Exhibit 10.1

SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 4, 2007, among J.
CREW OPERATING CORP., a Delaware corporation (“Operating”), J. CREW INC., a New
Jersey corporation (“J. Crew”), GRACE HOLMES, INC., a Delaware corporation doing
business as J. CREW RETAIL (“Retail”), H.F.D. NO. 55, INC., a Delaware
corporation doing business as J. Crew Factory (“Factory”), Madewell Inc., a
Delaware corporation (“Madewell”, and together with Factory, J. Crew, Retail,
and Operating, each individually a “Borrower” and collectively, the
“Borrowers”), J. CREW GROUP, INC., a Delaware corporation (“Holdings”) and J.
CREW INTERNATIONAL, INC., a Delaware corporation (“JCI” and together with
Holdings, each individually a “Guarantor” and collectively, the “Guarantors”),
the Lenders (as defined below), the Issuers (as defined below) and CITICORP USA,
INC. (“Citicorp”), as administrative agent for the Lenders and the Issuers (in
such capacity, the “Administrative Agent”), Citicorp, as collateral agent for
the Lenders and the Issuers (in such capacity, the “Collateral Agent”) and BANK
OF AMERICA, N.A, and WACHOVIA BANK, NATIONAL ASSOCIATION as syndication agents
for the Lenders and Issuers (in such capacity, the “Syndication Agents”).

W I T N E S S E T H:

WHEREAS, the Borrowers, the Guarantors, the lenders and issuers from time to
time party thereto, Wachovia Bank, National Association, as administrative agent
(the “Existing Agent”), Congress Financial Corporation, as collateral agent (the
“Existing Collateral Agent”), Bank of America, as the syndication agent and
certain other parties thereto, are parties to the Amended and Restated Loan and
Security Agreement, dated as of December 23, 2004 (as amended, modified, or
supplemented prior to the Effective Date (as defined below), the “Existing
Credit Agreement”);

WHEREAS, the Existing Agent and the Existing Collateral Agent have resigned from
each of their respective capacities as administrative agent and collateral agent
under the Existing Credit Agreement, and Citicorp has been appointed as the
successor Administrative Agent and as Swing Loan Lender and as Collateral Agent
under the Existing Credit Agreement, each effective immediately prior to the
Effective Date (as defined below), pursuant to a master assignment and
resignation agreement dated on or prior to the date hereof (the “Master
Assignment and Resignation Agreement”), among the Existing Agent, the Existing
Collateral Agent, Citicorp, the Borrowers and the other Loan Parties; and

WHEREAS, the Borrowers, the Guarantors, the Lenders, the Issuers and the other
parties hereto have agreed to amend and restate the Existing Credit Agreement on
the terms set forth herein;

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

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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.

“Acquired Indebtedness” means (a) with respect to any Person, Indebtedness
existing at the time such Person becomes a Subsidiary of Holdings,
(b) Indebtedness assumed by Holdings or any of its Subsidiaries in a Permitted
Acquisition; provided, that in the case of this clause (b), such Indebtedness
(i) is unsecured or secured only by collateral of such Person granted prior to
the consummation of any such Permitted Acquisition and (ii) was not incurred in
anticipation of such Permitted Acquisition, or (c) Indebtedness secured by a
Lien encumbering any asset acquired by such Person.

“Acquisition” means any acquisition, whether by purchase, merger or otherwise,
of all or substantially all of the assets of, all or substantially all of the
Stock of, or a business line or unit or a division of, any Person.

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

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

“Advance Rate” means, at any time, (1) ninety (90%) percent of Eligible Credit
Card Receivables, (2) the amount equal to the lesser of: (x) ninety
(90%) percent multiplied by the Value of each category of Eligible Inventory of
each Borrower and (y) during the period from August 1 of any Fiscal Year through
and including December 31 of such Fiscal Year, ninety-two and one half
(92.5%) percent of the Net Recovery Percentage as to each category of Eligible
Inventory of each Borrower multiplied by the Value of such category of Eligible
Inventory of such Borrower, and at all other times, ninety (90%) percent of the
Net Recovery Percentage as to each category of Eligible Inventory of each
Borrower multiplied by the Value of such category of Eligible Inventory of such
Borrower, (3) sixty-five (65%) percent of Eligible Real Property and (4) 100% of
Qualified Cash maintained by each Borrower in a Cash Collateral Account or in an
Approved Deposit Account subject to a perfected first priority Lien in favor of
the Administrative Agent.

“Affected Lender” has the meaning specified in Section 2.17 (Substitution of
Lenders).

“Affiliate” means, with respect to a specified Person, any other Person which
directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under

 

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common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds ten
(10%) percent or more of any class of Voting Stock of such Person and (b) any
Person of which such Person beneficially owns or holds ten (10%) percent or more
of any class of Voting Stock of such Person. For the purposes of this
definition, the term “control” (including with correlative meanings, the terms
“controlled by” and “under common control with”), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.

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

“Agreement” means this Second Amended and Restated Credit Agreement.

“Anti-Terrorism Order” means U.S. Executive Order 13224 of September 24, 2001
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism (66 Fed. Reg. 49,079 (2001)).

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

“Applicable Margin” means (a) during the period commencing on the Effective Date
and ending on the last day of the first full Fiscal Quarter commencing after the
Effective Date, with respect to (i) Loans maintained as Base Rate Loans, a rate
equal to 0.0% per annum and (ii) Loans maintained as Eurodollar Rate Loans, a
rate equal to 1.00% per annum and (b) thereafter, as of any date of
determination, a per annum rate equal to the rate set forth below opposite the
applicable type of Loan and the then applicable Quarterly Excess Availability
(determined on the last day of the most recent Fiscal Quarter) set forth below:

 

QUARTERLY EXCESS AVAILABILITY

   BASE RATE
LOANS     EURODOLLAR
RATE LOANS  

Greater than $50,000,000

   0.0 %   1.0 %

Less than or equal to $50,000,000

   0.25 %   1.25 %

Changes in the Applicable Margin resulting from a change in the Quarterly Excess
Availability on the last day of any Fiscal Quarter shall become effective as to
all Loans upon the first Business Day of the succeeding Fiscal Quarter.

“Applicable Unused Commitment Fee Rate” means 0.20% per annum.

“Approved Deposit Account” means a Deposit Account that is the subject of an
effective Deposit Account Control Agreement and that is maintained by any Loan
Party with a Deposit Account Bank. “Approved Deposit Account” includes all
monies on deposit in such Deposit Account and all certificates and instruments,
if any, representing or evidencing such Deposit Account.

“Approved Electronic Communications” means each notice, demand, communication,
information, document and other material that any Loan Party is obligated to, or

 

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otherwise chooses to, provide to the Administrative Agent pursuant to any
Financing Agreement or the transactions contemplated therein, including (a) any
supplement to the Guaranty, any joinder to the Pledge and Security Agreement and
any other written Contractual Obligation delivered or required to be delivered
in respect of any Financing Agreement or the transactions contemplated therein
and (b) any Financial Statement, financial and other report, notice, request,
certificate and other information material; provided, however, that, “Approved
Electronic Communication” shall exclude (i) any Notice of Borrowing, Letter of
Credit Request, Swing Loan Request, Notice of Conversion or Continuation, and
any other notice, demand, communication, information, document and other
material relating to a request for a new, or a conversion of an existing,
Borrowing, (ii) any notice pursuant to and Section 2.9 (Mandatory Prepayments)
and any other notice relating to the payment of any principal or other amount
due under any Financing Agreement prior to the scheduled date therefor,
(iii) all notices of any Default or Event of Default and (iv) any notice,
demand, communication, information, document and other material required to be
delivered to satisfy any of the conditions set forth in Article III (Conditions
Precedent) or Section 2.4(a) (Letters of Credit) or any other condition to any
Borrowing or other extension of credit hereunder or any condition precedent to
the effectiveness of this Agreement.

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

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

“Approved Securities Intermediary” means a Securities Intermediary or Commodity
Intermediary at which a Borrower or a Guarantor maintains a Control Account.

“Arrangers” means Citigroup Global Markets Inc., Wachovia Capital Markets and
Bank of America, N.A., as joint lead arrangers.

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

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

“Bailee’s Letter” means the form bailee letter identified on Exhibit L executed
in connection with the Existing Credit Agreement.

“Base Rate” means, with respect to any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the highest of the following:

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

(b) the sum (adjusted to the nearest 0.25% or, if there is no nearest 0.25%, to
the next higher 0.25%) of (i) 0.5% per annum, plus (ii) the rate per annum
obtained by dividing (A) the latest three week moving average of secondary
market morning offering

 

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rates in the United States for three month certificates of deposit of major
United States money market banks, such three week moving average being
determined weekly on each Monday (or, if any such day is not a Business Day, on
the next succeeding Business Day) for the three week period ending on the
previous Friday by Citibank on the basis of such rates reported by certificate
of deposit dealers to and published by the Federal Reserve Bank of New York or,
if such publication shall be suspended or terminated, on the basis of quotations
for such rates received by Citibank from three New York certificate of deposit
dealers of recognized standing selected by Citibank, by (B) a percentage equal
to 100% minus the average of the daily percentages specified during such three
week period by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities consisting of or including
(among other liabilities) three month Dollar nonpersonal time deposits in the
United States plus (iii) the average during such three week period of the
maximum annual assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring Dollar deposits in the United
States; and

(c) the sum of (i) 0.5% per annum plus (ii) the Federal Funds Rate.

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

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of
ERISA to which any Loan Party incurs or otherwise has any obligation or
liability, contingent or otherwise.

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

“Borrower Agent” means J. Crew Operating Corp., a Delaware corporation, in its
capacity as agent on behalf of the Borrowers pursuant to Section 2.19
(Appointment of Borrower Agent) hereof and its successors and assigns in such
capacity.

“Borrowers’ Accountants” means KPMG LLP or other independent
nationally-recognized public accountants.

“Borrowing” means a borrowing consisting of Loans made on the same day by the
Lenders ratably according to their respective Revolving Credit Commitments.

“Borrowing Base” means, at any time, the amount calculated pursuant to the
Borrowing Base Certificate most recently delivered to the Administrative Agent
in accordance with Section 6.11(a) equal to the sum of (i) the product of the
Advance Rate then in effect for Eligible Credit Card Receivables and the Dollar
Equivalent of the face amount of all Eligible Credit Card Receivables of the
Borrowers, (ii) the product of the Advance Rate then in effect for each class of
Eligible Inventory and the Dollar Equivalent of the Value of each such class of
Eligible Inventory of the Borrowers constituting each such class at such time;
(iii) the product of the Advance Rate then in effect for Eligible Real Property
and the Fair Market Value of such Eligible Real Property and (iv) 100% of
Qualified Cash maintained by each Borrower in a Cash Collateral Account or in an
Approved Deposit Account subject to a perfected first priority Lien in favor of,
the Administrative Agent.

 

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

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

“Capital Expenditures” means, for any Person for any period, the aggregate of
amounts that would be reflected as additions to property, plant or equipment or
similar items on a Consolidated balance sheet of such Person and its
Subsidiaries prepared in accordance with GAAP, excluding interest capitalized
during construction.

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

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

“Cash Collateral Account” means any Deposit Account or Securities Account that
is (a) established by the Administrative Agent from time to time in its sole
discretion to receive cash and Cash Equivalents (or purchase cash or Cash
Equivalents with funds received) from the Loan Parties or Persons acting on
their behalf pursuant to the Financing Agreements, (b) with such depositaries
and securities intermediaries as the Administrative Agent may determine in its
sole discretion exercised reasonably, (c) in the name of the Administrative
Agent (although such account may also have words referring to the Loan Parties
and the account’s purpose), (d) under the control of the Administrative Agent
and (e) in the case of a Securities Account, with respect to which the
Administrative Agent shall be the Entitlement Holder and the only Person
authorized to give Entitlement Orders with respect thereto.

“Cash Equivalents” means (a) securities issued or fully guaranteed or insured by
the United States federal government or any agency thereof, (b) certificates of
deposit, eurodollar time deposits, overnight bank deposits and bankers’
acceptances of any commercial bank organized under the laws of the United
States, any state thereof, the District of Columbia, any foreign bank, or its
branches or agencies (fully protected against currency fluctuations) that, at
the time of acquisition, are rated at least “A-1” by S&P or “P-1” by Moody’s,
(c) commercial paper of an issuer rated at least “A-1” by S&P or “P-1” by
Moody’s and (d) shares of any money market fund that (i) has at least 95% of its
assets invested continuously in the types of investments referred to in
clauses (a), (b) and (c) above, (ii) has net assets exceeding $500,000,000 and
(iii) is rated at least “A-1” by S&P or “P-1” by Moody’s; provided, however,
that the maturities of all obligations of the type specified in clauses (a),
(b) and (c) above shall not exceed 180 days. Cash Equivalents shall also include
“Cash Equivalents” as such term is defined in the Term Loan Facility.

 

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“Cash Interest Expense” means, with respect to any Person for any period, the
Interest Expense of such Person for such period less the Non-Cash Interest
Expense of such Person for such period.

“Cash Management Document” means any certificate, agreement or other document
executed by the Loan Parties evidencing the Cash Management Obligations of any
Loan Party.

“Cash Management Obligation” means, any direct or indirect liability, contingent
or otherwise, of the Loan Parties in respect of cash management services
(including treasury, depository, overdraft, credit or debit card, the provision
of certain trade finance services, including, without limitation, open account
services and account receivable purchases, electronic funds transfer and other
cash management arrangements) provided by the Administrative Agent, any Lender
or any Affiliate of any of them including obligations for the payment of fees,
interest, charges, expenses, attorneys’ fees and disbursements in connection
therewith.

“Change of Control” shall mean (a) any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), other than Permitted Holders, shall
beneficially own, directly or indirectly, shares of Voting Stock of Holdings
representing more than thirty (30%) percent of the voting power of the total
outstanding Voting Stock of Holdings; (b) occupation of a majority of the seats
(other than vacant seats) on the Board of Directors of Holdings by individuals
who were neither (i) nominated by members of Permitted Holders or the Board of
Directors of Holdings nor (ii) appointed by directors so nominated; or (c) the
failure of Holdings to own directly or indirectly one hundred (100%) percent of
the voting power of the total outstanding Voting Stock of any Borrower or other
Guarantor (except as a result of a transaction or event expressly permitted
under Section 8.4).

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

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

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

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

“Collateral Access Agreement” means the form collateral access agreement
identified on Exhibit K executed in connection with the Existing Credit
Agreement.

“Collateral Documents” means the Pledge and Security Agreement, the Deposit
Account Control Agreements, Securities Account Control Agreements, the
Mortgages, any Collateral Access Agreement, any Bailee Letter and any other
Financing Agreement executed and delivered by a Loan Party granting a Lien on
any of its property to secure payment of the Secured Obligations.

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

 

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

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

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

“Consolidated Net Income” means, for any Person for any period, the Consolidated
net income (or loss) of such Person and its Subsidiaries for such period;
provided, however, that (a) the net income of any other Person in which such
Person or one of its Subsidiaries has a joint interest with a third party (which
interest does not cause the net income of such other Person to be Consolidated
into the net income of such Person) shall be included only to the extent of the
amount of dividends or distributions paid to such Person or Subsidiary, (b) the
net income of any Subsidiary of such Person that is subject to any restriction
or limitation on the payment of dividends or the making of other distributions
shall be excluded to the extent of such restriction or limitation and
(c) extraordinary gains and losses and any one-time increase or decrease to net
income that is required to be recorded because of the adoption of new accounting
policies, practices or standards required by GAAP shall be excluded.

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

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

“Contractual Obligation” of any Person means any obligation, agreement,
undertaking or similar provision of any Security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument (excluding a Financing Agreement) to which such Person is a
party or by which it or any of its property is bound or to which any of its
property is subject.

“Control Account” means a Securities Account or Commodity Account that is the
subject of an effective Securities Account Control Agreement and that is
maintained by any Loan Party with an Approved Securities Intermediary. “Control
Account” includes all Financial Assets held in a Securities Account or a
Commodity Account and all certificates and instruments, if any, representing or
evidencing the Financial Assets contained therein.

“Credit Card Acknowledgments” shall mean, collectively, the agreements by Credit
Card Issuers or Credit Card Processors who are parties to Credit Card Agreements
in favor of the Administrative Agent in the form delivered under the Existing
Credit Agreement.

 

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“Credit Card Agreements” shall mean all agreements now or hereafter entered into
by any Borrower or any Guarantor for the benefit of any Borrower, 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
4.20 (Credit Card Agreements) hereto.

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

“Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any Borrower’s or 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” shall mean, collectively, (a) all present and future
rights of any Borrower or 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 any
Borrower or 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.

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

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

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

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

“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
a Borrower or a Guarantor in the ordinary course of its business.

“Dollar Equivalent” of any amount means, at the time of determination thereof,
(a) if such amount is expressed in Dollars, such amount or (b) if such amount is
denominated in any other currency, the equivalent of such amount in Dollars as
determined by the Administrative Agent using any method of determination it
reasonably deems appropriate.

 

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

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

“Domestic Subsidiary” means any Subsidiary of Holdings organized under the laws
of any state of the United States of America or the District of Columbia.

“EBITDA” means, with respect to any Person for any period, (a) Consolidated Net
Income of such Person for such period plus (b) the sum of, in each case to the
extent included in the calculation of such Consolidated Net Income, but without
duplication, (i) any Provision for Taxes, (ii) Interest Expense, (iii) loss from
extraordinary items, (iv) depreciation, depletion and amortization expenses,
(v) any aggregate net loss from the sale, exchange or other disposition of
capital assets by such Person and (vi) all other non-cash charges and non-cash
losses for such period, including the amount of any compensation deduction as
the result of any grant of Stock or Stock Equivalents to employees, officers,
directors or consultants minus (c) the sum of, in each case to the extent
included in the calculation of such Consolidated Net Income but without
duplication, (i) any credit for income tax, (ii) interest income, (iii) gains
from extraordinary items, (iv) any aggregate net gain from the sale, exchange or
other disposition of capital assets by such Person and (v) any other non-cash
gains or other items which have been added in determining Consolidated Net
Income, including any reversal of a change referred to in clause (b)(v) above by
reason of a decrease in the value of any Stock or Stock Equivalent.

“Effective Date” means May 4, 2007.

“Eligible Assignee” means (a) a Lender or an Affiliate or Approved Fund of any
Lender or (b) any other Person (other than a natural person) approved by (i) the
Administrative Agent, (ii) in the case of any assignment of a Revolving Credit
Commitment, each Issuer and (iii) unless an Event of Default shall have occurred
and be continuing, the Borrower Agent (each such approval not to be unreasonably
withheld or delayed); provided, however, that notwithstanding the foregoing,
“Eligible Assignee” shall not include the Borrowers, the Guarantors or any
Affiliate or Subsidiary of the Borrowers or the Guarantors.

“Eligible Credit Card Receivables” shall mean, as to each Borrower, Credit Card
Receivables of such Borrower 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 Borrower in the ordinary
course of the business of such Borrower;

(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;

 

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(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;

(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 setoffs to fees and
chargebacks consistent with the practices of such Credit Card Issuer or Credit
Card Processor with such Borrower 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 Borrower 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 setoff against amounts otherwise payable by such Credit
Card Issuer or Credit Card Processor to such Borrower for the purpose of
establishing a reserve or collateral for obligations of such Borrower 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);

(g) such Credit Card Receivables (x) are owned by a Borrower and such Borrower
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, for and on behalf of itself and Lenders, as to such Credit Card
Receivables of such Borrower and (z) are not subject to any other Lien except
those permitted under clause (y) above and those permitted under this Agreement
and the other Financing Agreements;

(h) the Credit Card Issuer or Credit Card Processor with respect to such Credit
Card Receivables is not subject to any bankruptcy or insolvency proceedings;

(i) no event of default has occurred under the Credit Card Agreement of such
Borrower 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 Borrower or any Guarantor; and

(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.

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 Borrowers. General criteria for
Eligible Credit Card Receivables may only be changed and any new criteria for
Eligible Credit Card Receivables may only be established by the Administrative
Agent in good faith, upon notice to Borrower Agent, based on either: (i) an
event, condition or

 

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other circumstance arising after the date hereof, or (ii) existing on the date
hereof to the extent the Administrative Agent has no written notice thereof from
a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Credit Card Receivables in the good faith determination of the
Administrative Agent. Any Credit Card Receivables which are not Eligible Credit
Card Receivables shall nevertheless be part of the Collateral.

“Eligible Inventory” shall mean, as to each Borrower, Inventory consisting of
finished goods held for resale in the ordinary course of the business of such
Borrower but shall not include: (a) work-in-process; (b) raw materials;
(c) spare parts for equipment; (d) packaging and shipping materials;
(e) supplies used or consumed in such Borrower’s business; (f) Inventory (other
than In-Transit Inventory as described in clause (n) below) at premises other
than those owned or leased and controlled by any Borrower; provided, that,
(i) as to retail store locations (including factory store locations) which are
leased by a Borrower, Administrative Agent may, at its option, establish
Reserves in respect of rental payments and other amounts in respect of such
leased location, (ii) as to all other locations leased by any Borrower, if the
Administrative Agent shall not have received a Collateral Access Agreement from
the owner and lessor with respect to such location, duly authorized, executed
and delivered by such owner and lessor (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
Administrative Agent), the Administrative Agent may, at its option, upon notice
to any Borrower or Borrower Agent, establish such Reserves in respect of amounts
at any time due or to become due to the owner and lessor thereof as
Administrative Agent shall determine and (iii) as to locations owned and
operated by a Person other than a Borrower or 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), Administrative Agent may, at its option, establish such 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; (g) Inventory subject to a
security interest or Lien in favor of any Person other than the Administrative
Agent except those permitted in this Agreement that are subordinate to the
security interest of the Administrative Agent pursuant to an intercreditor
agreement in form and substance satisfactory to the Administrative Agent between
the Administrative Agent and the holder of such other security interest or Lien;
(h) bill and hold goods; (i) obsolete or slow moving Inventory; (j) Inventory
which is not subject to the first priority, valid and perfected security
interest of the Administrative Agent; (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 the Administrative Agent shall have received
or conducted (i) appraisals, from appraisers reasonably satisfactory to the
Administrative Agent, of such Inventory to be acquired in such Acquisition and
(ii) such other due diligence as the Administrative Agent may reasonably
require, all of the results of the foregoing to be reasonably satisfactory to
the Administrative Agent (so long as the Administrative Agent has received
reasonable prior notice of such Permitted 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) and
(o) In-Transit Inventory (other than In-Transit Inventory the purchase of which
is financed with Letters of Credit hereunder which shall be deemed Eligible
Inventory).

 

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Notwithstanding the foregoing, Eligible Inventory shall at any given time be
deemed to include an amount equal to the aggregate undrawn amount of Documentary
Letters of Credit at such time. General criteria for Eligible Inventory may only
be changed and any new criteria for Eligible Inventory may only be established
by Administrative Agent in good faith, upon notice to Borrower Agent, based on
either: (i) an event, condition or other circumstance arising after the date
hereof, or (ii) existing on the date hereof to the extent the Administrative
Agent has no written notice thereof from the Borrower Agent prior to the date
hereof, in either case under clause (i) or (ii) which adversely affects or could
reasonably be expected to adversely affect the Inventory in the good faith
determination of Administrative Agent. Any Inventory which is not Eligible
Inventory shall nevertheless be part of the Collateral.

“Eligible Real Property” shall mean, as to any Borrower, Real Property owned by
such Borrower in fee simple but shall not include: (i) Real Property which is
not operated by a Borrower except as the Administrative Agent may otherwise
agree; (ii) Real Property subject to a security interest, Lien, mortgage or
other encumbrance in favor of any person other than the Administrative Agent
(and other than those permitted under Section 8.2 (Liens, Etc.) hereof or are
subject to an intercreditor agreement in form and substance satisfactory to the
Administrative Agent between the holder of such Lien and Administrative Agent);
(iii) Real Property that is not located in the continental United States of
America; (iv) Real Property that is not subject to the valid and enforceable,
first priority, perfected security interest, Lien and Mortgage of the
Administrative Agent; (v) Real Property where the Administrative Agent
reasonably determines that issues relating to compliance with Environmental Laws
adversely affect such Real Property in such manner that such Real Property would
not be acceptable for purposes of including it in the calculation of the
Borrowing Base based on the customary practices, procedures and policies of
Administrative Agent and its Affiliates; (vi) Real Property improved with
residential housing; (vii) if reasonably requested by Administrative Agent, Real
Property for which Administrative Agent shall not have received a then current
environmental audit conducted by an independent environmental engineering firm
reasonably acceptable to the Administrative Agent (based on the Administrative
Agent’s list of approved firms) and in form, scope, substance and methodology
reasonably satisfactory to the Administrative Agent, the results of which are
satisfactory to the Administrative Agent; (viii) if requested by the
Administrative Agent, Real Property for which the Administrative Agent shall not
have received, in form and substance reasonably satisfactory to the
Administrative Agent, a valid and effective title insurance policy (whether in
the form of a pro form policy or a marked up title policy commitment) issued by
a company reasonably acceptable to the Administrative Agent: (A) insuring the
priority, amount and sufficiency of the Mortgage with respect to such Real
Property, (B) insuring against matters that would be disclosed by surveys and
(C) containing any legally available endorsements, assurances or affirmative
coverage reasonably requested by the Administrative Agent for protection of its
interests and which the Borrowers can obtain on commercially reasonable terms or
(ix) any Real Property acquired by any Loan Party after the Effective Date which
the Administrative Agent shall not have received an appraisal with respect to
such parcel in form and substance satisfactory to the Administrative Agent and
performed by an appraiser that is satisfactory to the Administrative Agent. Any
Real Property subject to a Mortgage that is not Eligible Real Property shall
nevertheless be part of the Collateral.

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

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

 

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

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

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

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

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

“ERISA Affiliate” means, collectively, any Loan Party, and any Person under
common control or treated as a single employer. with any Loan Party, within the
meaning of Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” means (a) a reportable event described in Section 4043(b) (or,
unless the 30-day notice requirement has been duly waived under the applicable
regulations, Section 4043(c) of ERISA) with respect to a Title IV Plan, (b) the
withdrawal of any ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer, as defined
in Section 4001(a)(2) of ERISA, (c) the complete or partial withdrawal of any
ERISA Affiliate from any Multiemployer Plan, (d) with respect to any
Multiemployer Plan, the filing of notice of reorganization, insolvency or
termination (or treatment of a plan amendment as termination) under
Section 4041A of ERISA, (e) the filing of a notice of intent to terminate a
Title IV Plan (or the treatment of a plan amendment as termination) under
Section 4041 of ERISA, (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC, (g) the failure to make any
required contribution to a Title IV Plan or Multiemployer Plan, (h) the
imposition of a Lien under Section 412 of the Code or

 

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Section 302 or 4068 of ERISA on any property (or rights to property, whether
real or personal) of any ERISA Affiliate, (i) the loss of the tax-qualified
status of a Benefit Plan or any related trust under Section 401 or 501 of the
Code or (j) any other event or condition that might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or the imposition of any liability upon any ERISA Affiliate under Title IV of
ERISA other than for PBGC premiums due but not delinquent.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board.

“Eurodollar Base Rate” means, with respect to any Interest Period for any
Eurodollar Rate Loan, the rate of interest determined by the Administrative
Agent to be the rate per annum at which deposits in Dollars are offered by the
principal office of Citibank in London to major banks in the London interbank
market at 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the Eurodollar Rate
Loan of Citibank for a period equal to such Interest Period.

