or other legal
requirement in effect at such time (including a law with a delayed effective
date), such tax (including additions to tax, penalties and interest imposed with
respect to such tax) shall be considered excluded from Taxes (unless and until
such time as such Lender, Eligible Assignee or Agent subsequently provides forms
and certifications that establish to the reasonable satisfaction of Borrower and
the Administrative Agent that such Lender, Eligible Assignee or Agent is subject
to a lower rate of tax, at which time tax at such lower rate (including
additions to tax, penalties and interest imposed with respect to such tax) shall
be considered so excluded for periods during which such forms and certifications
remain valid and are sufficient, under the law in effect at the time such forms
and certifications are provided (including any law with a delayed effective
date), to establish that such Lender, Eligible Assignee or Agent is subject to
such lower rate of tax) except, in the case of an Eligible Assignee, to the
extent the Lender’s assignor was entitled to additional amounts or indemnity
payments immediately prior to the assignment (unless such assignment is made at
the express written request of the Borrower). Further, the Borrower shall not be
required pursuant to this Section 3.1 to pay any additional amount to, or to
indemnify, any Lender, Eligible Assignee or Agent, as the case may be, to the
extent that such Lender, Eligible Assignee or Agent becomes subject to Taxes
subsequent to the Effective Date (or, if later, the date such Lender, Eligible
Assignee or Agent becomes a party to this Agreement or otherwise acquires an
interest in the Loan) solely as a result of a change in the place of
organization or place of doing business of such Lender, Eligible Assignee or
Agent (or any applicable beneficial owner), a change in the Lending Office of
such Lender or Eligible Assignee (or any applicable beneficial owner) (other
than at the written request of the Borrower to change such Lending Office), a
change that results in such Lender or Eligible Assignee (or any applicable
beneficial owner) being described in clauses (A), (B) or (C) of
Section 3.1(b)(iii) or otherwise as a result of any change in the circumstances
of such Lender, Eligible Assignee or Agent, other than a Change in Law,
occurring after the date that such Lender, Eligible Assignee or Agent becomes a
party to this Agreement or otherwise acquires an interest in the Loan.

(f) The Borrower agrees to pay any and all present or future stamp, court or
documentary taxes and any other excise, property, intangible or mortgage
recording taxes or charges or similar levies which arise from any payment made
under any Loan Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Loan Document
(including additions to tax, penalties and interest related thereto) excluding,
in each case, such amounts that result from an Assignment and Assumption, grant
of a Participation, transfer or assignment to or designation of a new applicable
Lending Office or other office for receiving payments under any Loan Document,
except to the extent that any such change is requested in writing by the
Borrower (all such non-excluded taxes described in this Section 3.1(f) being
hereinafter referred to as “Other Taxes”).

 

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(g) If any Taxes or Other Taxes are directly asserted against any Agent or
Lender with respect to any payment received by such Agent or Lender in respect
of any Loan Document, such Agent or Lender may pay such Taxes or Other Taxes and
the Borrower will promptly indemnify and hold harmless such Agent or Lender for
the full amount of such Taxes and Other Taxes (and any Taxes and Other Taxes
imposed on amounts payable under this Section 3.1), and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally imposed or asserted. Payments under this
Section 3.1(g) shall be made within ten (10) days after the date Borrower
receives written demand for payment from such Agent or Lender.

(h) A Participant shall not be entitled to receive any greater payment under
Section 3.1 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent.

(i) If the Borrower determines in good faith that a reasonable basis exists for
contesting any taxes for which indemnification has been demanded hereunder, the
relevant Lender or the relevant Agent, as applicable, shall cooperate with the
Borrower in a reasonable challenge of such taxes if so requested by the
Borrower, provided that (a) such Lender or Agent determines in its reasonable
discretion that it would not be prejudiced by cooperating in such challenge,
(b) the Borrower pays all related expenses of such Agent or Lender and (c) the
Borrower indemnifies such Lender or Agent for any liabilities or other costs
incurred by such party in connection with such challenge.

(j) If any Agent or any Lender determines, in its reasonable discretion, that it
has received or is entitled to receive a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower or Holdings, as the
case may be or with respect to which the Borrower or Holdings, as the case may
be has paid additional amounts pursuant to this Section 3.1, it shall use
commercially reasonable efforts to obtain such refund (to the extent not yet
received) (provided that doing so would not otherwise materially disadvantage
the Agent or Lender) and it shall promptly remit such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
or Holdings, as the case may be under this Section 3.1 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all reasonable out-of-pocket
expenses incurred by the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Borrower or Holdings, as the
case may be, upon the request of the Administrative Agent or such Lender, agrees
to repay the amount paid over to the Borrower or Holdings, as the case may be
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. The Administrative Agent or such Lender, as the case may
be, shall provide the Borrower with a copy of any notice of assessment or other
evidence reasonably available of the requirement to repay such refund received
from the relevant Governmental Authority (provided that such Lender or the
Administrative Agent may delete any information therein that such Lender or the
Administrative Agent deems confidential in its reasonable discretion). This
subsection shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes that it reasonably deems confidential) to the Borrower, Holdings or
any other Person.

 

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(k) Each Lender agrees that, upon the occurrence of any event giving rise to the
operation of Section 3.1(a) or (g) with respect to such Lender, it will, if
requested by the Borrower, use commercially reasonable efforts (subject to legal
and regulatory restrictions) to mitigate the effect of any such event, including
by designating another Lending Office for any Loan affected by such event and by
completing and delivering or filing any tax-related forms which such Lender is
legally able to deliver and which would reduce or eliminate any amount of Taxes
or Other Taxes required to be deducted or withheld or paid by the Borrower;
provided that such efforts are made at the Borrower’s expense and on terms that,
in the reasonable judgment of such Lender, cause such Lender and its Lending
Office(s) to suffer no material economic, legal or regulatory disadvantage, and
provided further that nothing in this Section 3.1(k) shall affect or postpone
any of the Obligations of the Borrower or the rights of such Lender pursuant to
Section 3.1(a) or (g).

(l) Notwithstanding any other provision of this Agreement, the Borrower and the
Administrative Agent may deduct and withhold any taxes required by any Laws to
be deducted and withheld from any payment under any of the Loan Documents,
subject to the provisions of this Section 3.1.

(m) With respect to any Lender’s claim for compensation under this Section 3.1,
the Borrower shall not be required to compensate such Lender for any amount
incurred more than one hundred eighty (180) days prior to the date that such
Lender notifies the Borrower of the event that gives rise to such claim;
provided that, if the circumstance giving rise to such claim is retroactive,
then such 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.

(n) The agreements in this Section 3.1 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

SECTION 3.2 Illegality. If any Lender reasonably determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Loans whose interest is determined by reference to the Eurocurrency Rate or
the BA Rate, or to determine or charge interest rates based upon the
Eurocurrency Rate, BA Rate or Adjusted Eurocurrency Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, (i) any obligation of such Lender to make or continue
Eurocurrency Rate Loans or BA Rate Loans, as applicable, or to convert Base Rate
Loans or Canadian Prime Rate Loans, as applicable, to Eurocurrency Rate Loans or
BA Rate Loans, as applicable, shall be suspended, and (ii) if such notice
asserts the illegality of such Lender making or maintaining Base Rate Loans the
interest rate on which is determined by reference to the Adjusted Eurocurrency
Rate component of the Base Rate, the interest rate on which Base Rate Loans of
such Lender shall, if necessary to avoid such illegality, be determined by the
Administrative Agent without reference to the Adjusted Eurocurrency Rate
component of the Base Rate, in each case until such Lender notifies the
Administrative Agent

 

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and the Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, (x) the Borrower may revoke any
pending request for a Borrowing of, conversion to or continuation of
Eurocurrency Rate Loans or BA Rate Loans, as applicable, and shall, upon demand
from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable, convert all Eurocurrency Rate Loans or BA Rate Loans, as applicable,
of such Lender to Base Rate Loans or Canadian Prime Rate Loans, as applicable
(and the interest rate on which Base Rate Loans of such Lender shall, if
necessary to avoid such illegality, be determined by the Administrative Agent
without reference to the Adjusted Eurocurrency Rate component of the Base Rate),
either on the last day of the Interest Period therefor, if such Lender may
lawfully continue to maintain such Eurocurrency Rate Loans or BA Rate Loans, as
applicable, to such day, or immediately, if such Lender may not lawfully
continue to maintain such Eurocurrency Rate Loans or BA Rate Loans, as
applicable, and (y) if such notice asserts the illegality of such Lender
determining or charging interest rates based upon the Adjusted Eurocurrency Rate
component of the Base Rate with respect to any Base Rate Loans, the
Administrative Agent shall during the period of such suspension compute the Base
Rate applicable to such Lender without reference to the Adjusted Eurocurrency
Rate component thereof until the Administrative Agent is advised in writing by
such Lender that it is no longer illegal for such Lender to determine or charge
interest rates based upon the Eurocurrency Rate. Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or converted.

SECTION 3.3 Inability to Determine Rates. If the Requisite Lenders reasonably
determine that for any reason in connection with any request for a Eurocurrency
Rate Loan or a BA Rate Loan, as applicable, or a conversion to or continuation
thereof that (a) deposits (whether in Dollars or the applicable Alternative
Currency) are not being offered to banks in the applicable offshore interbank
market for such currency for the applicable amount and Interest Period of such
Eurocurrency Rate Loan (or BA Rate Loan, as applicable), (b) adequate and
reasonable means do not exist for determining the Eurocurrency Rate or BA Rate
Loan, as the case may be, for any requested Interest Period with respect to a
proposed Eurocurrency Rate Loan or BA Rate Loan, as the case may be, or in
connection with an existing or proposed Base Rate Loan or Canadian Prime Rate
Loan, as the case may be, or (c) the Eurocurrency Rate or BA Rate, as
applicable, for any requested Interest Period with respect to a proposed
Eurocurrency Rate Loan or BA Rate Loan, as applicable, does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, the Administrative
Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the
obligation of the Lenders to make or maintain Eurocurrency Rate Loans or BA Rate
Loan, as applicable, shall be suspended, and (y) in the event of a determination
described in the preceding sentence with respect to the Adjusted Eurocurrency
Rate component of the Base Rate, the utilization of the Adjusted Eurocurrency
Rate component in determining the Base Rate shall be suspended, in each case
until the Administrative Agent (upon the instruction of the Requisite Lenders)
revokes such notice. Upon receipt of such notice, the Borrower may revoke any
pending request for a Borrowing of, conversion to or continuation of
Eurocurrency Rate Loans or BA Rate Loans, as applicable, or, failing that, will
be deemed to have converted such request into a request for a Borrowing of Base
Rate Loans or Canadian Prime Rate Loan, as the case may be, in the amount
specified therein.

 

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SECTION 3.4 Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurocurrency Rate Loans and BA Rate Loans.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender or
any Issuer;

(ii) subject any Lender or any Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter
of Credit or any Eurocurrency Rate Loan or BA Rate Loan made by it, or change
the basis of taxation of payments to such Lender or the Issuer in respect
thereof (except for Taxes covered by Section 3.1 and any taxes and other amounts
described in clauses (i) through (vii) of the first sentence of Section 3.1(a)
that are imposed with respect to payments for or on account of any Agent or any
Lender under any Loan Document, and except for Other Taxes); or

(iii) impose on any Lender or any Issuer or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurocurrency Rate
Loans or BA Rate Loans made by such Lender or any Letter of Credit or
participation therein, in each case that is not otherwise accounted for in the
definition of Adjusted Eurocurrency Rate or this clause (a);

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan the interest on which is determined by
reference to the Eurocurrency Rate or BA Rate (or of maintaining its obligation
to make any such Loan), or to increase the cost to such Lender or such Issuer of
participating in, issuing or maintaining any Letter of Credit (or of maintaining
its obligation to participate in or to issue any Letter of Credit), or to reduce
the amount of any sum received or receivable by such Lender or Issuer hereunder
(whether of principal, interest or any other amount) then, from time to time
within fifteen (15) days after demand by such Lender or Issuer setting forth in
reasonable detail such increased costs (with a copy of such demand to the
Administrative Agent), the Borrower will pay to such Lender or Issuer, as the
case may be, such additional amount or amounts as will compensate such Lender or
Issuer, as the case may be, for such additional costs incurred or reduction
suffered.

(b) Capital Requirements. If any Lender or any Issuer reasonably determines that
any Change in Law affecting such Lender or such Issuer or any Lending Office of
such Lender or such Lender’s or such Issuer’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender’s or such Issuer’s capital or on the capital of such Lender’s or
such Issuer’s holding company, if any, as a consequence of this Agreement, the
Revolving Credit Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuer, to a level below that which such Lender or such
Issuer or such Lender’s or such Issuer’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s or such Issuer’s
policies and the policies of such Lender’s or such Issuer’s holding company with
respect to capital adequacy), then from time to time upon demand

 

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of such Lender or such Issuer setting forth in reasonable detail the charge and
the calculation of such reduced rate of return (with a copy of such demand to
the Administrative Agent), the Borrower will pay to such Lender or such Issuer,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Issuer or such Lender’s or such Issuer’s holding company for any
such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or an Issuer
setting forth the amount or amounts necessary to compensate such Lender or such
Issuer or its holding company, as the case may be, as specified in subsection
(a) or (b) of this Section 3.4 and delivered to the Borrower shall be conclusive
absent manifest error. The Borrower shall pay such Lender or such Issuer, as the
case may be, the amount shown as due on any such certificate within ten
(10) days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or any Issuer
to demand compensation pursuant to the foregoing provisions of this Section 3.4
shall not constitute a waiver of such Lender’s or such Issuer’s right to demand
such compensation, provided that the Borrower shall not be required to
compensate a Lender or an Issuer pursuant to the foregoing provisions of this
Section 3.4 for any increased costs incurred or reductions suffered more than
one hundred and eighty (180) days prior to the date that such Lender or such
Issuer, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or such Issuer’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof).

(e) Without duplication of any reserves specified in the definition of
“Eurocurrency Rate”, the Borrower shall pay to each Lender, as long as such
Lender shall be required to comply with any reserve ratio requirement or
analogous requirement of any central banking or financial regulatory authority
imposed in respect of the maintenance of the Aggregate Commitments or the
funding of the Eurocurrency Rate Loans, such additional costs (expressed as a
percentage per annum and rounded upwards, if necessary, to the nearest five
decimal places) equal to the actual costs allocated to such Commitment or Loan
by such Lender (as determined by such Lender in good faith, which determination
shall be conclusive absent manifest error), which shall be due and payable on
each date on which interest is payable on such Loan, provided the Company shall
have received at least fifteen (15) days’ prior notice (with a copy to the
Administrative Agent) of such additional costs from such Lender. If a Lender
fails to give notice fifteen (15) days prior to the relevant interest payment
date, such additional costs shall be due and payable fifteen (15) days from
receipt of such notice.

SECTION 3.5 Funding Losses. Upon written demand of any Lender (with a copy to
the Administrative Agent) from time to time, which demand shall set forth in
reasonable detail the basis for requesting such amount, the Borrower shall
promptly compensate such Lender for and hold such Lender harmless from any loss,
cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan or a Canadian Prime Rate Loan on a day prior to the last day of
the Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise);

 

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(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan or a Canadian Prime Rate Loan on the date or in the amount
notified by the Borrower; or

(c) any assignment of a Eurocurrency Rate Loan or BA Rate Loan on a day prior to
the last day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 3.7;

including any loss or expense (excluding loss of anticipated profits or margin)
actually incurred by reason of the liquidation or reemployment of funds obtained
by it to maintain such Loan or from fees payable to terminate the deposits from
which such funds were obtained.

SECTION 3.6 Matters Applicable to All Requests for Compensation.

(a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.4, or the Borrower is required to pay any
additional amount to any Lender, any Issuer, or any Governmental Authority for
the account of any Lender or any Issuer pursuant to Section 3.1, or if any
Lender gives a notice pursuant to Section 3.2, then such Lender or such Issuer
shall, as applicable, use reasonable efforts to designate a different Lending
Office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender or such Issuer, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.1 or 3.4, as
the case may be, in the future, or eliminate the need for the notice pursuant to
Section 3.2, as applicable, and (ii) in each case, would not subject such Lender
or such Issuer, as the case may be, to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender or such Issuer, as the
case may be in any material economic, legal or regulatory respect.

(b) Suspension of Lender Obligations. If any Lender requests compensation by the
Borrower under Section 3.4, the Borrower may, by notice to such Lender (with a
copy to the Administrative Agent), suspend the obligation of such Lender to make
or continue Eurocurrency Rate Loans from one Interest Period to another Interest
Period, or to convert Base Rate Loans into Eurocurrency Rate Loans, until the
event or condition giving rise to such request ceases to be in effect (in which
case the provisions of Section 3.6(c) shall be applicable); provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.

(c) Conversion of Eurocurrency Rate Loans. If any Lender gives notice to the
Borrower (with a copy to the Administrative Agent) that the circumstances
specified in Sections 3.2, 3.3 or 3.4 hereof that gave rise to the conversion of
such Lender’s Eurocurrency Rate Loans no longer exist (which such Lender agrees
to do promptly upon such circumstances ceasing to exist) at a time when
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other Lenders are outstanding, such Lender’s Base Rate Loans shall be
automatically converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurocurrency Rate Loans, to the extent necessary
so that, after giving effect thereto, all Loans of a given Class held by the
Lenders of such Class holding Eurocurrency Rate Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Pro Rata Shares.

SECTION 3.7 Replacement of Lenders under Certain Circumstances.

If (i) any Lender requests compensation under Section 3.4 or ceases to make
Eurocurrency Rate Loans or BA Rate Loans as a result of any condition described
in Section 3.2 or Section 3.4, (ii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.1, (iii) any Lender is a Non-Consenting Lender
or (iv) any other circumstance exists hereunder that gives the Borrower the
right to replace a Lender as a party hereto, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in, and consents required by,
Section 12.2), all of its interests, rights and obligations under this Agreement
and the related Loan Documents to one or more Eligible Assignees that shall
assume such obligations (any of which assignee may be another Lender, if a
Lender accepts such assignment), provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 12.2(b)(iv);

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.5) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);

(c) such Lender being replaced pursuant to this Section 3.7 shall (i) execute
and deliver an Assignment and Assumption with respect to such Lender’s
Commitment and outstanding Loans, and (ii) deliver any Revolving Credit Notes
evidencing such Loans to the Borrower or Administrative Agent (or a lost or
destroyed note indemnity in lieu thereof); provided that the failure of any such
Lender to execute an Assignment and Assumption or deliver such Revolving Credit
Notes shall not render such sale and purchase (and the corresponding assignment)
invalid and such assignment shall be recorded in the Register and the Revolving
Credit Notes shall be deemed to be canceled upon such failure;

(d) the Eligible Assignee shall become a Lender hereunder and the assigning
Lender shall cease to constitute a Lender hereunder with respect to such
assigned Loans, Revolving Credit Commitments and participations, except with
respect to indemnification provisions under this Agreement, which shall survive
as to such assigning Lender;

 

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(e) in the case of any such assignment resulting from a claim for compensation
under Section 3.4 or payments required to be made pursuant to Section 3.1, such
assignment will result in a reduction in such compensation or payments
thereafter; and

(f) such assignment does not conflict with applicable Laws.

In the event that (i) the Borrower or the Administrative Agent has requested
that the Lenders consent to a departure or waiver of any provisions of the Loan
Documents or agree to any amendment thereto, (ii) the consent, waiver or
amendment in question requires the agreement of each Lender, all affected
Lenders or all the Lenders or all affected Lenders with respect to a certain
Class or Classes of the Loans and (iii) the Requisite Lenders or the requisite
Lenders of the applicable Class or Classes of the Loans, have agreed to such
consent, waiver or amendment, then any Lender who does not agree to such
consent, waiver or amendment shall be deemed a “Non-Consenting Lender.”

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

SECTION 3.8 Survival. All of the Borrower’s obligations under this Article III
shall survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder and resignation of the Administrative Agent, the
Collateral Agent, the Swing Loan Lender or any Issuer.

ARTICLE IV

CONDITIONS PRECEDENT

SECTION 4.1 Conditions Precedent to Effective Date.

The effectiveness of this Agreement shall be subject to the satisfaction or due
waiver in accordance with Section 12.1 of each of the following conditions
precedent, except as otherwise agreed between the Borrower and the
Administrative Agent (the date on which such conditions are satisfied or waived
being herein in accordance with Section 12.1 shall be the “Effective Date”):

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party each in form and substance reasonably satisfactory to the Administrative
Agent and its legal counsel:

(i) a Notice of Borrowing in accordance with the requirements hereof;

(ii) executed counterparts of this Agreement and the Guaranty;

(iii) a Revolving Credit Note executed by the Borrower in favor of each Lender
that has requested a Note at least two (2) Business Days in advance of the
Effective Date;

 

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(iv) each Collateral Document set forth on Schedule 1.1A required to be executed
on the Effective Date as indicated on such schedule, duly executed by each Loan
Party thereto, together with:

(A) copies of certificates, if any, representing the Pledged Equity referred to
therein accompanied by undated stock powers executed in blank and instruments
evidencing the Pledged Debt indorsed in blank;

(B) to the extent required under the Collateral and Guarantee Requirement,
opinions of local counsel for the Loan Parties in states in which the Mortgaged
Properties are located, with respect to the enforceability and perfection of the
Mortgages and any related fixture filings in form and substance reasonably
satisfactory to the Administrative Agent; and

(C) evidence that all other actions, recordings and filings that the
Administrative Agent and the Collateral Agent may deem reasonably necessary to
satisfy the Collateral and Guarantee Requirement shall have been taken,
completed or otherwise provided for in a manner reasonably satisfactory to the
Administrative Agent;

(v) [reserved];

(vi) such certificates of good standing from the applicable secretary of state
of the state of organization of each Loan Party, certificates of resolutions or
other action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may reasonably require
evidencing the identity, authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this
Agreement and the other Loan Documents to which such Loan Party is a party or is
to be a party on the Effective Date;

(vii) an opinion from Ropes & Gray LLP, New York counsel to the Loan Parties
substantially in the form of Exhibit G;

(viii) a solvency certificate from the chief financial officer of the Borrower
(after giving effect to the Transaction) substantially in the form attached
hereto as Exhibit M;

(ix) evidence that all insurance (including title insurance) required to be
maintained pursuant to the Loan Documents has been obtained and is in effect and
that the Collateral Agent has been named as loss payee and/or additional
insured, as applicable, under each insurance policy with respect to such
insurance as to which the Collateral Agent shall have requested to be so named;

(x) certified copies of the Merger Agreement and schedules and other attachments
thereto, duly executed by the parties thereto, together with all material
agreements, instruments and other documents delivered in connection therewith as
the Administrative Agent shall reasonably request, each including

 

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certification by a Responsible Officer of the Borrower that such documents are
in full force and effect as of the Effective Date and that the condition
specified in clause (c) below has been satisfied;

(xi) copies of a recent Lien and judgment search in each jurisdiction reasonably
requested by the Administrative Agent with respect to the Loan Parties; and

(xii) a Borrowing Base Certificate, certified as complete and correct in all
respects, which calculates the Borrowing Base as of the last Business Day of the
most recent month ended at least fifteen (15) days prior to the Effective Date;

provided, however, that, each of the requirements set forth in clauses (iv) and
(ix) (with respect to title insurance) above, including the delivery of
documents and instruments necessary to satisfy the Collateral and Guarantee
Requirement (except for the execution and delivery of the Security Agreement and
to the extent that a Lien on such Collateral may be perfected (x) by the filing
of a financing statement under the Uniform Commercial Code or (y) by the
delivery of stock certificates of the Borrower and its wholly owned Domestic
Subsidiaries) shall not constitute conditions precedent to the Borrowing on the
Effective Date after the Borrower’s use of commercially reasonable efforts,
without undue burden or cost, to provide such items on or prior to the Effective
Date if the Borrower agrees to deliver, or cause to be delivered, such search
results, documents and instruments, or take or cause to be taken such other
actions as may be required to perfect such security interests within ninety
(90) days after the Effective Date (subject to extensions approved by the
Administrative Agent in its reasonable discretion).

(b) All fees and expenses required to be paid hereunder and invoiced at least
two (2) Business Days before the Effective Date shall have been paid in full in
cash.

(c) Prior to or substantially simultaneously with the effectiveness of this
Agreement on the Effective Date, (i) the Equity Contribution shall have been
consummated; and (ii) the Merger shall be consummated in all material respects
in accordance with the terms of the Merger Agreement (without giving effect to
any amendments or waivers thereto that are materially adverse to the Lenders
without the consent of the Arrangers, such consent not to be unreasonably
withheld or delayed); provided, that (A) any change to the definition of
“Material Adverse Effect” contained in the Merger Agreement shall be deemed
materially adverse to the Lenders and the Arrangers and shall require the
consent of the Arrangers and (B) a reduction in the purchase price under the
Merger Agreement of less than 10% of the total Merger Consideration shall be
deemed not to be materially adverse so long as it is applied to reduce the
aggregate commitments in respect of the Term Facility and any commitments of the
Arrangers to make bridge loans in lieu of the Senior Notes dollar-for-dollar on
a pro rata basis.

(d) Prior to or substantially simultaneously with the effectiveness of this
Agreement on the Effective Date, the Borrower shall have received (i) at least
$1,200,000,000 in gross cash proceeds from borrowings under the Term Facility
and (ii) at least $400,000,000 in gross cash proceeds from the issuance of the
Senior Notes.

 

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(e) The Intercreditor Agreement and the Term Facility Documentation shall have
been duly executed and delivered by each party thereto, and shall be in full
force and effect.

(f) Prior to or substantially simultaneously with the effectiveness of this
Agreement on the Effective Date, the Borrower shall have terminated the Existing
ABL Facility, and shall have taken all other necessary actions such that, after
giving effect to the Transaction, (i) Holdings, the Borrower and the Restricted
Subsidiaries shall have outstanding no material Indebtedness for borrowed money
or preferred Equity Interests other than (A) the Loans and Letter of Credit
Obligations, (B) borrowings under the Term Facility, (C) borrowings under the
Senior Notes and (D) Indebtedness permitted by Section 9.3(b) and (ii) the
Borrower shall have outstanding no Equity Interests (or securities convertible
into or exchangeable for Equity Interests or rights or options to acquire Equity
Interests) other than common stock owned by Holdings.

(g) The Arrangers shall have received (i) the Annual Financial Statements,
(ii) the Quarterly Financial Statements.

(h) The Arrangers shall have received the Pro Forma Financial Statements.

(i) The Arrangers shall have received at least five (5) days prior to the
Effective Date all documentation and other information reasonably requested in
writing by them at least ten (10) Business Days prior to the Effective Date in
order to allow the Arrangers and the Lenders to comply with applicable “know
your customer” and anti-money laundering rules and regulations, including the
USA PATRIOT Act.

(j) Since January 31, 2010, except (i) as set forth in the Company Disclosure
Schedule (as defined in the Merger Agreement) or (ii) disclosed in any Filed SEC
Document (as defined in the Merger Agreement), other than disclosures in such
Filed SEC Documents contained in the “Risk Factors” and “Forward Looking
Statements” sections thereof or any other disclosures in the Filed SEC Documents
which are forward-looking in nature, there shall not have been any effect,
change, event or occurrence that has had or would reasonably be expected to have
a Closing Date Material Adverse Effect.

(k) The Specified Representations shall be true and correct in all material
respects (or, if qualified by “materiality”, “Material Adverse Effect” or
similar language, in all respects (after giving effect to such qualification))
on and as of the Effective Date.

Without limiting the generality of the provisions of the last paragraph of
Section 9.3, for purposes of determining compliance with the conditions
specified in this Section 4.1, each Lender that has signed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent
shall have received notice from such Lender prior to the proposed Effective Date
specifying its objection thereto.

 

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SECTION 4.2 Conditions Precedent to Each Loan and Letter of Credit.

The obligation of each Lender on any date to make any Loan and of each Issuer on
any date to Issue any Letter of Credit is subject to the satisfaction of each of
the following conditions precedent:

(a) Request for Borrowing or Issuance of Letter of Credit. With respect to any
Loan, the Administrative Agent shall have received a duly executed Notice of
Borrowing (or, in the case of Swing Loans, a duly executed Swing Loan Request),
and, with respect to any Letter of Credit, the Administrative Agent and the
applicable Issuer shall have received a duly executed Letter of Credit Request.

(b) Representations and Warranties; No Defaults. The following statements shall
be true on the date of such Loan or Issuance, both immediately before and
immediately after giving effect thereto and, in the case of any Loan, giving
effect to the application of the proceeds thereof:

(i) The representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document (limited to, in the case of
the initial Credit Extensions on the Effective Date, the Specified
Representations) shall be true and correct in all material respects on and as of
the date of such Borrowing; provided that, to the extent that such
representations and warranties specifically refer to an earlier date, they shall
be true and correct in all material respects as of such earlier date; provided,
further that, any representation and warranty that is qualified as to
“materiality,” “Material Adverse Effect” or similar language shall be true and
correct (after giving effect to any qualification therein) in all respects on
such respective dates; and

(ii) except in the case of the initial Credit Extension on the Effective Date,
no Default shall exist, or would result from such proposed Credit Extension or
from the application of the proceeds therefrom.

(c) Borrowing Base. After giving effect to the Loans or Letters of Credit
requested to be made or Issued on any such date and the use of proceeds thereof,
the Revolving Credit Outstandings shall not exceed the Maximum Credit at such
time.

(d) Solvency. In the case of any Borrowing the proceeds of which will be used to
fund a Restricted Payment, the Borrower shall represent and warrant in the
relevant Notice of Borrowing that it and its Subsidiaries are Solvent.

Each submission by the Borrower to the Administrative Agent of a Notice of
Borrowing or a Swing Loan Request and the acceptance by the Borrower of the
proceeds of each Loan requested therein, and each submission by the Borrower to
an Issuer of a Letter of Credit Request, and the Issuance of each Letter of
Credit requested therein, shall be deemed to constitute a representation and
warranty by the Borrower that the conditions specified in clause (b) above have
been satisfied on and as of the date of the making of such Loan or the Issuance
of such Letter of Credit.

 

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SECTION 4.3 Determinations of Effective Date Borrowing Conditions.

For purposes of determining compliance with the conditions specified in
Section 4.1, 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 acceptable or 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 Borrowing on the Effective Date, borrowing of Swing Loans or
Issuance or deemed Issuance hereunder specifying its objection thereto and such
Lender shall not have made available to the Administrative Agent such Lender’s
Ratable Portion of such Borrowing or Swing Loans.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

To induce the Lenders, the Issuers and the Administrative Agent to enter into
this Agreement, each of Holdings and the Borrower represents and warrants each
of the following to the Lenders, the Issuers and the Administrative Agent, on
and as of the Effective Date and after giving effect to the making of the Loans
and the other financial accommodations on the Effective Date and on and as of
each date as required by Section 4.2(b)(i):

SECTION 5.1 Existence, Qualification and Power; Compliance with Laws. Each Loan
Party and each of its Restricted Subsidiaries that is a Material Subsidiary
(a) is a Person duly organized or formed, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation or organization (to the
extent such concept exists in such jurisdiction), (b) has all corporate or other
organizational power and authority to (i) own its assets and carry on its
business and (ii) execute, deliver and perform its obligations under the Loan
Documents to which it is a party, (c) is duly qualified and in good standing (to
the extent such concept exists) under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, (d) is in compliance with all applicable Laws,
orders, writs, injunctions and orders and (e) has all requisite governmental
licenses, authorizations, consents and approvals to operate its business as
currently conducted; except in each case referred to in clause (c), (d) or (e),
to the extent that failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

SECTION 5.2 Authorization; No Contravention. (a) The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is a
party have been duly authorized by all necessary corporate or other
organizational action. (b) Neither the execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is a party nor the
consummation of the Transaction will (i) contravene the terms of any of such
Person’s Organization Documents, (ii) result in any breach or contravention of,
or the creation of any Lien upon any of the property or assets of such Person or
any of the Restricted Subsidiaries (other than as permitted by Section 9.1)
under (A) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries or (B) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (iii) violate any

 

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applicable Law; except with respect to any breach, contravention or violation
(but not creation of Liens) referred to in clauses (ii) and (iii), to the extent
that such breach, contravention or violation would not reasonably be expected to
have a, individually or in the aggregate, Material Adverse Effect.

SECTION 5.3 Governmental Authorization. No material approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Loan Party of
this Agreement or any other Loan Document, except for (i) filings necessary to
perfect the Liens on the Collateral granted by the Loan Parties in favor of the
Secured Parties, (ii) the approvals, consents, exemptions, authorizations,
actions, notices and filings that have been duly obtained, taken, given or made
and are in full force and effect and (iii) those approvals, consents,
exemptions, authorizations or other actions, notices or filings, the failure of
which to obtain or make would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

SECTION 5.4 Binding Effect. This Agreement and each other Loan Document has been
duly executed and delivered by each Loan Party that is party thereto. This
Agreement and each other Loan Document constitutes a legal, valid and binding
obligation of such Loan Party, enforceable against such Loan Party that is party
thereto in accordance with its terms, except as such enforceability may be
limited by Debtor Relief Laws and by general principles of equity and principles
of good faith and fair dealing.

SECTION 5.5 Financial Statements; No Material Adverse Effect.

(a) (i) The Annual Financial Statements and the Quarterly Financial Statements
fairly present in all material respects the financial condition of the Borrower
and its Subsidiaries as of the dates thereof and their results of operations for
the period covered thereby in accordance with GAAP consistently applied
throughout the periods covered thereby, (A) except as otherwise expressly noted
therein and (B) subject, in the case of the Quarterly Financial Statements, to
changes resulting from normal year end adjustments and the absence of footnotes.

(ii) The unaudited pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of and for the twelve-month period ending on the last day of the
most recently completed four-Fiscal Quarter period ended at least forty-five
(45) days (or ninety (90) days in case such four-Fiscal Quarter period is the
end of the Company’s Fiscal Year) prior to the Effective Date, prepared after
giving effect to the Transaction as if the Transaction had occurred as of such
date (including the notes thereto) (the “Pro Forma Balance Sheet”) and the
unaudited pro forma consolidated statement of income of the Borrower and its
Subsidiaries for the 12-month period ended at least forty-five (45) days (or
ninety (90) days in case such four-Fiscal Quarter period is the end of the
Company’s Fiscal Year) prior to the Effective Date, prepared after giving effect
to the Transaction as if the Transaction had occurred at the beginning of such
period (together with the Pro Forma Balance Sheet, the “Pro Forma Financial
Statements”), copies of which have heretofore been furnished to the
Administrative Agent, have been prepared based on the Annual Financial
Statements and the Quarterly Financial Statements and have been prepared in good
faith, based on assumptions believed by the Borrower to be reasonable as of the

 

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date of delivery thereof, and present fairly in all material respects on a pro
forma basis the estimated financial position of the Borrower and its
Subsidiaries as at October 30, 2010 and their estimated results of operations
for the period covered thereby.

(b) Since the Effective Date, there has been no event or circumstance, either
individually or in the aggregate, that has had or would reasonably be expected
to have a Material Adverse Effect.

(c) The forecasts of consolidated balance sheets, income statements, cash flow
statements and Excess Availability of the Borrower and its Subsidiaries for each
Fiscal Year ending after the Effective Date until the fifth anniversary of the
Effective Date, copies of which have been furnished to the Administrative Agent
prior to the Effective Date, and all Projections delivered pursuant to
Section 7.1(d) have been prepared in good faith on the basis of the assumptions
stated therein, which assumptions were believed to be reasonable at the time
made, it being understood that projections as to future events are not to be
viewed as facts and actual results may vary materially from such forecasts.

SECTION 5.6 Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower, overtly threatened in
writing, at law, in equity, in arbitration or before any Governmental Authority,
by or against Holdings, the Borrower or any of the Restricted Subsidiaries that
would reasonably be expected to have a Material Adverse Effect.

SECTION 5.7 Labor Matters. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any of the Borrower or its Subsidiaries
pending or, to the knowledge of the Borrower, threatened and (b) since
February 3, 2008, hours worked by and payment made based on hours worked to
employees of each of the Borrower or its Subsidiaries have not been in material
violation of the Fair Labor Standards Act or any other applicable Laws dealing
with wage and hour matters.

SECTION 5.8 Ownership of Property; Liens. Each Loan Party and each of its
Subsidiaries has good record and marketable title in fee simple to, or valid
leasehold interests in, or easements or other limited property interests in, all
real property necessary in the ordinary conduct of its business, free and clear
of all Liens except for Liens permitted by Section 9.1 and except where the
failure to have such title or other interest would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

SECTION 5.9 Environmental Matters.

(a) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (i) each Loan Party and each of its
Subsidiaries is in compliance with all Environmental Laws in all jurisdictions
in which each Loan Party and each of its Subsidiaries, as the case may be, is
currently doing business (including having obtained all Environmental Permits)
and (ii) none of the Loan Parties or any of their respective Subsidiaries has
become subject to any pending, or to the knowledge of the Borrower, threatened
Environmental Claim or any other Environmental Liability.

 

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(b) None of the Loan Parties or any of their respective Subsidiaries has
treated, stored, transported or disposed of Hazardous Materials at or from any
currently or formerly operated real estate or facility relating to its business
in a manner that would reasonably be expected to have a Material Adverse Effect.

SECTION 5.10 Taxes. Except as would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect,
Holdings, the Borrower and its Subsidiaries have timely filed all Federal and
state and other tax returns and reports required to be filed, and have timely
paid all Federal and state and other taxes, assessments, fees and other
governmental charges (including satisfying its withholding tax obligations)
levied or imposed on their properties, income or assets or otherwise due and
payable, except those which are being contested in good faith by appropriate
actions diligently conducted and for which adequate reserves have been provided
in accordance with GAAP.

SECTION 5.11 ERISA Compliance.

(a) Except as set forth in Schedule 5.11(a) or as would not, either individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, each Plan is in compliance with the applicable provisions of ERISA, the
Code and other federal or state Laws.

(b) (i) No ERISA Event has occurred within the one-year period prior to the date
on which this representation is made or deemed made; (ii) no Pension Plan has
failed to satisfy the minimum funding standards (within the meaning of
Section 412 of the Code or Section 302 of ERISA) applicable to such Pension
Plan; (iii) none of the Loan Parties or any of their respective ERISA Affiliates
has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 et seq. or 4243 of ERISA with
respect to a Multiemployer Plan; (iv) none of the Loan Parties or any of their
respective ERISA Affiliates has engaged in a transaction that is subject to
Sections 4069 or 4212(c) of ERISA; and (v) neither any Loan Party nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization (within the meaning of Section 4242 of
ERISA), insolvent (within the meaning of Section 4245 of ERISA) or has been
determined to be in “endangered” or critical status (within the meaning of
Section 432 of the Code or Section 305 of ERISA) and no such Multiemployer Plan
is expected to be in reorganization, insolvent or endangered or critical status,
except, with respect to each of the foregoing clauses of this Section 5.11(b),
as would not reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect.

(c) Except where noncompliance or the incurrence of a material obligation would
not reasonably be expected to result in a Material Adverse Effect, each Foreign
Plan has been maintained in substantial compliance with its terms and with the
requirements of any and all applicable laws, statutes, rules, regulations and
orders, and neither Holdings nor any Subsidiary has incurred any material
obligation in connection with the termination of or withdrawal from any Foreign
Plan.

SECTION 5.12 Subsidiaries. As of the Effective Date, neither Holdings nor any
other Loan Party has any Subsidiaries other than those specifically disclosed in

 

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Schedule 5.12, and all of the outstanding Equity Interests in Holdings, the
Borrower and the Subsidiaries have been validly issued and are fully paid and
(if applicable) nonassessable, and all Equity Interests owned by Holdings or any
other Loan Party are owned free and clear of all security interests of any
person except (i) those created under the Collateral Documents or under the Term
Facility Documentation and secured Permitted Refinancing Indebtedness in respect
of the Indebtedness under the Term Facility Documentation (which Liens shall be
subject to the Intercreditor Agreement) and (ii) any nonconsensual Lien that is
permitted under Section 9.1. As of the Effective Date, Schedule 5.12 (a) sets
forth the name and jurisdiction of each Subsidiary, (b) sets forth the ownership
interest of Holdings, the Borrower and any other Subsidiary in each Subsidiary,
including the percentage of such ownership and (c) identifies each Subsidiary
that is a Subsidiary the Equity Interests of which are required to be pledged on
the Effective Date pursuant to the Collateral and Guarantee Requirement.

SECTION 5.13 Margin Regulations; Investment Company Act.

(a) As of the Effective Date, none of the Collateral is comprised of any Margin
Stock. No Loan Party is engaged nor will it engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Federal Reserve Board), or
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Borrowings will be used for any purpose that violates Regulation
U.

(b) Neither the Borrower nor any Guarantor is an “investment company” under the
Investment Company Act of 1940.

SECTION 5.14 Disclosure. None of the information and data heretofore or
contemporaneously furnished in writing by or on behalf of any Loan Party to any
Agent or any Lender in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder or any other Loan
Document (as modified or supplemented by other information so furnished) when
taken as a whole contains any material misstatement of fact or omits to state
any material fact necessary to make such information and data (taken as a
whole), in the light of the circumstances under which it was delivered, not
materially misleading; it being understood that for purposes of this
Section 5.14, such information and data shall not include projections and pro
forma financial information or information of a general economic or general
industry nature.

SECTION 5.15 Intellectual Property; Licenses, Etc. The Borrower and the
Restricted Subsidiaries have good and marketable title to, or a valid license or
right to use, all patents, patent rights, trademarks, servicemarks, trade names,
copyrights, technology, software, know-how database rights, rights of privacy
and publicity, licenses and other intellectual property rights (collectively,
“IP Rights”) that are necessary for the operation of their respective businesses
as currently conducted and as proposed to be conducted, except where the failure
to have any such rights, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. To the knowledge of
the Borrower, the operation of the respective businesses of the Borrower or any
of its Subsidiaries as currently conducted does not infringe upon, misuse,
misappropriate or violate any rights held by any Person except for such
infringements, misuses, misappropriations or violations individually or in the
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would not reasonably be expected to have a Material Adverse Effect. No claim or
litigation regarding any IP Rights is pending or, to the knowledge of the
Borrower, threatened against any Loan Party or Subsidiary, that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

SECTION 5.16 Solvency. On the Effective Date after giving effect to the
Transaction, the Borrower and its Restricted Subsidiaries, on a consolidated
basis, are Solvent.

SECTION 5.17 Subordination of Junior Financing. The Obligations are “Designated
Senior Debt,” “Senior Debt,” “Senior Indebtedness,” “Guarantor Senior Debt” or
“Senior Secured Financing” (or any comparable term) under, and as defined in,
any indenture or document governing any applicable Junior Financing
Documentation in respect of Indebtedness that is subordinated in right of
payment to the Obligations.

SECTION 5.18 USA PATRIOT Act. (a) To the extent applicable, each of Holdings and
its Subsidiaries is in compliance, in all material respects, with (i) the
Trading with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR Subtitle B, Chapter
V, as amended) and any other enabling legislation or executive order relating
thereto and (ii) the USA PATRIOT Act. No part of the proceeds of the Loans will
be used, directly or indirectly, for any payments to any governmental official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

(b) None of the Borrower or any Restricted Subsidiary nor, to the knowledge of
the Borrower, any director, officer, agent, employee or Affiliate of the
Borrower or any Restricted Subsidiary, (i) is a person on the list of “Specially
Designated Nationals and Blocked Persons” or (ii) is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Borrower will not directly or indirectly
use the proceeds of the Loans or the Letters of Credit or otherwise knowingly
make available such proceeds to any person, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.

SECTION 5.19 Collateral Documents. Except as otherwise contemplated hereby or
under any other Loan Documents, the provisions of the Collateral Documents,
together with such filings and other actions required to be taken hereby or by
the applicable Collateral Documents (including the delivery to Collateral Agent
of any Pledged Debt and any Pledged Equity required to be delivered pursuant to
the applicable Collateral Documents), are effective to create in favor of the
Collateral Agent for the benefit of the Secured Parties a legal, valid and
enforceable first priority Lien (subject to Liens permitted by Section 9.1 and
subject to the Intercreditor Agreement) on all right, title and interest of the
respective Loan Parties in the Collateral described therein.

 

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ARTICLE VI

FINANCIAL COVENANT

So long as any Lender shall have any Revolving Credit Commitment hereunder, any
Loan or other Obligation hereunder (other than (i) contingent indemnification
obligations as to which no claim has been asserted and (ii) Obligations under
Secured Hedge Agreements and Cash Management Obligations) shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding (unless the
Outstanding Amount of the Letter of Credit Obligations related thereto has been
Cash Collateralized or back-stopped by a letter of credit in form and substance
reasonably satisfactory to the Administrative Agent), the Borrower agrees with
the Lenders, the Issuers and the Administrative Agent to the following:

SECTION 6.1 Minimum Fixed Charge Coverage Ratio.

At any time that a Covenant Trigger Event shall be in effect, the Fixed Charge
Coverage Ratio of the Borrower and its Restricted Subsidiaries (on a
Consolidated basis) for the Test Period ending on the last day of the most
recent Fiscal Quarter for which financial statements of the Borrower and its
Restricted Subsidiaries were required to have been delivered pursuant to
Section 7.1(a) or (b), as applicable, and each subsequent Test Period during the
continuance of such Covenant Trigger Event, shall be not less than 1.0 to 1.0
and the Borrower shall immediately deliver to the Administrative Agent a
certificate of the chief financial officer setting forth reasonably detailed
calculations of the Fixed Charge Coverage Ratio.

ARTICLE VII

REPORTING COVENANTS

So long as any Lender shall have any Commitment hereunder or any Loan or other
Obligation hereunder (other than (i) contingent indemnification obligations as
to which no claim has been asserted and (ii) Obligations under Secured Hedge
Agreements and Cash Management Obligations) shall remain unpaid or unsatisfied,
or any Letter of Credit shall remain outstanding (unless the Outstanding Amount
of the Letter of Credit Obligations related thereto has been Cash Collateralized
or back-stopped by a letter of credit in form and substance reasonably
satisfactory to the Administrative Agent), the Borrower shall, and shall (except
in the case of the covenants set forth in Sections 7.1, 7.2 and 7.3) cause each
of the Restricted Subsidiaries to:

SECTION 7.1 Financial Statements, Etc.

Deliver to the Administrative Agent for prompt further distribution to each
Lender each of the following and shall take the following actions:

(a) as soon as available, but in any event within ninety (90) days after the end
of each Fiscal Year of the Borrower, a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such Fiscal Year, and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows for such Fiscal Year together with related notes thereto and management’s
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operations, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of KPMG LLP or any other
independent registered public accounting firm of nationally recognized standing,
which report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit;

(b) as soon as available, but in any event within forty-five (45) days after the
end of each of the first three (3) Fiscal Quarters of each Fiscal Year of the
Borrower (commencing with the Fiscal Quarter ended April 30, 2011), a condensed
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such Fiscal Quarter, and the related (i) condensed consolidated statements of
income or operations for such Fiscal Quarter and for the portion of the Fiscal
Year then ended and (ii) condensed consolidated statements of cash flows for the
portion of the Fiscal Year then ended, setting forth in each case in comparative
form the figures for the corresponding Fiscal Quarter of the previous Fiscal
Year and the corresponding portion of the previous Fiscal Year, all in
reasonable detail and certified by a Responsible Officer of the Borrower as
fairly presenting in all material respects the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries in accordance
with GAAP, subject to normal year-end adjustments and the absence of footnotes,
together with management’s discussion and analysis describing results of
operations;

(c) during the occurrence and continuation of any Cash Dominion Period, as soon
as available, but in any event within thirty (30) days after the end of each of
the first two (2) months of each Fiscal Quarter of the Borrower, a consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such month,
and the related consolidated statements of income or operations, for such month,
in the form prepared by management of the Borrower;

(d) within ninety (90) days after the end of each Fiscal Year (beginning with
the Fiscal Year ending January 28, 2012 of the Borrower), a reasonably detailed
consolidated budget for the following Fiscal Year as customarily prepared by
management of the Borrower for its internal use (including a projected
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
the following Fiscal Year, the related consolidated statements of projected
operations or income and projected cash flow and setting forth the material
underlying assumptions applicable thereto) in each case on a fiscal quarter
basis (collectively, the “Projections”), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections have been prepared in good faith on the basis of the assumptions
stated therein, which assumptions were believed to be reasonable at the time of
preparation of such Projections, it being understood that actual results may
vary from such Projections and that such variations may be material;

(e) simultaneously with the delivery of each set of consolidated financial
statements referred to in Sections 7.1(a) and 7.1(b) above, the related
consolidating financial statements reflecting the adjustments necessary to
eliminate the accounts of Unrestricted Subsidiaries (if any) from such
consolidated financial statements; and

 

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(f) quarterly, at a time mutually agreed with the Administrative Agent that is
promptly after the delivery of the information required pursuant to clause (a)
above and the information delivered pursuant to clause (b) above for each Fiscal
Quarter, participate in a conference call for Lenders to discuss the financial
condition and results of operations of the Borrower and its Subsidiaries for the
most recently-ended period for which financial statements have been delivered,
which requirement may be satisfied by including the Lenders and the
Administrative Agent on quarterly conference calls with the Term Facility
Lenders or the noteholders in respect of the Senior Notes.

Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this
Section 7.1 may be satisfied with respect to financial information of the
Borrower and its Subsidiaries by furnishing (A) the applicable financial
statements of any direct or indirect parent of the Borrower that holds all of
the Equity Interests of the Borrower or (B) the Borrower’s or such entity’s Form
10-K or 10-Q, as applicable, filed with the SEC; provided that, with respect to
each of clauses (A) and (B), (i) to the extent such information relates to a
parent of the Borrower, such information is accompanied by consolidating
information that explains in reasonable detail the differences between the
information relating to the Borrower (or such parent), on the one hand, and the
information relating to the Borrower and the Restricted Subsidiaries on a
standalone basis, on the other hand and (ii) to the extent such information is
in lieu of information required to be provided under Section 7.1(a), such
materials are accompanied by a report and opinion of KPMG LLP or any other
independent registered public accounting firm of nationally recognized standing,
which report and opinion shall be prepared in accordance with generally accepted
auditing standards and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit.

Any financial statements required to be delivered pursuant to Sections 7.1(a)
and (b) shall not be required to contain all purchase accounting adjustments
relating to the Transaction to the extent it is not practicable to include any
such adjustments in such financial statements.

SECTION 7.2 Certificates; Other Information. Deliver to the Administrative Agent
for prompt further distribution to each Lender:

(a) concurrently with the delivery of the financial statements referred to in
Section 7.1(a) (but only with respect to Fiscal Years ending after January 29.
2011) and Section 7.1(b), a duly completed Compliance Certificate signed by the
chief financial officer of the Borrower; provided that if such Compliance
Certificate demonstrates an Event of Default of any financial covenant pursuant
to Section 6.1, any of the Permitted Holders may deliver, prior to or together
with such Compliance Certificate, a notice of their intent to cure (a “Notice of
Intent to Cure”) pursuant to Section 10.4 to the extent permitted thereunder;

(b) promptly after the same are publicly available, copies of all annual,
regular, periodic and special reports, proxy statements and registration
statements which

 

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Holdings or the Borrower or any Restricted Subsidiary files with the SEC or with
any Governmental Authority that may be substituted therefor or with any national
securities exchange, as the case may be (other than amendments to any
registration statement (to the extent such registration statement, in the form
it became effective, is delivered to the Administrative Agent), exhibits to any
registration statement and, if applicable, any registration statement on Form
S-8), and in any case not otherwise required to be delivered to the
Administrative Agent pursuant to any other clause of this Section 7.2;

(c) promptly after the furnishing thereof, copies of any material statements or
material reports furnished to any holder of any class or series of debt
securities of any Loan Party having an aggregate outstanding principal amount
greater than $35,000,000 or pursuant to the terms of the Term Facility Credit
Agreement or the Senior Notes Indenture, in each case, so long as the aggregate
outstanding principal amount thereunder is greater than $35,000,000 and not
otherwise required to be furnished to the Administrative Agent pursuant to any
other clause of this Section 7.2;

(d) together with the delivery of the financial statements pursuant to
Sections 7.1(a) and 7.1(b) and each Compliance Certificate delivered pursuant to
Section 7.2(a) (but only with respect to Fiscal Years ending after January 29,
2011), (i) a report setting forth the information required by Section 3.03(c) of
the Security Agreement (or confirming that there has been no change in such
information since the Effective Date or the date of the last such report),
(ii) a description of each event, condition or circumstance during the last
Fiscal Quarter covered by such Compliance Certificate requiring a mandatory
prepayment under Section 2.9 and (iii) a list of each Subsidiary of the Borrower
that identifies each Subsidiary as a Restricted Subsidiary or an Unrestricted
Subsidiary as of the date of delivery of such Compliance Certificate or a
confirmation that there is no change in such information since the later of the
Effective Date and the date of the last such list;

(e) on the date on which the delivery of financial statements is required to be
made pursuant to Sections 7.1(a), the Borrower shall furnish to the
Administrative Agent a description, in detail reasonably satisfactory to the
Administrative Agent, of all material insurance coverage maintained by the Loan
Parties, together with evidence thereof;

(f) prior to or concurrent with the making of any Specified Payment, a detailed
calculation of the Fixed Charge Coverage Ratio and projected Excess Availability
as required pursuant to clauses (b) and (c) of the definition of “Payment
Conditions” or “RP Conditions”, as applicable, together with a certification
that no Event of Default exists or would arise as a result of the making of such
subject Specified Payment and, in the case of any Permitted Acquisition, that
the requirements of the definition of “Permitted Acquisitions” shall have been
satisfied; and

(g) promptly, such additional information regarding the business, legal,
financial or corporate affairs of any Loan Party or any Restricted Subsidiary,
or compliance with the terms of the Loan Documents, as the Administrative Agent
may from time to time on its own behalf or on behalf of any Lender reasonably
request.

 

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Documents required to be delivered pursuant to Section 7.1(a) or (b) or
Section 7.2(c) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Borrower posts such
documents, or provides a link thereto on the Borrower’s website on the Internet
at the website address listed on Schedule 12.8; or (ii) on which such documents
are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another
relevant website, if any, to which each Lender and the Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (i) upon written request by the
Administrative Agent, the Borrower shall deliver paper copies of such documents
to the Administrative Agent for further distribution to each Lender until a
written request to cease delivering paper copies is given by the Administrative
Agent and (ii) the Borrower shall notify (which may be by facsimile or
electronic mail) the Administrative Agent of the posting of any such documents
and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Each Lender shall be solely responsible
for timely accessing posted documents or requesting delivery of paper copies of
such documents from the Administrative Agent and maintaining its copies of such
documents.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Arrangers will make available to the Lenders and the Issuers materials and/or
information provided by or on behalf of the Borrower hereunder (collectively,
“Borrower Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”) and (b) certain of the Lenders (each,
a “Public Lender”) may have personnel who do not wish to receive material
non-public information with respect to the Borrower or its Subsidiaries, or the
respective securities of any of the foregoing, and who may be engaged in
investment and other market-related activities with respect to such Persons’
securities. The Borrower hereby agrees that (w) all Borrower Materials that are
to be made available to Public Lenders shall be clearly and conspicuously marked
“PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear
prominently on the first page thereof; (x) by marking Borrower Materials
“PUBLIC,” the Borrower shall be deemed to have authorized the Administrative
Agent, the Arrangers, the Issuers and the Lenders to treat such Borrower
Materials as not containing any material non-public information with respect to
the Borrower or its securities for purposes of United States Federal and state
securities laws (provided, however, that to the extent such Borrower Materials
constitute Information, they shall be treated as set forth in Section 12.19);
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Side Information”; and
(z) the Administrative Agent and the Arrangers shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Side Information.”

SECTION 7.3 Notices.

Promptly after a Responsible Officer obtains actual knowledge thereof, notify
the Administrative Agent:

(a) of the occurrence of any Default; and

 

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(b) of (i) any dispute, litigation, investigation or proceeding between any Loan
Party and any arbitrator or Governmental Authority, (ii) the filing or
commencement of, or any material development in, any litigation or proceeding
affecting any Loan Party or any Subsidiary, including pursuant to any applicable
Environmental Laws or in respect of IP Rights, the occurrence of any
noncompliance by any Loan Party or any of its Subsidiaries with, or liability
under, any Environmental Law or Environmental Permit, or (iii) the occurrence of
any ERISA Event that, in any such case referred to in clauses (i), (ii) or
(iii), has resulted or would reasonably be expected to result in a Material
Adverse Effect.

Each notice pursuant to this Section 7.3 shall be accompanied by a written
statement of a Responsible Officer of the Borrower (x) that such notice is being
delivered pursuant to Section 7.3(a) or (b) (as applicable) and (y) setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto.

SECTION 7.4 Borrowing Base Certificate.

(a) Borrower shall provide the Administrative Agent with the following documents
in a form and detail reasonably satisfactory to Administrative Agent: as soon as
possible after the end of each fiscal month (but in any event within
fifteen (15) Business Days after the end thereof) a Borrowing Base Certificate
setting forth the calculation of the Borrowing Base and of Excess Availability
as of the last Business Day of the immediately preceding fiscal month, duly
completed and executed by a Responsible Officer of the Borrower, together with
all schedules required pursuant to the terms of the Borrowing Base Certificate
duly completed (such certification, a “Monthly Borrowing Base Certificate”);
provided that the Borrower may elect, at its option, to deliver more frequent
Borrowing Base Certificates, in which case such Borrowing Base Certificates
shall be computed in accordance with the requirements in respect of Borrowing
Base Certificates required to be delivered during the continuance of a Weekly
Monitoring Event and the Borrower shall continue to deliver Borrowing Base
Certificates on a weekly basis until January 15th of the next succeeding
calendar year.

(b) At any time during the occurrence and continuation of a Weekly Monitoring
Event, the Borrower shall furnish a Borrowing Base Certificate calculated as of
the close of business on the last day of the immediately preceding calendar
week, on Wednesday of each week (or, if Wednesday is not a Business Day, on the
next succeeding Business Day).

(c) The Borrower shall also cooperate with (and cause its Subsidiaries to
cooperate with) the Administrative Agent, in connection with updates to the
Initial Inventory Appraisal that shall be in form and detail and from
third-party appraisers reasonably acceptable to the Administrative Agent (the
“Updated Inventory Appraisal”) for the purpose of determining the amount of the
Borrowing Base attributable to Inventory and the Administrative Agent may carry
out, at the Borrower’s expense, one (1) Updated Inventory Appraisal in any
period of 12 consecutive months; provided, however, that notwithstanding the
foregoing limitations (x)(i) at any time on or after the date on which Excess
Availability has been less than the greater of (A) $25,000,000 and (B) 25% of
the Maximum Credit, in each case, for five (5) consecutive Business Days, the
Administrative Agent may carry out, at the Borrower’s expense, two (2)

 

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Updated Inventory Appraisals in any period of 12 consecutive months, and (ii) at
any time during the continuation of a Specified Event of Default, the
Administrative Agent may carry out, at the Borrower’s expense, Updated Inventory
Appraisals as frequently as determined by the Administrative Agent in its
reasonable discretion and (y) in addition to the foregoing clause (x), the
Administrative Agent may carry out, at the Lenders’ expense, one (1) additional
Updated Inventory Appraisal in any period of 12 consecutive months. The Borrower
shall furnish to the Administrative Agent any information that the
Administrative Agent may reasonably request regarding the determination and
calculation of the Borrowing Base including correct and complete copies of any
invoices, underlying agreements, instruments or other documents and the identity
of all Account Debtors in respect of Accounts referred to therein .

(d) The Administrative Agent may carry out investigations and reviews of each
Loan Party’s property at the reasonable expense of the Borrower (including field
audits conducted by the Administrative Agent) (“Field Examination”) and the
Administrative Agent may carry out, at the Borrower’s expense, one (1) Field
Examination in any period of 12 consecutive months; provided, however, that
notwithstanding the foregoing limitations, (x)(i) at any time on or after the
date on which Excess Availability has been less than the greater of
(A) $25,000,000 and (B) 25% of the Maximum Credit, in each case, for five (5)
consecutive Business Days, the Administrative Agent may carry out, at the
Borrower’s expense, two (2) Field Examinations in any period of 12 consecutive
months, and (ii) at any time during the continuation of a Specified Event of
Default, the Administrative Agent may carry out, at the Borrower’s expense,
Field Examinations as frequently as determined by the Administrative Agent in
its reasonable discretion and (y) in addition to the foregoing clause (x), the
Administrative Agent may carry out, at the Lenders’ expense, one (1) additional
Field Examination in any period of 12 consecutive months. The Borrower shall
furnish to the Administrative Agent any information that the Administrative
Agent may reasonably request regarding the determination and calculation of the
Borrowing Base including correct and complete copies of any invoices, underlying
agreements, instruments or other documents and the identity of all Account
Debtors in respect of Accounts referred to therein.

ARTICLE VIII

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Revolving Credit Commitment hereunder or
any Loan or other Obligation hereunder (other than (i) contingent
indemnification obligations as to which no claim has been asserted and
(ii) Obligations under Secured Hedge Agreements and Cash Management Obligations)
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding (unless the Outstanding Amount of the Letter of Credit Obligations
related thereto has been Cash Collateralized or back-stopped by a letter of
credit in form and substance reasonably satisfactory to the Administrative
Agent), the Borrower shall, and shall cause each of the Restricted Subsidiaries
to:

SECTION 8.1 Preservation of Existence, Etc.

(a) Preserve, renew and maintain in full force and effect its legal existence
under the Laws of the jurisdiction of its organization and (b) take all
reasonable action to obtain,

 

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preserve, renew and keep in full force and effect its the rights, licenses,
permits, privileges, franchises, patents, copyrights, trademarks and trade names
material to the conduct of its business, except in the case of clause (a) or
(b) to the extent (other than with respect to the preservation of the existence
of Holdings and the Borrower) that failure to do so would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
pursuant to any merger, consolidation, liquidation, dissolution or Disposition
permitted by Article IX.

SECTION 8.2 Compliance with Laws, Etc.

Comply in all material respects with its Constituent Documents and the
requirements of all Laws and all orders, writs, injunctions and decrees of any
Governmental Authority applicable to it or to its business or property, except
if the failure to comply therewith would not reasonably be expected individually
or in the aggregate to have a Material Adverse Effect.

SECTION 8.3 Designation of Subsidiaries.

The board of directors of the Borrower may at any time designate any Restricted
Subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that (i) immediately before and after such
designation, no Default shall have occurred and be continuing, (ii) immediately
after giving effect to such designation, the Total Leverage Ratio for the Test
Period immediately preceding such designation for which financial statements
have been delivered pursuant to Section 7.1 is less than or equal to 6.0 to 1.0
(calculated on a Pro Forma Basis) (and, as a condition precedent to the
effectiveness of any such designation, the Borrower shall deliver to the
Administrative Agent a certificate setting forth in reasonable detail the
calculations demonstrating satisfaction of such test) and (iii) no Subsidiary
may be designated as an Unrestricted Subsidiary if, after such designation, it
would be a “Restricted Subsidiary” for the purpose of the Term Facility, the
Senior Notes, or any other Junior Financing or any other Indebtedness of any
Loan Party. The designation of any Subsidiary as an Unrestricted Subsidiary
shall constitute an Investment by the Borrower therein at the date of
designation in an amount equal to the fair market value as determined by the
Borrower in good faith of the Borrower’s or its Subsidiary’s (as applicable)
Investment therein. 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 and a
return on any Investment by the Borrower in Unrestricted Subsidiaries pursuant
to the preceding sentence in an amount equal to the fair market value as
determined by the Borrower in good faith at the date of such designation of the
Borrower’s or its Subsidiary’s (as applicable) Investment in such Subsidiary.

Notwithstanding the foregoing, any Unrestricted Subsidiary that has been
re-designated a Restricted Subsidiary may not be subsequently re-designated as
an Unrestricted Subsidiary.

 

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SECTION 8.4 Payment of Taxes, Etc.

Timely pay, discharge or otherwise satisfy, as the same shall become due and
payable, all of its obligations and liabilities in respect of taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or in respect of its property, except, in each case, to the extent (i) any such
tax, assessment, charge or levy is being contested in good faith and by
appropriate actions for which appropriate reserves have been established in
accordance with GAAP or (ii) the failure to pay or discharge the same would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

SECTION 8.5 Maintenance of Insurance.

Maintain with insurance companies that the Borrower believes (in the good faith
judgment of its management) are financially sound and reputable at the time the
relevant coverage is placed or renewed, insurance with respect to its properties
and business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Borrower and the Restricted Subsidiaries) as are customarily carried under
similar circumstances by such other Persons , and will furnish to the Lenders,
upon written request from the Administrative Agent, information presented in
reasonable detail as to the insurance so carried. Each such policy of insurance
shall, as appropriate, (i) name the Collateral Agent, on behalf of the Lenders,
as an additional insured thereunder as its interests may appear and/or (ii) in
the case of each casualty insurance policy, contain a loss payable clause or
endorsement that names the Collateral Agent, on behalf of the Lenders as the
loss payee thereunder.

SECTION 8.6 Inspection Rights.

In addition to the requirements pursuant to Section 7.4, permit representatives
and independent contractors of the Administrative Agent and each Lender to visit
and inspect any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom and to discuss
its affairs, finances and accounts with its directors, officers, and independent
public accountants (subject to such accountants’ customary policies and
procedures), all at the reasonable expense of the Borrower and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Borrower; provided that,
excluding any such visits and inspections during the continuation of an Event of
Default, only the Administrative Agent on behalf of the Lenders may exercise
rights of the Administrative Agent and the Lenders under this Section 8.6 and
the Administrative Agent shall not exercise such rights more often than
two (2) times during any calendar year absent the existence of an Event of
Default and only one (1) such time shall be at the Borrower’s expense; provided
further that when an Event of Default exists, the Administrative Agent or any
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and upon reasonable advance notice. The Administrative
Agent and the Lenders shall give the Borrower the opportunity to participate in
any discussions with the Borrower’s independent public accountants.
Notwithstanding anything to the contrary in this Section 8.6, none of the
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disclose, permit the inspection, examination or making copies or abstracts of,
or discussion of, any document, information or other matter that (a) in respect
of which disclosure to the Administrative Agent or any Lender (or their
respective representatives or contractors) is prohibited by Law or any bona fide
arm’s length third party contract or (b) is subject to attorney-client or
similar privilege or constitutes attorney work product.

SECTION 8.7 Books and Records.

Maintain proper books of record and account, in which entries that are full,
true and correct in all material respects and are in conformity with GAAP shall
be made of all material financial transactions and matters involving the assets
and business of Holdings, the Borrower or such Restricted Subsidiary, as the
case may be.

SECTION 8.8 Maintenance of Properties.

Except if the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, maintain, preserve
and protect all of its material properties and equipment used in the operation
of its business in good working order, repair and condition, ordinary wear and
tear excepted and casualty or condemnation excepted.

SECTION 8.9 Use of Proceeds.

Use the proceeds of the Loans only in compliance with (and not in contravention
of) applicable Laws and each Loan Document.

SECTION 8.10 Compliance with Environmental Laws.

Except, in each case, to the extent that the failure to do so would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (a) comply, and take all reasonable actions to cause any lessees
and other Persons operating or occupying its properties to comply with all
applicable Environmental Laws and Environmental Permits; (b) obtain and renew
all Environmental Permits necessary for its operations and properties; and,
(c) in each case to the extent required by applicable Environmental Laws,
conduct any investigation, study, sampling and testing, and undertake any
cleanup, removal, remedial or other action necessary to remove and clean up all
Hazardous Materials from any of its properties, in accordance with the
requirements of all applicable Environmental Laws.

SECTION 8.11 Covenant to Guarantee Obligations and Give Security.

At the Borrower’s expense, subject to the provisions of the Collateral and
Guarantee Requirement and any applicable limitation in any Collateral Document,
take all action necessary or reasonably requested by the Administrative Agent or
the Collateral Agent to ensure that the Collateral and Guarantee Requirement
continues to be satisfied, including:

(a) (x) upon the formation or acquisition of any new direct or indirect
Wholly-Owned Subsidiary that is a Material Domestic Subsidiary (in each case,
other than an Unrestricted Subsidiary or an Excluded Subsidiary) by any Loan
Party, the designation in accordance with Section 8.3, of any existing direct or
indirect Wholly-Owned Subsidiary that is a

 

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Material Domestic Subsidiary as a Restricted Subsidiary or any Subsidiary
becoming a Wholly-Owned Subsidiary that is a Material Domestic Subsidiary,
(y) upon the acquisition of any material assets by the Borrower or any other
Loan Party or (z) with respect to any Subsidiary at the time it becomes a Loan
Party, for any material assets held by such Subsidiary (in each case, other than
assets constituting Collateral under a Collateral Document that becomes subject
to the Lien created by such Collateral Document upon acquisition thereof
(without limitation of the obligations to perfect such Lien)):

(i) within forty-five (45) days (or such greater number of days specified below)
after such formation, acquisition or designation or, in each case, such longer
period as the Administrative Agent may agree in its reasonable discretion:

(A) cause each such Material Domestic Subsidiary that is required to become a
Guarantor under the Collateral and Guarantee Requirement to furnish to the
Collateral Agent a description of the Material Real Properties owned by such
Material Domestic Subsidiary in detail reasonably satisfactory to the Collateral
Agent;

(B) within forty-five (45) days (or within ninety (90) days in the case of
documents listed in Section 8.13(b)) after such formation, acquisition or
designation, cause each such Material Domestic Subsidiary that is required to
become a Guarantor pursuant to the Collateral and Guarantee Requirement to duly
execute and deliver to the Collateral Agent Mortgages with respect to any
Material Real Property, Security Agreement Supplements, Intellectual Property
Security Agreements and other security agreements and documents (including, with
respect to Mortgages, the documents listed in Section 8.13(b)), as reasonably
requested by and in form and substance reasonably satisfactory to the Collateral
Agent (consistent with the Mortgages, Security Agreement, Intellectual Property
Security Agreements and other Collateral Documents in effect on the Effective
Date), in each case granting Liens required by the Collateral and Guarantee
Requirement;

(C) cause each such Material Domestic Subsidiary that is required to become a
Guarantor pursuant to the Collateral and Guarantee Requirement to deliver any
and all certificates representing Equity Interests (to the extent certificated)
that are required to be pledged pursuant to the Collateral and Guarantee
Requirement, accompanied by undated stock powers or other appropriate
instruments of transfer executed in blank (or any other documents customary
under local law) and instruments evidencing the intercompany Indebtedness held
by such Material Domestic Subsidiary and required to be pledged pursuant to the
Collateral Documents, indorsed in blank to the Collateral Agent;

(D) within forty-five (45) days (or within ninety (90) days in the case of
documents listed in Section 8.13(b)) after such formation, acquisition or
designation, (1) take and cause the applicable Material Domestic Subsidiary and
each direct or indirect parent of the applicable Material Domestic Subsidiary
that is required to become a Guarantor pursuant to the Collateral and Guarantee
Requirement to take whatever action (including the recording of Mortgages, the
filing of UCC financing statements and delivery of stock and membership interest
certificates to the extent certificated) may be necessary in the reasonable
opinion of the Administrative Agent to vest in the Collateral

 

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Agent (or in any representative of the Collateral Agent designated by it) valid
Liens required by the Collateral and Guarantee Requirement, enforceable against
all third parties in accordance with their terms, except as such enforceability
may be limited by Debtor Relief Laws and by general principles of equity
(regardless of whether enforcement is sought in equity or at law) and (2) comply
with the requirements of Section 8.12 with respect to all Deposit Accounts; and

(ii) within forty-five (45) days (or within ninety (90) days in the case of
documents listed in Section 8.13(b)) after the request therefor by the
Administrative Agent (or such longer period as the Administrative Agent may
agree in its reasonable discretion), deliver to the Administrative Agent a
signed copy of an opinion, addressed to the Administrative Agent and the other
Secured Parties, of counsel for the Loan Parties reasonably acceptable to the
Administrative Agent as to such matters set forth in this Section 8.11(a) as the
Administrative Agent may reasonably request; and

(iii) as promptly as practicable after the reasonable request therefor by the
Administrative Agent or Collateral Agent, deliver to the Collateral Agent with
respect to each Material Real Property, title reports, surveys and environmental
assessment reports, provided that the Collateral Agent may in its reasonable
discretion accept any such existing report or survey to the extent prepared as
of a date reasonably satisfactory to the Collateral Agent; provided, however,
that there shall be no obligation to deliver to the Collateral Agent any
environmental assessment report whose disclosure to the Collateral Agent would
require the consent of a Person other than the Borrower or one of its
Subsidiaries, where, despite the commercially reasonable efforts of the Borrower
to obtain such consent, such consent cannot be obtained; and

(b) (i) the Borrower shall obtain the security interests and Guarantees set
forth on Schedule 1.1A on or prior to the dates corresponding to such security
interests and Guarantees set forth on Schedule 1.1A; and (ii) after the
Effective Date, promptly after the acquisition of any Material Real Property by
any Loan Party other than Holdings, and such Material Real Property shall not
already be subject to a perfected Lien pursuant to the Collateral and Guarantee
Requirement, the Borrower shall give notice thereof to the Collateral Agent and
will take, or cause the relevant Loan Party to take, the actions referred to in
Section 8.13(b).

SECTION 8.12 Cash Receipts.

