Exhibit 10.1
Execution Version
 
SECOND AMENDED AND RESTATED
LOAN AND GUARANTY AGREEMENT
by and among
COLLECTIVE BRANDS FINANCE, INC.
as Borrower,
THE GUARANTORS SIGNATORY HERETO,
as Credit Parties,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent,
WELLS FARGO CAPITAL FINANCE, LLC
as Sole Lead Arranger and Sole Bookrunner,
BANK OF AMERICA, N.A.
as Syndication Agent,
and
JPMORGAN CHASE BANK, N.A.
as Documentation Agent
Dated as of August 16, 2011
 

 

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TABLE OF CONTENTS

         
1. DEFINITIONS AND CONSTRUCTION
    1  
1.1 Definitions
    1  
1.2 Accounting Terms
    43  
1.3 Code
    43  
1.4 Construction
    44  
1.5 Schedules and Exhibits
    44  
 
       
2. LOAN AND TERMS OF PAYMENT
    44  
2.1 Revolver Advances
    44  
2.2 Revolver Increase
    45  
2.3 Borrowing Procedures and Settlements
    46  
2.4 Payments
    52  
2.5 Overadvances
    55  
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations
    55  
2.7 Cash Management
    56  
2.8 Crediting Payments
    60  
2.9 Designated Account
    60  
2.10 Maintenance of Loan Account; Statements of Obligations
    61  
2.11 Fees
    61  
2.12 Letters of Credit
    61  
2.13 LIBOR Option
    65  
2.14 Capital Requirements
    68  
 
       
3. CONDITIONS; TERM OF AGREEMENT
    69  
3.1 Conditions Precedent to the Initial Extension of Credit
    69  
3.2 [Intentionally Omitted]
    71  
3.3 Conditions Precedent to all Extensions of Credit
    71  
3.4 Term
    72  
3.5 Effect of Termination
    72  
3.6 Early Termination by Borrower
    73  
 
       
4. [INTENTIONALLY OMITTED]
    73  
 
       
5. REPRESENTATIONS AND WARRANTIES
    73  
5.1 No Encumbrances
    73  
5.2 Eligible Accounts
    74  
5.3 Eligible Inventory
    74  
5.4 Location of Inventory
    74  
5.5 Inventory Records
    74  

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5.6 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number
    74  
5.7 Due Organization and Qualification; Subsidiaries
    75  
5.8 Due Authorization; No Conflict
    75  
5.9 Litigation
    76  
5.10 No Material Adverse Change
    76  
5.11 Fraudulent Transfer
    77  
5.12 Employee Benefits
    77  
5.13 Environmental Condition
    77  
5.14 Investment Company Act
    77  
5.15 Intellectual Property
    77  
5.16 Leases
    78  
5.17 Deposit Accounts
    78  
5.18 Complete Disclosure
    78  
5.19 Indebtedness
    78  
5.20 Credit Card Receipts
    78  
5.21 Margin Stock
    79  
5.22 Senior Debt
    79  
5.23 Anti-Terrorism Laws
    79  
5.24 Related Documents
    80  
 
       
6. AFFIRMATIVE COVENANTS
    81  
6.1 Accounting System
    81  
6.2 Collateral Reporting
    81  
6.3 Financial Statements, Reports, Certificates
    81  
6.4 Returns
    84  
6.5 Maintenance of Properties
    84  
6.6 Taxes
    84  
6.7 Insurance
    84  
6.8 Location of Inventory/Chief Executive Offices
    85  
6.9 Compliance with Laws
    85  
6.10 Leases
    85  
6.11 Existence
    86  
6.12 Environmental
    86  
6.13 Disclosure Updates
    86  
6.14 Formation of Subsidiaries
    86  
6.15 Designation of Subsidiaries
    87  
6.16 Segregation of Collateral
    88  
 