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

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

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

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

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

“Excluded Foreign Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary in respect of which either (a) the pledge of all of the Stock of such
Subsidiary as Collateral to secure payment of the Obligations of the Loan
Parties, (b) the grant of a Lien on any of its property as Collateral to secure
payment of the Obligations of the Loan Parties or (c) the guaranteeing by such
Subsidiary of the Obligations of the Loan Parties, would, in the good faith

 

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judgment of the Borrowers based on an analysis reasonably satisfactory to the
Administrative Agent, result in materially adverse tax consequences to Holdings
and its Subsidiaries, taken as a whole; provided, however, that no such
Subsidiary shall be an Excluded Foreign Subsidiary if, with substantially
similar tax consequences, such Subsidiary has entered into Guaranty Obligations
in respect of, such Subsidiary has granted a security interest in any of its
property to secure, or more than 66% of the voting power of the Stock of such
Subsidiary has been pledged to secure, directly or indirectly, any obligations
under the Term Loan Facility or any Indebtedness (other than the Obligations) of
any Loan Party.

“Existing Credit Agreement” has the meaning assigned to such term in the
preamble to this Agreement.

“Existing Loan Documents” means the “Financing Agreements” under and as defined
in the Existing Credit Agreement.

“Existing Revolving Loans” means the “Revolving Loans” under and as defined in
the Existing Credit Agreement.

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

“Facility Increase” has the meaning specified in Section 2.18(a) (Facility
Increase).

“Facility Increase Effective Date” has the meaning specified in Section 2.18(b)
(Facility Increase).

“Fair Market Value” means (a) with respect to any asset or group of assets
(other than a marketable Security) at any date, the value of the consideration
obtainable in a sale of such asset at such date assuming a sale by a willing
seller to a willing purchaser dealing at arm’s length and arranged in an orderly
manner over a reasonable period of time having regard to the nature and
characteristics of such asset, as reasonably determined by the Board of
Directors of the Borrower Agent (or if less than $5,000,000, by the chief
financial officer) or, if such asset shall have been the subject of a relatively
contemporaneous appraisal by an independent third party appraiser, the basic
assumptions underlying which have not materially changed since its date, the
value set forth in such appraisal and (b) with respect to any marketable
Security at any date, the closing sale price of such Security on the Business
Day next preceding such date, as appearing in any published list of any national
securities exchange or the NASDAQ Stock Market or, if there is no such closing
sale price of such Security, the final price for the purchase of such Security
at face value quoted on such Business Day by a financial institution of
nationally recognized standing regularly dealing in Securities of such type.

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

 

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

“Fee Letter” shall mean the letter dated as of May 4, 2007, addressed to
Holdings from Citigroup Global Markets, Inc. and accepted by the Borrowers on
May 4, 2007, with respect to certain fees to be paid from time to time to
Citigroup Global Markets, Inc. and the Syndication Agents and the Lenders.

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

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

“Financing Agreements” means, collectively, this Agreement, the Revolving Credit
Notes (if any), the Guaranty, the Fee Letter, each Letter of Credit
Reimbursement Agreement, the Collateral Documents, the Intercreditor Agreement
and each certificate, agreement or document executed by a Loan Party and
delivered to the Administrative Agent or any Lender in connection with or
pursuant to any of the foregoing.

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

“Fiscal Year” means the fiscal year of Holdings 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 period,
the ratio of (a) EBITDA of such Person for such period to (b) the Fixed Charges
of such Person for such period.

“Fixed Charges” means, with respect to any Person for any period, the sum,
determined on a Consolidated basis, of (a) the Cash Interest Expense of such
Person and its Subsidiaries for such period, (b) scheduled payments of principal
on Indebtedness of such Person and its Subsidiaries having a scheduled due date
during such period, (c) all cash dividends paid by such Person and its
Subsidiaries on Stock in respect of such period to Persons other than such
Person and its Subsidiaries, (d) all Capital Expenditures (excluding Capital
Expenditures financed with the proceeds of Indebtedness permitted under
Section 8.1(i) and insurance proceeds obtained in connection with property,
plant and equipment) and (e) the cash portion of any Provision for Taxes paid in
such period (net of any tax refunds paid to any Loan Party) and unpaid amounts
of any Provision for Taxes the last date for payment of which before becoming
past due occurs during such period.

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

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

 

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

“Governmental Authority” means any nation, sovereign or government, any state or
other political subdivision thereof and any entity or authority exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any central bank or stock exchange and any
supranational bodies such as the European Union or the European Central Bank.

“Guarantors” means Holdings and each Subsidiary Guarantor.

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

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

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

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

“Inactive Subsidiary” means any Subsidiary, direct or indirect, that (a) has
total assets not in excess of $50,000; (b) conducts no business; and (c) has no
Indebtedness; provided,

 

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that, if more than one Subsidiary is deemed an Inactive Subsidiary pursuant to
this definition, all Inactive Subsidiaries shall be considered to be a single
Consolidated Subsidiary for purposes of determining whether the conditions
specified above are satisfied.

“Indebtedness” means, with respect to any Person, any liability, whether or not
contingent, (a) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments;
(b) representing the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an account
payable to a trade creditor (whether or not an Affiliate) created, incurred,
assumed or guaranteed by such Person in the ordinary course of business of such
Person in connection with obtaining goods, materials or services that is not
overdue by more than ninety (90) days, unless the trade payable is being
contested in good faith); (c) all Capital Lease Obligations; (d) any contractual
obligation, contingent or otherwise, of such Person to pay or be liable for the
payment of any indebtedness described in this definition of another Person,
including, without limitation, any such indebtedness, directly or indirectly
guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such
indebtedness, obligation or liability or any security therefor, or to provide
funds for the payment or discharge thereof, or to maintain solvency, assets,
level of income, or other financial condition; (e) all reimbursement obligations
of such Person with respect to letters of credit, banker’s acceptances, drafts
or similar documents or instruments issued for such Person’s account; (f) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual Lien, on any asset of such Person,
whether or not such obligations, liabilities or indebtedness are assumed by or
are a personal liability of such Person, all as of such time; provided, that, to
the extent that such Indebtedness is non-recourse to such Person, the amount of
such Indebtedness shall not be deemed to exceed the lesser of the amount of such
Indebtedness and the value of the assets securing such Indebtedness; and (g) all
obligations of such Person in respect of any Hedging Contracts; provided that,
(x) in no event shall obligations with respect to any Hedging Contract be deemed
“Indebtedness” for any purpose except as provided in the following clause (y),
and (y) all Indebtedness referred to in the preceding clause (x) of any Person
shall be zero unless and until there is an early termination event (or
equivalent) under such Hedging Contract, in which case, for purposes of
Section 9.1(e), the amount of such Indebtedness shall be the termination payment
due thereunder by such Person.

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

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

“Initial Inventory Appraisals” means that certain report prepared by Great
American Group for Citigroup Global Markets, Inc. and titled “Inventory
Valuation and Appraisal-April 2007 (Inventory as of February 3, 2007)”.

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as
of May 15, 2006, by and among Holdings, the Borrowers, Goldman Sachs Credit
Partners L.P., administrative agent and collateral agent for the holders of the
Term Loan Facility, the lenders party thereto, and the Existing Administrative
Agent, in the form attached hereto as Exhibit N.

“Interest Expense” means, for any Person for any period, (a) Consolidated total
interest expense of such Person and its Subsidiaries for such period and
including, in any event, interest capitalized during such period and net costs
under Interest Rate Contracts for such period

 

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minus (b) Consolidated net gains of such Person and its Subsidiaries under
Interest Rate Contracts for such period and minus (c) any Consolidated interest
income of such Person and its Subsidiaries for such period.

“Interest Period” means, in the case of any Eurodollar Rate Loan, (a) initially,
the period commencing on the date such Eurodollar Rate Loan is made or on the
date of conversion of a Base Rate Loan to such Eurodollar Rate Loan and ending
one, two, three or six months thereafter (or if deposits of such duration are
available to all Revolving Credit Lenders, nine or twelve months thereafter), as
selected by the Borrower Agent in its Notice of Borrowing or Notice of
Conversion or Continuation given to the Administrative Agent pursuant to
Section 2.2 (Borrowing Procedures) or 2.11 (Conversion/Continuation Option) and
(b) thereafter, if such Loan is continued, in whole or in part, as a Eurodollar
Rate Loan pursuant to Section 2.11 (Conversion/Continuation Option), a period
commencing on the last day of the immediately preceding Interest Period therefor
and ending one, two, three or six months thereafter (or if deposits of such
duration are available to all Revolving Credit Lenders, nine or twelve months
thereafter), as selected by the Borrower Agent in its Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.11
(Conversion/Continuation Option); provided, however, that all of the foregoing
provisions relating to Interest Periods in respect of Eurodollar Rate Loans are
subject to the following:

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

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

(iii) the Borrower Agent may not select any Interest Period that ends after the
Scheduled Termination Date or any date on which the Borrower Agent indicated
that it intends to terminate the Revolving Credit Commitments in accordance with
Section 2.5 (Reduction and Termination of the Revolving Credit Commitments);

(iv) the Borrower Agent may not select any Interest Period in respect of Loans
having an aggregate principal amount of less than $1,000,000; and

(v) there shall be outstanding at any one time no more than eight (8) Interest
Periods in the aggregate.

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

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

 

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

“Investment” means, with respect to any Person, (a) any purchase or other
acquisition by such Person of (i) any Security issued by, or (ii) a beneficial
interest in any Security issued by, any other Person, (b) any loan, advance
(other than deposits with financial institutions available for withdrawal on
demand, prepaid expenses, accounts receivable and similar items made or incurred
in the ordinary course of business as presently conducted) or capital
contribution by such Person to any other Person, including all Indebtedness of
any other Person to such Person arising from a sale of property by such Person
other than in the ordinary course of its business and (c) any Guaranty
Obligation incurred by such Person in respect of Indebtedness of any other
Person.

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

“Issue” means, with respect to any Letter of Credit, to issue, extend the expiry
of, 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” and “Issuance” shall have a corresponding meaning.

“Issuer” means each Lender or Affiliate of a Lender that (a) is listed on the
signature pages hereof as an “Issuer” or (b) hereafter becomes an Issuer with
the approval of the Administrative Agent and the Borrower Agent by agreeing
pursuant to an agreement with and in form and substance satisfactory to the
Administrative Agent and the Borrower Agent to be bound by the terms hereof
applicable to Issuers.

“J. Crew Card” shall mean the private label credit card issued by World
Financial Network National Bank pursuant to the Credit Card Agreement of
Operating with such bank (or any subsequent Credit Card Issuer with respect to
such private label credit card) to customers or prospective customers of
Borrowers.

“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 Acceptance or, in connection with a Facility
Increase, a Lender Joinder Agreement.

“Lender Joinder Agreement” means a joinder agreement substantially in the form
attached hereto as Exhibit M (Form of Lender Joinder Agreement) or such other
form as may be reasonably acceptable to the Administrative Agent.

“Letter of Credit” means any letter of credit Issued (or deemed Issued) pursuant
to Section 2.4 (Letters of Credit).

 

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“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.

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

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

“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, deed of trust, pledge, hypothecation, collateral
assignment, charge, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever giving rise to an
interest in property and intended to assure payment of any Indebtedness or the
performance of any other obligation, including any conditional sale or other
title retention agreement or the interest of a lessor under a Capital Lease.

“Loan” means any loan made by any Lender pursuant to this Agreement, including,
without limitation, Swing Loans.

“Loan Party” means each of Holdings, the Borrowers, each Subsidiary Guarantor
and each other Subsidiary of the Borrowers that executes and delivers a
Financing Agreement.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, business, performance or operations of Holdings and its
Subsidiaries, taken as a whole, (b) the perfection or priority of the security
interests and Liens of Administrative Agent upon the Collateral; (c) the
Collateral or its value, (d) the ability of Borrowers to repay the Obligations
or of Borrowers or Guarantors to perform their obligations under this Agreement
or any of the other Financing Agreements as and when to be performed; or (e) the
ability of the Administrative Agent or any Lender to enforce the Obligations or
realize upon the Collateral or otherwise with respect to the material rights and
remedies of the Administrative Agent and Lenders under this Agreement or any of
the other Financing Agreements (taken as a whole).

“Material Domestic Subsidiary” means a Domestic Subsidiary that is not a
Non-Material Domestic 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
minus the aggregate amount of any Reserve in effect at such time.

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

“Mortgage Supporting Documents” means, with respect to a Mortgage for a parcel
of Real Property, title policies or marked-up unconditional insurance binders
(in each case, together with copies of all documents referred to therein), ALTA
(or TLTA, if applicable) as-built

 

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surveys (in form and as to date that is sufficiently acceptable to the title
insurer issuing title insurance to the Administrative Agent for such title
insurer to deliver endorsements to such title insurance as reasonably requested
by the Administrative Agent), copies of all existing environmental assessments
and reports, an opinion of counsel regarding the validity and enforceability of
each mortgage in each jurisdiction where a Mortgage is granted, in form and
substance reasonably satisfactory to the Administrative Agent and evidence of
payment of fees, insurance premiums and taxes due, as set forth on an invoice of
each applicable title insurer to create, register and perfect a valid Lien on
such parcel of Real Property in favor of the Administrative Agent for the
benefit of the Secured Parties, subject only to Liens permitted under
Section 8.2 or other Liens as the Administrative Agent may approve.

“Mortgages” means the mortgages, deeds of trust or other real estate security
documents made or required herein to be made by the Borrowers or any other Loan
Party, each in form consistent with those delivered under the Existing Credit
Agreement prior to the Effective Date.

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrowers, any of their Subsidiaries
or any ERISA Affiliate has any obligation or liability, contingent or otherwise.

“Net Cash Proceeds” means, (a) with respect to any Asset Sale, an amount equal
to (i) cash or Cash Equivalents (including any cash or 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) received by any Loan Party from
such Asset Sale, minus (ii) any bona fide direct costs incurred in connection
with such Asset Sale, including (x) income or gains taxes payable by the seller
as a result of any gain recognized in connection with such Asset Sale,
(y) payment of the outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Obligations) that is secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale and (z) a reasonable
reserve for any indemnification payments (fixed or contingent) attributable to
seller’s indemnities and representations and warranties to purchaser in respect
of such Asset Sale undertaken by any Loan Party in connection with such Asset
Sale and (b) with respect to any Property Loss Event, an amount equal to
(i) cash or Cash Equivalents received by any Loan Party (x) under any casualty
insurance policy in respect of a covered loss thereunder or (y) as a result of
the taking of any assets of any Loan Party by any Person pursuant to the power
of eminent domain, condemnation or otherwise, or pursuant to a sale of any such
assets to a purchaser with such power under threat of such a taking, minus
(ii)(x) any actual and reasonable costs incurred by any Loan Party in connection
with the adjustment or settlement of any claims in respect thereof (including
any legal, accounting and advisory fees, and brokerage and sales commissions),
and (y) any bona fide direct costs (including any legal, accounting and advisory
fees, and brokerage and sales commissions) incurred in connection with any sale
of such assets as referred to in the immediately preceding subclause (y) of this
clause (b), including income taxes payable as a result of any gain recognized in
connection therewith.

“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 6.11, 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

 

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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 6.11(b).

“Non-Cash Interest Expense” means, with respect to any Person for any period,
the sum of the following amounts to the extent included in the definition of
Interest Expense (a) the amount of debt discount and debt issuance costs
amortized, (b) charges relating to write-ups or write-downs in the book or
carrying value of existing Indebtedness, (c) interest payable in evidences of
Indebtedness or by addition to the principal of the related Indebtedness and
(d) other non-cash interest.

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

“Non-Funding Lender” has the meaning specified in Section 2.2(d) (Borrowing
Procedures).

“Non-Material Domestic Subsidiary” means any Domestic Subsidiary the assets of
which do not have a Fair Market Value in excess of $5,000,000; provided,
however, the aggregate Fair Market Value of all assets held by all Non-Material
Domestic Subsidiaries shall not exceed $25,000,000.

“Non-U.S. Lender” means each Lender (or the Administrative Agent) and each
Issuer that is a foreign person as defined in Treasury Regulations
Section 1.1441-1(c)(2).

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

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

“Obligations” means the Loans, the Letter of Credit Obligations and all other
amounts, obligations, covenants and duties owing by the Borrowers to the
Administrative Agent, any Lender, any Issuer, any Affiliate of any of them or
any Indemnitee, of every type and description (whether by reason of an extension
of credit, opening or amendment of a letter of credit or payment of any draft
drawn or other payment thereunder, loan, guaranty, indemnification, foreign
exchange or currency swap transaction, interest rate hedging transaction or
otherwise), present or future, arising under this Agreement, any other Financing
Agreement, Cash Management Documents and Hedging Contracts entered into with a
Lender or an Affiliate of a Lender at a time when such Person (or its Affiliate)
was a Lender, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired and whether or not evidenced by any note,
guaranty or other instrument or for the payment of money, including all letter
of credit, cash management and, whether or not allowed to accrue in any
insolvency proceeding, other fees, interest, charges, expenses, attorneys’ fees
and disbursements, Cash Management Obligations and other sums chargeable to the
Borrowers under this Agreement, any other Financing Agreement, any Cash
Management Documents and any Hedging Contracts entered into with a Lender or an
Affiliate of a Lender at a time when such Person (or its Affiliate) was a
Lender, and all obligations of the Borrowers under any Financing Agreement to
provide cash collateral for any Letter of Credit Obligation.

 

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“Other Taxes” has the meaning specified in Section 2.16(b) (Taxes).

“Participant” has the meaning specified in Section 11.2(g).

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

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

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

“Permitted Acquisition” means any Acquisition by Holdings or any of its
Wholly-Owned Subsidiaries; provided, that:

(i) immediately prior to, and immediately after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom;

(ii) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable governmental authorizations;

(iii) in the case of the Acquisition of Stock of a Person, all of the Stock
(except for any such Securities in the nature of directors’ qualifying shares
required pursuant to applicable law) acquired or otherwise issued by such Person
or any newly formed Subsidiary of Holdings in connection with such Acquisition
shall be owned 100% by Holdings or a Subsidiary thereof, and Holdings shall have
taken, or caused to be taken, as of the date such Person becomes a Subsidiary of
Holdings, each of the actions set forth in Sections 7.11 and/or 7.14, as and
when applicable;

(iv) If Holdings was required to comply with the financial covenant contained in
Article V as of the last day of the Fiscal Quarter then most recently ended,
Holdings and its Subsidiaries would have been in compliance with such financial
covenant on a Pro Forma Basis after giving effect to such Acquisition as of the
last day of the Fiscal Quarter then most recently ended;

(v) Borrower Agent shall have delivered to the Administrative Agent (A) at least
5 Business Days prior to the date of consummation of such proposed Acquisition,
a Compliance Certificate evidencing compliance with Section 5.1 if required
under clause (iv) above, and (B) general information with respect to such
Acquisition as the Administrative Agent may reasonably request, including,
without limitation, the aggregate consideration for such Acquisition; and

(vi) Excess Availability, determined on a Pro Forma Basis after giving effect to
such Acquisition, shall not be less than $20,000,000.

“Permitted Holders” means, collectively, (a) TPG Partners II, L.P. and its
Affiliates, (b) Millard S. Drexel and his immediate family members, (c) Emily
Woods and her immediate family members and (d) trusts for the benefit of any of
the forgoing Persons, or any of their heirs, executors, successors or legal
representatives.

 

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“Permitted Refinancing” means renewals, extensions, refinancings and refundings
of Indebtedness permitted by Section 8.1(h), (i) or (j) that (a) are in an
aggregate principal amount not greater than the principal amount of, and is on
terms no less favorable to the Borrowers or any Subsidiary of the Borrowers
obligated thereunder and (b) either have a weighted average maturity and final
maturity (measured as of the date of such renewal, refinancing, extension or
refunding) not shorter than that of such Indebtedness or the maturity thereof is
after the Scheduled Termination Date.

“Permitted Seller Note” means a promissory note which is payable no earlier than
the Scheduled Termination Date, containing subordination and other related
provisions reasonably acceptable to the Administrative Agent, representing
Indebtedness of Holdings or any of its Subsidiaries incurred in connection with
any Permitted Acquisition and payable to the seller in connection therewith.

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

“Pledge and Security Agreement” means the Amended and Restated Pledge and a
Security Agreement, in substantially the form of Exhibit I (Form of Pledge and
Security Agreement), executed by Holdings, each Borrower and each Subsidiary
Guarantor.

“Pledged Debt Instruments” has the meaning ascribed to such term in the Pledge
and Security Agreement.

“Pledged Stock” has the meaning ascribed to such term in the Pledge and Security
Agreement.

“Pro Forma Basis” means, with respect to any determination for any period, that
such determination shall be made giving pro forma effect to each Acquisition
consummated during such period, together with all transactions relating thereto
consummated during such period (including any incurrence, assumption,
refinancing or repayment of Indebtedness), as if such Acquisition and related
transactions had been consummated on the first day of such period, in each case
based on historical results accounted for in accordance with GAAP and, to the
extent applicable, reasonable assumptions that are specified in details in the
relevant Compliance Certificate, Financial Statement or other document provided
to the Administrative Agent or any Lender in connection herewith in accordance
with Regulation S-X of the Securities Act of 1933.

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

“Property Loss Event” means (a) any loss of or damage to property of any Loan
Party or any of its Subsidiaries that results in the receipt by such Person of
proceeds of insurance which exceeds $5,000,000 (individually or in the
aggregate) or (b) any taking of property of any Loan Party or any of its
Subsidiaries pursuant to the power of eminent domain, condemnation or other
similar power of a Governmental Authority that results in the receipt by such
Person of a compensation payment in respect thereof which exceeds $5,000,000
(individually or in the aggregate).

 

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“Protective Advances” means all expenses, disbursements and advances incurred by
the Administrative Agent pursuant to the Financing Agreements after the
occurrence and during the continuance of a Default or Event of Default that the
Administrative Agent, in its sole discretion, deems necessary or desirable to
preserve or protect the Collateral or any portion thereof or to enhance the
likelihood, or maximize the amount, of repayment of the Obligations.

“Provision for Taxes” shall mean an amount equal to all taxes imposed on or
measured by net income, whether Federal, State, Provincial, county or local, and
whether foreign or domestic, that are paid or payable by any Person in respect
of any period in accordance with GAAP.

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

“Qualified Cash” means unrestricted cash or Cash Equivalents of Borrowers that
are subject to the valid, enforceable and first priority perfected security
interest of the Administrative Agent in a Control Account or subject to an
Approved Deposit Account, and which cash and Cash Equivalents are not subject to
any other Lien, claim, except to the extent that the holder of any of the same
has entered into an intercreditor agreement with the Administrative Agent, in
form and substance reasonably satisfactory to the Administrative Agent (other
than 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 such institution and Borrowers shall provide
such information with respect to such obligations as the Administrative Agent
may from time to time request).

“Quarterly Excess Availability” means, for any Fiscal Quarter in any Fiscal
Year, the average amount of Excess Availability on any date that occurs during
that period.

“Ratable Portion” or (other than in the expression “equally and ratably”)
“ratably” means, with respect to any Lender, the percentage obtained by dividing
(a) the Revolving Credit Commitment of such Lender by (b) the aggregate
Revolving Credit Commitments of all Lenders (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 owing to such
Lender by the aggregate outstanding principal balance of the Revolving Credit
Outstandings owing to all Lenders).

“Real Property” shall mean all now owned and hereafter acquired real property of
each Borrower and Guarantor, including leasehold interests (other than with
respect to retail store locations (including factory store locations)), together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located,
including the real property and related assets more particularly described in
the Mortgages.

“Register” has the meaning specified in Section 2.7(b) (Evidence of Debt).

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

 

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“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 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 Obligations” has the meaning specified in Section 10.9 (Collateral
Matters Relating to Related Obligations)

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

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

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

“Requisite Lenders” means, collectively, Lenders having more than 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. A Non-Funding Lender shall
not be included in the calculation of “Requisite Lenders.”

“Reserves” means, as of two Business Days after the date of written notice of
any determination thereof to the Borrower Agent by the Administrative Agent,
such amounts as the Administrative Agent may from time to time establish against
the Facility, in the Administrative Agent’s reasonable discretion and in
accordance with customary business practices for comparable asset based
transactions (a) in order either (i) to preserve the value of the Collateral or
the Administrative Agent’s Lien thereon or (ii) to provide for the payment of
unanticipated liabilities of any Loan Party arising after the Effective Date and
(b) in order to establish from time to time against the gross amounts of
Eligible Credit Card Receivables, Eligible Inventory (including In-Transit
Inventory) and Eligible Real Property to reflect risks or contingencies arising
after the Effective Date that may affect any one or more class of such items in
any material respect and that have not already been taken into account in the
calculation of the Borrowing Base.

 

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“Responsible Officer” means, with respect to any Person, any of the chief
executive officer, chief financial officer or vice president-controller of such
Person (or if such Person is a limited liability company or limited partnership,
the managing members or general partners, as applicable of such Person) but, in
any event, with respect to financial matters, the chief financial officer of
such Person.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of Stock
of Holdings, Operating or any Subsidiary of either of them, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of Stock of
Holdings, Operating or any Subsidiary or any option, warrant or other right to
acquire any such shares of Stock of Holdings, Operating or any such Subsidiary.

“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 in the aggregate principal amount outstanding not to exceed the
amount set forth opposite such Lender’s name on Schedule I (Revolving Credit
Commitments) under the caption “Revolving Credit Commitment,” as amended to
reflect each Assignment and Acceptance executed by such Lender and as such
amount may be reduced pursuant to this Agreement.

“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 each 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 such Borrower to such Lender resulting from the Loans 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” shall mean 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 (Reduction and Termination of the Revolving
Credit Commitments) and (c) the date on which the Obligations become due and
payable pursuant to Section 9.2 (Remedies).

“Revolving Loan” has the meaning specified in Section 2.1 (The Revolving Credit
Commitments).

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

“Scheduled Termination Date” means May 4, 2013.

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

 

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

“Securities Account” has the meaning given to such term in Article 8 of the UCC.

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

“Securities Intermediary” has the meaning given to such term in Article 8 of the
UCC.

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

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

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

“Special Purpose Vehicle” means any special purpose funding vehicle identified
as such in writing by any Lender to the Administrative Agent.

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

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

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

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

 

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“Subsidiary Guarantor” means each Domestic Subsidiary of Holdings party to or
that becomes party to the Guaranty.

“Substitute Institution” has the meaning specified in Section 2.17 (Substitution
of Lenders).

“Substitution Notice” has the meaning specified in Section 2.17 (Substitution of
Lenders).

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

“Swing Loan Lender” means Citicorp or any other Revolving Credit Lender that
becomes the Administrative Agent or agrees, with the approval of the
Administrative Agent and the Borrowers, to act as the Swing Loan Lender
hereunder, in each case in its capacity as the Swing Loan Lender hereunder.

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

“Swing Loan Sublimit” means $20,000,000.

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

“Tax Affiliate” means, with respect to any Person, (a) any Subsidiary of such
Person and (b) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns.

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

“Taxes” has the meaning specified in Section 2.16(a) (Taxes).

“Term Loan Collateral” has the meaning specified in the Intercreditor Agreement.

“Term Loan Documents” means, collectively, each agreement, certificate or other
document executed by a Loan Party in connection with or pursuant to any portion
of the Term Loan Facility.

“Term Loan Facility” means that certain Credit and Guaranty Agreement, dated as
of May 15, 2006, by and among Operating as borrower, Holdings and other
subsidiaries of Holdings as guarantors, Goldman Sachs Credit Partners LP, as the
administrative agent and the collateral agent, Goldman Sachs Credit Partners LP
and Bear, Stearns & Co. Inc., as joint lead arrangers and joint bookrunners, the
lenders party thereto.

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

 

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“Treasury Regulations” means the final and temporary (but not proposed) income
tax regulations promulgated under the Code, as such regulations may be amended
form time to time (including corresponding provisions of succeeding
regulations).

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

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

“Value” shall mean, as determined by the Administrative Agent in good faith,
with respect to Inventory, the lower of (a) cost (computed on a first-in
first-out basis in accordance with GAAP) and (b) market value; provided, that,
for purposes of the calculation of the Borrowing Base, (i) the Value of the
Inventory shall not include: (A) the portion of the Value of Inventory equal to
the profit earned by any Affiliate on the sale thereof to any Borrower or
(B) write-ups or write-downs in value with respect to currency exchange rates
and (ii) notwithstanding anything to the contrary contained herein, the cost of
the Inventory shall be computed in the same manner and consistent with the most
recent appraisal of the Inventory received by the Administrative Agent prior to
the date hereof, if any.