(a) Use commercially reasonable efforts to enter into, as soon as possible after
the Effective Date, an effective account control agreement (a “Deposit Account
Control Agreement”) with each Approved Account Bank, in each case in
substantially the form attached as Exhibit VI to the Security Agreement or
otherwise in form and substance reasonably satisfactory to the Administrative
Agent, with respect to each Deposit Account in which funds of any of the Loan
Parties are deposited (including those existing as of the Effective Date and
listed on Schedule 8.12 attached hereto, and excluding, for the avoidance of
doubt, the Asset Sale Proceeds Pledged Account, petty cash, payroll, trust and
tax withholding accounts) (collectively, the “Material Bank Accounts”); provided
that each Loan Party may maintain credit balances in Store Accounts or other
accounts, in each case that are not Approved Deposit Accounts, so long as the
aggregate balance in all such Store Accounts and other accounts does not exceed

 

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$7,500,000 (such amount, the “Excluded Amount”); provided further that, if on or
prior to ninety (90) days after the Effective Date (or such longer period (up to
not greater than sixty (60) additional days) following such date as the
Administrative Agent may agree in its sole discretion), the Borrower shall not
have entered into a Deposit Account Control Agreement with respect to any
Deposit Account required to be subject to a Deposit Account Control Agreement
under this Section 8.12(a), such Deposit Account shall be closed and all funds
therein transferred to a Deposit Account at the Administrative Agent, an
Affiliate of the Administrative Agent, or another financial institution that has
executed a Deposit Account Control Agreement. Notwithstanding anything in this
section to the contrary, the provisions of this Section 8.12(a) shall not apply
to any Deposit Account acquired by a Loan Party in connection with a Permitted
Acquisition prior to the date that is ninety (90) days (or such later date as
the Administrative Agent may agree) following the consummation of such Permitted
Acquisition.

(b) Each Loan Party shall (i) instruct each Account Debtor or other Person
obligated to make a payment to any of them under any Account to make payment, or
to continue to make payment, to an Approved Deposit Account, (ii) deposit in an
Approved Deposit Account promptly upon receipt all Cash Receipts (as defined
below) received by any Loan Party from any other Person, (iii) deliver to the
Administrative Agent, within thirty (30) Business Days following the Effective
Date, Credit Card Notifications and (iv) instruct each depository institution
for a Deposit Account to cause all amounts on deposit and available at the close
of each Business Day in such Deposit Account (other than balances constituting
the Excluded Amount) to be swept to one of the Loan Parties’ concentration
accounts no less frequently than on a daily basis, such instructions to be
irrevocable unless otherwise agreed to by the Administrative Agent.

(c) Each Credit Card Notification, Deposit Account Control Agreement (and, in
the case of clause (iii) below, Securities Account Control Agreement) shall
require (in each case, without further consent of the Loan Parties), and the
Loan Parties shall cause, after the occurrence and during the continuance of a
Cash Dominion Period and subject to the Intercreditor Agreement, the ACH or wire
transfer no less frequently than daily (and whether or not there are then any
outstanding Obligations) to the concentration account maintained by, in the name
of and under the sole dominion and control of the Administrative Agent at Bank
of America (the “Concentration Account”), of all cash receipts and collections,
including the following (collectively, the “Cash Receipts”):

(i) all available cash receipts from the sale of Inventory and other Current
Asset Collateral or casualty insurance proceeds arising from any of the
foregoing;

(ii) all proceeds of collections of Accounts (including, without limitation,
Credit Card Receivables);

(iii) the then contents of each Approved Deposit Account and each Approved
Securities Account (in each case, net of any minimum balance as may be required
to be kept in the subject Deposit Account or Securities Account, as the case may
be, by the institution at which such Deposit Account or Securities Account, as
applicable, is maintained); and

 

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(iv) the cash proceeds of all credit card charges.

(d) The Concentration Account shall at all times be under the sole dominion and
control of the Administrative Agent. The Loan Parties hereby acknowledge and
agree that (i) the Loan Parties have no right of withdrawal from the
Concentration Account, (ii) the funds on deposit in the Concentration Account
shall at all times be collateral security for all of the Obligations and
(iii) the funds on deposit in the Concentration Account shall be applied as
provided in this Agreement. In the event that, notwithstanding the provisions of
this Section, during the continuation of any Cash Dominion Period, any Loan
Party receives or otherwise has dominion and control of any such proceeds or
collections, such proceeds and collections shall be held in trust by such Loan
Party for the Administrative Agent, shall not be commingled with any of such
Loan Party’s other funds or deposited in any account of such Loan Party and
shall, not later than the Business Day after receipt thereof, be deposited into
the Concentration Account or dealt with in such other fashion as such Loan Party
may be instructed by the Administrative Agent.

(e) So long as no Cash Dominion Period (or, in the case of a Qualified Cash
Securities Account, Qualified Cash Trigger Period) is continuing, the Loan
Parties may direct, and shall have sole control over, the manner of disposition
of funds in the Approved Securities Accounts and Approved Deposit Accounts.

(f) Any amounts received in the Concentration Account at any time when no Cash
Dominion Period (or, in the case of a Qualified Cash Securities Account,
Qualified Cash Trigger Period) is continuing or all of the Obligations have been
paid in full shall be remitted to the operating account of the Loan Parties
maintained with the Administrative Agent or to an operating account otherwise
designated by the Borrower.

(g) The Administrative Agent shall promptly (but in any event within one
(1) Business Day) furnish written notice to each Approved Account Bank and each
Approved Securities Intermediary, as applicable, of any termination of a Cash
Dominion Period or (if a Cash Dominion Period does not otherwise exist) a
Qualified Cash Trigger Period.

SECTION 8.13 Further Assurances and Post-Closing Covenants.

Subject to the provisions of the Collateral and Guarantee Requirement and any
applicable limitations in any Collateral Document and in each case at the
expense of the Loan Parties:

(a) Promptly upon reasonable request by the Administrative Agent or the
Collateral Agent or as may be required by applicable law (i) correct any
material defect or error that may be discovered in the execution,
acknowledgment, filing or recordation of any Collateral Document or other
document or instrument relating to any Collateral, and (ii) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-register
any and all such further acts, deeds, certificates, assurances and other
instruments as the Administrative Agent or Collateral Agent may reasonably
request from time to time in order to carry out more effectively the purposes of
the Collateral Documents.

 

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(b) In the case of any Material Real Property, provide the Collateral Agent with
Mortgages with respect to such owned real property within ninety (90) days (or
such longer period as the Collateral Agent may agree in its sole discretion) of
the acquisition of, or, if requested by the Collateral Agent, entry into, or
renewal of, a ground lease in respect of, such real property in each case
together with:

(i) evidence that counterparts of the Mortgages have been duly executed,
acknowledged and delivered and are in form suitable for filing or recording in
all filing or recording offices that the Collateral Agent may deem reasonably
necessary or desirable in order to create a valid and subsisting perfected Lien
on the property and/or rights described therein in favor of the Collateral Agent
for the benefit of the Secured Parties and that all filing and recording taxes
and fees have been paid or otherwise provided for in a manner reasonably
satisfactory to the Collateral Agent;

(ii) fully paid American Land Title Association Lender’s Extended Coverage title
insurance policies or the equivalent or other form available in each applicable
jurisdiction (the “Mortgage Policies”) in form and substance, with endorsements
available in the applicable jurisdiction and in amount, reasonably acceptable to
the Collateral Agent (not to exceed the value of the real properties covered
thereby), issued, coinsured and reinsured by title insurers reasonably
acceptable to the Collateral Agent, insuring the Mortgages to be valid
subsisting Liens on the property described therein, subject only to Liens
permitted by Section 9.1, and providing for such other affirmative insurance
(including endorsements for future advances under the Loan Documents) and such
coinsurance and direct access reinsurance as the Collateral Agent may reasonably
request and is available in the applicable jurisdiction;

(iii) opinions of local counsel for the Loan Parties in states in which the real
properties are located, with respect to the enforceability and perfection of the
Mortgages and any related fixture filings in form and substance reasonably
satisfactory to the Administrative Agent; and

(iv) such other evidence that all other actions that the Administrative Agent or
Collateral Agent may reasonably deem necessary or desirable in order to create
valid and subsisting Liens on the property described in the Mortgages has been
taken.

ARTICLE IX

NEGATIVE COVENANTS

So long as any Lender shall have any Revolving Credit Commitment hereunder or
any Loan or other Obligation hereunder (other than (i) contingent
indemnification obligations as to which no claim has been asserted and
(ii) Obligations under Secured Hedge Agreements and Cash Management Obligations)
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding (unless the Outstanding Amount of the Letter of Credit Obligations
related

 

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thereto has been Cash Collateralized or back-stopped by a letter of credit in
form and substance reasonably satisfactory to the Administrative Agent), the
Borrower shall not (and, with respect to Section 9.15, only Holdings shall not),
nor shall the Borrower permit any Restricted Subsidiary to:

SECTION 9.1 Liens. Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

(a) Liens created pursuant to any Loan Document;

(b) Liens existing on the date hereof and set forth on Schedule 9.1(b);

(c) Liens for taxes, assessments or governmental charges that are not overdue
for a period of more than thirty (30) days or that are being contested in good
faith and by appropriate actions for which appropriate reserves have been
established in accordance with GAAP;

(d) statutory or common law Liens of landlords, carriers, warehousemen,
mechanics, materialmen, repairmen, construction contractors or other like Liens
or other customary Liens (other than in respect of Indebtedness) in favor of
landlords, so long as, in each case, such Liens arise in the ordinary course of
business that secure amounts not overdue for a period of more than thirty
(30) days or, if more than thirty (30) days overdue, are unfiled and no other
action has been taken to enforce such Lien or that are being contested in good
faith and by appropriate actions, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;

(e) (i) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation and (ii) pledges and deposits in the ordinary course of business
securing liability for reimbursement or indemnification obligations of
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance to Holdings, the Borrower or any Restricted Subsidiaries;

(f) deposits to secure the performance of bids, trade contracts, governmental
contracts and leases (other than Indebtedness for borrowed money), statutory
obligations, surety, stay, customs and appeal bonds, performance bonds and other
obligations of a like nature (including those to secure health, safety and
environmental obligations) incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions (including zoning restrictions),
encroachments, protrusions and other similar encumbrances and title defects
affecting real property that, in the aggregate, do not in any case materially
interfere with the ordinary conduct of the business of the Borrower and its
Subsidiaries taken as a whole, or the use of the property for its intended
purpose, and any other exceptions to title on the Mortgage Policies accepted by
the Collateral Agent in accordance with this Agreement;

 

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(h) Liens arising from judgments or orders for the payment of money not
constituting an Event of Default under Section 10.1(g);

(i) (i) Liens securing obligations in respect of Indebtedness permitted under
Section 9.3(e); provided that (A) such Liens attach concurrently with or within
two hundred and seventy (270) days after completion of the acquisition,
construction, repair, replacement or improvement (as applicable) of the property
subject to such Liens, (B) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness, replacements thereof and
additions and accessions to such property and the proceeds and the products
thereof and customary security deposits and (C) such Liens do not at any time
extend to or cover any assets (except for additions and accessions to such
assets, replacements and products thereof and customary security deposits) other
than the assets subject to, or acquired, constructed, repaired, replaced or
improved with the proceeds of such Indebtedness; provided that individual
financings of equipment provided by one lender may be cross collateralized to
other financings of equipment provided by such lender and (ii) Liens on assets
of Restricted Subsidiaries that are Non-Loan Parties securing Indebtedness of
such Restricted Subsidiaries permitted pursuant to Section 9.3(l);

(j) leases, licenses, subleases or sublicenses granted to others in the ordinary
course of business which do not (i) interfere in any material respect with the
business of the Borrower and its Subsidiaries, taken as a whole, or (ii) secure
any Indebtedness;

(k) Liens (i) in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods in the ordinary course of business and (ii) other than Current Asset
Collateral, on specific items of inventory or other goods and proceeds thereof
of any Person securing such Person’s obligations in respect of bankers’
acceptances or letters of credit issued or created for the account of such
person to facilitate the purchase, shipment or storage of such inventory or such
other goods in the ordinary course of business;

(l) Liens on insurance policies and the proceeds thereof securing the financing
of the premiums with respect thereto;

(m) Liens (i) on cash advances in favor of the seller of any property to be
acquired in an Investment permitted pursuant to Section 9.2(i) or Section 9.2(m)
to be applied against the purchase price for such Investment or (ii) consisting
of an agreement to Dispose of any property in a Disposition permitted under
Section 9.5, in each case, solely to the extent such Investment or Disposition,
as the case may be, would have been permitted on the date of the creation of
such Lien;

(n) Liens on property of any Foreign Subsidiary securing Indebtedness of such
Foreign Subsidiary incurred pursuant to Sections 9.3(b), (l), (r) or (v);

(o) Liens in favor of the Borrower or a Restricted Subsidiary securing
Indebtedness permitted under Section 9.3(d);

 

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(p) Liens existing on property (other than Current Asset Collateral unless the
Liens thereon are subordinated to the Lien of the Collateral Agent in a manner
consistent with the terms of the Intercreditor Agreement) at the time of its
acquisition or existing on the property of any Person at the time such Person
becomes a Restricted Subsidiary (other than by designation as a Restricted
Subsidiary pursuant to Section 8.3), in each case after the Effective Date
(other than Liens on the Equity Interests of any Person that becomes a
Restricted Subsidiary); provided that (i) such Lien does not extend to or cover
any other assets or property (other than the proceeds or products thereof and
other than after-acquired property of such acquired Restricted Subsidiary), and
(ii) the Indebtedness secured thereby is permitted under Section 9.3(e) or (v);

(q) any interest or title of a lessor, sublessor, licensor or sublicensor or
secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under
leases (other than Capitalized Leases) or licenses entered into by the Borrower
or any of the Restricted Subsidiaries in the ordinary course of business;

(r) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by the Borrower or any of
the Restricted Subsidiaries in the ordinary course of business;

(s) Liens deemed to exist in connection with Investments in repurchase
agreements under Section 9.2 and reasonable customary initial deposits and
margin deposits and similar Liens attaching to commodity trading accounts or
other brokerage accounts maintained in the ordinary course of business and not
for speculative purposes;

(t) Liens solely on any cash earnest money deposits made by the Borrower or any
of the Restricted Subsidiaries in connection with any letter of intent or
purchase agreement permitted hereunder;

(u) ground leases in respect of real property on which facilities owned or
leased by the Borrower or any of its Subsidiaries are located;

(v) purported Liens evidenced by the filing of precautionary UCC financing
statements or similar public filings;

(w) Liens securing obligations in respect of Indebtedness permitted under
Section 9.3(p)(i) and obligations in respect of any Secured Hedge Agreement and
any Cash Management Obligation (in each case, as defined in the Term Facility
Credit Agreement) permitted under Section 9.3(p)(ii) (or, in each case, any
Permitted Refinancing in respect thereof, and subject to the Intercreditor
Agreement or, in the case of any Permitted Refinancing thereof, another
intercreditor agreement containing terms that are at least as favorable to the
Secured Parties as those contained in the Intercreditor Agreement);

(x) Liens (i) of a collection bank arising under Section 4-208 of the UCC on the
items in the course of collection, (ii) attaching to commodity trading accounts
or other commodities brokerage accounts incurred in the ordinary course of
business and (iii) in favor of a banking or other financial institution arising
as a matter of law encumbering deposits or other funds maintained with a
financial institution (including the right of set off) and that are within the
general parameters customary in the banking industry;

 

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(y) any zoning or similar law or right reserved to or vested in any Governmental
Authority to control or regulate the use of any real property that does not
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries, taken as a whole;

(z) the modification, replacement, renewal or extension of any Lien permitted by
clauses (b), (i) and (p) of this Section 9.1; provided that (i) the Lien does
not extend to any additional property other than (A) after-acquired property
that is affixed or incorporated into the property covered by such Lien or
financed by Indebtedness permitted under Section 9.3(e), and (B) proceeds and
products thereof, and (ii) the renewal, extension or refinancing of the
obligations secured or benefited by such Liens is permitted by Section 9.3;

(aa) rights of set-off against credit balances of the Borrower or any of its
Subsidiaries with Credit Card Issuers or Credit Card Processors or amounts owing
by such Credit Card Issuers or Credit Card Processors to the Borrower or any of
its Subsidiaries in the ordinary course of business, but not rights of set-off
against any other property or assets of the Borrower or any of its Subsidiaries
pursuant to the Credit Card Agreements (as in effect on the date hereof) to
secure the obligations of the Borrower or any of its Subsidiaries to the Credit
Card Issuers or Credit Card Processors as a result of fees and chargebacks;

(bb) without duplication of, or aggregation with, any other Lien permitted under
any other clause of this Section 9.1, other Liens (not covering Current Asset
Collateral unless the Liens thereon are subordinated to the Lien of the
Collateral Agent in a manner consistent with the terms of the Intercreditor
Agreement) securing Indebtedness outstanding in an aggregate principal amount
not to exceed $50,000,000 at any time outstanding determined as of the date of
incurrence;

(cc) deposits of cash with the owner or lessor of premises leased and operated
by the Borrower or any of its Subsidiaries in the ordinary course of business of
the Borrower and such Subsidiary to secure the performance of the Borrower’s or
such Subsidiary’s obligations under the terms of the lease for such premises;
and

(dd) Liens that are contractual rights of setoff (i) relating to the
establishment of depository relations with banks or other deposit-taking
financial institutions in the ordinary course of business and not given in
connection with the issuance of Indebtedness or (ii) relating to pooled deposit
or sweep accounts of Holdings, the Borrower or any of the Restricted
Subsidiaries to permit satisfaction of overdraft or similar obligations incurred
in the ordinary course of business of Holdings, the Borrower and the Restricted
Subsidiaries.

SECTION 9.2 Investments.

Make or hold any Investments, except:

(a) Investments by the Borrower or any of the Restricted Subsidiaries in assets
that are cash and Cash Equivalents;

 

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(b) loans or advances to officers, directors and employees of Holdings (or any
direct or indirect parent thereof), the Borrower or any of the Restricted
Subsidiaries (i) for reasonable and customary business-related travel,
entertainment, relocation and analogous ordinary business purposes, (ii) in
connection with such Person’s purchase of Equity Interests of Holdings (or any
direct or indirect parent thereof; provided that, to the extent such loans or
advances are made in cash, the amount of such loans and advances used to acquire
such Equity Interests shall be contributed to Holdings in cash) and (iii) for
any other purpose, in an aggregate principal amount outstanding under clauses
(i) through (iii) not to exceed $20,000,000;

(c) Investments (i) by the Borrower or any Restricted Subsidiary that is a Loan
Party in the Borrower or any Restricted Subsidiary that is a Loan Party, (ii) by
any Non-Loan Party in any other Non-Loan Party that is a Restricted Subsidiary,
(iii) by any Non-Loan Party in the Borrower or any Restricted Subsidiary that is
a Loan Party and (iv) without duplication of any other clauses of this
Section 9.2, by any Loan Party in any Non-Loan Party that is a Restricted
Subsidiary; provided that (A) any such Investments made pursuant to this
clause (iv) in the form of intercompany loans shall be evidenced by notes that
have been pledged (individually or pursuant to a global note) to the Collateral
Agent for the benefit of the Lenders (it being understood and agreed that any
Investments permitted under this clause (iv) that are not so evidenced as of the
Effective Date are not required to be so evidenced and pledged until the date
that is sixty (60) days after the Effective Date (or such later date as may be
acceptable to the Administrative Agent)) and (B) the aggregate amount of
Investments made pursuant to this clause (iv) shall not exceed $37,500,000 at
any time outstanding;

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and other credits
to suppliers in the ordinary course of business;

(e) Investments consisting of Liens, Indebtedness, fundamental changes,
Dispositions and Restricted Payments permitted under Sections 9.1, 9.3 (other
than 9.3(c)(ii) or (d)), 9.4 (other than 9.4(c)(ii), (d) or (f)), 9.5 (other
than 9.5(d)(ii) or (e)) and 9.6 (other than 9.6(d) or (g)(iv)), respectively;

(f) Investments existing on the date hereof or made pursuant to legally binding
written contracts in existence on the date hereof, in each case, set forth on
Schedule 9.2(f) and any modification, replacement, renewal, reinvestment or
extension of any of the foregoing; provided that the amount of any Investment
permitted pursuant to this Section 9.2(f) is not increased from the amount of
such Investment on the Effective Date except pursuant to the terms of such
Investment as of the Effective Date or as otherwise permitted by another
clause of this Section 9.2;

 

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(g) Investments in Swap Contracts permitted under Section 9.3;

(h) promissory notes and other non-cash consideration that is permitted to be
received in connection with Dispositions permitted by Section 9.5;

(i) Permitted Acquisitions;

(j) Investments made to effect the Transaction;

(k) Investments (including debt obligations and Equity Interests) received in
connection with the bankruptcy or reorganization of suppliers and customers or
in settlement of delinquent obligations of, or other disputes with, customers
and suppliers arising in the ordinary course of business or upon the foreclosure
with respect to any secured Investment;

(l) loans and advances to Holdings (or any direct or indirect parent thereof) in
lieu of, and not in excess of the amount of (after giving effect to any other
loans, advances or Restricted Payments in respect thereof), Restricted Payments
to the extent permitted to be made to Holdings (or such direct or indirect
parent) in accordance with Section 9.6(f) or (g);

(m) without duplication of any other clauses of this Section 9.2, other
Investments that do not exceed $50,000,000 in the aggregate at any time
outstanding, determined as of the date of such Investment;

(n) advances of payroll payments to employees in the ordinary course of
business;

(o) Investments to the extent that payment for such Investments is made solely
with Qualified Equity Interests of Holdings (or any direct or indirect parent
thereof);

(p) Investments held by a Restricted Subsidiary acquired after the Effective
Date or of a Person merged into the Borrower or merged or consolidated with a
Restricted Subsidiary in accordance with Section 9.4 after the Effective Date
(other than existing Investments in subsidiaries of such Subsidiary or Person,
which must comply with the requirements of Sections 9.2(i) or (m)) to the extent
that such Investments were not made in contemplation of or in connection with
such acquisition, merger or consolidation and were in existence on the date of
such acquisition, merger or consolidation;

(q) Investments in the ordinary course of business consisting of UCC Article 3
endorsements for collection or deposit and Article 4 customary trade
arrangements with customers consistent with past practices;

(r) without duplication of, or aggregation with, any Investment made under any
other clause of this Section 9.2, the Borrower and its Restricted Subsidiaries
may make other Investments as long as the Payment Conditions are satisfied after
giving effect thereto;

 

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(s) Investments made by any Restricted Subsidiary that is not a Loan Party to
the extent such Investments are financed with the proceeds received by such
Restricted Subsidiary from an Investment made pursuant to clauses (c)(iv),
(i) or (m) of this Section 9.2.

(t) Guarantees by the Borrower or any of the Restricted Subsidiaries of leases
(other than Capitalized Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business; and

(u) Investments received in connection with (i) a Disposition permitted by
Section 9.5(m) or (ii) any Restricted Payment permitted by Section 9.6(k).

SECTION 9.3 Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness or issue any
Disqualified Equity Interest, other than:

(a) Indebtedness under the Loan Documents;

(b) (i) Indebtedness existing on the date hereof set forth on Schedule 9.3(b)
and any Permitted Refinancing thereof and (ii) intercompany Indebtedness
outstanding on the date hereof; provided that all such Indebtedness of any Loan
Party owed to any Non-Loan Party shall be subject to the Intercompany
Subordination Agreement;

(c) (i) Guarantees by the Borrower and the Restricted Subsidiaries in respect of
Indebtedness of the Borrower or any of the Restricted Subsidiaries otherwise
permitted hereunder (except that a Restricted Subsidiary that is not a Loan
Party may not, by virtue of this Section 9.3(c), Guarantee Indebtedness that
such Restricted Subsidiary could not otherwise incur under this Section 9.3);
provided that (A) no Guarantee by any Restricted Subsidiary of any Junior
Financing shall be permitted unless such Restricted Subsidiary shall have also
provided a Guarantee of the Obligations substantially on the terms set forth in
the Guaranty, and (B) if the Indebtedness being Guaranteed is subordinated to
the Obligations, such Guarantee shall be subordinated to the Guaranty on terms
at least as favorable to the Lenders as those contained in the subordination of
such Indebtedness, and (ii) any Guaranty by a Loan Party of Indebtedness of a
Restricted Subsidiary that would have been permitted as an Investment by such
Loan Party in such Restricted Subsidiary under Section 9.2(c);

(d) Indebtedness of the Borrower or any of the Restricted Subsidiaries owing to
the Borrower or any other Restricted Subsidiary to the extent constituting an
Investment permitted by Section 9.2; provided that (i) all such Indebtedness of
any Loan Party owed to any Person that is not a Loan Party shall be subject to
the Intercompany Subordination Agreement and (ii) in the event of any such
Indebtedness in respect of the sale, transfer or assignment of Current Asset
Collateral, such Indebtedness shall be duly noted on the books and records of
the Loan Parties as being owing in respect of Current Asset Collateral;

 

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(e) (i) Attributable Indebtedness and other Indebtedness (including Capitalized
Leases) of the Borrower and the Restricted Subsidiaries financing the
acquisition, construction, repair, replacement or improvement of fixed or
capital assets; provided that such Indebtedness is incurred concurrently with or
within two hundred and seventy (270) days after the applicable acquisition,
construction, repair, replacement or improvement and (ii) Attributable
Indebtedness arising out of sale-leaseback transactions, and, in each case, any
Permitted Refinancing thereof; provided that the aggregate principal amount of
Indebtedness at any one time outstanding incurred pursuant to this clause (e)
shall not exceed the greater of $50,000,000 and 1.75% of Total Assets, in each
case determined at the time of incurrence;

(f) Indebtedness in respect of Swap Contracts designed to hedge against
Holdings’, the Borrower’s or any Restricted Subsidiary’s exposure to interest
rates, foreign exchange rates or commodities pricing risks incurred in the
ordinary course of business and not for speculative purposes and Guarantees
thereof;

(g) Indebtedness representing deferred compensation to employees of the Borrower
and its Subsidiaries incurred in the ordinary course of business;

(h) Indebtedness to current or former officers, directors, managers, consultants
and employees, their respective estates, spouses or former spouses to finance
the purchase or redemption of Equity Interests of Holdings (or any direct or
indirect parent thereof) permitted by Section 9.6;

(i) Indebtedness incurred by the Borrower or any of the Restricted Subsidiaries
in a Permitted Acquisition, any other Investment expressly permitted hereunder
or any Disposition, in each case to the extent constituting indemnification
obligations or obligations in respect of purchase price (including earn-outs) or
other similar adjustments;

(j) Indebtedness consisting of obligations of the Borrower and the Restricted
Subsidiaries under deferred compensation or other similar arrangements with
employees incurred by such Person in connection with the Transaction and
Permitted Acquisitions or any other Investment expressly permitted hereunder;

(k) Cash Management Obligations and other Indebtedness in respect of netting
services, automatic clearinghouse arrangements, overdraft protections, employee
credit card programs and other cash management and similar arrangements in the
ordinary course of business and any Guarantees thereof;

(l) Indebtedness of the Borrower and the Restricted Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed the greater of
$100,000,000 and 3.25% of Total Assets, in each case determined at the time of
incurrence; provided that a maximum of the greater of $25,000,000 and 1.00% of
Total Assets in aggregate principal amount of such Indebtedness may be incurred
by Non-Loan Parties, in each case determined at the time of incurrence;

 

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

(n) Indebtedness incurred by the Borrower or any of the Restricted Subsidiaries
in respect of letters of credit, bank guarantees, bankers’ acceptances,
warehouse receipts or similar instruments issued or created in the ordinary
course of business consistent with past practice in respect of workers
compensation claims, health, disability or other employee benefits or property,
casualty or liability insurance or self-insurance or other Indebtedness with
respect to reimbursement-type obligations regarding workers compensation claims;

(o) obligations in respect of performance, bid, appeal and surety bonds and
performance and completion guarantees and similar obligations provided by the
Borrower or any of the Restricted Subsidiaries or obligations in respect of
letters of credit, bank guarantees or similar instruments related thereto, in
each case in the ordinary course of business or consistent with past practice;

(p) (i) Indebtedness in an aggregate principal amount not to exceed
$1,475,000,000 at any time outstanding under the Term Facility and (ii) the
amount of obligations in respect of (ii)(A) obligations under Secured Hedge
Agreements and (B) Cash Management Obligations (in the case of each of the
foregoing clauses (A) and (B), as defined in the Term Facility Credit Agreement)
at any time outstanding and not incurred in violation of Section 9.3(f), in each
case and, in respect of clauses (i) and (ii), any Permitted Refinancing thereof;

(q) (i) Indebtedness in respect of the Senior Notes (including any guarantees
thereof) and (ii) any Permitted Refinancing thereof;

(r) Indebtedness incurred by a Foreign Subsidiary which, when aggregated with
the principal amount of all other Indebtedness incurred pursuant to this
clause (r) and then outstanding, does not exceed $25,000,000;

(s) (i) other unsecured Indebtedness of the Borrower or any Restricted
Subsidiary, so long as (A) the Payment Conditions shall have been satisfied
after giving effect thereto and (B) the maturity date and Weighted Average Life
to Maturity of such Indebtedness is at least six (6) months after the Latest
Maturity Date at the time of incurrence of such Indebtedness and (ii) other
Indebtedness that is secured and subordinated, provided that such Indebtedness
(A) is not secured by any Current Asset Collateral, (B) is subject to an
intercreditor agreement containing terms that are at least as favorable to the
Secured Parties as those contained in the Intercreditor Agreement and (C) has a
maturity date and Weighted Average Life to Maturity that is at least six
(6) months after the Latest Maturity Date at the time of incurrence of such
Indebtedness (and any Permitted Refinancing thereof);

 

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(t) [reserved];

(u) Indebtedness in respect of letters of credit issued for the account of any
of the Subsidiaries of Holdings to finance the purchase of Inventory so long as
(x) such Indebtedness is unsecured and (y) the aggregate principal amount of
such Indebtedness does not exceed $50,000,000 at any time;

(v) Indebtedness (i) of any Person that becomes a Restricted Subsidiary after
the date hereof, which Indebtedness is existing at the time such Person becomes
a Restricted Subsidiary and is not incurred in contemplation of such Person
becoming a Restricted Subsidiary that is non-recourse to the Borrower, Holdings
or any other Restricted Subsidiary (other than any Subsidiary of such Person
that is a Subsidiary on the date such Person becomes a Restricted Subsidiary
after the date hereof) and is either (A) unsecured or (B) secured only by the
assets of such Restricted Subsidiary by Liens permitted under Section 9.1(p)
and, in each case, any Permitted Refinancing thereof, and (ii) of the Borrower
or any Restricted Subsidiary incurred or assumed in connection with any
Permitted Acquisition that is secured only by Liens permitted under
Section 9.1(p) (and any Permitted Refinancing of the foregoing) and so long as
the aggregate principal amount of such Indebtedness and all Indebtedness
resulting from any Permitted Refinancing thereof at any time outstanding
pursuant to clause (v)(ii) does not exceed $50,000,000; provided that
Indebtedness incurred under clause (i)(B) or clause (ii) of this paragraph
(v) that is secured by assets of a type that would otherwise constitute Current
Asset Collateral shall not exceed an aggregate amount outstanding of $25,000,000
and any such assets shall have been and at all times be segregated from, and not
commingled with, Current Asset Collateral, with reasonably satisfactory evidence
of compliance with the foregoing to be provided to the Administrative Agent
promptly upon request; and

(w) all premiums (if any), interest (including post-petition interest), fees,
expenses, charges and additional or contingent interest on obligations described
in clauses (a) through (v) above.

Notwithstanding the foregoing, no Restricted Subsidiary that is a Non-Loan Party
will guarantee any Indebtedness for borrowed money of a Loan Party unless such
Restricted Subsidiary becomes a Guarantor.

For purposes of determining compliance with any Dollar-denominated restriction
on the incurrence of Indebtedness, the Dollar-equivalent principal amount of
Indebtedness denominated in a foreign currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed, in the case of revolving
credit debt; provided that if such Indebtedness is incurred to extend, replace,
refund, refinance, renew or defease other Indebtedness denominated in a foreign
currency, and such extension, replacement, refunding, refinancing, renewal or
defeasance would cause the applicable Dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the
date of such extension, replacement, refunding, refinancing, renewal or
defeasance, such Dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing Indebtedness does
not exceed the principal amount of such Indebtedness being extended, replaced,
refunded, refinanced, renewed or defeased, plus the aggregate amount of fees,
underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing.

 

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The accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section 9.3. The principal
amount of any non-interest bearing Indebtedness or other discount security
constituting Indebtedness at any date shall be the principal amount thereof that
would be shown on a balance sheet of the Borrower dated such date prepared in
accordance with GAAP.

SECTION 9.4 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that:

(a) Holdings or any Restricted Subsidiary may merge or consolidate with the
Borrower (including a merger, the purpose of which is to reorganize the Borrower
into a new jurisdiction); provided that (x) the Borrower shall be the continuing
or surviving Person, (y) such merger or consolidation does not result in the
Borrower ceasing to be organized under the Laws of the United States, any state
thereof or the District of Columbia and (z) in the case of a merger or
consolidation of Holdings with and into the Borrower, Holdings shall not be an
obligor in respect of any Qualified Holding Company Debt or other Indebtedness
that is not permitted to be Indebtedness of the Borrower under this Agreement,
shall not be an obligor in respect of any Indebtedness that is not permitted to
be Indebtedness of the Borrower under this Agreement, shall have no direct
Subsidiaries at the time of such merger or consolidation other than the Borrower
and, after giving effect to such merger or consolidation, the direct parent of
the Borrower shall expressly assume all the obligations of Holdings under this
Agreement and the other Loan Documents to which Holdings is a party pursuant to
a supplement hereto or thereto in form reasonably satisfactory to the
Administrative Agent;

(b) (i) any Restricted Subsidiary that is not a Loan Party may merge or
consolidate with or into any other Restricted Subsidiary of the Borrower that is
not a Loan Party, (ii) any Restricted Subsidiary may merge or consolidate with
or into any other Restricted Subsidiary of the Borrower that is a Loan Party,
(iii) any merger the sole purpose of which is to reincorporate or reorganize a
Loan Party in another jurisdiction in the United States shall be permitted and
(iv) any Restricted Subsidiary may liquidate or dissolve or change its legal
form if the Borrower determines in good faith that such action is in the best
interests of the Borrower and its Restricted Subsidiaries and is not materially
disadvantageous to the Lenders; provided, in the case of clauses (ii)
through (iv) of this paragraph (b), that (A) no Event of Default shall result
therefrom, (B) no Change of Control shall result therefrom and (C) the surviving
Person (or, with respect to clause (iv), the Person who receives the assets of
such dissolving or liquidated Restricted Subsidiary that is a Guarantor) shall
be a Loan Party;

(c) any Restricted Subsidiary may Dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or another
Restricted

 

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Subsidiary; provided that if the transferor in such a transaction is a Loan
Party, then (i) the transferee must be a Loan Party or (ii) such Investment must
be a permitted Investment in a Restricted Subsidiary which is not a Loan Party
in accordance with Section 9.2 (other than clause (e) thereof) and must be a
permitted Disposition in accordance with Section 9.5;

(d) so long as no Default exists or would result therefrom, the Borrower may
merge or consolidate with any other Person; provided that (i) the Borrower shall
be the continuing or surviving corporation or (ii) if the Person formed by or
surviving any such merger or consolidation is not the Borrower (any such Person,
the “Successor Borrower”), (A) the Successor Borrower shall be an entity
organized or existing under the laws of the United States, any state thereof or
the District of Columbia, (B) the Successor Borrower shall expressly assume all
the obligations of the Borrower under this Agreement and the other Loan
Documents to which the Borrower is a party pursuant to a supplement hereto or
thereto in form reasonably satisfactory to the Administrative Agent, (C) each
Guarantor, unless it is the other party to such merger or consolidation, shall
have by a supplement to the Guaranty confirmed that its Guarantee of the
Obligations shall apply to the Successor Borrower’s obligations under this
Agreement, (D) each Loan Party, unless it is the other party to such merger or
consolidation, shall have by a supplement to the Security Agreement confirmed
that its obligations thereunder shall apply to the Successor Borrower’s
obligations under this Agreement, (E) each mortgagor of a Mortgaged Property,
unless it is the other party to such merger or consolidation, shall have by an
amendment to or restatement of the applicable Mortgage (or other instrument
reasonably satisfactory to the Collateral Agent) confirmed that its obligations
thereunder shall apply to the Successor Borrower’s obligations under this
Agreement, and (F) the Borrower shall have delivered to the Administrative Agent
an officer’s certificate and an opinion of counsel, each stating that such
merger or consolidation and such supplement to this Agreement or any Collateral
Document comply with this Agreement; provided, further, that if the foregoing
are satisfied, the Successor Borrower will succeed to, and be substituted for,
the Borrower under this Agreement;

(e) [reserved];

(f) so long as no Default exists or would result therefrom, any Restricted
Subsidiary may merge or consolidate with any other Person in order to effect an
Investment permitted pursuant to Section 9.2 (other than Section 9.2(e));
provided that the continuing or surviving Person shall be the Borrower or a
Restricted Subsidiary, which together with each of its Restricted Subsidiaries,
shall have complied with the applicable requirements of Sections 8.11, 8.12 and
8.13;

(g) the Merger may be consummated; and

(h) so long as no Default exists or would result therefrom, a merger,
dissolution, liquidation, consolidation or Disposition, the purpose of which is
to effect a Disposition permitted pursuant to Section 9.5 (other than
Section 9.5(e)).

 

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SECTION 9.5 Dispositions. Make any Disposition or enter into any agreement to
make any Disposition, except:

(a) Dispositions of obsolete, worn out, used or surplus property, whether now
owned or hereafter acquired, in the ordinary course of business and Dispositions
of property no longer used or useful in the conduct of the business of the
Borrower and the Restricted Subsidiaries;

(b) Dispositions of inventory and goods held for sale in the ordinary course of
business;

(c) Dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or
(ii) the proceeds of such Disposition are promptly applied to the purchase price
of such replacement property; provided that to the extent the property being
transferred constitutes Current Asset Collateral, such replacement property
shall constitute Current Asset Collateral;

(d) Dispositions of property to the Borrower or a Restricted Subsidiary;
provided that if the transferor of such property is a Loan Party (i) the
transferee thereof must be a Loan Party, (ii) such Investment must be a
permitted Investment in a Restricted Subsidiary that is not a Loan Party in
accordance with Section 9.2 (other than Section 9.2(e)) or (iii) to the extent
constituting a Disposition to a Restricted Subsidiary that is not a Loan Party,
such Disposition is for fair value and any promissory note or other non-cash
consideration received in respect thereof is a permitted investment in a
Restricted Subsidiary that is not a Loan Party in accordance with Section 9.2
(other than Section 9.2(e)); provided that no Disposition of Current Asset
Collateral (other than Cash and Cash Equivalents) shall be permitted pursuant to
this clause (d) unless the Borrower shall have (A) in respect of any Disposition
pursuant to this clause (d) of property with an aggregate fair market value in
excess of $2,000,000, delivered to the Administrative Agent written notice of
such disposition in reasonable detail and (B) if requested by the Administrative
Agent, delivered to the Administrative Agent an updated Borrowing Base
Certificate; provided further that Dispositions of Intellectual Property
pursuant to this Section 9.5(d) shall comply with the terms of
Section 9.5(j)(iv);

(e) Dispositions permitted by Sections 9.2 (other than Section 9.2(e)),
9.4(other than Section 9.4(h)) and 9.6 (other than Section 9.6(d)) and Liens
permitted by Section 9.1(other than Section 9.1(m)(ii));

(f) Dispositions of property (other than Current Asset Collateral) pursuant to
sale-leaseback transactions;

(g) any issuance or sale of Equity Interests in, or sale of Indebtedness or
other securities of, an Unrestricted Subsidiary;

(h) leases, subleases, licenses or sublicenses (including the provision of
software under an open source license), in each case in the ordinary course of
business and which do not materially interfere with the business of the Borrower
and the Restricted Subsidiaries, taken as a whole;

 

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(i) Dispositions of property other than Current Asset Collateral subject to
Casualty Events (as such term is defined in the Term Facility Credit Agreement);

(j) Dispositions of property (other than Current Asset Collateral) not otherwise
permitted under this Section 9.5; provided that (i) at the time of such
Disposition (other than any such Disposition made pursuant to a legally binding
commitment entered into at a time when no Default exists), no Default shall
exist or would result from such Disposition; (ii) with respect to any
Disposition pursuant to this clause (j) for a purchase price in excess of
$15,000,000, the Borrower or any of the Restricted Subsidiaries shall receive
not less than 75% of such consideration in the form of cash or Cash Equivalents
(in each case, free and clear of all Liens at the time received, other than
nonconsensual Liens permitted by Section 9.1 and Liens permitted by
Sections 9.1(a), (m), (s), (t),(w), (x) and (dd)); provided, however, that for
the purposes of this clause (ii), (A) any liabilities (as shown on the
Borrower’s or such Restricted Subsidiary’s most recent balance sheet provided
hereunder or in the footnotes thereto) of the Borrower or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the
payment in cash of the Obligations, that are assumed by the transferee with
respect to the applicable Disposition and for which the Borrower and all of the
Restricted Subsidiaries shall have been validly released by all applicable
creditors in writing, (B) any securities received by such Restricted Subsidiary
from such transferee that are converted by such Restricted Subsidiary into cash
(to the extent of the cash received) within one hundred and eighty (180) days
following the closing of the applicable Disposition and (C) any Designated
Non-Cash Consideration received in respect of such Disposition having an
aggregate fair market value as determined by the Borrower in good faith, taken
together with all other Designated Non-Cash Consideration received pursuant to
this clause (C) that is at that time outstanding, not in excess of the greater
of $25,000,000 and 1.00% of Total Assets at the time of the receipt of such
Designated Non-Cash Consideration, with the fair market value of each item of
Designated Non-Cash Consideration being measured at the time received and
without giving effect to subsequent changes in value, shall be deemed to be
cash; (iii) proceeds of such Dispositions are applied in accordance with the
Term Facility Credit Agreement; and (iv) in the event of a Disposition of
Intellectual Property used or useful in connection with the Current Asset
Collateral, the purchaser, assignee or other transferee thereof agrees in
writing to be bound by a non-exclusive royalty-free worldwide license of such
Intellectual Property in favor of the Collateral Agent for use in connection
with the exercise of the rights and remedies of the Secured Parties, which
license shall be in form and substance reasonably satisfactory to the Collateral
Agent, and provided further that in the case of a Disposition of Intellectual
Property licensed by the Borrower or one of its Restricted Subsidiaries from a
third party, the transferee thereof shall be required to provide such a license
only to the extent to which the applicable license gives it a right to do so;

(k) Dispositions of Investments in joint ventures to the extent required by, or
made pursuant to customary buy/sell arrangements between, the joint venture
parties set forth in joint venture arrangements and similar binding
arrangements;

 

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(l) bulk sales or other Dispositions of the Inventory of a Loan Party not in the
ordinary course of business in connection with store closings, at arm’s length,
provided that such store closures and related Inventory dispositions shall not
exceed in any transaction or series of related transactions, ten percent
(10%) of the number of the Loan Parties’ stores as of the date of such bulk sale
or other Disposition, unless the Borrower shall have delivered to the
Administrative Agent an updated Borrowing Base Certificate; provided further
that when such store closures first exceed fifteen percent (15%) in the
aggregate during any twelve-month period of the number of the Loan Parties’
stores in existence at the beginning of such period (net of new store openings),
the Borrower (x) shall have delivered immediately prior to such event written
notice of such Disposition in reasonable detail and (y) if requested by the
Administrative Agent, shall permit an updated Inventory appraisal in form and
detail and from an appraiser reasonably satisfactory to the Administrative
Agent; provided further that all Net Cash Proceeds received in connection
therewith are applied to the Obligations if then required in accordance with
Section 2.9 hereof;

(m) any Disposition of all or part of the Madewell Business (including by way of
the issuance or disposition of any Equity Interests) so long as immediately
after giving effect to such Disposition the Total Leverage Ratio for the Test
Period immediately preceding such Disposition for which financial statements
have been or are required to have been delivered pursuant to Section 7.1(a)
or (b) is less than or equal to 6.0 to 1.0 (calculated on a Pro Forma Basis);
provided that the Borrower shall have (i) delivered to the Administrative Agent
written notice of such Disposition in reasonable detail and (ii) if requested by
the Administrative Agent, shall promptly deliver to the Administrative Agent an
updated Borrowing Base Certificate;

(n) the unwinding of any Swap Contract;

(o) the lapse or abandonment in the ordinary course of business of any
registrations or applications for registration of any immaterial IP Rights;

(p) to the extent allowable under Section 1031 of the Code (or comparable or
successor provision), any exchange of like property (excluding any boot thereon
permitted by such provision) for use in any business conducted by the Borrower
or any of its Restricted Subsidiaries that is not in contravention of
Section 9.7;

(q) Dispositions of accounts receivable in connection with the collection or
compromise thereof, provided that no disposition of Eligible Accounts shall be
permitted pursuant to this clause (q) unless the Borrower shall have
(i) delivered to the Administrative Agent written notice of such disposition in
reasonable detail and (ii) if requested by the Administrative Agent, delivered
to the Administrative Agent an updated Borrowing Base Certificate;

(r) sales or other dispositions by the Borrower or any Restricted Subsidiary of
assets in connection with the closing or sale of a Store (including a factory
Store) in the ordinary course of business of the Borrower and its Subsidiaries
which consist of leasehold interests in the premises of such Store, the
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such premises and the books and records relating exclusively and directly to the
operations of such Store; provided that as to each and all such sales and
closings, (A) no Event of Default shall result therefrom and (B) such sale shall
be on commercially reasonable prices and terms in a bona fide arm’s length
transaction;

(s) so long as no Event of Default exists or would arise as a result of the
transaction, sales of a Subsidiary or any business segment which is a Non-Core
Business Segment, or any portion thereof, (i) to any Person other than a Loan
Party or a Subsidiary or a Sponsor, for fair market value and so long as the
consideration received for such sale or transfer is at least 85% cash or Cash
Equivalents, or (ii) to a Subsidiary or Sponsor, if the Payment Condition is
satisfied, such sale or transfer is for fair market value and the entire
consideration received for such sale or transfer is paid in cash or Cash
Equivalents, provided that, in each case, such sale shall be in an amount at
least equal to the greater of the amounts advanced or available to be advanced
against the assets included in the sale under the Borrowing Base, and further
provided that all Net Cash Proceeds, if any, received in connection with any
such sales are applied to prepay the Loans pursuant to Section 2.9(b); and

(t) Dispositions of Cash Equivalents;

provided that any Disposition of any property pursuant to this Section 9.5
(except pursuant to Sections 9.5(a), (e), (i), (k), (m), (n), (o) and (q) and
except for Dispositions from the Borrower or a Restricted Subsidiary that is a
Loan Party to the Borrower or a Restricted Subsidiary that is a Loan Party),
shall be for no less than the fair market value of such property at the time of
such Disposition as determined by the Borrower in good faith. To the extent any
Collateral is Disposed of as expressly permitted by this Section 9.5 to any
Person other than a Loan Party, such Collateral shall be sold free and clear of
the Liens created by the Loan Documents, and, if requested by the Administrative
Agent, upon the certification by the Borrower that such Disposition is permitted
by this Agreement, the Administrative Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.

SECTION 9.6 Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, except:

(a) each Restricted Subsidiary may make Restricted Payments to the Borrower and
to its other Restricted Subsidiaries (and, in the case of a Restricted Payment
by a non-wholly owned Restricted Subsidiary, to the Borrower and any of its
other Restricted Subsidiaries and to each other owner of Equity Interests of
such Restricted Subsidiary based on their relative ownership interests of the
relevant class of Equity Interests);

(b) the Borrower and each of its Restricted Subsidiaries may declare and make
dividend payments or other distributions payable solely in the Equity Interests
(other than Disqualified Equity Interests not otherwise permitted by
Section 9.3) of such Person;

 

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(c) Restricted Payments made on the Effective Date to consummate the
Transaction;

(d) to the extent constituting Restricted Payments, the Borrower and the
Restricted Subsidiaries may enter into and consummate transactions expressly
permitted by any provision of Section 9.2 (other than Section 9.2(e)), 9.4
(other than a merger or consolidation of Holdings and the Borrower) or 9.8
(other than Section 9.8(a), (j) or (k));

(e) repurchases of Equity Interests in Holdings, the Borrower or any of the
Restricted Subsidiaries deemed to occur upon exercise of stock options or
warrants or similar rights if such Equity Interests represent a portion of the
exercise price of such options or warrants or similar rights;

(f) the Borrower may pay (or make Restricted Payments to allow Holdings or any
direct or indirect parent thereof to pay) for the repurchase, retirement or
other acquisition or retirement for value of Equity Interests of Holdings (or of
any direct or indirect parent thereof) held by any future, present or former
employee, director, consultant or distributor (or any spouses, former spouses,
successors, executors, administrators, heirs, legatees or distributees of any of
the foregoing) of the Borrower (or any direct or indirect parent of the
Borrower) or any of its Subsidiaries upon the death, disability, retirement or
termination of employment of any such Person or otherwise pursuant to any
employee or director equity plan, employee or director stock option plan or any
other employee or director benefit plan or any agreement (including any stock
subscription or shareholder agreement) with any employee, director, consultant
or distributor of the Borrower (or any direct or indirect parent of the
Borrower) or any of its Subsidiaries in an aggregate amount after the Effective
Date together with the aggregate amount of loans and advances to Holdings made
pursuant to Section 9.2(l) in lieu of Restricted Payments permitted by this
clause (f) not to exceed $15,000,000 in any calendar year with unused amounts in
any calendar year being carried over to the next two succeeding calendar years;
provided, that such amount in any calendar year may be increased by an amount
not to exceed the cash proceeds of key man life insurance policies received by
the Borrower or its Restricted Subsidiaries after the Effective Date;

(g) the Borrower may make Restricted Payments to Holdings or to any direct or
indirect parent of Holdings:

(i) the proceeds of which will be used to pay (or make Restricted Payments to
allow any direct or indirect parent thereof to pay) the tax liability to each
foreign, federal, state or local jurisdiction in respect of which a
consolidated, combined, unitary or affiliated return is filed by Holdings (or
such direct or indirect parent) that includes the Borrower and/or any of its
Subsidiaries, to the extent such tax liability does not exceed the lesser of
(A) the taxes that would have been payable by the Borrower and/or its
Subsidiaries as a stand-alone group and (B) the actual tax liability of
Holdings’ consolidated, combined, unitary or affiliated group (or, if Holdings
is not the parent of the actual group, the taxes that would have been paid by
Holdings, the Borrower and/or the Borrower’s Subsidiaries as a stand-alone
group), reduced by any such taxes paid or to be paid directly by the Borrower or
its Subsidiaries;

 

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(ii) the proceeds of which shall be used to pay (or make Restricted Payments to
allow any direct or indirect parent thereof to pay) operating costs and expenses
of Holdings or its direct or indirect parents incurred in the ordinary course of
business and other corporate overhead costs and expenses (including
administrative, legal, accounting and similar expenses provided by third
parties), which are reasonable and customary and incurred in the ordinary course
of business, attributable to the ownership or operations of the Borrower and its
Subsidiaries;

(iii) the proceeds of which shall be used to pay (or make Restricted Payments to
allow any direct or indirect parent thereof which does not own other
Subsidiaries besides Holdings, its Subsidiaries and the direct or indirect
parents of Holdings to pay) franchise taxes and other fees, taxes and expenses
required to maintain its (or any of such direct or indirect parent’s) corporate
existence;

(iv) to finance any Investment permitted to be made pursuant to Section 9.2;
provided that (A) such Restricted Payment shall be made substantially
concurrently with the closing of such Investment and (B) Holdings and the
Borrower shall, immediately following the closing thereof, cause (1) all
property acquired (whether assets or Equity Interests) to be contributed to the
Borrower or a Restricted Subsidiary or (2) the merger (to the extent permitted
in Section 9.4) of the Person formed or acquired into the Borrower or a
Restricted Subsidiary in order to consummate such Permitted Acquisition, in each
case, in accordance with the requirements of Sections 8.11, 8.12 and 9.2;

(v) the proceeds of which shall be used to pay (or make Restricted Payments to
allow any direct or indirect parent thereof to pay) costs, fees and expenses
(other than to Affiliates) related to any unsuccessful equity or debt offering
permitted by this Agreement; and

(vi) the proceeds of which (A) shall be used to pay customary salary, bonus and
other benefits payable to officers and employees of Holdings or any direct or
indirect parent company of Holdings to the extent such salaries, bonuses and
other benefits are attributable to the ownership or operation of the Borrower
and the Restricted Subsidiaries or (B) shall be used to make payments permitted
under Sections 9.8(e), (h), (k) and (p) (but only to the extent such payments
have not been and are not expected to be made by the Borrower or a Restricted
Subsidiary);

(h) the Borrower or any of the Restricted Subsidiaries may pay cash in lieu of
fractional Equity Interests in connection with any dividend, split or
combination thereof or any Permitted Acquisition;

 

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(i) the declaration and payment of dividends on the Borrower’s common stock
following the first public offering of the Borrower’s common stock or the common
stock of any of its direct or indirect parents after the Effective Date, of up
to 6% per annum of the net proceeds received by or contributed to the Borrower
in or from any such public offering, other than public offerings with respect to
the Borrower’s common stock registered on Form S-4 or Form S-8;

(j) repurchases of Equity Interests (i) deemed to occur on the exercise of
options by the delivery of Equity Interests in satisfaction of the exercise
price of such options or (ii) in consideration of withholding or similar Taxes
payable by any future, present or former employee, director, manager or
consultant (or any spouses, former spouses, successors, executors,
administrators, heirs, legatees or distributees of any of the foregoing),
including deemed repurchases in connection with the exercise of stock options;

(k) so long as immediately after giving effect to such Restricted Payment,
(x) the Total Leverage Ratio for the Test Period immediately preceding for which
financial statements have been or are required to have been delivered pursuant
to Section 7.1(a) or (b) such Restricted Payment is less than or equal to 6.0 to
1.0 (calculated on a Pro Forma Basis) and satisfaction of such test shall be
evidenced by a certificate from the chief financial officer demonstrating such
satisfaction calculated in reasonable detail and (y) after giving Pro Forma
Effect to such Restricted Payment and projected for the succeeding six
(6) months following such Restricted Payment, Excess Availability shall be
greater than the greater of (1) 15% of the Maximum Credit and (2) $30,000,000,
(i) in an aggregate amount not to exceed the Net Cash Proceeds from any
Disposition, in whole or in part, of the Madewell Business (including by the
disposition or issuance of Equity Interests evidencing ownership in respect
thereof) or (ii) constituting the assets comprising all or any part of the
Madewell Business (including any Equity Interest evidencing ownership in respect
thereof);

(l) without duplication of any other clauses of this Section 9.6, other
Restricted Payments that do not exceed $25,000,000 in the aggregate at any time
outstanding, so long as the Payment Conditions shall have been satisfied after
giving effect thereto; and

(m) Restricted Payments so long as the RP Conditions shall have been satisfied.

SECTION 9.7 Change in Nature of Business.

Engage in any material line of business substantially different from those lines
of business conducted by the Borrower and the Restricted Subsidiaries on the
Effective Date or any business reasonably related or ancillary thereto.

SECTION 9.8 Transactions with Affiliates.

Enter into any transaction of any kind with any Affiliate (other than Holdings)
of the Borrower, whether or not in the ordinary course of business, other than:

(a) transactions between or among the Borrower or any of the Restricted
Subsidiaries or any entity that becomes a Restricted Subsidiary as a result of
such transaction,

 

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(b) transactions on terms substantially as favorable to the Borrower or such
Restricted Subsidiary as would be obtainable by the Borrower or such Restricted
Subsidiary at the time in a comparable arm’s-length transaction with a Person
other than an Affiliate,

(c) the Transaction and the payment of fees and expenses (including the
Transaction Expenses) related to the Transaction,

(d) the issuance of Equity Interests of Holdings to any officer, director.
employee or consultant of the Borrower or any of its Subsidiaries or any direct
or indirect parent of Holdings in connection with the Transaction,

(e) the payment of management, consulting, monitoring, advisory and other fees,
indemnities and expenses to the Sponsor pursuant to the Sponsor Management
Agreement (plus any unpaid management, consulting, monitoring, advisory and
other fees, indemnities and expenses accrued in any prior year) and any Sponsor
Termination Fees pursuant to the Sponsor Management Agreement,

(f) employment and severance arrangements between Holdings, the Borrower and the
Restricted Subsidiaries and their respective officers and employees in the
ordinary course of business and transactions pursuant to stock option plans and
employee benefit plans and arrangements,

(g) the non-exclusive licensing of trademarks, copyrights or other IP Rights in
the ordinary course of business to permit the commercial exploitation of IP
Rights between or among Affiliates and Subsidiaries of Holdings or the Borrower,

(h) the payment of customary fees and reasonable out-of-pocket costs to, and
indemnities provided on behalf of, directors, officers and employees of Holdings
and the Restricted Subsidiaries or any direct or indirect parent of Holdings in
the ordinary course of business to the extent attributable to the ownership or
operation of the Borrower and the Restricted Subsidiaries,

(i) any agreement, instrument or arrangement as in effect as of the Effective
Date and set forth on Schedule 9.8, or any amendment thereto (so long as any
such amendment is not adverse to the Lenders in any material respect as compared
to the applicable agreement as in effect on the Effective Date),

(j) Restricted Payments permitted under Section 9.6, and any Dispositions
permitted by Section 9.5(m).

(k) customary payments by the Borrower and any of the Restricted Subsidiaries to
the Sponsor made for any financial advisory, financing, underwriting or
placement services or in respect of other investment banking activities
(including in

 

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connection with acquisitions or divestitures), which payments are approved by
the majority of the members of the board of directors or a majority of the
disinterested members of the board of directors of Holdings in good faith,

(l) transactions in which the Borrower or any of the Restricted Subsidiaries, as
the case may be, delivers to the Administrative Agent a letter from an
Independent Financial Advisor stating that such transaction is fair to the
Borrower or such Restricted Subsidiary from a financial point of view or meets
the requirements of clause (b) of this Section 9.8,

(m) the issuance or transfer of Equity Interests (other than Disqualified Equity
Interests) of Holdings to any Permitted Holder or to any former, current or
future director, manager, officer, employee or consultant (or any spouses,
former spouses, successors, executors, administrators, heirs, legatees or
distributees of any of the foregoing) of the Borrower, any of its Subsidiaries
or any direct or indirect parent thereof to the extent otherwise permitted by
this Agreement and to the extent such issuance or transfer would not give rise
to a Change of Control,

(n) investments by the Sponsor or the Co-Investors in securities of Holdings,
the Borrower or any of the Restricted Subsidiaries so long as (A) the investment
is being offered generally to other investors on the same or more favorable
terms and (B) the investment constitutes less than 5.0% of the proposed or
outstanding issue amount of such class of securities,

(o) payments to or from, and transactions with, Joint Ventures (to the extent
any such Joint Venture is only an Affiliate as a result of Investments by the
Borrower and the Restricted Subsidiary in such Joint Venture) in the ordinary
course of business to the extent otherwise permitted under Section 9.2;

(p) the payment of reasonable out-of-pocket costs and expenses relating to
registration rights and indemnities provided to shareholders of Holdings or any
direct or indirect parent thereof pursuant to the stockholders agreement or the
registration and participation rights agreement entered into on the Effective
Date in connection therewith, and

(q) the payment of any dividend or distribution within sixty (60) days after the
date of declaration thereof, if at the date of declaration (i) such payment
would have complied with the provisions of this Agreement and (ii) no Event of
Default occurred and was continuing.

SECTION 9.9 Burdensome Agreements. Enter into or permit to exist any Contractual
Obligation (other than this Agreement or any other Loan Document) that
prohibits, restricts, imposes any condition on or limits the ability of (a) any
Restricted Subsidiary that is not a Loan Party to make Restricted Payments to
(directly or indirectly) or to make or repay loans or advances to any Loan Party
or to Guarantee the Obligations of any Loan Party under the Loan Documents or
(b) any Loan Party to create, incur, assume or suffer to exist Liens on property
of such Person for the benefit of the Lenders with respect to the Facility and
the Obligations under the Loan Documents; provided that the foregoing
clauses (a) and (b) shall not apply to Contractual Obligations that:

(i) (x) exist on the date hereof and (to the extent not otherwise permitted by
this Section 9.9) are listed on Schedule 9.9 hereto and (y) to the extent
Contractual Obligations permitted by clause (x) are set forth in an agreement
evidencing Indebtedness, are set forth in any agreement evidencing any permitted
modification, replacement, renewal, extension or refinancing of such
Indebtedness so long as such modification, replacement, renewal, extension or
refinancing does not expand the scope of such Contractual Obligation,

 

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(ii) are binding on a Restricted Subsidiary at the time such Restricted
Subsidiary first becomes a Restricted Subsidiary, so long as such Contractual
Obligations were not entered into in contemplation of such Person becoming a
Restricted Subsidiary,

(iii) represent Indebtedness of a Restricted Subsidiary that is not a Loan Party
that is permitted by Section 9.3,

(iv) are customary restrictions that arise in connection with (x) any Lien
permitted by Sections 9.1(a), (m), (s), (t), (w), (x) and (dd) and relate to the
property subject to such Lien or (y) any Disposition permitted by Section 9.5
applicable pending such Disposition solely to the assets subject to such
Disposition,

(v) are customary provisions in joint venture agreements and other similar
agreements applicable to joint ventures permitted under Section 9.2 and
applicable solely to such joint venture entered into in the ordinary course of
business,

(vi) are negative pledges and restrictions on Liens in favor of any holder of
Indebtedness permitted under Section 9.3 but solely to the extent any negative
pledge relates to the property financed by or the subject of such Indebtedness
(and excluding in any event any Indebtedness constituting any Junior Financing)
and the proceeds and products thereof and, in the case of the Term Facility and
any Permitted Refinancing thereof, permit the Liens securing the Obligations
without restriction (subject to the Intercreditor Agreement),

(vii) are customary restrictions on leases, subleases, licenses or asset sale
agreements otherwise permitted hereby so long as such restrictions relate to the
assets subject thereto,

(viii) comprise restrictions imposed by any agreement relating to secured
Indebtedness permitted pursuant to Sections 9.3(e), (m)(i), (p), (r) or (v) to
the extent that such restrictions apply only to the property or assets securing
such Indebtedness,

(ix) are customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of any Restricted Subsidiary,

(x) are customary provisions restricting assignment of any agreement entered
into in the ordinary course of business,

 

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(xi) are restrictions on cash or other deposits imposed by customers under
contracts entered into in the ordinary course of business,

(xii) are customary restrictions contained in the Term Facility Credit
Agreement, the Term Facility Documentation, the Senior Notes Indenture and the
Senior Notes and any Permitted Refinancing of any of the foregoing,

(xiii) arise in connection with cash or other deposits permitted under
Section 9.1, or

(xiv) comprise restrictions imposed by any agreement governing Indebtedness
entered into after the Effective Date and permitted under Section 9.3 that are,
taken as a whole, in the good faith judgment of the Borrower, no more
restrictive with respect to the Borrower or any Restricted Subsidiary than
customary market terms for Indebtedness of such type (and, in any event, are no
more restrictive than the restrictions contained in this Agreement), so long as
the Borrower shall have determined in good faith that such restrictions will not
affect its obligation or ability to make any payments required hereunder.

SECTION 9.10 [Reserved].

SECTION 9.11 Accounting Changes; Fiscal Year.

Make any change in Fiscal Year; provided, however, that the Borrower may, upon
written notice to the Administrative Agent, change its Fiscal Year to any other
fiscal year reasonably acceptable to the Administrative Agent, in which case the
Borrower and the Administrative Agent will, and are hereby authorized by the
Lenders to, make any adjustments to this Agreement that are necessary to reflect
such change in fiscal year.

SECTION 9.12 Prepayments, Etc. of Indebtedness.

Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner (it being understood that payments of regularly
scheduled principal and interest and mandatory prepayments of principal and
interest shall be permitted) any Indebtedness, except (i) so long as the Payment
Conditions are satisfied after giving effect thereto, any prepayment,
redemption, purchase, defeasance or other satisfaction of any Indebtedness;
(ii) the refinancing of any Indebtedness with the Net Cash Proceeds of, or in
exchange for, any Permitted Refinancing, to the extent not required to be
applied to prepayments pursuant to the Term Facility; (iii) the conversion (or
exchange) of any Indebtedness to Equity Interests (other than Disqualified
Equity Interests) or Indebtedness of Holdings or any of its direct or indirect
parents; (iv) the prepayment of Indebtedness of the Borrower or any Restricted
Subsidiary owed to Holdings, the Borrower or a Restricted Subsidiary or the
prepayment of any Indebtedness with the proceeds of any other Indebtedness
otherwise permitted by Section 9.3; (v) any Permitted Refinancing of any
Indebtedness; (vi) any prepayment, redemption, purchase, defeasance or other
satisfaction with the Net Cash Proceeds of any Permitted Equity Issuance; and
(vii) the prepayment of Indebtedness incurred pursuant to clauses (e), (f), (h),
(k) and (v) of Section 9.3;

 

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SECTION 9.13 [Reserved].

SECTION 9.14 Modification of Debt Agreements.

Amend, modify or change in any manner materially adverse to the interest of the
Lenders any term or condition of (i) any Material Indebtedness (other than as a
result of a Permitted Refinancing thereof and in any event excluding the Term
Facility and any Permitted Refinancing thereof and any Indebtedness hereunder)
without the consent of the Administrative Agent (not to be unreasonably withheld
or delayed) or (ii) the Term Facility or any refinancing Indebtedness in respect
thereof that would (A) shorten the maturity date of the Term Facility or such
refinancing Indebtedness to a date which is prior to ninety-one (91) days after
the Latest Maturity Date or (B) shorten the date scheduled for any principal
payment or increase the amount of any required principal payment, the result of
which would be to require principal payments on account thereof in excess of the
amounts previously required over the twenty-four (24) months following such
amendment, modification or waiver.

SECTION 9.15 Holdings. In the case of Holdings, conduct, transact or otherwise
engage in any business or operations other than the following (and activities
incidental thereto): (i) its ownership of the Equity Interests of the Borrower,
(ii) the maintenance of its legal existence (including the ability to incur
fees, costs and expenses relating to such maintenance), (iii) the performance of
its obligations with respect to the Loan Documents, the Term Facility, any
Senior Notes, any Qualified Holding Company Debt, or the Merger Agreement and
the other agreements contemplated by the Merger Agreement, (iv) any public
offering of its common stock or any other issuance of its Equity Interests or
make payments or restricted payments with any amounts received in any
transaction permitted under Section 9.6, (v) the incurrence of Qualified Holding
Company Debt and the issuance of Qualified Equity Interests, (vi) making
contributions to the capital of its Subsidiaries, (vii) guaranteeing the
obligations of the Borrower and its Subsidiaries solely to the extent such
obligations of the Borrower and its Subsidiaries are not prohibited hereunder,
(viii) participating in tax, accounting and other administrative matters as a
member of the consolidated group of Holdings and the Borrower, (ix) holding any
cash or property received in connection with Restricted Payments made by the
Borrower in accordance with Section 9.6 pending application thereof by Holdings,
(x) providing indemnification to officers and directors and (xi) activities
incidental to the businesses or activities described in clauses (i) to (x) of
this Section 9.15.

ARTICLE X

EVENTS OF DEFAULT

SECTION 10.1 Events of Default.

Each of the events referred to in clauses (a) through (l) of this Section 10.1
shall constitute an “Event of Default”

(a) Non-Payment. The Borrower fails to (i) pay when and as required to be paid
herein, any amount of principal of any Loan or deliver any cash collateral or
letter of credit required to be delivered pursuant to Section 2.4(b), or
(ii) pay within five (5) Business Days after the same becomes due, any interest
on any Loan or any other amount payable hereunder or with respect to any other
Loan Document; or

 

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(b) Specific Covenants.

(i) The Borrower, any Restricted Subsidiary or, in the case of Section 9.15,
Holdings, fails to perform or observe any term, covenant or agreement contained
in (A) Article VI; provided, that, any failure to comply with Article VI shall
be subject to cure to the extent provided in Section 10.4, (B) Section 7.2(a),
Section 8.1(a) (solely with respect to the Borrower), (C) Section 8.9 or
(D) Article IX;

(ii) during the continuation of any Cash Dominion Period the Borrower or any
other Loan Party fails to perform or observe (or to cause to be performed or
observed) any covenant or agreement contained in Section 8.12; or

(iii) the Borrower or any other Loan Party fails to perform or observe (or to
cause to be performed or observed) any covenant or agreement contained in
Section 7.4(a) or Section 7.4(b), as applicable, and in either case such failure
continues for five (5) Business Days after receipt by the Borrower of written
notice thereof from the Administrative Agent; or

(iv) the Borrower or any other Loan Party fails to perform or observe (or to
cause to be performed or observed) any covenant or agreement contained in
Section 8.5 in respect of any insurance covering Current Asset Collateral and
such failure continues for ten (10) Business Days after receipt by the Borrower
of written notice thereof from the Administrative Agent; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in Section 10.1(a) or (b) above and, for
the purpose of clarity, including any failure to perform or observe any covenant
or agreement contained in (x) Section 8.12 other than during the continuation of
any Cash Dominion Period or (y) Section 8.5 other than with respect to insurance
covering Current Asset Collateral) contained in any Loan Document on its part to
be performed or observed and such failure continues for thirty (30) days after
receipt by the Borrower of written notice thereof from the Administrative Agent;
or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by any Loan Party herein, in any other
Loan Document, or in any document required to be delivered in connection
herewith or therewith shall be untrue in any material respect when made or
deemed made; or

(e) Cross-Default. Any Loan Party or any Restricted Subsidiary (A) fails to make
any payment beyond the applicable grace period, if any, whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise, in respect of
any Indebtedness (other than Indebtedness hereunder) having an aggregate
outstanding principal amount (individually or in the aggregate with all other
Indebtedness as to which

 

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such a failure shall exist) of not less than $35,000,000, or (B) fails to
observe or perform any other agreement or condition relating to any such
Indebtedness, or any other event occurs (other than, with respect to
Indebtedness consisting of Swap Contracts, termination events or equivalent
events pursuant to the terms of such Swap Contracts and not as a result of any
default thereunder by any Loan Party) the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Indebtedness to be made, prior to its stated maturity; provided that
this clause (e)(B) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing such
Indebtedness, if such sale or transfer is permitted hereunder and under the
documents providing for such Indebtedness; provided further that such failure is
unremedied and is not waived by the holders of such Indebtedness prior to any
termination of the Aggregate Commitments or acceleration of the Loans pursuant
to Section 10.2; provided that no such event under the Term Facility (other than
a payment default or any default relating to insolvency or any proceeding under
any Debtor Relief Law) shall constitute an Event of Default under this
Section 8.1(e) until the earliest to occur of (x) the date that is thirty
(30) days after such event or circumstance (but only if such event or
circumstance has not been waived or cured), (y) the acceleration of the
Indebtedness under the Term Facility and (z) the exercise of any remedies by the
Term Facility Administrative Agent or collateral agent or any lenders under the
Term Facility in respect of any Collateral; or

(f) Insolvency Proceedings, Etc. Holdings, the Borrower or any Material
Subsidiary institutes or consents to the institution of any proceeding under any
Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator, administrator, administrative receiver
or similar officer for it or for all or any material part of its property; or
any receiver, trustee, custodian, conservator, liquidator, rehabilitator,
administrator, administrative receiver or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for sixty (60) calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for sixty (60) calendar days, or an order for relief is
entered in any such proceeding; or

(g) Judgments. There is entered against any Loan Party or any Restricted
Subsidiary a final judgment or order for the payment of money in an aggregate
amount exceeding $35,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer has been notified of such judgment
or order and has not denied or failed to acknowledge coverage thereof) and such
judgment or order shall not have been satisfied, vacated, discharged or stayed
or bonded pending an appeal for a period of sixty (60) consecutive days; or

 

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(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or would reasonably be expected to result
in liability of any Loan Party or their respective ERISA Affiliates under Title
IV of ERISA in an aggregate amount which would reasonably be expected to result
in a Material Adverse Effect, (ii) any Loan Party or any of their respective
ERISA Affiliates fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its Withdrawal Liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount
which would reasonably be expected to result in a Material Adverse Effect, or
(iii) with respect to a Foreign Plan a termination, withdrawal or noncompliance
with applicable law or plan terms that would reasonably be expected to result in
a Material Adverse Effect; or

(i) Invalidity of Loan Documents. Any material provision of any Loan Document at
any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder (including as a result of a
transaction permitted under Section 9.4 or 9.5) or the satisfaction in full of
all the Obligations, ceases to be in full force and effect; or any Loan Party
contests in writing the validity or enforceability of any provision of any Loan
Document; or any Loan Party denies in writing that it has any or further
liability or obligation under any Loan Document (other than as a result of
repayment in full of the Obligations and termination of the Aggregate
Commitments), or purports in writing to revoke or rescind any Loan Document; or

(j) Collateral Documents. Any Collateral Document after delivery thereof
pursuant to Section 4.1 or 8.11 shall for any reason (other than pursuant to the
terms hereof or thereof including as a result of a transaction permitted under
Section 9.4 or 9.5) cease to create, or any Lien purported to be created by any
Collateral Document shall be asserted in writing by any Loan Party not to be, a
valid and perfected lien, with the priority required by the Collateral Documents
(or other security purported to be created on the applicable Collateral) on and
security interest in any material portion of the Collateral purported to be
covered thereby, subject to Liens permitted under Section 9.1, except to the
extent that any such loss of perfection or priority results from the failure of
the Administrative Agent or the Collateral Agent to maintain possession of
certificates actually delivered to it representing securities pledged under the
Collateral Documents or to file UCC continuation statements and except as to
Collateral consisting of real property to the extent that such losses are
covered by a lender’s title insurance policy and such insurer has not denied
coverage; or

(k) Junior Financing Documentation. (i) Any of the Obligations of the Loan
Parties under the Loan Documents for any reason shall cease to be “Senior
Indebtedness” (or any comparable term) or “Senior Secured Financing” (or any
comparable term) under, and as defined in any Junior Financing Documentation
governing Junior Financing subordinated in right of payment to the Obligations
under the Loan Documents with an aggregate principal amount of not less than
$35,000,000 or (ii) the subordination provisions set forth in any Junior
Financing Documentation governing Junior Financing subordinated in right of
payment to the Obligations under the Loan Documents with an aggregate principal
amount of not less than $35,000,000 shall, in whole or in part, cease to be
effective or cease to be legally valid, binding and enforceable against the
holders of any such Junior Financing, if applicable; or

 

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(l) Change of Control. There occurs any Change of Control.