       
7. NEGATIVE COVENANTS
    88  
7.1 Indebtedness
    88  
7.2 Liens
    90  
7.3 Restrictions on Fundamental Changes/Disposal of Assets
    91  

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7.4 Change Name
    92  
7.5 Nature of Business
    92  
7.6 Amendments
    92  
7.7 Change of Control
    93  
7.8 Distributions
    93  
7.9 Accounting Methods; Fiscal Year
    93  
7.10 Investments
    93  
7.11 Transactions with Affiliates
    95  
7.12 Use of Proceeds
    95  
7.13 Limitations on Restrictions on Subsidiary Distributions; No New Negative
Pledge
    95  
7.14 Modification of Governing Documents
    96  
7.15 Modification of Related Documents
    96  
7.16 Sales and Lease-Backs
    96  
7.17 Minimum Fixed Charge Coverage Ratio
       
7.18 No Speculative Transactions
    96  
 
       
8. EVENTS OF DEFAULT
    97  
 
       
9. THE LENDER GROUP’S RIGHTS AND REMEDIES
    99  
9.1 Rights and Remedies
    99  
9.2 Remedies Cumulative
    101  
 
       
10. TAXES AND EXPENSES
    101  
 
       
11. WAIVERS; INDEMNIFICATION
    102  
11.1 Demand; Protest; etc
    102  
11.2 The Lender Group’s Liability for Collateral
    102  
11.3 Indemnification
    102  
 
       
12. NOTICES
    103  
 
       
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
    104  
 
       
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS
    105  
14.1 Assignments and Participations
    105  
14.2 Successors
    108  
 
       
15. AMENDMENTS; WAIVERS
    108  
15.1 Amendments and Waivers
    108  
15.2 Replacement of Holdout Lender
    110  
15.3 No Waivers; Cumulative Remedies
    110  
 
       
16. AGENT; THE LENDER GROUP
    111  

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16.1 Appointment and Authorization of Agent
    111  
16.2 Delegation of Duties
    112  
16.3 Liability of Agent
    112  
16.4 Reliance by Agent
    112  
16.5 Notice of Default or Event of Default
    113  
16.6 Credit Decision
    113  
16.7 Costs and Expenses; Indemnification
    114  
16.8 Agent in Individual Capacity
    114  
16.9 Successor Agent
    115  
16.10 Lender in Individual Capacity
    115  
16.11 Withholding Taxes
    116  
16.12 Collateral Matters
    118  
16.13 Restrictions on Actions by Lenders; Sharing of Payments
    119  
16.14 Agency for Perfection
    120  
16.15 Payments by Agent to the Lenders
    120  
16.16 Concerning the Collateral and Related Loan Documents
    120  
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information
    121  
16.18 Several Obligations; No Liability
    122  
16.19 Legal Representation of Agent
    125  
 
       
17. GUARANTY.
    125  
17.1 Guaranty of the Obligations
    125  
17.2 Contribution by Guarantors
    125  
17.3 Payment by Guarantors
    126  
17.4 Liability of Guarantors Absolute
    127  
17.5 Waivers by Guarantors
    129  
17.6 Guarantors’ Rights of Subrogation, Contribution, Etc.
    130  
17.7 Subordination Of Other Obligations
    131  
17.8 Continuing Guaranty
    131  
17.9 Authority of Guarantors or Borrower
    131  
17.10 Financial Condition of Borrower
    131  
17.11 Bankruptcy, Etc.
    131  
 
       
18. GENERAL PROVISIONS.
    132  
18.1 Effectiveness
    132  
18.2 Section Headings
    132  
18.3 Interpretation
    132  
18.4 Severability of Provisions
    132  
18.5 Amendments in Writing
    133  
18.6 Counterparts; Telefacsimile Execution
    133  
18.7 Revival and Reinstatement of Obligations
    133  
18.8 Confidentiality
    133  

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18.9 Integration
    134  
18.10 Patriot Act Notice
    134  
18.11 Amendment and Restatement
    135  