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

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

“Withdrawal Liability” means, at any time, any liability incurred (whether or
not assessed) by any ERISA Affiliate and not yet satisfied or paid in full at
such time with respect to any Multiemployer Plan pursuant to Section 4201 of
ERISA.

Section 1.2 Computation of Time Periods

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

Section 1.3 Accounting Terms and Principles

(a) Except as set forth below, all accounting terms not specifically defined
herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto (including for purpose of
measuring compliance with Article V (Financial Covenants)) shall, unless
expressly otherwise provided herein, be made in conformity with GAAP.

(b) If any change in the accounting principles used in the preparation of the
most recent Financial Statements referred to in Section 6.1 (Financial
Statements) is hereafter required or permitted by the rules, regulations,
pronouncements and opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or any

 

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successors thereto) and such change is adopted by the Borrowers and results in a
change in any of the calculations required to determine ongoing compliance with
Article V (Financial Covenants) or Article VIII (Negative Covenants) that would
not have resulted had such accounting change not occurred, the parties hereto
agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such change such that the criteria for evaluating compliance
with such covenants by the Borrowers shall be the same after such change as if
such change had not been made; provided, however, that no change in GAAP that
would affect a calculation that measures compliance with any covenant contained
in Article V (Financial Covenants) or Article VIII (Negative Covenants) shall be
given effect until such provisions are amended to reflect such changes in GAAP.

(c) For purposes of making all financial calculations to determine compliance
with Article V (Financial Covenants) or Article VIII (Negative Covenants), all
components of such calculations shall be adjusted to include or exclude, as the
case may be, without duplication, such components of such calculations
attributable to any business or assets that have been acquired by the Loan Party
(including through Permitted Acquisitions) after the first day of the applicable
period of determination and prior to the end of such period, as determined in
good faith by the Borrowers on a Pro Forma Basis.

Section 1.4 Conversion of Foreign Currencies

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

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

Section 1.5 Certain Terms

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

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

 

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

(d) References in this Agreement to any statute shall be to such statute as
amended or modified from time to time and to any successor legislation thereto,
in each case as in effect at the time any such reference is operative.

(e) The term “including” when used in any Financing Agreement means “including
without limitation” except when used in the computation of time periods.

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

ARTICLE II

THE FACILITY

Section 2.1 The Revolving Credit Commitments

On the terms and subject to the conditions contained in this Agreement, each
Lender severally agrees to make loans in Dollars (each a “Revolving Loan”) to
the Borrowers 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. On the Effective Date, all Existing Revolving
Loans shall be deemed Loans outstanding under this Agreement.

Section 2.2 Borrowing Procedures

(a) Each Borrowing shall be made on notice given by the Borrower Agent to the
Administrative Agent not later than 11:00 a.m. (New York time) (i) one Business
Day, in the case of a Borrowing of Base Rate Loans, and (ii) three Business
Days, in the case of a Borrowing of Eurodollar Rate Loans, prior to the date of
the proposed Borrowing. Each such notice shall be in substantially the form of
Exhibit C (Form of Notice of Borrowing) (a “Notice of Borrowing”), specifying
(A) the date of such proposed Borrowing, (B) the aggregate amount of such
proposed Borrowing, (C) whether any portion of the proposed Borrowing will be of
Base Rate Loans or Eurodollar Rate Loans, (D) the initial Interest Period or
Periods for any such Eurodollar Rate Loans and (E) the Maximum Credit (after
giving effect to the proposed Borrowing). The Loans shall be made as Base Rate
Loans unless, subject to Section 2.14 (Special Provisions Governing Eurodollar
Rate Loans), the Notice of Borrowing specifies that all or a portion thereof
shall be Eurodollar Rate Loans. Notwithstanding anything to the contrary
contained in Section 2.3(a) (Swing Loans), if any Notice of Borrowing requests a
Borrowing of Base Rate Loans, the Administrative Agent may make a Swing Loan
available to the Borrowers in an aggregate amount not to exceed such proposed
Borrowing, and the aggregate amount of the corresponding proposed Borrowing
shall be reduced accordingly by the principal amount of such Swing Loan. Each
Borrowing shall be in an aggregate amount of not less than $2,000,000 or an
integral multiple of $1,000,000 in excess thereof.

 

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(b) The Administrative Agent shall give to each Lender prompt notice of the
Administrative Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate
Loans are properly requested in such Notice of Borrowing, the applicable
interest rate determined pursuant to Section 2.14(a) (Determination of Interest
Rate). Each Lender shall, before 1:00 p.m. (New York time) on the date of the
proposed Borrowing, make available to the Administrative Agent at its address
referred to in Section 11.8 (Notices, Etc.), in immediately available funds,
such Lender’s Ratable Portion of such proposed Borrowing. Upon fulfillment (or
due waiver in accordance with Section 11.1 (Amendments, Waivers, Etc.)) (i) on
the Effective Date, of the applicable conditions set forth in Section 3.1
(Conditions Precedent to Effective Date) and (ii) at any time (including the
Effective Date), of the applicable conditions set forth in Section 3.2
(Conditions Precedent to Each Loan and Letter of Credit), 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 Borrowers.

(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 Borrowers 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 Borrowers 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 Borrowers until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrowers, the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate for the first Business Day and thereafter at the interest
rate applicable at the time to the Loans comprising such Borrowing. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
corresponding amount so repaid shall constitute such Lender’s Loan as part of
such Borrowing for purposes of this Agreement. If the Borrowers 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 Borrowers.

(d) The failure of any Lender to make on the date specified any Loan or any
payment required by it (such Lender being a “Non-Funding Lender”, if the
Administrative Agent shall have notified the Borrower Agent of such Lender’s
failure to make such payment), 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 no such other Lender shall be responsible for the failure of any Non-Funding
Lender to make a Loan or payment required under this Agreement.

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 Borrowers under the Facility from time to time on any Business
Day during the period

 

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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 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. Each Swing Loan shall be a Base Rate Loan and must be
repaid in full within seven 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. 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 Agent 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 (Form of Swing Loan
Request), 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. (New York time) 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 may make a Swing Loan available to the Administrative Agent and, in
turn, the Administrative Agent shall make such amounts available to the
Borrowers 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 3.2 (Conditions Precedent to Each Loan and Letter
of Credit) 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 3.2 (Conditions Precedent to Each Loan and Letter of Credit) have been
satisfied in connection with the making of any Swing Loan.

(c) [Intentionally Omitted].

(d) 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 (e) 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.

(e) The Administrative Agent shall forward each demand referred to in clause
(d) 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. (New York time) 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 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 3.2 (Conditions
Precedent to Each Loan and Letter of

 

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Credit) and 2.1 (The Revolving Credit Commitments) shall have been satisfied
(which conditions precedent the Lenders hereby irrevocably waive), each Lender
shall, before 11:00 a.m. (New York time) 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 immediately available funds, 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 (f) below, be deemed
to have made a Revolving Loan to the Borrowers in the amount of such payment.
The Administrative Agent shall use such funds to repay the Swing Loans to the
Swing Loan Lender. To the extent that any Lender fails to make such payment
available to the Administrative Agent for the account of the Swing Loan Lender,
such Lender shall be deemed to be a Non-Funding Lender and the Borrowers shall
repay such Swing Loan on demand.

(f) Upon the occurrence of a Default under Section 9.1(f) (Events of Default),
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 (e) 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 (e)
above, in immediately available 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.

(g) From and after the date on which any Lender (i) is deemed to have made a
Revolving Loan pursuant to clause (e) above with respect to any Swing Loan or
(ii) purchases an undivided participation interest in a Swing Loan pursuant to
clause (f) 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 (e) or (f) above.

Section 2.4 Letters of Credit

(a)(x) On the Effective Date all “Letters of Credit” issued under and as defined
in the Existing Credit Agreement shall be deemed to be Letters of Credit issued
and outstanding under this Agreement and (y) on the terms and subject to the
conditions contained in this Agreement, each Issuer agrees to Issue at the
request of the Borrower Agent and for the account of the Borrowers or any of the
Borrowers’ Subsidiaries 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 30 days prior to the
Scheduled Termination Date (or such later date as agreed to by the
Administrative Agent); 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 Requirement of Law applicable
to such Issuer or any request or directive (whether or not having the force of
law) from any

 

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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;

(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, the
aggregate Revolving Credit Outstandings would exceed the Maximum Credit at such
time;

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

(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 such 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.

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 year after the date of issuance thereof; provided, however, that any Letter
of Credit with a term less than or equal to one year may provide for the renewal
thereof for additional periods less than or equal to one year, as long as, on or
before the expiration of each such term and each such period, the Borrowers and
the Issuer of such Letter of Credit shall have the option to prevent such
renewal; and provided, further, that, for any Letter of Credit having an
expiration date after the Scheduled Termination Date, the Borrowers agree to
deliver to the Administrative Agent on or prior to the Scheduled Termination
Date a letter of credit or letters of credit in form and substance acceptable to
the Administrative Agent and issued by a bank acceptable to the Administrative
Agent, in each case in its 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 Agent
shall give the relevant Issuer and the Administrative Agent at least two
Business Days’ prior written notice, in substantially the form of Exhibit E
(Form of Letter of Credit Request) (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 of the Letter of Credit requested, the
date on which such

 

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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. (New York time) on
the last Business Day on which such notice can be given under the first sentence
of this clause (c).

(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 Borrowers 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 3.2
(Conditions Precedent to Each Loan and Letter of Credit) 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 3.2 (Conditions
Precedent to Each Loan and Letter of Credit) have been satisfied in connection
with the Issuance of any Letter of Credit.

(e) The Borrowers agree 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.

(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, of all drawings
under any Letter of Credit Issued by it and of the payment (or the failure to
pay when due) by the Borrowers 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) no later than 10 Business Days following the last day of each calendar
month, provide to the Administrative Agent (and the Administrative Agent shall
provide a copy to each Lender requesting the same) and the Borrowers 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, in each case
outstanding at the end of each month, and any information requested by the
Borrowers 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

 

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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 Borrowers with respect thereto (including all Letter of Credit Obligations
with respect thereto) and any security therefor and guaranty pertaining thereto.

(h) The Borrowers agree to pay to the Issuer of any Letter of Credit the amount
of all Reimbursement Obligations owing to such Issuer under any Letter of Credit
issued for its account no later than the date that is the next succeeding
Business Day after the Borrower Agent receives written notice from such Issuer
that payment has been made under such Letter of Credit in accordance with its
terms (the “Reimbursement Date”), irrespective of any claim, set-off, defense or
other right that the Borrowers 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 Borrowers 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 any such payment by the
Borrowers is rescinded or set aside for any reason, such Reimbursement
Obligation shall be payable 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 Base
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 Base 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 (or the Dollar Equivalent thereof if such payment was made in
any currency other than Dollars) in immediately available Dollars. If the
Administrative Agent so notifies such Lender prior to 11:00 a.m. (New York time)
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 immediately available funds. Upon such payment
by a Lender, such Lender shall, except during the continuance of a Default or
Event of Default under Section 9.1(f) (Events of Default) and notwithstanding
whether or not the conditions precedent set forth in Section 3.2 (Conditions
Precedent to Each Loan and Letter of Credit) shall have been satisfied (which
conditions precedent the Lenders hereby irrevocably waive), be deemed to have
made a Revolving Loan to the Borrowers in the principal amount of such payment.
Whenever any Issuer receives from the Borrowers 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 immediately available funds, 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.

(i) If and to the extent such Lender shall not have so made its Ratable Portion
of the amount of the payment required by clause (h) above available to the
Administrative Agent for the account of such Issuer, such Lender shall be deemed
to be a Non-Funding Lender and such 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 Base Rate Loans under the Facility.

 

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(j) The Borrowers’ 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
Financing Agreement, 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 Financing Agreement;

(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 Financing Agreement 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 the 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 Borrowers or any Lender. In determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof, the Issuer 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 Issuer 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 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 Issuer.

 

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Section 2.5 Reduction and Termination of the Revolving Credit Commitments

The Borrowers may, upon at least three Business Days’ prior notice to the
Administrative Agent, terminate in whole or reduce in part ratably the unused
portions of the respective Revolving Credit Commitments of the Lenders without
premium or penalty other than any amount required to be paid by the Borrowers
pursuant to Section 2.14(e) (Breakage Costs); provided, however, that each
partial reduction shall be in an aggregate amount of not less than $5,000,000 or
an integral multiple of $1,000,000 in excess thereof.

Section 2.6 Repayment of Loans

The Borrowers promise to repay the entire unpaid principal amount of the Loans
and the Swing Loans on the Scheduled Termination Date or earlier, if otherwise
required by the terms hereof.

Section 2.7 Evidence of Debt

(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing Indebtedness of the Borrowers to such Lender resulting
from each Loan of such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement. In addition, each Lender having sold a participation in any of
its Obligations or having identified a Special Purpose Vehicle as such to the
Administrative Agent, acting as agent of the Borrowers solely for this purpose
and for tax purposes, shall establish and maintain at its address referred to in
Section 11.8 (Notices, Etc.) a record of ownership in which such Lender shall
register by book entry (i) the name and address of each such Participant and
Special Purpose Vehicle (and each change thereto, whether by assignment or
otherwise) and (ii) the rights, interest or obligation of each such Participant
and Special Purpose Vehicle in any Obligation, in any Revolving Credit
Commitment and in any right to receive payment hereunder.

(b)(i) The Administrative Agent, acting as agent of the Borrowers solely for
this purpose and for tax purposes, shall establish and maintain at its address
referred to in Section 11.8 (Notices, Etc.) a record of ownership (the
“Register”) in which the Administrative Agent agrees to register by book entry
the Administrative Agent’s, each Lender’s and each Issuer’s interest in each
Loan, each Letter of Credit and each Reimbursement Obligation, and in the right
to receive any payments hereunder and any assignment of any such interest or
rights. In addition, the Administrative Agent, acting as agent of the Borrowers
solely for this purpose and for tax purposes, shall establish and maintain
accounts in the Register in accordance with its usual practice in which it shall
record (1) the names and addresses of the Lenders and the Issuers, (2) the
Revolving Credit Commitments of each Lender from time to time, (3) the amount of
each Loan made and, if a Eurodollar Rate Loan, the Interest Period applicable
thereto, (4) the amount of any drawn Letters of Credit, (5) the amount of any
principal or interest due and payable, and paid, by the Borrowers to, or for the
account of, each Lender hereunder, (6) the amount that is due and payable, and
paid, by the Borrowers to, or for the account of, each Issuer, including the
amount of Letter Credit Obligations (specifying the amount of any Reimbursement
Obligations) due and payable to an Issuer, and (7) the amount of any sum
received by the Administrative

 

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Agent hereunder from the Borrowers, whether such sum constitutes principal or
interest (and the type of Loan to which it applies), fees, expenses or other
amounts due under the Financing Agreements and each Lender’s and Issuer’s, as
the case may be, share thereof, if applicable.

(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 11.2
(Assignments and Participations) 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 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 Borrowers 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 Borrowers, 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 Borrowers execute and deliver a promissory note or
notes payable to such Lender in order to evidence the Indebtedness owing to such
Lender by the Borrowers hereunder, the Borrowers 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 form of Exhibit B
(Form of Revolving Credit Note).

Section 2.8 Optional Prepayments

The Borrowers may prepay 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 Eurodollar Rate Loan is made by the Borrowers other than on the last day
of an Interest Period for such Loan, the Borrowers shall also pay any amount
owing pursuant to Section 2.14(e) (Breakage Costs).

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, the Borrowers
shall forthwith, upon notification by the Administrative Agent, prepay the Swing
Loans first and then the other Loans then outstanding in an amount equal to such
excess. If any such excess remains after

 

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repayment in full of the aggregate outstanding Swing Loans and the other Loans,
the Borrowers shall provide cash collateral for the Letter of Credit Obligations
in the manner set forth in Section 9.3 (Actions in Respect of Letters of Credit)
in an amount equal to 101% of such excess.

(b) Upon receipt by any Loan Party or any of its Subsidiaries of Net Cash
Proceeds arising from an Asset Sale referred to in Section 8.4(b) or Property
Loss Event, subject to the Intercreditor Agreement, the Borrower shall promptly
(but in any event within 5 Business Days of such receipt) prepay the Loans (or
if at such time Excess Availability is less than $20,000,000, provide cash
collateral in respect of Letters of Credit) in an amount equal to 100% of such
Net Cash Proceeds; provided, however, this clause (b) shall not apply to the
extent the applicable Loan Party (directly or indirectly through one of its
Subsidiaries) uses the Net Cash Proceeds of such Asset Sale or Property Loss
Event to reinvest in long-term productive assets of the general type used in the
business of the Loan Parties or, in the case of a Property Loss Event, to effect
repairs, in each case not later than the date occurring 360 days after such
Asset Sale or Property Loss Event; provided further that the applicable Loan
Party or Subsidiary shall have an additional 180 days to complete such
reinvestment if (w) the intended reinvestment cannot be completed within such
360-day period after its receipt of such Net Asset Sale Proceeds, (x) the
applicable Loan Party or Subsidiary shall have entered into binding commitments
with third parties to complete such reinvestment, (y) the applicable Loan Party
or Subsidiary diligently pursues the consummation of such reinvestment as soon
as is reasonably practicable and (z) the Borrower Agent, during such 360-day
period, delivers a certificate of a Responsible Officer to the Administrative
Agent certifying as to compliance with clauses (w) through (z) hereof.

(c) Subject to Section 2.14(e) (Breakage Costs) 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 Borrowers, 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 Borrowers to the bank account designated
by the Administrative Agent for such purpose is received in such bank account
after 3:00 p.m, New York City time.

Section 2.10 Interest

(a) Rate of Interest. All Loans and the outstanding amount of all other
Obligations owing under the Financing Agreements shall bear interest, in the
case 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, 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 Loans that are Base Rate Loans; and

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

(b) Interest Payments. (i) Interest accrued on each Base Rate Loan (other than
Swing Loans) shall be payable in arrears (A) on the first Business Day of each
calendar

 

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quarter, commencing on the first such day following the making of such Base Rate
Loan and (B) if not previously paid in full, at maturity (whether by
acceleration or otherwise) of such Base Rate Loan, (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 Eurodollar
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 months, on each date during such Interest Period occurring every
three months from the first day of such Interest Period, (B) upon the payment or
prepayment thereof in full or in part and (C) if not previously paid in full, at
maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan and
(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. Notwithstanding the rates of interest specified in
clause (a) above or elsewhere herein, effective immediately upon the occurrence
of an Event of Default and for as long thereafter as such Event of Default shall
be continuing, the principal balance of all Loans and the amount of all other
Obligations then due and payable shall bear interest at a rate that is two
percent per annum in excess of the rate of interest applicable to such Loans or
other Obligations from time to time. Such interest shall be payable on the date
that would otherwise be applicable to such interest pursuant to clause (b) above
or otherwise on demand.

Section 2.11 Conversion/Continuation Option

(a) The Borrowers may elect (i) at any time on any Business Day, to convert Base
Rate Loans (other than Swing Loans) or any portion thereof to Eurodollar Rate
Loans and (ii) at the end of any applicable Interest Period, to convert
Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to continue
such Eurodollar Rate Loans or any portion thereof for an additional Interest
Period; provided, however, that the aggregate amount of the Eurodollar Rate
Loans for each Interest Period must be in the amount of at least $1,000,000 or
an integral multiple of $1,000,000 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 (Form of Notice of Conversion or Continuation) (a “Notice
of Conversion or Continuation”) and shall be made by giving the Administrative
Agent at least two 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 Eurodollar 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, no conversion in whole or in part of Base Rate
Loans to Eurodollar Rate Loans and no continuation in whole or in part of
Eurodollar Rate Loans upon the expiration of any applicable Interest Period
shall be permitted at any time at which (A) an Event of Default shall have
occurred and be continuing or (B) the continuation of, or conversion into, a
Eurodollar Rate Loan would violate any provision of Section 2.14 (Special
Provisions Governing Eurodollar Rate Loans). 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 Agent containing a
permitted election to continue any Eurodollar 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. Each Notice of Conversion or Continuation shall be irrevocable.

 

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Section 2.12 Fees

(a) Unused Commitment Fee. The Borrowers agree to pay in immediately available
Dollars to the Administrative Agent for the account of each Lender a 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 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 month,
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 Borrowers agree 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 0.10% 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 0.40% per annum 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 during the
continuance of an Event of Default, such fee shall be increased by two percent
per annum (instead of, and not in addition to, any increase pursuant to
Section 2.10(c) (Interest)) and shall be payable on demand; and

(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 Borrowers have 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.

 

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Section 2.13 Payments and Computations

(a) The Borrowers shall make each payment hereunder (including fees and
expenses) not later than 11:00 a.m. (New York time) on the day when due, in the
currency specified herein (or, if no such currency is specified, in Dollars) to
the Administrative Agent at its address referred to in Section 11.8 (Notices,
Etc.) in immediately available funds without set-off or counterclaim. The
Administrative Agent shall promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal, interest or
fees to the Lenders, in accordance with the application of payments set forth in
clause (f) or (g) below, as applicable, for the account of their respective
Applicable Lending Offices; provided, however, that amounts payable pursuant to
Section 2.14(c) or (d) (Special Provisions Governing Eurodollar Rate Loans),
Section 2.15 (Capital Adequacy) or Section 2.16 (Taxes) shall be paid only to
the affected Lender or Lenders and amounts payable with respect to Swing Loans
shall be paid only to the Swing Loan Lender. Payments received by the
Administrative Agent after 11:00 a.m. (New York time) shall be deemed to be
received on the next Business Day.

(b) All computations of interest and of fees shall be made by the Administrative
Agent on the basis of a year of 360 days with respect to Eurodollar Rate Loans
and 365/366 days with respect to all other computations, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of a rate of interest hereunder shall
be conclusive and binding for all purposes, absent manifest error.

(c) Each payment by the Borrowers of any Loan, Reimbursement Obligation
(including interest or fees in respect thereof) and each reimbursement of
various costs, expenses or other Obligation owing under any Financing Agreement
shall be made in Dollars; provided, however, that (i) the Letter of Credit
Reimbursement Agreement for a Letter of Credit may specify another currency for
the Reimbursement Obligation in respect of such Letter of Credit and (ii) other
than for payments in respect of a Loan or Reimbursement Obligation, Financing
Agreements duly executed by the Administrative Agent may specify other
currencies of payment for Obligations created by or directly related to such
Financing Agreement.

(d) Whenever any payment hereunder shall be stated to be due on a day other than
a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the immediately preceding Business Day. All
repayments of any Loans shall be applied as follows: first, to repay any such
Loans outstanding as Base Rate Loans and then, to repay any such Loans
outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans 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
Borrowers to the Lenders prior to the date on which any payment is due hereunder
that the Borrowers will not make such payment in full, the Administrative Agent
may assume that the Borrowers have made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, cause to be distributed to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent that the
Borrowers shall not have made such payment in full to the Administrative Agent,

 

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each Lender shall repay to the Administrative Agent forthwith on demand such
amount distributed to such Lender together with interest thereon (at the Federal
Funds Rate for the first Business Day and thereafter at the rate applicable to
Base Rate Loans) for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent.

(f) Except for payments and other amounts received by the Administrative Agent
and applied in accordance with the provisions of clause (g) below (or required
to be applied in accordance with Section 2.9 (Mandatory Prepayments)), all
payments and any other amounts received by the Administrative Agent from or for
the benefit of the Borrowers 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 Borrowers, second, to pay all other Obligations then due
and payable and third, as the Borrower Agent 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) The Borrowers hereby irrevocably waive 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 agree that during the continuance of an Event of Default, and
notwithstanding clause (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 9.2 (Remedies),
shall deliver a notice to each Deposit Account Bank and Control Account for each
Approved Deposit Account and Approved Securities Intermediary (instructing them
to cease complying with any instructions from any Loan Party and to transfer all
funds therein to the Administrative Agent) and the Administrative Agent shall
apply all payments in respect of any Obligations and all funds on deposit in any
Cash Collateral Account and all other proceeds of Collateral in the following
order:

(i) first, to pay interest on and then principal of any portion of the Loans
that the Administrative Agent may have advanced on behalf of any Lender for
which the Administrative Agent has not then been reimbursed by such Lender or
the Borrowers;

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

(iii) third, to pay Secured Obligations in respect of any expense reimbursements
or indemnities then due to the Lenders and the Issuers;

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

 

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(v) fifth, to pay interest then due and payable in respect of the Loans and
Reimbursement Obligations;

(vi) sixth, to pay or prepay principal amounts on the Loans and Reimbursement
Obligations, to provide cash collateral for outstanding Letter of Credit Undrawn
Amounts in the manner described in Section 9.3 (Actions in Respect of Letters of
Credit), and to pay Cash Management Obligations and amounts owing with respect
to Hedging Contracts, ratably to the aggregate principal amount of such Loans,
Reimbursement Obligations and Letter of Credit Undrawn Amounts, Cash Management
Obligations and Obligations owing with respect to Hedging Contracts; and

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

provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any Secured Obligation described in any of
clauses (i), (ii), (iii), (iv), (v), (vi) and (vii) 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 (i), (ii), (iii), (iv), (v), (vi) and (vii) 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 Borrowers, 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 (i), (ii),
(iii) and (iv) above may be changed only with the prior written consent of the
Administrative Agent in addition to that of all Lenders.

(h) 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 Borrowers make such
payments on the next succeeding Business Day after the Borrower Agent 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) (Swing Loans) and the Lenders to make such Loans
pursuant to Section 2.2(a) (Borrowing Procedures) 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 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 Borrowers agree
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 3.2 (Conditions Precedent to Each Loan and Letter of Credit), which
conditions the Lenders irrevocably waive) and directs that all proceeds thereof
shall be used to pay such amounts.

Section 2.14 Special Provisions Governing Eurodollar Rate Loans

(a) Determination of Interest Rate

 

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The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be
determined by the Administrative Agent pursuant to the procedures set forth in
the definition of “Eurodollar Rate.” The Administrative Agent’s determination
shall be presumed to be correct 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 Eurodollar Rate then being determined is to be
fixed or (ii) the Requisite Lenders notify the Administrative Agent that the
Eurodollar Rate for any Interest Period will not adequately reflect the cost to
the Lenders of making or maintaining such Loans for such Interest Period, the
Administrative Agent shall forthwith so notify the Borrower Agent and the
Lenders, whereupon each Eurodollar Rate Loan shall automatically, on the last
day of the current Interest Period for such Loan, convert into a Base Rate Loan
and the obligations of the Lenders to make Eurodollar Rate Loans or to convert
Base Rate Loans into Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower Agent that the Requisite Lenders
have determined that the circumstances causing such suspension no longer exist.

(c) Increased Costs

If at any time any Lender reasonably determines that the introduction of, or any
change in or in the interpretation of, any law, treaty or governmental rule,
regulation or order (other than any change by way of imposition or increase of
reserve requirements included in determining the Eurodollar Rate) or the
compliance by such Lender with any guideline, request or directive from any
central bank or other Governmental Authority (whether or not having the force of
law), shall have the effect of increasing the cost to such Lender of agreeing to
make or making, funding or maintaining any Eurodollar Rate Loans, then the
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts reasonably determined by such
Lender to be sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
Agent and the Administrative Agent by such Lender, shall be prima facie evidence
of the amount of such increased costs.

(d) Illegality

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

 

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determination to the Borrower Agent and the Administrative Agent, and the
Administrative Agent shall promptly transmit the notice to each other Lender.
The Borrowers’ right to request, and such Lender’s obligation, if any, to make
Eurodollar Rate Loans shall thereupon be restored.