SECTION 10.2 Remedies upon Event of Default.

(a) If any Event of Default occurs and is continuing, the Administrative Agent
may with the consent of, and shall at the request of, the Requisite Lenders take
any or all of the following actions:

(i) declare Revolving Credit Commitments of each Lender and any obligation of
the Issuers to make L/C Credit Extensions to be terminated, whereupon such
Revolving Credit Commitments and obligation shall be terminated;

(ii) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower;

(iii) require that the Borrower Cash Collateralize the Letter of Credit
Obligations (in an amount equal to the then Outstanding Amount thereof); and

(iv) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable Law;

provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United
States, the Revolving Credit Commitments of each Lender and any obligation of
the Issuers to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the Letter of Credit
Obligations as aforesaid shall automatically become effective, in each case
without further act of the Administrative Agent or any Lender.

(b) Without limitation of the rights of the Agents or Secured Parties under
Section 8.12 and the definitions of Qualified Cash and Qualified Cash Securities
Account, 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 during the continuance of an Event of Default,
and notwithstanding Section 2.13(f) above, the Administrative Agent may in its
sole discretion, and, upon either (A) the written direction of the Requisite
Lenders or (B) the acceleration of the Obligations pursuant to Section 10.2(a),
deliver a notice to each Approved Account Bank instructing them to cease
complying with any instructions from any Loan Party and to transfer all funds

 

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therein to the Administrative Agent and the Administrative Agent shall apply all
payments in respect of any Obligations and all funds on deposit in the
Concentration Account and all other proceeds of Collateral in the order
specified in Section 10.3 hereof.

(c) Notwithstanding anything to the contrary, if the only Events of Default then
having occurred and continuing are the failure to comply with Section 6.1 with
respect to the Test Period most recently ended, then the Administrative Agent
may not take any of the actions set forth in subclauses (i), (ii), (iii) and
(iv) of Section 10.2(a) during the period commencing on the date that the
Administrative Agent receives a Notice of Intent to Cure and ending on the Cure
Expiration Date with respect thereto in accordance with and to the extent
permitted by Section 10.4.

SECTION 10.3 Application of Funds. After the exercise of remedies provided for
in Section 10.2 (or after the Loans have automatically become immediately due
and payable and the Letter of Credit Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 10.2),
any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:

First, ratably, pay any fees, indemnities, or expense reimbursements then due to
the Administrative Agent or any Issuer from the Borrower (other than in
connection with Cash Management Obligations or Obligations in respect of Secured
Hedge Agreements);

Second, ratably, to pay any fees or expense reimbursements then due to the
Revolving Credit Lenders from the Borrower (other than in connection with Cash
Management Obligations or Obligations in respect of Secured Hedge Agreements);

Third, to pay interest due and payable in respect of any Loans (including any
Swing Loans) and any Protective Advances, ratably;

Fourth, to pay the principal of the Protective Advances;

Fifth, to pay principal on the Loans (other than the Protective Advances) and
unreimbursed Letter of Credit Borrowings and to pay any amounts owing with
respect to Obligations in respect of Secured Hedge Agreements (other than any
Specified Secured Hedge Obligations), ratably;

Sixth, to pay an amount to the Administrative Agent equal to 101% of the Letter
of Credit Obligations on such date, to be held in the Concentration Account as
cash collateral for such Obligations;

Seventh, to pay any amounts owing with respect to Cash Management Obligations,
ratably;

Eighth, to pay any amounts owing with respect to any Specified Secured Hedge
Obligations, ratably;

Ninth, to the payment of any other Obligation due to the Administrative Agent or
any Lender by the Borrower;

 

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Tenth, as provided for under the Intercreditor Agreement; and

Eleventh, after all of the Obligations have been paid in full, to the Borrower
or as the Borrower shall direct or as otherwise required by Law.

Subject to Sections 2.4, 2.16, 8.12 and 10.5, amounts used to Cash Collateralize
the aggregate undrawn amount of Letters of Credit pursuant to clause Sixth above
shall be applied to satisfy drawings under such Letters of Credit as they occur.
If any amount remains on deposit as cash collateral after all Letters of Credit
have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above and, if no
Obligations remain outstanding, to the Borrower.

Notwithstanding the foregoing, if sufficient funds are not available to fund all
payments to be made in respect of any Secured Obligation described in any of
clauses First through Tenth 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 or
Issuer’s interest in the aggregate outstanding Secured Obligations described in
such clauses; provided, however, that payments that would otherwise be allocated
to the Lenders shall be allocated first to repay Protective Advances and Swing
Loans pro rata until such Protective Advances and Swing Loans are paid in full
and then to repay the Loans. The order of priority set forth in clauses First
through Eighth above may at any time and from time to time be changed by the
agreement of all Lenders without necessity of notice to or consent of or
approval by the Borrower, any Secured Party that is not a Lender or Issuer or by
any other Person that is not a Lender or Issuer. The order of priority set forth
in clauses First through Ninth above may be changed only with the prior written
consent of the Administrative Agent in addition to that of all Lenders.

SECTION 10.4 Company’s Right to Cure.

(a) Notwithstanding anything to the contrary contained in Section 10.1, in the
event of any Event of Default under any covenant set forth in Article VI and
until the expiration of the tenth (10th) Business Day after the date on which
the Fixed Charge Coverage Ratio calculation would be required to be delivered
pursuant to Section 6.1 or Section 7.2(a) (such date, the “Cure Expiration
Date”), following delivery of a Notice of Intent to Cure in accordance herewith,
the Borrower may designate any portion of the Net Cash Proceeds of any issuance
of common Equity Interests of the Borrower or any cash capital contribution to
the common equity of the Borrower as an increase to Consolidated EBITDA with
respect to such applicable quarter; provided that all such Net Cash Proceeds to
be so designated (i) are actually received by the Borrower as cash common equity
(including through capital contribution of such Net Cash Proceeds to the
Borrower) after the date of such notice and before the Cure Expiration Date and
(ii) the aggregate amount of such Net Cash Proceeds or cash capital contribution
that are so designated shall not exceed 100% of the aggregate amount necessary
to cure such Event of Default under Article VI for any applicable period.

(b) Upon receipt by the Borrower of any such designated Net Cash Proceeds or
cash capital contribution (the “Cure Amount”) in accordance with this
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Consolidated EBITDA for any period of calculation which includes the last Fiscal
Quarter of the Test Period ending immediately prior to the date on which such
Cure Amount was received shall be increased, solely for the purpose of
calculating any financial ratio set forth in Article VI, by an amount equal to
the Cure Amount. The resulting increase to Consolidated EBITDA and any reduction
in Indebtedness, if applicable, from designation of a Cure Amount shall not
result in any adjustment to Consolidated EBITDA or any other financial
definition for any purpose under this Agreement other than for purposes of
calculating the financial ratio set forth in Article VI and for additional
clarification shall not adjust the calculation of Consolidated EBITDA for
purposes of determining the Total Leverage Ratio or Fixed Charge Coverage Ratio
(other than for purposes of actual compliance with Article VI as of the end of
any applicable Test Period).

(c) If, after giving effect to the foregoing recalculations, the Borrower shall
then be in compliance with the requirements of Article VI, the Borrower shall be
deemed to have satisfied the requirements of Article VI as of the relevant date
of determination with the same effect as though there had been no failure to
comply therewith at such date, and the applicable existing breach or default of
Article VI shall be deemed cured for this purpose of the Agreement.

(d) In each period of four Fiscal Quarters, there shall be at least two
(2) Fiscal Quarters for which Consolidated EBITDA is not increased by exercise
of a cure pursuant to Section 10.4(a).

SECTION 10.5 Actions in Respect of Letters of Credit; Cash Collateral.

(a) At any time (i) upon the Revolving Credit Termination Date, (ii) after the
Revolving Credit Termination Date when the aggregate funds on deposit in the
Concentration Account to Cash Collateralize Letter of Credit Obligations shall
be less than 101% of the Letter of Credit Obligations and (iii) as may be
required by Section 2.9 or Section 2.16, the Borrower shall pay to the
Administrative Agent in Same Day Funds at the Administrative Agent’s office
referred to in Section 12.8, for deposit in the Concentration Account, (x) in
the case of clauses (i) and (ii) above, the amount required to that, after such
payment, the aggregate funds on deposit in the Concentration Account counts
equals or exceeds 101% of the sum of all outstanding Letter of Credit
Obligations and (y) in the case of clause (iii) above, the amount required by
Section 2.9. The Administrative Agent may, from time to time after funds are
deposited in the Concentration Account, apply funds then held in the
Concentration Account to the payment of any amounts, in accordance with
Section 2.9 and Section 10.2(b), as shall have become or shall become due and
payable by the Borrower to the Issuers or Lenders in respect of the Letter of
Credit Obligations. The Administrative Agent shall promptly give written notice
of any such application; provided, however, that the failure to give such
written notice shall not invalidate any such application. If at any time the
Administrative Agent determines that Cash Collateral is subject to any right or
claim of any Person other than the Administrative Agent as herein provided, or
that the total amount of such Cash Collateral is less than the applicable
Fronting Exposure and other obligations secured thereby, the Borrower or the
relevant Defaulting Lender will, promptly upon demand by the Administrative
Agent, pay or provide to the Administrative Agent additional Cash Collateral in
an amount sufficient to eliminate such deficiency. The Administrative Agent may,
at any time and from time to time after the initial deposit of Cash Collateral,
request that additional Cash Collateral be provided in order to protect against
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(b) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this Section 10.5 or
Sections 2.4, 2.9, 2.12, 2.16 or 10.2 in respect of Letters of Credit or Swing
Loans shall be held and applied to the satisfaction of the specific Letter of
Credit Obligations, Swing Loans, obligations to fund participations therein
(including, as to Cash Collateral provided by a Defaulting Lender, any interest
accrued on such obligation) and other obligations for which the Cash Collateral
was so provided, prior to any other application of such property as may be
provided for herein.

(c) Release. Cash Collateral (or the appropriate portion thereof) provided to
reduce Fronting Exposure or other obligations shall be released promptly
following (i) the elimination of the applicable Fronting Exposure or other
obligations giving rise thereto (including by the termination of Defaulting
Lender status of the applicable Lender or, as appropriate, its assignee
following compliance with Section 12.2(b)(vi)) or (ii) the Administrative
Agent’s good faith determination that there exists excess Cash Collateral;
provided, however, (x) that Cash Collateral furnished by or on behalf of a Loan
Party shall not be released during the continuance of a Default or Event of
Default (and following application as provided in this Section 10.5 may be
otherwise applied in accordance with Section 10.3), and (y) the Person providing
Cash Collateral and the applicable Issuer or Swing Loan Lender, as applicable,
may agree that Cash Collateral shall not be released but instead held to support
future anticipated Fronting Exposure or other obligations.

ARTICLE XI

THE ADMINISTRATIVE AGENT

SECTION 11.1 Appointment and Authorization.

(a) Each of the Lenders and the Issuers hereby irrevocably appoints Bank of
America to act on its behalf as the Administrative Agent hereunder and under the
other Loan Documents and authorizes the Administrative Agent to take such
actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto. The provisions of this
Article XI (other than Sections 11.6 and 11.11) are solely for the benefit of
the Administrative Agent, the Lenders and the Issuers, and the Borrower shall
not have rights as a third party beneficiary of any such provision.

(b) The Administrative Agent shall also act as the “collateral agent” under the
Loan Documents, and each of the Lenders (including in its capacities as a
potential Hedge Bank and/or Cash Management Bank) and the Issuers hereby
irrevocably appoints and authorizes the Administrative Agent to act as the agent
of (and to hold any security interest created by the Collateral Documents for
and on behalf of or in trust for) such Lender and such Issuer for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Obligations, together with such powers
and discretion as are reasonably incidental thereto. In this connection, the
Administrative Agent, as “collateral agent” and any co-agents, sub-agents and
attorneys-in-fact appointed by the Administrative Agent pursuant to Section 11.5
for purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents, or for exercising any rights
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remedies thereunder at the direction of the Administrative Agent, shall be
entitled to the benefits of all provisions of this Article XI and Article XII
(including Sections 11.3, 11.14, 12.3, 12.4 and 12.5, as though such co-agents,
sub-agents and attorneys-in-fact were the “collateral agent” under the Loan
Documents) as if set forth in full herein with respect thereto. Without limiting
the generality of the foregoing, the Lenders hereby expressly authorize the
Administrative Agent to execute any and all documents (including releases) with
respect to the Collateral and the rights of the Secured Parties with respect
thereto (including the Intercreditor Agreement), as contemplated by and in
accordance with the provisions of this Agreement and the Collateral Documents
and acknowledge and agree that any such action by any Agent shall bind the
Lenders.

SECTION 11.2 Rights as a Lender.

Any Person serving as an Agent (including as Administrative Agent) hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include each Person serving as an Agent hereunder in
its individual capacity. Such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if such Person were not an Agent
hereunder and without any duty to account therefor to the Lenders. The Lenders
acknowledge that, pursuant to such activities, any Agent or its Affiliates may
receive information regarding any Loan Party or any of its Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Loan Party or such Affiliate) and acknowledge that no Agent shall be under any
obligation to provide such information to them.

SECTION 11.3 Exculpatory Provisions. Neither the Administrative Agent nor any
other Agent shall have any duties or obligations except those expressly set
forth herein and in the other Loan Documents. Without limiting the generality of
the foregoing, an Agent (including the Administrative Agent):

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing and without limiting the
generality of the foregoing, the use of the term “agent” herein and in the other
Loan Documents with reference to any Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law and instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that such Agent is required
to exercise as directed in writing by the Requisite Lenders (or such other
number or percentage of the Lenders as shall be expressly provided for herein or
in the other Loan Documents), provided that no Agent shall be required to take
any action that, in its opinion or the opinion of its counsel, may expose such
Agent to liability or that is contrary to any Loan Document or applicable law;
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(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by any Person serving as an Agent or any of its
Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Requisite Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 12.1 and 12.2) or (ii) in the absence of
its own gross negligence or willful misconduct as determined by the final
judgment of a court of competent jurisdiction, in connection with its duties
expressly set forth herein. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until notice describing such Default is
given to the Administrative Agent by the Borrower, a Lender or an Issuer.

No Agent-Related Person shall be responsible for or have any duty to ascertain
or inquire into (i) any recital statement, warranty or representation made in or
in connection with this Agreement or any other Loan Document, (ii) the contents
of any certificate, report or other document delivered hereunder or thereunder
or in connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or the creation, perfection or priority
of any Lien purported to be created by the Collateral Documents, (v) the value
or the sufficiency of any Collateral, or (vi) the satisfaction of any condition
set forth in Article IV or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent, or
(vii) to inspect the properties, books or records of any Loan Party or any
Affiliate thereof.

SECTION 11.4 Reliance by the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person. The Administrative Agent also may rely upon any statement made to
it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance
of a Letter of Credit, that by its terms must be fulfilled to the satisfaction
of a Lender or the applicable Issuer, the Administrative Agent may presume that
such condition is satisfactory to such Lender or such Issuer unless the
Administrative Agent shall have received notice to the contrary from such Lender
or such Issuer prior to the making of such Loan or the issuance of such Letter
of Credit. The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
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The Administrative Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such advice or
concurrence of the Requisite Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Requisite Lenders (or such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders;
provided that the Administrative Agent shall not be required to take any action
that, in its opinion or in the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or
applicable Law.

SECTION 11.5 Delegation of Duties.

The Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Loan Documents by or through any
one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Agent-Related Persons. The
exculpatory provisions of this Article shall apply to any such sub-agent and to
the Agent-Related Persons of the Administrative Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.

SECTION 11.6 Resignation of Administrative Agent or Collateral Agent.

(a) The Administrative Agent or Collateral Agent may at any time give notice of
its resignation to the Lenders, the Issuers and the Borrower. Upon receipt of
any such notice of resignation, the Requisite Lenders shall have the right, with
the consent of the Borrower at all times other than during the existence of an
Event of Default (which consent of the Borrower shall not be unreasonably
withheld or delayed), to appoint a successor, which shall be a Lender or a bank
with an office in the United States, or an Affiliate of any such Lender or bank
with an office in the United States. If no such successor shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent or Collateral
Agent, as applicable, gives notice of its resignation, then the retiring
Administrative Agent or Collateral Agent, as applicable, may on behalf of the
Lenders and the Issuers, appoint a successor Administrative Agent or Collateral
Agent, as applicable, meeting the qualifications set forth above; provided that
if the Administrative Agent or Collateral Agent, as applicable, shall notify the
Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent or
Collateral Agent, as applicable, shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the
case of any collateral security held by the Administrative Agent or Collateral
Agent on behalf of the Lenders or the Issuers under any of the Loan Documents,
the retiring Agent shall continue to hold such collateral security until such
time as a successor of such Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
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each Lender and each Issuer directly, until such time as the Requisite Lenders
appoint a successor Administrative Agent as provided for above in this
Section 11.6. Upon the acceptance of a successor’s appointment as Administrative
Agent or Collateral Agent, as applicable, hereunder and upon the execution and
filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Requisite Lenders may
request, in order to (i) continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents or (ii) otherwise ensure
that the Collateral and Guarantee Requirement is satisfied, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent or Collateral Agent, as
applicable, and the retiring Administrative Agent or Collateral Agent, as
applicable, shall be discharged from all of its duties and obligations hereunder
or under the other Loan Documents (if not already discharged therefrom as
provided above in this Section). The fees payable by the Borrower to a successor
Administrative Agent or Collateral Agent, as applicable, shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the retiring Agent’s resignation hereunder and under
the other Loan Documents, the provisions of this Article and Sections 12.3, 12.4
and 12.5 shall continue in effect for the benefit of such retiring Agent, its
sub-agents and their respective Agent-Related Persons in respect of any actions
taken or omitted to be taken by any of them while the retiring Agent was acting
as Administrative Agent or Collateral Agent, as applicable.

(b) Any resignation by Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation as an Issuer and Swing Loan
Lender. Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, (i) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring Issuer and Swing Loan
Lender, (ii) the retiring Issuer and Swing Loan Lender shall be discharged from
all of their respective duties and obligations hereunder or under the other Loan
Documents, and (iii) the successor Issuer shall issue letters of credit in
substitution for the Letters of Credit issued by Bank of America, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to the retiring Issuer to effectively assume the obligations of the
retiring Issuer with respect to such Letters of Credit.

SECTION 11.7 Non-Reliance on Administrative Agent and Other Lenders; Disclosure
of Information by Agents.

Each Lender and each Issuer acknowledges that no Agent-Related Person has made
any representation or warranty to it, and that no act by any Agent hereafter
taken, including any consent to and acceptance of any assignment or review of
the affairs of any Loan Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to each Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties
and their respective Subsidiaries, and all applicable bank or other regulatory
Laws relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Borrower and the other
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Parties hereunder. Each Lender and each Issuer also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Agent-Related Persons and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
the other Loan Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by any Agent herein, such
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 and other condition or creditworthiness of any of the Loan
Parties or any of their respective Affiliates which may come into the possession
of any Agent-Related Person.

SECTION 11.8 No Other Duties; Other Agents, Arrangers, Managers, Etc.

Goldman Sachs Bank USA is hereby appointed Syndication Agent hereunder, and each
Lender hereby authorizes Goldman Sachs Bank USA to act as Syndication Agent in
accordance with the terms hereof and the other Loan Documents. Each of HSBC Bank
USA, N.A., SunTrust Bank and Wells Fargo Capital Finance, LLC, is hereby
appointed Co-Documentation Agent hereunder, and each Lender hereby authorizes
HSBC Bank USA, N.A., SunTrust Bank and Wells Fargo Capital Finance, LLC, to act
as Co-Documentation Agent in accordance with the terms hereof and the other Loan
Documents. Each Agent hereby agrees to act in its capacity as such upon the
express conditions contained herein and the other Loan Documents, as applicable.
Anything herein to the contrary notwithstanding, none of the Joint Bookrunners,
Arrangers or other Agents listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent,
the Collateral Agent or a Lender hereunder and such Persons shall have the
benefit of this Article XI. Without limiting the foregoing, none of the Lenders
or other Persons so identified shall have or be deemed to have any agency or
fiduciary or trust relationship with any Lender, Holdings, the Borrower or any
of their respective Subsidiaries. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders or other Persons so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder. Each of the Syndication Agent and each Co-Documentation Agent,
without consent of or notice to any party hereto, may assign any and all of its
rights or obligations hereunder to any of its Affiliates. Each of the
Syndication Agent, and each Co-Documentation Agent and any other Agent may
resign from such role at any time, with immediate effect, by giving prior
written notice thereof to the Administrative Agent and Borrower.

SECTION 11.9 Intercreditor Agreement. The Administrative Agent and the
Collateral Agent are authorized to enter into the Intercreditor Agreement, and
the parties hereto acknowledge that the Intercreditor Agreement is binding upon
them. Each Lender (a) hereby consents to the subordination of the Liens on the
Collateral other than the Current Asset Collateral securing the Obligations on
the terms set forth in the Intercreditor Agreement, (b) hereby agrees that it
will be bound by and will take no actions contrary to the provisions of the
Intercreditor Agreement and (c) hereby authorizes and instructs the
Administrative Agent and Collateral Agent to enter into the Intercreditor
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Collateral securing the Obligations to the provisions thereof. The foregoing
provisions are intended as an inducement to the Secured Parties to extend credit
to the Borrower and such Secured Parties are intended third-party beneficiaries
of such provisions and the provisions of the Intercreditor Agreement.

SECTION 11.10 Administrative Agent May File Proofs of Claim.

In case of the pendency of any proceeding under any Debtor Relief Law or any
other judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or Letter of Credit
Obligation shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether the Administrative Agent shall have
made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, Letter of Credit Obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders, the
Issuers and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the Issuers
and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders, the Issuers and the Administrative Agent under
Sections 2.12, 12.3 and 12.4) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and each Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the Issuers, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agents and their respective agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.12,
12.3 and 12.4.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or any
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or any Issuer to authorize
the Administrative Agent to vote in respect of the claim of any Lender or any
Issuer in any such proceeding.

SECTION 11.11 Collateral and Guaranty Matters.

Each of the Lenders (including in its capacities as a potential Cash Management
Bank and a potential Hedge Bank) and the Issuers irrevocably authorizes the
Administrative Agent and the Collateral Agent, and each of the Administrative
Agent and the Collateral Agent agrees that it will:

(a) release any Lien on any property granted to or held by the Administrative
Agent or the Collateral Agent under any Loan Document (i) upon termination of
the Aggregate Commitments and payment in full of all Obligations (other than
(x) obligations and liabilities under Secured Hedge Agreements as to which
arrangements satisfactory to the applicable Hedge Bank shall have been made,
(y) Cash Management Obligations as to which arrangements satisfactory to the
applicable Cash Management Bank shall have been made and (z) contingent
indemnification obligations not yet accrued and payable) and the expiration or
termination of all Letters of Credit (other than Letters of Credit as to which
other arrangements reasonably satisfactory to the Administrative Agent and each
applicable Issuer shall have been made), (ii) at the time the property subject
to such Lien is transferred or to be transferred as part of or in connection
with any transfer permitted hereunder or under any other Loan Document to any
Person other than Holdings, the Borrower or any of its Domestic Subsidiaries
that are Guarantors, (iii) subject to Section 12.1, if the release of such Lien
is approved, authorized or ratified in writing by the Requisite Lenders, or
(iv) if the property subject to such Lien is owned by a Guarantor, upon release
of such Guarantor from its obligations under its Guaranty pursuant to clause (c)
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(b) release or subordinate any Lien on any property granted to or held by the
Administrative Agent or the Collateral Agent under any Loan Document to the
holder of any Lien on such property that is permitted by Section 9.1(i);

(c) release any Guarantor from its obligations under the Guaranty if (i) in the
case of any Subsidiary, such Person ceases to be a Restricted Subsidiary as a
result of a transaction or designation permitted hereunder or (ii) in the case
of Holdings, as a result of a transaction permitted hereunder; provided that no
such release shall occur if such Guarantor continues to be a guarantor in
respect of the Term Facility, Senior Notes or any Junior Financing; and

(d) if any Guarantor shall cease to be a Material Subsidiary (as certified in
writing by a Responsible Officer), and the Borrower notifies the Administrative
Agent in writing that it wishes such Guarantor to be released from its
obligations under the Guaranty and provides the Administrative Agent and the
Collateral Agent such certifications or documents as either such Agent shall
reasonably request, (i) release such Subsidiary from its obligations under the
Guaranty and (ii) release any Liens granted by such Subsidiary or Liens on the
Equity Interests of such Subsidiary; provided that no such release shall occur
if such Subsidiary continues to be a guarantor in respect of the Term Facility,
the Senior Notes or any other Junior Financing.

Upon request by the Administrative Agent at any time, the Requisite Lenders will
confirm in writing the Collateral Agent’s authority to release or subordinate
its interest in particular types or items of property, or to release any
Guarantor from its obligations under the Guaranty pursuant to this
Section 11.11. In each case as specified in this Section 11.11, the applicable
Agent will (and each Lender irrevocably authorizes the applicable Agent to), at
the Borrower’s expense, execute and deliver to the applicable Loan Party such
documents as such Loan Party may reasonably request to evidence the release or
subordination of such item of Collateral from the assignment and security
interest granted under the Collateral Documents, or to evidence the release of
such Guarantor from its obligations under the Guaranty, in each case in
accordance with the terms of the Loan Documents and this Section 11.11.

 

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SECTION 11.12 [Reserved].

SECTION 11.13 Secured Cash Management Agreements and Secured Hedge Agreements.

(a) Except as otherwise expressly set forth herein or in any Guaranty or any
Collateral Document, no Cash Management Bank or Hedge Bank that obtains the
benefits of Section 10.3, any Guaranty or any Collateral by virtue of the
provisions hereof or of any Guaranty or any Collateral Document shall have any
right to notice of any action or to consent to, direct or object to any action
hereunder or under any other Loan Document or otherwise in respect of the
Collateral (including the release or impairment of any Collateral) other than in
its capacity as a Lender and, in such case, only to the extent expressly
provided in the Loan Documents. Notwithstanding any other provision of this
Article XI to the contrary, the Administrative Agent shall not be required to
verify the payment of, or that other satisfactory arrangements have been made
with respect to, Obligations arising under Secured Cash Management Agreements
and Secured Hedge Agreements unless the Administrative Agent has received
written notice of such Obligations, together with such supporting documentation
as the Administrative Agent may request, from the applicable Cash Management
Bank or Hedge Bank, as the case may be.

(b) Each Secured Party hereby agrees (i) that, after the occurrence and during
the continuance of a Cash Dominion Period (and thereafter at such frequency as
the Administrative Agent may reasonably request in writing), it will provide to
the Administrative Agent, promptly upon the written request of the
Administrative Agent, a summary of all Obligations owing to it under this
Agreement and (ii) that the benefit of the provisions of the Loan Documents
directly relating to the Collateral or any Lien granted thereunder shall extend
to and be available to any Secured Party that is not an Agent, a Lender or an
Issuing Bank party hereto as long as, by accepting such benefits, such Secured
Party agrees, as among Agent and all other Secured Parties, that such Secured
Party is bound by (and, if requested by Agent, shall confirm such agreement in a
writing in form and substance reasonably acceptable to Agent) this Article XI
and Sections 3.1, Sections 12.4, 12.6, 12.19, 12.23 and 12.26 and the
Intercreditor Agreement, and the decisions and actions of any Agent and the
Requisite Lenders (or, where expressly required by the terms of this Agreement,
a greater proportion of the Lenders or other parties hereto as required herein)
to the same extent a Lender is bound; provided, however, that, notwithstanding
the foregoing clause (ii), (x) such Secured Party shall be bound by
Sections 12.3, 12.4 and 12.5 only to the extent of liabilities, reimbursement
obligations, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements with respect to or otherwise relating to the
Liens and Collateral held for the benefit of such Secured Party, in which case
the obligations of such Secured Party thereunder shall not be limited by any
concept of pro rata share or similar concept, (y) each of Agents, the Lenders
and the Issuers party hereto shall be entitled to act at its sole discretion,
without regard to the interest of such Secured Party, regardless of whether any
Obligation to such Secured Party thereafter remains outstanding, is deprived of
the benefit of the Collateral, becomes unsecured or is otherwise affected or put
in jeopardy thereby, and without any duty or liability to such Secured Party or
any such Obligation and (z) such Secured Party shall not have any right to be
notified of, consent to, direct, require or be heard with respect to, any action
taken or omitted in respect of the Collateral or under any Loan Document.

 

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SECTION 11.14 Indemnification of Agents.

Whether or not the transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand the Administrative Agent and each other
Agent-Related Person (solely to the extent any such Agent-Related Person was
performing services on behalf of the Administrative Agent) (to the extent not
reimbursed by or on behalf of any Loan Party and without limiting the obligation
of any Loan Party to do so), pro rata, and hold harmless the Administrative
Agent and each other Agent-Related Person (solely to the extent any such
Agent-Related Person was performing services on behalf of the Administrative
Agent) from and against any and all Indemnified Liabilities incurred by it;
provided that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting from such
Agent-Related Person’s own gross negligence or willful misconduct, as determined
by the final judgment of a court of competent jurisdiction; provided that no
action taken in accordance with the directions of the Requisite Lenders (or such
other number or percentage of the Lenders as shall be required by the Loan
Documents) shall be deemed to constitute gross negligence or willful misconduct
for purposes of this Section 11.14. In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Liabilities, this Section 11.14
applies whether any such investigation, litigation or proceeding is brought by
any Lender or any other Person. Without limitation of the foregoing, each Lender
shall reimburse the Administrative Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including Attorney Costs) 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
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower, provided that such reimbursement by the Lenders shall not affect the
Borrower’s continuing reimbursement obligations with respect thereto, provided
further that the failure of any Lender to indemnify or reimburse the
Administrative Agent shall not relieve any other Lender of its obligation in
respect thereof. The undertaking in this Section 11.14 shall survive termination
of the Aggregate Commitments, the payment of all other Obligations and the
resignation of the Administrative Agent, the Swing Loan Lender or any Issuer.

ARTICLE XII

MISCELLANEOUS

SECTION 12.1 Amendments, Etc. Except as otherwise set forth in this Agreement,
no amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower or any other Loan
Party therefrom, shall be effective unless in writing signed by the Requisite
Lenders and the Borrower or the applicable Loan Party, as the case may be, and
acknowledged by the Administrative Agent and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided that, no such amendment, waiver or consent shall:

(a) extend or increase the Revolving Credit Commitment of any Lender without the
written consent of each Lender directly affected thereby (it being understood

 

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that (i) a waiver of any condition precedent set forth in Section 4.2 and
(ii) the waiver of any Default, mandatory prepayment or mandatory reduction of
the Revolving Credit Commitments shall not constitute an extension or increase
of any Revolving Credit Commitment of any Lender);

(b) postpone any date scheduled for, or reduce the amount of, any payment of
principal or interest under Section 2.6 or 2.10 without the written consent of
each Lender directly affected thereby, it being understood that the waiver of
(or amendment to the terms of) any mandatory prepayment of the Loans shall not
constitute a postponement of any date scheduled for the payment of principal or
interest;

(c) reduce the principal of, or the rate of interest specified herein on, any
Loan or Letter of Credit Borrowing, or (subject to clause (iii) of the second
proviso to this Section 12.1) any fees or other amounts payable hereunder or
under any other Loan Document without the written consent of each Lender
directly affected thereby (it being understood that any change to any component
of “Excess Availability” shall not constitute a reduction in the rate of
interest); provided that only the consent of the Requisite Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrower to pay interest at the Default Rate;

(d) change any provision of this Section 12.1, the definition of “Requisite
Lenders”, “Requisite Class Lenders”, “Supermajority Lenders” or any other
provision specifying the number of Lenders or portion of the Loans or Revolving
Credit Commitments required to take any action under the Loan Documents, without
the written consent of each Lender affected thereby;

(e) other than in a transaction permitted under Section 9.4 or 9.5, release all
or substantially all of the Collateral in any transaction or series of related
transactions, without the written consent of each Lender;

(f) other than in a transaction permitted under Section 9.4 or 9.5, release all
or substantially all of the aggregate value of the Guaranty, without the written
consent of each Lender;

(g) change the definition of the term “Borrowing Base” or any component
definition thereof, but excluding the definition of “Eligible Accounts Advance
Rate”, “Credit Card Advance Rate”, “Letter of Credit Advance Rate”, “Eligible
Inventory Advance Rate” or “In-Transit Advance Rate” or the numerical percentage
of Qualified Cash in the definition of “Borrowing Base”, in each case the
amendment or modifications of which shall be subject to clause (h) below, if as
a result thereof the amounts available to be borrowed by the Borrower would be
increased, without the written consent of the Supermajority Lenders, provided
that the foregoing shall not limit the discretion of the Administrative Agent to
change, establish or eliminate any Availability Reserves, Inventory Reserves or
Shrink Reserves without the consent of any Lenders;

(h) increase the numerical percentage contained in Eligible Accounts Advance
Rate, Credit Card Advance Rate, Letter of Credit Advance Rate, Eligible
Inventory

 

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Advance Rate or In-Transit Advance Rate without the written consent of each
Lender; provided that the foregoing shall not limit the discretion of the
Administrative Agent to change, establish or eliminate any Availability
Reserves, Inventory Reserves or Shrink Reserves without the consent of any
Lenders;

(i) without the prior written consent of all Lenders directly affected thereby,
(i) subordinate the Obligations hereunder to any other Indebtedness, or
(ii) except as provided by operation of applicable Law or in the Intercreditor
Agreement, subordinate the Liens granted hereunder or under the other Loan
Documents to any other Lien; or

(j) change the order of the application of funds specified in Section 10.3
without the written consent of each Lender directly affected thereby;

and provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by each Issuer in addition to the Lenders required above,
affect the rights or duties of an Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Loan Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Loan Lender under this Agreement; (iii) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of, or any
fees or other amounts payable to, the Administrative Agent under this Agreement
or any other Loan Document; (iv) Section 12.2(g) may not be amended, waived or
otherwise modified without the consent of each Granting Lender all or any part
of whose Loans are being funded by an SPC at the time of such amendment, waiver
or other modification; (v) the consent of Requisite Class Lenders shall be
required with respect to any amendment that by its terms adversely affects the
rights of such Class in respect of payments hereunder in a manner different than
such amendment affects other Classes; and (vi) no Lender consent is required to
effect any amendment or supplement to the Intercreditor Agreement, (A) that is
for the purpose of adding the holders of Indebtedness incurred or issued
pursuant to a Permitted Refinancing of the Term Facility (or any agent or
trustee of such holders) as parties thereto, as expressly contemplated by the
terms of the Intercreditor Agreement and permitted under Section 9.3(p) (it
being understood that any such amendment or supplement may make such other
changes to the intercreditor agreement as, in the good faith determination of
the Administrative Agent, are required to effectuate the foregoing and provided
that such other changes are not adverse, in any material respect, to the
interests of the Lenders) or (B) that is expressly contemplated by Sections
5.2(c) or 7.4 of the Intercreditor Agreement with respect to a Permitted
Refinancing of the Term Facility permitted under Section 9.3(p) (or the
comparable provisions, if any, of any successor intercreditor agreement with
respect to a Permitted Refinancing of the Term Facility permitted under
Section 9.3(p)); provided further that no such agreement shall, pursuant to this
clause (vi), amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Collateral Agent hereunder or under any other Loan
Document without the prior written consent of the Administrative Agent or the
Collateral Agent, as applicable. Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder (and any amendment, waiver or consent
which by its terms requires the consent of all Lenders or each affected Lender
may be effected with the consent of the applicable Lenders other than Defaulting
Lenders), except that (x) the Revolving Credit Commitment of any Defaulting
Lender may not

 

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be increased or extended without the consent of such Lender and (y) any waiver,
amendment or modification requiring the consent of all Lenders or each affected
Lender that by its terms affects any Defaulting Lender more adversely than other
affected Lenders shall require the consent of such Defaulting Lender.

Notwithstanding anything to the contrary contained in Section 12.1, guarantees,
collateral security documents and related documents executed by Subsidiaries in
connection with this Agreement may be in a form reasonably determined by the
Administrative Agent and may be, together with this Agreement, amended and
waived with the consent of the Administrative Agent at the request of the
Borrower without the need to obtain the consent of any other Lender if such
amendment or waiver is delivered in order (i) to comply with local Law or advice
of local counsel, (ii) to cure ambiguities or defects or (iii) to cause such
guarantee, collateral security document or other document to be consistent with
this Agreement and the other Loan Documents.

If any Lender does not consent to a proposed amendment, waiver, consent or
release with respect to any Loan Document that requires the consent of each
Lender and that has been approved by the Requisite Lenders, the Borrower may
replace such non-consenting Lender in accordance with Section 3.7; provided that
such amendment, waiver, consent or release can be effected as a result of the
assignment contemplated by such Section (together with all other such
assignments required by the Borrower to be made pursuant to this paragraph).

SECTION 12.2 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither Holdings nor the
Borrower may, except as permitted by Section 9.4, assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (f) of this Section, or (iv) to an SPC in
accordance with the provisions of subsection (g) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection (d)
of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuers and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

 

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(b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Revolving Credit Commitment and the Loans
(including for purposes of this subsection (b), participations in Letter of
Credit Obligations and in Swing Loans) at the time owing to it); provided that
any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Revolving Credit Commitment and the Loans of any Class at the time
owing to it or in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate unused amount of the Revolving Credit Commitment (plus the principal
outstanding balance of the Loans) or, if the Revolving Credit Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment, determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each
of the Administrative Agent and, so long as no Event of Default under
Section 10.1(a) or (f), solely with respect to the Borrower, has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met;

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Revolving
Credit Commitment assigned, except that this clause (ii) shall not apply to
rights in respect of the Swing Loan Lender’s rights and obligations in respect
of Swing Loans;

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld)
shall be required unless (1) an Event of Default under Section 10.1(a) or,
solely with respect to the Borrower or any Guarantor, Section 10.1(f), has
occurred and is continuing at the time of such assignment or (2) such assignment
is to a Lender, an Affiliate of a Lender or an Approved Fund;

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required if such assignment is to a Person that is
not a Lender, an Affiliate of such Lender or an Approved Fund with respect to
such Lender;

 

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(C) the consent of the Issuers (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of
the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding); and

(D) the consent of the Swing Loan Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment;

(iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; provided, however, that the
Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment. The Eligible Assignee, if it
is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. All assignments shall be by novation.

(v) No Assignment to Certain Persons. No such assignment shall be made (A) to
Holdings, the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or
(B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon
becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (B), or (C) to a natural person.

(vi) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set
forth herein, the parties to the assignment shall make such additional payments
to the Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Borrower and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent or any Lender
hereunder (and interest accrued thereon) and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans and participations in Letters
of Credit and Swing Loans in accordance with its Applicable Percentage.
Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under
applicable Law without compliance with the provisions of this paragraph, then
the assignee of such interest shall be deemed to be a Defaulting Lender for all
purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to clause (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
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Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.1, 3.4, 3.5, 12.3, 12.4 and 12.5
with respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, and the surrender by the assigning Lender of its
Revolving Credit Note, the Borrower (at its expense) shall execute and deliver a
Revolving Credit Note to the assignee Lender. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as a
non-fiduciary agent of the Borrower, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Revolving Credit Commitments of, and principal amounts (and related interest
amounts) of the Loans and Letter of Credit Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive absent manifest error, and the Borrower, the
Agents and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. In addition, the
Administrative Agent shall maintain on the Register information regarding the
designation, and revocation of designation, of any Lender as a Defaulting
Lender. The Register shall be available for inspection by the Borrower, any
Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice. This Section 12.2(c) and Section 2.7 shall be construed
so that all 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
Treasury regulations (or any other relevant or successor provisions of the Code
or of such Treasury regulations).

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person, a Defaulting Lender or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Revolving Credit Commitment and/or the Loans
(including such Lender’s participations in Letter of Credit Obligations and/or
Swing Loans) owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Agents, the other Lenders and the Issuers shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or any
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instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in
the first proviso to Section 12.1 (other than clause (d) thereof) that directly
affects such Participant. Subject to subsection (e) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.1 (subject to the requirements of Sections 3.1(b), (c) or (d), as
applicable), Section 3.4 and Section 3.5 (through the applicable Lender) to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by
applicable Law, each Participant also shall be entitled to the benefits of
Section 12.6 as though it were a Lender, provided such Participant agrees to be
subject to Section 12.7 as though it were a Lender.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.1, 3.4 or 3.5 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
shall not be entitled to the benefits of Section 3.1 unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply and does in fact comply with
Section 3.1 as though it were a Lender. Each Lender that sells a participation
shall (acting solely for this purpose as a non-fiduciary agent of the Borrower)
maintain a register complying with the requirements of Sections 163(f), 871(h)
and 881(c)(2) of the Code and the Treasury regulations issued thereunder
relating to the exemption from withholding for portfolio interest on which is
entered the name and address of each Participant and the principal amounts (and
stated interest) of each Participant’s interest in the Loans or other
obligations under this Agreement (the “Participant Register”). A Lender shall
not be obligated to disclose the Participant Register to any Person except to
the extent such disclosure is necessary to establish that any Loan or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.

(f) Any Lender may, at any time, pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Revolving
Credit Note, if any) to secure obligations of such Lender, including any pledge
or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

(g) Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle identified as
such in writing from time to time by the Granting Lender to the Administrative
Agent and the Borrower (an “SPC”) the option to provide all or any part of any
Revolving Loan that such Granting Lender would otherwise be obligated to make
pursuant to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to fund any Revolving Loan, and (ii) if an SPC elects not
to exercise such option or otherwise fails to make all or any part of such
Revolving Loan, the Granting Lender shall be obligated to make such Revolving
Loan pursuant to the terms hereof or, if it fails to do so, to make such payment
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under Section 2.13(e). Each party hereto hereby agrees that (i) neither the
grant to any SPC nor the exercise by any SPC of such option shall increase the
costs or expenses or otherwise increase or change the obligations of the
Borrower under this Agreement (including its obligations under Sections 3.1, 3.4
and 3.5), (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and
(iii) the Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the lender of record hereunder. The making of a Revolving Loan by an SPC
hereunder shall utilize the Revolving Credit Commitment of the Granting Lender
to the same extent, and as if, such Revolving Loan were made by such Granting
Lender. In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) 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 SPC, it will not institute against,
or join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding under the
laws of the United States or any State thereof. Notwithstanding anything to the
contrary contained herein, any SPC may (i) with notice to, but without prior
consent of the Borrower and the Administrative Agent and with the payment of a
processing fee of $3,500 (which processing fee may be waived by the
Administrative Agent in its sole discretion), assign all or any portion of its
right to receive payment with respect to any Revolving Loan to the Granting
Lender and (ii) disclose on a confidential basis any non-public information
relating to its funding of Revolving Loans to any rating agency, commercial
paper dealer or provider of any surety or Guarantee or credit or liquidity
enhancement to such SPC.

(h) Resignation as Issuer or Swing Loan Lender after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time Bank of America or any
other Issuer assigns all of its Revolving Credit Commitment and Revolving Loans
pursuant to subsection (b) above, Bank of America or the applicable Issuer may,
(i) upon thirty (30) days’ notice to the Borrower and the Lenders, resign as
Issuer and/or (ii) if applicable, upon thirty (30) days’ notice to the Borrower,
resign as Swing Loan Lender. In the event of any such resignation as Issuer or
Swing Loan Lender, the Borrower shall be entitled to appoint from among the
Lenders a successor Issuer or Swing Loan Lender hereunder; provided, however,
that no failure by the Borrower to appoint any such successor shall affect the
resignation of Bank of America or the applicable Issuer as Issuer or (as
applicable) Swing Loan Lender, as the case may be. If Bank of America or the
applicable Issuer resigns as Issuer, it shall retain all the rights, powers,
privileges and duties of an Issuer hereunder with respect to all Letters of
Credit outstanding as of the effective date of its resignation as Issuer and all
Letter of Credit Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Loans, Canadian Prime Rate Loan or
fundings in respect of Letters of Credit denominated in Euros, as the case may
be, or fund risk participations in unreimbursed amounts under Letters of Credit
pursuant to Section 2.4). If Bank of America resigns as Swing Loan Lender, it
shall retain all the rights of the Swing Loan Lender provided for hereunder with
respect to Swing Loans made by it and outstanding as of the effective date of
such resignation, including the right to require the Lenders to make Base Rate
Loans, Canadian Prime Rate Loan or fundings in respect of Letters of Credit
denominated in Euros, as the case may be, or fund risk participations in
outstanding Swing Loans pursuant to Section 2.3. Upon the appointment of a
successor Issuer and/or Swing Loan Lender, (a) such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring Issuer or Swing Loan Lender, as the case may be, and (b) the

 

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successor Issuer shall issue letters of credit in substitution for the Letters
of Credit, if any, outstanding at the time of such succession or make other
arrangements satisfactory to Bank of America or the applicable Issuer to
effectively assume the obligations of Bank of America or the applicable Issuer
with respect to such Letters of Credit.

SECTION 12.3 Costs and Expenses.

The Borrower agrees (a) if the Effective Date occurs, to pay or reimburse the
Administrative Agent, the Syndication Agent, each Co-Documentation Agent and the
Arrangers for all reasonable and documented out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation, syndication and
execution of this Agreement and the other Loan Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs of Shearman & Sterling LLP and, if
reasonably necessary, one local counsel in each relevant jurisdiction material
to the interests of the Lenders taken as a whole, and (b) to pay or reimburse
the Administrative Agent, the Issuers and the Lenders for all reasonable and
documented out-of-pocket costs and expenses incurred in connection with the
enforcement of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any legal
proceeding, including any proceeding under any Debtor Relief Law, and including
all Attorney Costs of one counsel to the Administrative Agent, the Issuers and
the Lenders taken as a whole (and, if reasonably necessary, one local counsel in
any relevant material jurisdiction and, in the event of any conflict of
interest, one additional counsel in each relevant jurisdiction to each group of
affected Lenders similarly situated taken as a whole)). The agreements in this
Section 12.3 shall survive the termination of the Aggregate Commitments and
repayment of all other Obligations. All amounts due under this Section 12.3
shall be paid promptly following receipt by the Borrower of an invoice relating
thereto setting forth such expenses in reasonable detail. If any Loan Party
fails to pay when due any costs, expenses or other amounts payable by it
hereunder or under any Loan Document, such amount may be paid on behalf of such
Loan Party by the Administrative Agent in its sole discretion. The Borrower and
each other Loan Party hereby acknowledge that the Administrative Agent, any
Issuer and/or any Lender may receive a benefit, including a discount, credit or
other accommodation, from any of such counsel based on the fees such counsel may
receive on account of their relationship with the Administrative Agent, such
Issuer and/or such Lender, including fees paid pursuant to this Agreement or any
other Loan Document.

SECTION 12.4 Indemnities.

The Borrower shall indemnify and hold harmless the Agents, each Lender, each
Issuer, the Arrangers and their respective Affiliates, directors, officers,
employees, agents, partners, trustees or advisors and other representatives
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection with (but limited, in the case of legal fees and expenses, to the
reasonable and documented out-of-pocket fees, disbursements and other charges of
one counsel to all Indemnitees taken as a whole and, if

 

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reasonably necessary, a single local counsel for all Indemnitees taken as a
whole in each relevant jurisdiction that is material to the interest of the
Lenders, and solely in the case of a conflict of interest, one additional
counsel in each relevant jurisdiction to each group of affected Indemnitees
similarly situated taken as a whole) (i) the execution, delivery, enforcement,
performance or administration of any Loan Document or any other agreement,
letter or instrument delivered in connection with the transactions contemplated
thereby or the consummation of the transactions contemplated thereby, (ii) any
Revolving Credit Commitment, Loan or Letter of Credit or the use or proposed use
of the proceeds therefrom (including any refusal by an Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), or (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property currently or formerly owned or operated by the
Borrower, any Subsidiary or any other Loan Party, or any Environmental
Liabilities arising out of the activities or operations of the Borrower, any
Subsidiary or any other Loan Party, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any investigation
of, preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements resulted from (x) the gross negligence, bad faith or willful
misconduct of such Indemnitee or of any affiliate, director, officer, employee
or agent of such Indemnitee or (y) a material breach of any obligations under
any Loan Document by such Indemnitee or of any Related Indemnified Person, in
each case as determined by a final, non appealable judgment of a court of
competent jurisdiction or any dispute solely among Indemnitees other than any
claims against an Indemnitee in its capacity or in fulfilling its role as an
administrative agent or arranger or any similar role under the Facility and
other than any claims arising out of any act or omission of the Borrower or any
of its Affiliates. To the extent that the undertakings to indemnify and hold
harmless set forth in this Section 12.4 may be unenforceable in whole or in part
because they are violative of any applicable law or public policy, the Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them. No Indemnitee shall be
liable for any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar information
transmission systems in connection with this Agreement, nor shall any Indemnitee
or any Loan Party have any liability for any special, punitive, indirect or
consequential damages relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Effective Date) (other than, in the case of any Loan Party,
in respect of any such damages incurred or paid by an Indemnitee to a third
party). In the case of an investigation, litigation or other proceeding to which
the indemnity in this Section 12.4 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any
Loan Party, its directors, stockholders or creditors or an Indemnitee or any
other Person, whether or not any Indemnitee is otherwise a party thereto and
whether or not any of the transactions contemplated hereunder or under any of
the other Loan Documents is consummated. All amounts due under this Section 12.4
shall be paid within twenty (20) Business Days after written demand therefor.
The agreements in this Section 12.4

 

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shall survive the resignation of the Administrative Agent, the Collateral Agent,
the Swing Loan Lender or any Issuer, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations. This Section 12.4 shall not apply to
Taxes, or amounts excluded from the definition of Taxes pursuant to clauses
(i) through (vii) of the first sentence of Section 3.1(a), that are imposed with
respect to payments to or for account of any Agent or any Lender under any Loan
Document, which shall be governed by Section 3.1. This Section 12.5 also shall
not apply to Other Taxes or to taxes covered by Section 3.4.

SECTION 12.5 Limitation of Liability.

The Loan Parties agree 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, except to the extent such liability is determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnitee’s gross negligence or willful misconduct or bad faith or
breach by such Indemnitee of its material obligations under this Agreement. In
no event, shall any party hereto or any Indemnitee be liable on any theory of
liability for any special, indirect, consequential or punitive damages
(including any loss of profits, business or anticipated savings). Each party
hereto 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.

SECTION 12.6 Right of Setoff.

If an Event of Default shall have occurred and be continuing, each Lender and
each of its Affiliates is hereby authorized at any time and from time to time,
after obtaining the prior written consent of the Administrative Agent, to the
fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender or any such Affiliate to or for the credit or the
account of the Borrower or any other Loan Party against any and all of the
obligations of the Borrower or such other Loan Party now or hereafter existing
under this Agreement or any other Loan Document to such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations of the Borrower or such
Loan Party may be contingent or unmatured or are owed to a branch or office of
such Lender different from the branch or office holding such deposit or
obligated on such indebtedness; provided that in the event that any Defaulting
Lender shall exercise any such right of setoff, (x) all amounts so set off shall
be paid over immediately to the Administrative Agent for further application in
accordance with the provisions of Section 2.16 and, pending such payment, shall
be segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Administrative Agent and the Lenders, and (y) the
Defaulting Lender shall provide promptly to the Administrative Agent a statement
describing in reasonable detail the Obligations owing to such Defaulting Lender
as to which it exercised such right of setoff. The rights of each Lender and its
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(including other rights of setoff) that such Lender or its Affiliates may have.
Each Lender agrees to notify the Borrower and the Administrative Agent promptly
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application.

SECTION 12.7 Sharing of Payments.

If, other than as expressly provided elsewhere herein, any Lender shall obtain
payment in respect of any principal of or interest on account of the Loans made
by it, or the participations in Letter of Credit Obligations and Swing Loans
held by it (in each case, whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder) thereof, such Lender shall immediately (a) notify
the Administrative Agent of such fact, and (b) purchase from the other Lenders
such participations in the Loans made by them and/or such subparticipations in
the participations in Letter of Credit Obligations or Swing Loans held by them,
as the case may be, as shall be necessary to cause such purchasing Lender to
share the excess payment of principal of or interest on such Loans or such
participations, as the case may be, pro rata with each of them; provided that if
all or any portion of such excess payment is thereafter recovered from the
purchasing Lender under any of the circumstances described in Section 12.15
(including pursuant to any settlement entered into by the purchasing Lender in
its discretion), such purchase shall to that extent be rescinded and each other
Lender shall repay to the purchasing Lender the purchase price paid therefor,
together with an amount equal to such paying Lender’s ratable share (according
to the proportion of (i) the amount of such paying Lender’s required repayment
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, without further interest thereon. The provisions
of this Section shall not be construed to apply to the application of Cash
Collateral provided for in Sections 10.3 and 10.5. For avoidance of doubt, the
provisions of this paragraph shall not be construed to apply to (A) any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement as in effect from time to time or (B) any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans to any assignee or participant permitted hereunder. The Borrower
agrees that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by applicable Law, exercise all its rights of
payment (including the right of set-off, but subject to Section 12.6) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section 12.7 and will in
each case notify the Lenders following any such purchases or repayments. Each
Lender that purchases a participation pursuant to this Section 12.7 shall from
and after such purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased.

SECTION 12.8 Notices and Other Communications; Facsimile Copies.

(a) General. Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in subsection
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all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

(i) if to Holdings, the Borrower, the Administrative Agent, an Issuer or the
Swing Loan Lender, to the address, telecopier number, electronic mail address or
telephone number specified for such Person on Schedule 12.8; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.

Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below shall be effective as provided in such
subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders
and the Issuers hereunder may be delivered or furnished by electronic
communication (including e mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender or Issuer pursuant to Article II if
such Lender or Issuer, as applicable, has notified the Administrative Agent that
it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.

(c) Receipt. Unless the Administrative Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(d) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY

 

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OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Agent-Related Persons or any
Arranger (collectively, the “Agent Parties”) have any liability to Holdings, the
Borrower, any Lender, any Issuer or any other Person for losses, claims,
damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) arising out of the Borrower’s or the Administrative Agent’s
transmission of Borrower Materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent Party;
provided, however, that in no event shall any Agent Party have any liability to
Holdings, the Borrower, any Lender, any Issuer or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or
actual damages).

(e) Change of Address. Each of Holdings, the Borrower, the Administrative Agent,
each Issuer and the Swing Loan Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
other parties hereto. Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
Borrower, the Administrative Agent, each Issuer and the Swing Loan Lender. In
addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender. Furthermore, each Public Lender agrees to
cause at least one individual at or on behalf of such Public Lender to at all
times have selected the “Private Side Information” or similar designation on the
content declaration screen of the Platform in order to enable such Public Lender
or its delegate, in accordance with such Public Lender’s compliance procedures
and applicable Law, including United States Federal and state securities Laws,
to make reference to Borrower Materials that are not made available through the
“Public Side Information” portion of the Platform and that may contain material
non-public information with respect to the Borrower or its securities for
purposes of United States Federal or state securities laws.

(f) Reliance by Administrative Agent, Issuers and Lenders. The Administrative
Agent, the Issuers and the Lenders shall be entitled to rely and act upon any
notices (including telephonic Notices of Borrowing or Swing Loan Requests)
purportedly given by or on behalf of the Borrower even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
The Borrower shall indemnify the Administrative Agent, each Issuer, each Lender
and the Agent-Related Persons of each of them from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and
other telephonic communications with the Administrative Agent may be recorded by
the Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

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SECTION 12.9 No Waiver; Cumulative Remedies.

No failure by any Lender or the Administrative Agent to exercise, and no delay
by any such Person in exercising, any right, remedy, power or privilege
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by Law.

SECTION 12.10 Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business
Day preceding that on which final judgment is given. The obligation of the
Borrower in respect of any such sum due from it to the Administrative Agent or
the Lenders hereunder or under the other Loan Documents shall, notwithstanding
any judgment in a currency (the “Judgment Currency”) other than that in which
such sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent of any sum
adjudged to be so due in the Judgment Currency, the Administrative Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency. If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Administrative Agent from the Borrower
in the Agreement Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or the
Person to whom such obligation was owing against such loss. If the amount of the
Agreement Currency so purchased is greater than the sum originally due to the
Administrative Agent in such currency, the Administrative Agent agrees to return
the amount of any excess to the Borrower (or to any other Person who may be
entitled thereto under applicable Law).

SECTION 12.11 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower, Holdings and the Administrative Agent
and the Administrative Agent shall have been notified by each Lender, Swing Loan
Lender and each Issuer that each such Lender, Swing Loan Lender and Issuer has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, Holdings, each Agent and each Lender and their respective successors
and assigns.

SECTION 12.12 [Reserved].

SECTION 12.13 Governing Law; Submission to Jurisdiction; Service of Process.

(a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

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(b) THE BORROWER, HOLDINGS, THE ADMINISTRATIVE AGENT AND EACH LENDER EACH
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK CITY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
EACH PARTY HERETO AGREES THAT THE AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY
LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE
EXERCISE OF ANY RIGHTS UNDER ANY COLLATERAL DOCUMENT OR THE ENFORCEMENT OF ANY
JUDGMENT.

(c) THE BORROWER, HOLDINGS, THE ADMINISTRATIVE AGENT AND EACH LENDER EACH
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS
SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 12.8. NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

SECTION 12.14 Waiver of Jury Trial.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER

 

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PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 12.15 Marshaling; Payments Set Aside.

None of the Administrative Agent, any Lender or any Issuer shall be under any
obligation to marshal any assets in favor of the Loan Parties or any other party
or against or in payment of any or all of the Obligations. To the extent that
any payment by or on behalf of the Borrower is made to any Agent or any Lender,
or any Agent or any Lender exercises its right of set-off, and such payment or
the proceeds of such set-off or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by such Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and
(b) each Lender severally agrees to pay to the Administrative Agent upon demand
its applicable share of any amount so recovered from or repaid by any Agent,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the applicable Overnight Rate from time to
time in effect.

SECTION 12.16 [Reserved].

SECTION 12.17 Execution in Counterparts.

This Agreement may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Sections 4.1 and 4.3, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy or other electronic imaging means shall be effective as delivery of a
manually executed counterpart of this Agreement.

SECTION 12.18 Electronic Execution of Assignments and Certain Other Documents.

The words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption or in any amendment or other modification hereof
(including waivers and consents) shall be deemed to include electronic
signatures or the keeping of records

 

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in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

SECTION 12.19 Confidentiality.

Each of the Administrative Agent, the Lenders and the Issuers agrees to maintain
the confidentiality of the Information in accordance with its customary
procedures (as set forth below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, trustees, advisors and 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, provided that the Administrative Agent or such Lender, as
applicable, agrees that it will notify the Borrower as soon as practicable in
the event of any such disclosure by such Person (other than at the request of a
regulatory authority) unless such notification is prohibited by law, rule or
regulation, (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 at least as restrictive as those of this Section 12.19, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any
Eligible Assignee invited to be an Additional Lender or (ii) any actual or
prospective direct or indirect counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with
the consent of the Borrower; (h) to any rating agency when required by it (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 (i) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, any Issuer,
any Lender, or any of their respective Affiliates on a nonconfidential basis
from a source other than Holdings, the Borrower or any Subsidiary thereof, and
which source is not known by such Agent or Lender to be subject to a
confidentiality restriction in respect thereof in favor of the Borrower or any
Affiliate of the Borrower.

For purposes of this Section, “Information” means all information received from
any Loan Party or any Subsidiary thereof relating to any Loan Party or any
Subsidiary thereof or 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 any Loan Party or any Subsidiary
thereof, it being understood that all information received from Holdings, the
Borrower or any Subsidiary after the date hereof shall be deemed confidential
unless such information is clearly identified at the time of delivery as not
being 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 in accordance with its customary procedures 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.

 

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Each of the Administrative Agent and the Lenders acknowledges that (a) the
Information may include material non-public information concerning the Borrower
or a Subsidiary, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including
United States Federal and state securities Laws.

SECTION 12.20 Use of Name, Logo, etc.

Each Loan Party consents to the publication in the ordinary course by
Administrative Agent or the Arrangers of customary advertising material relating
to the financing transactions contemplated by this Agreement using such Loan
Party’s name, product photographs, logo or trademark. Such consent shall remain
effective until revoked by such Loan Party in writing to the Administrative
Agent and the Arrangers.

SECTION 12.21 USA PATRIOT Act Notice.

Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent
(for itself and not on behalf of any Lender) hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act, it is required to obtain,
verify and record information that identifies each Loan Party, which information
includes the name and address of each Loan Party and other information that will
allow such Lender or the Administrative Agent, as applicable, to identify each
Loan Party in accordance with the USA PATRIOT Act. The Borrower shall, promptly
following a request by the Administrative Agent or any Lender, provide all
documentation and other information that the Administrative Agent or such Lender
requests in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including the
USA PATRIOT Act.

SECTION 12.22 Reserved.

SECTION 12.23 No Advisory or Fiduciary Responsibility.

In connection with all aspects of each transaction contemplated hereby
(including in connection with any amendment, waiver or other modification hereof
or of any other Loan Document), each of the Borrower and Holdings acknowledges
and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the
arranging and other services regarding this Agreement provided by the Agents and
the Arrangers are arm’s-length commercial transactions between the Borrower,
Holdings and their respective Affiliates, on the one hand, and the Agents and
the Arrangers, on the other hand, (B) each of the Borrower and Holdings has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate, and (C) each of the Borrower and Holdings is capable
of evaluating, and understands and accepts, the terms, risks and conditions of
the transactions contemplated hereby and by the other Loan Documents;
(ii) (A) the Agents, the Arrangers and each Lender is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for the Borrower, Holdings or any of their respective Affiliates, or
any other Person and (B) none of the Agents, the Arrangers nor any

 

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Lender has any obligation to the Borrower, Holdings or any of their respective
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and
(iii) the Agents, the Arrangers, the Lender and their respective Affiliates may
be engaged in a broad range of transactions that involve interests that differ
from those of the Borrower, Holdings their respective Affiliates, and none of
the Agents, the Arrangers nor any Lender has any obligation to disclose any of
such interests to the Borrower, Holdings or any of their respective Affiliates.
To the fullest extent permitted by law, each of the Borrower and Holdings hereby
waives and releases any claims that it may have against the Agents, the
Arrangers nor any Lender with respect to any breach or alleged breach of agency
or fiduciary duty in connection with any aspect of any transaction contemplated
hereby.

SECTION 12.24 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the foregoing provisions of this
Section 12.24, if and to the extent that the enforceability of any provisions in
this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief
Laws, as determined in good faith by the Administrative Agent, the applicable
Issuer or the Swing Loan Lender, as applicable, then such provisions shall be
deemed to be in effect only to the extent not so limited.

SECTION 12.25 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent, each Issuer and each Lender, regardless of any
investigation made by the Administrative Agent, any Issuer or any Lender or on
their behalf and notwithstanding that the Administrative Agent, any Issuer or
any Lender may have had notice or knowledge of any Default at the time of any
Credit Extension, and shall continue in full force and effect as long as any
Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any
Letter of Credit shall remain outstanding.

SECTION 12.26 Lender Action. Each Lender agrees that it shall not take or
institute any actions or proceedings, judicial or otherwise, for any right or
remedy against any Loan Party under any of the Loan Documents or the Secured
Hedge Agreements (including the exercise of any right of set-off, rights on
account of any banker’s lien or similar claim or other rights of self-help), or
institute any actions or proceedings, or otherwise commence any remedial
procedures, with respect to any Collateral or any other property of any such
Loan Party, without the prior written consent of the Administrative Agent (which
shall not be withheld in contravention of Section 11.4). The provision of this
Section 12.26 are for the sole benefit of the Lenders and shall not afford any
right to, or constitute a defense available to, any Loan Party.

 

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SECTION 12.27 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If any Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest
contracted for, charged, or received by an Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable Law,
(a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

195

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

CHINOS ACQUISITION CORPORATION (which on the Effective Date shall be merged with
and into J. Crew Group, Inc., with J. Crew Group, Inc. surviving such merger as
the Borrower), By:  

/s/ Ronald Cami

  Name:   Ronald Cami   Title:   Vice President and Secretary CHINOS
INTERMEDIATE HOLDINGS B, INC., as Holdings, By:  

/s/ James Scully

  Name:   James Scully   Title:   Chief Administrative Officer and Chief
Financial Officer

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

The undersigned hereby confirms that, as a result of its merger with Chinos
Acquisition Corporation, it hereby assumes all of the rights and obligations of
Chinos Acquisition Corporation under this Agreement (in furtherance of, and not
in lieu of, any assumption or deemed assumption as a matter of law) and hereby
is joined to this Agreement as the Borrower thereunder. J. CREW GROUP, INC. By:
 

/s/ James Scully

  Name:   James Scully   Title:   Chief Administrative Officer and Chief
Financial Officer

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

BANK OF AMERICA, N.A., as Administrative Agent, By:  

/s/ Mark D. Twomey

  Name:   Mark D. Twomey   Title:   Senior Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

BANK OF AMERICA, N.A., as Swing Loan Lender, Issuer and a Lender, By:  

/s/ Mark D. Twomey

  Name:   Mark D. Twomey   Title:   Senior Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

HSBC Bank USA, N.A., as

Co-Documentation Agent and a Lender,

By:  

/s/ Brian Gingue

  Name:   Brian Gingue   Title:   Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

Mizuho Corporate Bank, Ltd., as a Lender, By:  

/s/ William Getz

  Name:   William Getz   Title:   Deputy General Manager

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

Sumitomo Mitsui Banking Corporation of Canada, as a Lender, By:  

/s/ Ming Chang

  Name:   Ming Chang   Title:   Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

TD Bank, N.A., as a Lender, By:  

/s/ Jeffrey Saperstein

  Name:   Jeffrey Saperstein   Title:   Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

U.S. Bank National Association, as a Lender, By:  

/s/ Christopher Fudge

  Name:   Christopher Fudge   Title:   Vice-President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

Wells Fargo Bank, National Association,

as a Lender,

By:  

/s/ Wai Yin Cheng

  Name:   Wai Yi Cheng   Title:   Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

SunTrust Bank, as a Lender, By:  

/s/ Jamie Hurley

  Name:   Jamie Hurley   Title:   Vice President

 

  [Signature Page]   J. Crew ABL Credit Agreement

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

Schedule I

Revolving Credit Commitments

 

Lender

   Revolving Loans  

Bank of America, N.A.

   $ 60,000,000   

Wells Fargo Bank, National Association

   $ 40,000,000   

HSBC Bank USA, National Association

   $ 37,500,000   

SunTrust Bank

   $ 37,500,000   

TD Bank, N.A.

   $ 25,000,000   

U.S. Bank National Association

   $ 25,000,000   

Sumitomo Mitsui Banking Corporation of Canada

   $ 15,000,000   

Mizuho Corporate Bank, LTD.

   $ 10,000,000            

Total

   $ 250,000,000            

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

Schedule II

Guarantors

J. Crew Operating Corp., a Delaware corporation

J. Crew Inc., a Delaware corporation

J. Crew International, Inc., a Delaware corporation

Grace Holmes, Inc., a Delaware corporation

H. F. D. No. 55, Inc., a Delaware corporation

Madewell Inc., a Delaware corporation

J. Crew Virginia, Inc., a Virginia corporation

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

Schedule 1.1A

Certain Security Interests and Guarantees

 

Obligation

  

Due Date

Mortgage:

  

a.       Real Property described in Title Commitment Number 11-00016041, located
at:

 

One Clifford Way

Arden, County of Buncombe, NC 28704

 

OR

 

One Clifford Way

Asheville, County of Buncombe, NC 28810

   90 days after the Effective Date

b.       J. Crew, Inc., One Ivy Crescent, Lynchburg, Virginia, 24506

   90 days after the Effective Date

Security Agreement dated of the Effective Date by and among the Loan Parties and
the Collateral Agent.

   On the Effective Date

Guaranty dated of the Effective Date by and among the Guarantors and the
Collateral Agent.

   On the Effective Date

Intercreditor Agreement dated as of the Effective Date by and among Holdings,
the Borrower, the Administrative Agent, the Collateral Agent and the Term
Facility Administrative Agent

   On the Effective Date

Intellectual Property Security Agreements (as defined in the Security
Agreement).

   On the Effective Date

 

1 precise address for this location could not be determined.

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

Schedule 1.1D

Mortgaged Properties

 

Entity of Record

  

Common Name and Address

Grace Holmes, Inc.   

Real Property described in Title Commitment Number 11-00016042 , located at:

 

One Clifford Way

Arden, County of Buncombe, NC 28704

 

OR

 

One Clifford Way

Asheville, County of Buncombe, NC 28810

J. Crew Inc.   

One Ivy Crescent, Lynchburg,

Virginia, 24506

 

2 precise address for this location could not be determined.

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Schedule 1.1E

Credit Card Agreements

 

1. Merchant Card Program Agreement, dated as of June 19, 2001, and Addendum to
the Merchant Card Program Agreement, dated as of August 7, 2001, each by and
between American Express Incentive Services, L.L.C., and J. Crew Group, Inc., as
may be further amended, restated, supplemented or otherwise modified.

 

2. Merchant Services Agreement, dated as of November 14, 1997, by and between
Novus Services, Inc. and J. Crew Group, Inc., as amended by letter agreement
dated June 12, 2009 by and between Discover Financial Services LLC and J. Crew
Group, Inc., as may be further amended, restated, supplemented or otherwise
modified.

 

3. Private Label Credit Card Program Agreement, dated October 29, 2004, by and
between World Financial Network National Bank and J. Crew Operating Corp., as
subsequently amended by the Amendment to Private Label Credit Card Program
Agreement, dated June 29, 2006, by and between World Financial Network National
Bank and J. Crew Operating Corp., as may be further amended, restated,
supplemented or otherwise modified.

 

4. Select Merchant Payment Card Processing Agreement, dated on or about
October 3, 2001, by and between Paymentech, LLC and J. Crew Inc., as
subsequently amended by the Amendment to Select Merchant Payment Card Processing
Agreement, dated April 26, 2007, by and between Paymentech, L.P. and Chase
Alliance Partners, L.P. and J. Crew Group, Inc., J. Crew Inc., J. Crew Operating
Corp. and Madewell Inc., as may be further amended, restated, supplemented or
otherwise modified.

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Schedule 1.1F

Existing Letters of Credit

See Attached Annex A.

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

J. Crew Group, Inc.

Existing Letters of Credit

As of February 17, 2011

 

 

   

Issuing Bank

  

Beneficiary

   L/C Number    LC Amount      Expiry Date   1   Wachovia    Liberty Mutual
Insurance    SM224597      2,916,000         2/28/12    2   Wachovia    National
Union Fire Insurance Co.    SM202997      1,365,125         12/22/11        
Total         4,281,125      

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

Schedule 5.11(a)

ERISA Compliance

None.

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

Schedule 5.12

Subsidiaries and Other Equity Investments

 

Current Legal Entities Owned

   Jurisdiction of
Organization   

Record Owner

   No. Shares/
Interest Owned
(Percentage
Owned)      Total Shares
Outstanding      Percent
Pledged     Stock
/Membership
Certificate No.

Chinos Acquisition Corporation

   Delaware    Chinos Intermediate Holdings B, Inc.      1,000 (100%)        
1,000         0 %    1

J. Crew Group, Inc.

   Delaware    Chinos Intermediate Holdings B, Inc. (after giving effect to the
Transaction)      1,000 (100%)         1,000         100 %    1

J. Crew Operating Corp.

   Delaware    J. Crew Group, Inc.      100 (100%)         100         100 %   
C1

J. Crew Inc.

   Delaware    J. Crew Operating Corp.      100 (100%)         100         100
%    2

Grace Holmes, Inc.

   Delaware    J. Crew Operating Corp.      10 (100%)         10         100 % 
  3

H.F.D. No. 55, Inc.

   Delaware    J. Crew Operating Corp.      10 (100%)         10         100 % 
  3

J. Crew Virginia, Inc.

   Virginia    J. Crew Operating Corp.      100 (100%)         100         100
%    1

Madewell Inc.

   Delaware    J. Crew Operating Corp.      10 (100%)         10         100 % 
  1

J. Crew International, Inc.

   Delaware    J. Crew Inc.      100 (100%)         100         100 %    3

C & W Outlet, Inc.

   New York    J. Crew Operating Corp.      100 (100%)         100         0 % 
  2

ERL, Inc.

   New Jersey    J. Crew, Inc.      100 (100%)         100         0 %    4

J. Crew Japan, Ltd

   Japan    J. Crew International, Inc.      60 (100%)3         60         0 % 
  Not Certificated

J. Crew Canada Inc.

   Ontario, Canada    J. Crew Operating Corp.      100 (100%)         100      
  65 %    C-2 (35 shares)

&

C-3 (65 shares)

 

3 Pursuant to a separate agreement, the units of J.Crew Japan, Ltd., have been
transferred to J. Crew International, Inc. but remain registered in the name of
Sasaki Accounting Co, Ltd., a Japanese accounting firm and Yoshiki Abe of Abe &
Matsutome, the Company’s Japanese law firm, in order to satisfy Japanese law
requirements.