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EXHIBITS AND SCHEDULES

     
Exhibit A-1
  Form of Assignment and Acceptance
Exhibit C-1
  Form of Compliance Certificate
Exhibit C-2
  Form of Closing Compliance Certificate
Exhibit G
  Form of Pledge and Security Agreement
Exhibit L-1
  Form of LIBOR Notice
Exhibit M
  Form of Borrowing Base Certificate
 
   
Schedule A-1
  Agent’s Account
Schedule A-2
  Authorized Persons
Schedule C-1
  Commitments
Schedule D-1
  Designated Account
Schedule D-2
  Group Concentration Account
Schedule E-1
  Eligible Inventory Locations
Schedule E-2
  Pool Locations
Schedule P-1
  Permitted Liens
Schedule 1.1(b)
  Qualified Restricted Subsidiary
Schedule 3.1(d)
  Real Property
Schedule 5.4
  Locations of Inventory
Schedule 5.6(a)
  States of Organization
Schedule 5.6(b)
  Chief Executive Offices
Schedule 5.6(c)
  FEINs
Schedule 5.7(b)
  Capitalization of Borrower
Schedule 5.7(c)
  Capitalization of Borrower’s Subsidiaries
Schedule 5.9
  Litigation
Schedule 5.12
  Employee Benefits
Schedule 5.13
  Environmental Matters
Schedule 5.15
  Intellectual Property
Schedule 5.17
  Deposit Accounts
Schedule 5.19
  Permitted Indebtedness
Schedule 5.20
  Credit Card Processors
Schedule 6.15
  Designation of Subsidiaries
Schedule 7.3
  Asset Dispositions
Schedule 7.9
  Accounting Methods; Fiscal Year
Schedule 7.10
  Investments
Schedule 7.11
  Transactions with Affiliates

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SECOND AMENDED AND RESTATED LOAN AND GUARANTY AGREEMENT
          THIS SECOND AMENDED AND RESTATED LOAN AND GUARANTY AGREEMENT (this
“Agreement”), is entered into as of August 16, 2011, by and among, on the one
hand, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and permitted assigns, are referred to
hereinafter each individually as a “Lender” and collectively as the “Lenders”)
and WELLS FARGO BANK, NATIONAL ASSOCIATION (successor by merger to Wells Fargo
Retail Finance, LLC), as administrative agent for the Lenders (“Agent”) and
WELLS FARGO CAPITAL FINANCE, LLC, as sole lead arranger and sole bookrunner and
BANK OF AMERICA, N.A., as syndication agent and JPMORGAN CHASE BANK, N.A., as
documentation agent and, on the other hand, COLLECTIVE BRANDS FINANCE, INC., a
Nevada corporation (“Borrower”) and the Guarantors identified on the signature
pages hereof (together with Borrower, the “Credit Parties” and each individually
as a “Credit Party”).
          WHEREAS, Borrower, Agent and certain financial institutions (such
financial institutions, the “Existing Lenders”) are party to an Amended and
Restated Loan and Guaranty Agreement dated as of August 17, 2007 (as amended
through the date hereof, the “Prior Loan Agreement”); and
          WHEREAS, Borrower, Agent and the Existing Lenders have agreed to amend
and restate the Prior Loan Agreement, subject to the terms and conditions set
forth herein, to, among other things, (i) cause the Guarantors to continue to
guarantee the Obligations and (ii) provide working capital for Borrower and to
provide funds for other general corporate purposes of Borrower;
          NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that the Prior Loan Agreement is amended and restated in its entirety as
follows:
1. DEFINITIONS AND CONSTRUCTION.
     1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
          “Account” means an account (as that term is defined in the Code), and
any and all supporting obligations in respect thereof.
          “Account Debtor” means any Person obligated on an Account and any
Credit Card Processor.