(e) Breakage Costs

In addition to all amounts required to be paid by the Borrowers pursuant to
Section 2.10 (Interest), the Borrowers shall compensate each Lender, upon
demand, for all losses, expenses and liabilities (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain such Lender’s Eurodollar Rate Loans
to the Borrowers) that such Lender shall reasonably determine it has sustained
(i) if for any reason (other than solely by reason of such Lender being a
Non-Funding Lender) a proposed Borrowing, conversion into or continuation of
Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of
Borrowing or a Notice of Conversion or Continuation given by the Borrower Agent
or in a telephonic request by it for borrowing or conversion or continuation or
a successive Interest Period does not commence after notice therefor is given
pursuant to Section 2.11 (Conversion/Continuation Option), (ii) if for any
reason any Eurodollar Rate Loan is prepaid (including mandatorily pursuant to
Section 2.9 (Mandatory Prepayments)) on a date that is not the last day of the
applicable Interest Period, (iii) as a consequence of a required conversion of a
Eurodollar Rate Loan to a Base Rate Loan as a result of any of the events
indicated in clause (d) above or (iv) as a consequence of any failure by the
Borrowers to repay Eurodollar Rate Loans when required by the terms hereof. The
Lender making demand for such compensation shall deliver to the Borrowers
concurrently with such demand a written statement as to such losses, expenses
and liabilities, and this statement shall be prima facie evidence as to the
amount of compensation due to such Lender, absent manifest error.

Section 2.15 Capital Adequacy

If at any time any Lender reasonably determines that (a) the adoption of, or any
change in or in the interpretation of, any law, treaty or governmental rule,
regulation or order after the Effective Date regarding capital adequacy,
(b) compliance with any such law, treaty, rule, regulation or order adopted or
modified, or as to which interpretation has changed, after the Effective Date or
(c) compliance with any guideline or request or directive from any central bank
or other Governmental Authority (whether or not having the force of law) given
after the Effective Date shall have the effect of reducing the rate of return on
such Lender’s (or any corporation controlling such Lender’s) capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change, compliance or interpretation, then, upon
demand from time to time by such Lender (with a copy of such demand to the
Administrative Agent), the Borrowers shall pay to the Administrative Agent for
the account of such Lender, from time to time as specified by such Lender,
additional amounts reasonably determined by such Lender to be sufficient to
compensate such Lender for such reduction. A certificate as to such amounts
submitted to the Borrowers and the Administrative Agent by such Lender shall be
prima facie evidence of such amounts.

Section 2.16 Taxes

(a) Except as otherwise provided in this Section 2.16 (Taxes), any and all
payments by any Loan Party under each Financing Agreement to, or for the account
of, any Lender, Issuer or the Administrative Agent shall be made free and clear
of and without deduction

 

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for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of each Lender, each Issuer and the Administrative Agent (A) taxes measured
by its net income or net profits, and franchise taxes imposed on it, and similar
taxes imposed by the jurisdiction (or any political subdivision thereof) under
the laws of which such Lender, such Issuer or the Administrative Agent (as the
case may be) is organized and (B) any U.S. withholding taxes payable with
respect to payments under the Financing Agreements under laws (including any
statute, treaty or regulation) in effect on the Effective Date (or, in the case
of (x) an Eligible Assignee, the date of the Assignment and Acceptance, (y) a
successor Administrative Agent, the date of the appointment of such
Administrative Agent and (z) a successor Issuer, the date on which such Issuer
becomes an Issuer) applicable to such Lender, such Issuer or the Administrative
Agent, as the case may be, but not excluding any U.S. withholding taxes payable
as a result of any change in such laws occurring after the Effective Date (or
the date of such Assignment and Acceptance or the date of such appointment of
such Administrative Agent or the date on which such Issuer becomes an Issuer),
(ii) in the case of each Lender or each Issuer, taxes measured by its net income
or net profits and franchise taxes imposed on it as a result of a present or
former connection (other than a connection arising solely from this Agreement)
between such Lender or such Issuer (as the case may be) and the jurisdiction of
the Governmental Authority imposing such tax or any taxing authority thereof or
therein, and (iii) any taxes, levies, imposts, deductions, charges or
withholdings, or any liabilities with respect thereto, to the extent imposed as
a result of the unreasonable failure of the Administrative Agent or a Lender, as
applicable, to provide upon a timely written demand by the Borrower Agent to the
Administrative Agent any certificates, documents or other evidence required to
qualify for an exemption from, or reduced rate of, any such taxes, levies,
imposts, deductions, charges or withholdings as required by the immediately
following subsection (f) or (g) as the case may be to be furnished by the
Administrative Agent or such Lender, as applicable (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”). If any Taxes shall be required by law to be
deducted from or in respect of any sum payable under any Financing Agreement to
any Lender, any Issuer or the Administrative Agent (w) the sum payable shall be
increased as may be necessary so that, after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.16 (Taxes)), such Lender, such Issuer or the Administrative Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (x) the relevant Loan Party shall make such
deductions, (y) the relevant Loan Party shall pay the full amount deducted to
the relevant taxing authority or other authority in accordance with applicable
Requirements of Law and (z) the relevant Loan Party shall deliver to the
Administrative Agent evidence of such payment in accordance with
Section 2.16(d).

(b) In addition, each Loan Party agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction, and all liabilities with respect thereto, in
each case arising from any payment made under any Financing Agreement or from
the execution, delivery or registration of, or otherwise with respect to, any
Financing Agreement (collectively, “Other Taxes”). Each Loan Party authorizes
the Administrative Agent to pay such Other Taxes in the name of such Loan Party
and, for such purpose, to submit a Notice of Borrowing for Loans in the currency
such Other Taxes are owed (or, if not available, in Dollars) (i) after the
occurrence and during the continuance of any Event of Default and in respect of
any event occurring on the Effective Date and (ii) otherwise, with the consent
of such Loan Party, in the name of the Loan Party owing such Other Taxes and in
an

 

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aggregate principal amount not to exceed all amounts owing in respect of such
Other Taxes. If such a Notice of Borrowing is prepared by the Administrative
Agent, the Borrowing corresponding thereto shall be made without regard to the
conditions precedent set forth in Section 3.2 (Conditions Precedent to Each Loan
and Letter of Credit) and the proceeds thereof shall be disbursed to the
Administrative Agent in the name of the Borrowers and shall be used by the
Administrative Agent solely to pay such Other Taxes (any excess thereof to be
used to repay such Borrowing). The Administrative Agent may also make Swing
Loans and Protective Advances to pay such Other Taxes in the name of such Loan
Party and may pay such Other Taxes and seek separate reimbursement of such Other
Taxes hereunder as a Secured Obligation, unless the Borrowers agree to pay such
Other Taxes on the next succeeding Business Day after the Borrower Agent
receives written notice from the Administrative Agent requesting such payments
and evidence of such payments have been provided to the Administrative Agent.

(c) If any Loan Party shall fail to pay any Tax or Other Tax when due, then each
Loan Party shall, jointly and severally, indemnify each Lender, each Issuer and
the Administrative Agent for the full amount of such Taxes and Other Taxes
(including any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.16 (Taxes)) paid by such Lender, such Issuer or the
Administrative Agent (as the case may be) and any liability (including for
penalties, interest and reasonable expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 10 days from the date such
Lender, such Issuer or the Administrative Agent (as the case may be) makes
written demand therefor.

(d) As soon as practical after the date of any payment of Taxes or Other Taxes
by any Loan Party pursuant to this Section 2.16 (Taxes), the Borrower Agent or
relevant Loan Party shall furnish to the Administrative Agent, at its address
referred to in Section 11.8 (Notices, Etc.), a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.

(e) Without prejudice to the survival of any other agreement of any Loan Party
hereunder or under the Guaranty, the agreements and obligations of such Loan
Party contained in this Section 2.16 shall survive the payment in full of the
Obligations.

(f) Each Non-U.S. Lender that is entitled to an exemption from U.S. withholding
tax, or that is subject to such tax at a reduced rate under an applicable tax
treaty, shall, (w) on or prior to the date on which such Non-U.S. Lender becomes
a Lender, (x) on or prior to the date on which any such form or certification
expires or becomes obsolete, (y) after the occurrence of any event requiring a
change in the most recent form or certification previously delivered by it to
the Borrower Agent and the Administrative Agent, and (z) from time to time
thereafter if requested by the Borrower Agent or the Administrative Agent,
provide the Administrative Agent and the Borrower Agent with two completed
originals of each of the following, as applicable: (A) Form W-8ECI (claiming
exemption from U.S. withholding tax because the income is effectively connected
with a U.S. trade or business) or any successor form, (B) Form W-8BEN (claiming
exemption from, or a reduction of, U.S. withholding tax under an income tax
treaty) or any successor form, (C) in the case of a Non-U.S. Lender claiming
exemption under Sections 871(h) or 881(c) of the Code, a Form W-8BEN (claiming
exemption from U.S. withholding tax under the portfolio interest exemption) or
any successor form or (D) any other applicable form, certificate or document
prescribed by the IRS certifying as to such Non-U.S. Lender’s entitlement to
such exemption from U.S. withholding tax or reduced rate with respect to all
payments to be made to such Non-U.S. Lender under the Financing Agreements.

 

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

(g) Each U.S. Lender shall, (w) on or prior to the date on which such U.S.
Lender becomes a Lender, (x) on or prior to the date on which any such form or
certification expires or becomes obsolete, (y) after the occurrence of any event
requiring a change in the most recent form or certification previously delivered
by it to the Borrower Agent and the Administrative Agent and (z) from time to
time if requested by the Borrower Agent or the Administrative Agent, provide the
Administrative Agent and the Borrower Agent with two completed originals of Form
W-9 (certifying that such U.S. Lender is entitled to an exemption from U.S.
backup withholding tax) or any successor form. Solely for purposes of this
Section 2.16(f), a U.S. Lender shall not include a Lender, an Issuer or an
Administrative Agent that may be treated as an exempt recipient based on the
indicators described in Treasury Regulations section 1.6049-4(c)(1)(ii).

(h) Any Lender claiming any additional amounts payable pursuant to this
Section 2.16 shall use its reasonable efforts (consistent with its internal
policies and Requirements of Law) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts that would be payable or may
thereafter accrue and would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender.

Section 2.17 Substitution of Lenders; Mitigation

(a) In the event that (i)(A) any Lender makes a claim under Section 2.14(c)
(Increased Costs) or 2.15 (Capital Adequacy), (B) it becomes illegal for any
Lender to continue to fund or make any Eurodollar Rate Loan and such Lender
notifies the Borrower Agent of such illegality pursuant to Section 2.14(d)
(Illegality), (C) any Loan Party is required to make any payment pursuant to
Section 2.16 (Taxes) that is attributable to a particular Lender or (D) any
Lender becomes a Non-Funding Lender, and (ii) in the case of clause (i)(A), and
(B) above, Requisite Lenders are not subject to such increased costs or
illegality, payment or proceedings (any such Lender, an “Affected Lender”), the
Borrowers may substitute any Lender or Lenders and, if reasonably acceptable to
the Administrative Agent, one or more Eligible Assignees (a “Substitute
Institution”) for such Affected Lender hereunder, after delivery of a written
notice (a “Substitution Notice”) by the Borrowers to the Administrative Agent
and the Affected Lender that the Borrowers intend to make such substitution.

(b) If the Substitution Notice was properly issued under this Section 2.17, the
Affected Lender shall sell, and the Substitute Institution(s) shall purchase,
all rights and claims of such Affected Lender under the Financing Agreements,
and the Substitute Institution(s) shall assume, and the Affected Lender shall be
relieved of, the Affected Lender’s Revolving Credit Commitments and all other
prior unperformed obligations of the Affected Lender under the Financing
Agreements (other than in respect of any damages which, pursuant to Section 11.5
Limitation of Liability, do not include exemplary or punitive damages, to the
extent permitted by applicable Requirements of Law in respect of any such
unperformed obligations). Such purchase and sale (and the corresponding
assignment of all rights and claims hereunder) shall be recorded

 

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in the Register maintained by the Administrative Agent and shall be effective on
(and not earlier than) the later of (i) the receipt by the Affected Lender of
its Ratable Portion of the Revolving Credit Outstandings, together with any
other Obligations owing to it, (ii) the receipt by the Administrative Agent of
an agreement in form and substance reasonably satisfactory to it and the
Borrower Agent whereby the Substitute Institution shall agree to be bound by the
terms hereof, (iii) the payment in full to the Affected Lender in cash of all
fees, unreimbursed costs and expenses and indemnities payable under the
Financing Agreements which are accrued and unpaid through such effective date
and (iv) the recording of such sale and purchase (and corresponding assignment)
in the Register maintained by the Administrative Agent. Upon the effectiveness
of such sale, purchase and assumption, the Substitute Institution shall become a
“Lender” hereunder for all purposes of this Agreement having a Revolving Credit
Commitment in the amount of such Affected Lender’s Revolving Credit Commitment
assumed by it and such Revolving Credit Commitment of the Affected Lender shall
be terminated; provided, however, that all indemnities under the Financing
Agreements shall continue in favor of such Affected Lender.

(c) Each Lender agrees that, if it becomes an Affected Lender and its rights and
claims are assigned hereunder to a Substitute Institution pursuant to this
Section 2.17, it shall execute and deliver to the Administrative Agent an
Assignment and Acceptance to evidence such assignment, together with any
Revolving Credit Note (if such Loans are evidenced by a Revolving Credit Note)
evidencing the Loans subject to such Assignment and Acceptance; provided,
however, that the failure of any Affected Lender to execute an Assignment and
Acceptance shall not render such assignment invalid.

Section 2.18 Facility Increase

(a) General. The Borrower Agent may request, in writing, at any time prior to
the Revolving Credit Termination Date one or more increases of the Revolving
Credit Commitments in a principal amount of up to $50,000,000 in the aggregate
(the “Facility Increase”); provided, however, that such increase must be in a
minimum principal amount of at least $25,000,000 and integral multiples of
$1,000,000 in excess thereof and will only become effective if (i) the Borrower
Agent shall have given the Administrative Agent at least 10 Business Days’
notice of its intention to effect a Facility Increase and the desired amount of
such Facility Increase, (ii) no Default or Event of Default has occurred and is
continuing, (iii) one or more Lenders agree to participate in such Facility
Increase (or a financial institution or other entity that meets the definition
of “Eligible Assignee” reasonably acceptable to the Administrative Agent and the
Borrowers agree to accept an offer to commit to such increase as provided below)
and (iv) the conditions precedent to a Borrowing set forth in Section 3.2
(Conditions Precedent to Each Loan and Letter of Credit) are satisfied as of
such date.

(b) Procedures. The Borrowers shall offer such increase to (x) the existing
Lenders (although no existing Lender shall be obligated to commit to such
increase) or (y) other Eligible Assignees reasonably acceptable to the
Administrative Agent, provided, however, that the minimum Revolving Credit
Commitment of each such new Eligible Assignee accepting a Revolving Credit
Commitment as part of such Facility Increase equals or exceeds $5,000,000, and
such Lender or Eligible Assignee executes a Lender Joinder Agreement pursuant to
which such Lender agrees to commit to all or a portion of such Facility Increase
and, in the case of an Eligible Assignee, to be bound by the terms of this
Agreement as a Lender. On the effective date provided for in such Lender Joinder
Agreement providing for a Facility Increase (each a “Facility Increase Effective
Date”), the Revolving Credit Commitments will be increased by the amount
committed to by each Lender or Eligible Assignee on the Facility Increase
Effective Date. In the

 

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event there are Lenders and Eligible Assignees that have committed to a Facility
Increase in excess of the maximum amount requested (or permitted), then the
Administrative Agent shall have the right to allocate such commitments on
whatever basis the Administrative Agent determines is appropriate in
consultation with the Borrower Agent.

(c) Funding of Facility Increase. On each Facility Increase Effective Date, each
Lender and Eligible Assignee providing a portion of the Facility Increase shall
transfer immediately available funds to the Administrative Agent in an amount
equal to its Ratable Portion (after giving effect to such Facility Increase) of
outstanding Loans. The Administrative Agent shall distribute such amount ratably
among the Lenders.

Section 2.19 Appointment of Borrower Agent as Agent.

(a) Each Borrower hereby irrevocably appoints and constitutes Borrower Agent as
its agent to request and receive Loans and Letters of Credit pursuant to this
Agreement and the other Financing Agreements from the Administrative Agent or
any Lender in the name or on behalf of such Borrower. The Administrative Agent
and Lenders may disburse the Loans to such bank account of Borrower Agent or a
Borrower or otherwise make such Loans to a Borrower and issue a Letter of Credit
for the account of a Borrower as Borrower Agent may designate or direct, without
notice to any other Borrower or Loan Party. Notwithstanding anything to the
contrary contained herein, the Administrative Agent may at any time and from
time to time require that Loans to or for the account of any Borrower be
disbursed directly to an operating account of such Borrower.

(b) Borrower Agent hereby accepts the appointment by Borrowers to act as the
agent of Borrowers pursuant to this Section 2.19.

(c) Borrower Agent shall ensure that the disbursement of any Loans to each
Borrower requested by or paid to or for the account of the Borrowers, or the
issuance of any Letters of Credit for a Borrower hereunder, shall be paid to or
for the account of such Borrower.

(d) Each Borrower and other Guarantor hereby irrevocably appoints and
constitutes Borrower Agent as its agent to receive statements on account and all
other notices from the Administrative Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.

(e) Any notice, election, representation, warranty, agreement or undertaking by
or on behalf of any other Borrower or any Guarantor by Borrower Agent shall be
deemed for all purposes to have been made by such Borrower or Guarantor, as the
case may be, and shall be binding upon and enforceable against such Borrower or
Guarantor to the same extent as if made directly by such Borrower or Guarantor.

(f) No purported termination of the appointment of Borrower Agent as agent as
aforesaid shall be effective, except after ten (10) days’ prior written notice
to the Administrative Agent.

 

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ARTICLE III

CONDITIONS PRECEDENT

Section 3.1 Conditions Precedent to Effective Date

The effectiveness of this Agreement shall be subject to the satisfaction or due
waiver in accordance with Section 11.1 (Amendments, Waivers, Etc.) of each of
the following conditions precedent (the date on which such conditions are
satisfied or waived being herein called the “Effective Date”):

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

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

(ii) the Guaranty, duly executed and delivered by Holdings and each Domestic
Subsidiary (other than an Inactive Subsidiary) that has guaranteed the Term Loan
Facility;

(iii) the Pledge and Security Agreement, duly executed and delivered by Holdings
and each of its Domestic Subsidiaries;

(iv) the Master Assignment and Resignation Agreement, in substantially the form
attached hereto as Exhibit O, duly executed by the Borrowers, the Guarantors,
the Existing Agent under the Existing Credit Agreement Administrative Agent;

(v) Assignments of the mortgages delivered under the Existing Credit Agreement
in favor of the Existing Agent for all of the owned Real Properties of the Loan
Parties identified on Schedule 4.19 (Real Property) (except as may be agreed to
by the Administrative Agent), together with down-date endorsements of existing
title policies for each of the owned Real Properties in favor of the
Administrative Agent insuring the mortgages as assigned by the assignments and
copies of all other Mortgage Supporting Documents relating thereto available to
the Borrowers;

(vi) a favorable opinion of (A) Alston & Bird LLP, counsel to the Loan Parties,
in substantially the form of Exhibit G (Form of Opinion of Counsel for the Loan
Parties) and (B) counsel to the Loan Parties in North Carolina and Virginia, in
each case addressed to the Administrative Agent and the Lenders and addressing
such other matters as any Lender through the Administrative Agent may reasonably
request.

 

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(vii) a copy of the articles or certificate of incorporation (or equivalent
Constituent Document) of each Loan Party, certified as of a recent date by the
Secretary of State of the state of organization or formation of such Loan Party,
in each case together with certificates of such official attesting to the good
standing of each such Loan Party in such state, and certificates regarding the
good standing of such Loan Parties issued by the Secretaries of State of the
jurisdictions set forth on Schedule 3.1(a)(vii) (Foreign Qualifications);

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

(ix) certificates of insurance evidencing that the insurance policies required
by Section 7.5 (Maintenance of Insurance) are in full force and effect, together
with, unless otherwise agreed by the Administrative Agent, endorsements naming
the Administrative Agent, on behalf of the Secured Parties, as an additional
insured or loss payee under all liability and property insurance policies to be
maintained with respect to the properties of the Borrowers and their
Subsidiaries that constitute Collateral, subject to the Intercreditor Agreement;
and

(x) a certificate of a Responsible Officer to the effect that (A) the
representations and warranties set forth in Article IV (Representations and
Warranties) and in the other Financing Agreements shall be true and correct in
all material respects on and as of the Closing Date and shall be true and
correct in all material respects on and as of any such date after the Closing
Date with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects as of such earlier date; and (B) no Default or
Event of Default shall have occurred and be continuing.

(xi) such other certificates, documents, agreements and information respecting
any Loan Party as any Lender through the Administrative Agent may reasonably
request.

(b) Fee and Expenses Paid. There shall have been paid to the Administrative
Agent, for the account of the Administrative Agent and the Lenders, as
applicable, all fees and expenses (including reasonable and documented fees and
expenses of counsel to the Administrative Agent) due and payable on or before
the Effective Date (including all such fees described in the Fee Letter) under
or in connection with this Agreement.

 

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(c) Consents, Etc. The Loan Parties shall have received all consents and
authorizations required pursuant to any material Contractual Obligation with any
other Person and shall have obtained all Permits of, and effected all notices to
and filings with, any Governmental Authority, in each case, as may be necessary
to allow each Loan Party lawfully (i) to execute, deliver and perform, in all
material respects, their respective obligations hereunder and under the
Financing Agreements to which each of them, respectively, is, or shall on the
Effective Date be, a party and each other agreement or instrument to be executed
and delivered by each of them, respectively, pursuant thereto or in connection
therewith, and (ii) to create and perfect the Liens on the Collateral to be
owned by each of them.

(d) Minimum Excess Availability. On the Effective Date, Excess Availability
shall not be less than $20,000,000 (after giving effect to Loans made
hereunder).

(e) Material Adverse Effect. Since February 3, 2007, there shall not have
occurred a Material Adverse Effect.

(f) Additional Matters. The Administrative Agent shall have received such
additional documents, information and materials as any Lender, through the
Administrative Agent, may reasonably request.

Section 3.2 Conditions Precedent to Each Loan and Letter of Credit

The obligation of each Lender on any date (including the Effective Date) to make
any Loan and of each Issuer on any date (including the Effective 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 (other than Loans outstanding under the Existing Credit Agreement and being
continued under this Agreement), 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 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 set forth in Article IV (Representations
and Warranties) and in the other Financing Agreements shall be true and correct
in all material respects on and as of the Effective Date and shall be true and
correct in all material respects on and as of any such date after the Effective
Date with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects as of such earlier date; and

(ii) no Default or Event of Default shall have occurred and be continuing.

 

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

Each submission by the Borrower Agent to the Administrative Agent of a Notice of
Borrowing or a Swing Loan Request and the acceptance by the Borrowers of the
proceeds of each Loan requested therein, and each submission by the Borrowers 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 Borrowers as to the matters specified in clause (b) above on the
date of the making of such Loan or the Issuance of such Letter of Credit.

Section 3.3 Determinations of Effective Date Borrowing Conditions

For purposes of determining compliance with the conditions specified in
Section 3.1 (Conditions Precedent to Effective Date), 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
Financing Agreements 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 IV

REPRESENTATIONS AND WARRANTIES

To induce the Lenders, the Issuers and the Administrative Agent to enter into
this Agreement, each of Holdings and each 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 3.2(b)(i) (Conditions Precedent to Each Loan
and Letter of Credit):

Section 4.1 Corporate Existence; Compliance with Law

Each Loan Party and its Subsidiaries (a) is duly organized or formed, validly
existing and in good standing under the laws of the jurisdiction of its
organization or formation, except where the failure to be so duly organized,
validly existing and in good standing could not reasonably be expected to have a
Material Adverse Effect, (b) is duly qualified to do business as a foreign
entity and is in good standing under the laws of each jurisdiction where such
qualification is necessary, except where the failure to be so qualified or in
good standing could not reasonably be expected to, in the aggregate, have a
Material Adverse Effect, (c) has all requisite power and authority and the legal
right to own, pledge, mortgage and operate its properties, to lease the

 

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property it operates under lease and to conduct its business as now or currently
proposed to be conducted, except where the failure to have such power and
authority could not reasonably be expected to have a Material Adverse Effect,
(d) is in compliance with all material provisions of its Constituent Documents
and (e) is in compliance with all applicable Requirements of Law (including the
Anti-Terrorism Order and the Patriot Act) except where the failure to be in
compliance could not reasonably be expected to, in the aggregate, have a
Material Adverse Effect.

Section 4.2 Corporate Power; Authorization; Enforceable Obligations

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

(i) are within such Loan Party’s powers as a corporation, limited liability
company, partnership or other form of business entity;

(ii) have been or, at the time of delivery thereof, will have been duly
authorized by all necessary corporate, limited liability company, partnership or
similar action, including the consent of shareholders, partners and members
where required;

(iii) do not and will not (A) contravene or violate such Loan Party’s
Constituent Documents, except where such contravention or violation could not
reasonably be expected to have a Material Adverse Effect, (B) violate any other
Requirement of Law applicable to such Loan Party (including Regulations T, U and
X of the Federal Reserve Board), or any order or decree of any Governmental
Authority or arbitrator applicable to such Loan Party, except where such
violation could not reasonably be expected to have a Material Adverse Effect,
(C) conflict with or result in the breach of, or constitute a default under, or
result in or permit the termination or acceleration of any material Contractual
Obligation of such Loan Party, except where such conflict, breach, default,
termination or acceleration could not reasonably be expected to have a Material
Adverse Effect or (D) result in the creation or imposition of any Lien upon any
property of such Loan Party, other than (x) those in favor of the Secured
Parties pursuant to the Collateral Documents and (y) Liens permitted by
Section 8.2(Liens, Etc.); and

(iv) do not require the consent of, authorization by, approval of, notice to, or
filing or registration with, any Governmental Authority, other than those that
have been or will be, prior to the Effective Date or on or prior to the date
such Person becomes a Loan Party, obtained or made, and each of which is or will
be, at the appropriate time, in full force and effect, except where failure to
be in full force and effect could not reasonably be expected to have a Material
Adverse Effect and, with respect to the Collateral, filings required to perfect
the Liens created by the Collateral Documents.

(b) This Agreement has been, and each of the other Financing Agreements will
have been upon delivery thereof pursuant to the terms of this Agreement, duly
executed and delivered by each Loan Party party thereto. This Agreement is, and
the other Financing Agreements will be, when delivered hereunder, the legal,
valid and binding obligation of each Loan Party party thereto, enforceable
against such Loan Party in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies and general principles of
equity.

 

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Section 4.3 Ownership of Subsidiaries; Borrower Information

(a) Set forth on Schedule 4.3 (Ownership of Subsidiaries; Borrower Information)
is a complete and accurate list showing, as of the date hereof, all Subsidiaries
of the Loan Parties and, as to each such Subsidiary, the aggregate percentage of
the outstanding Stock owned (directly or indirectly) by the Loan Parties. Except
as set forth on such Schedule, no Stock of any Subsidiary of any Loan Party is
as of the date hereof, subject to any outstanding option, warrant, right of
conversion or purchase of any similar right. All of the outstanding Stock of
each Subsidiary of the Loan Parties owned (directly or indirectly) by each Loan
Party has been validly issued, is fully paid and non-assessable (to the extent
applicable) and is owned by such Loan Party or a Subsidiary of such Loan Party,
free and clear of all Liens (other than the Lien in favor of the Secured Parties
created pursuant to the Pledge and Security Agreement and Liens permitted under
Section 8.2).