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

Schedule 8.12

Deposit Accounts

 

Account Holder

  

Bank

   Account No.   

Type of Account

J. Crew Group, Inc.    Wachovia Bank, N.A. (as predecessor in interest to Wells
Fargo Bank, N.A.)    XXXXXXXXXXX    Concentration

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

Schedule 9.1(b)

Existing Liens

 

Loan Party

   File Type   

Secured Party

Name

   Jurisdiction    Filing
Date    Filing Number    Collateral J. Crew Group, Inc.    UCC    CCA Financial,
LLC    Delaware    11/9/05    5347827 9    Equipment lease J. Crew Group, Inc.
   UCC    Tech Conveyor, Inc.    Delaware    11/26/07    2007 4454038   
Equipment lease J. Crew Group, Inc.    UCC    Key Equipment Finance Inc.   
Delaware    9/17/08    2008 3145271    Equipment lease J. Crew Group, Inc.   
UCC    Tygris Vendor Finance, Inc.    Delaware    4/20/09    2009 1245940   
Equipment lease J. Crew Group, Inc.    UCC    Tygris Vendor Finance, Inc.   
Delaware    10/30/09    2009 3491104    Equipment lease J. Crew Operating Corp.
   UCC    Tech Conveyor, Inc.    Delaware    11/26/07    2007 4454038   
Equipment lease J. Crew Inc.    UCC    NCR Corporation    Delaware    5/31/07   
2007 2038734    Equipment lease J. Crew Inc.    UCC    Ikon Financial Svcs   
Delaware    9/5/07    2007 3362927    Equipment lease J. Crew Inc.    UCC   
Tech Conveyor, Inc.    Delaware    11/26/07    2007 4454038    Equipment lease
J. Crew Inc.    UCC    Ikon Financial Svcs    Delaware    8/28/08    2008
2927232    Equipment lease J. Crew Inc.    UCC    Ikon Financial Svcs   
Delaware    8/28/08    2008 2927240    Equipment lease J. Crew Inc.    UCC   
Ikon Financial Svcs    Delaware    9/13/08    2008 3106265    Equipment lease J.
Crew Inc.    UCC    IOS Capital    New Jersey    2/23/05    22839817   
Equipment lease J. Crew Inc.    UCC    Tech Conveyor, Inc.    New Jersey   
11/26/07    24463164    Equipment lease

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

Schedule 9.2(f)

Existing Investments

Investments listed on Schedule 5.12.

Investment Accounts:

 

Account Holder

  

Broker

  

Account No.

  

Type of Investment

J. Crew Operating Corp.    Wells Fargo    XXXXXXXX    Securities Account J. Crew
Group, Inc.    Citibank    XXX-XXXXX-XX XX    Securities Account J. Crew
Operating Corp.    Bank of America    XXXXXXXX    Securities Account J. Crew
Group, Inc.    JP Morgan Chase    XXX-XXXXXXX    Securities Account

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

Schedule 9.3(b)

Existing Indebtedness

 

1. Demand Documentary Credit Facilities, dated October 31, 2007 (as amended on
July 8, 2008, on July 13, 2009 and on July 5, 2010), between J. Crew Operating
Corp. and the Hong Kong and Shanghai Banking Corporation, Hong Kong SAR.

 

2. Liabilities not exceeding $209,017,935.004 to former shareholders of the
Borrower in respect of the exercise of appraisal rights in connection with the
Merger.

 

4 Amount reflects $43.50 multiplied by the number of shares held by such
shareholders.

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

Schedule 9.8

Transactions with Affiliates

 

1. Trademark License Agreement, dated as of October 20, 2005, by and among the
Company, Millard S. Drexler and Millard S. Drexler, Inc.

 

2. Arrangement pursuant to which the Company charters the use of Millard S.
Drexler’s private aircraft from time to time for certain costs.

 

3. Management Stockholders Agreement, dated as of the Effective Date, by and
among Chinos Holdings, Inc., Chinos Acquisition Corporation, the Sponsors,
Millard S. Drexler and related trusts party thereto and certain members of
management party thereto.

 

4. Principal Investors Stockholders Agreement, dated as of the Effective Date,
by and among Chinos Holdings, Inc., Chinos Acquisition Corporation, the
Sponsors, Millard S. Drexler and related trusts party thereto and the other
stockholders party thereto.

 

5. Certain legal expenses of Millard S. Drexler incurred in connection with work
directly related to the Company’s business are reimbursed by the Company.

 

6. Employment Agreement of Millard S. Drexler by and among Chinos Holdings,
Inc., J. Crew Operating Corp. and Millard S. Drexler.

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

Schedule 9.9

Burdensome Agreements

None.

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

Schedule 12.8

Administrative Agent’s Office, Certain Addresses for Notices

HOLDINGS OR THE BORROWER:

J. Crew Group, Inc.

770 Broadway

New York, NY 10003

Attention: XXXXXXXX

Telephone: XXXXXXXX

Telecopier: XXXXXXXX

Website for posting documents: www.jcrew.com

With a copy to:

Ropes & Gray, LLP

1211 Avenue of the Americas

New York, NY 10036

Attention: XXXXXXXX

Telephone: XXXXXXXX

Telecopier: XXXXXXXX

Email: XXXXXXXX

ADMINISTRATIVE AGENT:

Bank of America

100 Federal Street

Boston, MA 02110

Attention: XXXXXXXX

Telephone: XXXXXXXX

Telecopier: XXXXXXXX

Email: XXXXXXXX

L/C ISSUER:

Bank of America

100 Federal Street

Boston, MA 02110

Attention: XXXXXXXX

Telephone: XXXXXXXX

Telecopier: XXXXXXXX

Email: XXXXXXXX

SWING LOAN LENDER:

Bank of America

100 Federal Street

Boston, MA 02110

Attention: XXXXXXXX

Telephone: XXXXXXXX

Telecopier: XXXXXXXX

Email: XXXXXXXX

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

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]1 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]2 Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]3 hereunder are several and not joint.]4
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by the Assignee. The Standard Terms
and Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the respective facilities identified below (including, without limitation,
the Letters of Credit and the Swing Loans included in such facilities5) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of [the Assignor (in its capacity as
a Lender)][the respective Assignors (in their respective capacities as Lenders)]
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned by [the][any]
Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being
referred to herein collectively as [the][an] “Assigned Interest”). Each such
sale and assignment is without recourse to [the][any] Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by [the][any] Assignor.

 

 

1

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

2

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

3

Select as appropriate.

4

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

5

Include all applicable subfacilities.

 

      A-1    Form of Assignment and Assumption

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

1. Assignor[s]:                             

 

2. Assignee[s]:                             

    ____________

[for each Assignee identify Lender]

 

3. Borrower : J. Crew Group, Inc.

 

4. Administrative Agent: Bank of America, N.A., including any successor thereto,
as the administrative agent under the Credit Agreement

 

5. Credit Agreement: The Credit Agreement, dated as of March [__], 2011, among
Chinos Acquisition Corporation, a Delaware corporation (which on the Effective
Date shall be merged with and into J. Crew Group, Inc., a Delaware corporation
(the “Company”), with the Company surviving such merger as the Borrower (the
“Borrower”)), Chinos Intermediate Holdings B, Inc., a Delaware corporation, the
Lenders and Issuers from time to time party thereto, and Bank of America, N.A.,
as Administrative Agent and Collateral Agent.

 

6. Assigned Interest:

 

Assignor[s]6

   Assignee[s]7      Facility
Assigned8      Aggregate
Amount of
Revolving Credit
Commitment/Loans
for all Lenders9      Amount of
Revolving
Credit
Commitment/Loans
Assigned      Percentage
Assigned of
Revolving Credit
Commitment/
Loans10     CUSIP
Number            $ ________________       $ _________         ____________ %   
         $ ________________       $ _________         ____________ %            
$ ________________       $ _________         ____________ %   

 

6

List each Assignor, as appropriate.

7

List each Assignee, as appropriate.

8

Fill in the appropriate terminology for the types of facilities under the Credit
Agreement that are being assigned under this Assignment and Assumption (e.g.,
“Revolving Credit Commitments,” “Extended Revolving Credit Agreements,” etc.).

9

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

10

Set forth, to at least 9 decimals, as a percentage of the Revolving Credit
Commitment/Loans of all Lenders thereunder.

 

      A-2    Form of Assignment and Assumption

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

[7.

Trade Date:             ]11

Effective Date:             , 20     [TO BE INSERTED BY THE ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

 

11

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

 

      A-3    Form of Assignment and Assumption

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

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:           Name:     Title:  

 

ASSIGNEE [NAME OF ASSIGNEE] By:           Name:     Title:  

 

[Consented to and]12 Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

By:       Name:     Title:  

 

[Consented to: [            ] By:       Name:     Title:    ]13  

 

12

To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

13

To be added only if the consent of the Borrower and/or other parties (e.g. Swing
Loan Lender, Issuer) is required by the terms of the Credit Agreement.

 

      A-4    Form of Assignment and Assumption

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

ANNEX 1

TO ASSIGNMENT AND ASSUMPTION

Credit Agreement, dated as of March [    ], 2011, among Chinos Acquisition
Corporation, (which on the Effective Date shall be merged with and into J. Crew
Group, Inc. (the “Company”), with the Company surviving such merger as the
Borrower (the “Borrower”)), Chinos Intermediate Holdings B, Inc. (“Holdings”),
the Lenders and Issuers from time to time party thereto, and Bank of America,
N.A., as Administrative Agent and Collateral Agent

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][[the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under Section 12.2(b)(iii) and
(v) of the Credit Agreement (subject to such consents, if any, as may be
required under Section 12.2(b)(iii) of the Credit Agreement), (iii) from and
after the Effective Date referred to in this Assignment and Assumption, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to
decisions to acquire assets of the type represented by [the][such] Assigned
Interest and either it, or the Person exercising discretion in making its
decision to acquire [the][such] Assigned Interest, is experienced in acquiring
assets of such type, (v) it has received a copy of the Credit Agreement, and has
received or has been accorded the opportunity to receive copies of the most
recent financial statements delivered pursuant to Section 7.1(a) and
(b) thereof, as applicable, and such other documents and information as it deems
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment

 

      A-5    Form of Assignment and Assumption

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

and Assumption and to purchase [the][such] Assigned Interest and (vii) attached
hereto is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, including but not limited to any documentation required
pursuant to Section 3.01 of the Credit Agreement, duly completed and executed by
[the][such] Assignee; and (b) agrees that (i) it will, independently and without
reliance upon the Administrative Agent, [the][any] Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the][the relevant] Assignee for amounts which have accrued from and after
the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which together shall
constitute one instrument. Delivery of an executed counterpart of a signature
page of this Assignment and Assumption by telecopy or other electronic imaging
means shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by,
and construed in accordance with, the law of the State of New York.

 

      A-6    Form of Assignment and Assumption

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

EXHIBIT B

FORM OF REVOLVING CREDIT NOTE

 

$            .00                     , 20    

FOR VALUE RECEIVED, the undersigned (the “Borrower”, together with all
successors and assigns), promises to pay              (hereinafter, together
with its successors in title and assigns, the “Lender”), the principal sum of
             DOLLARS ($            .00), or, if less, the aggregate unpaid
principal balance of Revolving Loans made by the Lender to or for the account of
the Borrower pursuant to the Credit Agreement (as hereafter defined) and amounts
advanced by the Lender in respect of any Letter of Credit, with interest, fees,
expenses and costs at the rate and payable in the manner stated in the Credit
Agreement. As used herein, the “Credit Agreement” means and refers to that
certain Credit Agreement, dated as of March 7, 2011 (as such may be amended,
restated, extended, supplemented or otherwise modified from time to time) by and
among CHINOS ACQUISITION CORPORATION, a Delaware corporation (which on the
Effective Date shall be merged with and into J. CREW GROUP, INC., a Delaware
corporation (the “Company”), with the Company surviving such merger as the
Borrower), CHINOS INTERMEDIATE HOLDINGS B, INC., a Delaware corporation, BANK OF
AMERICA, N.A., as administrative agent (in such capacity, including any
successor thereto, the “Administrative Agent”) and as collateral agent under the
Loan Documents, and each Lender and Issuer from time to time party thereto.
Capitalized terms used herein and not otherwise defined herein are used herein
as defined in the Credit Agreement.

This is a “Revolving Credit Note” to which reference is made in the Credit
Agreement and is subject to all terms and provisions thereof. This Revolving
Credit Note is also entitled to the benefits of the Guaranty and is secured by
the Collateral. The principal of, and interest on, this Revolving Credit Note
shall be payable at the times, in the manner, and in the amounts as provided in
the Credit Agreement and shall be subject to prepayment and acceleration as
provided therein. The Administrative Agent’s books and records concerning the
Revolving Credit Loans and amounts owing in respect of Letters of Credit, the
accrual of interest and fees thereon, and the repayment of such Revolving Loans
and Letters of Credit, shall be prima facie evidence of the indebtedness to the
Lender hereunder, absent manifest error.

No delay or omission by the Administrative Agent or the Lender in exercising or
enforcing any of the Administrative Agents’ or Lender’s powers, rights,
privileges, remedies, or discretions hereunder shall operate as a waiver thereof
on that occasion nor on any other occasion. No waiver of any Event of Default
shall operate as a waiver of any other Event of Default, nor as a continuing
waiver.

 

B-1

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

The Borrower waives presentment, demand, notice, and protest, and also waives
any delay on the part of the holder hereof. The Borrower assents to any
extension or other indulgence (including, without limitation, the release or
substitution of Collateral) permitted by the Administrative Agent and/or the
Lender with respect to this Revolving Credit Note and/or any Collateral Document
or any extension or other indulgence with respect to any other liability or any
collateral given to secure any other liability of the Borrower or any other
Person obligated on account of this Revolving Credit Note.

This Revolving Credit Note shall be binding upon the Borrower and upon their
respective successors, assigns, and representatives, and shall inure to the
benefit of the Lender and its successors, endorsees and assigns.

The Borrower agrees that any action or proceeding arising out of or relating to
this Revolving Credit Note or for recognition or enforcement of any judgment,
may be brought in the courts of the state of New York sitting in New York City
in the Borough of Manhattan or of the United States for the Southern District of
New York, and any appellate court from any thereof, and by execution and
delivery of this Revolving Credit Note, the Borrower and the Lender each
consent, for itself and in respect of its property, to the exclusive
jurisdiction of those courts. To the fullest extent permitted by applicable law,
the Borrower irrevocably waives any objection, including any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any action or proceeding in the courts
of the state of New York sitting in New York City in the Borough of Manhattan or
of the United States for the Southern District of New York, and any appellate
court from any thereof.

THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

The Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Administrative Agent and the Lender, in
the establishment and maintenance of their respective relationship with the
Borrower contemplated by this Revolving Credit Note, are each relying thereon.
THE BORROWER, AND THE LENDER BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS REVOLVING CREDIT NOTE OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY).

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note to be
duly executed and delivered by its duly authorized officer as of the date first
above written.

 

B-2

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

J. CREW GROUP, INC. By:     Name:   Title:  

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

LOANS AND PAYMENTS

 

Date

  

Amount of
Loan

  

Maturity

Date

  

Payments of

Principal/Interest

  

Principal

Balance of

Note

  

Name of

Person

Making this

Notation

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

EXHIBIT C

FORM OF NOTICE OF BORROWING

                 ,             

Bank of America, N.A.,

  as Administrative Agent under the

  Credit Agreement referred to below

100 Federal Street

Boston, MA 02110

(617) 434-9136

Attention: Mark D. Twomey

Re:   J. CREW

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as the same may be amended, restated, extended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among CHINOS ACQUISITION
CORPORATION, a Delaware corporation (which on the Effective Date shall be merged
with and into J. CREW GROUP, INC., a Delaware corporation (the “Company”), with
the Company surviving such merger as the Borrower (the “Borrower”)), CHINOS
INTERMEDIATE HOLDINGS B, INC., a Delaware corporation, BANK OF AMERICA, N.A., as
administrative agent (in such capacity, including any successor thereto, the
“Administrative Agent”) and as collateral agent under the Loan Documents, and
each Lender and Issuer from time to time party thereto. Capitalized terms used
herein and not otherwise defined herein are used herein as defined in the Credit
Agreement.

The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.2 of
the Credit Agreement that the undersigned hereby requests a Borrowing under the
Credit Agreement and, in connection therewith, sets forth below the information
relating to the Borrowing (the “Proposed Borrowing”) as required by Section 2.2
of the Credit Agreement:

(a) The date of the Proposed Borrowing is                  ,             (the
“Funding Date”).

(b) The aggregate amount of the Borrowing is [$] [€] [CAD]             .

(c) [$] [€] [CAD]             of the Borrowing shall be of [Base Rate Loans]
[Canadian Prime Rate Loans] [Eurocurrency Rate Loans] and/or [BA Rate Loans].

(d) For Eurocurrency Rate Loan or BA Rate Loan: with an Interest Period of
             months (such Interest Period to comply with the provisions of the
definition of “Interest Period”).

(e) The Class of the Borrowing shall be             .

(f) The Borrowing shall be denominated in [Dollars] [Canadian Dollars] [Euros].

 

C-1

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

(g) [Borrower represents and warrants that the Borrower and its Subsidiaries
(taken as a whole) are Solvent after giving effect to such Borrowing and the use
proceeds thereof.]1

The undersigned hereby represents and warrants that the conditions set forth in
Section 4.2(b) of the Credit Agreement shall be satisfied on the Funding Date
both immediately before and immediately after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom.

[Remainder of page intentionally left blank]

 

 

1

For any Borrowing the proceeds of which shall be used to fund a Restricted
Payment subject to the satisfaction of the RP Conditions.

 

C-2

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

J. CREW GROUP, INC. By:     Name:   Title:  

 

[SIGNATURE PAGE TO NOTICE OF BORROWING]

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

EXHIBIT D

FORM OF SWING LOAN REQUEST

                 ,             

Bank of America, N.A.,

  as Administrative Agent under the

  Credit Agreement referred to below

100 Federal Street

Boston, MA 02110

(617) 434-9136

Attention: Mark D. Twomey

Re:   J. CREW

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as the same may be amended, restated, extended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among CHINOS ACQUISITION
CORPORATION, a Delaware corporation (which on the Effective Date shall be merged
with and into J. CREW GROUP, INC., a Delaware corporation (the “Company”), with
the Company surviving such merger as the Borrower (the “Borrower”)), CHINOS
INTERMEDIATE HOLDINGS B, INC., a Delaware corporation, BANK OF AMERICA, N.A., as
administrative agent (in such capacity, including any successor thereto, the
“Administrative Agent”) and as collateral agent under the Loan Documents, and
each Lender and Issuer from time to time party thereto. Capitalized terms used
herein and not otherwise defined herein are used herein as defined in the Credit
Agreement.

The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.3 of
the Credit Agreement that the undersigned hereby requests that the Swing Loan
Lender make Swing Loans available to the Borrower under the Credit Agreement
and, in that connection therewith, sets forth below the information relating to
such Swing Loans (the “Proposed Advance”) as required by Section 2.3 of the
Credit Agreement:

(a) The date of the Proposed Advance                  ,             (the
“Funding Date”).

(b) The aggregate amount of the Proposed Advance is $            .

The undersigned hereby represents and warrants that the conditions set forth in
Section 4.2(b) of the Credit Agreement shall be satisfied on the Funding Date
both immediately before and immediately after giving effect to the Proposed
Advance and to the application of the proceeds therefrom.

[Remainder of page intentionally left blank]

 

D-1

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

J. CREW GROUP, INC. By:     Name:   Title:  

 

[SIGNATURE PAGE TO SWING LOAN REQUEST]

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

EXHIBIT E

FORM OF LETTER OF CREDIT REQUEST

                 ,             

[Name of Issuer], as an Issuer

  under the Credit Agreement referred

  to below

Bank of America, N.A.,

  as Administrative Agent under the

  Credit Agreement referred to below

100 Federal Street

Boston, MA 02110

(617) 434-9136

Attention: Mark D. Twomey

Re:   J. CREW

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as the same may be amended, restated, extended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among CHINOS ACQUISITION
CORPORATION, a Delaware corporation (which on the Effective Date shall be merged
with and into J. CREW GROUP, INC., a Delaware corporation (the “Company”), with
the Company surviving such merger as the Borrower (the “Borrower”)), CHINOS
INTERMEDIATE HOLDINGS B, INC., a Delaware corporation, BANK OF AMERICA, N.A., as
administrative agent (in such capacity, including any successor thereto, the
“Administrative Agent”) and as collateral agent under the Loan Documents, and
each lender from time to time party thereto. Capitalized terms used herein and
not otherwise defined herein are used herein as defined in the Credit Agreement.

The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.4 of
the Credit Agreement that the undersigned requests the issuance of a Letter of
Credit by [Name of Issuer] in the form of a [standby] [documentary] letter of
credit [for its own account] [for the account of a Restricted Subsidiary of the
Borrower] [for the benefit of [Name of Beneficiary]], in the amount of [$] [€]
[CAD][            ] to be issued on                  ,             (the “Issue
Date”) and having an expiration date of                  ,             .

The undersigned hereby represents and warrants that the conditions set forth in
Section 4.2(b) of the Credit Agreement shall be satisfied on the Issue Date both
immediately before and immediately after the proposed issuance.

[Remainder of page intentionally left blank]

 

E-1

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

J. CREW GROUP, INC. By:     Name:   Title:  

 

[SIGNATURE PAGE TO LETTER OF CREDIT REQUEST]

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

EXHIBIT F

FORM OF NOTICE OF CONVERSION OR CONTINUATION

                 ,             

Bank of America, N.A.,

  as Administrative Agent under the

  Credit Agreement referred to below

100 Federal Street

Boston, MA 02110

(617) 434-9136

Attention: Mark D. Twomey

Re:   J. CREW

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among CHINOS ACQUISITION CORPORATION, a
Delaware corporation (which on the Effective Date shall be merged with and into
J. CREW GROUP, INC., a Delaware corporation (the “Company”), with the Company
surviving such merger as the Borrower (the “Borrower”)), CHINOS INTERMEDIATE
HOLDINGS B, INC., a Delaware corporation, BANK OF AMERICA, N.A., as
administrative agent (in such capacity, including any successor thereto, the
“Administrative Agent”) and as collateral agent under the Loan Documents, and
each Lender and Issuer from time to time party thereto. Capitalized terms used
herein and not otherwise defined herein are used herein as defined in the Credit
Agreement.

The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.11 of
the Credit Agreement that the undersigned hereby requests a [conversion on
                 ,             ] [continuation] of [$] [€] [CAD]              in
principal amount of presently outstanding Revolving Loans that are [Base Rate
Loans] [Canadian Prime Rate Loans] [Eurocurrency Rate Loan] [BA Rate Loans]
having an Interest Period ending on                  ,              [to] [as]
[Base Rate] [Canadian Prime Rate] [Eurocurrency Rate] [BA Rate Loans] Loans. The
Interest Period for such amount requested to be converted to or continued as
[Eurocurrency Rate Loans] [BA Rate Loans] is              month[s]).

[Remainder of page intentionally left blank]

 

F-1

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

In connection herewith, the undersigned has executed this notice as of the date
first set forth above.

 

J. CREW GROUP, INC. By:     Name:   Title:  

 

F-2

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

EXHIBIT G

FORM OF LEGAL OPINION OF ROPES & GRAY LLP

[To be provided under separate cover]

 

G-1    Form of Opinion

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

Exhibit G

March 7, 2011

To the Agent and each Lender party to

the Credit Agreement referred to below

Ladies and Gentlemen:

This opinion is being furnished to you pursuant to the Credit Agreement, dated
as of March 7, 2011 (the “Credit Agreement”), among Chinos Acquisition
Corporation, a Delaware corporation (“Merger Sub”) (which on the Effective Date
shall be merged with and into J. Crew Group, Inc., a Delaware corporation (the
“Company”), with the Company surviving such merger and succeeding to the rights
and obligations of Merger Sub as the Borrower (as defined therein) under the
Credit Agreement), Chinos Intermediate Holdings B, Inc., a Delaware corporation
(“Holdings”), the Lenders from time to time party thereto, Bank of America,
N.A., as Administrative Agent and Collateral Agent (in such capacities, the
“Agent”), HSBC Bank USA, N.A., Suntrust Bank and Wells Fargo Capital Finance,
LLC, as Co-Documentation Agents, and the other agents named therein, in
connection with the closing held this day under the Credit Agreement. We have
attended today the closing under the Credit Agreement and the closing of the
Merger. Our opinions set forth herein with respect to Merger Sub are made prior
to the consummation of the Merger and our opinions set forth herein with respect
to the Loan Parties (as defined below) (other than Merger Sub) are made
immediately following the consummation of the Merger. Unless otherwise defined
herein, capitalized terms used herein have the meanings set forth in the Credit
Agreement.

We have acted as counsel to the Loan Parties (as defined below) in connection
with the Credit Documents (as defined below) being executed and delivered on the
date hereof. The Subsidiaries of the Company listed on Schedule 1 hereto are
referred to herein as the “Delaware Guarantors” and the Subsidiary of the
Company listed on Schedule 2 hereto is referred to herein as the “Other
Guarantor.” Holdings and the Delaware Guarantors are referred to herein as the
“Covered Guarantors.” Merger Sub, the Company, the Covered Guarantors and the
Other Guarantor are referred to herein collectively as the “Loan Parties.”

In connection with this opinion, we have examined the following documents:

 

  (a) the Credit Agreement;

 

  (b) the Revolving Credit Notes being delivered on the date hereof;

 

  (c) the Intercreditor Agreement, dated as of the date hereof, by and among the
ABL Agent (as defined therein) and the Term Agent (as defined therein) and
acknowledged by the Loan Parties;

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

 

The Agent, et al.   

- 2 -

 

  (d) the Guaranty, dated as of the date hereof, by and among Holdings, the
other Guarantors (as defined therein) and the Agent (the “Guaranty”);

 

  (e) the Security Agreement, dated as of the date hereof, by and among Merger
Sub, the Company, Holdings, the Subsidiary Guarantors (as defined therein) and
Agent (the “Security Agreement”);

 

  (f) the Trademark Security Agreement, dated as of the date hereof, by J. Crew
International, Inc. in favor of the Agent;

 

  (g) the Trademark Security Agreement, dated as of the date hereof, by Madewell
Inc. in favor of the Agent;

 

  (h) the Copyright Security Agreement, dated as of the date hereof, by J. Crew
Inc. in favor of the Agent;

 

  (i) the Copyright Security Agreement, dated as of the date hereof, by J. Crew
International, Inc. in favor of the Agent;

 

  (j) the Copyright Security Agreement, dated as of the date hereof, by Madewell
Inc. in favor of the Agent;

 

  (k) the Deposit Account Control Agreement listed on Schedule 6 hereto (the
“Deposit Account Control Agreement”); and

 

  (l) each Securities Account Control Agreement listed on Schedule 7 hereto
(collectively, the “Securities Account Control Agreements”).

The agreements referred to in clauses (a) through (l) above are referred to
herein collectively as the “Credit Documents”. The agreements referred to in
clauses (e) through (l) above are referred to herein collectively as the
“Collateral Documents”. The agreements referred to in clauses (k) and (l) above
are referred to herein collectively as the “Control Agreements”.

We have examined such certificates, documents and records and have made such
investigation of fact and such examination of law as we have deemed appropriate
in order to enable us to render the opinions set forth herein. In conducting
such investigation, we have relied, without independent verification, upon
certificates of officers of the Loan Parties and one or more of their
Subsidiaries, public officials and other appropriate Persons, and on the
covenants as to the application of proceeds contained in the Credit Documents.

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

 

The Agent, et al.   

- 3 -

 

In rendering the opinions set forth below, we have assumed that the Other
Guarantor (a) is validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has the power to execute and deliver each of
the Credit Documents to which it is a party and to perform its obligations
thereunder and (c) has duly authorized, executed and delivered each of the
Credit Documents to which it is a party.

The opinions expressed herein are limited to matters governed by the laws of the
State of New York, the General Corporation Law of the State of Delaware, and the
federal laws of the United States of America (collectively, the “Covered Laws”),
and in the case of paragraph 10 below, Article 9 of the Delaware Uniform
Commercial Code (“Delaware Article 9”).

Based upon and subject to the foregoing and subject to the additional
qualifications set forth below, we are of the opinion that:

1. Each of Merger Sub, the Company and the Covered Guarantors (a) is a
corporation validly existing and in good standing under the laws of the State of
Delaware and (b) has the corporate power to execute, deliver and perform its
obligations under each of the Credit Documents to which it is a party.

2. Each of Merger Sub, the Company and the Covered Guarantors has duly
authorized, executed and delivered each of the Credit Documents to which it is a
party.

3. Each of the Credit Documents constitutes the valid and binding obligation of
each of the Loan Parties party thereto and is enforceable against each such Loan
Party in accordance with its terms.

4. The execution and delivery by each of Merger Sub, the Company and the Covered
Guarantors of the Credit Documents to which such Person is a party and the
performance by such Person of its obligations thereunder will not violate or
require the repurchase of securities under the charter or by-laws of such
Person. The execution and delivery by each Loan Party of the Credit Documents to
which such Person is party and the performance by such Person of its obligations
thereunder (a) will not violate any Covered Laws and (b) will not result in a
breach or violation of, or constitute a default under, any of the agreements,
instruments, court orders, judgments or decrees listed on Schedule 3 hereto.

5. Except as may be required in order to perfect the Liens contemplated by the
Collateral Documents and the Mortgages, under the Covered Laws, no consent,
approval, license or exemption by, or order or authorization of, or filing,
recording or registration with, any governmental authority is required to be
obtained by any of the Loan Parties in connection with the execution and
delivery of the Credit Documents to which such Person is party or the
performance by such Person of its obligations thereunder.

6. We are not representing any of the Loan Parties in any pending litigation in
which it is a named defendant that challenges the validity or enforceability of,
or seeks to enjoin the performance of, the Credit Documents.

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The Agent, et al.   

- 4 -

 

7. None of the Loan Parties is required to be registered as an “investment
company” under the Investment Company Act of 1940, as amended.

8. Neither the making of the loans under the Credit Agreement, nor the
application of the proceeds thereof on the date hereof as provided in the Credit
Agreement, will violate Regulations T, U or X of the Board of Governors of the
Federal Reserve System.

9. The Security Agreement creates a valid security interest in favor of the
Agent for the benefit of the Secured Parties in the Collateral described therein
to the extent that a security interest in such Collateral can be created under
Article 9 of the New York Uniform Commercial Code (“New York Article 9”).

10. Upon the proper filing of the financing statements attached as Schedule 4 in
the office of the Secretary of State of Delaware (the “Delaware Filing Office”),
the security interests in the Collateral granted under the Security Agreement by
each of the Loan Parties organized in the State of Delaware will be perfected to
the extent a security interest in such Collateral can be perfected under
Delaware Article 9 by the filing of a financing statement in the Delaware Filing
Office.

11. Assuming the delivery to and continued possession by the Term Facility
Administrative Agent, for the benefit of the ABL Secured Parties (as defined in
the Intercreditor Agreement) in accordance with the Intercreditor Agreement, in
the State of New York of the certificates representing the Pledged Equity listed
on Schedule 5 and the related stock powers and assuming that none of the Agent,
the Term Facility Administrative Agent nor the Secured Parties (as defined in
the Intercreditor Agreement) have “notice of an adverse claim” (as defined in
Section 8-105 of the New York Uniform Commercial Code) with respect to such
Pledged Equity at the time such Pledged Equity is delivered to the Term Facility
Administrative Agent, for the benefit of the ABL Secured Parties, and except for
the security interests in such Pledged Equity created in favor of the Term
Secured Parties (as defined in the Intercreditor Agreement), the respective
security interests in such Pledged Equity created in favor of the Term Facility
Administrative Agent for the benefit of the Secured Parties under the Security
Agreement constitute perfected security interests in such Pledged Equity, free
of any adverse claim (within the meaning of Section 8-303 of the New York
Uniform Commercial Code).

12. Assuming that (i) the Deposit Account Control Agreement has been duly
authorized, executed and delivered by the Agent and each bank party thereto,
(ii) each such bank is a “bank” (as defined in Section 9-102(8) of the New York
Uniform Commercial Code) and (iii) each Collateral Account (as defined in the
Deposit Account Control Agreement) is a “deposit account” (as defined in
Section 9-102(29) of the New York Uniform Commercial Code), the security
interest in each such Collateral Account granted in favor of the Agent for the
benefit of the Secured Parties under the Security Agreement constitutes a
perfected security interest.

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The Agent, et al.   

- 5 -

 

13. Assuming that (i) each Securities Account Control Agreement has been duly
authorized, executed and delivered by the Agent and the securities intermediary
party thereto, (ii) in respect of such Securities Account Control Agreement, the
securities intermediary party thereto is a “securities intermediary” (as defined
in Section 8-102(14) of the New York Uniform Commercial Code) and (iii) in
respect of such Securities Account Control Agreement, the Collateral Account or
Securities Account (as applicable, and in each case as defined in the applicable
Securities Account Control Agreement) is a “securities account” (as defined in
Section 8-501 of the New York Uniform Commercial Code), the security interest in
each such Collateral Account or Securities Account granted in favor of the Agent
for the benefit of the Secured Parties under the Security Agreement constitutes
a perfected security interest.

Our opinion that each of the Credit Documents constitutes the valid and binding
obligation of each of the Loan Parties party thereto, enforceable against each
such Loan Party in accordance with its terms, is subject to (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other laws of
general application affecting the rights and remedies of creditors and secured
parties and (ii) general principles of equity. Our opinions set forth herein are
also subject to the effects of the possible judicial application of foreign laws
or foreign governmental or judicial action affecting creditors’ rights.

We express no opinion with respect to the applicability of Section 548 of the
federal Bankruptcy Code or any comparable provision of state law or the
enforceability of the provisions contained in Section 2.03(a) of the Guaranty
which purport to limit the obligations of any Guarantor thereunder or the effect
of the unenforceability of such provisions on the enforceability of the
Guaranty.

The opinions expressed herein are subject to the qualification that the
enforceability of provisions in the Credit Documents providing for
indemnification or contribution may be limited by public policy considerations.
In addition, we express no opinion as to (i) the extent to which broadly worded
waivers, waivers of rights to damages, offset or defenses, waivers of statutory,
regulatory or constitutional rights, conclusive presumptions or determinations
or powers of attorney may be enforced or (ii) the enforceability of any
provision which provides for a right of setoff without notice or by an affiliate
of a lender or a purchaser of a participation in the loans or other extensions
of credit under the Credit Documents or which is determined to constitute a
penalty or forfeiture, which provides for an agreement that any claim will be
brought only in the courts of a particular jurisdiction or which provides for
judgment currency. In connection with the provisions of the Credit Documents
whereby the parties submit to the jurisdiction of the courts of the United
States of America located in the State of New York, we note the limitations of
28 U.S.C. §§ 1331 and 1332 on subject matter jurisdiction of the federal courts.

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

 

The Agent, et al.   

- 6 -

 

In addition, certain provisions contained in the Collateral Documents may be
unenforceable in whole or in part but the inclusion of such provisions in the
Collateral Documents does not affect the validity of any of the other provisions
thereof, and the remaining provisions of the Collateral Documents are sufficient
for the practical realization of the benefits intended to be provided thereby.

We express no opinion as to the existence of, or as to the title of any Person
who has granted a security interest in any Collateral to, any item of Collateral
or (except to the extent set forth in paragraph 11 above) as to the priority or
(except to the extent set forth in paragraphs 10 through 13 above) the
perfection of any security interest in the Collateral or which law governs the
perfection or priority of a security interest. We express no opinion with
respect to (a) security interests in any commercial tort claims or (b) the
extent to which the grant (or purported grant) of a security interest in any
asset subject to a legal or contractual restriction on the creation, attachment,
perfection or enforcement of a security interest in such asset is effective or
violates any agreement to which any Loan Party is a party, except to the extent
such restriction is rendered ineffective by Section 9-406, 9-407, 9-408 or 9-409
of New York Article 9. We express no opinion as to any Account Agreement,
Account Documentation or account agreement (in each case, (x) other than the
Control Agreements and (y) as defined or used in the applicable Control
Agreement).

We call your attention to the fact that your security interest in certain
Collateral described in the Security Agreement may not be able to be perfected
by the filing of financing statements and that under certain circumstances, the
filings referred to in paragraph 10 may become ineffective as a result of
changes occurring after the date hereof and will terminate after five years
after the original filing date unless appropriate continuation statements are
duly filed. In addition, Section 552 of the Bankruptcy Code limits the extent to
which property acquired by a debtor after the commencement of a case under the
Bankruptcy Code may be subject to a lien resulting from any security agreement
entered into by the debtor before the commencement of the case.

This opinion is being furnished only to the addressees and is solely for their
benefit and the benefit of their assignees who become Lenders under the Credit
Agreement. This opinion may not be relied upon for any other purpose or by any
other Person without our prior written consent.

 

Very truly yours,   Ropes & Gray LLP

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

Schedule 1

Delaware Guarantors

 

1. J. Crew Operating Corp.

 

2. J. Crew Inc.

 

3. J. Crew International, Inc.

 

4. Grace Holmes, Inc.

 

5. H. F. D. No. 55, Inc.

 

6. Madewell Inc.

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

Schedule 2

Other Guarantor

 

1. J. Crew Virginia, Inc.

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

Schedule 3

Material Agreements

 

1. Credit Agreement, dated as of March 7, 2011, among Chinos Acquisition
Corporation, a Delaware corporation (which on the Closing Date (as defined
therein) shall be merged with and into J. Crew Group, Inc., a Delaware
corporation (the “Company”), with the Company surviving such merger and
succeeding to the rights and obligations of Merger Sub as the Borrower (as
defined therein) under the Credit Agreement), Chinos Intermediate Holdings B,
Inc., a Delaware corporation, the Lenders from time to time party thereto, Bank
of America, N.A., as Administrative Agent and Collateral Agent, Mizuho Corporate
Bank, Ltd. and Sumitomo Mitsui Banking Corporation, as Co-Documentation Agents,
and the other agents named therein.

 

2. Indenture, dated as of March 7, 2011 among Chinos Acquisition Corporation, a
Delaware corporation, and Wells Fargo Bank, National Association, as trustee, as
supplemented by the Supplemental Indenture, dated as of March 7, 2011 among the
trustee, J. Crew Group, Inc., a Delaware corporation, and the subsidiary
guarantors party thereto.

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

Schedule 4

Delaware Financing Statements

(see attached)

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

Schedule 5

Pledged Equity

 

Issuer

   Certificate No.   

Registered

Owner

   Number of
Shares/Units    Class of
Interests

J. Crew Group, Inc.

(after giving effect to

the Transaction)

   1    Chinos Intermediate Holdings B, Inc.    1,000    Common
shares

J. Crew Operating Corp.

   C1    J. Crew Group, Inc.    100    Common
shares

J. Crew Inc.

   2    J. Crew Operating Corp.    100    Common
shares

Grace Holmes, Inc.

   3    J. Crew Operating Corp.    10    Common
shares

H. F. D. No. 55, Inc.

   3    J. Crew Operating Corp.    10    Common
shares

J. Crew Virginia, Inc.

   1    J. Crew Operating Corp.    100    Common
shares

Madewell Inc.

   1    J. Crew Operating Corp.    10    Common
shares

J. Crew International, Inc.

   3    J. Crew Inc.    100    Common
shares

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

Schedule 6

Deposit Account Control Agreement

 

1. Deposit Account Control Agreement, dated as of March 7, 2011, entered into by
and among J. Crew Group, Inc., Bank of America, N.A., as First Lien Agent (as
defined therein), Bank of America, N.A., as Second Lien Agent (as defined
therein) and Wells Fargo Bank, National Association.

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

Schedule 7

Securities Account Control Agreements

 

1. Securities Account Control – Consent Agreement, dated as of March 7, 2011, by
and among J. Crew Operating Corp., Wells Fargo Securities, LLC, Bank of America,
N.A., as First Lien Collateral Agent (as defined therein) and Bank of America,
N.A., as Second Lien Collateral Agent (as defined therein).

 

2. Collateral Account Control Agreement, dated as of March 7, 2011, by and among
J. Crew Operating Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Bank of America, N.A., as First Lien Pledgee (as defined therein) and Bank of
America, N.A., as Second Lien Pledgee ( as defined therein).

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

EXHIBIT H

FORM OF GUARANTY

[To be provided under separate cover]

 

H-1    Form of Guaranty

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

Exhibit H

 

 

 

FORM OF GUARANTY

dated as of

[            ] [ ], 20[ ]

among

CHINOS INTERMEDIATE HOLDINGS B, INC.,

as Holdings,

THE OTHER GUARANTORS PARTY HERETO FROM TIME TO TIME,

and

BANK OF AMERICA, N.A.,

as Administrative Agent and Collateral Agent

 

 

 

 

Form of J. Crew Guaranty (ABL)

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

TABLE OF CONTENTS

 

          Page  

ARTICLE I Definitions

     1   

Section 1.01

   ABL Credit Agreement Definitions      1   

Section 1.02

   Other Defined Terms      2   

ARTICLE II Guarantee

     2   

Section 2.01

   Guarantee      2   

Section 2.02

   Guarantee of Payment      3   

Section 2.03

   No Limitations      3   

Section 2.04

   Reinstatement      5   

Section 2.05

   Agreement To Pay; Subrogation      5   

Section 2.06

   Information      5   

ARTICLE III Indemnity, Subrogation and Subordination

     5   

ARTICLE IV Miscellaneous

     6   

Section 4.01

   Notices      6   

Section 4.02

   Waivers; Amendment      6   

Section 4.03

   Administrative Agent’s and Collateral Agent’s Fees and Expenses;
Indemnification      7   

Section 4.04

   Successors and Assigns      8   

Section 4.05

   Survival of Agreement      8   

Section 4.06

   Counterparts; Effectiveness; Several Agreement      9   

Section 4.07

   Severability      9   

Section 4.08

   GOVERNING LAW, ETC      9   

Section 4.09

   WAIVER OF RIGHT TO TRIAL BY JURY      10   

Section 4.10

   Headings      10   

Section 4.11

   Obligations Absolute      11   

Section 4.12

   Termination or Release      11   

Section 4.13

   Additional Restricted Subsidiaries      12   

Section 4.14

   Recourse; Limited Obligations      12   

Section 4.15

   Intercreditor Agreement      12   

 

Form of J. Crew Guaranty (ABL)

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

SCHEDULES    Schedule I    Guarantors EXHIBITS    Exhibit I    Form of Guaranty
Supplement

 

Form of J. Crew Guaranty (ABL)

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

This GUARANTY, dated as of [    ] [   ], 20[     ], is among CHINOS INTERMEDIATE
HOLDINGS B, INC., a Delaware corporation (“Holdings”), and the other Guarantors
set forth on Schedule I hereto and BANK OF AMERICA, N.A., as Administrative
Agent and Collateral Agent for the Secured Parties (as defined below).

Reference is made to the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “ABL Credit Agreement”), among CHINOS ACQUISITION
CORPORATION, a Delaware corporation (which on the Closing Date shall be merged
with and into J. CREW GROUP, INC., a Delaware corporation (the “Company”), with
the Company surviving such merger as the borrower under the ABL Credit Agreement
referred to below (the “Borrower”)), Holdings, the Lenders and Issuers party
thereto from time to time, and Bank of America, N.A., as Administrative Agent
and Collateral Agent for the Lenders.

The Lenders have agreed to extend credit to the Borrower subject to the terms
and conditions set forth in the ABL Credit Agreement, and the Issuers have
agreed to issue Letters of Credit for the account of the Borrower or a
Restricted Subsidiary of the Borrower on the terms and conditions set forth
therein. The obligations of the Lenders to extend such credit, and the
obligation of the Issuers to issue Letters of Credit, are, in each case,
conditioned upon, among other things, the execution and delivery of this
Agreement by each Guarantor (as defined below). The Guarantors are affiliates of
one another, will derive substantial direct and indirect benefits from (i) the
extensions of credit to the Borrower pursuant to the ABL Credit Agreement and
(ii) the issuance of Letters of Credit by the Issuers for the account of the
Borrower and, in accordance with the ABL Credit Agreement, the Restricted
Subsidiaries, and are willing to execute and deliver this Agreement in order to
induce the Lenders to extend such credit and the Issuers to issue such Letters
of Credit. The Intercreditor Agreement governs the relative rights and
priorities of the Term Secured Parties (as defined in the Intercreditor
Agreement) and the ABL Secured Parties (as defined in the Intercreditor
Agreement) in respect of the Term Priority Collateral and the ABL Priority
Collateral (and with respect to certain other matters as described therein).
Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.01 ABL Credit Agreement Definitions.

(a) Capitalized terms used in this Agreement, including the preamble and
introductory paragraphs hereto, and not otherwise defined herein have the
meanings specified in the ABL Credit Agreement.

(b) The rules of construction specified in Article I of the ABL Credit Agreement
also apply to this Agreement.

 

   1    Form of J. Crew Guaranty (ABL)

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

Section 1.02 Other Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:

“ABL Credit Agreement” has the meaning assigned to such term in the preliminary
statement of this Agreement.

“Accommodation Payment” has the meaning assigned to such term in Article III.

“Agreement” means this Guaranty.

“Allocable Amount” has the meaning assigned to such term in Article III.

“Guaranteed Obligations” mean the “Obligations” as defined in the ABL Credit
Agreement.

“Guarantors” means, collectively, Holdings, each other Guarantor listed on
Schedule I hereto and any other Person that becomes a party to this Agreement
after the Effective Date pursuant to Section 4.13; provided that if any such
Guarantor is released from its obligations hereunder as provided in
Section 4.12(b), such Person shall cease to be a Guarantor hereunder effective
upon such release.

“Guaranty Supplement” means an instrument substantially in the form of Exhibit I
hereto.

“Secured Parties” has the meaning provided in the ABL Credit Agreement.

“UFCA” has the meaning assigned to such term in Article III.

“UFTA” has the meaning assigned to such term in Article III.

ARTICLE II

Guarantee

Section 2.01 Guarantee.

Each Guarantor irrevocably, absolutely and unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, the due and punctual payment and performance of the Guaranteed
Obligations, in each case, whether such Guaranteed Obligations are now existing
or hereafter incurred under, arising out of or in connection with any Loan
Document, Secured Hedge Agreements or Cash Management Services, and whether at
maturity, by acceleration or otherwise. Each of the Guarantors further agrees
that the Guaranteed Obligations may be extended, increased or renewed, amended
or modified, in whole or in part, without notice to, or further assent from,
such Guarantor and that such Guarantor will remain bound upon its guarantee
hereunder notwithstanding any such extension, increase, renewal, amendment or
modification of any Guaranteed Obligation. Each of the Guarantors waives
promptness, presentment to, demand of payment from, and protest to, any
Guarantor or any other Loan Party of any of the Guaranteed Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment.

 

   2    Form of J. Crew Guaranty (ABL)

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

Section 2.02 Guarantee of Payment.

Each of the Guarantors further agrees that its guarantee hereunder constitutes a
guarantee of payment when due (whether or not any bankruptcy or similar
proceeding shall have stayed the accrual of collection of any of the Guaranteed
Obligations or operated as a discharge thereof) and not of collection, and
waives any right to require that any resort be had by the Administrative Agent
or any other Secured Party to any security held for the payment of any of the
Guaranteed Obligations, or to any balance of any deposit account or credit on
the books of the Administrative Agent or any other Secured Party in favor of any
other Guarantor or any other Person. The obligations of each Guarantor hereunder
are independent of the obligations of any other Guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor or the Borrower and
whether or not any other Guarantor or the Borrower be joined in any such action
or actions. Any payment required to be made by a Guarantor hereunder may be
required by the Administrative Agent or any other Secured Party on any number of
occasions.

Section 2.03 No Limitations.

(a) Except for termination or release of a Guarantor’s obligations hereunder as
expressly provided in Section 4.12, to the fullest extent permitted by
applicable Law, the obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Guaranteed Obligations, any impossibility in the
performance of any of the Guaranteed Obligations, or otherwise. Without limiting
the generality of the foregoing, to the fullest extent permitted by applicable
Law and except for termination or release of a Guarantor’s obligations hereunder
in accordance with the terms of Section 4.12 (but without prejudice to
Section 2.04), the obligations of each Guarantor hereunder shall not be
discharged, impaired or otherwise affected by (i) the failure of the
Administrative Agent, any other Secured Party or any other Person to assert any
claim or demand or to enforce any right or remedy under the provisions of any
Loan Document or otherwise; (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, any Loan
Document or any other agreement, including with respect to any other Guarantor
under this Agreement; (iii) the release of, or any impairment of any security
held by the Collateral Agent or any other Secured Party for the Guaranteed
Obligations; (iv) any default, failure or delay, willful or otherwise, in the
performance of the Guaranteed Obligations; (v) the failure to perfect any
security interest in, or the release of, any of the Collateral held by or on
behalf of the Collateral Agent or any other Secured Party; (vi) any change in
the corporate existence, structure or ownership of any Loan Party, the lack of
legal existence of the Borrower or any other Guarantor or legal obligation to
discharge any of the Guaranteed Obligations by the Borrower or any other
Guarantor for any reason whatsoever, including, without limitation, in any
insolvency, bankruptcy or reorganization of any Loan Party; (vii) the existence
of any claim, set-off or other rights that any Guarantor may have at any time
against the Borrower, the Administrative Agent, any other Secured Party or any
other Person, whether in connection with the ABL Credit Agreement, the other
Loan Documents or any unrelated transaction; (viii) this Agreement having

 

   3    Form of J. Crew Guaranty (ABL)

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

been determined (on whatsoever grounds) to be invalid, non-binding or
unenforceable against any other Guarantor ab initio or at any time after the
Effective Date or (ix) any other circumstance (including statute of
limitations), any act or omission that may or might in any manner or to any
extent vary the risk of any Guarantor or otherwise operate as a defense to, or
discharge of, the Borrower, any Guarantor or any other guarantor or surety as a
matter of law or equity (in each case, other than the payment in full in cash of
all the Guaranteed Obligations (excluding contingent obligations as to which no
claim has been made). Each Guarantor expressly authorizes the applicable Secured
Parties, to the extent permitted by the Security Agreement, to take and hold
security for the payment and performance of the Guaranteed Obligations, to
exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and
manner of any sale thereof in their sole discretion or to release or substitute
any one or more other guarantors or obligors upon or in respect of the
Guaranteed Obligations all without affecting the obligations of any Guarantor
hereunder. Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Guarantor under this Agreement shall be limited to an
aggregate amount equal to the largest amount that would not render its
obligations under this Agreement subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of the Bankruptcy Code of the United States or
any comparable provisions of any similar federal or state law.

(b) To the fullest extent permitted by applicable Law and except for termination
or release of a Guarantor’s obligations hereunder in accordance with the terms
of Section 4.12 (but without prejudice to Section 2.04), each Guarantor waives
any defense based on or arising out of any defense of the Borrower or any other
Guarantor or the unenforceability of the Guaranteed Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower or any other Guarantor, other than the payment in full in cash of all
the Guaranteed Obligations (excluding contingent obligations as to which no
claim has been made). The Administrative Agent and the other Secured Parties may
in accordance with the terms of the Collateral Documents, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Guaranteed Obligations, make
any other accommodation with the Borrower or any other Guarantor or exercise any
other right or remedy available to them against any Guarantor, without affecting
or impairing in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been paid in full in cash (excluding
contingent obligations as to which no claim has been made). To the fullest
extent permitted by applicable Law, each Guarantor waives any defense arising
out of any such election even though such election operates, pursuant to
applicable Law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any other Guarantor, as the case may be, or any security. To the fullest extent
permitted by applicable Law, each Loan Party waives any and all suretyship
defenses.

 

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Section 2.04 Reinstatement.

Notwithstanding anything to contrary contained in this Agreement, each of the
Guarantors agrees that (a) its guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Guaranteed Obligation is rescinded or must otherwise be
restored by the Administrative Agent or any other Secured Party upon the
bankruptcy or reorganization (or any analogous proceeding in any jurisdiction)
of the Borrower or any other Guarantor or otherwise and (b) the provisions of
this Section 2.04 shall survive the termination of this Agreement.

Section 2.05 Agreement To Pay; Subrogation.

In furtherance of the foregoing and not in limitation of any other right that
the Administrative Agent or any other Secured Party has at law or in equity
against any Guarantor by virtue hereof, upon the failure of the Borrower or any
other Guarantor to pay any Guaranteed Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to
be paid, to the Administrative Agent for distribution to the applicable Secured
Parties in cash the amount of such unpaid Guaranteed Obligation. Upon payment by
any Guarantor of any sums to the Administrative Agent as provided above, all
rights of such Guarantor against the Borrower or any other Guarantor arising as
a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subject to Article III.

Section 2.06 Information.

Each Guarantor assumes all responsibility for being and keeping itself informed
of the Borrower’s and each other Guarantor’s financial condition and assets, and
of all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks that such Guarantor
assumes and incurs hereunder, and agrees that none of the Administrative Agent
or the other Secured Parties will have any duty to advise such Guarantor of
information known to it or any of them regarding such circumstances or risks.

ARTICLE III

Indemnity, Subrogation and Subordination

Upon payment by any Guarantor of any Guaranteed Obligations, all rights of such
Guarantor against the Borrower or any other Guarantor arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior payment in full in cash of all the Guaranteed Obligations
(excluding contingent obligations as to which no claim has been made) and the
termination of all Revolving Credit Commitments to any Loan Party under any Loan
Document. If any amount shall erroneously be paid to the Borrower or any other
Guarantor on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of the Borrower or any
other Guarantor, such amount shall be held in trust for the benefit of the
Secured Parties and shall forthwith be paid to the Administrative Agent to be
credited against the payment of the Guaranteed Obligations, whether matured or

 

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unmatured, in accordance with the terms of the ABL Credit Agreement and the
other Loan Documents. Subject to the foregoing, to the extent that any Guarantor
shall, under this Agreement or the ABL Credit Agreement as a joint and several
obligor, repay any of the Guaranteed Obligations constituting Loans made to
another Loan Party under the ABL Credit Agreement (an “Accommodation Payment”),
then the Guarantor making such Accommodation Payment shall be entitled to
contribution and indemnification from, and be reimbursed by, each of the other
Guarantors in an amount equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Guarantor’s Allocable Amount and the
denominator of which is the sum of the Allocable Amounts of all of the
Guarantors; provided that such rights of contribution and indemnification shall
be subordinated to the prior payment in full, in cash, of all of the Guaranteed
Obligations (excluding contingent obligations as to which no claim has been
made). As of any date of determination, the “Allocable Amount” of each Guarantor
shall be equal to the maximum amount of liability for Accommodation Payments
which could be asserted against such Guarantor hereunder and under the ABL
Credit Agreement without (a) rendering such Guarantor “insolvent” within the
meaning of Section 101 (31) of the Bankruptcy Code of the United States,
Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the
Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Guarantor with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code of the United States, Section 4 of the UFTA, or Section 5 of the
UFCA, or (c) leaving such Guarantor unable to pay its debts as they become due
within the meaning of Section 548 of the Bankruptcy Code of the United States or
Section 4 of the UFTA, or Section 5 of the UFCA.

ARTICLE IV

Miscellaneous

Section 4.01 Notices.

All communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 12.8 of the ABL
Credit Agreement. All communications and notice hereunder to a Guarantor other
than Holdings shall be given in care of the Borrower.

Section 4.02 Waivers; Amendment.

(a) No failure by any Secured Party to exercise, and no delay by any such Person
in exercising, any right, remedy, power or privilege hereunder or under any
other Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided,
and provided under each other Loan Document, are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by Law. No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section 4.02, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Revolving Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default or Event of Default, regardless of whether any Loan Party may have had
notice or knowledge of such Default or Event of Default at the time.

 

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(b) Subject to the Intercreditor Agreement, neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Administrative Agent and
the Loan Party or Loan Parties with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in accordance with
Section 12.1 of the ABL Credit Agreement.

Section 4.03 Administrative Agent’s and Collateral Agent’s Fees and Expenses;
Indemnification.

(a) Each Guarantor, jointly with the other Guarantors and severally, agrees to
reimburse the Administrative Agent and the Collateral Agent for its fees and
expenses incurred hereunder as provided in Section 12.3 of the ABL Credit
Agreement; provided that each reference therein to the “Borrower” shall be
deemed to be a reference to “each Guarantor”.

(b) Without limitation of its indemnification obligations under the other Loan
Documents, each Guarantor jointly and severally agrees to indemnify the
Administrative Agent, the Collateral Agent and the other Indemnitees (as defined
in Section 12.4 of the ABL Credit Agreement) against, and hold each Indemnitee
harmless from, any and all liabilities, obligations, losses, damages, penalties,
claims, demands, actions, judgments, suits, costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such Indemnitee in any
way relating to or arising out of or in connection with (but limited, in the
case of legal fees and expenses, to the reasonable and documented out-of-pocket
fees, disbursements and other charges of one counsel to all Indemnitees taken as
a whole and, if reasonably necessary, a single local counsel for all Indemnitees
taken as a whole in each relevant jurisdiction that is material to the interest
of the Lenders, and solely in the case of a conflict of interest, one additional
counsel in each relevant jurisdiction to each group of affected Indemnitees
similarly situated taken as a whole) (i) the execution, delivery, enforcement,
performance or administration of this Agreement or any other agreement, letter
or instrument delivered in connection with the transactions contemplated hereby
or the consummation of the transactions contemplated hereby, (ii) any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by any Guarantor, or any Environmental
Liability arising out of the activities or operations of any Guarantor, or,
(iii) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory (including any investigation of, preparation for, or defense of any
pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether any Indemnitee is a party thereto and, in each case,
whether or not caused by or arising, in whole or in part, out of the negligence
of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements (i) resulted from the gross negligence, bad faith, or willful
misconduct of such Indemnitee or of any Related Indemnified Person of such
Indemnitee, as determined by the final non-appealable judgment of a court of

 

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competent jurisdiction, (ii) are relating to disputes amongst Indemnitees other
than (1) any claim against an Indemnitee in its capacity or in fulfilling its
role as Administrative Agent or Collateral Agent and (2) any claim arising out
of any act or omission of the Borrower or any of its Affiliates, and
(iii) related to Taxes or amounts excluded from the definition of Taxes in the
Term Loan Credit Agreement pursuant to clauses (i) through (vii) of the first
sentence of Section 3.1(a) of the ABL Credit Agreement that are imposed with
respect to payments to or for the account of any Agent or any Secured Party
under this Agreement or any other Loan Document, which shall be governed by
Section 3.1 of the ABL Credit Agreement, or (iv) related to Other Taxes or to
taxes covered by Section 3.4 of the ABL Credit Agreement. No Indemnitee nor any
Guarantor shall have any liability and each party hereby waives, any claim
against any other party to this Agreement or any Indemnitee, for any special,
punitive, indirect or consequential damages relating to this Agreement or
arising out of its activities in connection herewith or therewith (whether
before or after the Effective Date) (other than, in the case of any Guarantor,
in respect of any such damages incurred or paid by an Indemnitee to a third
party).

(c) Any such amounts payable as provided hereunder shall be additional
Guaranteed Obligations guaranteed hereby and secured by the Collateral
Documents. The provisions of this Section 4.03 shall remain operative and in
full force and effect regardless of the termination of this Agreement, any other
Loan Document or any Secured Hedge Agreement or any Cash Management Services
agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Guaranteed Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, any resignation of the Administrative Agent or Collateral Agent or any
document governing any of the Obligations arising under any Secured Hedge
Agreements or any Cash Management Obligations, or any investigation made by or
on behalf of the Administrative Agent or any other Secured Party. All amounts
due under this Section 4.03 shall be payable within twenty (20) Business Days of
written demand therefor.

Section 4.04 Successors and Assigns.

Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the permitted successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of any
Guarantor or any Secured Party that are contained in this Agreement shall bind
and inure to the benefit of their respective permitted successors and assigns.
Except as provided in Section 12.2 of the ABL Credit Agreement, no Guarantor may
assign any of its rights or obligations hereunder without the written consent of
the Administrative Agent.

Section 4.05 Survival of Agreement.

All covenants, agreements, indemnities, representations and warranties made by
the Guarantors in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the Secured
Parties and shall survive the execution and delivery of the Loan Documents and
the making of any Loans and the issuance of any Letters of Credit, regardless of
any investigation made by any Secured Party or on its behalf and notwithstanding

 

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that any Secured Party may have had notice or knowledge of any Default or Event
of Default or incorrect representation or warranty at the time any credit is
extended under the ABL Credit Agreement or any other Loan Document, and shall
continue in full force and effect until this Agreement is terminated as provided
in Section 4.12 hereof, or with respect to any individual Guarantor until such
Guarantor is otherwise released from its obligations under this Agreement in
accordance with the terms hereof.

Section 4.06 Counterparts; Effectiveness; Several Agreement.

This Agreement may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
shall become effective when it shall have been executed by the Guarantors, the
Administrative Agent and the Collateral Agent and thereafter shall be binding
upon and inure to the benefit of each Guarantor, the Administrative Agent, the
Collateral Agent, the other Secured Parties and their respective permitted
successors and assigns, subject to Section 4.04 hereof. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy or other
electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement shall be construed as a separate
agreement with respect to each Guarantor and may be amended, restated, modified,
supplemented, waived or released with respect to any Guarantor without the
approval of any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.

Section 4.07 Severability.

If any provision of this Agreement is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired thereby and
(b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 4.08 GOVERNING LAW, ETC.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

(b) THE GUARANTORS, THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT EACH
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK CITY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND

 

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UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH PARTY HERETO AGREES THAT
THE ADMINISTRATIVE AGENT AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN
THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY
RIGHTS UNDER THIS AGREEMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

(c) THE GUARANTORS, THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT EACH
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

Section 4.09 WAIVER OF RIGHT TO TRIAL BY JURY.

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

Section 4.10 Headings.

Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

 

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Section 4.11 Obligations Absolute.

All rights of the Collateral Agent, the Administrative Agent and the other
Secured Parties hereunder and all obligations of each Guarantor hereunder shall
be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the ABL Credit Agreement, any other Loan Document, any
agreement with respect to any of the Guaranteed Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Guaranteed Obligations, or any other amendment or waiver of or any consent to
any departure from the ABL Credit Agreement, any other Loan Document, or any
other agreement or instrument, (c) any release or amendment or waiver of or
consent under or departure from any guarantee guaranteeing all or any of the
Guaranteed Obligations or (d) subject only to termination or release of a
Guarantor’s obligations hereunder in accordance with the terms of Section 4.12,
but without prejudice to reinstatement rights under Section 2.04, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Guarantor in respect of the Guaranteed Obligations or this
Agreement.

Section 4.12 Termination or Release.

(a) This Agreement and the Guarantees made herein shall terminate with respect
to all Guaranteed Obligations when (i) all Revolving Credit Commitments have
expired or been terminated and the Lenders have no further commitment to lend
under the ABL Credit Agreement and (ii) all principal and interest in respect of
each Loan (including Swing Loans) and all other Guaranteed Obligations (other
than (A) contingent indemnification obligations with respect to then unasserted
claims and (B) Guaranteed Obligations in respect of Obligations that may
thereafter arise with respect to any Secured Hedge Agreement or Cash Management
Services not yet due and payable, unless the Collateral Agent has received
written notice, at least two (2) Business Days prior to the proposed date of any
such termination, stating that arrangements reasonably satisfactory to each
applicable Hedge Bank or Cash Management Bank, as the case may be, in respect
thereof have not been made) shall have been paid in full in cash, (iii) all
Letters of Credit shall have expired or terminated (or been Cash Collateralized
or backstopped in a manner reasonably satisfactory to the applicable Issuer) and
(iv) all Letter of Credit Obligations have been reduced to zero (or Cash
Collateralized in a manner reasonably satisfactory to the applicable Issuer),
provided, however, that in connection with the termination of this Agreement,
the Administrative Agent may require such indemnities as it shall reasonably
deem necessary or appropriate to protect the Secured Parties against (x) loss on
account of credits previously applied to the Guaranteed Obligations that may
subsequently be reversed or revoked, and (y) any Obligations that may thereafter
arise with respect to the Secured Hedge Agreements or Cash Management
Obligations to the extent not provided for thereunder.

(b) A Guarantor that is a Restricted Subsidiary shall automatically be released
in the circumstances set forth in Section 11.11 of the ABL Credit Agreement.

(c) In connection with any termination or release pursuant to clauses (a) or
(b) above, the Administrative Agent and the Collateral Agent shall promptly
execute and deliver to any Guarantor, at such Guarantor’s expense, all documents
that such Guarantor shall reasonably request to evidence such termination or
release. Any execution and delivery of documents pursuant to this Section 4.12
shall be without recourse to or warranty by the Administrative Agent or the
Collateral Agent.

 

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(d) At any time that the respective Guarantor desires that the Administrative
Agent or the Collateral Agent take any of the actions described in immediately
preceding clause (c), it shall, upon request of the Administrative Agent or the
Collateral Agent, deliver to the Administrative Agent an officer’s certificate
certifying that the release of the respective Guarantor is permitted pursuant to
clause (a) or (b) above. The Administrative Agent and the Collateral Agent shall
have no liability whatsoever to any Secured Party as a result of any release of
any Guarantor by it as permitted (or which the Administrative Agent in good
faith believes to be permitted) by this Section 4.12.

Section 4.13 Additional Restricted Subsidiaries.

Pursuant to Section 8.11 of the ABL Credit Agreement, certain Restricted
Subsidiaries of the Loan Parties that are wholly owned Material Domestic
Subsidiaries and not Excluded Subsidiaries and that were not in existence or not
Restricted Subsidiaries on the date of the ABL Credit Agreement are required to
enter in this Agreement as Guarantors upon becoming Restricted Subsidiaries (for
avoidance of doubt, the Borrower may cause any Restricted Subsidiary that is not
a Guarantor to Guarantee the Obligations by causing such Restricted Subsidiary
to execute a Guaranty Supplement in accordance with the provisions of this
Section 4.13 and any such Restricted Subsidiary shall be a Guarantor hereunder
with the same force and effect as if originally named as a Guarantor herein).
Upon execution and delivery by the Administrative Agent and a Restricted
Subsidiary of a Guaranty Supplement, such Restricted Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor herein. The execution and delivery of any such instrument shall not
require the consent of any other Guarantor hereunder. The rights and obligations
of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.

Section 4.14 Recourse; Limited Obligations.

This Agreement is made with full recourse to each Guarantor and pursuant to and
upon all the warranties, representations, covenants and agreements on the part
of such Guarantor contained herein, in the ABL Credit Agreement and the other
Loan Documents and otherwise in writing in connection herewith or therewith. It
is the desire and intent of each Guarantor and each applicable Secured Party
that this Agreement shall be enforced against each Guarantor to the fullest
extent permissible under applicable Law applied in each jurisdiction in which
enforcement is sought.

Section 4.15 Intercreditor Agreement.

The Guarantors, the Collateral Agent and the Administrative Agent acknowledge
that the exercise of certain of the Collateral Agent’s and the Administrative
Agent’s rights and remedies hereunder may be subject to, and restricted by, the
provisions of the Intercreditor Agreement.

 

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Except as specified herein, nothing contained in the Intercreditor Agreement
shall be deemed to modify any of the provisions of this Agreement, which, as
among the Guarantors, the Collateral Agent and the Administrative Agent shall
remain in full force and effect.

[Signature Pages Follow]

 

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

 

GUARANTORS: CHINOS INTERMEDIATE HOLDINGS B, INC. By:     Name:   Title:  

 

[Signature Page to ABL Guaranty]

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GUARANTORS:

 

J. CREW OPERATING CORP.

J. CREW INC.

J. CREW INTERNATIONAL, INC.

GRACE HOLMES, INC.

H. F. D. NO. 55, INC.

MADEWELL INC.

J. CREW VIRGINIA, INC.

By:     Name:   Title:  

 

[Signature Page to ABL Guaranty]

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ADMINISTRATIVE AGENT AND COLLATERAL AGENT: BANK OF AMERICA, N.A., as
Administrative Agent and as Collateral Agent By:     Name:   Title:  

 

[Signature Page to ABL Guaranty]

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SCHEDULE I TO GUARANTY

GUARANTORS

Chinos Intermediate Holdings B, Inc.

J. Crew Operating Corp.

J. Crew Inc.

J. Crew International, Inc.

Grace Holmes, Inc.

H. F. D. No. 55, Inc.

Madewell Inc.

J. Crew Virginia, Inc.

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EXHIBIT I TO GUARANTY

FORM OF GUARANTY SUPPLEMENT

SUPPLEMENT NO.      dated as of                      , 20    , to the Guaranty
dated as of March 7, 2011, among CHINOS INTERMEDIATE HOLDINGS B, INC., a
Delaware corporation (“Holdings”), the other Guarantors party thereto from time
to time and BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent
for the Secured Parties (as amended, restated, amended and restated,
supplemented and/or otherwise modified from time to time, the “Guaranty”).

A. Reference is made to the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “ABL Credit Agreement”), by, among others, the Borrower,
Holdings, the Lenders and Issuers party thereto, and Bank of America, N.A., as
Administrative Agent and Collateral Agent for the Lenders.

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the ABL Credit Agreement and the Guaranty, as
applicable.

C. The Guarantors have entered into the Guaranty in order to induce (x) the
Lenders to make Loans and (y) the Issuers to issue Letters of Credit.
Section 4.13 of the Guaranty provides that additional Restricted Subsidiaries of
the Guarantors may become Guarantors under the Guaranty by execution and
delivery of an instrument in the form of this Supplement. The undersigned
Restricted Subsidiary (the “New Subsidiary”) is executing this Supplement in
accordance with the requirements of the ABL Credit Agreement to become a
Guarantor under the Guaranty as consideration for Loans previously made.

Accordingly, the Administrative Agent and the New Subsidiary agree as follows:

Section 1. In accordance with Section 4.13 of the Guaranty, the New Subsidiary
by its signature below becomes a Guarantor under the Guaranty with the same
force and effect as if originally named therein as a Guarantor and the New
Subsidiary hereby (a) agrees to all the terms and provisions of the Guaranty
applicable to it as a Guarantor thereunder and (b) represents and warrants that
the representations and warranties made by it as a Guarantor thereunder are true
and correct on and as of the date hereof, provided that, to the extent that such
representations and warranties specifically refer to an earlier date, they shall
be true and correct in all respects as of such earlier date. Each reference to a
“Guarantor” in the Guaranty shall be deemed to include the New Subsidiary as if
originally named therein as a Guarantor. The Guaranty is hereby incorporated
herein by reference.

Section 2. The New Subsidiary represents and warrants to the Administrative
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except
as such enforceability may be limited by Debtor Relief Laws and by general
principles of equity.

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

Section 3. This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Supplement shall become effective when the Administrative Agent
shall have received a counterpart of this Supplement that bears the signature of
the New Subsidiary and the Administrative Agent has executed a counterpart
hereof. Delivery of an executed counterpart of a signature page of this
Supplement by telecopy or other electronic imaging means shall be effective as
delivery of a manually executed counterpart of this Supplement.

Section 4. Except as expressly supplemented hereby, the Guaranty shall remain in
full force and effect.

Section 5. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

(b) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK CITY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
EACH PARTY HERETO AGREES THAT THE ADMINISTRATIVE AGENT AND LENDERS RETAIN THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN
CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER THIS AGREEMENT OR THE
ENFORCEMENT OF ANY JUDGMENT.

(c) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS
SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

Form of J. Crew Guaranty (ABL)

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

Section 6. If any provision of this Supplement is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Supplement shall not be affected or impaired thereby and
(b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 7. All communications and notices hereunder shall be in writing and
given as provided in Section 4.01 of the Guaranty.

Section 8. The New Subsidiary agrees to reimburse the Administrative Agent for
its reasonable out-of-pocket expenses in connection with this Supplement, as
provided in Section 4.03(a) of the Guaranty.

 

Form of J. Crew Guaranty (ABL)

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IN WITNESS WHEREOF, the New Subsidiary and the Administrative Agent have duly
executed this Supplement to the Guaranty as of the day and year first above
written.

 

[NAME OF NEW SUBSIDIARY] By:     Name:   Title:  

 

BANK OF AMERICA, N.A., as Administrative Agent By:     Name:   Title:  

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EXHIBIT I

FORM OF SECURITY AGREEMENT

[To be provided under separate cover]

 

F-1    Form of Security Agreement

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Exhibit I

 

 

 

FORM OF SECURITY AGREEMENT

dated as of [            ] [    ], 20[    ]

among

CHINOS ACQUISITION CORPORATION,

which on the Effective Date shall be merged with and into

J. CREW GROUP, INC.,

with J. Crew Group, Inc. surviving such merger as the Borrower,

CHINOS INTERMEDIATE HOLDINGS B, INC.

as Holdings,

THE SUBSIDIARY GUARANTORS PARTY HERETO FROM TIME TO TIME,

and

BANK OF AMERICA, N.A.,

as Collateral Agent

 

 

 

 

Form of ABL Security Agreement

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TABLE OF CONTENTS

 

          Page  

ARTICLE I

   Definitions      2   

Section 1.01.

   Credit Agreement      2   

Section 1.02.

   Other Defined Terms      2   

ARTICLE II

   Pledge of Securities      7   

Section 2.01.

   Pledge      7   

Section 2.02.

   Delivery of the Pledged Collateral      8   

Section 2.03.