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          “Advance Rates” means the percentage rates set forth in the definition
of “Borrowing Base”, as such percentage rates may be modified pursuant to
Section 2.1(b).
          “Advances” has the meaning set forth in Section 2.1(a).
          “Affiliate” “ means, with respect to any Person, any other Person
directly or indirectly controlling or that is controlled by or is under common
control with such Person, each officer, director, general partner or
joint-venturer of such Person, and each Person that is the beneficial owner of
15% or more of any class of Voting Stock of such Person; provided, however,
“Affiliate” shall not include any holder of a minority interest in any
Subsidiary of the Parent. For the purposes of this definition, “control” means
the possession of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
          “Agent” means Wells Fargo, in its capacity as arranger and
administrative agent hereunder, and any successor thereto.
          “Agent Advances” has the meaning set forth in Section 2.3(e)(i).
          “Agent-Related Persons” means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
          “Agent’s Account” means the Deposit Account of Agent identified on
Schedule A-1 to the Closing Compliance Certificate.
          “Agent’s Liens” means the Liens granted by the Credit Parties to Agent
under this Agreement or the other Loan Documents.
          “Aggregate Payments” has the meaning set forth in Section 17.2.
          “Agreement” has the meaning set forth in the preamble to this
Agreement.
          “Applicable Margin” means initially, the rates for Base Rate Loans and
LIBOR Rate Loans set forth in Level I below and thereafter means the rates for
Base Rate Loans and LIBOR Rate Loans set forth in the grid below based upon
Average Availability:

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                                                              Documentary  
Standby     Average   Base Rate   LIBOR Rate   Letters   Letters of Level  
Availability   Loans   Loans   of Credit   Credit
I
  Greater than or equal to $225,000,000     0.75 %     1.75 %     1.25 %    
1.75 %
 
                                   
II
  Greater than or equal to $125,000,000 but less than $225,000,000     1.00 %  
  2.00 %     1.50 %     2.00 %
 
                                   
III
  Less than
$125,000,000     1.25 %     2.25 %     1.75 %     2.25 %

          The Applicable Margin shall be adjusted quarterly as of the first day
of each fiscal quarter, based upon the Average Availability for the immediately
preceding fiscal quarter provided it is understood and agreed that the
Applicable Margin will be deemed to be at Level I from the Closing Date until
delivery of the financial statements for the fiscal quarter ended October 30,
2011 at which time it will be adjusted per the grid above.
          “Anti-Terrorism Laws” has the meaning set forth in Section 5.23.
          “Arranger” means WFCF in its capacity as sole lead arranger and sole
bookrunner.
          “Asset Sale” means a sale, conveyance, transfer, lease or other
disposition of any of its respective assets or any interest therein by the
Borrower or any of its Restricted Subsidiaries (including the sale or factoring
at maturity or collection of any accounts) to any Person, or a permitting or
sufferance of any other Person to acquire any interest in any of the respective
assets of the Borrower or any of its Restricted Subsidiaries or, except in the
case of the Borrower, the issuance or sale of any shares of Stock or any Stock
Equivalent, other than (i) the sale or disposition of Cash Equivalents,
Inventory or other assets, in each case in the ordinary course of business,
(ii) the sale or disposition of equipment that has become obsolete, damaged,
surplus or otherwise no longer used or useful in the ordinary course of business
or is replaced in the ordinary course of business, (iii) any Recovery Event
(without giving effect to the limitations in the definition thereof), (iv) sales
or other dispositions without recourse and in the ordinary course of business of
overdue accounts receivable in connection with the compromise or collection
thereof, (v) the licensing, sublicensing or other similar ordinary course
transfers (but not sales) of intellectual property rights (on an exclusive or
non-exclusive basis) to the extent that the foregoing occurs on an arms-length
basis, (vi) the settlement, release or surrender of tort or other litigation
claims, (vii) asset contributions for no cash consideration (or its equivalent)
to the extent constituting an Investment permitted under clause (d) of the
definition of “Permitted Investments,” (viii) Assets Sales among Credit Parties,
(xi) a true lease or sublease of Real Property not constituting Indebtedness and
not constituting a Sale-Leaseback, (x) dispositions of property pursuant to a
Permitted Sale-Leaseback, (xi) as long as no Default or Event of Default is
continuing or would result therefrom, any other Asset Sale for fair market
value, 75% of