(b) Each of C&W Outlet Inc., a New York corporation, ERL, Inc., a New Jersey
corporation, and J. Crew Virginia, Inc., is an Inactive Subsidiary and does not
and will not engage in any business or commercial activities and each does not
and will not own or hold any assets or properties, except that J. Crew Virginia,
Inc., a Virginia corporation, may engage in activities in connection with the
issuance of gift cards and store credits for and on behalf of Borrowers. J. Crew
Virginia, Inc. does not and will not engage in any other business or activity
and does not and will not hold any assets or properties.

Section 4.4 Financial Statements

The Consolidated balance sheet of Holdings and its Subsidiaries as at
February 3, 2007, and the related Consolidated statements of income,
stockholders’ equity and cash flows of Holdings and its Subsidiaries for the
Fiscal Year then ended, certified by the Borrowers’ Accountants, fairly present
in all material respects, the Consolidated financial condition of Holdings and
its Subsidiaries as at such dates and the Consolidated results of the operations
of Holdings and its Subsidiaries for the period ended on such dates, all in
conformity with GAAP.

Section 4.5 Material Adverse Effect

Since February 3, 2007, there have been no events or developments that, in the
aggregate, have had a Material Adverse Effect.

Section 4.6 Solvency

Each Loan Party is and, upon the incurrence of any Obligation by such Loan Party
on any date on which this representation and warranty is made, will be, Solvent.

Section 4.7 Litigation

Except as set forth on Schedule 4.7 (Litigation), there are no pending, or to
the knowledge of Holdings or any of its Subsidiaries, threatened, actions,
investigations or proceedings affecting any Loan Party or any of its
Subsidiaries before any court, Governmental Authority or arbitrator other than
those that, in the aggregate, could not reasonably be expected to

 

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have a Material Adverse Effect. The performance of any action by any Loan Party
required or contemplated by any Financing Agreement is not restrained or
enjoined (either temporarily, preliminarily or permanently).

Section 4.8 Taxes

Each Loan Party has timely filed all federal, state, local and foreign income
and franchise and other material tax returns, reports and statements required to
be filed and paid and discharged before the same have become delinquent, all
lawful governmental claims, taxes, assessments, charges and levis, except
(x) where contested in good faith by proper proceedings and adequate reserves
thereof have been established on the books of such Loan Party in conformity with
GAAP or (y) where the failure to pay and discharge such delinquent claims,
taxes, assessments, charges and levies in the aggregate could not reasonably be
expected to have a Material Adverse Effect.

Section 4.9 Full Disclosure

The written information prepared or furnished by or on behalf of any Loan Party
in connection with this Agreement or the consummation of the transactions
contemplated hereunder taken as a whole, does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained therein or herein not misleading in any material respect in
light of the circumstances in which the same were made.

Section 4.10 Margin Regulations

No Loan Party is engaged principally in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Federal Reserve Board), and no proceeds of any Loan will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock in contravention of
Regulation T, U or X of the Federal Reserve Board.

Section 4.11 No Defaults

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

Section 4.12 Investment Company Act

Neither Holdings nor any of its Subsidiaries is an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company,” as such terms are defined in the Investment Company Act of
1940, as amended.

Section 4.13 Use of Proceeds

The proceeds of the Loans and the Letters of Credit are being used by the
Borrowers (and, to the extent distributed to them by the Borrowers, each other
Loan Party) solely for working capital and general corporate purposes.

 

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Section 4.14 [Intentionally Omitted]

Section 4.15 Labor Matters

Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor
practice that would reasonably be expected to have a Material Adverse Effect.
There is (a) no unfair labor practice complaint pending against Holdings or any
of its Subsidiaries, before the National Labor Relations Board and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement that is so pending against Holdings or any of its Subsidiaries and
(b) no strike or work stoppage in existence involving Holdings or any of its
Subsidiaries, except (with respect to any matter specified in clause (a) or
(b) above) such as is not reasonably likely to have a Material Adverse Effect.

Section 4.16 ERISA

(a) As of the date hereof, there are no Title IV Plans or Multiemployer Plans.

(b) Each Benefit Plan, and each related trust thereunder, intended to qualify
for tax-qualified status under Section 401 or 501 of the Code so qualifies,
except where such failures, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.

(c) Except for those that could not reasonably be expected to, in the aggregate,
have a Material Adverse Effect, (i) each Benefit Plan is in compliance in all
material respects with applicable provisions of ERISA, the Code and other
Requirements of Law, (ii) there are no existing or pending (or, to the knowledge
of any Loan Party, threatened) claims (other than routine claims for benefits in
the normal course), sanctions, actions, lawsuits or other proceedings or
investigation involving any Benefit Plan to which any Loan Party incurs or
otherwise has or could have an obligation or any liability and (iii) no ERISA
Event is reasonably expected to occur.

(d) On the Effective Date no ERISA Event has occurred in connection with which
obligations and liabilities (contingent or otherwise) remain outstanding.

Section 4.17 Environmental Matters

(a) No Loan Party or any Real Property is subject to any pending claim, order,
proceeding or governmental investigation, nor to the knowledge of any Loan Party
has any of the foregoing been threatened in writing, under or pursuant to
Environmental Laws other than those that, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

(b) No Real Property owned, operated or leased by any Loan Party is a treatment,
storage or disposal facility requiring a Permit under the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq., the regulations thereunder or any
state analog.

 

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Section 4.18 [Intentionally Omitted]

Section 4.19 Title; Real Property

(a) Each Loan Party has good and marketable title to, or valid leasehold
interests in, all Real Property and good title or valid leasehold interests in,
all personal property, in each case that is purported to be owned or leased by
it, except where the failure to have such good and marketable title, or valid
leasehold interests, could not reasonably be expected to have a Material Adverse
Effect, and none of the Loan Parties’ properties and assets is subject to any
Lien, except Liens permitted under Section 8.2 (Liens, Etc.).

(b) Set forth on Schedule 4.19 (Real Property) is, as of the date hereof, a
complete and accurate list of all Real Property, including without limitation,
all Leases of each Loan Party and its Subsidiaries and showing, as of the date
hereof, the current street address (including, where applicable, county, state
and other relevant jurisdictions), record owner or landlord (if leased) and,
where applicable, lessee thereof.

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

Section 4.20 Credit Card Agreements.

Set forth in Schedule 4.20 (Credit Card Agreements) hereto is, as of the date
hereof, a correct and complete list of all of the Credit Card Agreements between
or among any Borrower or any of its Affiliates, on the one hand, the Credit Card
Issuers, the Credit Card Processors and any of their Affiliates, on the other
hand.

Section 4.21 Intercreditor Agreement

Exhibit N attaches the true, correct and complete copy of the Intercreditor
Agreement which, as of the date hereof, has not been amended, modified or
supplemented in any form since such May 15, 2006.

ARTICLE V

FINANCIAL COVENANTS

Each Loan Party agrees with the Lenders, the Issuers and the Administrative
Agent to the following as long as any Obligation or any Revolving Credit
Commitment remains outstanding, unless the Requisite Lenders otherwise consent
in writing:

Section 5.1 Minimum Fixed Charge Coverage Ratio

At any time Excess Availability is less than $20,000,000, the Fixed Charge
Coverage Ratio of Holdings and its Subsidiaries (on a Consolidated basis) for
the immediately preceding four consecutive Fiscal Quarters (treated as a single
account period) ending on the last

 

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day of the most recent Fiscal Quarter for which financial statements of Holdings
and its Subsidiaries have been provided pursuant to Section 6.1(a) shall be not
less than 1.10 to 1.00 with respect to such period.

ARTICLE VI

REPORTING COVENANTS

Each Loan Party agree with the Lenders, the Issuers and the Administrative Agent
to each of the following, as long as any Obligation or any Revolving Credit
Commitment remains outstanding and, in each case, unless the Requisite Lenders
otherwise consent in writing:

Section 6.1 Financial Statements

Subject to Section 6.16 (Electronic Delivery of Information), the Borrower Agent
shall furnish to the Administrative Agent each of the following:

(a) Quarterly Reports. Within 45 days after the end of the first three Fiscal
Quarters of each Fiscal Year, an unaudited Consolidated balance sheet of
Holdings and its Subsidiaries as of the close of such Fiscal Quarter and the
related unaudited Consolidated statements of income and cash flow for such
Fiscal Quarter and that portion of the Fiscal Year ending as of the close of
such Fiscal Quarter, setting forth in comparative form, in the case of the
statement of income, the figures for the corresponding period in the prior year,
in each case certified by a Responsible Officer of Holdings as fairly
presenting, in all material respects, the Consolidated financial condition of
Holdings and its Subsidiaries as at the dates indicated and the results of their
operations for the periods indicated in accordance with GAAP (subject to the
absence of footnote disclosure and normal year-end audit adjustments).

(b) Annual Reports. Within 90 days after the end of each Fiscal Year, a
Consolidated balance sheet of Holdings and its Subsidiaries as of the end of
such Fiscal Year and related Consolidated statements of income and cash flows of
Holdings and its Subsidiaries for such Fiscal Year, all prepared in conformity
with GAAP and certified, in the case of such Consolidated Financial Statements,
without qualification as to the scope of the audit or as to the Borrowers being
a going concern by the Borrowers’ Accountants, together with the report of such
accounting firm stating that (i) such Financial Statements fairly present, in
all material respects, the Consolidated financial condition of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except for changes with which the Borrowers’
Accountants shall concur and that shall have been disclosed in the notes to the
Financial Statements) and (ii) the examination by the Borrowers’ Accountants in
connection with such Consolidated Financial Statements has been made in
accordance with generally accepted auditing standards, and accompanied by a
certificate stating, and subject to Statement on Auditing Standards 62, that in
the course of the regular audit of the business of the Holdings and its
Subsidiaries such accounting firm has obtained no knowledge that a Default or
Event of Default in respect of the financial covenants contained in Article V
(Financial Covenants) has occurred and is continuing, or, if in the opinion of
such accounting firm, a Default or Event of Default has occurred and is
continuing in respect of such financial covenants, a statement as to the nature
thereof.

 

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(c) Compliance Certificate. Together with each delivery of any Financial
Statement pursuant to clause (a) or (b) above, a certificate of a Responsible
Officer of the Borrowers (each, a “Compliance Certificate”) (i) showing in
reasonable detail the calculations used in determining the Quarterly Excess
Availability (for purposes of determining the Applicable Margin) and
demonstrating compliance with the financial covenant contained in Article V
(Financial Covenants) but only if and to the extent compliance with such
financial covenant was required during the applicable period and (ii) stating
that no Default or Event of Default has occurred and is continuing or, if a
Default or an Event of Default has occurred and is continuing, stating the
nature thereof and the action that the Borrowers propose to take with respect
thereto.

(d) Business Plan. Within 60 days after the end of each Fiscal Year, the annual
business plan of Holdings and its Subsidiaries for the next succeeding Fiscal
Year prepared on a Consolidated basis for each Fiscal Quarter in such Fiscal
Year which shall include a Consolidated balance sheet and income statement and
statement of cash flows for Holdings and its Subsidiaries for each such Fiscal
Quarter.

Section 6.2 Default Notices

As soon as practicable, and in any event within five Business Days after a
Responsible Officer of any Loan Party has actual knowledge of the existence of
any (A) Default, Event of Default or other event having had, or having any
reasonable likelihood of causing, or resulting in, a Material Adverse Effect or
(B) any “Default”, “Event of Default” (as such terms are defined under the Term
Loan Facility) or other event having had, or having any reasonable likelihood of
causing, or resulting in, a “Material Adverse Effect” (as such term is defined
under the Term Loan Facility), in each case in clauses (A) and (B) above, the
Borrowers shall give the Administrative Agent notice specifying the nature of
such Default or Event of Default or other event, including the anticipated
effect thereof, which notice, if given by telephone, shall be promptly confirmed
in writing on the next Business Day.

Section 6.3 Litigation

Subject to Section 6.16 (Electronic Delivery of Information), promptly after the
commencement thereof, the Borrower Agent shall give the Administrative Agent
written notice of the commencement of all actions, suits and proceedings before
any domestic or foreign Governmental Authority or arbitrator affecting any Loan
Party that (i) seeks injunctive or similar relief or (ii) exposes such Loan
Party to liability that, in the case of either clause (i) or (ii), could
reasonably be expected to have a Material Adverse Effect.

Section 6.4 [Intentionally Omitted]

Section 6.5 SEC Filings

Subject to Section 6.16 (Electronic Delivery of Information), promptly after the
sending or filing thereof, the Borrower Agent shall send the Administrative
Agent copies of (a) all reports that Holdings sends to its security holders
generally, and (b) all reports and registration statements that any Loan Party
files with the Securities and Exchange Commission or any national or foreign
securities exchange or the National Association of Securities Dealers, Inc.

 

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Section 6.6 Labor Relations

Subject to Section 6.16 (Electronic Delivery of Information), promptly after
becoming aware of the same, the Borrower Agent shall give the Administrative
Agent written notice of (a) any material labor dispute to which any Loan Party
is or may become a party, including any strikes, lockouts or other disputes
relating to any of such Person’s plants and other facilities, and (b) any Worker
Adjustment and Retraining Notification Act or related liability incurred with
respect to the closing of any plant or other facility of any such Person, in
each case in clause (a) and (b) that could reasonably be expected to have a
Material Adverse Effect.

Section 6.7 Tax Returns

Upon the request of any Lender, through the Administrative Agent, the Borrower
Agent shall provide copies of all federal, state, local and foreign tax returns
and reports filed by any Loan Party in respect of taxes measured by income
(excluding sales, use, property and like taxes).

Section 6.8 Insurance

As soon as is practicable and in any event by the last day of each Fiscal Year,
the Borrower Agent shall furnish the Administrative Agent evidence reasonably
satisfactory to the Administrative Agent of all material insurance coverage
maintained by the Loan Parties.

Section 6.9 ERISA Matters

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

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

(b) promptly and in any event within 10 days after any ERISA Affiliate knows or
has reason to know that a request for a minimum funding waiver under Section 412
of the Code has been filed with respect to any Title IV Plan or Multiemployer
Plan, a written statement of a Responsible Officer of the Borrower Agent
describing such ERISA Event or waiver request and any action, that any ERISA
Affiliate proposes to take with respect thereto, together with a copy of any
notice filed with the PBGC or the IRS pertaining thereto.

Section 6.10 Environmental Matters

Subject to Section 6.16 (Electronic Delivery of Information), the Borrower Agent
shall provide the Administrative Agent promptly and in any event within 10 days
after any Loan Party learning of any of the following, written notice of each of
the following:

(a) that any Loan Party is or may be liable to any Person as a result of a
Release or threatened Release that could reasonably be expected to subject such
Loan Party to Environmental Liabilities and Costs which could reasonably be
expected to have a Material Adverse Effect;

 

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(b) the receipt by any Loan Party of notification that any real or personal
property of such Loan Party is or is reasonably likely to be subject to any
Environmental Lien that could reasonably be expected to have a Material Adverse
Effect;

(c) the receipt by any Loan Party of any notice of violation of or potential
liability under, or knowledge by such Loan Party that there exists a condition
that could reasonably be expected to result in a violation of or liability
under, any Environmental Law, except for violations and liabilities the
consequence of which, in the aggregate, could not reasonably be expected to
subject the Loan Parties collectively to Environmental Liabilities and Costs
which could reasonably be expected to have a Material Adverse Effect;

(d) the commencement of any judicial or administrative proceeding or
investigation alleging a violation of or liability under any Environmental Law,
that, in the aggregate, could reasonably be expected to subject the Loan Parties
collectively to Environmental Liabilities and Costs which could reasonably be
expected to have a Material Adverse Effect;

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

Section 6.11 Borrowing Base Determination

(a) Borrower Agent shall provide Administrative Agent with the following
documents in a form 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) so long as no Default or Event of
Default exists and Excess Availability shall be greater than $20,000,000 (and
more frequently as Administrative Agent may require at any time a Default or
Event of Default exists or Excess Availability is less than $20,000,000), a
Borrowing Base Certificate setting forth the calculation of the Borrowing Base
as of the last Business Day of the immediately preceding applicable period as to
the Accounts and Eligible Inventory, duly completed and executed by a
Responsible Officer of the Borrower Agent, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly completed;

(b) The Borrowers shall conduct, or shall cause to be conducted, at their
reasonable expense and upon request of the Administrative Agent, and present to
the Administrative Agent for approval, updates to the Initial Inventory
Appraisal that shall be in form and substance 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; provided, however, that as long as no Default or
Event of Default exists and is continuing and as long as Excess Availability is
greater than $20,000,000, the Borrowers shall not be required to conduct Updated
Inventory Appraisals more than (x) 0 times in any period of 12 consecutive
months if no Obligations are outstanding under this Facility, (y) once in any
period of 12 consecutive months if Obligations are outstanding under this
Facility, and (z) twice in any period of 12 consecutive months if Excess
Availability is less than $20,000,000;

(c) The Administrative Agent may carry out investigations and reviews of each
Loan Parties’ property at the reasonable expense of the Borrowers (including
field audits conducted by the Administrative Agent) (“Field Examination”);
provided, however, that as long as no Default or Event of Default exists and is
continuing and as long as Excess Availability is

 

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greater than $20,000,000, the Administrative Agent shall carry out Field
Examinations, no more than (x) 0 times in any period of 12 consecutive months if
no Obligations are outstanding under this Facility, (y) one time in any period
of 12 consecutive months if Obligations are outstanding under this Facility, and
(z) twice in any period of 12 consecutive months if Excess Availability is less
than $20,000,000. The Borrowers 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) Concurrent with delivery to the agent under the Term Loan Facility, or at
any time as Administrative Agent may request at Borrowers’ expense on or after
an Event of Default has occurred and is continuing, deliver or cause to be
delivered to Administrative Agent written appraisals as to the Intellectual
Property.

(e) Nothing contained in any Borrowing Base Certificate shall be deemed to
limit, impair or otherwise affect the rights of the Administrative Agent
contained herein and in the event of any conflict or inconsistency between the
calculation of the Borrowing Base as set forth in any Borrowing Base Certificate
and as determined by Administrative Agent in its good faith, the determination
of Administrative Agent shall govern and be conclusive and binding upon
Borrowers and Guarantors, absent manifest error. Without limiting the foregoing,
Borrowers shall furnish to Administrative Agent any information which
Administrative Agent may reasonably request regarding the determination and
calculation of any of the amounts set forth in any Borrowing Base Certificate.
The Borrowing Base may be adjusted based on the information set forth in the
reports received by Administrative Agent pursuant to Section 6.11(a)(i) above.

Section 6.12 [Intentionally Omitted]

Section 6.13 Tax Reporting

In the event that any of the Borrowers determines that it intends to treat any
of the Loans, the Letters of Credit, or the related transactions contemplated
hereby as a “reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4, the Borrower Agent shall give the Administrative Agent written
notice thereof and shall deliver to the Administrative Agent all IRS forms
required in connection therewith.

Section 6.14 New Collateral Locations

Each Loan Party may only open any new location within the continental United
States provided such Loan Party (a) gives Administrative Agent ten (10) days
prior written notice of the intended opening of any such new location and
(b) executes and delivers, or causes to be executed and delivered, to
Administrative Agent such agreements, documents, and instruments as
Administrative Agent may deem reasonably necessary or desirable to protect its
interests in the Collateral at such location; provided, that, without limiting
the obligations of Borrowers and Guarantors pursuant to Section 7.1
(Preservation of Corporate Existence, Etc.) hereof or otherwise hereunder, the
Loan Parties shall not be required to comply with the foregoing conditions with
respect to the opening by them of any new retail or factory store locations.

 

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Section 6.15 Other Information

The Borrowers shall provide the Administrative Agent or any Lender with such
other information respecting the business, properties, condition, financial or
otherwise, or operations of Holdings, the Borrowers or any Subsidiary of the
Borrowers as the Administrative Agent or such Lender may from time to time
reasonably request.

Section 6.16 Electronic Delivery of Information

(a) The Borrowers may deliver documents, materials and other information
required to be delivered pursuant to Article VI (collectively, “Information”) in
an electronic format acceptable to the Administrative Agent by e-mailing any
such Information to an e-mail address of the Administrative Agent as specified
by the Administrative Agent to the Borrower Agent from time to time. Any
Information provided in such manner shall only be deemed to have been delivered
to the Administrative Agent and the Lenders on the date on which the
Administrative Agent posts such Information on the Borrowers’ behalf (which the
Administrative Agent agrees to do promptly upon receipt from the Borrower Agent)
on an internet or intranet website to which each Lender and the Administrative
Agent has access, whether a commercial, third-party website (such as Intralinks
or SyndTrak) or a website sponsored by the Administrative Agent.

(b) In addition, the Borrowers may deliver Information required to be delivered
pursuant to this Article VI, by posting any such Information to Holding’s
internet website (as of the Agreement Date, www.jcrew.com). Any such Information
provided in such manner shall only be deemed to have been delivered to the
Administrative Agent or a Lender on the date on which the Administrative Agent
or such Lender, as applicable, receives notice from the Borrower that such
Information has been posted to the Borrower’s internet website. In addition to
any manner permitted by Section 11.8, the Borrower may notify the Administrative
Agent or a Lender that Information has been posted to such a website by causing
an e-mail notification to be sent to an e-mail address specified from time to
time by the Administrative Agent or such Lender, as applicable.

(c) Notwithstanding anything in this Section to the contrary, the obligations of
the Borrowers to deliver (i) the financial statements referred to in
Sections 6.1(a) and (b) shall be satisfied when Holdings files its Form 10-Q and
10-K, respectively, with the Securities and Exchange Commission, (ii) notices
required under Section 6.3, 6.6 or 6.10 shall be satisfied when Holdings files a
Form 8-K with the Securities and Exchange Commission regarding the matters
referred to in such Section, and (iii) the reports required to be delivered
under Section 6.5 shall be satisfied to the extent Holdings files such reports
with the Securities and Exchange Commission.

ARTICLE VII

AFFIRMATIVE COVENANTS

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

 

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Section 7.1 Preservation of Corporate Existence, Etc.

Each Loan Party shall preserve and maintain its legal existence, except as
permitted by Section 8.4.

Section 7.2 Compliance with Laws, Etc.

Each Loan Party shall comply with all applicable Requirements of Law and
Permits, except where the failure so to comply could not reasonably be expected
to, in the aggregate, have a Material Adverse Effect.

Section 7.3 Conduct of Business

From and after the Effective Date, no Loan Party shall, nor shall it permit any
of its Subsidiaries to, engage in any business other than the businesses engaged
in by the Loan Parties on the Effective Date, and any business reasonably
incidental, related, ancillary or complimentary thereto.

Section 7.4 Payment of Taxes, Etc.

Each Loan Party shall pay and discharge before the same shall become delinquent,
all lawful governmental claims, taxes, assessments, charges and levies, except
(x) where contested in good faith, by proper proceedings and adequate reserves
therefor have been established on the books of such Loan Party in conformity
with GAAP or (y) where the failure to pay and discharge of such delinquent
claims, taxes, assessments, charges and levies could not reasonably be expected
to have a Material Adverse Effect.

Section 7.5 Maintenance of Insurance

Each Loan Party shall (a) maintain or cause to be maintained insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Loan Party operates, and, in any event, all insurance required by any
Collateral Documents and (b) cause all property and liability insurance relating
to Holdings or any other Loan Party to name the Administrative Agent on behalf
of the Secured Parties as additional insured or loss payee, as appropriate, and
to provide that no cancellation, or material decrease in coverage shall be
effective with respect to the Administrative Agent and the Lenders until after
30 days’ written notice thereof to the Administrative Agent. Without limiting
the generality of the foregoing, Holdings shall maintain or cause to be
maintained replacement value casualty insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times carried or maintained
under similar circumstances by Persons established reputation engaged in similar
businesses.

Section 7.6 Access

Each Loan Party shall from time to time permit the Administrative Agent, or any
agents or representatives thereof, upon at least two Business Days prior written
notification of the same (except that during the continuance of an Event of
Default, no such notice shall be required) to (a) examine and make copies of and
abstracts from the records and books of account of each

 

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Loan Party, (b) visit the properties of each Loan Party, (c) discuss the
affairs, finances and accounts of each Loan Party with any officer or director
of such Loan Party and (d) communicate directly with any certified public
accountants (including the Borrowers’ Accountants).

Section 7.7 Keeping of Books

Each Loan Party shall keep proper books of record and account in conformity with
GAAP of all financial transactions and the assets and business of each Loan
Party.

Section 7.8 Maintenance of Properties, Etc.

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

Section 7.9 Application of Proceeds

The Borrowers (and, to the extent distributed to them by the Borrowers, each
Loan Party) shall use the entire amount of the proceeds of the Loans as provided
in Section 4.13(Use of Proceeds).

Section 7.10 Environmental

Each Loan Party shall comply with all Environmental Laws except where the
failure to comply with such Environmental Laws could not reasonably be expected
to have a Material Adverse Effect, and, without limiting the foregoing, the
Borrowers shall, at their sole cost and expense, upon receipt of any
notification or otherwise obtaining knowledge of any Release or other event that
has any reasonable likelihood of any Loan Party incurring Environmental
Liabilities and Costs which could reasonably be expected to have a Material
Adverse Effect, take such Remedial Action and undertake such investigation or
other action as required by Environmental Laws or as any Governmental Authority
requires or as is appropriate and consistent with good business practice to
address the Release or event and otherwise ensure compliance with Environmental
Laws as required by this Section.

Section 7.11 Additional Collateral and Guaranties

To the extent not delivered to the Administrative Agent on or before the
Effective Date (including in respect of after-acquired property and Persons that
become Subsidiaries of any Loan Party after the Effective Date), each Loan Party
shall promptly do each of the following, unless otherwise agreed by the
Administrative Agent:

(a) deliver to the Administrative Agent such duly-executed supplements and
amendments to the Guaranty (or, in the case of any Subsidiary of any Loan Party
that is not a Domestic Subsidiary or that holds shares in any Person that is not
a Domestic Subsidiary, foreign guarantees and related documents), in each case
in form and substance reasonably satisfactory to the Administrative Agent and as
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order to ensure that each Subsidiary of each Loan Party that has entered into
Guaranty Obligations in respect of the Indebtedness of any Loan Party owing
under the Term Loan Facility or any other Person that has entered into any such
Guaranty Obligations guaranties, as primary obligor and not as surety, the full
and punctual payment when due of the Obligations or any part thereof; provided,
however, in no event shall any Excluded Foreign Subsidiary be required to
guaranty the payment of the Obligations unless the Borrower Agent and the
Administrative Agent otherwise agree and; provided, further, the terms of this
clause (a) shall only apply to Material Domestic Subsidiaries of the Loan
Parties solely after the satisfaction in full of all of the obligations
outstanding under the Term Loan Facility and the Borrower Agent has provided the
Administrative Agent evidence of the termination of such Term Loan Facility;

(b) deliver to the Administrative Agent such duly-executed joinder and
amendments to the Pledge and Security Agreement and, if applicable, other
Collateral Documents (or, in the case of any such Subsidiary of any Loan Party
that is not a Domestic Subsidiary or that holds shares in any Person that is not
a Domestic Subsidiary, foreign charges, pledges, security agreements and other
Collateral Documents), in each case in form and substance reasonably
satisfactory to the Administrative Agent and as the Administrative Agent deems
necessary or advisable in order to (i) effectively grant to the Administrative
Agent, for the benefit of the Secured Parties, a valid, perfected and
enforceable first-priority security interest in the Stock and Stock Equivalents
and other debt Securities owned by any Loan Party or any Subsidiary of any Loan
Party that has entered into Guaranty Obligations in respect of the Indebtedness
of any Loan Party made under the Term Loan Facility or any other Person that has
entered into any such Guaranty Obligations and (ii) effectively grant to the
Administrative Agent, for the benefit of the Secured Parties, a valid, perfected
and enforceable first-priority security interest in all property interests and
other assets of any Loan Party or any Subsidiary of any Loan Party that has
entered into Guaranty Obligations in respect of the Indebtedness of any Loan
Party made under the Term Loan Facility or any other Person that has entered
into any such Guaranty Obligations; provided, however, in no event shall (x) any
Loan Party or any of its Subsidiaries, individually or collectively, be required
to pledge in excess of 66% of the outstanding Voting Stock of any Excluded
Foreign Subsidiary or (y) any assets of any Excluded Foreign Subsidiary be
required to be pledged, unless the Borrower and the Administrative Agent
otherwise agree and; provided, further, the terms of this clause (b) shall only
apply to Material Domestic Subsidiaries of the Loan Parties solely after the
satisfaction in full of all of the obligations outstanding under the Term Loan
Facility and the Borrower Agent has provided the Administrative Agent evidence
of the termination of such Term Loan Facility;

(c) deliver to the Administrative Agent all certificates, instruments and other
documents representing all Pledged Stock, Pledged Debt Instruments and all other
Stock, Stock Equivalents and other debt Securities being pledged pursuant to the
joinders, amendments and foreign agreements executed pursuant to clause (b)
above, together with (i) in the case of certificated Pledged Stock and other
certificated Stock and Stock Equivalents, undated stock powers endorsed in blank
and (ii) in the case of Pledged Debt Instruments and other certificated debt
Securities, endorsed in blank, in each case executed and delivered by a
Responsible Officer of such Loan Party or such Subsidiary thereof, as the case
may be;

(d) to take such other actions necessary or advisable to ensure the validity or
continuing validity of the guaranties required to be given pursuant to
clause (a) above or to create, maintain or perfect the security interest
required to be granted pursuant to clause (b) above, including the filing of UCC
financing statements in such jurisdictions as may be required by the Collateral
Documents or by law or as may be reasonably requested by the Administrative
Agent; and

 

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(e) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

Section 7.12 Control Accounts; Approved Deposit Accounts

(a) Each Loan Party may establish or maintain any Deposit Account (including,
maintaining or establishing certain Deposit Accounts for the purposes of
receiving store receipts from a retail store location of a Borrower,
collectively, the “Store Accounts” and each individually, a “Store Account”);
provided, however, each Loan Party shall (i) deposit all cash it receives,
including, without limitation, all proceeds from sales of Inventory (including,
without limitation, all amounts payable to each Borrower from Credit Card
Issuers and Credit Card Processors and all other proceeds of Collateral) in
every form, cash, checks, credit card sales drafts, credit card sales or charge
slips or receipts and other forms of daily store receipts, from each retail
store location of such Borrower into an Approved Deposit Account of such
Borrower on each Business Day and (ii) not establish or maintain any Securities
Account that is not a Control Account; provided, further, notwithstanding the
foregoing, each Loan Party may maintain credit balances in Store Accounts, or
other accounts that are not Approved Deposit Accounts, so long as the aggregate
balance in all such accounts does not exceed $10,000,000.