   Representations, Warranties and Covenants      9   

Section 2.04.

   Certification of Limited Liability Company and Limited Partnership Interests
     11   

Section 2.05.

   Registration in Nominee Name; Denominations      11   

Section 2.06.

   Voting Rights; Dividends and Interest      11   

Section 2.07.

   Collateral Agent Not a Partner or Limited Liability Company Member      13   

ARTICLE III

   Security Interests in Personal Property      14   

Section 3.01.

   Security Interest      14   

Section 3.02.

   Representations and Warranties      16   

Section 3.03.

   Covenants      19   

Section 3.04.

   Other Actions      21   

ARTICLE IV

   Special Provisions Concerning IP Collateral      23   

Section 4.01.

   Grant of License to Use Intellectual Property      23   

Section 4.02.

   Protection of Collateral Agent’s Security      24   

ARTICLE V

   Collections      25   

ARTICLE VI

   Remedies      26   

Section 6.01.

   Remedies Upon Default      26   

Section 6.02.

   Application of Proceeds      29   

ARTICLE VII

   Indemnity, Subrogation and Subordination      29   

ARTICLE VIII

   Miscellaneous      30   

Section 8.01.

   Notices      30   

Section 8.02.

   Waivers; Amendment      30   

Section 8.03.

   Collateral Agent’s Fees and Expenses; Indemnification      31   

Section 8.04.

   Successors and Assigns      32   

 

Form of ABL Security Agreement

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TABLE OF CONTENTS

(continued)

 

          Page  

Section 8.05.

   Survival of Agreement      32   

Section 8.06.

   Counterparts; Effectiveness; Several Agreement      32   

Section 8.07.

   Severability      33   

Section 8.08.

   Right of Set Off   

Section 8.09.

   GOVERNING LAW      33   

Section 8.10.

   WAIVER OF RIGHT TO TRIAL BY JURY      34   

Section 8.11.

   Headings      34   

Section 8.12.

   Security Interest Absolute      34   

Section 8.13.

   Termination or Release      34   

Section 8.14.

   Additional Restricted Subsidiaries      35   

Section 8.15.

   Collateral Agent Appointed Attorney-in-Fact      36   

Section 8.16.

   General Authority of the Collateral Agent      37   

Section 8.17.

   Collateral Agent’s Duties      37   

Section 8.18.

   Recourse; Limited Obligations      37   

Section 8.19.

   Mortgages      38   

Section 8.20.

   Intercreditor Agreement      38   

 

Form of ABL Security Agreement

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SCHEDULES

 

Schedule I

   -   

Subsidiary Guarantors

Schedule II

   -   

Pledged Equity; Pledged Debt

Schedule III

   -   

Commercial Tort Claims

Schedule IV

   -   

UCC Filing Offices

 

EXHIBITS

 

Exhibit I

   -   

Form of Security Agreement Supplement

Exhibit II

   -   

Form of Perfection Certificate

Exhibit III

   -   

Form of Trademark Security Agreement

Exhibit IV

   -   

Form of Patent Security Agreement

Exhibit V

   -   

Form of Copyright Security Agreement

Exhibit VI

     

Form of Deposit Account Control Agreement

Exhibit VII

     

Form of Securities Account Control Agreement

 

Form of ABL Security Agreement

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This SECURITY AGREEMENT, dated as of [            ] [    ], 20[    ] (this
“Agreement”), among CHINOS ACQUISITION CORPORATION, a Delaware corporation
(which on the Effective Date shall be merged with and into J. CREW GROUP, INC.,
a Delaware corporation (the “Company”), with the Company surviving such merger
as the Borrower (the “Borrower”), CHINOS INTERMEDIATE HOLDINGS B, INC., a
Delaware corporation (“Holdings”), the Subsidiary Guarantors set forth on
Schedule I hereto and BANK OF AMERICA, N.A., as Collateral Agent for the Secured
Parties (as defined below).

Reference is made to the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “Credit Agreement”), among the Borrower, Holdings, the
Lenders and Issuers party thereto from time to time, and Bank of America, N.A.,
as Administrative Agent for the Lenders and Collateral Agent for the Secured
Parties.

The Lenders have agreed to extend credit to the Borrower subject to the terms
and conditions set forth in the Credit Agreement, the Issuers have agreed to
issue Letters of Credit for the account of the Borrower or a Restricted
Subsidiary on the terms and conditions set forth in the Credit Agreement, the
Hedge Banks have agreed to enter into and/or maintain one or more Secured Hedge
Agreements and the Cash Management Banks have agreed to enter into and/or
maintain Cash Management Services, on the terms and conditions set forth in the
Credit Agreement, in such Secured Hedge Agreements and in such Cash Management
Services agreements, as applicable. The obligations of the Lenders to extend
such credit, the obligation of the Issuers to issue Letters of Credit, the
obligation of the Hedge Banks to enter into and/or maintain such Secured Hedge
Agreements and the obligation of the Cash Management Banks to enter into and/or
maintain such Cash Management Services are, in each case, conditioned upon,
among other things, the execution and delivery of this Agreement by each Grantor
(as defined below). The Grantors are affiliates of one another, will derive
substantial direct and indirect benefits from (i) the extensions of credit to
the Borrower pursuant to the Credit Agreement, (ii) the issuance of Letters of
Credit by the Issuers for the account of the Borrower or, in accordance with the
Credit Agreement, a Restricted Subsidiary, (iii) the entering into and/or
maintaining by the Hedge Banks of Secured Hedge Agreements with the Borrower
and/or one or more of its Restricted Subsidiaries, and (iv) the entering into
and/or maintaining by the Cash Management Banks of Cash Management Services with
the Borrower and/or one or more of its Restricted Subsidiaries, and are willing
to execute and deliver this Agreement in order to induce the Lenders to extend
such credit, the Issuers to issue such Letters of Credit, the Hedge Banks to
enter into and/or maintain such Secured Hedge Agreements and the Cash Management
Banks to enter into and/or maintain such Cash Management Services. The
Intercreditor Agreement governs the relative rights and priorities of the
Secured Parties and the Term Secured Parties (as defined below) in respect of
the Term Priority Collateral (as defined below) and the ABL Priority Collateral
(as defined below) (and with respect to certain other matters as described
therein). Accordingly, the parties hereto agree as follows:

 

   - 1 -    Form of ABL Security Agreement

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ARTICLE I

Definitions

Section 1.01. Credit Agreement.

(a) Capitalized terms used in this Agreement, including the preamble and
introductory paragraphs hereto, and not otherwise defined herein have the
meanings specified in the Credit Agreement.

(b) Unless otherwise defined in this Agreement or in the Credit Agreement, terms
defined in Article 8 or 9 of the UCC (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9.

(c) The rules of construction specified in Article I of the Credit Agreement
also apply to this Agreement.

Section 1.02. Other Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

“ABL Priority Collateral” shall have the meaning assigned that term in the
Intercreditor Agreement.

“Accommodation Payment” has the meaning assigned to such term in Article VII.

“Account(s)” means “accounts” as defined in Section 9-102 of the UCC, and also
means a right to payment of a monetary obligation, whether or not earned by
performance, (a) for property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of, (b) for services rendered or to be rendered,
or (c) arising out of the use of a credit or charge card or information
contained on or for use with the card.

“Account Debtor” means any Person who is or who may become obligated to any
Grantor under, with respect to or on account of an Account.

“After-Acquired Intellectual Property” has the meaning assigned to such term in
Section 4.02(f).

“Agreement” has the meaning assigned to such term in the introductory paragraph
hereto.

“Allocable Amount” has the meaning assigned to such term in Article VII.

“Article 9 Collateral” has the meaning assigned to such term in Section 3.01(a).

“Bankruptcy Event of Default” means any Event of Default under Sections 10.1(f)
of the Credit Agreement.

“Blue Sky Laws” has the meaning assigned to such term in Section 6.01.

“Borrower” has the meaning assigned to such term in the introductory paragraph
to this Agreement.

“Collateral” means the Article 9 Collateral and the Pledged Collateral.

 

   - 2 -    Form of ABL Security Agreement

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“Collateral Account” means the Concentration Account (as defined in the Credit
Agreement), which cash collateral account shall be maintained with, and under
the sole dominion and control of, the Collateral Agent for the benefit of the
relevant Secured Parties.

“Company” has the meaning assigned to such term in the preliminary statement
hereto.

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

“Copyrights” means all of the following now owned or hereafter acquired by or
assigned to any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, whether registered or unregistered and
whether published or unpublished, (b) all registrations and applications for
registration of any such copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office, including
those listed on Schedule 7(c) to the Perfection Certificate and all: (i) rights
and privileges arising under applicable Law with respect to such Grantor’s use
of such copyrights, (ii) reissues, renewals, and extensions thereof and
amendments thereto, (iii) income, fees, royalties, damages, claims and payments
now or hereafter due and/or payable with respect thereto, including damages and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to sue for past,
present or future infringements thereof.

“Credit Agreement” has the meaning assigned to such term in the preliminary
statement of this Agreement.

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

“Discharge of Term Obligations” has the meaning assigned that term in the
Intercreditor Agreement.

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

“Effective Date Grantor” has the meaning assigned to such term in Section 2.02
of this Agreement.

“Equipment” shall mean (x) any “equipment” as such term is defined in Article 9
of the UCC and in any event, shall include, but shall not be limited to, all
machinery, equipment, furnishings, appliances, furniture, fixtures, tools, and
vehicles now or hereafter owned by any Grantor in each case, regardless of
whether characterized as equipment under the UCC and

 

   - 3 -    Form of ABL Security Agreement

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(y) and any and all additions, substitutions and replacements of any of the
foregoing and all accessions thereto, wherever located, whether or not at any
time of determination incorporated or installed therein or attached thereto, and
all replacements therefore, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.

“Excluded Equity Interests” has the meaning assigned to such term in
Section 2.01 of this Agreement.

“Excluded Property” has the meaning assigned to such term in Section 3.01 of
this Agreement.

“General Intangibles” has the meaning provided in Article 9 of the UCC and shall
in any event include all choses in action and causes of action and all other
intangible personal property of every kind and nature (other than Accounts) now
owned or hereafter acquired by any Grantor, as the case may be, including
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Swap
Contracts and other agreements), goodwill, registrations, franchises, tax refund
claims and any letter of credit, guarantee, claim, security interest or other
security held by or granted to any Grantor.

“Grant of Security Interest” means a Grant of Security Interest in certain IP
Collateral in the form of Exhibit III, IV or V attached hereto.

“Grantor” means the Borrower and each Guarantor.

“Holdings” has the meaning assigned to such term in the preliminary statement
hereto.

“Inactive Subsidiaries” has the meaning assigned to such term in Section 3.02(f)
of this Agreement.

“Intellectual Property” means all intellectual and similar property of every
kind and nature now owned, licensed or hereafter acquired by any Grantor,
including: inventions, designs, Patents, Copyrights, Licenses, Trademarks,
Domain Names, trade secrets, confidential or proprietary technical and business
information, know how, show how or other data or information, software,
databases, all other proprietary information and all embodiments or fixations
thereof and related documentation, registrations and all additions, improvements
and accessions to, and books and records describing or used in connection with,
any of the foregoing.

“IP Collateral” means the Collateral consisting of Intellectual Property.

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement granting rights under Intellectual
Property to which any Grantor is a party.

“Patent License” means any written agreement, now or hereafter in effect,
granting to any third party any right to develop, commercialize, import, make,
have made, offer for sale, use or sell any invention on which a Patent, now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, is in existence, or granting to any Grantor any such right with respect
to any invention on which a Patent, now or hereafter owned by any third party,
is in existence, and all rights of any Grantor under any such agreement.

 

   - 4 -    Form of ABL Security Agreement

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“Patents” means all of the following now owned or hereafter acquired by any
Grantor: (a) all letters patent of the United States or the equivalent thereof
in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule 7(a) to the
Perfection Certificate, and (b) all (i) rights and privileges arising under
applicable Law with respect to such Grantor’s use of any patents,
(ii) inventions and improvements described and claimed therein, (iii) reissues,
divisions, continuations, renewals, extensions and continuations-in-part thereof
and amendments thereto, (iv) income, fees, royalties, damages, claims and
payments now or hereafter due and/or payable with respect to any of the
foregoing including damages and payments for past, present or future
infringements thereof, (v) rights corresponding thereto throughout the world and
(vi) rights to sue for past, present or future infringements thereof.

“Perfection Certificate” means a certificate substantially in the form of
Exhibit II, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Responsible Officer of the
Borrower.

“Pledged Collateral” has the meaning assigned to such term in Section 2.01.

“Pledged Debt” has the meaning assigned to such term in Section 2.01.

“Pledged Equity” has the meaning assigned to such term in Section 2.01.

“Pledged Securities” means any Promissory Notes, stock certificates, unit
certificates, limited or unlimited liability membership certificates or other
Securities or Instruments now or hereafter included in the Pledged Collateral,
including all Pledged Equity, Pledged Debt and all other certificates,
instruments or other documents representing or evidencing any Pledged
Collateral.

“Secured Obligations” means the “Obligations” as defined in the Credit
Agreement; it being acknowledged and agreed that the term “Secured Obligations”
as used herein shall include each extension of credit under the Credit Agreement
and all obligations of the Loan Parties and their respective Subsidiaries which
arise under the Loan Documents (including the Guaranty) or with respect to the
Obligations in respect of Secured Hedge Agreements or Cash Management
Obligations, in each case, whether outstanding on the date of this Agreement or
extended or arising from time to time after the date of this Agreement.

“Secured Parties” has the meaning provided in the Credit Agreement.

“Securities Act” has the meaning assigned to such term in Section 6.01.

“Security” means a “security” as such term is defined in Article 8 of the UCC
and, in any event, shall include any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, options, warrants,

 

   - 5 -    Form of ABL Security Agreement

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bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

“Security Agreement Supplement” means an instrument substantially in the form of
Exhibit I hereto.

“Security Interest” has the meaning assigned to such term in Section 3.01(a).

“Term Agent” has the meaning assigned that term in the Intercreditor Agreement.

“Term Documents” has the meaning assigned that term in the Intercreditor
Agreement.

“Term Priority Collateral” has the meaning assigned that term in the
Intercreditor Agreement.

“Term Secured Parties” has the meaning assigned that term in the Intercreditor
Agreement.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any Trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement (not
including vendor or distribution agreements that allow incidental use of
intellectual property rights in connection with the sale or distribution of such
products or services).

“Trademarks” means all of the following now owned or hereafter acquired by any
Grantor: (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, the goodwill of the business symbolized thereby or
associated therewith, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office or any similar offices in any State of the United States or any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule 7(b) to the Perfection
Certificate, (b) all rights and privileges arising under applicable Law with
respect to such Grantor’s use of any trademarks, (c) all extensions and renewals
thereof and amendments thereto, (d) all income, fees, royalties, damages and
payments now and hereafter due and/or payable with respect to any of the
foregoing, including damages, claims and payments for past, present or future
infringements thereof, (e) all rights corresponding thereto throughout the world
and (f) all rights to sue for past, present and future infringements or
dilutions thereof or other injuries thereto.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if by reason of mandatory provisions of law,
perfection, or the effect of perfection or non-perfection or the priority of a
security interest in any Collateral or the

 

   - 6 -    Form of ABL Security Agreement

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availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, “UCC” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection or priority or availability of such remedy, as the case may be.

“UFCA” has the meaning assigned to such term in Article VII.

“UFTA” has the meaning assigned to such term in Article VII.

ARTICLE II

Pledge of Securities

Section 2.01. Pledge. As security for the payment or performance, as the case
may be, in full of the Secured Obligations, each Grantor hereby assigns and
pledges to the Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, and hereby grants to the Collateral Agent, its successors
and assigns, for the benefit of the Secured Parties, a continuing security
interest in, all of such Grantor’s right, title and interest in, to and under
(a) (i) all Equity Interests held by it (including those Equity Interests listed
on Schedule II other than those of the Inactive Subsidiaries and of J. Crew
Japan, Ltd.) and (ii) any other Equity Interests obtained in the future by such
Grantor and the certificates representing all such Equity Interests (the
foregoing clauses (i) and (ii) collectively, the “Pledged Equity”), in each case
including all dividends, distributions, return of capital, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Pledged Equity and all
warrants, rights or options issued thereon or with respect thereto; provided
that the Pledged Equity shall not include (A) more than 65% of the issued and
outstanding Equity Interests of (x) each Subsidiary that is a Foreign Subsidiary
that is directly owned by the Borrower or by any Subsidiary Guarantor and
(y) each Subsidiary that is a Domestic Subsidiary that is directly owned by the
Borrower or by any Subsidiary Guarantor and that is a disregarded entity for
United States Federal income tax purposes substantially all of the assets of
which consist of Equity Interests in one or more Foreign Subsidiaries, (B) any
Equity Interest of any Person (other than a Wholly-Owned Subsidiary), to the
extent not permitted or restricted by the terms of such Person’s organizational
or joint venture documents or other agreements with holders of such Equity
Interests, (C) any Equity Interest if, to the extent and for so long as the
pledge of such Equity Interest hereunder is prohibited by any applicable Law
(other than to the extent that any such prohibition would be rendered
ineffective pursuant to the UCC or any other applicable Law); provided that such
Equity Interest shall cease to be an Excluded Equity Interest at such time as
such prohibition ceases to be in effect, (D) any Equity Interest that the
Borrower and the Administrative Agent shall have agreed in writing to treat as
an Excluded Equity Interest for purposes hereof on account of the cost of
pledging such Equity Interest hereunder (including any material adverse tax
consequences to Holdings and its Affiliates resulting therefrom) being excessive
in view of the benefits to be obtained by the Secured Parties therefrom (any
Equity Interests excluded pursuant to clauses (A) through (D) above, the
“Excluded Equity Interests”); (b)(i) the Promissory Notes and any Instruments
evidencing indebtedness owned by it (including those listed opposite the name of
such Grantor on Schedule II) and (ii) any Promissory Notes and Instruments
evidencing

 

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indebtedness obtained in the future by such Grantor (the foregoing
clauses (i) and (ii) collectively, the “Pledged Debt”), in each case including
all interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
Pledged Debt; (c) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms of this Section 2.01; (d) subject to
Section 2.06, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a), (b) and (c) above; (e) subject to Section 2.06, all rights and
privileges of such Grantor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of, and
Security Entitlements in respect of, any of the foregoing (the items referred to
in clauses (a) through (f) above being collectively referred to as the “Pledged
Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the benefit of the
Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.

Section 2.02. Delivery of the Pledged Collateral.

(a) On the Effective Date (in the case of any Grantor that grants a Lien on any
of its assets hereunder on the Effective Date (each, including, for the
avoidance of doubt, the Company, a “Effective Date Grantor”)) or on the date on
which it signs and delivers its first Security Agreement Supplement (in the case
of any other Grantor), each Grantor shall deliver or cause to be delivered to
the Collateral Agent, for the benefit of the applicable Secured Parties, any and
all Pledged Securities (other than any Uncertificated Securities, but only for
so long as such Securities remain uncertificated); provided that Promissory
Notes and Instruments evidencing Indebtedness shall only be so required to be
delivered to the extent required pursuant to paragraph (b) of this Section 2.02.
Thereafter, whenever such Grantor acquires any other Pledged Security (other
than any Uncertificated Securities, but only for so long as such Securities
remain uncertificated), such Grantor shall promptly deliver or cause to be
delivered to the Collateral Agent such Pledged Security as Collateral; provided
that Promissory Notes and Instruments evidencing Indebtedness shall only be so
required to be delivered to the extent required pursuant to paragraph (b) of
this Section 2.02.

(b) As promptly as practicable (and in any event within thirty (30) days after
receipt by Grantor (or such longer period as the Administrative Agent may agree
in its reasonable discretion)), each Grantor will cause any Indebtedness for
borrowed money having an aggregate principal amount equal to or in excess of
$5,000,000 owed to such Grantor by any Person (other than a Loan Party) to be
evidenced by a duly executed Promissory Note that is pledged and delivered to
the Collateral Agent, for the benefit of the Secured Parties, pursuant to the
terms hereof.

(c) Upon delivery to the Collateral Agent, (i) any certificate or promissory
note representing Pledged Collateral shall be accompanied by undated stock or
note powers, as applicable, duly executed in blank or other undated instruments
of transfer duly-executed in

 

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blank reasonably satisfactory to the Collateral Agent and by such other
instruments and documents as the Collateral Agent may reasonably request and
(ii) all other property comprising part of the Pledged Collateral shall be
accompanied by such instruments and documents as the Collateral Agent may
reasonably request. Each delivery of Pledged Securities shall be accompanied by
a schedule describing such Pledged Securities, which schedule shall be deemed to
supplement Schedule II and be made a part hereof; provided that failure to
provide any such schedule hereto shall not affect the validity of such pledge of
such Pledged Securities. Each schedule so delivered shall supplement any prior
schedules so delivered.

(d) Notwithstanding the foregoing, to the extent that any Effective Date Grantor
does not or cannot deliver any Pledged Collateral (other than Pledged Collateral
consisting of the Equity Interests of the Borrower or any wholly-owned Domestic
Subsidiary of the Borrower) on the Effective Date, after the use of commercially
reasonable efforts to do so, such Effective Date Grantor shall not be required
to deliver such Pledged Collateral until the date that is ninety (90) days after
the Effective Date (or such longer period as the Administrative Agent may agree
in its reasonable discretion (or, subject to the Intercreditor Agreement, to the
extent such Pledged Collateral constitutes Term Priority Collateral, as the Term
Agent may agree prior to the Discharge of Term Obligations)).

(e) The assignment, pledge and security interest granted in Section 2.01 are
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Pledged Collateral.

Section 2.03. Representations, Warranties and Covenants. Each Grantor, jointly
and severally, represents, warrants and covenants, as to itself and the other
Grantors, to and with the Collateral Agent, for the benefit of the Secured
Parties, that:

(a) Schedule II sets forth, as of the Effective Date and as of each date on
which a supplement to Schedule II is delivered pursuant to Section 2.02(c), a
true and correct list of (i) all the issued and outstanding units of each class
of the Equity Interests of the issuer thereof represented by the Pledged Equity
directly owned beneficially, or of record, by such Grantor specifying the issuer
and certificate number (if any) of, and the number and percentage of ownership
represented by, such Pledged Equity and (ii) all the Pledged Debt owned by such
Grantor (other than checks to be deposited in the ordinary course of business),
including all Promissory Notes and Instruments required to be pledged hereunder;

(b) the Pledged Equity issued by the Borrower, each other Grantor or their
respective Subsidiaries and the Pledged Debt (solely with respect to Pledged
Debt issued by a Person other than any Grantor or any of their respective
Subsidiaries, to the best of each Grantor’s knowledge) have been duly and
validly authorized and issued by the issuers thereof and (i) in the case of
Pledged Equity (other than Pledged Equity consisting of limited liability
company interests or partnership interests which, pursuant to the relevant
organizational or formation documents, cannot be fully paid and non-assessable),
are fully paid and nonassessable and (ii) in the case of Pledged Debt (solely
with respect to Pledged Debt issued by a Person other than any Grantor or any of
their respective Subsidiaries, to the best of each Grantor’s knowledge), are
legal, valid and binding obligations of the issuers thereof, subject to
applicable Debtor Relief Laws and general principles of equity;

 

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(c) Each of the Grantors (i) holds the Pledged Securities indicated on Schedule
II as owned by such Grantor free and clear of all Liens, other than (A) Liens
created by the Collateral Documents and, subject to the Intercreditor Agreement,
the Term Documents and (B) other Liens expressly permitted pursuant to
Section 9.1 of the Credit Agreement, (ii) will make no assignment, pledge,
hypothecation or transfer of, or create or permit to exist any security interest
in or other Lien on, the Pledged Collateral, other than (A) Liens created by the
Collateral Documents and the Term Documents, subject to the Intercreditor
Agreement, and (B) other Liens expressly permitted pursuant to Section 9.1 of
the Credit Agreement, and (iii) will defend its title or interest thereto or
therein against any and all Liens (other than the Liens permitted pursuant to
this Section 2.03(c)), however arising, of all Persons whomsoever;

(d) except for (i) restrictions and limitations imposed by the Loan Documents or
securities laws generally or by Liens expressly permitted pursuant to
Section 9.1 of the Credit Agreement and (ii) in the case of Pledged Equity of
Persons that are not Subsidiaries, transfer restrictions that exist at the time
of acquisition of Equity Interests in such Persons, the Pledged Equity is and
will continue to be freely transferable and assignable, and none of the Pledged
Equity is or will be subject to any option, right of first refusal, shareholders
agreement, charter or by-law or other organizational document provisions or
contractual restriction of any nature that might prohibit, impair, delay or
otherwise affect in any manner material and adverse to the Secured Parties the
pledge of such Pledged Equity hereunder, the sale or disposition thereof
pursuant hereto or the exercise by the Collateral Agent of rights and remedies
hereunder;

(e) each of the Grantors has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f) no consent or approval of any Governmental Authority, any securities
exchange or any other Person was or is necessary to the validity and perfection
of the pledge effected hereby (other than such as have been obtained and are in
full force and effect);

(g) by virtue of the execution and delivery by the Grantors of this Agreement,
when any Pledged Securities are delivered to the Collateral Agent in accordance
with this Agreement, the Collateral Agent will (i) obtain a legal, valid and
first-priority (subject only to any nonconsensual Liens permitted pursuant to
Section 9.1 of the Credit Agreement and, subject to the Intercreditor Agreement,
Liens granted to the Term Agent pursuant to the Term Documents or to any other
agent or trustee pursuant to any Permitted Refinancing of the Term Facility)
perfected lien upon and security interest in such Pledged Securities as security
for the payment and performance of the Secured Obligations, (ii) have Control of
such Pledged Securities and (iii) assuming that neither the Collateral Agent nor
any of the Secured Parties (and, in case of delivery of such Pledged Securities
to the Term Agent or to any other agent or trustee pursuant to any Permitted
Refinancing of the Term Facility, neither such Person nor any of the Term
Secured Parties (as defined in the Intercreditor Agreement)) have “notice of an
adverse claim” (as defined in Section 8-105 of the UCC) with respect to such
Pledged Securities at the time such Pledged Securities are delivered to the
Collateral Agent, be a protected purchaser (within the meaning of Section 8-303
of the UCC) thereof;

 

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(h) the pledge effected hereby is effective to vest in the Collateral Agent, for
the benefit of the Secured Parties, the rights of the Collateral Agent in the
Pledged Collateral as set forth herein; and

(i) subject to the terms of this Agreement and to the extent permitted by
applicable Law, each Grantor hereby agrees that upon the occurrence and during
the continuation of an Event of Default, it will comply with instructions of the
Collateral Agent with respect to the Equity Interests in such Grantor that
constitute Pledged Equity hereunder that are not certificated without further
consent by the applicable owner or holder of such Pledged Equity.

Section 2.04. Certification of Limited Liability Company and Limited Partnership
Interests. Each Grantor acknowledges and agrees that, to the extent any interest
in any limited liability company or limited partnership controlled by any
Grantor and pledged under Section 2.01 is a “security” within the meaning of
Article 8 of the UCC and is governed by Article 8 of the UCC, such interest
shall be represented by a certificate. Each Grantor further acknowledges and
agrees that with respect to any interest in any limited liability company or
limited partnership controlled on or after the date hereof by such Grantor and
pledged hereunder that is not a “security” within the meaning of Article 8 of
the UCC, such Grantor shall at no time elect to treat any such interest as a
“security” within the meaning of Article 8 of the UCC, nor shall such interest
be represented by a certificate, unless such election and such interest is
thereafter represented by a certificate that is promptly delivered to the
Collateral Agent, subject to the Intercreditor Agreement, pursuant to the terms
hereof.

Section 2.05. Registration in Nominee Name; Denominations. If an Event of
Default shall have occurred and be continuing and the Collateral Agent shall
have given the Borrower notice of its intent to exercise such rights, (a) the
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to cause each of the Pledged Securities to be
transferred of record into the name of the Collateral Agent and (b) the
Collateral Agent shall have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement; provided that, notwithstanding the
foregoing, if a Bankruptcy Event of Default shall have occurred and be
continuing, the Collateral Agent shall not be required to give the notice
referred to above in order to exercise the rights described above. Each Grantor
will promptly give to the Collateral Agent copies of any material notices
received by it with respect to Pledged Securities registered in the name of such
Grantor. Each Grantor will take any and all actions reasonably requested by the
Collateral Agent to facilitate compliance with this Section 2.05.

Section 2.06. Voting Rights; Dividends and Interest. (a) Unless and until an
Event of Default shall have occurred and be continuing and the Collateral Agent
shall have notified the Borrower that the rights of the Grantors under this
Section 2.06 are being suspended:

(i) Each Grantor shall be entitled to exercise any and all voting and/or other
consensual rights and powers inuring to an owner of Pledged Securities or any
part thereof for any purpose consistent with the terms of this Agreement, the
Credit Agreement and the other Loan Documents; provided that such rights and
powers shall not be exercised in any manner that could materially and adversely
affect the rights inuring to a holder of any Pledged Securities or the rights
and remedies of any of the Collateral Agent or the other Secured Parties under
this Agreement, the Credit Agreement or any other Loan Document or the ability
of the Secured Parties to exercise the same.

 

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(ii) The Collateral Agent shall promptly execute and deliver to each Grantor, or
cause to be executed and delivered to such Grantor, all such proxies, powers of
attorney and other instruments as such Grantor may reasonably request in writing
for the purpose of enabling such Grantor to exercise the voting and/or
consensual rights and powers it is entitled to exercise pursuant to subparagraph
(i) above, in each case as shall be specified in such request and be in form and
substance reasonably satisfactory to the Collateral Agent.

(iii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Securities, to the extent (and only to the extent) that
such dividends, interest, principal and other distributions are permitted by,
and otherwise paid or distributed in accordance with, the terms and conditions
of the Credit Agreement, the other Loan Documents and applicable Laws; provided
that any noncash dividends, interest, principal or other distributions that
would constitute Pledged Equity or Pledged Debt, whether resulting from a
subdivision, combination or reclassification of the outstanding Equity Interests
of the issuer of any Pledged Securities or received in exchange for Pledged
Securities or any part thereof, or in redemption thereof, or as a result of any
merger, consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the Pledged
Collateral, and, if received by any Grantor, shall not be commingled by such
Grantor with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Collateral Agent
and the other Secured Parties and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement reasonably
requested by the Collateral Agent). So long as no Event of Default has occurred
and is continuing, the Collateral Agent shall promptly deliver to each Grantor
(at the expense of such Grantor) any Pledged Securities in its possession if
requested to be delivered to the issuer thereof in connection with any exchange
or redemption of such Pledged Securities.

(b) Upon the occurrence and during the continuance of any Event of Default,
after the Collateral Agent shall have notified the Borrower of the suspension of
the rights of the Grantors under Section 2.06(a), then all rights of any Grantor
to dividends, interest, principal or other distributions that such Grantor is
authorized to receive pursuant to Section 2.06(a)(iii) shall cease, and all such
rights shall thereupon become vested in the Collateral Agent, which shall have
the sole and exclusive right and authority to receive and retain such dividends,
interest, principal or other distributions. All dividends, interest, principal
or other distributions received by any Grantor contrary to the provisions of
this Section 2.06 shall be held in trust for the benefit of the Collateral Agent
and the other Secured Parties, shall be segregated from other property or funds
of such Grantor and shall be forthwith delivered to the Collateral Agent upon
demand in the same form as so received (with any necessary stock or note powers
and other instruments of transfer reasonably requested by the Collateral Agent).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph

 

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(b) shall be retained by the Collateral Agent in an account to be established by
the Collateral Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 6.02. After all Events of
Default have been cured or waived and the Borrower shall have delivered to the
Collateral Agent a certificate to such effect, the Collateral Agent shall
promptly repay to each Grantor (without interest) all dividends, interest,
principal or other distributions that such Grantor would otherwise be permitted
to retain pursuant to the terms of Section 2.06(a)(iii) in the absence of any
such Event of Default and that remain in such account, and such Grantor’s right
to receive and retain any and all dividends, interest, principal and other
distributions paid on or distributed in respect of the Pledged Securities shall
be automatically reinstated.

(c) Upon the occurrence and during the continuance of an Event of Default, after
the Collateral Agent shall have notified the Borrower of the suspension of the
rights of the Grantors under Section 2.06(a), then all rights of any Grantor to
exercise the voting and consensual rights and powers it is entitled to exercise
pursuant to Section 2.06(a)(i), and the obligations of the Collateral Agent
under Section 2.06(a)(ii), shall cease, and all such rights shall thereupon
become, subject to the rights of the Term Agent under the Intercreditor
Agreement, vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers; provided that, unless otherwise directed by the Requisite Lenders, the
Collateral Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Grantors to exercise such
rights. After all Events of Default have been cured or waived and the Borrower
shall have delivered to the Collateral Agent a certificate to such effect, each
Grantor shall have the exclusive right to exercise the voting and/or consensual
rights and powers that such Grantor would otherwise be entitled to exercise
pursuant to the terms of Section 2.06(a)(i), and the obligations of the
Collateral Agent under Section 2.06(a)(ii) shall be reinstated.

(d) Any notice given by the Collateral Agent to the Borrower suspending the
rights of the Grantors under this Section 2.06, (i) shall be given in writing,
(ii) may be given with respect to one or more of the Grantors at the same or
different times and (iii) may suspend the rights of the Grantors under
Sections 2.06(a)(i) or (iii) in part without suspending all such rights (as
specified by the Collateral Agent in its sole and absolute discretion) and
without waiving or otherwise affecting the Collateral Agent’s rights to give
additional notices from time to time suspending other rights so long as an Event
of Default has occurred and is continuing. Notwithstanding anything to the
contrary contained in Section 2.06(a), (b) or (c), if a Bankruptcy Event of
Default shall have occurred and be continuing, the Collateral Agent shall not be
required to give any notice referred to in said Sections in order to exercise
any of its rights described in such Sections, and the suspension of the rights
of each of the Grantors under each such Section shall be automatic upon the
occurrence of such Bankruptcy Event of Default.

Section 2.07. Collateral Agent Not a Partner or Limited Liability Company
Member. Nothing contained in this Agreement shall be construed to make the
Collateral Agent or any other Secured Party liable as a member of any limited
liability company or as a partner of any partnership and neither the Collateral
Agent nor any other Secured Party by virtue of this Agreement or otherwise
(except as referred to in the following sentence) shall have any of the duties,
obligations or liabilities of a member of any limited liability company or as a
partner in any partnership. The parties hereto expressly agree that, unless the
Collateral Agent shall

 

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become the absolute owner of Pledged Equity consisting of a limited liability
company interest or a partnership interest pursuant hereto, this Agreement shall
not be construed as creating a partnership or joint venture among the Collateral
Agent, any other Secured Party, any Grantor and/or any other Person.

ARTICLE III

Security Interests in Personal Property

Section 3.01. Security Interest.

(a) As security for the payment or performance, as the case may be, in full of
the Secured Obligations, each Grantor hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest (the “Security Interest”) in, all of such Grantor’s right, title and
interest in, to or under any and all of the following assets and properties,
whether now owned or at any time hereafter acquired by such Grantor or in which
such Grantor now has or at any time in the future may acquire any right, title
or interest (collectively, the “Article 9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Documents;

(iv) all Equipment;

(v) all General Intangibles;

(vi) all Instruments;

(vii) all Inventory;

(viii) all Investment Property:

(ix) all books and records pertaining to the Article 9 Collateral;

(x) all Goods and Fixtures;

(xi) all Money, cash, cash equivalents and Deposit Accounts;

(xii) all Letter-of-Credit Rights;

(xiii) all Commercial Tort Claims described on Schedule III from time to time;

(xiv) the Collateral Account, and all cash, Money, Securities and other
investments deposited therein;

 

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(xv) all Supporting Obligations;

(xvi) all Security Entitlements in any or all of the foregoing;

(xvii) all Intellectual Property; and

(xviii) to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing;

provided that “Collateral” shall not include any of the following assets or
property, each being an “Excluded Property”: (i) any “intent to use” trademark
application, solely during the period in which the grant of a security interest
therein would impair the validity or enforceability of such intent-to-use
trademark application under applicable federal law, after which period such
application shall be automatically subject to the security interest granted
herein and deemed to be included in the Collateral, (ii) the Excluded Equity
Interests, (iii) any specifically identified asset with respect to which the
Collateral Agent has confirmed in writing to the Grantors its reasonable
determination, in consultation with the Borrower, that the costs or other
consequences (including adverse tax consequences) of providing a security
interest is excessive in view of the practical benefits to be obtained by the
Secured Parties, (iv) any assets securing purchase money obligations or
Capitalized Lease Obligations permitted to be incurred under the Credit
Agreement, to the extent that the terms of the agreements relating to such Lien
prohibit the security interest under this Agreement from attaching to such
assets, (v) any particular asset, if the pledge thereof or the security interest
therein is prohibited by applicable Law other than to the extent such
prohibition is rendered ineffective under the UCC or other applicable Law
notwithstanding such prohibition, (vi) any rights of a Grantor arising under or
evidenced by any contract, lease, instrument, license or agreement to the extent
the pledges thereof and security interests therein are prohibited or restricted
by such contract, lease, instrument, license or other agreement, other than
Proceeds and receivables thereof, except to the extent (x) the pledge of such
rights is deemed effective under the UCC or other applicable Law or principle of
equity notwithstanding such prohibition or restriction, or (y) such prohibition
or restriction is deemed ineffective under the UCC or other applicable Law or
principle of equity, (vii) licenses and any other property and assets to the
extent that the Collateral Agent may not validly possess a security interest
therein under applicable Laws (including, without limitation, rules and
regulations of any Governmental Authority) to the extent such applicable Laws,
rules or regulations are not rendered ineffective by the UCC or other applicable
Law, or the pledge or creation of a security interest in which would require
governmental consent, approval, license or authorization (except that Proceeds
of dispositions thereof in accordance with applicable Law (including, without
limitation, rules and regulations of any Governmental Authority) shall
constitute Collateral), provided that Collateral shall include to the maximum
extent permitted by applicable Law all rights incident or appurtenant to such
licenses, property and assets (except to the extent any Lien on such asset in
favor of the Collateral Agent requires consent, approval or authorization from
any Governmental Authority) and the right to receive all Proceeds realized from
the sale, assignment or transfer of such licenses, property and assets, or
(viii) any governmental licenses or state or local franchises, charters and
authorizations, to the extent security interests in such licenses, franchises,
charters or authorizations are prohibited or restricted thereby (except to the
extent such prohibition or restriction is deemed ineffective under

 

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the UCC or other applicable Law or principle of equity). Each Grantor shall, if
requested to do so by the Collateral Agent, use commercially reasonable efforts
to obtain any such required consent that is reasonably obtainable with respect
to Collateral described in clause (vi) above which the Collateral Agent
reasonably determines to be material.

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent for the
benefit of the Secured Parties at any time and from time to time to file in any
relevant jurisdiction any financing statements or continuation statements
(including fixture filings) with respect to the Article 9 Collateral or any part
thereof and amendments thereto that (i) describe the collateral covered thereby
in any manner that the Administrative Agent or the Collateral Agent reasonably
determines is necessary or advisable to ensure the perfection of the security
interest in the Article 9 Collateral granted under this Agreement including
indicating the Collateral as all assets or all personal property of such Grantor
or words of similar effect and (ii) contain the information required by
Article 9 of the UCC of each applicable jurisdiction for the filing of any
financing statement or amendment, including (A) whether such Grantor is an
organization, the type of organization and any organizational identification
number issued to such Grantor and (B) in the case of a financing statement filed
as a fixture filing, a sufficient description of the real property to which such
Article 9 Collateral relates. Each Grantor agrees to provide such information to
the Collateral Agent promptly upon request.

(c) The Security Interest is granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or in any way alter or modify,
any obligation or liability of any Grantor with respect to or arising out of the
Article 9 Collateral.

(d) Each Grantor hereby further authorizes the Collateral Agent to file a Grant
of Security Interest substantially in the form of Exhibit III, IV or V, as
applicable, covering relevant IP Collateral consisting of Patents (and Patents
for which applications are pending), registered Trademarks (and Trademarks for
which registration applications are pending) and registered Copyrights (and
Copyrights for which registration applications are pending) with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office), as applicable, and such other documents as may be necessary
or advisable for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by such Grantor hereunder, without the
signature of such Grantor, and naming such Grantor, as debtor, and the
Collateral Agent, as secured party.

Section 3.02. Representations and Warranties. Each Grantor represents and
warrants, as to itself and the other Grantors, to the Collateral Agent and the
Secured Parties that:

(a) Each Grantor has good and valid rights (not subject to any Liens other than
Liens permitted by Section 9.1 of the Credit Agreement) and/or good or
marketable title in the Article 9 Collateral with respect to which it has
purported to grant a Security Interest hereunder (which rights and/or title, are
in any event, sufficient under Section 9-203 of the UCC), and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Article 9 Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval that has been
obtained.

 

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(b) The Perfection Certificate has been duly executed and delivered to the
Collateral Agent and the information set forth therein, including the exact
legal name of each Grantor and its jurisdiction of organization, taken as a
whole, is correct and complete in all material respects as of the Effective
Date. The UCC financing statements (including fixture filings, as applicable)
prepared by the Collateral Agent based upon the information provided to the
Collateral Agent in the Perfection Certificate for filing in each governmental,
municipal or other office specified in Schedule IV of this Agreement (or
specified by notice from the applicable Grantor to the Collateral Agent after
the Effective Date in the case of filings, recordings or registrations required
by Section 8.11 of the Credit Agreement and the Collateral and Guarantee
Requirement), are all the filings, recordings and registrations (other than any
filings required to be made in the United States Patent and Trademark Office or
the United States Copyright Office in order to perfect the Security Interest in
Article 9 Collateral consisting of Intellectual Property) necessary to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the benefit of the Secured Parties) in respect of all Article 9 Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration with respect to such
Article 9 Collateral is necessary in any such jurisdiction, except as provided
under applicable Law with respect to the filing of continuation statements. Each
Grantor represents and warrants that, as of the Effective Date, fully executed
Grants of Security Interest in the form attached as Exhibit III, IV or V, as
applicable, containing a description of all IP Collateral consisting of Patents
(and Patents for which applications are pending), registered Trademarks (and
Trademarks for which registration applications are pending) or registered
Copyrights (and Copyrights for which registration applications are pending), as
applicable, have been delivered to the Collateral Agent for recording by the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205
and the regulations thereunder.

(c) The Security Interest constitutes (i) a legal and valid security interest in
all the Article 9 Collateral securing the payment and performance of the Secured
Obligations, (ii) subject to the filings described in Section 3.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement in the United States (or any political subdivision thereof) and its
territories and possessions pursuant to the UCC and (iii) a security interest
that shall be perfected in all Article 9 Collateral (other than with respect to
any Copyright that is not material to the business of the Grantors, taken as a
whole) in which a security interest may be perfected upon the receipt and
recording of the relevant Grants of Security Interest with the United States
Patent and Trademark Office and the United States Copyright Office, as
applicable, within the three month period (commencing as of the date hereof)
pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 or the one month period
(commencing as of the date hereof) pursuant to 17 U.S.C. § 205. The Security
Interest is and shall be prior to any other Lien on any of the Article 9
Collateral, other than (i) any nonconsensual Lien that is expressly permitted
pursuant to Section 9.1 of the Credit Agreement and has priority as a matter of
law and (ii) any other Lien that is expressly permitted pursuant to Section 9.1
of the Credit Agreement and which, in the case of Liens permitted pursuant to
Section 9.1(w) of the Credit Agreement, are subject at all times to the
Intercreditor Agreement.

 

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(d) The Article 9 Collateral is owned by the Grantors free and clear of any
Lien, except for Liens expressly permitted pursuant to Section 9.1 of the Credit
Agreement. None of the Grantors has filed or consented to the filing of (i) any
financing statement or analogous document under the UCC or any other applicable
Laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor
assigns any Article 9 Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with the United States Patent and Trademark
Office or the United States Copyright Office, or (iii) any assignment in which
any Grantor assigns any Article 9 Collateral or any security agreement or
similar instrument covering any Article 9 Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect, except, in each case, for Liens expressly permitted pursuant to
Section 9.1 of the Credit Agreement.

(e) All Commercial Tort Claims of each Grantor where the amount of the damages
claimed by such Grantor is in excess of $5,000,000 in existence on the date of
this Agreement (or on the date upon which such Grantor becomes a party to this
Agreement) are described on Schedule III hereto.

(f) C & W Outlet, Inc., a New York corporation (“C & W”) and ERL, Inc., a New
Jersey corporation (“ERL” and together with C & W, the “Inactive Subsidiaries”),
are inactive, hold no assets or liabilities, and will be dissolved as required
by Section 3.03(h). J. Crew Japan, Ltd. holds no assets or liabilities other
than the internet domain name jcrew.co.jp. and no more than $50,000 in cash.

(g) Except as could not reasonably be expected to have a Material Adverse
Effect, with respect to the IP Collateral:

(i) such Grantor is the exclusive owner of all right, title and interest in and
to the IP Collateral or has the right or license to use the IP Collateral
subject only to the terms of the Licenses;

(ii) the operation of such Grantor’s business as currently conducted and the use
of the IP Collateral in connection therewith do not conflict with, infringe,
misappropriate, dilute, misuse or otherwise violate the intellectual property
rights of any third party;

(iii) the IP Collateral set forth on the Perfection Certificate includes all of
the patents, patent applications, domain names, trademark registrations and
applications, copyright registrations and applications owned by such Grantor as
of the date hereof;

(iv) the IP Collateral is subsisting and has not been adjudged invalid or
unenforceable in whole or in part, and to such Grantor’s knowledge, is valid and
enforceable. Such Grantor is not aware of any uses of any material item of IP
Collateral that could be expected to lead to such item becoming invalid or
unenforceable;

(v) such Grantor has made or performed all filings, recordings and other acts
and has paid all required fees and taxes to maintain and protect its interest in
each and every item of IP Collateral in full force and effect, and to protect
and maintain its interest therein;

 

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(vi) no claim, action, suit, investigation, litigation or proceeding has been
asserted or is pending or threatened against such Grantor (A) based upon or
challenging or seeking to deny or restrict the Grantor’s rights in or use of any
of the IP Collateral, (B) alleging that the Grantor’s rights in or use of the IP
Collateral or that any services provided by, processes used by, or products
manufactured or sold by, such Grantor infringe, misappropriate, dilute, misuse
or otherwise violate any patent, trademark, copyright or any other proprietary
right of any third party, or (C) alleging that the IP Collateral is being
licensed or sublicensed in violation or contravention of the terms of any
license or other agreement. To such Grantor’s knowledge, no Person is engaging
in any activity that infringes, misappropriates, dilutes, misuses or otherwise
violates the material IP Collateral or the Grantor’s rights in or use thereof.
The consummation of the transactions contemplated by the Loan Documents will not
result in the termination or impairment of any of the IP Collateral;

(vii) with respect to each License: (A) such License is valid and binding and in
full force and effect; (B) such Grantor has not received any notice of
termination or cancellation under such License; (C) such Grantor has not
received any notice of a breach or default under such License; and (D) neither
such Grantor nor, to such Grantor’s knowledge, any other party to such License
is in breach or default thereof in any material respect, and no event has
occurred that, with notice or lapse of time or both, would constitute such a
breach or default or permit termination, modification or acceleration under such
License; and

(viii) to such Grantor’s knowledge, (A) none of the material trade secrets of
such Grantor has been used, divulged, disclosed or appropriated to the detriment
of such Grantor for the benefit of any other Person other than such Grantor;
(B) no employee, independent contractor or agent of such Grantor has
misappropriated any material trade secrets of any other Person in the course of
the performance of his or her duties as an employee, independent contractor or
agent of such Grantor; and (C) no employee, independent contractor or agent of
such Grantor is in default or breach of any material term of any employment
agreement, non-disclosure agreement, assignment of inventions agreement or
similar agreement or contract relating in any way to the protection, ownership,
development, use or transfer of such Grantor’s material IP Collateral.

Section 3.03. Covenants.

(a) The Borrower agrees to promptly (and in any event within thirty (30)
calendar days of such event, or such later date as the Collateral Agent may
agree in its reasonable discretion) notify the Collateral Agent of any change
(i) in the legal name of any Grantor, (ii) in the identity or type of
organization or corporate structure of any Grantor, (iii) in the jurisdiction of
organization of any Grantor, (iv) in the location of any Grantor under the UCC
or (v) in the organizational identification number of any Grantor. In addition,
if any Grantor does not have an organizational identification number on the
Effective Date (or the date such Grantor becomes a party to this Agreement) and
later obtains one, the Borrower shall promptly thereafter notify the Collateral
Agent of such organizational identification number and shall take all actions
reasonably satisfactory to the Collateral Agent to the extent necessary to
maintain the security interests (and the priority thereof) of the Collateral
Agent in the Collateral intended to be granted hereby fully perfected and in
full force and effect. The Loan Parties agree not to effect or permit any change
referred to in the preceding sentence unless all filings, publications and

 

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registrations, have been made (or will be made in a timely fashion) under the
UCC or other applicable Law that are required in order for the Collateral Agent
to continue at all times following such change to have a valid, legal and
perfected first priority security interest to the extent required under the Loan
Documents (subject only to (i) any nonconsensual Lien that is expressly
permitted pursuant to Section 9.1 of the Credit Agreement and has priority as a
matter of law and (ii) Liens expressly permitted pursuant to Section 9.1 of the
Credit Agreement and which, in the case of Liens permitted in respect of the
Term Facility pursuant to Section 9.1 thereof, are subject to the Intercreditor
Agreement) in all the Collateral for its own benefit and the benefit of the
other Secured Parties.

(b) Each Grantor shall, at its own expense, take any and all commercially
reasonable actions necessary to defend title to the Article 9 Collateral against
all Persons, except with respect to Article 9 Collateral that such Grantor
determines in its reasonable business judgment is no longer necessary or
beneficial to the conduct of the business, and to defend the Security Interest
of the Collateral Agent in the Article 9 Collateral and the priority thereof
against any Lien not permitted pursuant to Section 9.1 of the Credit Agreement.

(c) At the time of delivery of annual financial statements with respect to the
preceding Fiscal Year pursuant to Section 7.1(a) of the Credit Agreement and
delivery of the related Compliance Certificate, the Borrower shall deliver to
the Collateral Agent a certificate executed by a Responsible Officer of the
Borrower setting forth the information required pursuant to the Perfection
Certificate (other than Section 1(b) and Section 1(c)(ii) of the Perfection
Certificate) or confirming that there has been no change in such information
since the date of such certificate or the date of the most recent certificate
delivered pursuant to this Section 3.03(c).

(d) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver
and cause to be duly filed all such further instruments and documents and take
all such actions as the Collateral Agent may from time to time reasonably
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and Taxes required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any financing
statements (including fixture filings) or other documents in connection herewith
or therewith. If any amount payable under or in connection with any of the
Article 9 Collateral (other than by a Loan Party) that equals or exceeds
$5,000,000 (or, in the case of ABL Priority Collateral, $2,000,000) shall be or
become evidenced by any Promissory Note or Instrument, such Promissory Note or
Instrument shall be promptly pledged and, subject to the Intercreditor
Agreement, delivered to the Collateral Agent, for the benefit of the Secured
Parties, in a manner reasonably satisfactory to the Collateral Agent.

(e) At its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not permitted pursuant
to Section 9.1 of the Credit Agreement, and may pay for the maintenance and
preservation of the Article 9 Collateral to the extent any Grantor fails to do
so as required by the Credit Agreement, this Agreement or any other Loan
Document and within a reasonable period of time after the Collateral Agent has
requested that it do so, and each Grantor jointly and severally agrees to
reimburse the Collateral

 

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Agent within ten (10) days after demand for any payment made or any reasonable
out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided that nothing in this paragraph shall be interpreted as
excusing any Grantor from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any covenants or other
promises of any Grantor with respect to taxes, assessments, charges, fees,
Liens, security interests or other encumbrances and maintenance as set forth
herein or in the other Loan Documents.

(f) If at any time any Grantor shall take a security interest in any property of
an Account Debtor or any other Person the value of which equals or exceeds
$2,000,000 to secure payment and performance of an Account or related contracts,
such Grantor shall promptly assign such security interest to the Collateral
Agent for the benefit of the applicable Secured Parties. Such assignment need
not be filed of public record unless necessary to continue the perfected status
of the security interest against creditors of and transferees from the Account
Debtor or other Person granting the security interest.

(g) Each Grantor (rather than the Collateral Agent or any Secured Party) shall
remain liable (as between itself and any relevant counterparty) to observe and
perform all the conditions and obligations to be observed and performed by it
under each contract, agreement or instrument relating to the Article 9
Collateral, all in accordance with the terms and conditions thereof, and each
Grantor jointly and severally agrees to indemnify and hold harmless the
Collateral Agent and the Secured Parties from and against any and all liability
for such performance.

(h) The Grantors agree to use commercially reasonable efforts to dissolve the
Inactive Subsidiaries as promptly as practical after the Effective Date.

(i) Notwithstanding anything in this Agreement to the contrary other than the
filing of a UCC financing statement, (i) no actions shall be required to perfect
the security interest granted hereunder in Letter-of-Credit Rights, (ii) no
actions shall be required to perfect the security interest granted hereunder in
motor vehicles and other assets subject to certificates of title and (iii) no
Grantor shall be required to complete any filings or other action with respect
to the perfection of the security interests created hereby in any jurisdiction
outside of the United States or any State thereof.

Section 3.04. Other Actions. In order to further insure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Security Interest, each Grantor agrees, in each case at such Grantor’s own
expense and subject to the Intercreditor Agreement, to take the following
actions with respect to the following Article 9 Collateral:

(a) Instruments. If any Grantor shall at any time hold or acquire any
Instruments constituting Collateral and evidencing an amount equal to or in
excess of $5,000,000 (or, in the case of ABL Priority Collateral, $2,000,000)
such Grantor shall promptly endorse, assign and deliver the same to the
Collateral Agent for the benefit of the applicable Secured Parties, accompanied
by such undated instruments of transfer or assignment duly executed in blank as
the Collateral Agent may from time to time reasonably request.

 

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(b) Investment Property. Except to the extent otherwise provided in Article II,
if any Grantor shall at any time hold or acquire any Certificated Securities,
such Grantor shall promptly endorse, assign and deliver the same to the
Collateral Agent for the benefit of the applicable Secured Parties, accompanied
by such undated instruments of transfer or assignment duly executed in blank as
the Collateral Agent may from time to time reasonably request. If any Securities
now or hereafter acquired by any Grantor are uncertificated and are issued to
such Grantor or its nominee directly by the issuer thereof, upon the Collateral
Agent’s request and following the occurrence of an Event of Default such Grantor
shall promptly notify the Collateral Agent thereof and, at the Collateral
Agent’s reasonable request, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (but only to the extent
such Securities and other Investment Property constitute Collateral) (i) cause
the issuer to agree to comply with instructions from the Collateral Agent as to
such Securities, without further consent of any Grantor or such nominee, or
(ii) arrange for the Collateral Agent to become the registered owner of the
Securities. If any Securities, whether certificated or uncertificated, or other
Investment Property are held by any Grantor or its nominee through a Securities
Intermediary, upon the Collateral Agent’s request and following the occurrence
of an Event of Default (or, with respect to a Qualified Cash Securities Account,
during the continuation of any Qualified Cash Trigger Period), such Grantor
shall immediately notify the Collateral Agent thereof and at the Collateral
Agent’s request and option, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent shall either (i) cause such
Securities Intermediary to agree to comply with Entitlement Orders or other
instructions from the Collateral Agent to such Securities Intermediary as to
such Security Entitlements without further consent of any Grantor or such
nominee, or (ii) in the case of Financial Assets or other Investment Property
held through a Securities Intermediary, arrange for the Collateral Agent to
become the Entitlement Holder with respect to such Investment Property, with the
Grantor being permitted, only with the consent of the Collateral Agent, to
exercise rights to withdraw or otherwise deal with such Investment Property.
Notwithstanding the foregoing, unless and until an Event of Default has occurred
and is continuing, (A) other than during a Qualified Cash Trigger Period, the
Collateral Agent agrees with each of the Grantors that the Collateral Agent
shall not give any such Entitlement Orders or instructions or directions to any
such issuer, or Securities Intermediary, and shall not withhold its consent to
the exercise of any withdrawal or dealing rights by any Grantor and (B) during a
Qualified Cash Trigger Period, the Collateral Agent agrees to issue Entitlement
Orders as reasonably requested by the Borrower with respected to any Qualified
Cash Securities Account; provided that, with respect to this subclause (B), to
the extent any such Entitlement Order requested by the Borrower constitutes
withdrawal or transfer of Security Entitlements, prior to any such withdrawal or
transfer the Borrower shall deliver to the Administrative Agent a Borrowing Base
Certificate giving pro forma effect to the proposed withdrawal or transfer of
Security Entitlements.

(c) Commercial Tort Claims. If any Grantor shall at any time after the date of
this Agreement acquire a Commercial Tort Claim in an amount (taking the greater
of the aggregate claimed damages thereunder or the reasonably estimated value
thereof) of $5,000,000 or more, such Grantor shall promptly notify the
Collateral Agent thereof in a writing signed by such Grantor and provide
supplements to Schedule III describing the details thereof and shall grant to
the Collateral Agent a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement.

 

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ARTICLE IV

Special Provisions Concerning IP Collateral

Section 4.01. Grant of License to Use Intellectual Property.

Without limiting the provisions of Section 3.01 hereof or any other rights of
the Collateral Agent as the holder of a Security Interest in any IP Collateral,
for the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Agreement at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent, for the benefit of the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to the Grantors) to use, license or sublicense any of the IP
Collateral now owned or hereafter acquired by such Grantor, and wherever the
same may be located (whether or not any license agreement by and between any
Grantor and any other Person relating to the use of such IP Collateral may be
terminated hereafter), and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof,
provided, however, that any such license granted by the Collateral Agent to a
third party shall include reasonable and customary terms necessary to preserve
the existence, validity and value of the affected IP Collateral, including
without limitation, provisions requiring the continuing confidential handling of
trade secrets, requiring the use of appropriate notices and prohibiting the use
of false notices, protecting and maintaining the quality standards of the
Trademarks in the manner set forth below (it being understood and agreed that,
without limiting any other rights and remedies of the Collateral Agent under
this Agreement, any other Loan Document or applicable Law, nothing in the
foregoing license grant shall be construed as granting the Collateral Agent
rights in and to such IP Collateral above and beyond (x) the rights to such IP
Collateral that each Grantor has reserved for itself and (y) in the case of IP
Collateral that is licensed to any such Grantor by a third party, the extent to
which such Grantor has the right to grant a sublicense to such IP Collateral
hereunder).

The use of such license by the Collateral Agent may only be exercised, at the
option of the Collateral Agent, during the continuation of an Event of Default;
provided that any license, sublicense or other transaction entered into by the
Collateral Agent in accordance herewith shall immediately terminate at such time
as the Collateral Agent is no longer lawfully entitled to exercise its rights
and remedies under this Agreement. Nothing in this Section 4.01 shall require a
Grantor to grant any license that is prohibited by any rule of law, statute or
regulation, or is prohibited by, or constitutes a breach or default under or
results in the termination of any contract, license, agreement, instrument or
other document evidencing, giving rise to or theretofore granted, with respect
to such property or otherwise unreasonably prejudices the value thereof to the
relevant Grantor. In the event the license set forth in this Section 4.01 is
exercised with regard to any Trademarks, then the following shall apply: (i) all
goodwill arising from any licensed or sublicensed use of any Trademark shall
inure to the benefit of the Grantor; (ii) the licensed or sublicensed Trademarks
shall only be used in association with goods or services of a quality and nature
consistent with the quality and reputation with which such Trademarks were
associated when used by Grantor prior to the exercise of the license rights set
forth herein; and (iii) at the Grantor’s request and expense, licensees and
sublicensees shall provide reasonable cooperation in any effort by the Grantor
to maintain the registration or otherwise secure the ongoing validity and
effectiveness of such licensed Trademarks, including, without limitation the
actions and conduct described in Section 4.02 below.

 

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Section 4.02 Protection of Collateral Agent’s Security.

(a) Except to the extent permitted by subsection 4.02(h) below, or to the extent
that failure to act could not reasonably be expected to have a Material Adverse
Effect, with respect to registration or pending application of each item of its
IP Collateral for which such Grantor has standing to do so, each Grantor agrees
to take, at its expense, all reasonable steps, including, without limitation, in
the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authority located in the United States to (i) maintain the validity
and enforceability of any registered IP Collateral and maintain such IP
Collateral in full force and effect, and (ii) pursue the registration and
maintenance of each Patent, Trademark, or Copyright registration or application,
now or hereafter included in such IP Collateral of such Grantor, including,
without limitation, the payment of required fees and taxes, the filing of
responses to office actions issued by the U.S. Patent and Trademark Office, the
U.S. Copyright Office or other governmental authorities, the filing of
applications for renewal or extension, the filing of affidavits under Sections 8
and 15 of the U.S. Trademark Act, the filing of divisional, continuation,
continuation-in-part, reissue and renewal applications or extensions, the
payment of maintenance fees and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings.

(b) Except to the extent permitted by subsection 4.02(h) below, or to the extent
that failure to act could not reasonably be expected to have a Material Adverse
Effect, no Grantor shall do or permit any act or knowingly omit to do any act
whereby any of its IP Collateral may lapse, be terminated, or become invalid or
unenforceable or placed in the public domain (or in case of a trade secret, lose
its competitive value).

(c) In the event that any Grantor becomes aware that any material item of the IP
Collateral is being infringed or misappropriated by a third party, such Grantor
shall promptly notify the Collateral Agent and shall take such actions, at its
expense, as such Grantor reasonably deems appropriate under the circumstances to
protect or enforce such IP Collateral, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.

(d) Each Grantor shall use proper statutory notice as commercially practical in
connection with its use of each item of its IP Collateral. Except to the extent
permitted by subsection 4.02(h) below, or to the extent that failure to act
could not reasonably be expected to have a Material Adverse Effect, no Grantor
shall do or permit any act or knowingly omit to do any act whereby any of its IP
Collateral may lapse or become invalid or unenforceable or placed in the public
domain.

(e) Except to the extent permitted by subsection 4.02(h) below, or to the extent
that failure to act could not reasonably be expected to have a Material Adverse
Effect, each Grantor shall take all reasonable steps to preserve and protect
each item of its IP Collateral, including, without limitation, maintaining the
quality of any and all products or services used or

 

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provided in connection with any of the Trademarks, consistent with the quality
of the products and services as of the date hereof, and taking all reasonable
steps necessary to ensure that all licensed users of any of the Trademarks abide
by the applicable license’s terms with respect to the standards of quality.

(f) Each Grantor agrees that, should it obtain an ownership or other interest in
any IP Collateral after the Effective Date (the “After-Acquired Intellectual
Property”) (i) the provisions of this Agreement shall automatically apply
thereto, and (ii) any such After-Acquired Intellectual Property and, in the case
of Trademarks, the goodwill symbolized thereby, shall automatically become part
of the IP Collateral subject to the terms and conditions of this Agreement with
respect thereto.

(g) Once every Fiscal Quarter of the Borrower, each Grantor shall sign and
deliver to the Collateral Agent an appropriate Security Agreement Supplement and
related Grant of Security Interest with respect to applications for registration
or registrations of IP Collateral owned or exclusively licensed by it as of the
last day of such fiscal quarter, to the extent that such IP Collateral is not
covered by any previous Security Agreement Supplement (and Grant of Security
Interests) so signed and delivered by it. In each case, it will promptly
cooperate as reasonably necessary to enable the Collateral Agent to make any
necessary or reasonably desirable recordations with the U.S. Copyright Office or
the U.S. Patent and Trademark Office, as appropriate.

(h) Notwithstanding the foregoing provisions of this Section 4.02 or elsewhere
in this Agreement, nothing in this Agreement shall prevent any Grantor from
abandoning or discontinuing the use or maintenance of any or its IP Collateral,
or from failing to take action to enforce license agreements or pursue actions
against infringers, if such Grantor determines in its reasonable business
judgment that such abandonment, discontinuance, or failure to take action is
desirable in the conduct of its business.

ARTICLE V

Collections

(a) Each Grantor hereby agrees to comply with the provisions of Section 8.12 of
the Credit Agreement to the extent applicable to such Grantor.

(b) Subject to Section 8.12 of the Credit Agreement, without the prior written
consent of the Collateral Agent, no Grantor shall modify or amend (i) the
instructions pursuant to any of the Credit Card Notifications, (ii) the Credit
Card Agreements, (iii) in the case of Cash Receipts or Deposit Accounts, the
Deposit Account Control Agreements or (iv) in the case of Qualified Cash or
Approved Securities Accounts, the Securities Account Control Agreements. Each
Grantor shall, and the Collateral Agent hereby authorizes each Grantor to,
enforce and collect all amounts owing on the Inventory, Accounts and related
contracts, for the benefit and on behalf of the Collateral Agent and the other
Secured Parties; provided, however, that such authorization may, at the
direction of the Collateral Agent, be terminated in accordance with the terms of
the Credit Agreement and the other Loan Documents after the occurrence and
during the continuance of any Cash Dominion Period.

 

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ARTICLE VI

Remedies

Section 6.01. Remedies Upon Default.

Upon the occurrence and during the continuance of an Event of Default, subject
to the Intercreditor Agreement, it is agreed that the Collateral Agent shall
have the right to exercise any and all rights afforded to a secured party under
this Agreement, the UCC or other applicable Law, and, subject to the
Intercreditor Agreement, also may, (i) require each Grantor to, and each Grantor
agrees that it will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place and time to be
designated by the Collateral Agent that is reasonably convenient to both
parties; (ii) occupy any premises owned or, to the extent lawful and permitted,
leased by any of the Grantors where the Collateral or any part thereof is
assembled or located for a reasonable period in order to effectuate its rights
and remedies hereunder or under law, without obligation to such Grantor in
respect of such occupation; provided that the Collateral Agent shall provide the
applicable Grantor with notice thereof prior to or promptly after such
occupancy; (iii) exercise any and all rights and remedies of any of the Grantors
under or in connection with the Collateral, or otherwise in respect of the
Collateral; provided that the Collateral Agent shall provide the applicable
Grantor with notice thereof prior to or promptly after such exercise;
(iv) withdraw any and all cash or other Collateral from any Collateral Account,
Approved Deposit Account or Approved Securities Account and apply such cash and
other Collateral to the payment of any and all Secured Obligations in the manner
provided in Section 6.02 of this Agreement; (v) subject to the mandatory
requirements of applicable Law and the notice requirements described below, sell
or otherwise dispose of all or any part of the Collateral securing the Secured
Obligations at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate and (vi) with respect to any IP
Collateral, on demand, cause the Security Interest to become an assignment,
transfer and conveyance of any of or all such IP Collateral (provided that no
such demand may be made unless an Event of Default has occurred and has
continued for thirty (30) days) by the applicable Grantors to the Collateral
Agent, or license or sublicense, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, any such IP Collateral throughout
the world on such terms and conditions and in such manner as the Collateral
Agent shall determine, provided, however, that such terms shall include all
terms and restrictions that customarily required to ensure the continuing
validity and effectiveness of the IP Collateral at issue, such as, without
limitation, notice, quality control and inurement provisions with regard to
Trademarks, patent designation provisions with regard to patents, and copyright
notices and restrictions or decompilation and reverse engineering of copyrighted
software, and confidentiality protections for trade secrets.

 

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Each Grantor acknowledges and recognizes that (a) the Collateral Agent may be
unable to effect a public sale of all or a part of the Collateral consisting of
securities by reason of certain prohibitions contained in the Securities Act of
1933, 15 U.S.C. §77, (as amended and in effect, the “Securities Act”) or the
securities laws of various states (the “Blue Sky Laws”), but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such securities for their
own account, for investment and not with a view to the distribution or resale
thereof, (b) private sales so made may be at prices and upon other terms less
favorable to the seller than if such securities were sold at public sales,
(c) neither the Collateral Agent nor any other Secured Party has any obligation
to delay sale of any of the Collateral for the period of time necessary to
permit such securities to be registered for public sale under the Securities Act
or the Blue Sky Laws, and (d) private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner. To the maximum extent permitted by Law, each Grantor hereby waives any
claim against any Secured Party arising because the price at which any
Collateral may have been sold at a private sale was less than the price that
might have been obtained at a public sale, even if the Collateral Agent accepts
the first offer received and does not offer such Collateral to more than one
offeree. Upon consummation of any such sale the Collateral Agent shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any sale of Collateral shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
Law) all rights of redemption, stay and appraisal which such Grantor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.

The Collateral Agent shall give the applicable Grantors ten (10) days’ written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the UCC or its equivalent in other jurisdictions) of the
Collateral Agent’s intention to make any sale of Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker’s board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice (if any) of such sale. The Collateral Agent may
conduct one or more going out of business sales, in the Collateral Agent’s own
right or by one or more agents and contractors. Such sale(s) may be conducted
upon any premises owned, leased, or occupied by any Grantor. The Collateral
Agent and any such agent or contractor, in conjunction with any such sale, may
augment the Inventory with other goods (all of which other goods shall remain
the sole property of the Collateral Agent or such agent or contractor). Any
amounts realized from the sale of such goods which constitute augmentations to
the Inventory (net of an allocable share of the costs and expenses incurred in
their disposition) shall be the sole property of the Collateral Agent or such
agent or contractor and neither any Grantor nor any Person claiming under or in
right of any Grantor shall have any interest therein. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause

 

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the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by applicable Law, private) sale made pursuant to this Agreement, any Secured
Party may bid for or purchase, free (to the extent permitted by applicable Law)
from any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released to the extent
permitted by applicable Law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to such Secured Party from any Grantor as a credit against the purchase
price, and such Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to any
Grantor therefor. For purposes of determining the Grantors’ rights in the
Collateral, a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof; the Collateral Agent shall be free
to carry out such sale pursuant to such agreement and no Grantor shall be
entitled to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the Secured
Obligations paid in full, provided, however, that such agreements shall include
all terms and restrictions that are customarily required to ensure the
continuing validity and effectiveness of the IP Collateral at issue, such as,
without limitation, quality control and inurement provisions with regard to
Trademarks, patent designation provisions with regard to patents, and copyright
notices and restrictions or decompilation and reverse engineering of copyrighted
software, and protecting the confidentiality of trade secrets. As an alternative
to exercising the power of sale herein conferred upon it, the Collateral Agent
may proceed by a suit or suits at law or in equity to foreclose this Agreement
and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court appointed receiver. Any sale pursuant to the provisions of
this Section 6.01 shall be deemed to conform to the commercially reasonable
standards as provided in Section 9-610(b) of the UCC or its equivalent in other
jurisdictions.

Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent
(and all officers, employees or agents designated by the Collateral Agent) as
such Grantor’s true and lawful agent (and attorney-in-fact) during the
continuance of an Event of Default and after notice to the Borrower of its
intent to exercise such rights (except in the case of a Bankruptcy Event of
Default, in which case no such notice shall be required), for the purpose of,
subject to the Intercreditor Agreement, (i) making, settling and adjusting
claims in respect of Article 9 Collateral under policies of insurance, endorsing
the name of such Grantor on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance, (ii) making all
determinations and decisions with respect thereto and (iii) obtaining or
maintaining the policies of insurance required by Section 8.5 of the Credit
Agreement or to pay any premium in whole or in part relating thereto. All sums
disbursed by the Collateral Agent in connection with this paragraph, including
reasonable out-of-pocket attorneys’ fees, court costs, expenses and other
charges relating thereto, shall be payable, within ten (10) days of demand, by
the Grantors to the Collateral Agent and shall be additional Secured Obligations
secured hereby.

 

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By accepting the benefits of this Agreement and each other Collateral Document,
the Secured Parties expressly acknowledge and agree that this Agreement and each
other Collateral Document may be enforced only by the action of the Collateral
Agent and that no other Secured Party shall have any right individually to seek
to enforce or to enforce this Agreement or to realize upon the security to be
granted hereby, it being understood and agreed that such rights and remedies may
be exercised by the Collateral Agent for the benefit of the Secured Parties upon
the terms of this Agreement and the other Collateral Documents.

Section 6.02. Application of Proceeds.

Subject to the Intercreditor Agreement, the Collateral Agent shall apply the
proceeds of any collection or sale of Collateral, including any Collateral
consisting of cash, in accordance with the provisions of Section 10.3 of the
Credit Agreement. The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof. It
is understood and agreed that the Grantors shall remain jointly and severally
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Secured Obligations.

ARTICLE VII

Indemnity, Subrogation and Subordination

Upon payment by any Grantor of any Secured Obligations, all rights of such
Grantor against the Borrower or any other Grantor arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
payment in full in cash of all the Secured Obligations (other than
(i) contingent indemnity obligations for then unasserted claims;
(ii) obligations and liabilities under Secured Hedge Agreements as to which
arrangements satisfactory to the applicable Hedge Bank shall have been made; or
(iii) Cash Management Obligations as to which arrangements satisfactory to the
applicable Cash Management Bank shall have been made) and the termination of all
Commitments to any Loan Party under any Loan Document. If any amount shall
erroneously be paid to the Borrower or any other Grantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any
such indebtedness of the Borrower or any other Grantor, such amount shall be
held in trust for the benefit of the Secured Parties and shall forthwith be paid
to the Collateral Agent to be credited against the payment of the Secured
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement and the other Loan Documents. Subject to the foregoing, to the
extent that any Grantor (other than the Borrower) shall, under this Agreement or
the Credit Agreement as a joint and several obligor, repay any of the Secured
Obligations (an “Accommodation Payment”), then the Grantor making such
Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each

 

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of the other Grantors in an amount equal to a fraction of such Accommodation
Payment, the numerator of which fraction is such other Grantor’s Allocable
Amount and the denominator of which is the sum of the Allocable Amounts of all
of the Grantors. As of any date of determination, the “Allocable Amount” of each
Grantor shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Grantor hereunder and under the
Credit Agreement without (a) rendering such Grantor “insolvent” within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent
Conveyance Act (“UFCA”), (b) leaving such Grantor with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Grantor
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.