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which shall be payable in cash upon such sale, provided, however, that with
respect to any such Asset Sale pursuant to this clause (xi), the total Dollar
amount of the aggregate consideration received during any fiscal year for all
such Asset Sales shall not exceed 2.0% of the Consolidated Net Tangible Assets
of Borrower and the Restricted Subsidiaries taken as a whole at any time
outstanding, (xii) any other sale or transfer or series of related sales or
transfers that result in cash consideration of less than $1,000,000,
(xiii) transfers to insurers as part of insurance settlements for losses to
governmental authority for condemned property, (xiv) Store Closings within the
Store Closing Basket and (xv) dispositions listed on Schedule 7.3.
          “Assignee” has the meaning set forth in Section 14.1(a).
          “Assignment and Acceptance” means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
          “Authorized Person” means those individuals identified on Schedule A-2
to the Closing Compliance Certificate, as such schedule may be modified by
written notice from Borrower to Agent from time to time.
          “Availability” means, as of any date of determination, the amount that
Borrower is entitled to borrow as Advances hereunder (after giving effect to all
then outstanding Obligations and all sublimits and Reserves then applicable
hereunder).
          “Average Availability” means for any fiscal quarter an amount equal to
the sum of Availability for each day of such fiscal quarter divided by the
actual number of days in such fiscal quarter, as determined by Agent, which
determination shall be conclusive absent manifest error.
          “Banking Services” means each and any of the following bank services
provided to any Credit Party by any Lender: (a) commercial credit cards,
(b) stored value cards and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
returned items, overdrafts and interstate depository network services).
          “Banking Services Obligations” means any and all obligations of the
Credit Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefore), in connection with Banking
Services.
          “Bankruptcy Code” means title 11 of the United States Code, as in
effect from time to time.
          “Base LIBOR Rate” means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation

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sources as it considers appropriate (rounded upwards, if necessary, to the next
1/100%), to be the rate at which Dollar deposits (for delivery on the first day
of the requested Interest Period) are offered to major banks in the London
interbank market at approximately 11 a.m. (London time) 2 Business Days prior to
the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of an
extant LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate
Loan) by Borrower in accordance with this Agreement, which determination shall
be conclusive in the absence of manifest error.
          “Base Rate” means, the rate of interest announced, from time to time,
within Wells Fargo at its principal office in San Francisco as its “prime rate”,
with the understanding that the “prime rate” is one of Wells Fargo’s base rates
(not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo may designate.
          “Base Rate Loan” means the portion of the Advances that bears interest
at a rate determined by reference to the Base Rate.
          “Benefit Plan” means a “defined benefit plan” (as defined in
Section 3(35) of ERISA) subject to Title IV of ERISA for which any Credit Party
or ERISA Affiliate of any Credit Party has been an “employer” (as defined in
Section 3(5) of ERISA) within the past six years.
          “Board of Directors” means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board of directors (or comparable managers).
          “Books” means each Credit Party’s now owned or hereafter acquired
books and records (including all of its Records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of the
Records of each Credit Party relating to its business operations or financial
condition, and all of its goods related to such information).
          “Borrower” has the meaning set forth in the preamble to this
Agreement.
          “Borrowing” means a borrowing hereunder consisting of Advances made on
the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in
the case of a Swing Loan, or by Agent in the case of an Agent Advance.
          “Borrowing Base” means, as of any date of determination, the result
of:
          (a) 85% of Eligible Accounts, plus