(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 and (ii) deposit in
an Approved Deposit Account immediately upon receipt all Proceeds of such
Accounts received by any Loan Party from any other Person.

(c) In the event (i) any Loan Party or any Deposit Account Bank shall, after the
date hereof, terminate an agreement with respect to the maintenance of an
Approved Deposit Account for any reason, (ii) the Administrative Agent shall
demand such termination as a result of the failure of a Deposit Account Bank to
comply with the terms of the applicable Deposit Account Control Agreement or
(iii) the Administrative Agent determines in its sole discretion that the
financial condition of a Deposit Account Bank has materially deteriorated, each
Loan Party notify all of their respective obligors that were making payments to
such terminated Approved Deposit Account to make all future payments to another
Approved Deposit Account.

(d) In the event (i) any Loan Party or any Approved Securities Intermediary
shall, after the date hereof, terminate an agreement with respect to the
maintenance of a Control Account for any reason, (ii) the Administrative Agent
shall demand such termination as a result of the failure of an Approved
Securities Intermediary to comply with the terms of the applicable Securities
Account Control Agreement or (iii) the Administrative Agent determines in its
sole discretion that the financial condition of an Approved Securities
Intermediary has materially deteriorated, each Loan Party shall notify all of
its obligors that were making payments to such terminated Control Account to
make all future payments to another Control Account.

(e) The Administrative Agent may establish one or more Cash Collateral Accounts
with such depositaries and Securities Intermediaries as it in its sole
discretion shall determine; provided, however, that no Cash Collateral Account
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respect to the assets of any Excluded Foreign Subsidiary and (ii) except as
expressly permitted elsewhere in this Agreement, if an Event of Default has not
occurred and is continuing or Excess Availability is not less than $20,000,000.
Each Borrower agrees that each such Cash Collateral Account shall meet the
requirements of the definition of “Cash Collateral Account”. Without limiting
the foregoing, funds on deposit in any Cash Collateral Account may be invested
(but the Administrative Agent shall be under no obligation to make any such
investment) in Cash Equivalents at the direction of the Administrative Agent
and, except during the continuance of an Event of Default, the Administrative
Agent agrees with the Borrowers to issue Entitlement Orders for such investments
in Cash Equivalents as requested by the Borrower; provided, however, that the
Administrative Agent shall not have any responsibility for, or bear any risk of
loss of, any such investment or income thereon. No Loan Party and no Person
claiming on behalf of or through any Loan Party shall have any right to demand
payment of any funds held in any Cash Collateral Account at any time prior to
the termination of all outstanding Letters of Credit and the payment in full of
all then outstanding and payable monetary Obligations. The Administrative the
Administrative Agent shall apply all funds on deposit in a Cash Collateral
Account as provided in Section 2.13(g).

(f) The requirements of this Section 7.12 shall not apply to any Excluded
Foreign Subsidiary.

Section 7.13 Collateral Access Agreements, Bailee’s Letters and Credit Card
Acknowledgments

Each Loan Party (other than Holdings) shall, within 30 days after the Effective
Date (or such later date as shall be acceptable to the Administrative Agent in
its sole discretion), deliver to the Administrative Agent copies of notices sent
by the applicable Loan Party to the other parties to the Collateral Access
Agreements, Bailee’s Letters and Credit Card Acknowledgements in effect on the
Effective Date and, set forth on Schedule 7.13, notifying such parties of the
resignation of the Existing Agent and the amendment and restatement of the
Existing Credit Agreement.

Section 7.14 Real Property

(a) Each Loan Party shall (i) comply with all of their respective obligations
under all of their respective Leases now or hereafter held respectively by them,
including the Leases set forth on Schedule 4.19 (Real Property) except where the
failure to comply could reasonably be expected to have a Material Adverse
Effect, (ii) not assign or sublet any other Lease if such assignment or sublet
could reasonably be expected to have a Material Adverse Effect, and
(iii) provide the Administrative Agent with a copy of each notice of default
under any Lease that could reasonably be expected to have a Material Adverse
Effect received by any Loan Party within 2 Business Days receipt thereof and
deliver to the Administrative Agent a copy of each notice of default sent by a
Loan Party under any Lease simultaneously with its delivery of such notice under
such Lease.

(b) Promptly upon any Borrower or any Guarantor acquiring any owned Real
Property with a Fair Market Value in excess of $5,000,000 (“Material Real
Property”), the Borrower Agent shall provide the Administrative Agent written
notice thereof and, upon written request of the Administrative Agent, such
Borrower or Guarantor shall provide a Phase I environmental report on such Real
Property.

 

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(c) To the extent not previously delivered to the Administrative Agent, upon
written request of the Administrative Agent, the Borrowers shall, and shall
cause each Subsidiary Guarantor to, execute and deliver to the Administrative
Agent, for the benefit of the Secured Parties, promptly and in any event not
later than 45 days after receipt of such notice, a Mortgage on any Real Property
owned (as opposed to leased by) the Loan Parties together with (i) if requested
by the Administrative Agent and such Material Real Property is located in the
United States, all Mortgage Supporting Documents relating thereto or
(ii) otherwise, documents similar to Mortgage Supporting Documents reasonably
deemed by the Administrative Agent to be appropriate in the applicable
jurisdiction to obtain the equivalent in such jurisdiction of a first-priority
mortgage on such Real Property.

ARTICLE VIII

NEGATIVE COVENANTS

The Borrowers and Holdings agree with the Lenders, the Issuers and the
Administrative Agent to each of the following, as long as any Obligation or any
Revolving Credit Commitment remains outstanding and, in each case, unless the
Requisite Lenders otherwise consent in writing:

Section 8.1 Indebtedness

No Loan Party shall, directly or indirectly create, incur, assume or otherwise
become or remain liable with respect to any Indebtedness except for the
following:

(a) the Obligations;

(b) Indebtedness of any Subsidiary Guarantor to the Borrowers or to any other
Guarantor, or of any Borrower to Holdings or to any other Guarantor, or of
Holdings to any Borrower or any other Guarantor; provided, (i) if such
Indebtedness shall be evidenced by promissory notes, all such notes shall be
pledged pursuant to the Pledge and Security Agreement, (ii) all such
Indebtedness shall be unsecured and subordinated in right of payment to the
payment in full of the Obligations pursuant to the terms of any applicable
promissory notes or an intercompany subordination agreement that in any such
case, is reasonably satisfactory to the Administrative Agent, and (iii) the
Borrowers and the Subsidiary Guarantors shall not be permitted to make any
payments to Holdings in respect of any such Indebtedness owing to Holdings
unless such payments would be expressly permitted to be made, if made by way of
a dividend or other Restricted Payment pursuant to Section 8.5;

(c) Indebtedness incurred by Holdings or any of its Subsidiaries arising from
agreements providing for indemnification, earn-outs, adjustment of purchase
price or similar obligations, or from guaranties or letters of credit, surety
bonds or performance bonds securing the performance of Holdings or any such
Subsidiary pursuant to such agreements, in connection with Permitted
Acquisitions or Asset Sale of any business, assets or Subsidiary of Holdings or
any of its Subsidiaries permitted hereunder;

(d) Indebtedness which may be deemed to exist pursuant to any worker’s
compensation claims, self-insurance obligations, guaranties, performance,
surety, statutory, appeal, custom bonds or similar obligations incurred in the
ordinary course of business;

 

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(e) Indebtedness in respect of (x) netting services, overdraft protections and
otherwise in connection with Deposit Accounts or Securities Accounts and (y) the
endorsement of instruments for collection or deposits in the ordinary course of
business;

(f) guaranties in the ordinary course of business of the obligations of
suppliers, franchisees and licensees of Holdings and its Subsidiaries;

(g) guaranties by Holdings and its Subsidiaries of Indebtedness or other
obligations of Subsidiaries of Holdings or guaranties by a Subsidiary of
Holdings of Indebtedness or other obligations of Holdings and its Subsidiaries
with respect, in each case, to Indebtedness otherwise permitted to be incurred
pursuant to this Section 8.1, or other obligations not prohibited hereunder;
provided, however, if any guaranty of Indebtedness or other obligations of a
Subsidiary that is not a Loan Party gives rise to an Investment in such
Subsidiary, such Investment must be permitted under Section 8.3;

(h) Indebtedness existing on the date hereof and described in Schedule 8.1,
together with any Permitted Refinancing of any Indebtedness permitted under this
clause (h);

(i) purchase money Indebtedness and Indebtedness with respect to Capital Leases,
in each case, incurred by the Borrowers or any Subsidiary to finance the
acquisition of fixed assets, in an aggregate amount not to exceed $50,000,000 at
any time outstanding (together with any Permitted Refinancing of any
Indebtedness permitted under this clause (i)); provided, that any such
Indebtedness (including any Permitted Refinancing thereof) shall be secured only
by the assets (and proceeds thereof) acquired in connection with the initial
incurrence of such Indebtedness;

(j) Indebtedness under the Term Loan Facility in an aggregate principal amount
not to exceed $285,000,000 or such other amounts permitted under the
Intercreditor Agreement, and any Permitted Refinancing thereof;

(k) Acquired Indebtedness, in an aggregate principal amount not to exceed
$20,000,000 at any time outstanding together with any Permitted Refinancing of
any Indebtedness permitted under this clause (k);

(l) other unsecured Indebtedness of Holdings and its Subsidiaries in an
aggregate principal amount not to exceed at any time $25,000,000;

(m) Indebtedness of any Borrower under Permitted Seller Notes issued as
consideration in connection with a Permitted Acquisition, in an aggregate
principal amount not to exceed at any time $10,000,000;

(n) Indebtedness arising under Hedging Contracts permitted under Section 8.15
(No Speculative Transactions);

(o) Indebtedness incurred in connection with Asset Sales constituting sale
leaseback transactions provided that the outstanding principal amount of such
Indebtedness (other than sale leaseback transactions involving distribution
centers) shall not exceed $20,000,000 in the aggregate; and

 

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(p) 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.

Section 8.2 Liens, Etc.

No Loan Party shall create or suffer to exist, any Lien upon or with respect to
any of their respective properties or assets, whether now owned or hereafter
acquired, except for the following:

(a) Liens in favor of Collateral Agent for the benefit of Secured Parties
granted pursuant to any Financing Agreement (including for the purpose of
securing any Cash Management Obligations or any Hedging Contract);

(b) Liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which is being
contested in good faith by appropriate proceedings diligently pursued and with
respect to which adequate reserves or other appropriate provisions are being
maintained to the extent required by GAAP;

(c) statutory Liens of landlords, banks (and rights of set-off), of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law (other than any such Lien imposed pursuant to Section 401 (a)(29)
or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in
the ordinary course of business (i) for amounts not yet overdue or (ii) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of thirty days) are being contested in good faith by
appropriate proceedings, with respect to which adequate reserves or other
appropriate provisions are being maintained to the extent required by GAAP;

(d) Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money or other Indebtedness);

(e) easements, rights-of-way, restrictions, encroachments, and other defects,
exceptions or irregularities in title, in each case which do not materially
interfere with the ordinary conduct of the business of Holdings or any of its
Subsidiaries;

(f) any interest or title of a lessor or sublessor under any lease;

(g) Liens solely on any cash earnest money deposits made by Holdings or any of
its Subsidiaries in connection with any letter of intent or purchase agreement
permitted hereunder;

(h) purported Liens evidenced by the filing of precautionary UCC financing
statements;

(i) Liens 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;

 

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(j) any zoning or similar law or right reserved to or vested in any governmental
office or agency to control or regulate the use of any real property;

(k) Liens described in Schedule 8.2 or, solely with respect to fee-owned Real
Property on a title report delivered in connection with any Real Property
subject to a Mortgage;

(l) Liens securing Indebtedness permitted pursuant to Section 8.1(i) or (m);
provided, any such Lien shall encumber only the asset (and proceeds thereof)
acquired upon the initial incurrence of such Indebtedness or subject to a sale
leaseback transaction, as applicable;

(m) Liens securing Indebtedness permitted pursuant to Section 8.1(j);

(n) Liens securing Acquired Indebtedness permitted under Section 8.1(k);
provided that such Lien was not created in contemplation of the applicable
Acquisition or asset acquisition;

(o) Liens arising in connection with out-bound licenses of patents, copyrights,
trademarks and other Intellectual Property rights granted by any Borrower or any
or any of its Subsidiaries in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of the business of
Holdings or any of its Subsidiaries,

(p) Liens or rights of setoff against credit balances of any 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 any Borrower or
any of its Subsidiaries in the ordinary course of business, but not Liens on or
rights of setoff against any other property or assets of any Borrower or any of
its Subsidiaries pursuant to the Credit Card Agreements (as in effect on the
date hereof) to secure the obligations of any Borrower or any of its
Subsidiaries to the Credit Card Issuers or Credit Card Processors as a result of
fees and chargebacks;

(q) deposits of cash with the owner or lessor of premises leased and operated by
any Borrower or any of its Subsidiaries in the ordinary course of business of
such Borrower and such Subsidiary to secure the performance of such Borrower’s
or such Subsidiary’s obligations under the terms of the lease for such premises;
and

(r) Liens arising from judgments in circumstances not constituting an Event of
Default hereunder.

Section 8.3 Investments

No Loan Party shall make or maintain, directly or indirectly, any Investment
except for the following:

(a) Investments in cash and Cash Equivalents;

(b) Investments in (i) any Borrower, any Guarantor or any other Loan Party,
(ii) Subsidiaries that are not Loan Parties described on Schedule 8.3 and
(iii) Subsidiaries that are not Loan Parties and not described on Schedule 8.3
in an aggregate initial amount not to exceed $10,000,000;

(c) other Investments described on Schedule 8.3;

 

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(d) Investments (i) in any Securities received in satisfaction or partial
satisfaction thereof from financially troubled obligors, (ii) deposits,
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of Holdings and its Subsidiaries and
(iii) Investments received upon the foreclosure with respect to any secured
Investment of any Loan Party or any Subsidiary thereof or other transfer of
title with respect to any secured Investment of any Loan Party or any Subsidiary
thereof;

(e) intercompany loans to the extent permitted under Section 8.1(b);

(f) loans and advances to employees of Holdings and its Subsidiaries (other than
Inactive Subsidiaries) made in the ordinary course of business, in an aggregate
principal amount not to exceed $5,000,000 at any time;

(g) Investments made after the Effective Date by (i) Holdings, the Borrowers or
any other Guarantor in connection with Permitted Acquisitions; (ii) any
Subsidiary that is not a Subsidiary Guarantor in Holdings (to the extent that
such Investment, if it were made as a Restricted Payment to Holdings, would be
permitted to be made under Section 8.5), the Borrowers or any other Subsidiary
Guarantor; (iii) Holdings, the Borrowers or any Subsidiary Guarantor in any
joint venture that is not a Subsidiary; provided, that the aggregate initial
amount of all Investments permitted pursuant to this clause (iii) shall not
exceed $5,000,000 at any time; or (iv) the Borrowers or any Subsidiary Guarantor
in Holdings, solely to the extent that such Investment, if it were made as a
Restricted Payment to Holdings, would be permitted to be made under Section 8.5;

(h) Investments permitted pursuant to Section 8.1(e)(y), 8.1(f), 8.1(g) and
8.1(m);

(i) extensions of trade credit in the ordinary course of business;

(j) Investments of any Person in existence at the time such Person becomes a
Subsidiary; provided that such Investment was not created in anticipation of
such Person becoming a Subsidiary and the Loan Parties shall have complied with
the applicable requirements of Section 7.11;

(k) Investments made in Persons that are newly formed Subsidiaries that will
become Guarantors in connection with the formation thereof, provided that the
Loan Parties shall have complied with the applicable requirements of
Section 7.11;

(l) Permitted Acquisitions, provided, however, that the Loan Parties shall have
complied with the requirements of Sections 7.11 and 7.14 upon the consummation
of such Permitted Acquisition;

(m) Investments in notes and other debt Securities received in connection with
transactions permitted under Section 8.4(b); and

(n) other Investments in an aggregate initial amount not to exceed at any time
$5,000,000.

 

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Section 8.4 Sale of Assets

No Loan Party shall sell, convey, transfer, lease or otherwise dispose of, any
of their respective assets or any interest therein (including the sale or
factoring at maturity or collection of any accounts) to any Person or merge or
consolidate with any Person, except in the case of Holdings, issue or sell any
shares of their Stock or any Stock Equivalents (any such disposition being an
“Asset Sale”), except for the following:

(a) any Subsidiary may be merged with or into any Borrower or any other
Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to any Borrower, any Subsidiary Guarantor or other any Subsidiary
provided such Subsidiary becomes a Guarantor in accordance with Section 7.11;
provided, in the case of such a merger, such Borrower or such Subsidiary
Guarantor, as applicable shall be the continuing or surviving Person;

(b) as long as no Default or Event of Default is continuing or would result
therefrom and as long as Excess Availability (both before and after giving
effect to such Asset Sale) is greater than $20,000,000, any other Asset Sale;
provided, however, Net Cash Proceeds from any such Asset Sale in excess of
$25,000,000 in any fiscal year (valued at the principal amount thereof in the
case of non-cash proceeds consisting of notes or other debt Securities and
valued at Fair Market Value in the case of other non-cash proceeds) are applied
to repay the Obligations to the extent required in Section 2.9(b);

(c) disposals of obsolete, worn out or surplus property;

(d) the leasing, occupancy agreements or sub-leasing of property in the ordinary
course of business and which do not materially interfere with the business of
the Borrowers or their Subsidiaries;

(e) transfers of property subject to condemnation, takings or casualty events;

(f)(i) a true lease or sublease of Real Property not constituting Indebtedness
and not constituting a sale and leaseback transaction and (ii) an Asset Sale
pursuant to a sale and leaseback transaction;

(g) sales or other dispositions by any Borrower of assets in connection with the
closing or sale of a retail store location (including a factory store) of such
Borrower in the ordinary course of such Borrower’s business which consist of
leasehold interests in the premises of such store, the Equipment and fixtures
located at 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;

(h) assignments and licenses of intellectual property of the Loan Parties in the
ordinary course of business;

(i) the sale, issuance or transfer of the Stock of (x) Operating to Holdings;
(y) any Borrower (other than Operating) or any Subsidiary Guarantor to Holdings,
any Borrower or any Subsidiary Guarantor and (z) any other Subsidiary to
Holdings or any Subsidiary of Holdings; provided, however, that the Loan Parties
shall have complied with the applicable requirements of Sections 7.11;

 

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(j) sales of Inventory in the ordinary course of business;

(k) the issuance and sale by any Borrower, Guarantor or other Subsidiary of
Holdings of Stock of such Person (for purposes of this clause (k) only, the
“issuer”); provided, that, (A) the Administrative Agent shall have received not
less than 10 Business Days’ prior written notice of such issuance and sale by
such Borrower, Guarantor or other Subsidiary, which notice shall specify the
parties to whom such Stock is to be sold, the terms of such sale, the total
amount which it is anticipated will be realized from the issuance and sale of
such Stock and the Net Cash Proceeds which it is anticipated will be received by
such Borrower, Guarantor or other Subsidiary from such sale, (B) such Borrower,
Guarantor or other Subsidiary shall not be required to pay any cash dividends or
repurchase or redeem such Stock or make any other payments in respect thereof,
except (x) as otherwise permitted in Section 8.5 (Restricted Payments) hereof or
(y) after the Scheduled Termination Date and the payment in full in cash or
other immediately available funds of all of the Obligations, (C) the terms of
such Stock, and the terms and conditions of the purchase and sale thereof, shall
not include any terms that include any limitation on the right of any Borrower
to request or receive Loans or Letters of Credit or the right of any Loan Party
to amend or modify any of the terms and conditions of this Agreement or any of
the other Financing Agreements or otherwise in any way relate to or affect the
arrangements of the Loan Parties with the Administrative Agent and Lenders or
are more restrictive or burdensome to any Borrower or Guarantor than the terms
of any Stock in effect on the date hereof, (D) after giving effect thereto, no
Default or Event of Default shall exist or have occurred and (E) after giving
effect to such issuance and sale, the Borrowers and Guarantors shall own at
least eighty (80%) percent of such issuer;

(l) the issuance of Stock of any Borrower or Guarantor pursuant to any equity
plan of such Borrower or Guarantor, including, without limitation, stock
options, restricted stock or other Stock, or employee stock purchase plan or
401(k) plans of such Borrower or Guarantor for the benefit of its employees,
directors and consultants, provided, that, in no event shall such Borrower or
Guarantor be required to issue, or shall such Borrower or Guarantor issue, Stock
pursuant to such equity plans or 401(k) plans which would result in a Change of
Control or other Event of Default;

(m) any Subsidiary of a Borrower may merge with another Person (other than
Holdings or any of its Subsidiaries) to effect a Permitted Acquisition or Asset
Sale permitted by this Agreement; provided, however, after giving effect to any
such merger to effect a Permitted Acquisition, the survivor of such merger is a
Subsidiary of a Borrower and such Borrower complies with Section 7.11, if
applicable ; and

(n) any Inactive Subsidiary may be liquidated, wound up or dissolved.

Section 8.5 Restricted Payments

No Loan Party shall, directly or indirectly, declare, order, pay, make or set
apart any sum for any Restricted Payment except for the following:

(a) Restricted Payments by any Loan Party to any other Loan Party or by any
other Subsidiary of Holdings to Holdings or any of its Subsidiaries;

 

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(b) Restricted Payments in connection with the purchase of fractional shares of
its common stock arising out of stock dividends, splits or combinations or
business combinations;

(c) Restricted Payments may be made for repurchases of Stock or Stock
Equivalents in Holdings deemed to occur upon exercise of stock options or
warrants if such Stock or Stock Equivalents represent a portion of the exercise
price of such options or warrants held by employees or management of any
Borrower or Guarantor pursuant to employee stock ownership plan or management
compensation plan, as applicable;

(d) Restricted Payments in respect of Stock or Stock Equivalents to the extent
payable in the same Stock or Stock Equivalent;

(e) Borrowers and Guarantors may repurchase Stock held by employees pursuant to
any employee stock ownership plan thereof upon the termination, retirement,
disability or death of any such employee in accordance with the provisions of
such plan, provided, that, as to any such repurchase, each of the following
conditions is satisfied: (i) no Default or Event of Default will result from the
payment for such repurchase, (ii) such repurchase shall be paid with funds
legally available therefor, (iii) such repurchase shall not violate any
Requirement of Law, and (iv) the aggregate amount of all payments for such
repurchases in any Fiscal Year shall not exceed $500,000; and

(f) Holdings and the other Loan Parties may make other Restricted Payments so
long as (i) no Event of Default shall have occurred and be continuing or would
result therefrom and (ii) Excess Availability shall be greater than $20,000,000
after giving effect to any such Restricted Payment.

Section 8.6 Prepayment and Cancellation of Indebtedness

No Loan Party shall cancel any claim or Indebtedness owed to any of them except
(i) in the ordinary course of business consistent with past practice, (ii) in
respect of intercompany Indebtedness among the Borrowers and the Subsidiary
Guarantors that are Domestic Subsidiaries, (iii) any cancellation resulting in
an Investment not prohibited under Section 8.3 or (iv) either the Board of
Directors or the chief financial officer of Holdings determines in good faith
that such cancellation is in the best interest of Holdings and its Subsidiaries;
provided, however, clauses (iii) and (iv) of this Section shall only apply
during any period Excess Availability is greater than $20,000,000.

Section 8.7 [Intentionally Omitted]

Section 8.8 Transactions with Affiliates

No Loan Party shall enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate, except transactions on terms which are no less
favorable to such Loan Party than would be obtained in a comparable arm’s length
transaction with a Person that is not an Affiliate, provided the provisions of
this Section shall not apply to (a) any transaction entirely between or among
Loan Parties; (b) reasonable and customary fees paid to members of the Board of
Directors (or similar governing body) of Holdings and its Subsidiaries;
(c) compensation, benefits and incentive arrangements for directors, officers
and other employees of Holdings and its

 

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Subsidiaries as determined in good faith by the Board of Directors (or similar
governing body) of Holdings or Operating; (d) loans or advances to employees
permitted by Section 8.3(f); (e) any management, financial advisory, financing,
underwriting or placement services or any other investment banking services
involving Holdings or any of its Subsidiaries (including, without limitation,
any payments in cash, Stock or other considerations made by Holdings or any of
its Subsidiaries in connection therewith and otherwise in accordance herewith)
on the one hand and TPG Partners II, L.P. or any of its Affiliates on the other
hand, which services (and payments and other transactions in connection
therewith) are approved by a majority of the disinterested members of the Board
of Directors (or similar governing body) of Holdings or Operating in good faith;
(f) Restricted Payments to Holdings permitted under Section 8.5(a); and
(g) transactions described on Schedule 8.8.