ARTICLE VIII

Miscellaneous

Section 8.01. Notices.

All communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 12.8 of the
Credit Agreement. All communications and notices hereunder to a Grantor other
than the Borrower shall be given in care of the Borrower.

Section 8.02. Waivers; Amendment.

(a) No failure or delay by the Collateral Agent in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and
under the other Loan Documents are cumulative and are not exclusive of any other
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section 8.02, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Revolving Credit Loan or issuance
of a Letter of Credit shall not be construed as a waiver of any Default or Event
of Default, regardless of whether the Collateral Agent or any other Secured
Party may have had notice or knowledge of such Default or Event of Default at
the time.

(b) Subject to the Intercreditor Agreement, neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Collateral Agent and the
Grantor or Grantors with respect to which such waiver, amendment or modification
is to apply, subject to any consent required in accordance with Section 12.1 of
the Credit Agreement.

 

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Section 8.03. Collateral Agent’s Fees and Expenses; Indemnification.

(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 12.3 of
the Credit Agreement.

(b) Without limitation of its indemnification obligations under the other Loan
Documents, each Grantor jointly and severally agrees to indemnify the Collateral
Agent and the other Indemnitees (as defined in Section 12.4 of the Credit
Agreement) against, and hold each Indemnitee harmless from, any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including, without
limitation, all Attorney Costs of Shearman & Sterling LLP and, if reasonably
necessary, one local counsel in each relevant jurisdiction material to the
interests of all Indemnitees taken as a whole), imposed on, incurred by or
asserted against any such Indemnitee arising out of, in connection with, (a) the
execution, delivery, enforcement, performance or administration of this
Agreement or any other agreement, letter or instrument delivered in connection
with the transactions contemplated hereby or the consummation of the
transactions contemplated hereby, (b) the ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any
Collateral or (c) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory (including any investigation of, preparation for, or defense of
any pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether or not such investigation, litigation or proceeding is
brought by any Grantor, its directors, stockholders or creditors or an
Indemnitee or any other Person, whether or not any Indemnitee is otherwise a
party thereto and, in each case, whether or not caused by or arising, in whole
or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements (i) resulted from the gross
negligence, bad faith, or willful misconduct of such Indemnitee or of any
Affiliate or Related Indemnified Person of such Indemnitee, as determined by the
final non-appealable judgment of a court of competent jurisdiction, (ii) are
relating to disputes amongst Indemnitees other than (1) any claim against an
Indemnitee or its Related Parties in its capacity or in fulfilling its role as
Collateral Agent and (2) any claim arising out of any act or omission of the
Borrower or any of its Affiliates or (iii) subject to Section 3.1 of the Credit
Agreement, related to Taxes (other than Taxes relating to liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements indemnified under this Section 8.03(b)).
No Indemnitee nor any Grantor shall have any liability and each party hereby
waives, any claim against any other party to this Agreement or any Indemnitee,
for any special, punitive, indirect or consequential damages relating to this
Agreement or arising out of its activities in connection herewith or therewith
(whether before or after the Effective Date) (other than, in the case of any
Grantor, in respect of any such damages incurred or paid by an Indemnitee to a
third party).

(c) Any such amounts payable as provided hereunder shall be additional Secured
Obligations secured hereby and by the other Collateral Documents. The provisions
of this Section 8.03 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
repayment of any of the Secured Obligations, the invalidity or unenforceability
of any term or provision of this Agreement or any

 

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other Loan Document, any resignation of the Administrative Agent, Collateral
Agent, Swing Loan Lender or Issuer or any investigation made by or on behalf of
the Collateral Agent or any other Secured Party. All amounts due under this
Section 8.03 shall be payable within twenty (20) Business Days after written
demand therefor.

Section 8.04. Successors and Assigns.

Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the permitted successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of any
Grantor or the Collateral Agent that are contained in this Agreement shall bind
and inure to the benefit of their respective permitted successors and assigns.
Except as provided in Section 12.2 of the Credit Agreement, no Grantor may
assign any of its rights or obligations hereunder without the written consent of
the Collateral Agent.

Section 8.05. Survival of Agreement.

Without limitation of any provision of the Credit Agreement or Section 8.03
hereof, all covenants, agreements, indemnities, representations and warranties
made by the Grantors in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the Lenders
and shall survive the execution and delivery of the Loan Documents and the
making of any Revolving Credit Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such Lender or on its behalf and
notwithstanding that the Collateral Agent or any Lender may have had notice or
knowledge of any Default or Event of Default or incorrect representation or
warranty at the time any credit is extended under the Credit Agreement, and
shall continue in full force and effect until this Agreement is terminated as
provided in Section 8.13 hereof, or with respect to any individual Grantor until
such Grantor is otherwise released from its obligations under this Agreement in
accordance with the terms hereof.

Section 8.06. Counterparts; Effectiveness; Several Agreement.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which when taken together shall constitute one
and the same instrument. Delivery by telecopier or by electronic .pdf copy of an
executed counterpart of a signature page to this Agreement shall be effective as
delivery of an original executed counterpart of this Agreement. This Agreement
shall become effective when it shall have been executed by each Effective Date
Grantor (and, with respect to each Person that becomes a Grantor hereunder
following the Effective Date, on the date of delivery of a Security Agreement
Supplement by such Grantor) and the Collateral Agent and thereafter shall be
binding upon and inure to the benefit of each Grantor and the Collateral Agent
and the other Secured Parties and their respective permitted successors and
assigns, subject to Section 8.04 hereof. This Agreement shall be construed as a
separate agreement with respect to each Grantor and may be amended, restated,
modified, supplemented, waived or released with respect to any Grantor without
the approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.

 

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Section 8.07. Severability.

If any provision of this Agreement is held to be invalid, illegal, or
unenforceable, the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired thereby. The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

Section 8.08. GOVERNING LAW, ETC.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

(b) THE GRANTORS AND THE COLLATERAL AGENT EACH IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY IN THE BOROUGH OF
MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF
NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. EACH PARTY HERETO AGREES THAT THE COLLATERAL AGENT RETAINS THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION IN
CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER THIS AGREEMENT OR THE
ENFORCEMENT OF ANY JUDGMENT.

(c) THE GRANTORS AND THE COLLATERAL AGENT EACH IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

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Section 8.09. WAIVER OF RIGHT TO TRIAL BY JURY.

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

Section 8.10. Headings.

Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

Section 8.11. Security Interest Absolute.

All rights of the Collateral Agent hereunder, the Security Interest, the grant
of a security interest in the Pledged Collateral and all obligations of each
Grantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, the Secured Hedge Agreement, any Cash Management Services, any
agreement with respect to any of the Secured Obligations or any other agreement
or instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document, the Secured Hedge
Agreement, any Cash Management Services, or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Secured Obligations or
(d) subject only to termination of a Grantor’s obligations hereunder in
accordance with the terms of Section 8.12, but without prejudice to
reinstatement rights under Section 2.04 of the Guaranty, any other circumstance
that might otherwise constitute a defense available to, or a discharge of, any
Grantor in respect of the Secured Obligations or this Agreement.

Section 8.12. Termination or Release.

(a) This Agreement, the Security Interest and all other security interests
granted hereby shall terminate with respect to all Secured Obligations when
(i) all Revolving Credit Commitments have expired or been terminated and the
Lenders have no further commitment to lend under the Credit Agreement, (ii) all
outstanding Secured Obligations (other than (A) contingent indemnification
obligations with respect to then unasserted claims and (B) Secured Obligations
in respect of obligations that may thereafter arise with respect to Obligations
in respect of Secured Hedge Agreements and Cash Management Obligations, in each

 

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case, not yet due and payable; unless the Collateral Agent has received written
notice, at least two (2) Business Days prior to the proposed date of any such
release of the Security Interest, stating that arrangements reasonably
satisfactory to the applicable Cash Management Bank or Hedge Bank, as the case
may be, in respect thereof have not been made) shall have been paid in full in
cash, (iii) all Letters of Credit shall have expired or terminated (or been Cash
Collateralized or backstopped in a manner reasonably satisfactory to the
applicable Issuer) and (iv) all Letter of Credit Obligations have been reduced
to zero (or Cash Collateralized in a manner reasonably satisfactory to the
applicable Issuer), provided, however, that in connection with the termination
of this Agreement, the Administrative Agent or the Collateral Agent may require
such indemnities as it shall reasonably deem necessary or appropriate to protect
the Secured Parties against (x) loss on account of credits previously applied to
the Secured Obligations that may subsequently be reversed or revoked, and
(y) any obligations that may thereafter arise with respect to the Obligations in
respect of Secured Hedge Agreements and Cash Management Obligations, in each
case to the extent not provided for thereunder.

(b) The Security Interest in any Collateral shall be automatically released in
the circumstances set forth in Section 11.11(a) of the Credit Agreement or upon
any release of the Lien on such Collateral in accordance with Sections 11.11(b)
or (d) of the Credit Agreement.

(c) In connection with any termination or release pursuant to paragraph (a) or
(b), the Collateral Agent shall promptly execute and deliver to any Grantor, at
such Grantor’s expense, all documents that such Grantor shall reasonably request
to evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 8.12 shall be without recourse to or warranty by the
Collateral Agent.

(d) At any time that the respective Grantor desires that the Collateral Agent
take any of the actions described in immediately preceding clause (c), it shall,
upon request of the Collateral Agent, deliver to the Collateral Agent an
officer’s certificate certifying that the release of the respective Collateral
is permitted pursuant to paragraph (a) or (b). The Collateral Agent shall have
no liability whatsoever to any Secured Party as the result of any release of
Collateral by it as permitted (or which the Collateral Agent in good faith
believes to be permitted) by this Section 8.12.

Section 8.13. Additional Restricted Subsidiaries.

Pursuant to Section 8.11 of the Credit Agreement, certain Restricted
Subsidiaries of the Loan Parties that were not in existence or not Restricted
Subsidiaries on the date of the Credit Agreement are required to enter in this
Agreement as Grantors upon becoming Restricted Subsidiaries. Upon execution and
delivery by the Collateral Agent and a Restricted Subsidiary of a Security
Agreement Supplement, such Restricted Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
herein. The execution and delivery of any such instrument shall not require the
consent of any other Grantor hereunder. The rights and obligations of each
Grantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor as a party to this Agreement.

 

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Section 8.14. Collateral Agent Appointed Attorney-in-Fact.

(a) Each Grantor hereby appoints the Collateral Agent the true and lawful
attorney-in-fact of such Grantor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof at any time after and during the continuance of a Cash Dominion Period,
subject to Section 3.04(b), a Qualified Cash Trigger Period or an Event of
Default, as applicable, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Collateral Agent
shall have the right, subject to the Intercreditor Agreement, (i) upon the
occurrence and during the continuance of a Cash Dominion Period, subject to
Section 3.04(b), a Qualified Cash Trigger Period and (unless a Bankruptcy Event
of Default has occurred and is continuing, in which case no such notice shall be
required) upon and after delivery of notice by the Collateral Agent to the
Borrower of its intent to exercise such rights, with full power of substitution
either in the Collateral Agent’s name or in the name of such Grantor (a) to take
actions required to be taken by the Grantors under Article V of this Agreement;
and (b) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; and (ii) subject to the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of Default
and (unless a Bankruptcy Event of Default has occurred and is continuing, in
which case no such notice shall be required) delivery of notice by the
Collateral Agent to the Borrower of its intent to exercise such rights, with
full power of substitution either in the Collateral Agent’s name or in the name
of such Grantor (a) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (b) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (c) to send verifications of Accounts to any Account Debtor; (d) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (e) to settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to all or any of the Collateral; (f) to notify, or
to require any Grantor to notify, Account Debtors to make payment directly to
the Collateral Agent or to a Collateral Account and adjust, settle or compromise
the amount of payment of any Account or related contracts; (g) to make, settle
and adjust claims in respect of Collateral under policies of insurance and to
endorse the name of such Grantor on any check, draft, instrument or any other
item of payment with respect to the proceeds of such policies of insurance and
for making all determinations and decisions with respect thereto; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby. The
Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct or that of any of
their Affiliates, directors, officers, employees, counsel, agents or
attorneys-in-fact.

 

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(b) All acts in accordance with this Section 8.14 of said attorney or designee
are hereby ratified and approved by the Grantors. The powers conferred on the
Collateral Agent, for the benefit of the Secured Parties, under this
Section 8.14 are solely to protect the Collateral Agent’s interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any
Secured Party to exercise any such powers.

Section 8.15. General Authority of the Collateral Agent.

By acceptance of the benefits of this Agreement and any other Collateral
Documents, each Secured Party (whether or not a signatory hereto) shall be
deemed irrevocably (a) to consent to the appointment of the Collateral Agent as
its agent hereunder and under such other Collateral Documents, (b) to confirm
that the Collateral Agent shall have the authority to act as the exclusive agent
of such Secured Party for the enforcement of any provisions of this Agreement
and such other Collateral Documents against any Grantor, the exercise of
remedies hereunder or thereunder and the giving or withholding of any consent or
approval hereunder or thereunder relating to any Collateral or any Grantor’s
obligations with respect thereto, (c) to agree that it shall not take any action
to enforce any provisions of this Agreement or any other Collateral Document
against any Grantor, to exercise any remedy hereunder or thereunder or to give
any consents or approvals hereunder or thereunder except as expressly provided
in this Agreement or any other Collateral Document and (d) to agree to be bound
by the terms of this Agreement and any other Collateral Documents.

Section 8.16. Collateral Agent’s Duties.

Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not any Secured Party has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.

Section 8.17. Recourse; Limited Obligations.

This Agreement is made with full recourse to each Grantor and pursuant to and
upon all the warranties, representations, covenants and agreements on the part
of such Grantor contained herein, in the Credit Agreement and the other Loan
Documents and otherwise in writing in connection herewith or therewith, with
respect to the Secured Obligations of each applicable Secured Party. It is the
desire and intent of each Grantor and each applicable Secured Party that this
Agreement shall be enforced against each Grantor to the fullest extent
permissible under applicable Law applied in each jurisdiction in which
enforcement is sought.

 

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Section 8.18. Mortgages.

In the event that any of the Collateral hereunder is also subject to a valid and
enforceable Lien under the terms of a Mortgage and the terms thereof are
inconsistent with the terms of this Agreement, then with respect to such
Collateral, the terms of such Mortgage shall control in the case of fixtures and
real property leases, letting and licenses of, and contracts, and agreements
relating to the lease of, real property, and the terms of this Agreement shall
control in the case of all other Collateral.

Section 8.19. Intercreditor Agreement.

(a) Notwithstanding anything herein to the contrary, the Liens granted to the
Collateral Agent under this Agreement and the exercise of the rights and
remedies of the Collateral Agent hereunder and under any other Collateral
Document are subject to the provisions of the Intercreditor Agreement. In the
event of any conflict between the terms of the Intercreditor Agreement and this
Agreement or any other Collateral Document, the terms of the Intercreditor
Agreement shall govern and control. Notwithstanding anything to the contrary
herein, the Collateral Agent acknowledges and agrees that no Grantor shall be
required to take or refrain from taking any action at the request of the
Collateral Agent with respect to the Collateral if such action or inaction would
be inconsistent with the terms of the Intercreditor Agreement.

(b) Subject to the foregoing, (i) to the extent the provisions of this Agreement
(or any other Collateral Documents) require the delivery of, or control over,
Term Priority Collateral to be granted to the Collateral Agent at any time prior
to the Discharge of Term Obligations, then delivery of such Term Priority
Collateral (or control with respect thereto, (and any related approval or
consent rights)) shall instead be granted to the Term Agent, to be held in
accordance with the Term Documents and subject to the Intercreditor Agreement
and (ii) any provision of this Agreement (or any other Collateral Documents)
requiring Grantors to name the Collateral Agent as an additional insured or a
loss payee under any insurance policy or a beneficiary of any letter of credit,
such requirement shall have been complied with if any such insurance policy or
letter of credit also names the Term Agent as an additional insured, loss payee
or beneficiary, as the case may be, in each case pursuant and subject to the
terms of the Intercreditor Agreement.

(c) Furthermore, at all times prior to the Discharge of Term Obligations, the
Collateral Agent is authorized by the parties hereto to effect transfers of Term
Priority Collateral at any time in its possession (and any “control” or similar
agreements with respect to Term Priority Collateral) to the Term Agent.

(d) Notwithstanding anything to the contrary herein but subject to the
Intercreditor Agreement, in the event the Term Documents provide for the grant
of a security interest or pledge over the assets of any Grantor and such assets
do not otherwise constitute Collateral under this Agreement or any other Loan
Document, such Grantor shall (i) promptly grant a security interest in or pledge
such assets to secure the Secured Obligations, (ii) promptly take any actions
necessary to perfect such security interest or pledge to the extent set forth in
the Term Documents and (iii) take all other steps reasonably requested by the
Collateral Agent in connection with the foregoing.

(e) Nothing contained in the Intercreditor Agreement shall be deemed to modify
any of the provisions of this Agreement, which, as among the Grantors and the
Collateral Agent shall remain in full force and effect in accordance with its
terms.

 

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[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

CHINOS ACQUISITION

CORPORATION (which on the Effective Date shall be merged with and into J. Crew
Group, Inc., with J. Crew Group, Inc. surviving such merger as the Borrower),

By:       Name:   Title: CHINOS INTERMEDIATE HOLDINGS B, INC., as Holdings, By:
      Name:   Title:

 

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The undersigned hereby confirms that, as a result of its merger with Chinos
Acquisition Corporation, it hereby assumes all of the rights and obligations of
Chinos Acquisition Corporation under this Agreement (in furtherance of, and not
in lieu of, any assumption or deemed assumption as a matter of law) and is
joined to this Agreement as the Borrower thereunder. J. CREW GROUP, INC. By:    
  Name:   Title:

 

J. Crew – Signature Page to ABL Security Agreement

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SUBSIDIARY GUARANTOR:

J. Crew Operating Corp.

J. Crew Inc.

J. Crew International, Inc.

Grace Holmes, Inc.

H. F. D. No. 55, Inc.

Madewell Inc.

J. Crew Virginia, Inc.

Each of the above as a Subsidiary Guarantor By:       Name:   Title:

 

J. Crew – Signature Page to ABL Security Agreement

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COLLATERAL AGENT: BANK OF AMERICA, N.A., as Collateral Agent By:       Name:  
Title:

 

J. Crew – Signature Page to ABL Security Agreement

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SCHEDULE I TO SECURITY AGREEMENT

SUBSIDIARY GUARANTORS

J. Crew Operating Corp.

J. Crew Inc.

J. Crew International, Inc.

Grace Holmes, Inc.

H. F. D. No. 55, Inc.

Madewell Inc.

J. Crew Virginia, Inc.

 

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SCHEDULE II TO SECURITY AGREEMENT

EQUITY INTERESTS

 

Issuer

  

Registered

Owner/Grantor

   Percentage of
Equity Interests     Number of
Shares     

Class of Equity
Interest

   Number of
Certificate

J. Crew Group, Inc.

   Chinos Intermediate Holdings B, Inc. (after giving effect to the Transaction)
     100 %      1,000       Common Stock    1

J. Crew Operating Corp.

   J. Crew Group, Inc.      100 %      100       Common Stock    C1

J. Crew Inc.

   J. Crew Operating Corp.      100 %      100       Common Stock    2

Grace Holmes, Inc.

   J. Crew Operating Corp.      100 %      10       Common Stock    3

H. F. D. No. 55, Inc.

   J. Crew Operating Corp.      100 %      10       Common Stock    3

J. Crew Virginia, Inc.

   J. Crew Operating Corp.      100 %      100       Common Stock    1

Madewell Inc.

   J. Crew Operating Corp.      100 %      10       Common Stock    1

J. Crew International, Inc.

   J. Crew Inc.      100 %      100       Common Stock    3

J. Crew Canada Inc.

   J. Crew Operating Corp.      65 %      100       Common Stock    C-3

PLEDGED DEBT

 

1. Intercompany Notes:

Global Intercompany Note, dated as of the Effective Date, among the Borrower and
its Subsidiaries party thereto.

 

2. Promissory Notes or Other Pledged Debt:

None.

 

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SCHEDULE III TO SECURITY AGREEMENT

COMMERCIAL TORT CLAIMS

None.

 

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SCHEDULE IV TO SECURITY AGREEMENT

UCC FILINGS

 

Grantor

  

Jurisdiction

Chinos Intermediate Holdings B, Inc.

   Delaware

J. Crew Group, Inc.

   Delaware

J. Crew Operating Corp.

   Delaware

J. Crew Inc.

   Delaware

J. Crew International, Inc.

   Delaware

Grace Holmes, Inc.

   Delaware

H. F. D. No. 55, Inc.

   Delaware

Madewell Inc.

   Delaware

J. Crew Virginia, Inc.

   Virginia

 

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EXHIBIT I TO SECURITY AGREEMENT

FORM OF SECURITY AGREEMENT SUPPLEMENT

SUPPLEMENT NO.          dated as of                      , 20     (this
“Supplement”), to the Security Agreement dated as of March 7, 2011 (the
“Security Agreement”), among CHINOS ACQUISITION CORPORATION, a Delaware
corporation (which on the Effective Date was merged with and into J. CREW GROUP,
INC., a Delaware corporation (the “Company”), with the Company surviving such
merger as the Borrower (the “Borrower”)), CHINOS INTERMEDIATE HOLDINGS B, INC.,
a Delaware corporation (“Holdings”), the Subsidiary Guarantors thereto and BANK
OF AMERICA, N.A., as Collateral Agent for the Secured Parties.

A. Reference is made to (i) the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, supplemented and/or otherwise modified from time to time, the
“Credit Agreement”), by, among others, the Borrower, Holdings, the Lenders party
thereto, and Bank of America, N.A., as Administrative Agent for the Lenders and
Collateral Agent for the Secured Parties and (ii) the Guaranty (as defined in
the Credit Agreement).

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement and the Security
Agreement, as applicable.

C. The Grantors have entered into the Security Agreement in order to induce
(x) the Lenders to make Loans and (y) the Issuers to issue Letters of Credit.
Section 8.13 of the Security Agreement provides that additional Restricted
Subsidiaries of the Grantors may become Grantors under the Security Agreement by
execution and delivery of an instrument substantially in the form of this
Supplement. The undersigned Restricted Subsidiary (the “New Subsidiary”) is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Grantor under the Security Agreement in order to induce
the Lenders to make additional Loans and as consideration for Loans previously
made.

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

Section 1. In accordance with Section 8.13 of the Security Agreement, the New
Subsidiary by its signature below becomes a Grantor under the Security Agreement
with the same force and effect as if originally named therein as a Grantor and
the New Subsidiary hereby (a) agrees to all the terms and provisions of the
Security Agreement applicable to it as a Grantor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Grantor
thereunder are true and correct on and as of the date hereof; provided that, to
the extent that such representations and warranties specifically refer to an
earlier date, they shall be true and correct in all respects as of such earlier
date. In furtherance of the foregoing, the New Subsidiary, as security for the
payment and performance in full of the Secured Obligations does hereby create
and grant to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Subsidiary’s right, title and interest in and to the
Collateral (as defined in the Security Agreement) of the New Subsidiary. Each
reference to a “Grantor” in the Security Agreement shall be deemed to include
the New Subsidiary as if originally named therein as a Grantor. The Security
Agreement is hereby incorporated herein by reference.

 

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Section 2. The New Subsidiary represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as such
enforceability may be limited by Debtor Relief Laws and by general principles of
equity.

Section 3. This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Supplement shall become effective when the Collateral Agent shall
have received a counterpart of this Supplement that bears the signature of the
New Subsidiary and the Collateral Agent has executed a counterpart hereof.
Delivery of an executed signature page to this Supplement by facsimile or
electronic (including .pdf file) transmission shall be as effective as delivery
of a manually signed counterpart of this Supplement.

Section 4. The New Subsidiary hereby represents and warrants that the Perfection
Certificate and updated schedules to the Security Agreement attached hereto as
Schedule I have been duly executed and delivered to the Collateral Agent and the
information set forth therein, including the exact legal name of the New
Subsidiary and its jurisdiction of organization, is correct and complete in all
material respects as of the date hereof.

Section 5. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.

Section 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

Section 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

Section 8. All communications and notices hereunder shall be in writing and
given as provided in Section 8.01 of the Security Agreement.

Section 9. The New Subsidiary agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including
all Attorney Costs of counsel for the Collateral Agent as provided in
Section 8.03(a) of the Security Agreement.

 

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IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

 

[NAME OF NEW SUBSIDIARY] By:     Name: Title: Legal Name: Jurisdiction of
Formation: Location of Chief Executive Office: BANK OF AMERICA, N.A., as
Collateral Agent By:     Name:   Title:  

 

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SCHEDULE I TO SECURITY AGREEMENT SUPPLEMENT

[ATTACH COMPLETED PERFECTION CERTIFICATE FOR NEW SUBSIDIARY AND

ALL SCHEDULES TO SECURITY AGREEMENT, UPDATED FOR NEW SUBSIDIARY]

 

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EXHIBIT II TO SECURITY AGREEMENT

FORM OF PERFECTION CERTIFICATE

Reference is made to (i) the Credit Agreement dated as of March 7, 2011 (the
“Term Facility Credit Agreement”), among Chinos Acquisition Corporation, which
on the Closing Date shall be merged with and into J. Crew Group, Inc. (the
“Company”), with the Company surviving such merger as the Borrower (the
“Borrower”), Chinos Intermediate Holdings B, Inc. (“Holdings”), the lenders from
time to time party thereto and Bank of America, N.A., as Administrative Agent
and Collateral Agent and (ii) the Credit Agreement dated as of March 7, 2011
(the “ABL Credit Agreement” and, together with the Term Facility Credit
Agreement, the “Credit Agreements”), among Chinos Acquisition Corporation, which
on the Effective Date shall be merged with and into the Company, with the
Company surviving such merger as the Borrower, Holdings, the lenders from time
to time party thereto, Bank of America, N.A., as Administrative Agent,
Collateral Agent and an Issuer and the other Issuers party thereto. Capitalized
terms used but not defined herein have the meanings assigned in the applicable
Credit Agreement or the Security Agreement referred to therein, as applicable.

The undersigned, a Responsible Officer of the Borrower, hereby certifies to the
Administrative Agent and each other Secured Party on behalf of the Loan Parties
as follows:

SECTION 1. Names. (a) Set forth on Schedule 1(a) is (i) the exact legal name of
each Loan Party, as such name appears in its certificate of organization or like
document and (ii) each other legal name such Loan Party has had in the past five
years, together with the date of the relevant name change and each other name
used by each Loan Party on any filings with the Internal Revenue Service at any
time in the past five years.

(b) Except as set forth on Schedule 1(b) and pursuant to the Transactions, no
Loan Party has changed its identity or corporate structure or entered into a
similar reorganization in any way within the past five years. Changes in
identity or corporate structure would include mergers, consolidations and
acquisitions of all or substantially all of the assets of (or all or
substantially all the assets constituting a business unit, division, product
line or line of business of) a Person or other acquisitions of material assets
outside the ordinary course of business, as well as any change in the form,
nature or jurisdiction of organization. With respect to any such change that has
occurred within the past five years, Schedules 1(a), 1(b) and 2(a) set forth the
information required by Sections 1(a) and 2(a) of this Perfection Certificate as
to each acquiree or constituent party to such merger, consolidation or
acquisition.

(c) Set forth on Schedule 1(c) is (i) the exact legal name of each direct and
indirect Subsidiary of Holdings, as such name appears in its certificate of
organization or like document and (ii) each contractual agreement existing on
the date hereof that would restrict a Guarantee of the Obligations by any such
Subsidiary that would otherwise be required to become a Guarantor pursuant to
the Credit Agreements.

 

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SECTION 2. Jurisdictions and Locations.

(a) Set forth on Schedule 2(a) is (i) the jurisdiction of organization and the
form of organization of each Loan Party, (ii) the organizational identification
number, if any, assigned by such jurisdiction and (iii) the address (including
the county) of the chief executive office of such Loan Party.

(b) Set forth in Schedule 2(b) are all locations where each Loan Party maintains
any books or records relating to any Collateral.

(c) Set forth in Schedule 2(c) hereto are all other locations where each Loan
Party maintains any of the Collateral consisting of Inventory or equipment, not
identified above, with an aggregate value in excess of $2,000,000.

(d) Set forth in Schedule 2(d) hereto are the names, addresses and title in
regards to the Collateral of all persons or entities other than each Loan Party,
such as lessees, consignees, warehousemen or purchasers of chattel paper, which
have possession or are intended to have possession of any of the Collateral
consisting of instruments, chattel paper, Inventory or equipment.

SECTION 3. Unusual Transactions. Except for Inventory or Accounts acquired
pursuant to any merger, consolidation or acquisition which is listed on Schedule
1(b) hereof, all Accounts have been originated by the Loan Parties and all
Inventory with an aggregate value in excess of $5,000,000 has been acquired by
the Loan Parties in the ordinary course of business.

SECTION 4. Stock Ownership and other Equity Interests. Set forth on Schedule 4
is a true and correct list, for each Loan Party, of all the issued and
outstanding Pledged Equity owned, beneficially or of record, by such Loan Party,
specifying the issuer and certificate number (if any) of, and the number and
percentage of ownership represented by, such Pledged Equity and setting forth
the percentage of such Pledged Equity pledged under the Security Agreements.

SECTION 5. Debt Instruments. Set forth on Schedule 5 is a true and correct list,
for each Loan Party, of all promissory notes and other evidence of indebtedness
(other than checks to be deposited in the ordinary course of business) owned by
such Loan Party that are required to be pledged under the Credit Agreements and
the Collateral Documents, and to the extent applicable, specifying the creditor
and debtor thereunder and the outstanding principal amount thereof.

SECTION 6. Real Property. Set forth on Schedule 6 is a true and correct list,
for each Loan Party, of all real property with a fair market value in excess of
$5,000,000 owned by such Loan Party that is required to be pledged under the
Credit Agreements and the Collateral Documents.

SECTION 7. Intellectual Property. (a) Set forth on Schedule 7(a) is a true and
correct list, with respect to each Loan Party, of all United States patents and
patent applications owned by such Loan Party (except, for the avoidance of
doubt, as otherwise indicated on Schedule 7(a)), including the name of the
owner, title, registration or application number of any registrations or
applications.

 

      Form of ABL Security Agreement

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(b) Set forth on Schedule 7(b) is a true and correct list, with respect to each
Loan Party, of all United States trademark registrations and applications owned
by such Loan Party (except, for the avoidance of doubt, as otherwise indicated
on Schedule 7(b)), including the name of the registered owner and the
registration or application number of any registrations and applications.

(c) Set forth on Schedule 7(c) is a true and correct list, with respect to each
Loan Party, of all United States copyright registrations and applications owned
by such Loan Party (except, for the avoidance of doubt, as otherwise indicated
on Schedule 7(c)), including the name of the registered owner, title and the
registration or serial number of any copyright registrations.

(d) Set forth on Schedule 7(d) is a true and correct list, with respect to each
Loan Party, of all exclusive Copyright Licenses under which such Loan Party is a
licensee, including the name and address of the licensor under such exclusive
Copyright License and the name of the registered owner, title and the
registration or serial number of any copyright registration to which such
exclusive Copyright License relates.

SECTION 8. Commercial Tort Claims. Set forth on Schedule 8 is a true and correct
list of commercial tort claims in excess of $5,000,000 held by any Loan Party,
including a brief description thereof.

SECTION 9. Deposit Accounts. Attached hereto as Schedule 9 is a true and correct
list of deposit accounts, brokerage accounts, commodity accounts or securities
investment accounts maintained by any Loan Party, including the name and address
of the applicable depositary or other institution, the name and type of account,
the name of the Loan Party that maintains each account and the account number.

 

      Form of ABL Security Agreement

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

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate on the
date above first written.

 

CHINOS ACQUISITION CORPORATION

  By:         Name:     Title: J. CREW GROUP, INC.   By:         Name:    
Title:

 

   Signature Page to Perfection Certificate          Form of ABL Security
Agreement

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

Schedule 1(a)

Names

 

      Form of ABL Security Agreement

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Schedule 1(b)

Unusual Transactions

 

      Form of ABL Security Agreement

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Schedule 1(c)

 

      Form of ABL Security Agreement

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Schedule 2(a)

Jurisdictions and Locations

 

      Form of ABL Security Agreement

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Schedule 2(b)

Books and Records

 

      Form of ABL Security Agreement

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Schedule 2(c)

Location of Collateral

 

      Form of ABL Security Agreement

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Schedule 2(d)

Holders of Collateral

 

      Form of ABL Security Agreement

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Schedule 4

Stock Ownership and Other Equity Interests

 

      Form of ABL Security Agreement

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Schedule 5

Debt Instruments

 

      Form of ABL Security Agreement

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Schedule 6

Real Property

 

      Form of ABL Security Agreement

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Schedule 7(a)

Intellectual Property

U.S. Patent Registrations and Patent Applications

 

      Form of ABL Security Agreement

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

Schedule 7(b)

Intellectual Property

U.S. Trademark Registrations

U.S. Trademark Applications

 

      Form of ABL Security Agreement

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

Schedule 7(c)

Intellectual Property

U.S. Copyright Registrations and Copyright Applications

 

      Form of ABL Security Agreement

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

Schedule 7(d)

Intellectual Property

Exclusive Copyright Licenses under which a Loan Party is a Licensee

 

      Form of ABL Security Agreement

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Schedule 8

Commercial Tort Claims

 

      Form of ABL Security Agreement

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Schedule 9

Deposit Accounts

 

      Form of ABL Security Agreement

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EXHIBIT III TO SECURITY AGREEMENT

[FORM OF] TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Trademark Security
Agreement”) dated             , 20    , is made by the Persons listed on the
signature pages hereof (collectively, the “Grantors”) in favor of Bank of
America, N.A., as collateral agent (the “Collateral Agent”) for the Secured
Parties (as defined in the Credit Agreement referred to below).

Reference is made to (i) the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “Credit Agreement”), among Chinos Acquisition
Corporation, J. Crew Group, Inc., Chinos Intermediate Holdings B, Inc., the
Lenders party thereto from time to time and Bank of America, N.A., as
Administrative Agent and Collateral Agent, (ii) each Secured Hedge Agreement and
(iii) each agreement relating to Cash Management Services. The Lenders have
agreed to extend credit to the Borrower subject to the terms and conditions set
forth in the Credit Agreement, the Issuers have agreed to issue Letters of
Credit for the account of the Borrower or a Restricted Subsidiary on the terms
and conditions set forth in the Credit Agreement, the Hedge Banks have agreed to
enter into and/or maintain one or more Secured Hedge Agreements and the Cash
Management Banks have agreed to enter into and/or maintain Cash Management
Services, on the terms and conditions set forth in the Credit Agreement, in such
Secured Hedge Agreements or agreements relating to Cash Management Services, as
applicable.

Whereas, as a condition precedent to the Lenders extension of such credit, the
obligation of the Hedge Banks to enter into and/or maintain such Secured Hedge
Agreements and the obligation of the Cash Management Banks to enter into and/or
maintain such Cash Management Services, each Grantor has executed and delivered
that certain Security Agreement dated March 7, 2011, made by the Grantors to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Security Agreement”).

Whereas, under the terms of the Security Agreement, the Grantors have granted to
the Collateral Agent, for the benefit of the Secured Parties, a security
interest in, among other property, certain intellectual property of the
Grantors, and have agreed as a condition thereof to execute this Trademark
Security Agreement for recording with the U.S. Patent and Trademark Office and
other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1. Terms. Terms defined in the Credit Agreement and Security Agreement
and not otherwise defined herein are used herein as defined in the Credit
Agreement and Security Agreement.

 

      Form of ABL Security Agreement

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

SECTION 2. Grant of Security. Each Grantor hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties a
continuing security interest in all of the Grantor’s right, title and interest
in, to and under the Trademarks, including the Trademarks set forth on
Schedule A attached hereto.

SECTION 3. Security for Obligations. The grant of a security interest in the
Trademarks by each Grantor under this Trademark Security Agreement is made to
secure the payment or performance, as the case may be, in full of the Secured
Obligations.

SECTION 4. Recordation. Each Grantor authorizes and requests that the
Commissioner for Trademarks and any other applicable government officer record
this Trademark Security Agreement.

SECTION 5. Execution in Counterparts. This Trademark Security Agreement may be
executed in any number of 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.

SECTION 6. Security Agreement. This Trademark Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement. Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.

[Remainder of this page intentionally left blank]

 

      Form of ABL Security Agreement

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

IN WITNESS WHEREOF, the undersigned have executed this Trademark Security
Agreement as of the date first above written.

 

[NAME OF GRANTOR], Grantor By:       Name:   Title: BANK OF AMERICA, N.A. as
Collateral Agent and Grantee By:       Name:   Title:

 

      Form of ABL Security Agreement

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SCHEDULE A

 

MARK

  

SERIAL/REG. NO.

  

APP./REG. DATE

 

      Form of ABL Security Agreement

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EXHIBIT IV TO SECURITY AGREEMENT

[FORM OF] PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Patent Security Agreement”) dated
            , 20    , is made by the Persons listed on the signature pages
hereof (collectively, the “Grantors”) in favor of Bank of America, N.A., as
collateral agent (the “Collateral Agent”) for the Secured Parties (as defined in
the Credit Agreement referred to below).

Reference is made to (i) the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “Credit Agreement”), among Chinos Acquisition
Corporation, J. Crew Group, Inc., Chinos Intermediate Holdings B, Inc., the
Lenders party thereto from time to time and Bank of America, N.A., as
Administrative Agent and Collateral Agent, (ii) each Secured Hedge Agreement and
(iii) each agreement relating to Cash Management Services. The Lenders have
agreed to extend credit to the Borrower subject to the terms and conditions set
forth in the Credit Agreement, the Issuers have agreed to issue Letters of
Credit for the account of the Borrower or a Restricted Subsidiary on the terms
and conditions set forth in the Credit Agreement, the Hedge Banks have agreed to
enter into and/or maintain one or more Secured Hedge Agreements and the Cash
Management Banks have agreed to enter into and/or maintain Cash Management
Services, on the terms and conditions set forth in the Credit Agreement, in such
Secured Hedge Agreements or agreements relating to Cash Management Services, as
applicable.

Whereas, as a condition precedent to the Lenders extension of such credit, the
obligation of the Hedge Banks to enter into and/or maintain such Secured Hedge
Agreements and the obligation of the Cash Management Banks to enter into and/or
maintain such Cash Management Services, each Grantor has executed and delivered
that certain Security Agreement dated March 7, 2011, made by the Grantors to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Security Agreement”).

Whereas, under the terms of the Security Agreement, the Grantors have granted to
the Collateral Agent, for the benefit of the Secured Parties, a security
interest in, among other property, certain intellectual property of the
Grantors, and have agreed as a condition thereof to execute this Patent Security
Agreement for recording with the U.S. Patent and Trademark Office and other
governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1. Terms. Terms defined in the Credit Agreement and Security Agreement
and not otherwise defined herein are used herein as defined in the Credit
Agreement and Security Agreement.

 

      Form of ABL Security Agreement

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

SECTION 2. Grant of Security. Each Grantor hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties a
continuing security interest in all of the Grantor’s right, title and interest
in, to and under the Patents, including the Patents set forth on Schedule A
attached hereto.

SECTION 3. Security for Obligations. The grant of a security interest in the
Patent by each Grantor under this Patent Security Agreement is made to secure
the payment or performance, as the case may be, in full of the Secured
Obligations.

SECTION 4. Recordation. Each Grantor authorizes and requests that the
Commissioner for Patents and any other applicable government officer record this
Patent Security Agreement.

SECTION 5. Execution in Counterparts. This Patent Security Agreement may be
executed in any number of 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.

SECTION 6. Security Agreement. This Patent Security Agreement has been entered
into in conjunction with the provisions of the Security Agreement. Each Grantor
does hereby acknowledge and confirm that the grant of the security interest
hereunder to, and the rights and remedies of, the Collateral Agent with respect
to the Collateral are more fully set forth in the Security Agreement, the terms
and provisions of which are incorporated herein by reference as if fully set
forth herein.

[Remainder of this page intentionally left blank]

 

      Form of ABL Security Agreement

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

IN WITNESS WHEREOF, the undersigned have executed this Patent Security Agreement
as of the date first above written.

 

[NAME OF GRANTOR], Grantor By:       Name:   Title: BANK OF AMERICA, N.A., as
Collateral Agent and Grantee By:       Name:   Title:

 

      Form of ABL Security Agreement

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SCHEDULE A

 

PATENT

  

PATENT NO.

  

FILING/ISSUE DATE

 

      Form of ABL Security Agreement

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EXHIBIT V TO SECURITY AGREEMENT

[FORM OF] COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Copyright Security
Agreement”) dated             , 2011, is made by the Persons listed on the
signature pages hereof (collectively, the “Grantors”) in favor of Bank of
America, N.A., as collateral agent (the “Collateral Agent”) for the Secured
Parties (as defined in the Credit Agreement referred to below).

Reference is made to (i) the Credit Agreement, dated as of March 7, 2011 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “Credit Agreement”), among Chinos Acquisition
Corporation, J. Crew Group, Inc., Chinos Intermediate Holdings B, Inc., the
Lenders party thereto from time to time and Bank of America, N.A., as
Administrative Agent and Collateral Agent, (ii) each Secured Hedge Agreement and
(iii) each agreement relating to Cash Management Services. The Lenders have
agreed to extend credit to the Borrower subject to the terms and conditions set
forth in the Credit Agreement, the Issuers have agreed to issue Letters of
Credit for the account of the Borrower or a Restricted Subsidiary on the terms
and conditions set forth in the Credit Agreement, the Hedge Banks have agreed to
enter into and/or maintain one or more Secured Hedge Agreements and the Cash
Management Banks have agreed to enter into and/or maintain Cash Management
Services, on the terms and conditions set forth in the Credit Agreement, in such
Secured Hedge Agreements or agreements relating to Cash Management Services, as
applicable.

Whereas, as a condition precedent to the Lenders extension of such credit, the
obligation of the Hedge Banks to enter into and/or maintain such Secured Hedge
Agreements and the obligation of the Cash Management Banks to enter into and/or
maintain such Cash Management Services, each Grantor has executed and delivered
that certain Security Agreement dated March 7, 2011, made by the Grantors to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Security Agreement”).

Whereas, under the terms of the Security Agreement, the Grantors have granted to
the Collateral Agent, for the benefit of the Secured Parties, a security
interest in, among other property, certain intellectual property of the
Grantors, and have agreed as a condition thereof to execute this Copyright
Security Agreement for recording with the U.S. Copyright Office and other
governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees as follows:

 

      Form of ABL Security Agreement

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SECTION 1. Terms. Terms defined in the Credit Agreement and Security Agreement
and not otherwise defined herein are used herein as defined in the Credit
Agreement and Security Agreement.

SECTION 2. Grant of Security. Each Grantor hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties a
continuing security interest in all of the Grantor’s right, title and interest
in, to and under the Copyrights and exclusive Copyright Licenses, including the
Copyrights and exclusive Copyright Licenses set forth on Schedule A attached
hereto.

SECTION 3. Security for Obligations. The grant of a security interest in the
Copyrights and exclusive Copyright Licenses by each Grantor under this
Copyrights Security Agreement is made to secure the payment or performance, as
the case may be, in full of the Secured Obligations.

SECTION 4. Recordation. Each Grantor authorizes and requests that the
Commissioner for Copyrights and any other applicable government officer record
this Copyright Security Agreement.

SECTION 5. Execution in Counterparts. This Copyright Security Agreement may be
executed in any number of 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.

SECTION 6. Security Agreement. This Copyright Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement. Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.

[Remainder of this page intentionally left blank]

 

      Form of ABL Security Agreement

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

IN WITNESS WHEREOF, the undersigned have executed this Copyright Security
Agreement as of the date first above written.

 

[NAME OF GRANTOR], Grantor By:       Name:   Title: BANK OF AMERICA, N.A., as
Collateral Agent and Grantee By:       Name:   Title:

 

      Form of ABL Security Agreement

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SCHEDULE A

COPYRIGHTS

 

COPYRIGHT

  

COPYRIGHT NO.

  

APP./REG. DATE

COPYRIGHT LICENSES

 

AGREEMENT

  

PARTIES

  

DATE

  

SUBJECT MATTER

 

      Form of ABL Security Agreement

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EXHIBIT VI TO SECURITY AGREEMENT

FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT

[separately provided]

 

      Form of ABL Security Agreement

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

EXHIBIT VII TO SECURITY AGREEMENT

FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT

[separately provided]

 

      Form of ABL Security Agreement

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

Exhibit J

 

LOGO [g159162img001.jpg]    J. Crew Group, Inc.       Form of Borrowing Base
Certificate   

 

Email to:         Certificate No.         __________            Certificate Date
        __________    On Hand Inventory as of:    ________________          
At Cost   ADD:    Retail          Factory          Direct         

Total On Hand Inventory

      LESS:    Shrink Reserve          Unprocessed Damages         

Total Inventory Ineligibles / Reserves

      Eligible On-Hand Inventory      

NOLV (Jan - Aug : 113.0%; Sept - Dec : 120.4%)

     

Advance Rate (Jan 1 - Sept 30: 90%; Aug 1 - Dec 31: 92.5%)

     

Total On-Hand Inventory Availability

 

  

In-Transit Inventory as of:    ________________       LESS:    Ineligible
In-Transit Inventory       Eligible In-Transit Inventory      

NOLV (Jan - Aug : 81.9%; Sept - Dec : 89.6%)

     

Advance Rate

     

Total In-Transit Inventory Availability

 

                  Letter of Credit Inventory as of: _____________________      
LESS:    Ineligible LC Inventory       Eligible Letter of Credit Inventory      

NOLV (Jan - Aug : 48.9%; Sept - Dec : 56.1%)

     

Advance Rate

     

Total Letter of Credit Inventory Availability

 

                 

Total Inventory Availability

 

                  Credit Card Receivables as of: _____________________      
LESS:      Outstanding Fees      delete as net from above or note such       $
—                          Amounts Older Than Five Business Days       $ —     
                 

  Total Ineligible Credit Card Receivables

      Eligible Credit Card Receivables      

Advance Rate:

     

Credit Card Receivables Availability

 

                  Qualified Cash as of:    _____________________     
TBD              

Advance Rate:

     

Qualified Cash Availability

 

                  LESS: Availability Reserves:          Rent Reserve - 1
month rent in PA, VA and WA          Gift Certificates (50%)          Ad Valorem
Taxes for Texas          Self Funded Insurance Reserve          Duty & Freight
(6% of Eligible LC/In Transit Inventory)       Total Availability Reserves      

Borrowing Base (as calculated)

     

Maximum Credit (lesser of Borrowing Base and $250MM)

 

                 

AVAILABILITY CALCULATION

     

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

Exhibit J

 

LOGO [g159162img001.jpg]    J. Crew Group, Inc.       Form of Borrowing Base
Certificate   

 

Email to:            Certificate No.         __________              
Certificate Date         __________    Beginning Principal Balance            
     ADD:       Prior days advance            ADD:       Interest / Fees charged
today            LESS:       Prior day’s paydown       Ending principal balance
                 ADD:       Standby Letters of Credit            ADD:      
Documentary Letters of Credit      

Total loan balance and L/Cs prior to request

      Excess Availability prior to today’s request      

ADVANCE REQUEST

     

PAY DOWN

     

Excess Availability

     

The undersigned represents and warrants that the information set forth above and
in the supporting documentation provided herewith is true and correct in all
material respects and has been prepared in accordance with the requirements of
the Credit Agreement, dated as of March 7, 2011 (as amended, restated, amended
and restated, supplemented and/or otherwise modified from time to time, the
“Credit Agreement”), among Chinos Acquisition Corporation, a Delaware
corporation (which on the Effective Date shall be merged with and into J. Crew
Group, Inc., a Delaware Corporation (the “Company”), with the Company surviving
such merger as the Borrower (the “Borrower”)), Chinos Intermediate Holdings B,
Inc., a Delaware Corporation (“Holdings”), the Lenders and Issuers party thereto
from time to time and Bank of America, N.A., as Administrative Agent for the
Lenders and Collateral Agent for the Secured Parties.

 

Authorized Signature         Name         Title         Date        

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EXHIBIT K

FORM OF INTERCREDITOR AGREEMENT

[To be provided under separate cover]

 

K-1    Form of ABL Intercreditor Agreement

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

Exhibit K

 

 

 

FORM OF INTERCREDITOR AGREEMENT

by and between

BANK OF AMERICA, N.A.,

as ABL Agent,

and

BANK OF AMERICA, N.A.,

as Term Agent

Dated as of [    ] [     ], 20[     ]

 

 

 

Form of J. Crew Intercreditor Agreement

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

TABLE OF CONTENTS

 

              Page No.  

ARTICLE 1

  DEFINITIONS      2   

Section 1.1

    

UCC Definitions

     2   

Section 1.2

    

Other Definitions

     2   

Section 1.3

    

Rules of Construction

     16   

ARTICLE 2

 

LIEN PRIORITY

     17   

Section 2.1

    

Priority of Liens

     17   

Section 2.2

    

Waiver of Right to Contest Liens

     18   

Section 2.3

    

Remedies Standstill

     19   

Section 2.4

    

Exercise of Rights

     20   

Section 2.5

    

No New Liens

     22   

Section 2.6

    

Waiver of Marshalling

     22   

ARTICLE 3

 

ACTIONS OF THE PARTIES

     23   

Section 3.1

    

Certain Actions Permitted

     23   

Section 3.2

    

Agent for Perfection

     23   

Section 3.3

    

Sharing of Information and Access

     24   

Section 3.4

    

Insurance

     24   

Section 3.5

    

No Additional Rights For the Credit Parties Hereunder

     24   

Section 3.6

    

Inspection and Access Rights

     25   

Section 3.7

    

Tracing of and Priorities in Proceeds

     27   

Section 3.8

    

Purchase Right

     27   

Section 3.9

    

Payments Over

     29   

ARTICLE 4

 

APPLICATION OF PROCEEDS

     30   

Section 4.1

    

Application of Proceeds

     30   

Section 4.2

    

Specific Performance

     32   

ARTICLE 5

 

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

     32   

Section 5.1

    

Notice of Acceptance and Other Waivers

     32   

Section 5.2

    

Modifications to ABL Documents and Term Documents

     33   

Section 5.3

    

Reinstatement and Continuation of Agreement

     35   

ARTICLE 6

 

INSOLVENCY PROCEEDINGS

     36   

Section 6.1

    

DIP Financing

     36   

 

Form of J. Crew Intercreditor Agreement

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

Section 6.2

    

Relief From Stay

     38   

Section 6.3

    

No Contest; Adequate Protection

     38   

Section 6.4

    

Asset Sales

     39   

Section 6.5

    

Separate Grants of Security and Separate Classification

     40   

Section 6.6

    

Enforceability

     41   

Section 6.7

    

ABL Obligations Unconditional

     41   

Section 6.8

    

Term Obligations Unconditional

     41   

ARTICLE 7

 

MISCELLANEOUS

     42   

Section 7.1

    

Rights of Subrogation

     42   

Section 7.2

    

Further Assurances

     42   

Section 7.3

    

Representations

     42   

Section 7.4

    

Amendments

     43   

Section 7.5

    

Addresses for Notices

     43   

Section 7.6

    

No Waiver; Remedies

     44   

Section 7.7

    

Continuing Agreement, Transfer of Secured Obligations

     44   

Section 7.8

    

Governing Law; Entire Agreement

     44   

Section 7.9

    

Counterparts

     44   

Section 7.10

    

No Third Party Beneficiaries

     44   

Section 7.11

    

Headings

     45   

Section 7.12

    

Severability

     45   

Section 7.13

    

Attorneys’ Fees

     45   

Section 7.14

    

VENUE; JURY TRIAL WAIVER

     45   

Section 7.15

    

Intercreditor Agreement

     46   

Section 7.16

    

No Warranties or Liability

     46   

Section 7.17

    

Conflicts

     47   

Section 7.18

    

Information Concerning Financial Condition of the Credit Parties

     47   

 

Form of J. Crew Intercreditor Agreement

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INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (as amended, supplemented, restated or otherwise
modified from time to time pursuant to the terms hereof, this “Agreement”) is
entered into as of [            ] [ ], 2011 between BANK OF AMERICA, N.A. (“Bank
of America”), in its capacities as administrative agent and collateral agent
(together with its successors and assigns in such capacities, the “ABL Agent”)
for (i) the financial institutions, lenders and investors party from time to
time to the ABL Credit Agreement referred to below (such financial institutions,
lenders and investors together with their respective successors, assigns and
transferees, including any letter of credit issuers under the ABL Credit
Agreement, the “ABL Lenders”), (ii) any ABL Cash Management Affiliates (as
defined below) and (iii) any ABL Hedging Affiliates (as defined below) (such ABL
Cash Management Affiliates and ABL Hedging Affiliates, together with the ABL
Agent and the ABL Lenders and any other secured parties under any ABL Credit
Agreement, the “ABL Secured Parties”) and Bank of America, in its capacities as
administrative agent and collateral agent (together with its successors and
assigns in such capacities, the “Term Agent”) for (i) the financial
institutions, lenders and investors party from time to time to the Term Credit
Agreement referred to below (such financial institutions, lenders and investors,
together with their respective successors, assigns and transferees, the “Term
Lenders”), (ii) any Term Cash Management Affiliates (as defined below) and
(iii) any Term Hedging Affiliates (as defined below) (such Term Cash Management
Affiliates and Term Hedging Affiliates, together with the Term Agent and the
Term Lenders and any other secured parties under any Term Credit Agreement, the
“Term Secured Parties”).

RECITALS

A. Pursuant to that certain Credit Agreement dated as of the date hereof by and
among CHINOS ACQUISITION CORPORATION, a Delaware corporation (which on the date
hereof shall be merged with and into J. CREW GROUP, INC., a Delaware corporation
(the “Company”), with the Company surviving such merger as the borrower (the
“Borrower”), CHINOS INTERMEDIATE HOLDINGS B, INC., a Delaware corporation
(“Holdings”), the ABL Lenders and the ABL Agent (as such agreement may be
amended, supplemented, restated or otherwise modified from time to time, the
“ABL Credit Agreement”), the ABL Lenders have agreed to make certain loans and
other financial accommodations to or for the benefit of the Borrower.

B. Pursuant to certain guaranties each dated as of the date hereof (as the same
may be amended, supplemented, restated and/or otherwise modified, collectively,
the “ABL Guaranty”) by each of the ABL Guarantors in favor of the ABL Secured
Parties, the ABL Guarantors have agreed to guarantee, inter alia, the payment
and performance of the Borrower’s obligations under the ABL Documents (as
hereinafter defined).

C. As a condition to the effectiveness of the ABL Credit Agreement and to secure
the obligations of the Borrower and the ABL Guarantors (the Borrower, the ABL
Guarantors (as hereinafter defined) and each other direct or indirect subsidiary
or parent of the Borrower or any of their affiliates that is now or hereafter
becomes a party to any ABL Document, collectively, the “ABL Credit Parties”)
under and in connection with the ABL Documents, the ABL Credit Parties have
granted to the ABL Agent (for the benefit of the ABL Secured Parties) Liens on
the Collateral.

 

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D. Pursuant to that certain Credit Agreement dated as of the date hereof by and
among CHINOS ACQUISITION CORPORATION (which on the date hereof shall be merged
with and into the Company, with the Company surviving such merger as the
Borrower), Holdings, the Term Lenders and the Term Agent (as such agreement may
be amended, supplemented, restated or otherwise modified from time to time, the
“Term Credit Agreement”), the Term Lenders have agreed to make certain loans to
the Borrower.

E. Pursuant to certain guaranties each dated as of the date hereof (as the same
may be amended, supplemented, restated and/or otherwise modified, collectively
(collectively, the “Term Guaranty”) by each of the Term Guarantors (as
hereinafter defined) in favor of the Term Secured Parties, the Term Guarantors
have agreed to guarantee, inter alia, the payment and performance of the
Borrower’s obligations under the Term Documents (as hereinafter defined).

F. As a condition to the effectiveness of the Term Credit Agreement and to
secure the obligations of the Borrower and the Term Guarantors (the Borrower,
the Term Guarantors and each other direct or indirect subsidiary or parent of
the Borrower or any of its affiliates that is now or hereafter becomes a party
to any Term Document, collectively, the “Term Credit Parties”) under and in
connection with the Term Documents, the Term Credit Parties have granted to the
Term Agent (for the benefit of the Term Secured Parties) Liens on the
Collateral.

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

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

ARTICLE 1

DEFINITIONS

Section 1.1 UCC Definitions. The following terms which are defined in the
Uniform Commercial Code are used herein as so defined: Account, Chattel Paper,
Commercial Tort Claim, Deposit Account, Document, Electronic Chattel Paper,
Financial Asset, Fixtures, General Intangible, Instrument, Inventory, Investment
Property, Letter-of-Credit Right, Money, Payment Intangible, Promissory Note,
Records, Securities Account, Security Entitlement, Supporting Obligation and
Tangible Chattel Paper.

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

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

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“ABL Cash Management Affiliate” shall mean any ABL Cash Management Bank that is
owed ABL Cash Management Obligations by an ABL Credit Party and which ABL Cash
Management Obligations are secured by one or more ABL Collateral Documents,
together with their respective successors, assigns and transferees.

“ABL Cash Management Bank” shall mean, as of any date of determination, any
Person that is an ABL Lender or an Affiliate of an ABL Lender on such date.

“ABL Cash Management Obligations” shall mean obligations owed by the Borrower or
any Restricted Subsidiary to any ABL Cash Management Bank in respect of or in
connection with any Cash Management Services and designated under the ABL Credit
Agreement by the ABL Cash Management Bank and the Borrower in writing to the ABL
Agent as “Cash Management Obligations”.

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

“ABL Credit Agreement” shall have the meaning assigned to such term in the
recitals to this Agreement and shall include any one or more other agreements,
indentures or facilities extending the maturity of, consolidating,
restructuring, refunding, replacing or refinancing all or any portion of the ABL
Obligations, whether by the same or any other agent, trustee, lender, group of
lenders, creditor or group of creditors and whether or not increasing the amount
of any Indebtedness that may be incurred thereunder.

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

“ABL Deposit and Securities Accounts” means all Deposit Accounts, Securities
Accounts, collection accounts and lockbox accounts (and all related lockboxes)
of the Credit Parties (other than the Term Loan Priority Accounts).

“ABL Documents” shall mean any ABL Credit Agreement, any ABL Guaranty, any ABL
Collateral Document, all Cash Management Services between the Borrower or any
Restricted Subsidiary and any ABL Cash Management Affiliate, any ABL Hedging
Agreement between any ABL Credit Party or any Restricted Subsidiary and any ABL
Hedging Affiliate, any other ancillary agreement as to which any ABL Secured
Party is a party or a beneficiary and all other agreements, instruments,
documents and certificates, now or hereafter executed by or on behalf of any ABL
Credit Party or any of its respective Subsidiaries or Affiliates, and delivered
to the ABL Agent or any other ABL Secured Party, in connection with any of the
foregoing or any ABL Credit Agreement, in each case as the same may be amended,
supplemented, restated or otherwise modified from time to time.

“ABL Guarantors” shall mean the collective reference to (i) Holdings and each
wholly owned Material Domestic Subsidiary (as defined in the ABL Credit
Agreement) of the Borrower other than any Excluded Subsidiary (as defined in the
ABL Credit Agreement), and (ii) any other Person who becomes a guarantor under
any ABL Guaranty. The term “ABL Guarantors” shall include all “Guarantors” under
and as defined in the ABL Credit Agreement.

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

“ABL Hedge Bank” shall have the meaning assigned to the term “Hedge Bank” in the
ABL Credit Agreement.

“ABL Hedging Affiliate” shall mean any ABL Hedge Bank that has entered into an
ABL Hedging Agreement with an ABL Credit Party or Restricted Subsidiary, as
applicable, with the obligations of such ABL Credit Party or Restricted
Subsidiary, as applicable, thereunder being secured by one or more ABL
Collateral Documents, together with their respective successors, assigns and
transferees.

“ABL Hedging Agreement” means any “Secured Hedge Agreement” as defined in the
ABL Credit Agreement.

“ABL Joint Collateral” shall have the meaning set forth in Section 3.6(a).

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

“ABL Obligations” shall mean any and all obligations of every nature of each ABL
Credit Party from time to time owed to the ABL Secured Parties, or any of them,
under, in connection with, or evidenced or secured by any ABL Document,
including, without limitation, all “Obligations” or similar term as defined in
any ABL Credit Agreement and whether for principal, interest (including interest
which, but for the filing of a petition in bankruptcy with respect to such ABL
Credit Party, would have accrued on any ABL Obligation, whether or not a claim
is allowed against such ABL Credit Party for such interest in the related
bankruptcy proceeding), reimbursement of amounts drawn under letters of credit,
payments for early termination of Swap Contracts, fees, expenses,
indemnification or otherwise, and all other amounts owing or due under the terms
of any ABL Document.

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

(1) all Accounts, other than Accounts which constitute identifiable proceeds of
Term Priority Collateral;

(2) cash, Money and cash equivalents;

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(3) all (x) Deposit Accounts (other than Term Loan Priority Accounts) and Money
and all cash, checks, other negotiable instruments, funds and other evidences of
payments properly held therein, including intercompany indebtedness between or
among the Credit Parties or their Affiliates, to the extent owing in respect of
ABL Priority Collateral, (y) Securities Accounts (other than Term Loan Priority
Accounts), Security Entitlements and Securities credited to such a Securities
Account (other than Equity Interests) and (z) Commodity Accounts (other than
Term Loan Priority Accounts) and Commodity Contracts credited thereto, and, in
each case, all cash, Money, cash equivalents, checks and other property properly
held therein or credited thereto (other than Equity Interests); provided,
however, that to the extent that identifiable proceeds of Term Priority
Collateral are deposited in any such Deposit Accounts or Securities Accounts,
such identifiable proceeds shall be treated as Term Priority Collateral;

(4) all Inventory;

(5) to the extent relating to, evidencing or governing any of the items referred
to in the preceding clauses (1) through (4) constituting ABL Priority
Collateral, all Documents, General Intangibles (including all rights under
contracts but excluding any Intellectual Property), Instruments (including
Promissory Notes), Chattel Paper (including Tangible Chattel Paper and
Electronic Chattel Paper) and Commercial Tort Claims; provided that to the
extent any of the foregoing also relates to Term Priority Collateral, only that
portion related to the items referred to in the preceding clauses (1) through
(4) shall be included in the ABL Priority Collateral;

(6) to the extent relating to any of the items referred to in the preceding
clauses (1) through (5) constituting ABL Priority Collateral, all Supporting
Obligations and Letter-of-Credit Rights; provided that to the extent any of the
foregoing also relates to Term Priority Collateral only that portion related to
the items referred to in the preceding clauses (1) through (5) shall be included
in the ABL Priority Collateral;

(7) all books and Records relating to the items referred to in the preceding
clauses (1) through (6) constituting ABL Priority Collateral (including all
books, databases, customer lists, engineer drawings, and Records, whether
tangible or electronic, which contain any information relating to any of the
items referred to in the preceding clauses (1) through (6) constituting ABL
Priority Collateral but, in each case, excluding any Intellectual Property); and

(8) all collateral security and guarantees with respect to any of the foregoing
constituting ABL Priority Collateral and all cash, Money, cash equivalents,
insurance proceeds, Instruments, Securities and Financial Assets received as
proceeds of any of the foregoing constituting ABL Priority Collateral (such
proceeds, “ABL Priority Proceeds”); provided, however, that no proceeds of ABL
Priority Proceeds will constitute ABL Priority Collateral unless such proceeds
of ABL Priority Proceeds would otherwise constitute ABL Priority Collateral.

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

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

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“Affiliate” shall mean, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.

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

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

“Asset Sale Proceeds Pledged Account” shall mean an account held at, and subject
to the sole dominion and control of, the Term Agent in which the proceeds from
any disposition of Term Priority Collateral is held pending reinvestment
pursuant to the Term Credit Agreement.

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

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

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

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

“Capitalized Leases” means all leases that have been or are required to be, in
accordance with GAAP, recorded as capitalized leases; provided that for all
purposes hereunder the amount of obligations under any Capitalized Lease shall
be the amount thereof accounted for as a liability in accordance with GAAP.

“Cash Management Services” means any agreement or arrangement to provide cash
management services, including treasury, depository, overdraft, credit card
processing, credit or debit card, purchase card, electronic funds transfer and
other cash management arrangements.

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

“Control” shall have the meaning specified in the definition of “Affiliate”.

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

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

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

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

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

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

“DIP Financing” shall have the meaning set forth in Section 6.1(a).

“Discharge of ABL Obligations” shall mean (a) the payment in full in cash of all
outstanding ABL Obligations excluding contingent indemnity obligations with
respect to then unasserted claims but including, with respect to amounts
available to be drawn under outstanding letters of credit issued under any ABL
Credit Agreement (or indemnities or other undertakings issued pursuant thereto
in respect of outstanding letters of credit), the cancellation of such letters
of credit or the delivery or provision of cash collateral or backstop letters of
credit in respect thereof in compliance with the terms of any ABL Credit
Agreement (which shall not exceed an amount equal to 101% of the aggregate
undrawn amount of such letters of credit) and (b) the termination of all
commitments to extend credit under the ABL Documents.

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“Discharge of Term Obligations” shall mean the payment in full in cash of all
outstanding Term Obligations (other than contingent indemnity obligations with
respect to then unasserted claims).

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

“Domestic Subsidiary” shall mean any Subsidiary that is organized under the Laws
of the United States, any state thereof or the District of Columbia.

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

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

“Equipment” shall mean (x) any “equipment” as such term is defined in Article 9
of the Uniform Commercial Code, and in any event, shall include, but shall not
be limited to, all machinery, equipment, furnishings, appliances, furniture,
fixtures, tools, and vehicles now or hereafter owned by any Credit Party in each
case, regardless of whether characterized as equipment under the Uniform
Commercial Code (but excluding any such items which constitute Inventory), and
(y) any and all additions, substitutions and replacements of any of the
foregoing and all accessions thereto, wherever located, whether or not at any
time of determination incorporated or installed therein or attached thereto, and
all replacements therefore, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.

“Equity Interest” shall mean, with respect to any Person, all of the shares,
interests, rights, participations or other equivalents (however designated) of
capital stock of (or other ownership or profit interests or units in) such
Person and all of the warrants, options or other rights for the purchase,
acquisition or exchange from such Person of any of the foregoing (including
through convertible securities).

“Event of Default” shall mean an “Event of Default” or similar term under and as
defined in any ABL Credit Agreement or any Term Credit Agreement, as applicable.

“Excluded Subsidiary” means (a) with respect to ABL Guarantors, any “Excluded
Subsidiary” or similar term under and as defined in any ABL Credit Agreement and
(b) with respect to the Term Guarantors, any “Excluded Subsidiary” or similar
term under and as defined in any Term Credit Agreement.

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

(b) the taking by any Secured Party of any action to enforce or realize upon any
Lien, including the institution of any foreclosure proceedings or the noticing
of any public or private sale pursuant to Article 9 of the Uniform Commercial
Code or other applicable law;

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

(d) the taking of any action by any Secured Party or the exercise of any right
or remedy by any Secured Party in respect of the collection on, set off against,
marshaling of, injunction respecting or foreclosure on the Collateral or the
Proceeds thereof;

(e) the appointment on the application of a Secured Party, of a receiver,
receiver and manager or interim receiver of all or part of the Collateral;

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

(g) the exercise of any other right of a secured creditor under Part 6 of
Article 9 of the Uniform Commercial Code or under provisions of similar effect
under other applicable law; and

(h) the exercise by any Secured Party of any voting rights relating to any
Equity Interest included in the Collateral.

For the avoidance of doubt, none of the following shall be deemed to constitute
an Exercise of Secured Creditor Remedies: (i) the filing of a proof of claim in
any Insolvency Proceeding or the seeking of adequate protection, (ii) the
exercise of rights by the ABL Agent upon the occurrence of a Cash Dominion Event
(as defined in any ABL Credit Agreement), including, without limitation, the
notification of account debtors, depository institutions or any other Person to
deliver proceeds of ABL Priority Collateral to the ABL Agent, (iii) the consent
by the ABL Agent to a store closing sale, going out of business sale or other
disposition by any Credit Party of any of the ABL Priority Collateral, (iv) the
reduction of advance rates or sub-limits by the ABL Agent and the ABL Lenders,
or (v) the imposition of Reserves (as defined in the ABL Credit Agreement) by
the ABL Agent.

“Foreign Subsidiary” shall mean any direct or indirect Restricted Subsidiary of
the Borrower that is not a Domestic Subsidiary.

“GAAP” shall have the meaning assigned to that term in the Term Credit
Agreement.

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

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

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

“Indebtedness” shall have the meaning provided in the ABL Credit Agreement and
the Term Credit Agreement as in effect on the date hereof.

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

“Intellectual Property” shall mean all intellectual and similar property of
every kind and nature now owned, licensed or hereafter acquired by any Credit
Party that is subject to a security interest under any ABL Documents and any
Term Documents, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, Domain Names, trade secrets, confidential or proprietary technical
and business information, know how, show how or other data or information,
software, databases, all other proprietary information and all embodiments or
fixations thereof and related documentation and registrations and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.

“Intellectual Property Collateral” shall mean Collateral consisting of
Intellectual Property.

“Lenders” means, collectively, all of the ABL Lenders and the Term Lenders.

“License” shall mean any Patent License, Trademark License, Copyright License,
or other license or sublicense agreement granting rights under Intellectual
Property to which any Credit Party is a party.

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing); provided that in no event shall an operating
lease in and of itself be deemed a Lien.

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

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“Other Liabilities” means ABL Cash Management Obligations and Obligations (as
defined in the ABL Credit Agreement) in respect of any ABL Hedging Agreement.

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

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to develop, commercialize, import, make,
have made, offer for sale, use or sell any invention on which a Patent, now or
hereafter owned by any Credit Party or that any Credit Party otherwise has the
right to license, is in existence, or granting to any Credit Party any such
right with respect to any invention on which a Patent, now or hereafter owned by
any third party, is in existence, and all rights of any Credit Party under any
such agreement.

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

“Permitted Junior Secured Refinancing Debt” shall mean any “Permitted Junior
Secured Refinancing Debt” as defined in the Term Credit Agreement.

“Permitted Refinancing” shall mean any “Permitted Refinancing” as defined in the
Term Credit Agreement.

“Person” shall mean any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

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

“Proceeds” shall mean (a) all “proceeds,” as defined in Article 9 of the Uniform
Commercial Code, with respect to the Collateral, and (b) whatever is recoverable
or recovered when any Collateral is sold, exchanged, collected, or disposed of,
whether voluntarily or involuntarily.

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

 

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“Purchase Date” shall have the meaning set forth in Section 3.8(a).

“Purchase Notice” shall have the meaning set forth in Section 3.8(a).

“Purchase Option Event” shall have the meaning set forth in Section 3.8(a).

“Purchasing Creditors” shall have the meaning set forth in Section 3.8(a).

“Real Property” shall mean any right, title or interest in and to real property,
including any fee interest, leasehold interest, easement, or license and any
other right to use or occupy real property.

“Replacement Agent” shall have the meaning set forth in Section 3.8(d).

“Restricted Subsidiary” means (a) with respect to ABL Guarantors, any
“Restricted Subsidiary” under and as defined in any ABL Credit Agreement and
(b) with respect to the Term Guarantors, any “Restricted Subsidiary” under and
as defined in any Term Credit Agreement.

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

“Security” shall mean any “security” as such term is defined in Article 8 of the
Uniform Commercial Code, any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as “securities” or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

“Subsidiary” of a Person shall mean a corporation, partnership, joint venture,
limited liability company or other business entity (excluding, for the avoidance
of doubt, charitable foundations) of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person.

“Swap Contract” has the meaning set forth in the ABL Credit Agreement.

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

“Term Cash Management Affiliate” shall mean any Term Cash Management Bank that
is owed Term Cash Management Obligations by a Term Credit Party and which Term
Cash Management Obligations are secured by one or more Term Collateral
Documents, together with their respective successors, assigns and transferees.

 

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“Term Cash Management Bank” means any Person that is a Term Lender or an
Affiliate of a Term Lender at the time it provides any Cash Management Services,
whether or not such Person subsequently ceases to be a Term Lender or an
Affiliate of a Term Lender.

“Term Cash Management Obligations” means obligations owed by the Borrower or any
Restricted Subsidiary to any Term Cash Management Bank in respect of or in
connection with any Cash Management Services and designated under the Term
Credit Agreement by the Term Cash Management Bank and the Borrower in writing to
the Term Agent as “Cash Management Obligations”.

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

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

“Term Credit Agreement” shall have the meaning assigned to that term in the
recitals to this Agreement and shall include any one or more other agreements,
indentures or facilities extending the maturity of, consolidating,
restructuring, refunding, replacing or refinancing all or any portion of the
Term Obligations, whether by the same or any other agent, trustee, lender, group
of lenders, creditor or group of creditors and whether or not increasing the
amount of any Indebtedness that may be incurred thereunder.