Section 8.9 Limitations on Restrictions on Subsidiary Distributions

Each Borrower and Guarantor shall not, create or otherwise cause or suffer to
exist any encumbrance or restriction which prohibits or limits the ability of
any Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other
distributions or pay any Indebtedness owed to such Borrower or Guarantor or any
Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor,
(c) transfer any of its properties or assets to such Borrower or Guarantor or
any Subsidiary of such Borrower or Guarantor; or (d) 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 encumbrances and restrictions
arising under (i) applicable law, (ii) this Agreement, (iii) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor, (iv) customary restrictions on dispositions of real
property interests found in reciprocal easement agreements of such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor, (v) any agreement
relating to permitted Indebtedness incurred by a Subsidiary of such Borrower or
Guarantor prior to the date on which such Subsidiary was acquired by such
Borrower or such Guarantor and outstanding on such acquisition date, (vi) the
extension or continuation of contractual obligations in existence on the date
hereof; provided, that, any such encumbrances or restrictions contained in such
extension or continuation are no less favorable to Administrative Agent and
Lenders than those encumbrances and restrictions under or pursuant to the
contractual obligations so extended or continued, (vii) agreements relating to
the sale of a Subsidiary or assets pending such sale, or relating to
Indebtedness secured by a Lien on assets that the Loan Parties may create,
incur, assume, or permit or suffer to exist under Sections 8.1, 8.2 and 8.4, as
applicable, provided that in any such case the encumbrances and restrictions
apply only to the Subsidiary or the assets that are the subject of such sale or
Lien, as the case may be, (viii) the organizational documents or other
agreements binding on or applicable to any Subsidiary that is not a Wholly Owned
Subsidiary (but only to the extent such encumbrance or restriction covers any
Stock in such Subsidiary or the property or assets of such Subsidiary), (ix) any
agreement (a) evidencing Indebtedness which such Loan Party may create, incur,
assume, or permit or suffer to exist under Section 8.1 and which Indebtedness is
secured by a Lien permitted to exist under Section 8.2, and (b) which prohibits
the transfer of, and the creation of any other Lien on, the property securing
such Indebtedness (and any replacement property and customary provisions in
respect of proceeds, accessions, and other after-acquired property) and (x) the
Term Loan Facility.

 

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Section 8.10 Modification of Constituent Documents

No Loan Party shall amend its Constituent Documents, except for amendments that
do not materially and adversely affect the interests of the Secured Parties
under the Financing Agreements or in the Collateral.

Section 8.11 Modification Term Loan Facility

Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary of
Holdings to, alter, rescind, terminate, amend, supplement, waive or otherwise
modify any provision of any Term Loan Document (except in accordance with the
Intercreditor Agreement).

Section 8.12 Modification of Debt Agreements

Except as permitted under this Agreement, no Loan Party shall change or amend
the terms of any agreement, or any indenture or other material document
evidencing any Indebtedness, (other than the Term Loan Documents which shall be
subject to the terms of the Intercreditor Agreement), if the effect of such
amendment is to (a) increase the interest rate on such Indebtedness, (b) change
the dates upon which payments of principal or interest are due on such
Indebtedness other than to extend such dates, (c) change any default or event of
default other than to delete or make less restrictive any default provision
therein, or add any covenant with respect to such debt agreement, (d) change the
redemption or prepayment provisions of such agreement other than to extend the
dates therefor or to reduce the premiums or other amounts payable in connection
therewith or (e) change or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
material rights to the holder of such Indebtedness in a manner materially
adverse to the Secured Parties.

Section 8.13 Accounting Changes; Fiscal Year

No Loan Party shall change its (a) accounting treatment and reporting practices
or tax reporting treatment, except as permitted by GAAP or any Requirement of
Law and publicly disclosed or otherwise disclosed to the Lenders and the
Administrative Agent or (b) fiscal year.

Section 8.14 Margin Regulations

Neither Holdings nor the Borrowers shall, nor shall they permit any Subsidiary
of the Borrowers to, use all or any portion of the proceeds of any credit
extended hereunder to purchase or carry margin stock (within the meaning of
Regulation U of the Federal Reserve Board) in contravention of Regulation U of
the Federal Reserve Board.

Section 8.15 No Speculative Transactions

No Loan Party shall engage in any transaction involving Hedging Contracts except
for the sole purpose of hedging risk in the normal course of business and
consistent with industry practices.

Section 8.16 Compliance with ERISA

No ERISA Affiliate shall cause or suffer to exist any ERISA Event that could
reasonably be expected to, in the aggregate, have a Material Adverse Effect. No
ERISA Affiliate shall cause or suffer to exist any event that could result in
the imposition of a Lien with respect to any Title IV Plan.

 

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ARTICLE IX

EVENTS OF DEFAULT

Section 9.1 Events of Default

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

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

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

(c) any representation or warranty made or deemed made by any Loan Party in any
Financing Agreement shall prove to have been incorrect in any material respect
when made or deemed made; or

(d) any Loan Party shall fail to perform or observe (i) any term, covenant or
agreement contained in Article V (Financial Covenants), 6.2 (Default Notices),
Section 6.11 (Borrowing Base Determination), 7.1 (Preservation of Corporate
Existence, Etc.), Section 7.9 (Application of Proceeds), or Article VIII
(excluding Section 8.8 (Transactions with Affiliates)) or (ii) any other term,
covenant or agreement contained in this Agreement or in any other Financing
Agreement if such failure under this clause (ii) shall remain unremedied for 30
days after the date on which written notice thereof shall have been given to the
Borrowers by the Administrative Agent; or

(e) (i) Any Loan Party or any of its Subsidiaries (other than Excluded Foreign
Subsidiaries) shall fail to make any payment on any Indebtedness of such Loan
Party or its Subsidiaries (other than the Obligations) or any Guaranty
Obligation in respect of Indebtedness of any other Person, and, in each case,
such failure relates to Indebtedness having a principal amount of $20,000,000 or
more, when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), (ii) any other event
shall occur or condition shall exist under any agreement or instrument relating
to any such Indebtedness, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Indebtedness,
and all applicable grace or cure periods shall have lapsed or (iii) any such
Indebtedness shall become or be declared to be due and payable, or be required
to be prepaid or repurchased (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;

(f)(i) Any Loan Party shall generally not pay its debts as such debts become
due, shall admit in writing its inability to pay its debts generally or shall
make a general assignment for the benefit of creditors, (ii) any proceeding
shall be instituted by or against any Loan Party seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,

 

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reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts, under any Requirement of Law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a custodian, receiver, trustee or other similar official
for it or for any substantial part of its property; provided, however, that, in
the case of any such proceedings instituted against any Loan Party (but not
instituted by any Loan Party), either such proceedings shall remain undismissed
or unstayed for a period of 60 days or more or any action or relief sought in
such proceedings shall occur or be granted or (iii) any Loan Party shall take
any corporate action to authorize any action set forth in clauses (i) and
(ii) above; or

(g) one or more judgments or orders (or other similar process) involving, in the
case of money judgments, an aggregate amount whose Dollar Equivalent exceeds
$20,000,000, to the extent not covered by insurance, shall be rendered against
one or more of the Loan Parties or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 20 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or

(h) an ERISA Event shall occur and the Dollar Equivalent of the amount of all
liabilities and deficiencies resulting therefrom, whether or not assessed,
exceeds $10,000,000 in the aggregate; or

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

(j) any Collateral Document shall for any reason fail or cease to create a valid
and enforceable Lien on any Collateral purported to be covered thereby except
(x) as permitted by the Financing Agreements and (y) for inadvertent failures to
create or maintain a valid, enforceable and perfected Lien on any portion of the
Collateral where the Fair Market Value of such Collateral does not exceed
$500,000), or such Lien shall fail or cease to be a perfected and (subject to
the Intercreditor Agreement and clause (y) above) first priority Lien for any
reason other than the failure of the Collateral Agent or any Secured Party to
take any action within its control, or any Loan Party shall so state in writing;
or

(k) there shall occur any Change of Control; or

(i) the failure of any Borrower or Guarantor to pay when due any principal of or
interest on or any other amount payable in respect of the Term Loan Documents
beyond the grace period, if any provided therefore or any other default under
the Term Loan Documents shall exist beyond the grace period, if any, provided
therefor (including, but not limited to, the failure of any party thereto to
comply in any material respect with any of the terms thereof) if the effect of
such breach or default is to cause, or to permit the holder or holders of that
Indebtedness to cause, that Indebtedness to become or be declared due and
payable prior to its stated maturity.

Section 9.2 Remedies

During the continuance of any Event of Default, the Administrative Agent
(a) may, and, at the request of the Requisite Lenders, shall, by notice to the
Borrower declare that all or any portion of the Revolving Credit Commitments be
terminated, whereupon the obligation

 

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of each Lender to make any Loan and each Issuer to Issue any Letter of Credit
shall immediately terminate, (b) may, and, at the request of the Requisite
Lenders, shall, by notice to the Borrower, declare the Loans, all interest
thereon and all other amounts and Obligations payable under this Agreement to be
forthwith due and payable, whereupon the Loans, all such interest and all such
amounts and Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of the Events of Default specified in Section 9.1(f) (Events of
Default), (x) the Revolving Credit Commitments of each Lender to make Loans and
the commitments of each Lender and Issuer to Issue or participate in Letters of
Credit shall each automatically be terminated and (y) the Loans, all such
interest and all such amounts and Obligations shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower, and (c) take any
remedial action provided for in any Financing Agreement. In addition to the
remedies set forth above, the Administrative Agent may exercise any remedies
provided for by the Collateral Documents in accordance with the terms thereof or
any other remedies provided by applicable Requirements of Law.

Section 9.3 Actions in Respect of Letters of Credit

At any time (i) upon the Revolving Credit Termination Date, (ii) after the
Revolving Credit Termination Date when the aggregate funds on deposit in Cash
Collateral Accounts shall be less than 101% of the Letter of Credit Obligations
and (iii) as may be required by Section 2.9 (Mandatory Prepayments), the
Borrowers shall pay to the Administrative Agent in immediately available funds
at the Administrative Agent’s office referred to in Section 11.8 (Notices,
Etc.), for deposit in a Cash Collateral 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 Cash Collateral Accounts 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 (Mandatory Prepayments).
The Administrative Agent may, from time to time after funds are deposited in any
Cash Collateral Account, apply funds then held in such Cash Collateral Account
to the payment of any amounts, in accordance with Section 2.9 (Mandatory
Prepayments) and Section 2.13(g) (Payments and Computations), as shall have
become or shall become due and payable by the Borrowers 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.

Section 9.4 Rescission

If at any time after termination of the Revolving Credit Commitments or
acceleration of the maturity of the Loans, the Borrower shall pay all arrears of
interest and all payments on account of principal of the Loans and Reimbursement
Obligations that shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue interest,
at the rates specified herein) and all Events of Default and Defaults (other
than non-payment of principal of and accrued interest on the Loans due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to Section 11.1 (Amendments, Waivers, Etc.), then upon the written consent of
the Requisite Lenders and written notice to the Borrower, the termination of the
Revolving Credit Commitments or the acceleration and their consequences may be
rescinded and annulled; provided, however, that such action shall not affect any
subsequent Event of Default or Default or impair any right or remedy consequent
thereon.

 

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ARTICLE X

THE ADMINISTRATIVE AGENT

Section 10.1 Authorization and Action

(a) Each Lender and each Issuer hereby appoints Citicorp as the Administrative
Agent hereunder and each Lender and each Issuer authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Financing Agreements as are delegated to the
Administrative Agent under such agreements and to exercise such powers as are
reasonably incidental thereto. Without limiting the foregoing, each Lender and
each Issuer hereby authorizes the Administrative Agent to execute and deliver,
and to perform its obligations under, each of the Financing Agreements to which
the Administrative Agent is a party, to exercise all rights, powers and remedies
that the Administrative Agent may have under such Financing Agreements and, in
the case of the Collateral Documents, to act as agent for the Lenders, Issuers
and the other Secured Parties under such Collateral Documents.

(b) As to any matters not expressly provided for by this Agreement and the other
Financing Agreements (including enforcement or collection), the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Requisite
Lenders, and such instructions shall be binding upon all Lenders and each
Issuer; provided, however, that the Administrative Agent shall not be required
to take any action that (i) the Administrative Agent in good faith believes
exposes it to personal liability unless the Administrative Agent receives an
indemnification satisfactory to it from the Lenders and the Issuers with respect
to such action or (ii) is contrary to this Agreement or applicable Requirements
of Law. The Administrative Agent agrees to give to each Lender and each Issuer
prompt notice of each notice given to it by any Loan Party pursuant to the terms
of this Agreement or the other Financing Agreements.

(c) In performing its functions and duties hereunder and under the other
Financing Agreements, the Administrative Agent is acting solely on behalf of the
Lenders and the Issuers except to the limited extent provided in Section 2.7(c)
(Evidence of Debt), and its duties are entirely administrative in nature. The
Administrative Agent does not assume and shall not be deemed to have assumed any
obligation other than as expressly set forth herein and in the other Financing
Agreements or any other relationship as the agent, fiduciary or trustee of or
for any Lender, Issuer or holder of any other Obligation. The Administrative
Agent may perform any of its duties under any Financing Agreement by or through
its agents or employees.

(d) In the event that Citicorp or any of its Affiliates shall be or become an
indenture trustee under the Trust Indenture Act of 1939 (as amended, the “Trust
Indenture Act”) in respect of any securities issued or guaranteed by any Loan
Party, the parties hereto acknowledge and agree that any payment or property
received in satisfaction of or in respect of any Obligation of such Loan Party
hereunder or under any other Financing Agreement by or on behalf of Citicorp in
its capacity as the Administrative Agent for the benefit of any Loan Party under
any Financing Agreement (other than Citicorp or an Affiliate of Citicorp) and
which is applied in accordance with the Financing Agreements shall be deemed to
be exempt from the requirements of Section 311 of the Trust Indenture Act
pursuant to Section 311(b)(3) of the Trust Indenture Act.

 

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Section 10.2 Administrative Agent’s Reliance, Etc.

None of the Administrative Agent, any of its Affiliates or any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Financing Agreements, except for
its, his, her or their own gross negligence or willful misconduct. Without
limiting the foregoing, the Administrative Agent (a) may treat the payee of any
Revolving Credit Note as its holder until such Revolving Credit Note has been
assigned in accordance with Section 11.2 (Assignments and Participations),
(b) may rely on the Register to the extent set forth in Section 11.2(d)
(Assignments and Participations), (c) may consult with legal counsel (including
counsel to the Loan Parties), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, (d) makes no warranty or representation to any Lender or
Issuer and shall not be responsible to any Lender or Issuer for any statements,
warranties or representations made by or on behalf of any Loan Party or any of
its Subsidiaries in or in connection with this Agreement or any other Financing
Agreement, (e) shall not have any duty to ascertain or to inquire either as to
the performance or observance of any term, covenant or condition of this
Agreement or any other Financing Agreement, as to the financial condition of any
Loan Party or as to the existence or possible existence of any Default or Event
of Default, (f) shall not be responsible to any Lender or Issuer for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the attachment, perfection or priority of any Lien created or purported
to be created under or in connection with, this Agreement, any other Financing
Agreement or any other instrument or document furnished pursuant hereto or
thereto and (g) shall incur no liability under or in respect of this Agreement
or any other Financing Agreement by acting upon any notice, consent, certificate
or other instrument or writing (which writing may be a telecopy or electronic
mail) or any telephone message believed by it to be genuine and signed or sent
by the proper party or parties.

Section 10.3 Posting of Approved Electronic Communications

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

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

 

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(C) THE APPROVED ELECTRONIC COMMUNICATIONS AND THE APPROVED ELECTRONIC PLATFORM
ARE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF THE ADMINISTRATIVE AGENT OR ANY
OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ADVISORS OR REPRESENTATIVES (THE “AGENT AFFILIATES”) WARRANT THE
ACCURACY, ADEQUACY OR COMPLETENESS OF THE APPROVED ELECTRONIC COMMUNICATIONS AND
THE APPROVED ELECTRONIC PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR
ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC COMMUNICATIONS AND THE APPROVED
ELECTRONIC PLATFORM EXCEPT ERRORS OR OMISSIONS RESULTING FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY AGENT AFFILIATE. NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY (INCLUDING, WITHOUT LIMITATION, ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS) IS MADE BY THE
ADMINISTRATIVE AGENT AFFILIATES IN CONNECTION WITH THE APPROVED ELECTRONIC
COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM.

(d) Each of the Lenders, the Issuers, the Loan Parties agree, that the
Administrative Agent may, but (except as may be required by applicable law)
shall not be obligated to, store the Approved Electronic Communications on the
Approved Electronic Platform in accordance with the Administrative Agent’s
generally-applicable document retention procedures and policies.

Section 10.4 The Administrative Agent Individually

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

Section 10.5 Lender Credit Decision

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

 

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Section 10.6 Indemnification

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

Section 10.7 Successor Administrative Agent

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

 

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Section 10.8 Concerning the Collateral and the Collateral Documents

(a) Each Lender and each Issuer agrees that any action taken by the
Administrative Agent or the Requisite Lenders (or, where required by the express
terms of this Agreement, a greater proportion of the Lenders) in accordance with
the provisions of this Agreement or of the other Financing Agreements, and the
exercise by the Administrative Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders, Issuers and other Secured
Parties. Without limiting the generality of the foregoing, the Administrative
Agent shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for the Lenders and the Issuers with respect to
all payments and collections arising in connection herewith and with the
Collateral Documents, (ii) execute and deliver each Collateral Document and
accept delivery of each such agreement delivered by Holdings or any of its
Subsidiaries, (iii) act as collateral agent for the Lenders, the Issuers and the
other Secured Parties for purposes of the perfection of all security interests
and Liens created by such agreements and all other purposes stated therein,
provided, however, that the Administrative Agent hereby appoints, authorizes and
directs each Lender and Issuer to act as collateral sub-agent for the
Administrative Agent, the Lenders and the Issuers for purposes of the perfection
of all security interests and Liens with respect to the Collateral, including
any Deposit Accounts and Securities Accounts maintained by a Loan Party with,
and cash and Cash Equivalents held by, such Lender or such Issuer, (iv) manage,
supervise and otherwise deal with the Collateral, including the making of
Protective Advances in an aggregate amount not to exceed 10% of the then
effective Revolving Credit Commitments provided, however, (x) after giving
effect to such Protective Advances, Revolving Credit Outstandings shall not
exceed Revolving Credit Commitments, and (y) the Loan Parties shall repay each
Protective Advance no later than 45 Business Days after such Protective Advance
shall have been made, (v) take such action as is necessary or desirable to
maintain the perfection and priority of the security interests and Liens created
or purported to be created by the Collateral Documents and (vi) except as may be
otherwise specifically restricted by the terms hereof or of any other Financing
Agreement, exercise all remedies given to the Administrative Agent, the Lenders,
the Issuers and the other Secured Parties with respect to the Collateral under
the Financing Agreements relating thereto, applicable Requirements of Law or
otherwise.

(b) Each of the Lenders and the Issuers hereby consents to the release and
hereby directs, in accordance with the terms hereof, the Administrative Agent to
release (or, in the case of clause (ii) below, release or subordinate) any Lien
held by the Administrative Agent for the benefit of the Lenders and the Issuers
against any of the following:

(i) all of the Collateral and all Loan Parties, upon termination of the
Revolving Credit Commitments and payment and satisfaction in full of all Loans,
all Reimbursement Obligations and all other Obligations that the Administrative
Agent has been notified in writing are then due and payable (and, in respect of
Letter of Credit Undrawn Amounts, with respect to which cash collateral has been
deposited or a back-up letter of credit has been issued, in either case in the
appropriate currency and on terms satisfactory to the Administrative Agent and
the applicable Issuers);

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

 

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(iii) any part of the Collateral sold or disposed of by a Loan Party if such
sale or disposition is permitted by this Agreement (or permitted pursuant to a
waiver or consent to a transaction otherwise prohibited by this Agreement) or,
in the case of Term Loan Collateral, the Term Loan Facility to the extent the
Collateral is required to be released pursuant to the Intercreditor Agreement.

Each of the Lenders and the Issuers hereby directs the Administrative Agent to
execute and deliver or file such termination and partial release statements and
do such other things as are necessary to release Liens to be released pursuant
to this Section 10.8 promptly upon the effectiveness of any such release.

Section 10.9 Collateral Matters Relating to Related Obligations

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

Section 10.10 Delivery of Certain Financial Information

The Administrative Agent shall, and the Loan Parties agree, that the
Administrative Agent may, make available to the Lenders and the Issuers all
Approved Electronic

 

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Communications provided to the Administrative Agent pursuant to clauses
(a) through (c) of Section 6.1 (Financial Statements). The Loan Parties further
agree, that the Administrative Agent may make available to the Lenders and the
Issuers such other Approved Electronic Communications provided to the
Administrative Agent, upon such Lenders’ and Issuers’ request.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Amendments, Waivers, Etc.

(a) No amendment or waiver of any provision of this Agreement or any other
Financing Agreement (other than the Fee Letter, the Deposit Account Control
Agreements, the Securities Account Control Agreements and the Letter of Credit
Reimbursement Agreements) nor consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be in writing
and (x) in the case of any such waiver or consent signed by the Requisite
Lenders (or by the Administrative Agent with the consent of the Requisite
Lenders) and (y) in the case of any other amendment, by the Requisite Lenders
(or by the Administrative Agent with the consent of the Requisite Lenders ) and
the Loan Parties, and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by each Lender directly affected thereby, in addition to the Requisite
Lenders (or the Administrative Agent with the consent thereof), do any of the
following:

(i) waive any condition specified in Section 3.1 (Conditions Precedent to
Effective Date) or 3.2(a) (Conditions Precedent to Each Loan and Letter of
Credit), except with respect to a condition based upon another provision hereof,
the waiver of which requires only the concurrence of the Requisite Lenders and,
in the case of the conditions specified in Section 3.1 (Conditions Precedent to
Effective Date), subject to the provisions of Section 3.3 (Determinations of
Effective Date Borrowing Conditions);

(ii) increase the Revolving Credit Commitment of such Lender or subject such
Lender to any additional obligation;

(iii) extend the scheduled final maturity of any Loan owing to such Lender, or
waive, reduce or postpone any scheduled date fixed for the payment or reduction
of principal or interest of any such Loan or fees owing to such Lender (it being
understood that Section 2.9 (Mandatory Prepayments) does not provide for
scheduled dates fixed for payment) or for the reduction of such Lender’s
Revolving Credit Commitment;

(iv) reduce, or release the Borrowers from their obligations to repay, the
principal amount of any Loan or Reimbursement Obligation owing to such Lender
(other than by the payment or prepayment thereof);

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

 

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(vi) expressly subordinate any of the Secured Obligations or any Liens securing
the Secured Obligations;

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

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

(ix) release all or substantially all of the Collateral except as provided in
Section 10.8(b) (Concerning the Collateral and the Collateral Documents) or
release any Guarantor from its obligations under the Guaranty except in
connection with the sale or other disposition of a Subsidiary Guarantor (or all
or substantially all of the assets thereof) permitted by this Agreement (or
permitted pursuant to a waiver or consent of a transaction otherwise prohibited
by this Agreement);

(x)(i) increase any of the percentages set forth in the definition of “Advance
Rate” or “Borrowing Base” above the maximum percentages stated in such
definitions on the date hereof; or (ii) change the definitions of “Eligible
Credit Card Receivables”, “Eligible Inventory” “Eligible Real Property” or
“Qualified Cash” in a manner that would result in any increase in the Borrowing
Base;

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

and provided, however, that (x) no amendment, waiver or consent shall, unless in
writing and signed by any Special Purpose Vehicle that has been granted an
option pursuant to Section 11.2(f) (Assignments and Participations), affect the
grant or nature of such option or the right or duties of such Special Purpose
Vehicle hereunder, (y) no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required above
to take such action, affect the rights or duties of the Administrative Agent
under this Agreement or the other Financing Agreements and (z) no amendment,
waiver or consent shall, unless in writing and signed by the Swing Loan Lender
in addition to the Lenders required above to take such action, affect the rights
or duties of the Swing Loan Lender under this Agreement or the other Financing
Agreements; and provided, further, that the Administrative Agent may, with the
consent of the Borrowers, amend, modify or supplement this Agreement to cure any
ambiguity, omission, defect or inconsistency, so long as such amendment,
modification or supplement does not adversely affect the rights of any Lender or
any Issuer; and provided, further, that no consent of any Lender shall be
required to effectuate any amendment, waiver or modification under this
Agreement or under any other Financing Agreement that is necessary to implement
a Facility Increase pursuant to Section 2.18 (Facility Increase).

(b) The Administrative Agent may, but shall have no obligation to, with the
written concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of such Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on the Borrowers in any case shall entitle the Borrowers to
any other or further notice or demand in similar or other circumstances.

 

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

Section 11.2 Assignments and Participations

(a) 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 the Loan Parties may not 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 or Issuer may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an assignee in accordance with the provisions of clauses (b) and
(h) below, (ii) by way of participation in accordance with the provisions of
clause (g) below or (iii) by way of a grant to a Special Purpose Vehicle or a
pledge or assignment of a security interest subject to the restrictions of
clause (f) below (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, express or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and permitted assigns, Participants to the extent
provided in clause (g) below, Special Purpose Vehicles to the extent provided in
(f) below and, to the extent expressly contemplated hereby, each of the
Administrative Agent, the Lenders and the Issuers, their respective Affiliates
and each of their respective partners, directors, officers, employees, agents,
trustee, representatives, attorneys, consultants and advisors) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

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(b) Each Lender may at any time assign to one or more Eligible Assignees all or
a portion of its rights and obligations hereunder (including all or a portion of
its Revolving Credit Commitment and the Loans at the time owing to it and all of
its rights and obligations with respect to the Swing Loans and Letters of
Credit); provided, however, that any such assignment shall be subject to the
following conditions:

(i)(A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Revolving Credit Commitment and the Loans and Swing Loans 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 clause (b)(i)(A) above, the aggregate amount of the
Revolving Credit Commitment (which for this purpose includes the Revolving
Credit Outstandings thereunder) or, if the applicable Revolving Credit
Commitment is not then in effect, the principal outstanding balance of the
Revolving Credit Outstandings of the assigning Lender subject to each such
assignment (determined as of the effective date of the Assignment and Acceptance
with respect to such assignment) shall not be less than $5,000,000, unless each
of the Administrative Agent and, so long as no Event of Default shall have
occurred and be continuing, the Borrower Agent otherwise consents (each such
consent not to be unreasonably withheld or delayed).

(ii) Each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Revolving Credit Outstandings and the Revolving Credit
Commitment assigned.

(iii) No consent shall be required for any assignment except to the extent
required by clause (b)(i)(B) above and, in addition:

(A) the consent of the Borrower Agent (such consent not to be unreasonably
withheld or delayed) shall be required unless an Event of Default shall have
occurred and be continuing at the time of such assignment or;

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments to a Person who is not a
Lender, an Affiliate of a Lender or an Approved Fund;

(C) the consent of the Issuer (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 in respect of the
Swing Loans.

(iv) The parties to each assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with (A) other than in respect of
assignments made pursuant to Sections 2.17 (Substitution of Lenders) and 11.1(a)
(Amendments, Waivers, Etc.), a processing and recordation fee of $3,500 and
(B) any Revolving Credit Note (if the

 

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assigning Lender’s Loans are evidenced by a Revolving Credit Note), subject to
such assignment. The assignee, if it is not a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

(c) Subject to acceptance and recording thereof by the Administrative Agent in
the Register pursuant to Section 2.7 (Evidence of Debt) and the receipt of the
assignment fee referenced in clause (b)(iv) above, from and after the effective
date specified in each Assignment and Acceptance, (A) the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and, if such Lender was an Issuer, of such Issuer hereunder,
(B) the Revolving Credit Notes (if any) corresponding to the Loans assigned
thereby shall be transferred to such assignee by notation in the Register and
(C) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under the Financing Agreements (and, in the case of an Assignment and Acceptance
covering all of the assigning Lender’s rights and obligations under the
Financing Agreements, such Lender shall cease to be a party hereto) but shall
continue to be entitled to the benefits of Sections 2.14(c) (Increased Costs),
2.15 (Capital Adequacy), 2.16 (Taxes), 11.3 (Costs and Expenses), 11.4
(Indemnities) and Section 11.5 (Limitation of Liability) with respect to facts
and circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph 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 clause (g) of this Section 11.2.

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

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

(f) In addition to the other assignment rights provided in this Section 11.2,
each Lender may do each of the following:

(i) grant to a Special Purpose Vehicle the option (but not the obligation) to
make all or any part of any Loan that such Lender would otherwise be

 

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required to make hereunder and the exercise of such option by any such Special
Purpose Vehicle and the making of Loans pursuant thereto shall satisfy (once and
to the extent that such Loans are made) the obligation of such Lender to make
such Loans thereunder, provided, however, that (x) nothing herein shall
constitute a commitment or an offer to commit by such a Special Purpose Vehicle
to make Loans hereunder and no such Special Purpose Vehicle shall be liable for
any indemnity or other Obligation (other than the making of Loans for which such
Special Purpose Vehicle shall have exercised an option, and then only in
accordance with the relevant option agreement) and (y) such Lender’s obligations
under the Financing Agreements shall remain unchanged, such Lender shall remain
responsible to the other parties for the performance of its obligations under
the terms of this Agreement and shall remain the holder of the Obligations for
all purposes hereunder; and

(ii) assign, as collateral or otherwise, any of its rights under this Agreement,
whether now owned or hereafter acquired (including rights to payments of
principal or interest on the Loans), to (A) without notice to or consent of the
Administrative Agent or the Borrowers, any Federal Reserve Bank (pursuant to
Regulation A of the Federal Reserve Board) and (B) without consent of the
Administrative Agent or the Borrowers, (1) any holder of, or trustee for the
benefit of, the holders of such Lender’s Securities and (2) any Special Purpose
Vehicle to which such Lender has granted an option pursuant to clause (i) above;

provided, however, that no such assignment or grant shall release such Lender
from any of its obligations hereunder except as expressly provided in clause (i)
above and except, in the case of a subsequent foreclosure pursuant to an
assignment as collateral, if such foreclosure is made in compliance with the
other provisions of this Section 11.2 other than this clause (f) or clause
(g) below. Each party hereto acknowledges and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding
commercial paper or other senior debt of any such Special Purpose Vehicle, such
party shall not institute against, or join any other Person in instituting
against, any Special Purpose Vehicle that has been granted an option pursuant to
this clause (f) any bankruptcy, reorganization, insolvency or liquidation
proceeding (such agreement shall survive the payment in full of the
Obligations). The terms of the designation of, or assignment to, such Special
Purpose Vehicle shall not restrict such Lender’s ability to, or grant such
Special Purpose Vehicle the right to, consent to any amendment or waiver to this
Agreement or any other Financing Agreement or to the departure by the Loan
Parties from any provision of this Agreement or any other Financing Agreement
and the Administrative Agent and the Lenders, Issuers and other Secured Parties
shall continue to, and shall be entitled to continue to, deal solely and
directly with such Lender in connection with such Lender’s obligations under
this Agreement; provided, however, any amendment or departure from any of the
Financing Agreements that has the effect of reducing the principal amount of, or
the rate of interest on, any Obligations, amends this clause (f) or postpones
any scheduled date of payment of such principal or interest may be subject to
the consent of such Special Purpose Vehicle (such consent not to be unreasonably
withheld or delayed). Each Special Purpose Vehicle shall be entitled to the
benefits of Sections 2.15 (Capital Adequacy) and 2.16 (Taxes) and of
Section 2.14(d) (Illegality) as if it were such Lender; provided, however, that
anything herein to the contrary notwithstanding, no Borrower shall, at any time,
be obligated to make under Section 2.15 (Capital Adequacy), 2.16 (Taxes) or
Section 2.14(d) (Illegality) to any such Special Purpose Vehicle and any such
Lender any payment in excess of the amount the Borrowers would have been
obligated to pay to such Lender in respect of such interest if such Special
Purpose Vehicle had not been assigned the

 

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rights of such Lender hereunder; and provided, further, that such Special
Purpose Vehicle shall have no direct right to enforce any of the terms of this
Agreement against the Borrowers, the Administrative Agent or the other Lenders.

(g)(i) Any Lender may at any time, without the consent of, or notice to, the
Borrowers or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrowers or any of the Borrowers’ 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 and Swing Loans owing to it and
its rights and obligations with respect to the Letters of Credit); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (C) the Borrowers, the Administrative
Agent, the Lenders, the Issuers and the Swing Loan Lender shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

(ii) Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver that would (A) reduce the amount, or
postpone any date fixed for, any amount (whether of principal, interest or fees)
payable to such Participant under the Financing Agreements, to which such
Participant would otherwise be entitled under such participation or (B) result
in the release of all or substantially all of the Collateral other than in
accordance with Section 10.8(b) (Concerning the Collateral and the Collateral
Documents). Subject to clause (i) below, the Borrowers agree that each
Participant shall be entitled to the benefits of Section 2.14(c) (Increased
Costs), 2.15 (Capital Adequacy) or 2.16 (Taxes) to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to clause (b)
above. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 11.6 (Right of Set-off) as though it were a Lender,
provided such Participant agrees to be subject to Section 11.7 (Sharing of
Payments, Etc.) as though it were a Lender.

(h) Any Issuer may at any time assign its rights and obligations hereunder to
any other Lender by an instrument in form and substance satisfactory to the
Borrowers, the Administrative Agent, such Issuer and such Lender, subject to the
provisions of Section 2.7(c) (Evidence of Debt) relating to notations of
transfer in the Register. If any Issuer ceases to be a Lender hereunder by
virtue of any assignment made pursuant to this Section 11.2, then, as of the
effective date of such cessation, such Issuer’s obligations to Issue Letters of
Credit pursuant to Section 2.4 (Letters of Credit) shall terminate and such
Issuer shall be an Issuer hereunder only with respect to outstanding Letters of
Credit issued prior to such date.

(i) A Participant shall not be entitled to receive any greater payment under
Section 2.14(c) (Increased Costs), 2.15 (Capital Adequacy) or 2.16 (Taxes) 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 Borrowers’ prior written consent. A
Participant that would be a Non-U.S. Lender if it were a Lender shall not be
entitled to the benefits of Section 2.16 (Taxes) unless the Borrowers are
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrowers, to comply with Section 2.16(f) (Taxes)
as though it were a Lender.

 

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(j) The words “execution,” “signed,” “signature,” and words of like import in
any Assignment and Acceptance shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

Section 11.3 Costs and Expenses

(a) The Loan Parties agree upon demand to, jointly and severally, pay, or
reimburse the Administrative Agent for, all of the Administrative Agent’s
reasonable internal and external audit, legal, appraisal, valuation, filing,
document duplication and reproduction and investigation expenses and for all
other reasonable out-of-pocket costs and expenses of every type and nature
(including the reasonable fees, expenses and disbursements of the Administrative
Agent’s counsel, Weil, Gotshal & Manges LLP, local legal counsel, auditors,
accountants, appraisers, printers, insurance and environmental advisors, and
other consultants and agents) actually incurred by the Administrative Agent in
connection with any of the following: (i) the Administrative Agent’s audit and
investigation of Holdings and its Subsidiaries in connection with the
preparation, negotiation or execution of any Financing Agreement or the
Administrative Agent’s periodic audits of Holdings or any of its Subsidiaries,
as the case may be, (ii) the preparation, negotiation, execution or
interpretation of this Agreement (including, without limitation, the
satisfaction or attempted satisfaction of any condition set forth in Article III
(Conditions Precedent)), any Financing Agreement or any proposal letter or
commitment letter issued in connection therewith, or the making of the Loans
hereunder, (iii) the creation, perfection or protection of the Liens under any
Financing Agreement (including any reasonable fees, disbursements and expenses
for local counsel in various jurisdictions), (iv) the ongoing administration of
this Agreement and the Loans (other than the ordinary administrative services
provided by the Administrative Agent), including consultation with attorneys in
connection therewith and with respect to the Administrative Agent’s rights and
responsibilities hereunder and under the other Financing Agreements, (v) the
protection, collection or enforcement of any Obligation or the enforcement of
any Financing Agreement, (vi) the commencement, defense or intervention in any
court proceeding relating in any way to the Obligations, any Loan Party, any of
the Borrowers’ Subsidiaries, this Agreement or any other Financing Agreement,
(vii) the response to, and preparation for, any subpoena or request for document
production with which the Administrative Agent is served or deposition or other
proceeding in which the Administrative Agent is called to testify, in each case,
relating in any way to the Obligations, any Loan Party, any of the Borrowers’
Subsidiaries, this Agreement or any other Financing Agreement or (viii) any
amendment, consent, waiver, assignment, restatement, or supplement to any
Financing Agreement or the preparation, negotiation and execution of the same.

(b) The Loan Parties further agree to, jointly and severally, pay or reimburse,
without duplication of any expense or reimbursement pursuant to Section 11.3,
the Administrative Agent and each of the Lenders and Issuers upon demand for all
reasonable out-of-pocket costs and expenses, including the reasonable fees,
charges and disbursements of counsel (which shall be limited to one primary
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Administrative Agent, the Collateral Agent, the Lenders and the Issuers unless,
in the reasonable opinion of the Administrative Agent, representation of all
such Indemnitees would be inappropriate due to an actual or potential conflict
of interest, in which case there shall be permitted one additional counsel for
such affected Indemnitee), and other reasonable costs and expenses actually
incurred by the Administrative Agent, such Lenders or such Issuers in connection
with any of the following: (i) in enforcing any Financing Agreement or
Obligation or any security therefor or exercising or enforcing any other right
or remedy available by reason of an Event of Default, (ii) in connection with
any refinancing or restructuring of the credit arrangements provided hereunder
in the nature of a “work-out” or in any insolvency or bankruptcy proceeding,
(iii) in commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal proceeding
relating to the Obligations, any Loan Party, any of the Borrowers’ Subsidiaries
and related to or arising out of the transactions contemplated hereby or by any
other Financing Agreement or (iv) in taking any other action in or with respect
to any suit or proceeding (bankruptcy or otherwise) described in clause (i),
(ii) or (iii) above.

Section 11.4 Indemnities

(a) The Loan Parties agree to indemnify and hold harmless the Administrative
Agent, each Lender and each Issuer and each of their respective Affiliates, and
each of the directors, officers, employees, agents, trustees, representatives,
attorneys, consultants and advisors of or to any of the foregoing (including
those retained in connection with the satisfaction or attempted satisfaction of
any condition set forth in Article III (Conditions Precedent) (each such Person
being an “Indemnitee”) from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
disbursements and expenses, joint or several, of any kind or nature (including
fees, disbursements and expenses of financial advisors and of one primary
counsel and, if necessary, one local counsel per jurisdiction for the
Indemnitees) that may be imposed on or incurred by against any such Indemnitee
in connection with or arising out of any investigation, litigation or
proceeding, whether or not such investigation, litigation or proceeding is
brought by any such Indemnitee or any of its directors, security holders or
creditors or any such Indemnitee, director, security holder or creditor is a
party thereto, whether direct, indirect, or consequential and whether based on
any federal, state or local law or other statutory regulation, securities or
commercial law or regulation, or under common law or in equity, or on contract,
tort or otherwise, in any manner relating to or arising out of this Agreement,
any other Financing Agreement, any Obligation owing under any Financing
Agreement, any Letter of Credit, or any act, event or transaction related or
attendant to any thereof, or the use or intended use of the proceeds of the
Loans or Letters of Credit or in connection with any investigation of any
potential matter covered hereby (collectively, the “Indemnified Matters”);
provided, however, that the Borrowers shall not have any liability under this
Section 11.4 to an Indemnitee with respect to any Indemnified Matter that has
resulted from the gross negligence or willful misconduct of that Indemnitee or
bad faith breach by such Indemnitee of its material obligations under this
Agreement, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order. Without limiting the foregoing, “Indemnified
Matters” include (i) all Environmental Liabilities and Costs arising from or
connected with the past, present or future operations of any Loan Party
involving any property subject to a Collateral Document, or damage to real or
personal property or natural resources or harm or injury alleged to have
resulted from any Release of Contaminants on, upon or into such property or any
contiguous real estate, (ii) any costs or liabilities incurred in connection
with any Remedial Action concerning any Loan Party, (iii) any costs or
liabilities incurred in connection

 

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with any Environmental Lien and (iv) any costs or liabilities incurred in
connection with any other matter under any Environmental Law, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (49
U.S.C. § 9601 et seq.) and applicable state property transfer laws, whether,
with respect to any such matter, such Indemnitee is a mortgagee pursuant to any
leasehold mortgage, a mortgagee in possession, the successor in interest to any
Loan Party, or the owner, lessee or operator of any property of any Loan Party
by virtue of foreclosure, except, with respect to those matters referred to in
clauses (i), (ii), (iii) and (iv) above, to the extent (x) incurred following
foreclosure by the Administrative Agent, any Lender or any Issuer, or the
Administrative Agent, any Lender or any Issuer having become the successor in
interest to the any Loan Party and (y) attributable solely to acts of the
Administrative Agent, such Lender or such Issuer or any agent on behalf of the
Administrative Agent, such Lender or such Issuer.

(b) The Loan Parties shall indemnify the Administrative Agent, the Lenders and
each Issuer for, and hold the Administrative Agent, the Lenders and each Issuer
harmless from and against, any and all claims for brokerage commissions, fees
and other compensation made against the Administrative Agent, the Lenders and
the Issuers for any broker, finder or consultant with respect to any agreement,
arrangement or understanding made by or on behalf of any Loan Party or any of
its Subsidiaries in connection with the transactions contemplated by this
Agreement.

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

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

Section 11.5 Limitation of Liability

(a) 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 Financing
Agreements, 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
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, without limitation, any loss of profits, business or

 

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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.

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

Section 11.6 Right of Set-off

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

Section 11.7 Sharing of Payments, Etc.

(a) If any Lender (directly or through an Affiliate thereof) obtains any payment
(whether voluntary, involuntary, through the exercise of any right of set-off
(including pursuant to Section 11.6 (Right of Set-off) or otherwise) of the
Loans owing to it, any interest thereon, fees in respect thereof or amounts due
pursuant to Section 11.3 (Costs and Expenses) or 11.4 (Indemnities) (other than
payments pursuant to Sections 2.14 (Special Provisions Governing Eurodollar Rate
Loans), 2.15 (Capital Adequacy) or 2.16 (Taxes)) or otherwise receives any
Collateral or any “Proceeds” (as defined in the Pledge and Security Agreement)
of Collateral (other than payments pursuant to Sections 2.14 (Special Provisions
Governing Eurodollar Rate Loans), 2.15 (Capital Adequacy) or 2.16 (Taxes)) (in
each case, whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise (including pursuant to Section 11.6 (Right of Set-off)) in
excess of its Ratable Portion of all payments of such Obligations obtained by
all the Lenders, such Lender (a “Purchasing Lender”) shall forthwith purchase
from the other Lenders (each, a “Selling Lender”) such participations in their
Loans or other Obligations as shall be necessary to cause such Purchasing Lender
to share the excess payment ratably with each of them.

 

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

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

Section 11.8 Notices, Etc.

(a) Addresses for Notices. All notices, demands, requests, consents and other
communications provided for in this Agreement shall be given in writing, and
addressed to the party to be notified as follows:

(i) if to the Borrowers or any Loan Party:

J. Crew Group, Inc.

770 Broadway

New York, New York 10013

Attention: Chief Financial Officer

Telephone No.: 212-209-8040

with a copy to:

J. Crew Group, Inc.

770 Broadway

New York, New York 10013

Attention: General Counsel

Telephone No.: 212-209-8254

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

(iii) if to any Issuer, at the address set forth under its name on Schedule II
(Applicable Lending Offices and Addresses for Notices); and

(iv) if to the Administrative Agent or the Swing Loan Lender:

CITICORP USA, Inc.

388 Greenwich Street, 20th Floor

New York, New York 10013

Attention: Thomas Halsch

Telecopy no: (212) 816-2613

 

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or at such other address as shall be notified in writing (x) in the case of the
Borrowers, the Administrative Agent and the Swing Loan Lender, to the other
parties and (y) in the case of all other parties, to the Borrower Agent and the
Administrative Agent.

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

(c) Use of Electronic Platform. Notwithstanding clauses (a) and (b) above
(unless the Administrative Agent requests that the provisions of clause (a) and
(b) above be followed) and any other provision in this Agreement or any other
Financing Agreement providing for the delivery of, any Approved Electronic
Communication by any other means, the Loan Parties shall deliver all Approved
Electronic Communications to the Administrative Agent by properly transmitting
such Approved Electronic Communications in an electronic soft medium in a format
acceptable to the Administrative Agent to oploanswebadmin@citigroup.com or such
other electronic mail address (or similar means of electronic delivery) as the
Administrative Agent may notify the Borrower Agent. Nothing in this clause (b)
shall prejudice the right of the Administrative Agent or any Lender or Issuer to
deliver any Approved Electronic Communication to any Loan Party in any manner
authorized in this Agreement or to request that the Borrowers effect delivery in
such manner.

Section 11.9 No Waiver; Remedies

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

 

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Section 11.10 [Intentionally Omitted]

Section 11.11 Amendment and Restatement; Binding Effect

(a) The terms and conditions of this Agreement and the Administrative Agent’s,
the Lenders’ and the Issuers’ rights and remedies under this Agreement and the
other Financing Agreements shall apply to all of the Obligations incurred under
the Existing Credit Agreement. This Agreement is not in any way intended to
constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement or evidence payment of all or any portion of such
obligations and liabilities.

(b) On the Effective Date, the Existing Credit Agreement shall be amended and
restated in its entirety by this Agreement, and the Existing Credit Agreement
shall thereafter be of no further force and effect, except to evidence (i) the
incurrence by the Borrowers of the “Obligations” under and as defined in the
Existing Credit Agreement (whether or not such “Obligations” are contingent as
of the Effective Date), (ii) the representations and warranties made by the Loan
Parties prior to the Effective Date and (iii) any action or omission performed
or required to be performed pursuant to such Existing Credit Agreement prior to
the Effective Date (including any failure, prior to the Effective Date, to
comply with the covenants contained in such Existing Credit Agreement).

(c) On and after the Effective Date, (i) all references to the Existing Credit
Agreement (or to any amendment or any amendment and restatement thereof) in the
Financing Agreements (other than this Agreement) shall be deemed to refer to the
Existing Credit Agreement, as amended and restated hereby, (ii) all references
to any Article, Section or sub-clause of the Existing Credit Agreement or in any
Financing Agreement (but not herein) shall be amended to become, mutatis
mutandis, references to the corresponding provisions of this Agreement and
(iii) except as the context otherwise provides, on or after the Effective Date,
all references to this Agreement herein (including for purposes of
indemnification and reimbursement of fees) shall be deemed to be references to
the Existing Credit Agreement, as amended and restated hereby.

(d) This amendment and restatement is limited as written and is not a consent to
any other amendment, restatement or waiver, whether or not similar and, except
as expressly provided herein or in any other Financing Agreement, all terms and
conditions of the Financing Agreements remain in full force and effect unless
otherwise specifically amended or amended and restated hereby or by any other
Financing Agreement.

Section 11.12 Governing Law

This Agreement and the rights and obligations of the parties hereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.

Section 11.13 Submission to Jurisdiction; Service of Process

(a) Any legal action or proceeding with respect to this Agreement or any other
Financing Agreement may be brought in the courts of the State of New York
located in the City of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
each of the Loan Parties hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid

 

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courts. The parties hereto hereby irrevocably waive any objection, including any
objection to the laying of venue or based on the grounds of forum non
conveniens, that any of them may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.

(b) Each Loan Party hereby irrevocably designates, appoints and empowers the
Borrower Agent to act as its process agent, in the case of any suit, action or
proceeding brought in the United States of America as its designee, appointee
and agent to receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process, summons, notices
and documents that may be served in any action or proceeding arising out of, or
in connection with, this Agreement or any other Financing Agreement. The
Borrower Agent agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

(c) Nothing contained in this Section 11.13 shall affect the right of the
Administrative Agent or any Lender to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against any
Loan Party in any other jurisdiction.

(d) If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder in Dollars into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase Dollars with such other
currency at the spot rate of exchange quoted by the Administrative Agent at
11:00 a.m. (New York time) on the Business Day preceding that on which final
judgment is given, for the purchase of Dollars, for delivery two Business Days
thereafter.

Section 11.14 Waiver of Jury Trial

EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUERS, HOLDINGS AND THE
BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER FINANCING AGREEMENT.

Section 11.15 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
the Borrowers make a payment or payments to the Administrative Agent, the
Lenders or the Issuers or any such Person receives payment from the proceeds of
the Collateral or exercise their rights of setoff, and such payment or payments
or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, right and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

Section 11.16 Section Titles

The section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement

 

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between the parties hereto, except when used to reference a section. Any
reference to the number of a clause, sub-clause or subsection hereof immediately
followed by a reference in parenthesis to the title of the Section containing
such clause, sub-clause or subsection is a reference to such clause, sub-clause
or subsection and not to the entire Section; provided, however, that, in case of
direct conflict between the reference to the title and the reference to the
number of such Section, the reference to the title shall govern absent manifest
error. If any reference to the number of a Section (but not to any clause,
sub-clause or subsection thereof) is followed immediately by a reference in
parenthesis to the title of a Section, the title reference shall govern in case
of direct conflict absent manifest error.

Section 11.17 Execution in Counterparts

This Agreement shall become effective when it shall have been executed by the
Borrowers and the Administrative Agent and when the Administrative Agent shall
have been notified by each Lender and Issuer that such Lender or Issuer has
executed it. This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are attached to the same document. Delivery of an executed signature page of
this Agreement by facsimile transmission, by electronic mail or by posting on
the Approved Electronic Platform shall be as effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement signed by all
parties shall be lodged with the Borrowers and the Administrative Agent.

Section 11.18 Entire Agreement

This Agreement, together with all of the other Financing Agreements and all
certificates and documents delivered hereunder or thereunder, embodies the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. In the event of any
conflict between the terms of this Agreement and any other Financing Agreement,
the terms of this Agreement shall govern.

Section 11.19 Confidentiality

Each Lender and the Administrative Agent agree to use all reasonable efforts to
keep information obtained by it pursuant hereto and the other Financing
Agreements confidential in accordance with such Lender’s or the Administrative
Agent’s, as the case may be, customary practices and agrees that it shall not
disclose any such information other than (a) to such Lender’s or the
Administrative Agent’s, as the case may be, employees, representatives and
agents that are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by this Agreement
and are advised of the confidential nature of such information, (b) to
Affiliates of such Lender or the Administrative Agent, and the employees,
representatives and agents of such Affiliates, in each case, that are or are
expected to be involved in the evaluation of such information in connection with
the transactions contemplated by this Agreement, in each case and to the extent
such Affiliates agree to be bound by the provisions of this Section 11.19 and
such employees, representatives and agents are advised of the confidential
nature of such information, (c) to the extent such information presently is or
hereafter becomes available to such Lender or the Administrative Agent, as the
case may be, on a non-confidential basis from a source other than any Loan
Party, (d) to the extent disclosure is required by law,

 

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regulation or judicial order or requested or required by bank regulators or
auditors or (e) to current or prospective assignees, Participants and Special
Purpose Vehicle grantees of any option described in Section 11.2(f) (Assignments
and Participations), contractual counterparties in any Hedging Contract
permitted hereunder and to their respective legal or financial advisors, in each
case and to the extent such assignees, Participants, grantees or counterparties
agree to be bound by, and to cause their advisors to comply with, the provisions
of this Section 11.19. Notwithstanding any other provision in this Agreement,
the Administrative Agent hereby agrees that the Loan Parties (and each of their
officers, directors, employees, accountants, attorneys and other advisors) may
disclose to any and all persons, without limitation of any kind, the U.S. tax
treatment and U.S. tax structure of the Facility and the transactions
contemplated hereby and all materials of any kind (including opinions and other
tax analyses) that are provided to it relating to such U.S. tax treatment and
U.S. tax structure.

Section 11.20 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 11.21 Patriot Act Notice

Each Lender subject to the Patriot Act hereby notifies the Loan Parties that,
pursuant to Section 326 of the Patriot Act, it is required to obtain, verify and
record information that identifies the Loan Parties, including the name and
address of the Loan Parties and other information that will allow such Lender to
identify the Loan Parties in accordance with the Patriot Act.

Section 11.22 Termination.

At such time as (a) all of the Revolving Credit Commitments have been
terminated, (b) all Letters of Credit have terminated or expired or been cash
collateralized to the reasonable satisfaction of the respective Issuers and
(c) all Obligations under the Financing Agreements (other than obligations which
survive as provided in the following sentence) have been paid and satisfied in
full, this Agreement shall terminate. The indemnities to which the
Administrative Agent and the Lenders are entitled under the provisions of
Section 10.6, Section 11.3 and Section 11.4 of this Agreement and any other
provision of this Agreement and the other Financing Agreements, shall continue
in full force and effect and shall protect the Administrative Agent and the
Lenders (i) notwithstanding any termination of this Agreement, or of the other
Financing Agreements, against claims arising after such termination as well as
before related to matters and events existing on or prior to the date of
termination of this Agreement in accordance with its terms and (ii) at all times
after any such party ceases to be a party to this Agreement with respect to all
matters and events existing on or prior to the date such party ceased to be a
party to this Agreement. The Administrative Agent agrees to furnish to the Loan
Parties, upon the Borrower Agent’s request and at the Borrowers’ cost and
expense, any release, termination, or other agreement or document evidencing the
foregoing termination and the release of the Liens created under any of the
Collateral Documents as may be reasonably requested by the Borrower Agent.

 

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[SIGNATURE PAGES FOLLOW]

 

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

 

BORROWERS

J. CREW OPERATING CORP.

J. CREW INC.

GRACE HOLMES, INC.

H.F.D. NO. 55, INC.

MADEWELL INC.

 

By:   \s\ James S. Scully   Name: James S. Scully   Title: Chief Financial
Officer

 

GUARANTORS J. CREW GROUP, INC. By:   \s\ James S. Scully  

Name: James S. Scully

Title: Chief Financial Officer

 

J. CREW INTERNATIONAL, INC. By:   \s\ Nicholas P. Lamberti   Name: Nicholas P.
Lamberti   Title: Vice President and Controller

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

CITCORP USA, INC.,

    as Administrative Agent

By:   \s\ Thomas M. Halsch  

Name: Thomas M. Halsch

Title: Director

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

WACHOVIA BANK, NATIONAL ASSOCIATION

    as Issuer

By:   \s\ Sang Kim   Name: Sang Kim   Title: Vice President

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

WACHOVIA BANK, NATIONAL ASSOCIATION

    as Syndication Agent

By:   \s\ Sang Kim  

Name: Sang Kim

Title: Vice President

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

BANK OF AMERICA,

as Syndication Agent

By:   \s\ Kathleen Dimock  

Name: Kathleen Dimock

Title: Managing Director

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

LENDERS

CITICORP USA, INC.,

    as Swing Loan Lender and Lender

By:   \s\ Thomas M. Halsch  

Name: Thomas M. Halsch

Title: Director

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

LENDERS

BANK OF AMERICA,

as Lender

By:   \s\ Kathleen Dimock  

Name: Kathleen Dimock

Title: Managing Director

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

LENDERS

WACHOVIA BANK, NATIONAL ASSOCIATION

as Lender

By:   \s\ Sang Kim  

Name: Sang Kim

Title: Vice President

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

LENDERS

HSBC BUSINESS CREDIT (USA) INC.

as Lender

By:   \s\ Dan Bueno  

Name: Dan Bueno

Title: Vice President

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

LENDERS

JPMorgan Chase BANK, N.A.

as Lender

By:   \s\ Kathleen C. Krieg  

Name: Kathleen C. Krieg

Title: Senior Vice President

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

SCHEDULE I

COMMITMENTS

 

Bank

   Commitment

Bank of America

   $ 50,000,000

Citicorp USA, Inc.

   $ 50,000,000

Wachovia Bank, National Association

   $ 50,000,000

HSBC Business Credit (USA) Inc.

   $ 25,000,000

JP Morgan Chase Bank, N.A.

   $ 25,000,000

Total

   $ 200,000,000