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

“Term Documents” shall mean any Term Credit Agreement, any Term Guaranty, any
Term Collateral Document, any Cash Management Services between the Borrower or
any Restricted Subsidiary and any Term Cash Management Affiliate, any Term
Hedging Agreements between any Term Credit Party or any Restricted Subsidiary
and any Term Hedging Affiliate, any other ancillary agreement as to which any
Term Secured Party is a party or a beneficiary and all other agreements,
instruments, documents and certificates, now or hereafter executed by or on
behalf of any Term Credit Party or any of its respective Subsidiaries or
Affiliates, and delivered to the Term Agent or any other Term Secured Party, in
connection with any of the foregoing or any Term Credit Agreement, in each case
as the same may be amended, supplemented, restated or otherwise modified from
time to time.

“Term Guarantors” shall mean the collective reference to (i) Holdings and each
wholly owned Material Domestic Subsidiary (as defined in the Term Credit
Agreement) of the Borrower, other than any Excluded Subsidiary and (ii) any
other Person who becomes a guarantor under any Term Guaranty. The term “Term
Guarantors” shall include all “Guarantors” under and as defined in the Term
Credit Agreement.

 

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

“Term Hedge Bank” shall mean any Person that is an Agent, a Lender or a Joint
Bookrunner under the Term Credit Agreement or an Affiliate of any of the
foregoing on the Closing Date or at the time it enters into a Term Hedging
Agreement, in its capacity as a party thereto, whether or not such Person
subsequently ceases to be an Agent, a Lender or an Affiliate of any of the
foregoing.

“Term Hedging Affiliate” shall mean any Term Hedge Bank that has entered into a
Term Hedging Agreement with a Term Credit Party or Restricted Subsidiary, as
applicable, with the obligations of such Term Credit Party or Restricted
Subsidiary, as applicable, thereunder being secured by one or more Term
Collateral Documents, together with their respective successors, assigns and
transferees (even if such Term Hedge Bank subsequently ceases to be an agent or
lender, as applicable, under the Term Credit Agreement for any reason).

“Term Hedging Agreement” means any “Secured Hedge Agreement” as defined in the
Term Credit Agreement.

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

“Term Loan Priority Accounts” means the Asset Sale Proceeds Pledged Account and
any Deposit Accounts, Securities Accounts or Commodity Accounts, in each case
that are intended to solely contain Term Priority Collateral or identifiable
proceeds of the Term Priority Collateral (it being understood that any property
in such Deposit Accounts, Securities Accounts or Commodities Accounts which is
not Term Priority Collateral or identifiable proceeds of Term Priority
Collateral shall not be Term Priority Collateral solely by virtue of being on
deposit in any such Deposit Account, Securities Account or Commodity Account).

“Term Obligations” shall mean any and all obligations of every nature of each
Term Credit Party from time to time owed to the Term Secured Parties or any of
them, under, in connection with, or evidenced or secured by any Term Document,
including, without limitation, all “Obligations” or similar term as defined in
any Term Credit Agreement and whether for principal, interest (including
interest which, but for the filing of a petition in bankruptcy with respect to
such Term Credit Party, would have accrued on any Term Obligation, whether or
not a claim is allowed against such Term Credit Party for such interest in the
related bankruptcy proceeding), payments for early termination of Term Hedging
Agreements, fees, expenses, indemnification or otherwise, and all other amounts
owing or due under the terms of any Term Document, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time.

 

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

(1) all Equipment, Fixtures, Real Property, Intellectual Property, intercompany
indebtedness between or among the Credit Parties or their Affiliates, except to
the extent constituting ABL Priority Collateral, and Investment Property (other
than any Investment Property described in clauses 3(y) and 8 of the definition
of ABL Priority Collateral);

(2) except to the extent constituting ABL Priority Collateral, all Instruments,
Commercial Tort Claims, Documents and General Intangibles;

(3) Term Loan Priority Accounts; provided, however, that to the extent that
identifiable proceeds of ABL Priority Collateral are deposited in any such Term
Loan Priority Accounts, such identifiable proceeds shall be treated as ABL
Priority Collateral;

(4) all other Collateral, other than the ABL Priority Collateral (including ABL
Priority Proceeds); and

(5) all collateral security and guarantees with respect to the foregoing, and
all cash, Money, insurance proceeds, Instruments, Securities and Financial
Assets received as proceeds of any Collateral, other than the ABL Priority
Collateral (including ABL Priority Proceeds) (such proceeds, “Term Priority
Proceeds”); provided, however, that no proceeds of Term Priority Proceeds will
constitute Term Priority Collateral unless such proceeds of Term Priority
Proceeds would otherwise constitute Term Priority Collateral.

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

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

“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Credit Party or that any Credit Party otherwise has the
right to license, or granting to any Credit Party any right to use any Trademark
now or hereafter owned by any third party, and all rights of any Credit Party
under any such agreement (not including vendor or distribution agreements that
allow incidental use of intellectual property rights in connection with the sale
or distribution of such products or services).

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Credit Party: (a) all trademarks, service marks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
trade dress, logos, other source or business identifiers, designs and general
intangibles of like nature, the goodwill of the business symbolized thereby or
associated therewith, all registrations and recordings thereof, and all

 

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registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office or any similar offices in any State of the United States or any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on the applicable schedule to the
Perfection Certificate (as defined in the Term Credit Agreement) (b) any and all
rights and privileges arising under applicable law with respect to such Credit
Party’s use of any trademarks, (c) all extensions and renewals thereof and
amendments thereto, (d) all income, fees, royalties, damages and payments now
and hereafter due and/or payable with respect to any of the foregoing, including
damages, claims and payments for past, present or future infringements thereof,
(e) all rights corresponding thereto throughout the world and (f) all rights to
sue for past, present and future infringements or dilution thereof or other
injuries thereto.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect
from time to time in the State of New York; provided that, if by reason of
mandatory provisions of law, perfection, or the effect of perfection or non
perfection or the priority of a security interest in any Collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, “Uniform Commercial Code”
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non perfection or priority or availability of such remedy, as the
case may be.

“Use Period” means the period commencing on the date that the ABL Agent or an
agent acting on its behalf (or an ABL Credit Party acting with the consent of
the ABL Agent) commences the liquidation and sale of the ABL Priority Collateral
in a manner as provided in Section 3.6 (having theretofore furnished the Term
Agent with an Enforcement Notice) and ending 180 days thereafter. If any stay or
other order that prohibits any of the ABL Agent, the other ABL Secured Parties
or any ABL Credit Party (with the consent of the ABL Agent) from commencing and
continuing to Exercise Any Secured Creditor Remedies or from liquidating and
selling the ABL Priority Collateral has been entered by a court of competent
jurisdiction, such 180-day period shall be tolled during the pendency of any
such stay or other order and the Use Period shall be so extended.

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

 

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ARTICLE 2

LIEN PRIORITY

Section 2.1 Priority of Liens.

(a) Subject to the provisos in subclauses (b) and (c) of Section 4.1,
notwithstanding (i) the date, time, method, manner, or order of grant,
attachment or perfection (including any defect or deficiency or alleged defect
or deficiency in any of the foregoing) of any Liens granted to the ABL Secured
Parties in respect of all or any portion of the Collateral or of any Liens
granted to the Term Secured Parties in respect of all or any portion of the
Collateral and regardless of how any such Lien was acquired (whether by grant,
statute, operation of law, subrogation or otherwise), (ii) the order or time of
filing or recordation of any document or instrument for perfecting the Liens in
favor of the ABL Agent or the Term Agent (or ABL Secured Parties or Term Secured
Parties) in any Collateral, (iii) any provision of the Uniform Commercial Code,
Debtor Relief Laws or any other applicable law, or of the ABL Documents or the
Term Documents, (iv) whether the ABL Agent or the Term Agent, in each case,
either directly or through agents, holds possession of, or has control over, all
or any part of the Collateral, (v) the date on which the ABL Obligations or the
Term Obligations are advanced or made available to the Credit Parties, (vi) the
fact that any such Liens in favor of the ABL Agent or the ABL Lenders or the
Term Agent or the Term Lenders securing any of the ABL Obligations or Term
Obligations, respectively, are (x) subordinated to any Lien securing any
obligation of any Credit Party other than the Term Obligations or the ABL
Obligations, respectively, or (y) otherwise subordinated, voided, avoided,
invalidated or lapsed, or (vii) any other circumstance of any kind or nature
whatsoever, the ABL Agent, on behalf of itself and the ABL Secured Parties, and
the Term Agent, on behalf of itself and the Term Secured Parties, hereby agree
that:

(1) any Lien in respect of all or any portion of the ABL Priority Collateral now
or hereafter held by or on behalf of the Term Agent or any Term Secured Party
that secures all or any portion of the Term Obligations shall in all respects be
junior and subordinate to all Liens granted to the ABL Agent and the ABL Secured
Parties in such ABL Priority Collateral to secure all or any portion of the ABL
Obligations;

(2) any Lien in respect of all or any portion of the ABL Priority Collateral now
or hereafter held by or on behalf of the ABL Agent or any ABL Secured Party that
secures all or any portion of the ABL Obligations shall in all respects be
senior and prior to all Liens granted to the Term Agent or any Term Secured
Party in such ABL Priority Collateral to secure all or any portion of the Term
Obligations;

(3) any Lien in respect of all or any portion of the Term Priority Collateral
now or hereafter held by or on behalf of the ABL Agent or any ABL Secured Party
that secures all or any portion of the ABL Obligations shall in all respects be
junior and subordinate to all Liens granted to the Term Agent and the Term
Secured Parties in such Term Priority Collateral to secure all or any portion of
the Term Obligations; and

 

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(4) any Lien in respect of all or any portion of the Term Priority Collateral
now or hereafter held by or on behalf of the Term Agent or any Term Secured
Party that secures all or any portion of the Term Obligations shall in all
respects be senior and prior to all Liens granted to the ABL Agent or any ABL
Secured Party in such Term Priority Collateral to secure all or any portion of
the ABL Obligations.

(b) Notwithstanding any failure by any ABL Secured Party or Term Secured Party
to perfect its security interests in the Collateral or any avoidance,
invalidation, priming or subordination by any third party or court of competent
jurisdiction of the security interests in the Collateral granted to the ABL
Secured Parties or the Term Secured Parties (but, for the avoidance of doubt,
subject to the provisos in subclauses (b) and (c) of Section 4.1), the priority
and rights as between the ABL Secured Parties and the Term Secured Parties with
respect to the Collateral shall be as set forth herein.

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

Section 2.2 Waiver of Right to Contest Liens.

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

 

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(b) The ABL Agent, for and on behalf of itself and the ABL Secured Parties,
agrees that it and they shall not (and hereby waives any right to) take any
action to contest or challenge (or assist or support any other Person in
contesting or challenging), directly or indirectly, whether or not in any
proceeding (including in any Insolvency Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the Term Agent or the Term Secured
Parties in respect of the Collateral or the provisions of this Agreement. Except
to the extent expressly set forth in Section 3.6 of this Agreement, the ABL
Agent, for itself and on behalf of the ABL Secured Parties, agrees that none of
the ABL Agent or the ABL Secured Parties will take any action that would
interfere with any Exercise of Secured Creditor Remedies undertaken by the Term
Agent or any Term Secured Party under the Term Documents with respect to the
Term Priority Collateral. The ABL Agent, for itself and on behalf of the ABL
Secured Parties, hereby waives any and all rights it or the ABL Secured Parties
may have as a junior lien creditor or otherwise to contest, protest, object to,
or interfere with the manner in which the Term Agent or any Term Secured Party
seeks to enforce its Liens in any Term Priority Collateral. The foregoing shall
not be construed to prohibit the ABL Agent from enforcing the provisions of this
Agreement.

Section 2.3 Remedies Standstill.

(a) The Term Agent, on behalf of itself and the Term Secured Parties, agrees
that, from the date hereof until the date upon which the Discharge of ABL
Obligations shall have occurred, neither the Term Agent nor any Term Secured
Party will Exercise Any Secured Creditor Remedies with respect to any of the ABL
Priority Collateral without the written consent of the ABL Agent, and will not
take, receive or accept any Proceeds of ABL Priority Collateral, it being
understood and agreed that the temporary deposit of Proceeds of ABL Priority
Collateral in a Deposit Account controlled by the Term Agent shall not
constitute a breach of this Agreement so long as such Proceeds are promptly (but
in no event later than five Business Days after receipt) remitted to the ABL
Agent. From and after the date upon which the Discharge of ABL Obligations shall
have occurred (or prior thereto upon obtaining the written consent of the ABL
Agent), the Term Agent or any Term Secured Party may Exercise Any Secured
Creditor Remedies under the Term Documents or applicable law as to any ABL
Priority Collateral; provided, however, that any Exercise of Secured Creditor
Remedies with respect to any Collateral by the Term Agent or the Term Secured
Parties is at all times subject to the provisions of this Agreement.

(b) The ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that,
from the date hereof until the date upon which the Discharge of Term Obligations
shall have occurred, neither the ABL Agent nor any ABL Secured Party will
Exercise Any Secured Creditor Remedies with respect to the Term Priority
Collateral without the written consent of the Term Agent, and will not take,
receive or accept any Proceeds of the Term Priority Collateral, it being
understood and agreed that the temporary deposit of Proceeds of Term Priority
Collateral in a Deposit Account controlled by the ABL Agent shall not constitute
a breach of this Agreement so long as such Proceeds are promptly (but in no
event later than five Business Days after receipt) remitted to the Term Agent.
From and after the date upon which the Discharge of Term Obligations shall have
occurred (or prior thereto upon obtaining the written consent of the Term
Agent), the ABL Agent or any ABL Secured Party may Exercise Any Secured Creditor
Remedies under the ABL Documents or applicable law as to any Term Priority
Collateral; provided, however, that any Exercise of Secured Creditor Remedies
with respect to any Collateral by the ABL Agent or the ABL Secured Parties is at
all times subject to the provisions of this Agreement.

 

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(c) Notwithstanding the provisions of Sections 2.3(a), 2.3(b) or any other
provision of this Agreement, nothing contained herein shall be construed to
prevent any Agent or any Secured Party from (i) filing a claim or statement of
interest with respect to the ABL Obligations or Term Obligations owed to it in
any Insolvency Proceeding commenced by or against any Credit Party, (ii) taking
any action (not adverse to the priority status of the Liens of the other Agent
or other Secured Parties on the Collateral in which such other Agent or other
Secured Party has a priority Lien or the rights of the other Agent or any of the
other Secured Parties to Exercise Any Secured Creditor Remedies in respect
thereof) in order to create, perfect, preserve or protect (but not enforce its
Lien) on any Collateral, (iii) filing any necessary or responsive pleadings in
opposition to any motion, adversary proceeding or other pleading filed by any
Person objecting to or otherwise seeking disallowance of the claim or Lien of
such Agent or Secured Party or (iv) voting on any plan of reorganization or file
any proof of claim in any Insolvency Proceeding of any Credit Party, in each
case (i) through (iv) above to the extent not inconsistent with the express
terms of this Agreement.

Section 2.4 Exercise of Rights.

(a) No Other Restrictions. Except as expressly set forth in this Agreement, each
Term Secured Party and each ABL Secured Party shall have any and all rights and
remedies it may have as a creditor under applicable law, including the right to
the Exercise of Secured Creditor Remedies; provided, however, that the Exercise
of Secured Creditor Remedies with respect to the Collateral shall be subject to
the Lien Priority and to the provisions of this Agreement. The ABL Agent may
enforce the provisions of the ABL Documents, the Term Agent may enforce the
provisions of the Term Documents and each may Exercise Any Secured Creditor
Remedies, all in such order and in such manner as each may determine in the
exercise of its sole discretion, consistent with the terms of this Agreement and
mandatory provisions of applicable law; provided, however, that each of the ABL
Agent and the Term Agent agrees to provide to the other (x) an Enforcement
Notice prior to the commencement of an Exercise of Any Secured Creditor Remedies
and (y) copies of any notices that it is required under applicable law to
deliver to any Credit Party; provided further, however, that the ABL Agent’s
failure to provide the Enforcement Notice (other than in connection with
Section 3.6) or any such copies to the Term Agent shall not impair any of the
ABL Agent’s rights hereunder or under any of the ABL Documents and the Term
Agent’s failure to provide the Enforcement Notice or any such copies to the ABL
Agent shall not impair any of the Term Agent’s rights hereunder or under any of
the Term Documents. Each of the Term Agent, each Term Secured Party, the ABL
Agent and each ABL Secured Party agrees that it will not institute any suit or
other proceeding or assert in any suit, Insolvency Proceeding or other
proceeding any claim, in the case of the Term Agent and each Term Secured Party,
against either the ABL Agent or any other ABL Secured Party, and in the case of
the ABL Agent and each other ABL Secured Party, against either the Term Agent or
any other Term Secured Party, seeking damages from or other relief by way of
specific performance, instructions or otherwise, with respect to any action
taken or omitted to be taken by such Person with respect to the Collateral which
is consistent with the terms of this Agreement, and none of such Parties shall
be liable for any such action taken or omitted to be taken.

 

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(b) Release of Liens.

(i) In the event of (A) any private or public sale of all or any portion of the
ABL Priority Collateral in connection with any Exercise of Secured Creditor
Remedies by or with the consent of the ABL Agent (other than in connection with
a refinancing as described in Section 5.2(c)), or (B) any sale, transfer or
other disposition of all or any portion of the ABL Priority Collateral (other
than in connection with a refinancing as described in Section 5.2(c)), so long
as such sale, transfer or other disposition is then permitted by the ABL
Documents or consented to by the requisite ABL Lenders, irrespective of whether
an Event of Default has occurred, the Term Agent agrees, on behalf of itself and
the Term Secured Parties that, so long as the Term Agent, for the benefit of the
Term Secured Parties, shall retain a Lien on the proceeds of such sale, transfer
or other disposition (to the extent that such proceeds are not applied to the
ABL Obligations as provided in Section 4.1(b) hereof), such sale, transfer or
other disposition will be free and clear of the Liens on such ABL Priority
Collateral (but not the proceeds thereof) securing the Term Obligations, and the
Term Agent’s and the Term Secured Parties’ Liens with respect to the ABL
Priority Collateral (but not the proceeds thereof) so sold, transferred, or
disposed shall terminate and be automatically released without further action
concurrently with, and to the same extent as, the release of the ABL Secured
Parties’ Liens on such ABL Priority Collateral. In furtherance of, and subject
to, the foregoing, the Term Agent agrees that it will promptly execute any and
all Lien releases or other documents reasonably requested by the ABL Agent in
connection therewith. The Term Agent hereby appoints the ABL Agent and any
officer or duly authorized person of the ABL Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power of attorney in the place and stead of the Term Agent and in the name of
the Term Agent or in the ABL Agent’s own name, from time to time, in the ABL
Agent’s sole discretion, for the purposes of carrying out the terms of this
paragraph, to take any and all appropriate action and to execute and deliver any
and all documents and instruments as may be necessary or desirable to accomplish
the purposes of this paragraph, including any financing statements,
endorsements, assignments, releases or other documents or instruments of
transfer (which appointment, being coupled with an interest, is irrevocable).

(ii) In the event of (A) any private or public sale of all or any portion of the
Term Priority Collateral in connection with any Exercise of Secured Creditor
Remedies by or with the consent of the Term Agent (other than in connection with
a refinancing as described in Section 5.2(c)), or (B) any sale, transfer or
other disposition of all or any portion of the Term Priority Collateral (other
than in connection with a refinancing as described in Section 5.2(c)), so long
as such sale, transfer or other disposition is then permitted by the Term
Documents or consented to by the requisite Term Lenders, irrespective of whether
an Event of Default has occurred, the ABL Agent agrees, on behalf of itself and
the ABL Secured Parties that, so long as the ABL Agent, for the benefit of the
ABL Secured Parties, shall retain a Lien on the proceeds of such sale, transfer
or other disposition (to the extent that such proceeds are not applied to the
Term Obligations as provided in Section 4.1(c) hereof), such sale, transfer or
disposition will be free and clear of the Liens on such Term Priority Collateral
(but not the proceeds thereof) securing the ABL Obligations and the ABL Agent’s
and the ABL Secured Parties’ Liens with respect to the Term Priority Collateral
(but not the proceeds thereof) so sold, transferred, or disposed shall terminate
and be automatically released without further action concurrently with, and to
the same extent as, the release of the Term Secured Parties’ Liens on such Term
Priority Collateral. In furtherance of, and subject to, the foregoing, the ABL
Agent agrees that it will

 

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promptly execute any and all Lien releases or other documents reasonably
requested by the Term Agent in connection therewith. The ABL Agent hereby
appoints the Term Agent and any officer or duly authorized person of the Term
Agent, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power of attorney in the place and stead of the ABL Agent
and in the name of the ABL Agent or in the Term Agent’s own name, from time to
time, in the Term Agent’s sole discretion, for the purposes of carrying out the
terms of this paragraph, to take any and all appropriate action and to execute
and deliver any and all documents and instruments as may be necessary or
desirable to accomplish the purposes of this paragraph, including any financing
statements, endorsements, assignments, releases or other documents or
instruments of transfer (which appointment, being coupled with an interest, is
irrevocable).

Section 2.5 No New Liens.

(a) It is the anticipation of the parties, that until the date upon which the
Discharge of ABL Obligations shall have occurred, no Term Secured Party shall
acquire or hold any consensual Lien on any assets securing any Term Obligation
which assets are not also subject to the Lien of the ABL Agent under the ABL
Documents. If any Term Secured Party shall (nonetheless and in breach hereof)
acquire or hold any Lien on any assets of any Credit Party securing any Term
Obligation which assets are not also subject to the Lien of the ABL Agent under
the ABL Documents, then the Term Agent (or the relevant Term Secured Party)
shall, without the need for any further consent of any other Term Secured Party,
the Borrower or any Term Guarantor and notwithstanding anything to the contrary
in any other Term Document, be deemed to also hold and have held such Lien as
agent or bailee for the benefit of the ABL Agent as security for the ABL
Obligations (subject to the Lien Priority and other terms hereof) and shall
promptly notify the ABL Agent in writing of the existence of such Lien upon
becoming aware thereof.

(b) It is the anticipation of the parties, that until the date upon which the
Discharge of Term Obligations shall have occurred, no ABL Secured Party shall
acquire or hold any consensual Lien on any assets securing any ABL Obligation
which assets are not also subject to the Lien of the Term Agent under the Term
Documents. If any ABL Secured Party shall (nonetheless and in breach hereof)
acquire or hold any Lien on any assets of any Credit Party securing any ABL
Obligation which assets are not also subject to the Lien of the Term Agent under
the Term Documents, then the ABL Agent (or the relevant ABL Secured Party)
shall, without the need for any further consent of any other ABL Secured Party,
the Borrower or any ABL Guarantor and notwithstanding anything to the contrary
in any other ABL Document be deemed to also hold and have held such Lien as
agent or bailee for the benefit of the Term Agent as security for the Term
Obligations (subject to the Lien Priority and other terms hereof) and shall
promptly notify the Term Agent in writing of the existence of such Lien upon
becoming aware thereof.

Section 2.6 Waiver of Marshalling.

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

 

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

ARTICLE 3

ACTIONS OF THE PARTIES

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

Section 3.2 Agent for Perfection. The ABL Agent, for and on behalf of itself and
each ABL Secured Party, and the Term Agent, for and on behalf of itself and each
Term Secured Party, as applicable, each agree to hold all Collateral in their
respective possession, custody, or control (including as defined in Sections
9-104, 9-105, 9-106, 9-107 and 8-106 of the UCC) (or in the possession, custody,
or control of agents or bailees for either) as gratuitous bailee for the other
solely for the purpose of perfecting the security interest granted to each in
such Collateral, subject to the terms and conditions of this Section 3.2. None
of the ABL Agent, the ABL Secured Parties, the Term Agent, or the Term Secured
Parties, as applicable, shall have any obligation whatsoever to the others to
assure that the Collateral is genuine or owned by the Borrower, any Guarantor,
or any other Person or to preserve rights or benefits of any Person. The duties
or responsibilities of the ABL Agent and the Term Agent under this Section 3.2
are and shall be limited solely to holding or maintaining control of the Control
Collateral as gratuitous bailee for the other Party for purposes of perfecting
the Lien held by the Term Agent or the ABL Agent, as applicable. The ABL Agent
is not and shall not be deemed to be a fiduciary of any kind for the Term
Secured Parties or any other Person. Without limiting the generality of the
foregoing, the ABL Secured Parties shall not be obligated to see to the
application of any Proceeds of the Term Priority Collateral deposited into any
Deposit Account or be answerable in any way for the misapplication thereof. The
Term Agent is not and shall not

 

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be deemed to be a fiduciary of any kind for the ABL Secured Parties, or any
other Person. Without limiting the generality of the foregoing, the Term Secured
Parties shall not be obligated to see to the application of any Proceeds of the
ABL Priority Collateral deposited into any Deposit Account or be answerable in
any way for the misapplication thereof. In addition, the Term Agent, on behalf
of the Term Secured Parties, hereby agrees and acknowledges that other than with
respect to ABL Priority Collateral that may be perfected through the filing of a
UCC financing statement, the ABL Agent’s Liens may be perfected on certain items
of ABL Priority Collateral with respect to which the Term Agent’s Liens would
not be perfected but for the provisions of this Section 3.2, and the Term Agent,
on behalf of the Term Secured Parties, hereby further agrees that the foregoing
described in this sentence shall not be deemed a breach of this Agreement.

Section 3.3 Sharing of Information and Access. In the event that the ABL Agent
shall, in the exercise of its rights under the ABL Collateral Documents or
otherwise, receive possession or control of any books and records of any Term
Credit Party which contain information identifying or pertaining to the Term
Priority Collateral, the ABL Agent shall, upon request from the Term Agent and
as promptly as practicable thereafter, either make available to the Term Agent
such books and records for inspection and duplication or provide to the Term
Agent copies thereof. In the event that the Term Agent shall, in the exercise of
its rights under the Term Collateral Documents or otherwise, receive possession
or control of any books and records of any ABL Credit Party which contain
information identifying or pertaining to any of the ABL Priority Collateral, the
Term Agent shall, upon request from the ABL Agent and as promptly as practicable
thereafter, either make available to the ABL Agent such books and records for
inspection and duplication or provide the ABL Agent copies thereof.

Section 3.4 Insurance. Proceeds of Collateral include insurance proceeds and,
therefore, the Lien Priority shall govern the ultimate disposition of casualty
insurance proceeds. The ABL Agent and the Term Agent shall each be named as
additional insured or loss payee, as applicable, with respect to all insurance
policies relating to the Collateral as set forth in the Term Credit Agreement or
the ABL Credit Agreement, as applicable. The ABL Agent shall have the sole and
exclusive right, as against the Term Agent, to adjust settlement of insurance
claims in the event of any covered loss, theft or destruction of ABL Priority
Collateral. The Term Agent shall have the sole and exclusive right, as against
the ABL Agent, to adjust settlement of insurance claims in the event of any
covered loss, theft or destruction of Term Priority Collateral. If any insurance
claim includes both ABL Priority Collateral and Term Priority Collateral, the
insurer will not settle such claim separately with respect to ABL Priority
Collateral and Term Priority Collateral, and if the Parties are unable after
negotiating in good faith to agree on the settlement for such claim, either
Party may apply to a court of competent jurisdiction to make a determination as
to the settlement of such claim, and the court’s determination shall be binding
upon the Parties. All proceeds of such insurance shall be remitted to the ABL
Agent or the Term Agent, as the case may be, and each of the Term Agent and ABL
Agent shall cooperate (if necessary) in a reasonable manner in effecting the
payment of insurance proceeds in accordance with Section 4.1 hereof.

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

 

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Section 3.6 Inspection and Access Rights. (a) Without limiting any rights the
ABL Agent or any other ABL Secured Party may otherwise have under applicable law
or by agreement, in the event of any liquidation of the ABL Priority Collateral
(or any other Exercise of Any Secured Creditor Remedies by the ABL Agent) and
whether or not the Term Agent or any other Term Secured Party has commenced and
is continuing to Exercise Any Secured Creditor Remedies of the Term Agent, the
ABL Agent or any other Person (including any ABL Credit Party) acting with the
consent, or on behalf, of the ABL Agent, shall have the right (a) during the Use
Period during normal business hours on any Business Day, to access ABL Priority
Collateral that (i) is stored or located in or on, (ii) has become an accession
with respect to (within the meaning of Section 9-335 of the Uniform Commercial
Code), or (iii) has been commingled with (within the meaning of Section 9-336 of
the Uniform Commercial Code) Term Priority Collateral (collectively, the “ABL
Joint Collateral”), and (b) during the Use Period, shall have the irrevocable
right to use the Term Priority Collateral (including, without limitation,
Equipment, Fixtures, Intellectual Property, General Intangibles and Real
Property) on a rent-free, royalty-free basis, each of the foregoing solely for
the limited purposes of assembling, inspecting, copying or downloading
information stored on, taking actions to perfect its Lien on, completing a
production run of Inventory involving, taking possession of, moving, preparing
and advertising for sale, selling (by public auction, private sale or a “store
closing”, “going out of business” or similar sale, whether in bulk, in lots or
to customers in the ordinary course of business or otherwise and which sale may
include augmented Inventory of the same type sold in any ABL Credit Party’s
business), storing or otherwise dealing with the ABL Priority Collateral, in
each case without notice to, the involvement of or interference by any Term
Secured Party or liability to any Term Secured Party; provided, however, that
the expiration of the Use Period shall be without prejudice to the sale or other
disposition of the ABL Priority Collateral in accordance with this Agreement and
applicable law. In the event that any ABL Secured Party has commenced and is
continuing the Exercise of Any Secured Creditor Remedies with respect to any ABL
Joint Collateral or any other sale or liquidation of the ABL Joint Collateral
has been commenced by an ABL Credit Party (with the consent of the ABL Agent),
the Term Agent may not sell, assign or otherwise transfer the related Term
Priority Collateral prior to the expiration of the Use Period, unless the
purchaser, assignee or transferee thereof agrees in writing to be bound by the
provisions of this Section 3.6.

(b) During the period of actual occupation, use and/or control by the ABL
Secured Parties and/or the ABL Agent (or their respective employees, agents,
advisers and representatives) of any Term Priority Collateral, the ABL Secured
Parties and the ABL Agent shall be obligated to repair at their expense any
physical damage (but not any diminution in value) to such Term Priority
Collateral resulting from such occupancy, use or control, and to leave such Term
Priority Collateral in substantially the same condition as it was at the
commencement of such occupancy, use or control, ordinary wear and tear excepted.
Notwithstanding the foregoing, in no event shall the ABL Secured Parties or the
ABL Agent have any liability to the Term Secured Parties and/or to the Term
Agent pursuant to this Section 3.6 as a result of any condition (including any
environmental condition, claim or liability) on or with respect to the Term
Priority Collateral existing prior to the date of the exercise by the ABL

 

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Secured Parties (or the ABL Agent, as the case may be) of their rights under
Section 3.6 and the ABL Secured Parties shall have no duty or liability to
maintain the Term Priority Collateral in a condition or manner better than that
in which it was maintained prior to the use thereof by the ABL Secured Parties,
or for any diminution in the value of the Term Priority Collateral that results
from ordinary wear and tear resulting from the use of the Term Priority
Collateral by the ABL Secured Parties in the manner and for the time periods
specified under this Section 3.6. Without limiting the rights granted in this
Section 3.6, the ABL Secured Parties and the ABL Agent shall cooperate with the
Term Secured Parties and/or the Term Agent in connection with any efforts made
by the Term Secured Parties and/or the Term Agent to sell the Term Priority
Collateral.

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

(d) The ABL Secured Parties shall (i) use the Term Priority Collateral in
accordance with applicable law; (ii) insure for damage to property and liability
to persons, including property and liability insurance for the benefit of the
Term Secured Parties; and (iii) reimburse the Term Secured Parties for any
injury or damage to Persons or property (ordinary wear-and-tear excepted) caused
by the acts or omissions of Persons under their control (except for those
arising from the gross negligence or willful misconduct of any Term Secured
Party); provided, however, that the ABL Secured Parties will not be liable for
any diminution in the value of the Term Priority Collateral caused by the
absence of the ABL Priority Collateral therefrom.

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

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

(g) In furtherance of the foregoing in this Section 3.6, the Term Agent, in its
capacity as a secured party (or as a purchaser, assignee or transferee, as
applicable), and to the extent of its interest therein, hereby grants to the ABL
Agent a nonexclusive, irrevocable, royalty-free, worldwide license to use,
license or sublicense any and all Intellectual Property now owned or hereafter
acquired by the Credit Parties (except to the extent such grant is prohibited by
any rule of law, statute or regulation), included as part of the Term Priority
Collateral (and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof) as is or may be necessary
or advisable in the ABL Agent’s reasonable judgment for the ABL

 

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Agent to process, ship, produce, store, supply, lease, complete, sell, liquidate
or otherwise deal with the ABL Priority Collateral, or to collect or otherwise
realize upon any Accounts (as defined in the ABL Credit Agreement) comprising
ABL Priority Collateral, in each case solely in connection with any Exercise of
Secured Creditor Remedies; provided that (i) any such license shall terminate
upon the sale of the applicable ABL Priority Collateral and shall not extend or
transfer to the purchaser of such ABL Priority Collateral, (ii) the ABL Agent’s
use of such Intellectual Property shall be reasonable and lawful, and (iii) any
such license is granted on an “AS IS” basis, without any representation or
warranty whatsoever. The Term Agent (i) acknowledges and consents to the grant
to the ABL Agent by the Credit Parties of the license referred to in
Section 4.01 of the Security Agreement (as defined in the ABL Credit Agreement)
and (ii) agrees that its Liens in the Term Priority Collateral shall be subject
in all respects to such license. Furthermore, the Term Agent agrees that, in
connection with any Exercise of Secured Creditor Remedies conducted by the Term
Agent in respect of Term Priority Collateral, (x) any notice required to be
given by the Term Agent in connection with such Exercise of Secured Creditor
Remedies shall contain an acknowledgement of the existence of such license and
(y) the Term Agent shall provide written notice to any purchaser, assignee or
transferee pursuant to an Exercise of Secured Creditor Remedies that the
applicable assets are subject to such license.

Section 3.7 Tracing of and Priorities in Proceeds. The ABL Agent, for itself and
on behalf of the ABL Secured Parties, and the Term Agent, for itself and on
behalf of the Term Secured Parties, further agree that prior to an issuance of
any notice of Exercise of Any Secured Creditor Remedies by such Secured Party
(unless a bankruptcy or insolvency Event of Default then exists), any proceeds
of Collateral, whether or not deposited under control agreements, which are used
by any Credit Party to acquire other property which is Collateral shall not
(solely as between the Agents and the Lenders) be treated as Proceeds of
Collateral for purposes of determining the relative priorities in the Collateral
which was so acquired.

Section 3.8 Purchase Right

(a) If (i) the ABL Agent or “Requisite Lenders” (as defined in the ABL Credit
Agreement) shall sell, lease, license or dispose of all or substantially all of
the ABL Priority Collateral by private or public sale, (ii) an Insolvency
Proceeding with respect to the Borrower or Holdings shall have occurred or shall
have been commenced, or (iii) the ABL Obligations under the ABL Credit Agreement
shall have been accelerated (including as a result of any automatic
acceleration) or shall remain unpaid following the Scheduled Termination Date
(as defined in the ABL Credit Agreement), (each such event described in clauses
(i) through (iii) herein above, a “Purchase Option Event”), the Term Secured
Parties shall have the opportunity to purchase (at par and without premium) all
(but not less than all) of the ABL Obligations pursuant to this Section 3.8;
provided, that such option shall expire if the applicable Term Secured Parties
fail to deliver a written notice (a “Purchase Notice”) to the ABL Agent with a
copy to the Borrower within ten (10) business days following the first date the
Term Agent obtains actual knowledge of the occurrence of the earliest Purchase
Option Event, which Purchase Notice shall (A) be signed by the applicable Term
Secured Parties committing to such purchase (the “Purchasing Creditors”) and
indicate the percentage of the ABL Obligations to be purchased by each
Purchasing Creditor (which aggregate commitments must add up to 100% of the ABL
Obligations) and (B) state that (1) it is a Purchase Notice delivered pursuant
to Section 3.8 of this Agreement and (2) the offer contained therein is
irrevocable. Upon receipt of such Purchase

 

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Notice by the ABL Agent, the Purchasing Creditors shall have from the date of
delivery thereof to and including the date that is ten (10) business days after
the Purchase Notice was received by the ABL Agent to purchase all (but not less
than all) of the ABL Obligations pursuant to this Section 3.8 (the date of such
purchase, the “Purchase Date”).

(b) On the Purchase Date, the ABL Agent and the other ABL Secured Parties shall,
subject to any required approval of any Governmental Authority and any
limitation in the ABL Credit Agreement, in each case then in effect, if any,
sell to the Purchasing Creditors all (but not less than all) of the ABL
Obligations. On such Purchase Date, the Purchasing Creditors shall (i) pay to
the ABL Agent, for the benefit of the ABL Secured Parties, as directed by the
ABL Agent, in immediately available funds the full amount (at par and without
premium) of all ABL Obligations then outstanding together with all accrued and
unpaid interest and fees thereon, all in the amounts specified by the ABL Agent
and determined in accordance with the applicable ABL Documents, (ii) furnish
such amount of cash collateral in immediately available funds as the ABL Agent
determines is reasonably necessary to secure ABL Secured Parties in connection
with any (x) contingent Other Liabilities or (y) issued and outstanding letters
of credit issued under the ABL Credit Agreement but not in any event in an
amount greater than 101% of the aggregate undrawn amount of all such outstanding
letters of credit (and in the case of clauses (x) and (y) herein above, any
excess of such cash collateral for such Other Liabilities or letters of credit
remaining at such time when there are no longer any such Other Liabilities or
letters of credit outstanding and there are no unreimbursed amounts then owing
in respect of such Other Liabilities or drawings under such letters of credit
shall be promptly paid over to the Term Agent) and (iii) agree to reimburse the
ABL Secured Parties for any loss, cost, damage or expense resulting from the
granting of provisional credit for any checks, wire or ACH transfers that are
reversed or not final or other payments provisionally credited to the ABL
Obligations under the ABL Credit Agreement and as to which the ABL Agent and ABL
Secured Parties have not yet received final payment as of the Purchase Date.
Such purchase price shall be remitted by wire transfer in immediately available
funds to such bank account of the ABL Agent (for the benefit of the ABL Secured
Parties) as the ABL Agent shall have specified in writing to the Term Agent.
Interest and fees shall be calculated to but excluding the Purchase Date if the
amounts so paid by the applicable Term Lenders to the bank account designated by
the ABL Agent are received in such bank account prior to 1:00 p.m., New York
time, and interest shall be calculated to and including such Purchase Date if
the amounts so paid by the applicable Term Lenders to the bank account
designated by the ABL Agent are received in such bank account after 1:00 p.m.,
New York time.

(c) Any purchase pursuant to the purchase option set forth in this Section 3.8
shall, except as provided below, be expressly made without representation or
warranty of any kind by the ABL Agent or the other ABL Secured Parties as to the
ABL Obligations, the collateral or otherwise, and without recourse to the ABL
Agent and the other ABL Secured Parties as to the ABL Obligations, the
collateral or otherwise, except that the ABL Agent and each of the ABL Secured
Parties, as to itself only, shall represent and warrant only as to the matters
set forth in the assignment agreement to be entered into as provided herein in
connection with such purchase, which shall include (i) the principal amount of
the ABL Obligations being sold by it, (ii) that such Person has not created any
Lien on any ABL Obligations being sold by it, and (iii) that such Person has the
right to assign the ABL Obligations being assigned by it and its assignment
agreement has been duly authorized and delivered.

 

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(d) Upon notice to the Credit Parties by the Term Agent that the purchase of ABL
Obligations pursuant to this Section 3.8 has been consummated by delivery of the
purchase price to the ABL Agent, the Credit Parties shall treat the applicable
Term Lenders as holders of the ABL Obligations and the Term Agent shall be
deemed appointed to act in such capacity as the “agent” or “administrative
agent” (or analogous capacity) (the “Replacement Agent”) under the ABL
Documents, for all purposes hereunder and under each ABL Document (it being
agreed that the ABL Agent shall have no obligation to act as such replacement
“agent” or “administrative agent” (or analogous capacity)). In connection with
any purchase of ABL Obligations pursuant to this Section 3.8, each ABL Lender
and ABL Agent agrees to enter into and deliver to the applicable Term Lenders on
the Purchase Date, as a condition to closing, an assignment agreement
customarily used by the ABL Agent in connection with the ABL Credit Agreement
and the ABL Agent and each other ABL Lender shall deliver all possessory
collateral (if any), together with any necessary endorsements and other
documents (including any applicable stock powers or bond powers), then in its
possession or in the possession of its agent or bailee, or turn over control as
to any pledged collateral, deposit accounts or securities accounts of which it
or its agent or bailee then has control, as the case may be, to the Replacement
Agent, and deliver the loan register and participant register, if applicable and
all other records pertaining to the ABL Obligations to the Replacement Agent and
otherwise take such actions as may be reasonably appropriate to effect an
orderly transition to the Replacement Agent. Upon the consummation of the
purchase of the ABL Obligations pursuant to this Section 3.8, the ABL Agent (and
all other agents under the ABL Credit Agreement) shall be deemed to have
resigned as an “agent” or “administrative agent” for the ABL Secured Parties
under the ABL Documents; provided that the ABL Agent (and all other agents under
the ABL Credit Agreement) shall be entitled to all of the rights and benefits of
a former “agent” or “administrative agent” under the ABL Credit Agreement.

(e) Notwithstanding the foregoing purchase of the ABL Obligations by the
Purchasing Creditors, the ABL Secured Parties shall retain those contingent
indemnification obligations and other obligations under the ABL Documents which
by their express terms would survive any repayment of the ABL Obligations
pursuant to this Section 3.8.

Section 3.9 Payments Over.

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

(b) So long as the Discharge of ABL Obligations has not occurred, any ABL
Priority Collateral or Proceeds thereof not constituting Term Priority
Collateral received by the Term Agent or any Term Secured Parties in connection
with the exercise of any right or remedy

 

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(including set off) relating to the ABL Priority Collateral in contravention of
this Agreement shall be segregated and held in trust and forthwith paid over to
the ABL Agent for the benefit of the ABL Secured Parties in the same form as
received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct. The ABL Agent is hereby authorized to make
any such endorsements as agent for the Term Agent or any such Term Secured
Parties. This authorization is coupled with an interest and is irrevocable until
such time as this Agreement is terminated in accordance with its terms.

ARTICLE 4

APPLICATION OF PROCEEDS

Section 4.1 Application of Proceeds.

(a) Revolving Nature of ABL Obligations. The Term Agent, for and on behalf of
itself and the Term Secured Parties, expressly acknowledges and agrees that
(i) the ABL Credit Agreement includes a revolving commitment, that in the
ordinary course of business the ABL Agent and the ABL Lenders will apply
payments and make advances thereunder, and that no application of any ABL
Priority Collateral or the release of any Lien by the ABL Agent upon any portion
of the Collateral in connection with a permitted disposition by the ABL Credit
Parties under any ABL Credit Agreement shall constitute the Exercise of Secured
Creditor Remedies under this Agreement; (ii) the amount of the ABL Obligations
that may be outstanding at any time or from time to time may be increased or
reduced and subsequently reborrowed, and that the terms of the ABL Obligations
may be modified, extended or amended from time to time, and that the aggregate
amount of the ABL Obligations may be increased, replaced or refinanced, in each
event, without notice to or consent by the Term Secured Parties and without
affecting the provisions hereof; and (iii) all ABL Priority Collateral received
by the ABL Agent may be applied, reversed, reapplied, credited, or reborrowed,
in whole or in part, to the ABL Obligations at any time; provided, however, that
from and after the date on which the ABL Agent (or any ABL Secured Party) or the
Term Agent (or any Term Secured Party) commences the Exercise of Any Secured
Creditor Remedies, all amounts received by the ABL Agent or any ABL Lender shall
be applied as specified in this Section 4.1. The Lien Priority shall not be
altered or otherwise affected by any such amendment, modification, supplement,
extension, repayment, reborrowing, increase, replacement, renewal, restatement
or refinancing of either the ABL Obligations or the Term Obligations, or any
portion thereof. Notwithstanding anything to the contrary contained in this
Agreement, any Term Document or any ABL Document, each Credit Party and the Term
Agent, for itself and on behalf of the Term Secured Parties, agrees that
(i) only Term Priority Collateral or proceeds of the Term Priority Collateral
shall be deposited in the Term Loan Priority Accounts and (ii) prior to the
receipt of a Term Cash Proceeds Notice, the ABL Secured Parties are hereby
permitted to treat all cash, cash equivalents, Money, collections and payments
deposited in any ABL Deposit and Securities Account or otherwise received by any
ABL Secured Parties as ABL Priority Collateral, and no such amounts credited to
any such ABL Deposit and Securities Account or received by any ABL Secured
Parties or applied to the ABL Obligations shall be subject to disgorgement or
deemed to be held in trust for the benefit of the Term Secured Parties (and all
claims of the Term Agent or any other Term Secured Party to such amounts are
hereby waived).

 

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(b) Application of Proceeds of ABL Priority Collateral. The ABL Agent and the
Term Agent hereby agree that all ABL Priority Collateral, ABL Priority Proceeds
and all other Proceeds thereof, received by either of them in connection with
any Exercise of Secured Creditor Remedies with respect to the ABL Priority
Collateral shall be applied,

first, to the payment of costs and expenses of the ABL Agent in connection with
such Exercise of Secured Creditor Remedies,

second, to the payment or discharge of the ABL Obligations in accordance with
the ABL Documents until the Discharge of ABL Obligations shall have occurred,

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

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

(c) Application of Proceeds of Term Priority Collateral. The ABL Agent and the
Term Agent hereby agree that all Term Priority Collateral, Term Priority
Proceeds and all other Proceeds thereof, received by either of them in
connection with any Exercise of Secured Creditor Remedies with respect to the
Term Priority Collateral shall be applied,

first, to the payment of costs and expenses of the Term Agent in connection with
such Exercise of Secured Creditor Remedies,

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

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

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

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

(e) Turnover of Collateral After Discharge. Upon the Discharge of ABL
Obligations, the ABL Agent shall deliver to the Term Agent or shall execute such
documents as the Term Agent may reasonably request to enable the Term Agent to
have control over any Control Collateral still in the ABL Agent’s possession,
custody, or control in the same form as

 

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

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

ARTICLE 5

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

Section 5.1 Notice of Acceptance and Other Waivers.

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

(b) None of the ABL Agent, any ABL Secured Party, or any of their respective
Affiliates, directors, officers, employees, or agents shall be liable for
failure to demand, collect, or realize upon any of the Collateral or any
Proceeds, or for any delay in doing so, or shall be under any obligation to sell
or otherwise dispose of any Collateral or Proceeds thereof or to take any other
action whatsoever with regard to the Collateral or any part or Proceeds thereof,
except as specifically provided in this Agreement. If the ABL Agent or any ABL
Secured Party honors (or fails to honor) a request by the Borrower for an
extension of credit pursuant to any ABL Credit Agreement or any of the other ABL
Documents, whether the ABL Agent or any ABL Secured Party has knowledge that the
honoring of (or failure to honor) any such request would constitute a default
under the terms of any Term Credit Agreement or any other Term Document or an
act, condition, or event that, with the giving of notice or the passage of time,
or both, would constitute such a default, or if the ABL Agent or any ABL Secured
Party otherwise should exercise any of its contractual rights or remedies under
any ABL Documents (subject to the express terms and conditions hereof), neither
the ABL Agent nor any

 

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ABL Secured Party shall have any liability whatsoever to the Term Agent or any
Term Secured Party as a result of such action, omission, or exercise (so long as
any such exercise does not breach the express terms and provisions of this
Agreement). The ABL Agent and the ABL Secured Parties shall be entitled to
manage and supervise their loans and extensions of credit under any ABL Credit
Agreement and any of the other ABL Documents as they may, in their sole
discretion, deem appropriate, and may manage their loans and extensions of
credit without regard to any rights or interests that the Term Agent or any of
the Term Secured Parties have in the Collateral, except as otherwise expressly
set forth in this Agreement. The Term Agent, on behalf of itself and the Term
Secured Parties, agrees that neither the ABL Agent nor any ABL Secured Party
shall incur any liability as a result of a sale, lease, license, application, or
other disposition of all or any portion of the Collateral or Proceeds thereof,
pursuant to the ABL Documents, so long as such disposition is conducted in
accordance with mandatory provisions of applicable law and does not breach the
provisions of this Agreement.

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

Section 5.2 Modifications to ABL Documents and Term Documents.

(a) The Term Agent, on behalf of itself and the Term Secured Parties, hereby
agrees that, without affecting the obligations of the Term Agent and the Term
Secured Parties hereunder, the ABL Agent and the ABL Secured Parties may, at any
time and from time to time, in their sole discretion without the consent of or
notice to the Term Agent or any Term Secured

 

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Party (except to the extent such notice or consent is required pursuant to the
express provisions of this Agreement), and without incurring any liability to
the Term Agent or any Term Secured Party or impairing or releasing the
subordination provided for herein, amend, restate, supplement, replace,
refinance, extend, consolidate, restructure, or otherwise modify any of the ABL
Documents in any manner whatsoever (other than in a manner which would
contravene the provisions of this Agreement), including, without limitation, to:

(i) change the manner, place, time, or terms of payment or renew, alter or
increase, all or any of the ABL Obligations or otherwise amend, restate,
supplement, or otherwise modify in any manner, or grant any waiver or release
with respect to, all or any part of the ABL Obligations or any of the ABL
Documents;

(ii) subject to Section 2.5, retain or obtain a Lien on any Property of any
Person to secure any of the ABL Obligations, and in connection therewith to
enter into any additional ABL Documents;

(iii) amend, or grant any waiver, compromise, or release with respect to, or
consent to any departure from, any guaranty or other obligations of any Person
obligated in any manner under or in respect of the ABL Obligations;

(iv) release its Lien on any Collateral or other Property;

(v) exercise or refrain from exercising any rights against the Borrower, any
Guarantor, or any other Person;

(vi) subject to Section 2.5, retain or obtain the primary or secondary
obligation of any other Person with respect to any of the ABL Obligations; and

(vii) otherwise manage and supervise the ABL Obligations as the ABL Agent shall
deem appropriate.

(b) The ABL Agent, on behalf of itself and the ABL Secured Parties, hereby
agrees that, without affecting the obligations of the ABL Agent and the ABL
Secured Parties hereunder, the Term Agent and the Term Secured Parties may, at
any time and from time to time, in their sole discretion without the consent of
or notice to the ABL Agent or any ABL Secured Party (except to the extent such
notice or consent is required pursuant to the express provisions of this
Agreement), and without incurring any liability to the ABL Agent or any ABL
Secured Party or impairing or releasing the subordination provided for herein,
amend, restate, supplement, replace, refinance, extend, consolidate,
restructure, or otherwise modify any of the Term Documents in any manner
whatsoever (other than in a manner which would contravene the provisions of this
Agreement), including, without limitation, to:

(i) change the manner, place, time, or terms of payment or renew, alter or
increase, all or any of the Term Obligations or otherwise amend, restate,
supplement, or otherwise modify in any manner, or grant any waiver or release
with respect to, all or any part of the Term Obligations or any of the Term
Documents;

 

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(ii) subject to Section 2.5, retain or obtain a Lien on any Property of any
Person to secure any of the Term Obligations, and in connection therewith to
enter into any additional Term Documents;

(iii) amend, or grant any waiver, compromise, or release with respect to, or
consent to any departure from, any guaranty or other obligations of any Person
obligated in any manner under or in respect of the Term Obligations;

(iv) release its Lien on any Collateral or other Property;

(v) exercise or refrain from exercising any rights against the Borrower, any
Guarantor, or any other Person;

(vi) subject to Section 2.5, retain or obtain the primary or secondary
obligation of any other Person with respect to any of the Term Obligations; and

(vii) otherwise manage and supervise the Term Obligations as the Term Agent
shall deem appropriate.

(c) The ABL Obligations and the Term Obligations may be refinanced, in whole or
in part, from time to time, in each case, without notice to, or the consent
(except to the extent a consent is required to permit such refinancing
transaction under any ABL Document or any Term Document) of the ABL Agent, the
ABL Secured Parties, the Term Agent or the Term Secured Parties, as the case may
be, all without affecting the Lien Priorities provided for herein or the other
provisions hereof, provided, however, that the holders of any class or series of
such refinancing Indebtedness (or an authorized agent or trustee on their
behalf) bind themselves in writing to the terms of this Agreement pursuant to
such documents or agreements (including amendments or supplements to this
Agreement) as the ABL Agent or the Term Agent, as the case may be, shall
reasonably request and in form and substance reasonably acceptable to the ABL
Agent or the Term Agent, as the case may be, and any such refinancing
transaction shall be in accordance with any applicable provisions of both the
ABL Documents and the Term Documents (to the extent such documents survive the
refinancing).

Section 5.3 Reinstatement and Continuation of Agreement.

(a) If the ABL Agent or any ABL Secured Party is required in any Insolvency
Proceeding or otherwise to turn over or otherwise pay to the estate of the
Borrower, any Guarantor, or any other Person any payment made in satisfaction of
all or any portion of the ABL Obligations (an “ABL Recovery”), then the ABL
Obligations shall be reinstated to the extent of such ABL Recovery. If this
Agreement shall have been terminated prior to such ABL Recovery, this Agreement
shall be reinstated in full force and effect in the event of such ABL Recovery,
and such prior termination shall not diminish, release, discharge, impair, or
otherwise affect the obligations of the Parties from such date of reinstatement.
All rights, interests, agreements, and obligations of the ABL Agent, the Term
Agent, the ABL Secured Parties, and the Term Secured Parties under this
Agreement shall remain in full force and effect and shall continue irrespective
of the commencement of, or any discharge, confirmation, conversion, or dismissal
of, any Insolvency Proceeding by or against the Borrower or any Guarantor or any
other circumstance which otherwise might constitute a defense available to, or a
discharge of the

 

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Borrower or any Guarantor in respect of the ABL Obligations or the Term
Obligations. No priority or right of the ABL Agent or any ABL Secured Party
shall at any time be prejudiced or impaired in any way by any act or failure to
act on the part of the Borrower or any Guarantor or by the noncompliance by any
Person with the terms, provisions, or covenants of any of the ABL Documents,
regardless of any knowledge thereof which the ABL Agent or any ABL Secured Party
may have.

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

ARTICLE 6

INSOLVENCY PROCEEDINGS

Section 6.1 DIP Financing.

(a) If the Borrower or any Guarantor shall be subject to any Insolvency
Proceeding at any time prior to the Discharge of ABL Obligations, and the ABL
Agent or the ABL Secured Parties shall seek to provide the Borrower or any
Guarantor with, or consent to a third party providing, any financing under
Section 364 of the Bankruptcy Code or consent to any order for the use of cash
collateral constituting ABL Priority Collateral under Section 363 of the
Bankruptcy Code (or any similar provision of any foreign Debtor Relief Laws or
under a court order in respect of measures granted with similar effect under any
foreign Debtor Relief Laws) (each, a “DIP Financing”), with such DIP Financing
to be secured by all or any portion of the Collateral (including assets that,
but for the application of Section 552 of the Bankruptcy Code (or any similar
provision of any foreign Debtor Relief Laws) would be Collateral) (it being
agreed that the ABL Agent and the ABL Secured Parties shall not propose any DIP
Financing secured by the Term Priority Collateral in competition with the Term
Agent and the Term Secured Parties without the consent of the Term Agent), then
the Term Agent, on behalf of itself and the Term Secured Parties, agrees that it
will raise no objection and will not support any objection to such DIP Financing
or use of cash collateral or to the Liens securing the same on the

 

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grounds of a failure to provide “adequate protection” for the Liens of the Term
Agent securing the Term Obligations or on any other grounds (and will not
request any adequate protection solely as a result of such DIP Financing or use
of cash collateral that is ABL Priority Collateral except as permitted by
Section 6.3(c)(i)), so long as (i) the Term Agent retains its Lien on the
Collateral to secure the Term Obligations (in each case, including Proceeds
thereof arising after the commencement of the case under any Debtor Relief Laws)
and, as to the Term Priority Collateral only, such Lien has the same priority as
existed prior to the commencement of the case under the subject Debtor Relief
Laws and any Lien on the Term Priority Collateral securing such DIP Financing is
junior and subordinate to the Lien of the Term Agent on the Term Priority
Collateral, (ii) all Liens on ABL Priority Collateral securing any such DIP
Financing shall be senior to or on a parity with the Liens of the ABL Agent and
the ABL Secured Parties securing the ABL Obligations on ABL Priority Collateral
and (iii) the foregoing provisions of this Section 6.1(a) shall not prevent the
Term Agent and the Term Secured Parties from objecting to any provision in any
DIP Financing relating to any provision or content of a plan of reorganization
or other plan of similar effect under any Debtor Relief Laws.

(b) If the Borrower or any Guarantor shall be subject to any Insolvency
Proceeding at any time prior to the Discharge of Term Obligations, and the Term
Agent or the Term Secured Parties shall seek to provide the Borrower or any
Guarantor with, or consent to a third party providing, any DIP Financing, with
such DIP Financing to be secured by all or any portion of the Collateral
(including assets that, but for the application of Section 552 of the Bankruptcy
Code (or any similar provision of any foreign Debtor Relief Laws) would be
Collateral) (it being agreed that the Term Agent and the Term Secured Parties
shall not propose any DIP Financing secured by the ABL Priority Collateral in
competition with the ABL Agent and the ABL Secured Parties without the consent
of the ABL Agent), then the ABL Agent, on behalf of itself and the ABL Secured
Parties, agrees that it will raise no objection and will not support any
objection to such DIP Financing or to the Liens securing the same on the grounds
of a failure to provide “adequate protection” for the Liens of the ABL Agent
securing the ABL Obligations or on any other grounds (and will not request any
adequate protection solely as a result of such DIP Financing), so long as
(i) the ABL Agent retains its Lien on the Collateral to secure the ABL
Obligations (in each case, including Proceeds thereof arising after the
commencement of the case under any Debtor Relief Law) and, as to the ABL
Priority Collateral only, such Lien has the same priority as existed prior to
the commencement of the case under the subject Debtor Relief Laws and any Lien
on ABL Priority Collateral securing such DIP Financing furnished by the Term
Agent or Term Secured Parties is junior and subordinate to the Lien of the ABL
Agent on the ABL Priority Collateral, (ii) all Liens on Term Priority Collateral
securing any such DIP Financing furnished by the Term Agent or Term Secured
Parties shall be senior to or on a parity with the Liens of the Term Agent and
the Term Secured Parties securing the Term Obligations on Term Priority
Collateral and (iii) the foregoing provisions of this Section 6.1(b) shall not
prevent the ABL Agent and the ABL Secured Parties from objecting to any
provision in any DIP Financing relating to any provision or content of a plan of
reorganization or other plan of similar effect under any Debtor Relief Laws.

(c) All Liens granted to the ABL Agent or the Term Agent in any Insolvency
Proceeding, whether as adequate protection or otherwise, are intended by the
Parties to be and shall be deemed to be subject to the Lien Priority and the
other terms and conditions of this Agreement.

 

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Section 6.2 Relief From Stay. Until the Discharge of ABL Obligations has
occurred, the Term Agent, on behalf of itself and the Term Secured Parties,
agrees not to seek relief from the automatic stay or any other stay in any
Insolvency Proceeding in respect of any portion of the ABL Priority Collateral
without the ABL Agent’s express written consent. Until the Discharge of Term
Obligations has occurred, the ABL Agent, on behalf of itself and the ABL Secured
Parties, agrees not to seek relief from the automatic stay or any other stay in
any Insolvency Proceeding in respect of any portion of the Term Priority
Collateral without the Term Agent’s express written consent. In addition,
neither the Term Agent nor the ABL Agent shall seek any relief from the
automatic stay with respect to any Collateral without providing three (3) days’
prior written notice to the other, unless such period is agreed by both the ABL
Agent and the Term Agent to be modified or unless the ABL Agent or Term Agent,
as applicable, makes a good faith determination that either (A) the ABL Priority
Collateral or the Term Priority Collateral, as applicable, will decline speedily
in value or (B) the failure to take any action will have a reasonable likelihood
of endangering the ABL Agent’s or the Term Agent’s ability to realize upon its
Collateral.

Section 6.3 No Contest; Adequate Protection.

(a) The Term Agent, on behalf of itself and the Term Secured Parties, agrees
that, prior to the Discharge of ABL Obligations, none of them shall seek or
accept any form of adequate protection under any or all of §361, §362, §363 or
§364 of the Bankruptcy Code with respect to the ABL Priority Collateral, except
as set forth in Section 6.1 and this Section 6.3 or as may otherwise be
consented to in writing by the ABL Agent in its sole and absolute discretion.
The Term Agent, on behalf of itself and the Term Secured Parties, agrees that,
prior to the Discharge of ABL Obligations, none of them shall contest (or
support any other Person contesting) (i) any request by the ABL Agent or any ABL
Secured Party for adequate protection of its interest in the Collateral (unless
in contravention of Section 6.1(b) above), (ii) any proposed provision of DIP
Financing by the ABL Agent and the ABL Secured Parties (or any other Person
proposing to provide DIP Financing with the consent of the ABL Agent) (unless in
contravention of Section 6.1(a) above) or (iii) any objection by the ABL Agent
or any ABL Secured Party to any motion, relief, action, or proceeding based on a
claim by the ABL Agent or any ABL Secured Party that its interests in the
Collateral (unless in contravention of Section 6.1(b) above) are not adequately
protected (or any other similar request under any law applicable to an
Insolvency Proceeding), so long as any Liens granted to the ABL Agent as
adequate protection of its interests are subject to this Agreement.

(b) The ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that,
prior to the Discharge of Term Obligations, none of them shall seek or accept
any form of adequate protection under any or all of §361, §362, §363 or §364 of
the Bankruptcy Code with respect to the Term Priority Collateral, except as set
forth in Section 6.1 and this Section 6.3 or as may otherwise be consented to in
writing by the Term Agent in its sole and absolute discretion. The ABL Agent, on
behalf of itself and the ABL Secured Parties, agrees that, prior to the
Discharge of Term Obligations, none of them shall contest (or support any other
Person contesting) (i) any request by the Term Agent or any Term Secured Party
for adequate protection of its interest in the Collateral (unless in
contravention of Section 6.1(a) above), (ii) any proposed provision of DIP
Financing by the Term Agent and the Term Secured Parties (or any other Person
proposing to provide DIP Financing with the consent of the Term Agent) (unless
in

 

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contravention of Section 6.1(b) above) or (iii) any objection by the Term Agent
or any Term Secured Party to any motion, relief, action or proceeding based on a
claim by the Term Agent or any Term Secured Party that its interests in the
Collateral (unless in contravention of Section 6.1(a) above) are not adequately
protected (or any other similar request under any law applicable to an
Insolvency Proceeding), so long as any Liens granted to the Term Agent as
adequate protection of its interests are subject to this Agreement.

(c) Notwithstanding the foregoing provisions in this Section 6.3, in any
Insolvency Proceeding:

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

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

(iii) Except as otherwise expressly set forth in Section 6.1 or in connection
with the exercise of remedies with respect to the ABL Priority Collateral,
nothing herein shall limit the rights of the Term Agent or the Term Secured
Parties from seeking adequate protection with respect to their rights in the
Term Priority Collateral in any Insolvency Proceeding (including adequate
protection in the form of a cash payment, periodic cash payments or otherwise).
Except as otherwise expressly set forth in Section 6.1 or in connection with the
exercise of remedies with respect to the Term Priority Collateral, nothing
herein shall limit the rights of the ABL Agent or the ABL Secured Parties from
seeking adequate protection with respect to their rights in the ABL Priority
Collateral in any Insolvency Proceeding (including adequate protection in the
form of a cash payment, periodic cash payments or otherwise).

Section 6.4 Asset Sales. The Term Agent agrees, on behalf of itself and the Term
Secured Parties, that it will not oppose any sale consented to by the ABL Agent
of any ABL Priority Collateral pursuant to Section 363(f) of the Bankruptcy Code
(or any similar provision under the law applicable to any Insolvency Proceeding
or under a court order in respect of measures granted with similar effect under
any foreign Debtor Relief Laws) so long as the Term

 

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Agent, for the benefit of the Term Secured Parties, shall retain a Lien on the
proceeds of such sale (to the extent such proceeds are not applied to the ABL
Obligations in accordance with Section 4.1(b)). The ABL Agent agrees, on behalf
of itself and the ABL Secured Parties, that it will not oppose any sale
consented to by the Term Agent of any Term Priority Collateral pursuant to
Section 363(f) of the Bankruptcy Code (or any similar provision under the law
applicable to any Insolvency Proceeding or under a court order in respect of
measures granted with similar effect under any foreign Debtor Relief Laws) so
long as (i) any such sale is made in accordance with Section 3.6 and (ii) the
ABL Agent, for the benefit of the ABL Secured Parties, shall retain a Lien on
the proceeds of such sale (to the extent such proceeds are not applied to the
Term Obligations in accordance with Section 4.1(c)). If such sale of Collateral
includes both ABL Priority Collateral and Term Priority Collateral and the
Parties are unable after negotiating in good faith to agree on the allocation of
the purchase price between the ABL Priority Collateral and Term Priority
Collateral, either Party may apply to the court in such Insolvency Proceeding to
make a determination of such allocation, and the court’s determination shall be
binding upon the Parties.

For the avoidance of doubt, the Term Agent, on behalf of itself and the Term
Secured Parties, acknowledges and agrees that in connection with any of the
matters described in the foregoing Sections 6.1, 6.2 or 6.3 or in this
Section 6.4, the rights of each Term Secured Party that is an ABL Secured Party
but not an ABL Lender, in such Term Secured Party’s capacity as an ABL Secured
Party, are subject to, and limited as set forth in, Section 11.13(b) of the ABL
Credit Agreement.

Section 6.5 Separate Grants of Security and Separate Classification. Each Term
Secured Party and each ABL Secured Party acknowledges and agrees that (i) the
grants of Liens pursuant to the ABL Collateral Documents and the Term Collateral
Documents constitute two separate and distinct grants of Liens and (ii) because
of, among other things, their differing rights in the Collateral, the Term
Obligations are fundamentally different from the ABL Obligations and must be
separately classified in any plan of reorganization (or other plan of similar
effect under any Debtor Relief Laws) proposed or adopted in an Insolvency
Proceeding. To further effectuate the intent of the parties as provided in the
immediately preceding sentence, if it is held that the claims of the ABL Secured
Parties and the Term Secured Parties in respect of the Collateral constitute
only one secured claim (rather than separate classes of senior and junior
secured claims), then the ABL Secured Parties and the Term Secured Parties
hereby acknowledge and agree that all distributions shall be made as if there
were separate classes of ABL Obligation claims and Term Obligation claims
against the Credit Parties, with the effect being that, to the extent that the
aggregate value of the ABL Priority Collateral or Term Priority Collateral, as
applicable, is sufficient (for this purpose ignoring all claims held by the
other Secured Parties), the ABL Secured Parties or the Term Secured Parties,
respectively, shall be entitled to receive, in addition to amounts distributed
to them in respect of principal, pre-petition interest and other claims, all
amounts owing in respect of post-petition interest that is available from each
pool of Priority Collateral for each of the ABL Secured Parties and the Term
Secured Parties, respectively, before any distribution is made in respect of the
claims held by the other Secured Parties from such Collateral, with the other
Secured Parties hereby acknowledging and agreeing to turn over to the respective
other Secured Parties amounts otherwise received or receivable by them to the
extent necessary to effectuate the intent of this sentence, even if such
turnover has the effect of reducing the aggregate recoveries.

 

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Section 6.6 Enforceability. The provisions of this Agreement are intended to be
and shall be enforceable under Section 510(a) of the Bankruptcy Code.

Section 6.7 ABL Obligations Unconditional. All rights of the ABL Agent
hereunder, and all agreements and obligations of the Term Agent and the Credit
Parties (to the extent applicable) hereunder, shall remain in full force and
effect irrespective of:

A. any lack of validity or enforceability of any ABL Document;

B. any change in the time, place or manner of payment of, or in any other term
of, all or any portion of the ABL Obligations, or any amendment, waiver or other
modification, whether by course of conduct or otherwise, or any refinancing,
replacement, refunding or restatement of any ABL Document;

C. any exchange, release, voiding, avoidance or non perfection of any security
interest in any Collateral or any other collateral, or any release, amendment,
waiver or other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding, restatement or increase of all or any
portion of the ABL Obligations or any guarantee or guaranty thereof; or

D. any other circumstances that otherwise might constitute a defense available
to, or a discharge of, any Credit Party in respect of the ABL Obligations, or of
any of the Term Agent or any Credit Party, to the extent applicable, in respect
of this Agreement.

Section 6.8 Term Obligations Unconditional. All rights of the Term Agent
hereunder, and all agreements and obligations of the ABL Agent and the Credit
Parties (to the extent applicable) hereunder, shall remain in full force and
effect irrespective of:

A. any lack of validity or enforceability of any Term Document;

B. any change in the time, place or manner of payment of, or in any other term
of, all or any portion of the Term Obligations, or any amendment, waiver or
other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding or restatement of any Term Document;

C. any exchange, release, voiding, avoidance or non perfection of any security
interest in any Collateral, or any other collateral, or any release, amendment,
waiver or other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding, restatement or increase of all or any
portion of the Term Obligations or any guarantee or guaranty thereof; or

D. any other circumstances that otherwise might constitute a defense available
to, or a discharge of, any Credit Party in respect of the Term Obligations, or
of any of the ABL Agent or any Credit Party, to the extent applicable, in
respect of this Agreement.

 

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ARTICLE 7

MISCELLANEOUS

Section 7.1 Rights of Subrogation. The Term Agent, for and on behalf of itself
and the Term Secured Parties, agrees that no payment to the ABL Agent or any ABL
Secured Party pursuant to the provisions of this Agreement shall entitle the
Term Agent or any Term Secured Party to exercise any rights of subrogation in
respect thereof until the Discharge of ABL Obligations shall have occurred.
Following the Discharge of ABL Obligations, the ABL Agent agrees to execute such
documents, agreements, and instruments as the Term Agent or any Term Secured
Party may reasonably request to evidence the transfer by subrogation to any such
Person of an interest in the ABL Obligations resulting from payments to the ABL
Agent by such Person, so long as all costs and expenses (including all
reasonable legal fees and disbursements) incurred in connection therewith by the
ABL Agent are paid by such Person upon request for payment thereof. The ABL
Agent, for and on behalf of itself and the ABL Secured Parties, agrees that no
payment to the Term Agent or any Term Secured Party pursuant to the provisions
of this Agreement shall entitle the ABL Agent or any ABL Secured Party to
exercise any rights of subrogation in respect thereof until the Discharge of
Term Obligations shall have occurred. Following the Discharge of Term
Obligations, the Term Agent agrees to execute such documents, agreements, and
instruments as the ABL Agent or any ABL Secured Party may reasonably request to
evidence the transfer by subrogation to any such Person of an interest in the
Term Obligations resulting from payments to the Term Agent by such Person, so
long as all costs and expenses (including all reasonable legal fees and
disbursements) incurred in connection therewith by the Term Agent are paid by
such Person upon request for payment thereof.

Section 7.2 Further Assurances. The Parties will, at their own expense and at
any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that either Party may reasonably request, in order to protect any
right or interest granted or purported to be granted hereby or to enable the ABL
Agent or the Term Agent to exercise and enforce its rights and remedies
hereunder; provided, however, that no Party shall be required to pay over any
payment or distribution, execute any instruments or documents, or take any other
action referred to in this Section 7.2, to the extent that such action would
contravene any law, order or other legal requirement or any of the terms or
provisions of this Agreement, and in the event of a controversy or dispute, such
Party may interplead any payment or distribution in any court of competent
jurisdiction, without further responsibility in respect of such payment or
distribution under this Section 7.2.

Section 7.3 Representations. The Term Agent represents and warrants to the ABL
Agent that it has the requisite power and authority under the Term Documents to
enter into, execute, deliver, and carry out the terms of this Agreement on
behalf of itself and the Term Secured Parties and that this Agreement shall be
binding obligations of the Term Agent and the Term Secured Parties, enforceable
against the Term Agent and the Term Secured Parties in accordance with its
terms. The ABL Agent represents and warrants to the Term Agent that it has the
requisite power and authority under the ABL Documents to enter into, execute,
deliver, and carry out the terms of this Agreement on behalf of itself and the
ABL Secured Parties and that this Agreement shall be binding obligations of the
ABL Agent and the ABL Secured Parties, enforceable against the ABL Agent and the
ABL Secured Parties in accordance with its terms.

 

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Section 7.4 Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Party hereto shall be effective
unless it is in a written agreement executed by the Term Agent and the ABL Agent
and, in the case of any amendment or waiver that would be materially adverse to
any Credit Party, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

It is understood that the ABL Agent and the Term Agent, without the consent of
any other ABL Secured Party or Term Secured Party, may in their discretion
determine that a supplemental agreement (which may take the form of an amendment
and restatement of this Agreement) is necessary or appropriate (i) to facilitate
having additional indebtedness or other obligations of any of the Credit Parties
become ABL Obligations or Term Obligations, as the case may be, under this
Agreement or (ii) to effectuate the subordination of Liens securing any
Permitted Junior Secured Refinancing Debt (or any Permitted Refinancing thereof)
to the Liens on the Term Priority Collateral securing the ABL Obligations and to
the Liens on the ABL Priority Collateral securing the Term Obligations (the
indebtedness or other obligations described in clauses (i) and (ii), “Additional
Debt”), which supplemental agreement shall, except in the case of Permitted
Junior Secured Refinancing Debt or any Permitted Refinancing thereof, specify
whether such Additional Debt constitutes ABL Obligations or Term Obligations;
provided that such Additional Debt is permitted to be incurred under any ABL
Credit Agreement and any Term Credit Agreement then extant in accordance with
the terms thereof.

Section 7.5 Addresses for Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, emailed, or
sent by overnight express courier service or United States mail and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of a telecopy or five (5) days after deposit in the United States mail
(certified, with postage prepaid and properly addressed). For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section) shall be as set forth below or, as to
each party, at such other address as may be designated by such party in a
written notice to all of the other parties.

 

ABL Agent:  

Bank of America, N.A.

100 Federal Street

Boston, MA 02110

Attention: Mark D. Twomey

Telecopier: 312.453.4364

E-mail: mark.twomey@baml.com

Term Agent:  

Bank of America, N.A.

1455 Market Street

Mail Code: CA5-701-05-19

San Francisco, CA 94103

Attention: Kevin Ahart, VP, Agency Management

Telecopier: 415.503.5000

Email: kevin.ahart@baml.com

 

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Section 7.6 No Waiver; Remedies. No failure on the part of any Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

Section 7.7 Continuing Agreement, Transfer of Secured Obligations. This
Agreement is a continuing agreement and shall (a) remain in full force and
effect until the Discharge of ABL Obligations and the Discharge of Term
Obligations shall have occurred, (b) be binding upon the Parties and their
successors and assigns, and (c) inure to the benefit of and be enforceable by
the Parties and their respective successors, transferees and assigns. Except as
set forth in Section 7.4, nothing herein is intended, or shall be construed to
give, any other Person any right, remedy or claim under, to or in respect of
this Agreement or any Collateral. All references to any Credit Party shall
include any Credit Party as debtor-in-possession and any receiver or trustee for
such Credit Party in any Insolvency Proceeding. Without limiting the generality
of the foregoing clause (c), the ABL Agent, any ABL Secured Party, the Term
Agent, or any Term Secured Party may assign or otherwise transfer all or any
portion of the ABL Obligations or the Term Obligations in accordance with the
ABL Credit Agreement or the Term Credit Agreement, in each case, as applicable,
to any other Person (other than the Borrower, any Guarantor or any Affiliate of
the Borrower or any Guarantor and any Subsidiary of the Borrower or any
Guarantor (except as provided in such ABL Credit Agreement or such Term Credit
Agreement, as applicable)), and such other Person shall thereupon become vested
with all the rights and obligations in respect thereof granted to the ABL Agent,
the Term Agent, any ABL Secured Party, or any Term Secured Party, as the case
may be, herein or otherwise. The ABL Secured Parties and the Term Secured
Parties may continue, at any time and without notice to the other parties
hereto, to extend credit and other financial accommodations, lend monies and
provide Indebtedness to, or for the benefit of, any Credit Party on the faith
hereof.

Section 7.8 GOVERNING LAW; ENTIRE AGREEMENT. (a) THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
This Agreement constitutes the entire agreement and understanding among the
Parties with respect to the subject matter hereof and supersedes any prior
agreements, written or oral, with respect thereto.

Section 7.9 Counterparts. This Agreement may be executed in any number of
counterparts, and it is not necessary that the signatures of all Parties be
contained on any one counterpart hereof, each counterpart will be deemed to be
an original, and all together shall constitute one and the same document.
Delivery of an executed signature page to this Agreement by facsimile or other
electronic transmission (in .pdf or similar format) shall be as effective as
delivery of a manually signed counterpart of this Agreement.

Section 7.10 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the ABL Agent, ABL Secured Parties, Term Agent and Term Secured
Parties. Except as set forth in Section 7.4, no other Person (including the
Borrower, any Guarantor or any Affiliate of the Borrower or any Guarantor, or
any Subsidiary of the Borrower or any Guarantor (except as provided in any ABL
Credit Agreement or any Term Credit Agreement, as applicable)) shall be deemed
to be a third party beneficiary of this Agreement.

 

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Section 7.11 Headings. The headings of the articles and sections of this
Agreement are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

Section 7.12 Severability. If any of the provisions in this Agreement shall, for
any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement and shall not invalidate the Lien Priority or the application
of Proceeds and other priorities set forth in this Agreement. The parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

Section 7.13 Attorneys’ Fees. The Parties agree that if any dispute,
arbitration, litigation, or other proceeding is brought with respect to the
enforcement of this Agreement or any provision hereof, the prevailing party in
such dispute, arbitration, litigation, or other proceeding shall be entitled to
recover its reasonable attorneys’ fees and all other costs and expenses incurred
in the enforcement of this Agreement, irrespective of whether suit is brought.

Section 7.14 VENUE; JURY TRIAL WAIVER.

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

(b) EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS

 

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AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (a) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HERETO REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 7.5. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW.

Section 7.15 Intercreditor Agreement. This Agreement is the “Intercreditor
Agreement” referred to in the ABL Credit Agreement and this Agreement is the
“ABL Intercreditor Agreement” referred to in the Term Credit Agreement. Nothing
in this Agreement shall be deemed to subordinate the obligations due to (i) any
ABL Secured Party to the obligations due to any Term Secured Party or (ii) any
Term Secured Party to the obligations due to any ABL Secured Party (in each
case, whether before or after the occurrence of an Insolvency Proceeding), it
being the intent of the Parties that this Agreement shall effectuate a
subordination of Liens but not a subordination of Indebtedness.

Section 7.16 No Warranties or Liability. The Term Agent and the ABL Agent
acknowledge and agree that neither has made any representation or warranty with
respect to the execution, validity, legality, completeness, collectability or
enforceability of any other ABL Document or any Term Document. Except as
otherwise provided in this Agreement, the Term Agent and the ABL Agent will be
entitled to manage and supervise their respective extensions of credit to any
Credit Party in accordance with law and their usual practices, modified from
time to time as they deem appropriate.

 

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Section 7.17 Conflicts. In the event of any conflict between the provisions of
this Agreement and the provisions of any ABL Document or any Term Document, the
provisions of this Agreement shall govern.

Section 7.18 Costs and Expenses. All costs and expenses incurred by the Term
Agent and the ABL Agent, including, without limitation pursuant to
Section 3.8(d) and Section 4.1(e) hereunder shall be reimbursed by the Borrower
and the Credit Parties as provided in Section 10.04 of the Term Credit Agreement
(or any similar provision) and Section 12.3 (or any similar provision) of the
ABL Credit Agreement.

Section 7.19 Information Concerning Financial Condition of the Credit Parties.
Each of the Term Agent and the ABL Agent hereby assumes responsibility for
keeping itself informed of the financial condition of the Credit Parties and all
other circumstances bearing upon the risk of nonpayment of the ABL Obligations
or the Term Obligations. The Term Agent and the ABL Agent hereby agree that no
party shall have any duty to advise any other party of information known to it
regarding such condition or any such circumstances. In the event the Term Agent
or the ABL Agent, in its sole discretion, undertakes at any time or from time to
time to provide any information to any other party to this Agreement, (a) it
shall be under no obligation (i) to provide any such information to such other
party or any other party on any subsequent occasion, (ii) to undertake any
investigation not a part of its regular business routine, or (iii) to disclose
any other information, (b) it makes no representation as to the accuracy or
completeness of any such information and shall not be liable for any information
contained therein, and (c) the Party receiving such information hereby agrees to
hold the other Party harmless from any action the receiving Party may take or
conclusion the receiving Party may reach or draw from any such information, as
well as from and against any and all losses, claims, damages, liabilities, and
expenses to which such receiving Party may become subject arising out of or in
connection with the use of such information.

[SIGNATURE PAGES FOLLOW]

 

   47    Form of J. Crew Intercreditor Agreement

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

 

BANK OF AMERICA, N.A., in its capacity as the ABL Agent By:       Name:   Title:

 

[Signature Page to Intercreditor Agreement]

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BANK OF AMERICA, N.A., in its capacity as the Term Agent By:       Name:  
Title:

 

[Signature Page to Intercreditor Agreement]

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ACKNOWLEDGMENT

The Borrower and each Guarantor hereby acknowledges that it has received a copy
of this Agreement as in effect on the date hereof and consents thereto, agrees
to recognize all rights granted thereby to the ABL Agent, the ABL Secured
Parties, the Term Agent, and the Term Secured Parties (including pursuant to
Section 7.18) and will not do any act or perform any obligation which is not in
accordance with the agreements set forth in this Agreement as in effect on the
date hereof. The Borrower and each Guarantor further acknowledges and agrees
that (except as set forth in Section 7.4) it is not an intended beneficiary or
third party beneficiary under this Agreement and (i) as between the ABL Secured
Parties, the Borrower and Guarantors, the ABL Documents remain in full force and
effect as written and are in no way modified hereby, and (ii) as between the
Term Secured Parties, the Borrower and Guarantors, the Term Documents remain in
full force and effect as written and are in no way modified hereby.

Without limiting the foregoing or any rights or remedies the Borrower and the
other Credit Parties may have, Holdings, the Borrower and the other Credit
Parties consent to the performance by the Term Agent of the obligations set
forth in Section 3.6 of this Agreement and acknowledge and agree that neither
the Term Agent nor any other Term Secured Party shall ever be accountable or
liable for any action taken or omitted by the ABL Agent or any other ABL Secured
Party or its or any of their officers, employees, agents successors or assigns
in connection therewith or incidental thereto or in consequence thereof,
including any improper use or disclosure of any proprietary information or other
Intellectual Property by the ABL Agent or any other ABL Secured Party or its or
any of their officers, employees, agents, successors or assigns or any other
damage to or misuse or loss of any property of the Credit Parties as a result of
any action taken or omitted by the ABL Agent or its officers, employees, agents,
successors or assigns pursuant to, and in accordance with, Section 3.6 of this
Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

[Signature Page to Intercreditor Agreement]

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CREDIT PARTIES: CHINOS ACQUISITION CORPORATION (which on the Closing Date shall
be merged with and into J. Crew Group, Inc., with J. Crew Group, Inc. surviving
such merger as the Borrower), By:     Name:     Title:    

 

[Signature Page to Intercreditor Agreement]

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The undersigned hereby confirms that, as a result of its merger with Chinos
Acquisition Corporation, it hereby assumes all of the rights and obligations of
Chinos Acquisition Corporation under this Agreement (in furtherance of, and not
in lieu of, any assumption or deemed assumption as a matter of law) and hereby
is joined to this Agreement as the Borrower hereunder. J. CREW GROUP, INC. By:  
  Name:     Title:    

 

[Signature Page to Intercreditor Agreement]

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GUARANTORS: CHINOS INTERMEDIATE HOLDINGS B, INC. J. CREW OPERATING CORP. J. CREW
INC. J. CREW INTERNATIONAL, INC. GRACE HOLMES, INC. H. F. D. NO. 55, INC.
MADEWELL INC. J. CREW VIRGINIA, INC. By:     Name:     Title:    

 

[Signature Page to Intercreditor Agreement]

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EXHIBIT L

FORM OF INTERCOMPANY SUBORDINATION AGREEMENT

[To be provided under separate cover]

 

L-1    Form of Intercompany Subordination Agreement

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Exhibit L

FORM OF INTERCOMPANY SUBORDINATION AGREEMENT

This INTERCOMPANY SUBORDINATION AGREEMENT, dated as of [            ] [    ],
20[    ] (as from time to time amended, amended and restated, modified, replaced
or supplemented in accordance with the terms hereof, this “Intercompany
Subordination Agreement”), is made and entered into by and among each of the
undersigned, to the extent a borrower from time to time (in such capacity for
the purposes of this Agreement, an “Obligor”) from any other entity listed on
the signature page (in such capacity for the purposes of this Intercompany
Subordination Agreement, a “Subordinated Creditor”).

RECITALS

(A) Reference is made to (i) that Credit Agreement dated as of March 7, 2011 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Term Credit Agreement”, among Chinos Acquisition Corporation, a
Delaware corporation(“Merger Sub”) (which on the date hereof shall be merged
with and into J. Crew Group, Inc., a Delaware corporation (the “Company”), with
the Company surviving such merger as the Borrower (the “Borrower”)), Chinos
Intermediate Holdings B, Inc., a Delaware corporation (“Holdings”), the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent and Collateral Agent (in such capacities, the “Term Agent”) and any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection with the Term Credit Agreement, and in each case as
amended, modified, renewed, refunded, replaced, restated, restructured,
increased, supplemented or refinanced in whole or in part from time to time,
regardless of whether such amendment, modification, renewal, refunding,
replacement, restatement, restructuring, increase, supplement or refinancing is
with the same lenders or holders, agents or otherwise and (ii) that Credit
Agreement, dated as of March 7, 2011 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “ABL Credit
Agreement” and, together with the Term Credit Agreement, the “Credit
Agreements”) among Merger Sub (which on the date hereof shall be merged with and
into the Company, with the Company surviving such merger as the Borrower),
Holdings, the Lenders and Issuers from time to time party thereto and Bank of
America, N.A, as Administrative Agent and Collateral Agent thereunder (in such
capacities, the “ABL Agent” and, together with the Term Agent, the “Agents”) and
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection with the ABL Credit Agreement, and in each case as
amended, modified, renewed, refunded, replaced, restated, restructured,
increased, supplemented or refinanced in whole or in part from time to time,
regardless of whether such amendment, modification, renewal, refunding,
replacement, restatement, restructuring, increase, supplement or refinancing is
with the same lenders or holders, agents or otherwise. Capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned to
them in each Credit Agreement, as applicable.

(B) All Indebtedness of each Obligor that is a Loan Party to each Subordinated
Creditor that is not a Loan Party now or hereafter existing (whether created
directly or acquired by assignment or otherwise), and all interest, premiums,
costs, expenses or indemnification

 

Form of J. Crew Intercompany Subordination Agreement

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amounts thereon or payable in respect thereof or in connection therewith, are
hereinafter referred to as the “Subordinated Debt”. Indebtedness owed by any
Obligor that is not a Loan Party shall not be subordinated to, and shall rank
pari passu in right of payment with, any other obligation of such Obligor.

(C) This Intercompany Subordination Agreement is entered into pursuant to
Sections 7.03(b)(ii) and 7.03(d) of the Term Credit Agreement and Sections
9.3(b)(ii) and 9.3(d) of the ABL Credit Agreement and delivered in connection
therewith.

SECTION 1. Subordination.

(a) Each Subordinated Creditor and each Obligor agrees that the Subordinated
Debt is and shall be subordinate, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of (i) all Obligations of any
such Obligor now or hereafter existing under the Term Credit Agreement and the
other Loan Documents, including, without limitation, where applicable, such
Obligor’s guarantee thereof (the “Term Loan Obligations”), (ii) all Secured
Obligations of any such Obligor now or hereafter existing under the ABL Credit
Agreement and the other Loan Documents (as defined in the ABL Credit Agreement),
including, without limitation, where applicable, such Obligor’s guarantee
thereof (the “ABL Obligations”) and (iii) all obligations of such Obligor or any
guarantee thereof under the Senior Notes (the “Notes Obligations”) (the
foregoing, collectively, the “Senior Indebtedness”).

(b) For the purposes of this Intercompany Subordination Agreement, (A) the Term
Loan Obligations shall not be deemed to have been paid in full until the latest
of: (i) the payment in full in cash of the Term Loan Obligations and all other
amounts (other than contingent indemnification obligations as to which no claim
has been asserted and obligations and liabilities under Secured Hedge Agreements
and Cash Management Obligations as to which arrangements satisfactory to the
applicable Hedge Bank or Cash Management Bank shall have been made) payable
under the Credit Agreement and the other Loan Documents and (ii) the Maturity
Date; (B) the ABL Obligations shall not be deemed to have been paid in full
until the latest of: (i) the payment in full in cash of the ABL Obligations and
all other amounts (other than (x) contingent indemnification obligations as to
which no claim has been asserted, (y) obligations and liabilities under Secured
Hedge Agreements and Cash Management Obligations as to which arrangements
satisfactory to the applicable Hedge Bank or Cash Management Bank shall have
been made and (z) Letter of Credit Obligations which have been Cash
Collateralized or back-stopped by a latter of credit as provided for in the ABL
Credit Agreement) payable under the ABL Credit Agreement and the other Loan
Documents and (ii) the Scheduled Termination Date (as defined in the ABL Credit
Agreement) and (C) the Notes Obligations shall not be deemed to have been paid
in full until the latest of: (i) the payment in full of the Notes Obligations
and all other amounts (other than contingent indemnification obligations as to
which no claim has been asserted) payable under the Senior Notes Indenture and
(ii) the scheduled maturity date of the Senior Notes.

(c) A Subordinated Creditor shall automatically be released from its obligations
hereunder upon the consummation of any transaction permitted by the Credit
Agreements as a result of which such Subordinated Creditor ceases to be a
Subsidiary of the Borrower.

 

   2    Form of J. Crew Intercompany Subordination Agreement

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SECTION 2. Events of Subordination.

(a) In the event of any dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief or composition of any Obligor or
its debts, whether voluntary or involuntary, in any bankruptcy, insolvency,
arrangement, reorganization, receivership, relief or other similar case or
proceeding under any Debtor Relief Law or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of any Obligor
or otherwise, the holders of Secured Indebtedness shall be entitled to receive
payment in full of the Obligations before any Subordinated Creditor is entitled
to receive any payment of all or any of the Subordinated Debt, and any payment
or distribution of any kind (whether in cash, property or securities, but other
than (A) equity securities or (B) debt securities of such Obligor that are
subordinated, to at least the same extent as the Subordinated Debt hereunder, to
the payment of all Senior Indebtedness then outstanding) that otherwise would be
payable or deliverable upon or with respect to the Subordinated Debt in any such
case, proceeding, assignment, marshalling or otherwise (including any payment
that may be payable by reason of any other indebtedness of such Obligor being
subordinated to payment of the Subordinated Debt) shall be paid or delivered
directly to the Agents for the account of the holders of Secured Indebtedness
for application (in the case of cash) to, or as collateral (in the case of
non-cash property or securities) for, the payment or prepayment of the Senior
Indebtedness until the Obligations shall have been paid in full in cash.

(b) If any Event of Default has occurred and is continuing under either
Section 8.01(a) or 8.01(f) Term Credit Agreement or Section 10.1(a) or 10.1(f)
of the ABL Credit Agreement and after notice from the applicable Agent (provided
that no such notice shall be required to be given in the case of any Event of
Default arising under Section 8.01(f) of the Term Credit Agreement or
Section 10.01(f) of the ABL Credit Agreement), then no payment (including any
payment that may be payable by reason of any other Indebtedness of any Obligor
being subordinated to payment of the Subordinated Debt) or distribution of any
kind or character shall be made by or on behalf of any Obligor for or on account
of any Subordinated Debt, and no Subordinated Creditor shall take or receive
from any Obligor, directly or indirectly, in cash or other property or by
set-off or in any other manner, including, without limitation, from or by way of
collateral, payment of all or any of the Subordinated Debt, unless and that is a
Loan Party owed to any Subordinated Creditor that is not a Loan Party until
(x) the Senior Indebtedness shall have been paid in full in cash or (y) such
Event of Default shall have been cured or waived, unless otherwise agreed in
writing by the Term Agent or the ABL Agent (as applicable) in its reasonable
discretion.

(c) In the event that any Event of Default (other than an Event of Default
described in Section 8.01(a) of the Credit Agreement) shall have occurred and be
continuing and any Agent gives written notice thereof to each Subordinated
Creditor, then no payment (including any payment that may be payable by reason
of any other indebtedness of any Obligor being subordinated to payment of the
Subordinated Debt) shall be made by or on behalf of any Obligor for or on
account of any Subordinated Debt, and no Subordinated Creditor shall take or
receive from any Obligor, directly or indirectly, in cash or other property or
by set-off or in any other manner, including, without limitation, from or by way
of collateral, payment of all or any of the Subordinated Debt, unless and until
(x) the Obligations shall have been paid in full or (y) such Event of Default
shall have been cured or waived.

 

   3    Form of J. Crew Intercompany Subordination Agreement

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(d) Except as otherwise set forth in Sections 2(a) through (c) above, any
Obligor is permitted to pay, and any Subordinated Creditor is entitled to
receive, any payment or prepayment of principal and interest on the Subordinated
Debt.

SECTION 3. In Furtherance of Subordination. Each Subordinated Creditor agrees as
follows:

(a) If any proceeding referred to in Section 2(a) above is commenced by or
against any Obligor,

(i) each Agent is hereby irrevocably authorized and empowered (in its own name
or in the name of each Subordinated Creditor or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution referred to in Section 2(a) and give acquittance therefor and to
file claims and proofs of claim and take such other action (including, without
limitation, voting the Subordinated Debt or enforcing any security interest or
other lien securing payment of the Subordinated Debt) as it may deem necessary
or advisable for the exercise or enforcement of any of the rights or interests
of the Agents or the Lenders hereunder; and

(ii) each Subordinated Creditor shall duly and promptly take such action as
Agent may reasonably request (A) to collect the Subordinated Debt for the
account of the Lenders and to file appropriate claims or proofs or claim in
respect of the Subordinated Debt, (B) to execute and deliver to the Agents such
powers of attorney, assignments, or other instruments as the Agent may request
in order to enable the Agents to enforce any and all claims with respect to, and
any security interests and other liens securing payment of, the Subordinated
Debt, and (C) to collect and receive any and all payments or distributions which
may be payable or deliverable upon or with respect to the Subordinated Debt.

(b) All payments or distributions upon or with respect to the Subordinated Debt
which are received by each Subordinated Creditor contrary to the provisions of
this Intercompany Subordination Agreement shall be received in trust for the
benefit of the Lenders, shall be segregated from other funds and property held
by such Subordinated Creditor and shall be forthwith paid over to the Agents for
the account of the Lenders in the same form as so received (with any necessary
indorsement) to be applied (in the case of cash) to, or held as collateral (in
the case of non-cash property or securities) for, the payment or prepayment of
the Obligations or the Senior Obligations, as applicable in accordance with the
terms of the applicable Credit Agreement.

 

   4    Form of J. Crew Intercompany Subordination Agreement

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(c) Each Agent is hereby authorized to demand specific performance of this
Intercompany Subordination Agreement, whether or not such Obligor shall have
complied with any of the provisions hereof applicable to it, at any time when
such Subordinated Creditor shall have failed to comply with any of the
provisions of this Intercompany Subordination Agreement applicable to it. Each
Subordinated Creditor hereby irrevocably waives any defense based on the
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.

SECTION 4. Rights of Subrogation. Each Subordinated Creditor agrees that no
payment or distribution to the Agents or the Lenders pursuant to the provisions
of this Intercompany Subordination Agreement shall entitle such Subordinated
Creditor to exercise any right of subrogation in respect thereof until the
Senior Indebtedness shall have been paid in full in cash (other than
(x) contingent indemnification obligations as to which no claim has been
asserted, (y) obligations and liabilities under Secured Hedge Agreements and
Cash Management Obligations as to which arrangements satisfactory to the
applicable Hedge Bank or Cash Management Bank shall have been made and
(z) Letter of Credit Obligations which have been Cash Collateralized or
back-stopped by a letter of credit as provided for in the ABL Credit Agreement).

SECTION 5. Further Assurances. Each Subordinated Creditor and each Obligor will,
at its expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that the Agents may reasonably request in writing, in order
to protect any right or interest granted or purported to be granted hereby or to
enable the Agents or any Lender to exercise and enforce its rights and remedies
hereunder.

SECTION 6. Agreements in Respect of Subordinated Debt. No Subordinated Creditor
will except as permitted under the applicable Credit Agreement:

 

  (i) sell, assign, pledge, encumber or otherwise dispose of any of the
Subordinated Debt unless such sale, assignment, pledge, encumbrance or
disposition is made expressly subject to this Intercompany Subordination
Agreement; or

 

  (ii) permit the terms of any of the Subordinated Debt to be changed in such a
manner as to have a material adverse effect upon the rights or interests of the
Agents or any Lender hereunder.

SECTION 7. Agreement by the Obligors. Each Obligor agrees that it will not make
any payment of any of the Subordinated Debt, or take any other action, in each
case if such payment or other action would be in contravention of the provisions
of this Intercompany Subordination Agreement.

 

   5    Form of J. Crew Intercompany Subordination Agreement

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SECTION 8. Obligations Hereunder Not Affected. All rights and interests of the
Agents and the Lenders hereunder, and all agreements and obligations of each
Subordinated Creditor and each Obligor under this Intercompany Subordination
Agreement, shall remain in full force and effect irrespective of:

 

  (i) any amendment, extension, renewal, compromise, discharge, acceleration or
other change in the time for payment or the terms of the Senior Indebtedness or
any part thereof;

 

  (ii) any taking, holding, exchange, enforcement, waiver, release, failure to
perfect, sell or otherwise dispose of any security for payment of the Guaranty
or any Senior Indebtedness;

 

  (iii)  the application of security and directing the order or manner of sale
thereof as the Agents and the Lenders in their sole discretion may determine;

 

  (iv)  the release or substitution of one or more of any endorsers or other
guarantors of any of the Senior Indebtedness;

 

  (v) the taking of, or failure to take any action which might in any manner or
to any extent vary the risks of any Guarantor or which, but for this Section 8,
might operate as a discharge of such Guarantor;

 

  (vi) any defense arising by reason of any disability, change in corporate
existence or structure or other defense of any Obligor, any other Guarantor or a
Subordinated Creditor, the cessation from any cause whatsoever (including any
act or omission of any Secured Party) of the liability of such Obligor, any
other Guarantor or a Subordinated Creditor;

 

  (vii)  any defense based on any claim that such Guarantor’s or Subordinated
Creditor’s obligations exceed or are more burdensome than those of any Obligor,
any other Guarantor or any other subordinated creditor, as applicable;

 

  (viii)  the benefit of any statute of limitations affecting such Guarantor’s
or Subordinated Creditor’s liability hereunder;

 

  (ix)  any right to proceed against any Obligor, proceed against or exhaust any
security for the Obligations, or pursue any other remedy in the power of any
Secured Party, whatsoever;

 

  (x) any benefit of and any right to participate in any security now or
hereafter held by any Secured Party, and

 

   6    Form of J. Crew Intercompany Subordination Agreement

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  (xi)  to the fullest extent permitted by law, any and all other defenses or
benefits that may be derived from or afforded by applicable law limiting the
liability of or exonerating guarantors or sureties.

This Intercompany Subordination Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by any Agent or any
Lender upon the insolvency, bankruptcy or reorganization of any Obligor or
otherwise, all as though such payment had not been made.

SECTION 9. Waiver. Each Subordinated Creditor and each Obligor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Intercompany Subordination Agreement and any
requirement that Agent or any Lender protect, secure, perfect or insure any
security interest or lien or any property subject thereto or exhaust any right
or take any action against any Obligor or any other person or entity or any
collateral.

SECTION 10. Amendments, Etc. No amendment or waiver of any provision of this
Intercompany Subordination Agreement, and no consent to any departure by any
Subordinated Creditor or any Obligor herefrom, shall in any event be effective
unless the same shall be in writing and signed by the Agents, such Obligor and
each Subordinated Creditor, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

SECTION 10. Expenses. This Intercompany Subordination Agreement is entitled to
the benefits of Section 12.3 of the ABL Credit Agreement and Section 10.04 of
the Term Credit Agreement.

SECTION 11. Addresses for Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 10.08 of the Term Credit Agreement or Section 12.8 of the
ABL Credit Agreement, as applicable. All communications and notice hereunder to
an Obligor other than the Borrower shall be given in care of the Borrower.

SECTION 12. No Waiver; Remedies. No failure on the part of the Agents or any
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

 

   7    Form of J. Crew Intercompany Subordination Agreement

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SECTION 13. Joinder. Upon execution and delivery after the date hereof by any
Restricted Subsidiary of a joinder agreement in substantially the form of
Exhibit A hereto, each such party shall become an Obligor and/or a Subordinated
Creditor, as applicable, hereunder with the same force and effect as if
originally named as an Obligor or a Subordinated Creditor, as applicable,
hereunder. The rights and obligations of each Obligor and each Subordinated
Creditor hereunder shall remain in full force and effect notwithstanding the
addition of any new Obligor or Subordinated Creditor as a party to this
Intercompany Subordination Agreement.

SECTION 14. Governing Law; Jurisdiction; Etc. (a) THIS INTERCOMPANY
SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.

(b) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN THE STATE, COUNTY AND CITY OF NEW YORK IN THE BOROUGH OF
MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF
NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INTERCOMPANY SUBORDINATION AGREEMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
INTERCOMPANY SUBORDINATION AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENTS, ANY
LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS INTERCOMPANY SUBORDINATION AGREEMENT AGAINST THE BORROWER OR
ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INTERCOMPANY SUBORDINATION AGREEMENT IN ANY COURT REFERRED TO
IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

  8    Form of J. Crew Intercompany Subordination Agreement

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(d) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 11 OF THIS INTERCOMPANY SUBORDINATION AGREEMENT.
NOTHING IN THIS INTERCOMPANY SUBORDINATION AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.

(e) EACH PARTY TO THIS INTERCOMPANY SUBORDINATION AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER THIS INTERCOMPANY SUBORDINATION AGREEMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS INTERCOMPANY SUBORDINATION AGREEMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 14(E)
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

[Remainder of page left intentionally blank]

 

  9    Form of J. Crew Intercompany Subordination Agreement

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IN WITNESS WHEREOF, each Subordinated Creditor, each Obligor and the Borrower
each has caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

 

J. CREW GROUP, INC. By:       Name:   Title:

 

[Signature Page to Intercompany Subordination Agreement]

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[OBLIGORS] By:       Name:   Title:

 

[Signature Page to Intercompany Subordination Agreement]

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[SUBORDINATED CREDITORS] By:       Name:   Title:

 

[Signature Page to Intercompany Subordination Agreement]

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Agreed and acknowledged as of the date Above written: BANK OF AMERICA, N.A., as
Term Agent By       Name:   Title: BANK OF AMERICA, N.A., as ABL Agent By      
Name:   Title:

 

[Signature Page to Intercompany Subordination Agreement]

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Exhibit A to the Intercompany Subordination Agreement

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of             , 201     (this “Joinder”), is
delivered pursuant to the Intercompany Subordination Agreement, dated as of
March 7, 2011 (as the same may from time to time be amended, restated,
supplemented or otherwise modified, the “Intercompany Subordination Agreement”)
among J. Crew Group, Inc., a Delaware corporation (the “Borrower”), the
Subordinated Creditors and Obligors from time to time party thereto, and Bank of
America, N.A., as Administrative Agent under the Term Credit Agreement and the
ABL Credit Agreement. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to them in the Intercompany Subordination
Agreement.

1. Joinder in the Intercompany Subordination. The undersigned hereby agrees that
on and after the date hereof, it shall be [an “Obligor”] [and] [a “Subordinated
Creditor”] under and as defined in the Intercompany Subordination Agreement,
hereby assumes and agrees to perform all of the obligations of [an Obligor]
[and] [a Subordinated Creditor] thereunder and agrees that it shall comply with
and be fully bound by the terms of the Intercompany Subordination Agreement as
if it had been a signatory thereto as of the date thereof; provided that the
representations and warranties made by the undersigned thereunder shall be
deemed true and correct as of the date of this Joinder.

2. Unconditional Joinder. The undersigned acknowledges that the undersigned’s
obligations as a party to this Joinder are unconditional and are not subject to
the execution of one or more Joinders by other parties. The undersigned further
agrees that it has joined and is fully obligated as [an Obligor] [and] [a
Subordinated Creditor] under the Intercompany Subordination Agreement.

3. Incorporation by Reference. All terms and conditions of the Intercompany
Subordination Agreement are hereby incorporated by reference in this Joinder as
if set forth in full.

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder
as of the day and year first above written.

 

[                                                                     
                ] By:       Name:   Title:

 

Exhibit A

Form of J. Crew Intercompany Subordination Agreement

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EXHIBIT M

FORM OF SOLVENCY CERTIFICATE

of

J. CREW GROUP, INC.

AND ITS SUBSIDIARIES

March 7, 2011

Pursuant to (i) that certain Credit Agreement, dated as of the date hereof (the
“Term Credit Agreement”), among Chinos Acquisition Corporation, a Delaware
corporation (“Merger Sub”) (which on the date hereof shall be merged with and
into J. Crew Group, Inc., a Delaware corporation (the “Company”), with the
Company surviving such merger as the Borrower (the “Borrower”)), Chinos
Intermediate Holdings B, Inc., a Delaware corporation (“Holdings”), the Lenders
from time to time party thereto and Bank of America, N.A., as Administrative
Agent and Collateral Agent thereunder and (ii) that certain Credit Agreement,
dated as of the date hereof (the “ABL Credit Agreement” and, together with the
Term Credit Agreement, the “Credit Agreements”), among Merger Sub (which on the
date hereof shall be merged with and into the Company, with the Company
surviving such merger as the Borrower), Holdings, the Lenders and Issuers from
time to time party thereto and Bank of America, N.A., as Administrative Agent
and Collateral Agent thereunder, the undersigned hereby certifies, solely in
such undersigned’s capacity as chief financial officer of the Company, and not
individually, as follows:

As of the date hereof, after giving effect to the consummation of the
Transaction, including the making of the Loans under the Credit Agreements on
the date hereof, and after giving effect to the application of the proceeds of
such Loans:

 

  a. The fair value of the assets of the Company and its subsidiaries, on a
consolidated basis, exceeds, on a consolidated basis, their debts and
liabilities, subordinated, contingent or otherwise;

 

  b. The present fair saleable value of the property of the Company and its
subsidiaries, on a consolidated basis, is greater than the amount that will be
required to pay the probable liability, on a consolidated basis, of their debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured;

 

  c. The Company and its subsidiaries, on a consolidated basis, are able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured; and

 

  d. The Company and its subsidiaries, on a consolidated basis, are not engaged
in, and are not about to engage in, business for which they have unreasonably
small capital.

 

M-1    Form of Solvency Certificate

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For purposes of this Certificate, the amount of any contingent liability at any
time shall be computed as the amount that would reasonably be expected to become
an actual and matured liability. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to them in the respective Credit
Agreements.

The undersigned is familiar with the business and financial position of the
Company and its subsidiaries. In reaching the conclusions set forth in this
Certificate, the undersigned has made such other investigations and inquiries as
the undersigned has deemed appropriate, having taken into account the nature of
the particular business anticipated to be conducted by the Company and its
subsidiaries after consummation of the Transaction.

[Signature Page Follows]

 

M-2    Form of Solvency Certificate

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IN WITNESS WHEREOF, the undersigned has executed this Certificate in such
undersigned’s capacity as chief financial officer of the Company, on behalf of
the Company, and not individually, as of the date first stated above.

 

J. CREW GROUP, INC. By:       Name:   Title: Chief Financial Officer

 

M-3    Form of Solvency Certificate

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EXHIBIT O-1

FORM OF NON-BANK CERTIFICATE

(For Foreign Lenders That Are Not Partnerships or Pass-Thru Entities For U.S.
Federal

Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Chinos Acquisition Corporation, a Delaware corporation (which
on the Closing Date shall be merged with and into J. Crew Group, Inc., a
Delaware corporation (the “Company”), with the Company surviving such merger as
the Borrower (the “Borrower”)), Chinos Intermediate Holdings B, Inc., a Delaware
corporation, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent and Collateral Agent. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.                                               (the “Foreign
Lender”) is providing this certificate pursuant to Section 3.1(b) of the Credit
Agreement.

The Foreign Lender hereby represents and warrants that:

1. The Foreign Lender is the sole record and beneficial owner of the Loans (as
well as any notes evidencing such loans) in respect of which it is providing
this certificate.

2. The Foreign Lender is not a “bank” for purposes of Section 881(c)(3)(A) of
the Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the
Foreign Lender further represents and warrants that:

 

  (a) the Foreign Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and

 

  (b) the Foreign Lender has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any exemption from
tax, securities law or other legal requirements.

3. The Foreign Lender is not a 10-percent shareholder of the Borrower within the
meaning of Section 871(h)(3)(B) of the Code.

4. The Foreign Lender is not a controlled foreign corporation within the meaning
of Section 881(c)(3)(C) of the Code related to the Borrower within the meaning
of Section 864(d) of the Code.

[Signature Page Follows]

 

O-1    Form of Non-Bank Certificate

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

IN WITNESS WHEREOF, the undersigned has duly executed this certificate on the
             day of                     , 20    .

 

[NAME OF FOREIGN LENDER] By:       Name:   Title:

 

O-2    Form of Non-Bank Certificate

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EXHIBIT O-2

FORM OF NON-BANK CERTIFICATE

(For Foreign Lenders That Are Partnerships or Pass-Thru Entities For U.S.
Federal

Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Chinos Acquisition Corporation, a Delaware corporation (which
on the Closing Date shall be merged with and into J. Crew Group, Inc., a
Delaware corporation (the “Company”), with the Company surviving such merger as
the Borrower (the “Borrower”)), Chinos Intermediate Holdings B, Inc., a Delaware
corporation, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent and Collateral Agent. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.                          (the “Foreign Lender”) is providing
this certificate pursuant to Section 3.1(b) of the Credit Agreement.

The Foreign Lender hereby represents and warrants that:

1. The Foreign Lender is the sole record owner of the Loans (as well as any
notes evidencing such Loans) in respect of which it is providing this
certificate.

2. The Foreign Lender’s partners/members are the sole beneficial owners of the
Loans (as well as any notes evidencing such Loans).

3. Neither the Foreign Lender nor any of its partners/members is a “bank” for
purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended (the “Code”). In this regard, the Foreign Lender further represents and
warrants that:

 

  (a) neither the Foreign Lender nor any of its partners/members is subject to
regulatory or other legal requirements as a bank in any jurisdiction; and

 

  (b) neither the Foreign Lender nor any of its partners/members has been
treated as a bank for purposes of any tax, securities law or other filing or
submission made to any Governmental Authority, any application made to a rating
agency or qualification for any exemption from tax, securities law or other
legal requirements.

4. None of the Foreign Lender’s partners/members is a 10-percent shareholder of
the Borrower within the meaning of Section 871(h)(3)(B) of the Code.

5. None of the Foreign Lender’s partners/members is a controlled foreign
corporation within the meaning of Section 881(c)(3)(C) of the Code related to
the Borrower within the meaning of Section 864(d) of the Code.

 

O-3    Form of Non-Bank Certificate

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[Signature Page Follows]

 

O-4    Form of Non-Bank Certificate

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

IN WITNESS WHEREOF, the undersigned has duly executed this certificate on the
             day of                     , 20    .

 

[NAME OF FOREIGN LENDER] By:       Name:   Title:

 

O-5    Form of Non-Bank Certificate

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EXHIBIT O-3

FORM OF NON-BANK CERTIFICATE

(For Foreign Participants That Are Not Partnerships or Pass-Thru Entities For
U.S.

Federal Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Chinos Acquisition Corporation, a Delaware corporation (which
on the Closing Date shall be merged with and into J. Crew Group, Inc., a
Delaware corporation (the “Company”), with the Company surviving such merger as
the Borrower (the “Borrower”)), Chinos Intermediate Holdings B, Inc., a Delaware
corporation, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent and Collateral Agent. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.                              (the “Foreign Participant”) is
providing this certificate pursuant to Section 3.1(b) and Section 12.2(d) of the
Credit Agreement.

The Foreign Participant hereby represents and warrants that:

1. The Foreign Participant is the sole record and beneficial owner of the
participation in respect of which it is providing this certificate.

2. The Foreign Participant is not a “bank” for purposes of Section 881(c)(3)(A)
of the Internal Revenue Code of 1986, as amended (the “Code”). In this regard,
the Foreign Participant further represents and warrants that:

 

  (a) the Foreign Participant is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and

 

  (b) the Foreign Participant has not been treated as a bank for purposes of any
tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements.

3. The Foreign Participant is not a 10-percent shareholder of the Borrower
within the meaning of Section 871(h)(3)(B) of the Code.

4. The Foreign Participant is not a controlled foreign corporation within the
meaning of Section 881(c)(3)(C) of the Code related to the Borrower within the
meaning of Section 864(d) of the Code.

[Signature Page Follows]

 

   O-6    Form of Non-Bank Certificate

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

IN WITNESS WHEREOF, the undersigned has duly executed this certificate on the
             day of                 , 20    .

 

[NAME OF FOREIGN PARTICIPANT] By:       Name:   Title:

 

   O-7    Form of Non-Bank Certificate

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

EXHIBIT O-4

FORM OF NON-BANK CERTIFICATE

(For Foreign Participants That Are Partnerships or Pass-Thru Entities For

U.S. Federal Income Tax Purposes)

Reference is made to that certain Credit Agreement, dated as of March 7, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Chinos Acquisition Corporation, a Delaware corporation (which
on the Closing Date shall be merged with and into J. Crew Group, Inc., a
Delaware corporation (the “Company”), with the Company surviving such merger as
the Borrower (the “Borrower”)), Chinos Intermediate Holdings B, Inc., a Delaware
corporation, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent and Collateral Agent. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.                                          (the “Foreign
Participant”) is providing this certificate pursuant to Section 3.1(b) and
Section 12.2(d) of the Credit Agreement.

The Foreign Participant hereby represents and warrants that:

1. The Foreign Participant is the sole record owner of the participation in
respect of which it is providing this certificate.

2. The Foreign Participant’s partners/members are the sole beneficial owners of
the participation.

3. Neither the Foreign Participant nor any of its partners/members is a “bank”
for purposes of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended (the “Code”). In this regard, the Foreign Participant further represents
and warrants that:

 

  (a) neither the Foreign Participant nor any of its partners/members is subject
to regulatory or other legal requirements as a bank in any jurisdiction; and

 

  (b) neither the Foreign Participant nor any of its partners/members has been
treated as a bank for purposes of any tax, securities law or other filing or
submission made to any Governmental Authority, any application made to a rating
agency or qualification for any exemption from tax, securities law or other
legal requirements.

4. None of the Foreign Participant’s partners/members is a 10-percent
shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the
Code.

5. None of the Foreign Participant’s partners/members is a controlled foreign
corporation within the meaning of Section 881(c)(3)(C) of the Code related to
the Borrower within the meaning of Section 864(d) of the Code.

[Signature Page Follows]

 

   O-8    Form of Non-Bank Certificate

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IN WITNESS WHEREOF, the undersigned has duly executed this certificate on the
             day of                 , 20    .

 

[NAME OF FOREIGN PARTICIPANT] By:       Name:   Title:

 

   O-9    Form of Non-Bank Certificate

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EXHIBIT P

FORM OF COMPLIANCE CERTIFICATE

[Insert date]

Reference is made to the Credit Agreement, dated as of March 7, 2011(as amended,
extended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among Chinos Acquisition Corporation, a Delaware
corporation (which on the Effective Date shall be merged with and into J. Crew
Group, Inc., a Delaware corporation (the “Company”), with the Company surviving
such merger as the Borrower (the “Borrower”)), Chinos Intermediate Holdings B,
Inc., a Delaware corporation, the Lenders and Issuers from time to time party
thereto, and Bank of America, N.A., as Administrative Agent and Collateral Agent
(capitalized terms used herein have the meanings attributed thereto in the
Credit Agreement unless otherwise defined herein). Pursuant to Section 7.2(a) of
the Credit Agreement, the undersigned, solely in his/her capacity as the chief
financial officer of the Borrower, certifies as follows:

1. [Attached hereto as Exhibit A is a consolidated balance sheet of the Borrower
and its Subsidiaries for the fiscal year ended [    ], 20[    ], and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows for such Fiscal Year, together with related notes thereto and management’s
discussion and analysis describing results of operations, setting forth in each
case in comparative form the figures for the previous Fiscal Year, all in
reasonable detail and prepared in accordance with GAAP, audited and accompanied
by a report and opinion of KPMG LLP, which report and opinion has been prepared
in accordance with generally accepted auditing standards and is not subject to
any “going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit. Also attached hereto as Exhibit A are
the related consolidating financial statements reflecting the adjustments
necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) (which
may be in footnote form only) from such consolidated financial statements.]1

2. [Attached hereto as Exhibit A is a condensed consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of the Fiscal Quarter ended
[            ], and the related (i) condensed consolidated statements of income
or operations for such Fiscal Quarter and for the portion of the Fiscal Year
then ended and (ii) condensed consolidated statements of cash flows for the
portion of the Fiscal Year then ended, setting forth in each case in comparative
form the figures for the corresponding Fiscal Quarter of the previous Fiscal
Year and the corresponding portion of the previous Fiscal Year, all in
reasonable detail (collectively, the “Financial Statements”), together with
management’s discussion and analysis describing results of operations. Such
Financial Statements fairly present in all material respects the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end
adjustments and the absence of footnotes. Also attached hereto as Exhibit A are
the related consolidating financial statements reflecting the adjustments
necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) (which
may be in footnote form only) from such consolidated financial statements.]2

 

1 To be included if accompanying annual financial statements only.

2 To be included if accompanying quarterly financial statements only.

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3. [Attached hereto as Exhibit B are the Projections required to be delivered
pursuant to Section 7.1(d) of the Credit Agreement. Such Projections have been
prepared in good faith on the basis of the assumptions stated therein, which
assumptions were believed to be reasonable at the time of preparation of such
Projections. Actual results may vary from such Projections and such variations
may be material.]3

4. [To my knowledge, except as otherwise disclosed to the Administrative Agent
pursuant to the Credit Agreement, no Default has occurred and is continuing.]
[If unable to provide the foregoing certification, attach an Annex A specifying
the details of the Default that has occurred and is continuing and any action
taken or proposed to be taken with respect thereto.]

5. [Attached hereto as Schedule 1 is a reasonably detailed calculation of the
Fixed Charge Coverage Ratio of the Borrower and its Restricted Subsidiaries as
of the end of the most recent Test Period, which calculation is true and
accurate on and as of the date of this Certificate.]

6. [Attached hereto as Schedule 2 are reasonably detailed calculations, which
calculations are true and accurate on and as of the date of this Certificate, of
the Net Cash Proceeds received during the Fiscal Year ended [            ] by or
on behalf of, Holdings or any of its Restricted Subsidiaries in respect of any
Disposition subject to prepayment pursuant to Section 2.9(b) of the Credit
Agreement.]

7. [Attached hereto is the information required to be delivered pursuant to
Section 7.2(d) of the Credit Agreement.]

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

3 To be included only in annual compliance certificate (beginning with the
fiscal year ending January 28, 2012).

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IN WITNESS WHEREOF, the undersigned, solely in his/her capacity as a chief
financial officer of J. Crew Group, Inc., has executed this certificate for and
on behalf of J. Crew Group, Inc. and has caused this certificate to be delivered
as of the date first set forth above.

 

J. CREW GROUP, INC. By:       Name:   Title: Chief Financial Officer

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SCHEDULE 1

TO COMPLIANCE CERTIFICATE

 

Test Period covered by the calculations below: [            ], 20[    ] to
[            ], 20[    ].         Fixed Charge Coverage Ratio for the Test
Period is         : 1:00.   

(A)

     Fixed Charge Coverage Ratio         (1)        Consolidated EBITDA        
  (a )      Consolidated Net Income:             (i )     
 
  the net income (loss) of the Borrower and its Restricted Subsidiaries for such
period on a consolidated
basis and otherwise determined in accordance with GAAP and before any reduction
in respect of
preferred stock dividends, excluding, without duplication:    $                
           (A )    any net after-tax extraordinary, non-recurring or unusual
gains or losses (less all fees and expenses relating thereto) or expenses, and
Transaction Expenses, relocation costs, integration costs, facility
consolidation and closing costs (other than with respect to Stores), severance
costs and expenses and one-time compensation charges    $                       
    (B )    the cumulative effect of a change in accounting principles during
such period, whether effected through a cumulative effect adjustment or a
retroactive application in each case in accordance with GAAP    $             
              (C )    effects of adjustments (including the effect of such
adjustments pushed down to the Borrower and the Restricted Subsidiaries) in such
Person’s consolidated financial statements pursuant to GAAP (including in the
inventory, property and equipment, software, goodwill, intangible assets,
in-process research and development, deferred revenue and debt line items
thereof) resulting from the application of recapitalization accounting or
purchase accounting, as the case may be, in relation to the Transaction or any
consummated acquisition or the amortization or write-off of any amounts thereof,
net of taxes    $                

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                 (D )    any net after-tax income (loss) from disposed or
discontinued operations and any net after-tax gains or losses on disposal of
disposed or discontinued operations    $                                  (E ) 
  any net after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions or the sale or other disposition of
any Equity Interests of any Person other than in the ordinary course of
business, as determined in good faith by the Borrower    $                      
           (F )    the Net Income for such period of any Person that is not a
Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the
equity method of accounting, provided that Consolidated Net Income of the
Borrower shall be increased by the amount of dividends or distributions or other
payments that are actually paid in cash (or to the extent converted into cash)
to the referent Person or a Restricted Subsidiary thereof in respect of such
period    $                                  (G )    (i) any net unrealized gain
or loss (after any offset) resulting in such period from obligations in respect
of Swap Contracts and the application of Financial Accounting Standards Board
Accounting Standards Codification 815 (Derivatives and Hedging), (ii) any net
gain or loss resulting in such period from currency translation gains or losses
related to currency remeasurements of Indebtedness (including the net loss or
gain (A) resulting from Swap Contracts for currency exchange risk and (B)
resulting from intercompany Indebtedness) and all other foreign currency
translation gains or losses to the extent such gain or losses are non-cash
items, and (iii) any net after-tax income (loss) for such period attributable to
the early extinguishment or conversion of (A) Indebtedness, (B) obligations
under any Swap Contracts or (C) other derivative instruments    $             
  

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

             (H )    any impairment charge or asset write-off, including
impairment charges or asset write-offs or write-downs related to intangible
assets, long-lived assets, investments in debt and equity securities or as a
result of a change in law or regulation, in each case pursuant to GAAP, and the
amortization of intangibles arising pursuant to GAAP    $                      
       (I )    any expenses, charges or losses that are covered by
indemnification or other reimbursement provisions in connection with any
Investment, Permitted Acquisition or any sale, conveyance, transfer or other
disposition of assets permitted under the Credit Agreement, to the extent
actually reimbursed, or, so long as the Borrower has made a determination that a
reasonable basis exists for indemnification or reimbursement and only to the
extent that such amount is in fact indemnified or reimbursed within 365 days of
such determination (with a deduction in the applicable future period for any
amount so added back to the extent not so indemnified or reimbursed within such
365 days)    $                              (J )    to the extent covered by
insurance and actually reimbursed, or, so long as the Borrower has made a
determination that there exists reasonable evidence that such amount will in
fact be reimbursed within 365 days of the date of such determination (with a
deduction in the applicable future period for any amount so added back to the
extent not so reimbursed within such 365 days), expenses, charges or losses with
respect to liability or casualty events or business interruption    $
                             (K )    any non-cash (for such period and all other
periods) compensation charge or expense, including any such charge or expense
arising from the grants of stock appreciation or similar rights, stock options,
restricted stock or other rights or equity incentive programs shall be excluded,
and any cash charges associated with the rollover, acceleration or payout of
Equity Interests by, or to, management of the Borrower or any of its Restricted
Subsidiaries in connection with the Transaction    $                           

 

Consolidated Net Income (item (A)(1)(a)(i) minus the sum of items
(A)(1)(a)(i)(A) through (K))

   $                            (b)        increased by (without duplication):
  

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

              (i )    provision for taxes based on income or profits or capital,
plus franchise or similar taxes and foreign withholding taxes, of such Person
for such period deducted in computing Consolidated Net Income    $             
                 (ii )    (A) total interest expense of such Person for such
period and (B) bank fees and costs of surety bonds, in each case under this
clause (B), in connection with financing activities and, in each case under
clauses (A) and (B), to the extent the same was deducted in computing
Consolidated Net Income    $                               (iii )   
Consolidated Depreciation and Amortization Expense of such Person for such
period to the extent such depreciation and amortization were deducted in
computing Consolidated Net Income    $                               (iv )   
any expenses or charges related to any issuance of Equity Interests, Investment,
acquisition, disposition, recapitalization or the incurrence or repayment of
Indebtedness permitted to be incurred under the Credit Agreement including a
refinancing thereof (whether or not successful) and any amendment or
modification to the terms of any such transactions, including such fees,
expenses or charges related to the Transaction, in each case, deducted in
computing Consolidated Net Income    $                               (v )    the
amount of any restructuring charge or reserve deducted in such period in
computing Consolidated Net Income, including any one-time costs incurred in
connection with (A) Permitted Acquisitions after the Effective Date or (B) the
closing of any Stores or distribution centers after the Effective Date    $
                              (vi )    the amount of costs relating to
pre-opening and opening costs for Stores, signing, retention and completion
bonuses, costs incurred in connection with any strategic initiatives, transition
costs, consolidation and closing costs for Stores and costs incurred in
connection with non-recurring product and intellectual property development
after the Effective Date, other business optimization expenses (including costs
and expenses relating to business optimization programs), and new systems design
and implementation costs and project start-up costs in an aggregate amount for
all items added pursuant to this item (A)(1)(b)(vi) not to exceed $25,000,000 in
any period of four-consecutive Fiscal Quarters,    $                

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

              (vii )    any other non-cash charges including any write offs or
write downs reducing Consolidated Net Income for such period (provided that if
any such non-cash charges represent an accrual or reserve for potential cash
items in any future period, (1) the Borrower may determine not to add back such
non-cash charge in the current period and (2) to the extent the Borrower does
decide to add back such non-cash charge, the cash payment in respect thereof in
such future period shall be subtracted from Consolidated EBITDA to such extent,
and excluding amortization of a prepaid cash item that was paid in a prior
period)    $                               (viii )    the amount of any minority
interest expense deducted in calculating Consolidated Net Income    $
                              (ix )    the amount of management, monitoring,
consulting and advisory fees (including termination fees) and related
indemnities and expenses paid or accrued in such period under the Sponsor
Management Agreement or otherwise to the Sponsors to the extent permitted under
Section 9.8 of the Credit Agreement and deducted in such period in computing
Consolidated Net Income    $                               (x )    the amount of
net cost savings and synergies (other than any of the foregoing related to
Specified Transactions) projected by the Borrower in good faith to result from
actions taken or expected to be taken no later than twelve (12) months after the
end of such period (calculated on a pro forma basis as though such cost savings
and synergies had been realized on the first day of the period for which
Consolidated EBITDA is being determined), net of the amount of actual benefits
realized during such period from such actions; provided that (A) such cost
savings and synergies are reasonably identifiable and factually supportable, and
(B) the aggregate amount of cost savings and synergies added pursuant to this
item (A)(1)(b)(x) for any Test Period shall not exceed, after the Effective
Date, the greater of (x) $30,000,000 and (y) 10% of Consolidated EBITDA for such
Test Period (calculated prior to giving effect to any adjustment pursuant to
this item (A)(1)(b)(x))    $                

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

             (xi )    cash receipts (or any netting arrangements resulting in
reduced cash expenditures) not representing Consolidated EBITDA or Consolidated
Net Income in any period to the extent non-cash gains relating to such income
were deducted in the calculation of Consolidated EBITDA pursuant to item
(A)(1)(c) below for any previous period and not added back    $                
             (xii )    any costs or expenses incurred by the Borrower or a
Restricted Subsidiary pursuant to any management equity plan or stock option
plan or any other management or employee benefit plan or agreement or any stock
subscription or stockholders agreement, to the extent that such costs or
expenses are funded with cash proceeds contributed to the capital of the
Borrower or net cash proceeds of issuance of Equity Interests of the Borrower
(other than Disqualified Equity Interests)    $                            (c ) 
    decreased by (without duplication):                 (i )    any non-cash
gains increasing Consolidated Net Income of such Person for such period,
excluding any gains that represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period (other than such cash
charges that have been added back to Consolidated Net Income in calculating
Consolidated EBITDA in accordance with the calculation set forth in this
Schedule 1)    $                              (ii )    any non-cash gains with
respect to cash actually received in a prior period unless such cash did not
increase Consolidated EBITDA in such prior period    $                

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

          (d )     
  Consolidated EBITDA (Consolidated Net Income plus the sum of items
(A)(1)(b)(i) through (xii) minus
the sum of items (A)(1)(c)(i) and (ii))    $                         (2 )     
Capital Expenditures              (a )      (i )    all amounts that would be
reflected as additions to property, plant or equipment on a Consolidated
statement of cash flows of the Borrower and its Restricted Subsidiaries in
accordance with GAAP    $                             (ii )    the value of all
assets under Capitalized Leases incurred by the Borrower and its Restricted
Subsidiaries during such period    $                          
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  provided that Capital Expenditures shall not include (i) expenditures made in
connection with the
replacement, substitution, restoration or repair of assets to the extent
financed with (x) insurance proceeds
paid on account of the loss of or damage to the assets being replaced,
substituted, restored or repaired or (y)
awards of compensation arising from the taking by eminent domain or condemnation
of the assets being
replaced, (ii) the purchase price of equipment that is purchased simultaneously
with the trade-in of existing
equipment to the extent that the gross amount of such purchase price is reduced
by the credit granted by the
seller of such equipment for the equipment being traded in at such time, (iii)
the purchase of plant, property
or equipment or software to the extent financed with the proceeds of
Dispositions that are not required to be
applied to prepay the Loans pursuant to Section 2.9(b) of the Credit Agreement,
(iv) expenditures that are
accounted for as capital expenditures by the Borrower or any Restricted
Subsidiary and that actually are paid
for, or reimbursed to the Borrower or any Restricted Subsidiary in cash or Cash
Equivalents, by a Person
other than the Borrower or any Restricted Subsidiary and for which neither the
Borrower nor any Restricted
Subsidiary has provided or is required to provide or incur, directly or
indirectly, any consideration or
obligation (other than rent) in respect of such expenditures to such Person or
any other Person (whether
before, during or after such period), (v) expenditures to the extent
constituting any portion of a Permitted
Acquisition, (vi) the purchase price of equipment purchased during such period
to the extent the
consideration therefor consists of any combination of (A) used or surplus
equipment traded in at the time of
such purchase and (B) the proceeds of a concurrent sale of used or surplus
equipment, in each case, in the
ordinary course of business, (vii) expenditures relating to the construction,
acquisition, replacement,
reconstruction, development, refurbishment, renovation or improvement of any
property which has been
transferred to a Person other than the Borrower or a Restricted Subsidiary
during the same Fiscal Year in
which such expenditures were made pursuant to a sale-leaseback transaction to
the extent of the cash
proceeds received by the Borrower or such Restricted Subsidiary pursuant to such
sale-leaseback transaction
or (viii) expenditures financed with the proceeds of an issuance of Equity
Interests of the Borrower or a
capital contribution to the Borrower or Indebtedness permitted to be incurred
under the Credit Agreement   

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

            Capital Expenditures             (iii )      the sum of items
(A)(2)(a)(i) and (ii)    $                             Cash Taxes           (b
)     
  with respect to any Test Period, all taxes paid or payable in cash by the
Borrower and its Restricted
Subsidiaries during such Test Period    $                        (c )        
item (A)(1)(d) minus item (A)(2)(a)(iii) minus item (A)(2)(b)    $             
        (3)        Fixed Charges           with respect to any Person for any
Test Period, the sum, determined on a Consolidated basis, of:           (a )   
  Consolidated Net Cash Interest Expense             (i)       with respect to
the Borrower and its Restricted Subsidiaries on a Consolidated basis for any
period, determined in accordance with GAAP, total interest expense paid or
payable in cash in such period (including that attributable to obligations with
respect to Capitalized Leases in accordance with GAAP in effect on the Effective
Date but excluding any imputed interest as a result of purchase accounting) of
the Borrower and its Restricted Subsidiaries on a Consolidated basis and all
commissions, discounts and other fees and charges owed with respect to
Indebtedness of the Borrower and its Restricted Subsidiaries    $             
               provided that Consolidated Net Cash Interest Expense shall not
include (i) any non-cash interest or deferred financing costs, (ii) any
amortization or write-down of deferred financing fees, debt issuance costs,
discounted liabilities, commissions, fees and expenses, (iii) any expensing of
bridge, commitment and other financing fees and (iv) penalties and interest
related to Taxes   

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

             (ii )    interest income of the Borrower and its Restricted
Subsidiaries actually received in cash during such period Swap Contracts.    $
                           Consolidated Net Cash Interest Expense              
  (iii )    item (A)(3)(a)(i) minus item (A)(3)(a)(ii)    $                   
        (b )      Scheduled payments of principal on Indebtedness for borrowed
money of such Person and its Subsidiaries due and payable during such period   
$                            Fixed Charges               (c )      the sum of
item (A)(3)(a)(iii) and item (A)(3)(b)    $                            Fixed
Charge Coverage Ratio                 item (2)(c)(d) divided by item (3)(c)     
          :
1.00   
  

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

SCHEDULE 2

TO COMPLIANCE CERTIFICATE

 

(B)

     Net Cash Proceeds        
  with respect to the Disposition of any asset by the Borrower or any of the
Restricted Subsidiaries, the excess, if any,
of:               (i )      the sum of:                 (A )    cash and Cash
Equivalents received in connection with such Disposition (including any cash and
Cash Equivalents received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received)    $                            (ii )      over the sum of:         
       (A )    the principal amount, premium or penalty, if any, interest and
other amounts on any Indebtedness that is secured by the asset subject to such
Disposition and that is required to be repaid in connection with such
Disposition (other than Indebtedness under the Loan Documents or the Term
Facility Documentation or any Permitted Refinancing of the Indebtedness under
the Term Facility Documentation)    $                              (B )    the
out-of-pocket fees and expenses (including attorneys’ fees, investment banking
fees, survey costs, title insurance premiums, and related search and recording
charges, transfer taxes, deed or mortgage recording taxes, other customary
expenses and brokerage, consultant and other customary fees) actually incurred
by the Borrower or such Restricted Subsidiary in connection with such
Disposition    $                              (C )    taxes or distributions
made pursuant to Section 9.6(g)(i) or (g)(ii) of the Credit Agreement paid or
reasonably estimated to be payable in connection therewith (including taxes
imposed on the distribution or repatriation of any such Net Cash Proceeds)    $
                             (D )    in the case of any Disposition by a
non-wholly owned Restricted Subsidiary, the pro-rata portion of the Net Cash
Proceeds thereof (calculated without regard to this item (B)(ii)(D))
attributable to minority interests and not available for distribution to or for
the account of the Borrower or a wholly owned Restricted Subsidiary as a result
thereof    $                              (E )    any reserve for adjustment in
respect of (x) the sale price of such asset or assets established in accordance
with GAAP and (y) any liabilities associated with such asset or assets and
retained by the Borrower or any Restricted Subsidiary after such sale or other
disposition thereof, including pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction, it being
understood that “Net Cash Proceeds” shall include the amount of any reversal
(without the satisfaction of any applicable liabilities in cash in a
corresponding amount) of any reserve described in this clause (ii)(E)    $
                Net Cash Proceeds (item (B)(i)(A) minus the sum of items
(B)(ii)(A) through (E))    $                

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

EXHIBIT R

[FORM OF] CUSTOMS BROKER AGREEMENT

[DATE]

Name and Address of [Customs Broker/Freight Forwarder/Carrier]:

____________________________

____________________________

____________________________

Email Address:                                     

Fax Number:                                         

Dear Sir/Madam:

[J. Crew Group, Inc.][Insert name of other Loan Party], a
[Delaware][            ] corporation with its principal executive offices at
[770 Broadway, New York, New York 10003][Insert address for Loan Party]
(referred to herein as the “Company”), among others, has entered into a Security
Agreement dated as of March 7, 2011 (the “Security Agreement”) with Bank of
America, N.A., with offices at 100 Federal Street, Boston, MA 02110, as
collateral agent (in such capacity, herein the “Agent”) for the ratable benefit
of the Secured Parties, as defined under that certain Credit Agreement dated as
of March 7, 2011 (the “Credit Agreement”) by and among Chinos Acquisition
Corporation, which on the Effective Date shall be merged with and into [J. Crew
Group, Inc.][the Company], with [J. Crew Group, Inc.][the Company] surviving
such merger as the Borrower, Chinos Intermediate Holdings B, Inc., the Lenders
and Issuers from time to time party thereto, Bank of America, N.A., as
administrative agent and collateral agent and the other agents named therein,
pursuant to which Security Agreement, the Company, among others, has granted a
security interest to the Agent in and to, substantially all of the assets of the
Company, including, among other things, all of the Company’s inventory, goods,
documents, bills of lading and other documents of title. Capitalized terms used
but not defined herein have the meanings assigned to such terms in the Credit
Agreement.

The Agent has requested that you (together with any affiliates providing
services to the Company or its affiliates, the “[Customs Broker/Freight
Forwarder/Carrier]”) act as the Agent’s agent for the limited purpose of more
fully perfecting and protecting the security interest of the Agent in the Title
Documents (as defined below) and the Property (as defined below), and the
[Customs Broker/Freight Forwarder/Carrier] has agreed to do so. This letter
agreement (this “Agreement”) shall set forth the terms of the [Customs
Broker/Freight Forwarder/Carrier]’s engagement.

1. Acknowledgment of Security Interest; Power of Attorney: The [Customs
Broker/Freight Forwarder/Carrier] acknowledges that the Company has granted a
security interest to the Agent in all of the Company’s right, title, and
interest in, to and under the Title Documents (as defined below), the Property
(as defined below) and any contracts or agreements relating thereto. The Company
advises the [Customs Broker/Freight Forwarder/Carrier], and the [Customs
Broker/Freight Forwarder/Carrier] acknowledges that the Company has irrevocably
constituted and appointed the Agent as the Company’s true and lawful attorney,
with full power of substitution to exercise all of such rights, title, and
interest, which appointment has been coupled with an interest. The [Customs
Broker/Freight Forwarder/Carrier] further acknowledges and agrees that: (i) the
Company holds title to all Title Documents (as defined below) and Property (as
defined below) while in the custody or control of the

 

   1    Form of Customs Broker Agreement

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

[Customs Broker/Freight Forwarder/Carrier]; (ii) upon receipt of any such Title
Documents or Property, the [Customs Broker/Freight Forwarder/Carrier] shall
promptly notify the Company that it is holding such Title Documents or Property
on behalf of the Company; (iii) [the [Customs Broker/Freight Forwarder] shall
not deliver any Property to a third party for shipment and delivery unless any
related Title Documents reflects a Loan Party as “consignor/shipper” and a Loan
Party as “consignee” and such third party is advised of the Agent’s liens on
such Title Documents and Property and rights with respect thereto]1; and (iv) if
the [Customs Broker/Freight Forwarder/Carrier] receives notice from any seller
of any Property of such seller’s intent to stop delivery of such Property to the
Company, the [Customs Broker/Freight Forwarder/Carrier] shall promptly notify
the Agent of the same and, in all such cases, shall follow solely the
instructions of the Agent concerning the release, transfer, or other disposition
of the Property and will not follow any instructions of the Company or any other
person concerning same, unless instructed otherwise by the Agent.

2. Appointment Of [Customs Broker/Freight Forwarder/Carrier] as Agent of Agent:
The [Customs Broker/Freight Forwarder/Carrier] is hereby appointed as agent for
the Agent to receive and retain possession of (i) all bills of lading, waybills,
documents, and any other documents of title or carriage constituting,
evidencing, or relating to the Company’s inventory (collectively, the “Title
Documents”) heretofore or at any time hereafter issued for any goods, inventory,
or other property of the Company which are received by the [Customs
Broker/Freight Forwarder/Carrier] for processing (collectively, the “Property”),
and (ii) all Property, as applicable, such receipt and retention of possession
being for the purpose of more fully perfecting and preserving the Agent’s
security interests in the Title Documents and the Property. The [Customs
Broker/Freight Forwarder/Carrier] will maintain possession of the Title
Documents and Property, as applicable, subject to the security interests of the
Agent, and will note the security interests of the Agent on the [Customs
Broker/Freight Forwarder/Carrier]’s books and records.

3. Delivery of Title Documents. Release of Goods: Until the [Customs
Broker/Freight Forwarder/Carrier] receives written notification from the Agent
pursuant to paragraph 4 below to the contrary the [Customs Broker/Freight
Forwarder/Carrier] may deliver:

(a) the Title Documents to the [issuing carrier or to its agent (who shall act
on the [Customs Broker/Freight Forwarder]’s behalf as the [Customs
Broker/Freight Forwarder]’s sub-agent hereunder) for the purpose of permitting
the Company, as consignee, to obtain possession or control of the Property
subject to such Title Documents]2[Company or as otherwise directed by the
Company]3; and

(b) the Property as directed by the Company.

4. Notice From Agent To Follow Agent’s Instructions: Upon the [Customs
Broker/Freight Forwarder/Carrier]’s receipt of written notification from the
Agent, the [Customs Broker/Freight Forwarder/Carrier] shall thereafter follow
solely the instructions of the Agent concerning the disposition of the Title
Documents and the Property and will not follow any instructions of the Company
or any other person concerning the same, unless, in each case, instructed
otherwise by the Agent.

 

1 Insert if used with a Freight Forwarder or Customs Broker, if applicable.

2 Inserted if used with a Customs Broker or Carrier.

3 Inserted if used with a Carrier.

 

   2    Form of Customs Broker Agreement

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

5. Limited Authority: The [Customs Broker/Freight Forwarder/Carrier]’s sole
authority as the agent of the Agent is to receive and maintain possession of the
Title Documents and Property on behalf of the Agent and to follow the
instructions of the Agent as provided herein. Except as may be specifically
authorized and instructed in writing by the Agent, the [Customs Broker/Freight
Forwarder/Carrier] shall have no authority as the agent of the Agent to
undertake any other action or to enter into any other commitments on behalf of
the Agent.

6. Expenses: The Agent shall not be obligated to compensate the [Customs
Broker/Freight Forwarder/Carrier] for serving as agent hereunder, nor shall the
Agent be responsible for any fees, expenses, customs, duties, taxes, or other
charges relating to the Title Documents or the Property. The [Customs
Broker/Freight Forwarder/Carrier] acknowledges that the Company is solely
responsible for payment of any compensation and charges which are to the
Company’s account. The Company is further responsible for paying any fees,
expenses, customs duties, taxes, or other charges which are, or may accrue, to
the account of the Property. The Agent, at its sole option, may authorize the
[Customs Broker/Freight Forwarder/Carrier] to perform specified services on
behalf of the Agent at mutually agreed to rates of compensation, which shall be
to the Agent’s account, and payable to the [Customs Broker/Freight
Forwarder/Carrier] by the Agent; provided, however, that such payments shall not
affect any obligations of the Company to reimburse the Agent for any such
compensation or other costs or expenses incurred by the Agent as required by the
Credit Agreement or any other Loan Document.

7. Term:

(a) In the event that the [Customs Broker/Freight Forwarder/Carrier] desires to
terminate this Agreement, the [Customs Broker/Freight Forwarder/Carrier] shall
furnish the Agent with sixty (60) days prior written notice of the [Customs
Broker/Freight Forwarder/Carrier]’s intention to do so. During such 60 day
period (which may be shortened by written notice to the [Customs Broker/Freight
Forwarder/Carrier] by the Agent), the [Customs Broker/Freight Forwarder/Carrier]
shall continue to serve as agent hereunder. The [Customs Broker/Freight
Forwarder/Carrier] shall also cooperate with the Agent and execute all such
documentation and undertake all such action as may be reasonably required by the
Agent in connection with such termination.

(b) All notices given under this Agreement shall be delivered to the following
addresses (or to such other addresses as may be provided to the other parties
hereto via written notice) and shall be delivered via overnight currier or
registered mail:

If to Agent:

Bank of America, N.A.

100 Federal Street

Boston, MA 02110

Attn: Mark D. Twomey

Re: J. Crew Group, Inc.

If to [Customs Broker/Freight Forwarder/Carrier]

_____________________

_____________________

_____________________

 

   3    Form of Customs Broker Agreement

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

(c) Except as provided in Section 7(a), above, this Agreement shall remain in
full force and effect until the [Customs Broker/Freight Forwarder/Carrier]
receives written notification from the Agent of the termination of the [Customs
Broker/Freight Forwarder/Carrier]’s responsibilities hereunder.

8. Customs Broker/Freight Forwarder/Carrier]’s Lien: The [Customs Broker/Freight
Forwarder/Carrier] hereby waives any lien, security interest, hypothecation or
right of retention (whether arising by contract, statute or otherwise) it now
has or hereafter may acquire on or in any Title Documents and Property. The
[Customs Broker/Freight Forwarder/Carrier] certifies that it does not know of
any security interest or other claim with respect to any of the Property other
than the security interest in favor of the Agent which is the subject of this
Agreement.

9. Counterparts; Integration. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement constitutes the entire agreement between the
[Customs Broker/Freight Forwarder/Carrier] and Agent relating to the subject
matter hereof and supersedes any and all contemporaneous or previous agreements
and understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when it shall have been executed by the parties
and when the Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy or other
electronic means shall be effective as delivery of a manually executed
counterpart of this Agreement. No party hereto shall have any liability to any
other party for any direct, incidental, special, consequential, punitive or
exemplary damage, or damages for loss of profit, business or data, arising out
of this Agreement or the matters contemplated hereunder.

10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

[Signature Page Follows]

 

   4    Form of Customs Broker Agreement

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

If the foregoing correctly sets forth our understanding, please indicate the
[Customs Broker/Freight Forwarder/Carrier]’s acknowledgment and agreement to the
foregoing.

 

Very truly yours, COMPANY: [J. CREW GROUP INC.][LOAN PARTY] By:     Name:    
Title:    

Agreed, Acknowledged and Accepted:

[CUSTOMS BROKER/FREIGHT FORWARDER/CARRIER]:

 

  By:     Name:     Title:    

 

Acknowledged: AGENT: BANK OF AMERICA, N.A. By:     Name:   Title:  

 

   5    Form of Customs Broker Agreement