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          (b) 90% of Eligible Credit Card Accounts, plus
          (c) 90% times the then extant Net Liquidation Percentage times
Eligible Inventory, minus
          (d) the aggregate amount of Permitted Reserves, if any, established by
the Agent.
          “Borrowing Base Certificate” has the meaning set forth in
Section 18.12(a).
          “Business Day” means any day that is not a Saturday, Sunday, or other
day on which banks are authorized or required to close in the states of
California, Kansas, Massachusetts or New York, except that, if a determination
of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day”
also shall exclude any day on which banks are closed for dealings in Dollar
deposits in the London interbank market.
          “Capital Lease” means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
          “Capitalized Lease Obligation” means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
          “Cash Equivalents” means, as of any date of determination,
(i) marketable securities (a) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government or (b) issued by
any agency of the United States in each case maturing within thirteen months
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within thirteen months
after such date and having, at the time of the acquisition thereof, a rating of
at least A-1 from Standard &Poor’s Rating Group (“S&P”) or at least P-1 from
Moody’s Investors Service Inc. (“Moody’s”); (iii) (a) commercial paper maturing
no more than thirteen months from the date of creation thereof and having, at
the time of the acquisition thereof, a rating of at least A-1 from S&P or at
least P-1 from Moody’s and (b) other corporate obligations maturing no more than
thirteen months from the acquisition thereof and having, at the time of the
acquisition thereof, a rating of at least AA from S&P or at least Aa2 from
Moody’s; (iv) variable rate demand notes and auction rate securities maturing no
more than thirteen months from the date of creation thereof; (v) certificates of
deposit or bankers’ acceptances maturing within thirteen months after such date
and issued or accepted by any Lender or by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1 capital
(as defined in such regulations) of not less than $100,000,000; and (vi) shares
of any money market mutual fund that (a) has substantially all of its assets
invested continuously in the

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types of investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500,000,000 and (c) has the highest rating obtainable
from either S&P or Moody’s.
          “Cash Management Account” has the meaning set forth in Section 2.7(a).
          “Cash Management Agreements” means those certain cash management
agreements, in form and substance satisfactory to Agent, each of which is among
the applicable Credit Party, Agent, and one of the Cash Management Banks.
          “Cash Management Bank” has the meaning set forth in Section 2.7(a).
          “Change of Control” means any event or circumstance after which
(a) any person or group of persons (within the meaning of the Securities
Exchange Act of 1934, as amended) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Act of 1934, as amended) of more than 50% of the voting
stock of the Parent, (b) a majority of the board of directors of the Parent
shall not be Continuing Directors or (c) Borrower shall cease to be a direct
Wholly Owned Domestic Subsidiary of the Parent.
          “Closing Compliance Certificate” means a certificate substantially in
the form of Exhibit C-2 delivered by the chief financial officer of Borrower to
Agent.
          “Closing Date” means the date of the making of the initial Advance (or
other extension of credit) hereunder or the date on which Agent sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
either have been satisfied or have been waived.
          “Closing Date Business Plan” means the set of Projections of Parent
and its Subsidiaries (on a combined basis) through the 2015 fiscal year,
prepared on a quarterly basis through the end of 2011 (and annually thereafter).
          “Code” means the New York Uniform Commercial Code, as in effect from
time to time.
          “Collateral” means all property and interests in property and proceeds
thereof now owned or hereafter acquired by any Credit Party in or upon which a
Lien is granted under any Collateral Document.
          “Collateral Documents” means the Pledge and Security Agreement, other
pledge or security agreements (including those in respect of Intellectual
Property), the Mortgages, the Deposit Account Control Agreements, the Securities
Account Control Agreements and any other document executed and delivered by a
Credit Party granting a Lien on any of its property to secure payment of the
Secured Obligations.

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          “Collateral Access Agreement” means a landlord waiver, bailee letter,
or acknowledgement agreement of any lessor, warehouseman, processor, consignee,
or other Person in possession of, having a Lien upon, or having rights or
interests in any Credit Party’s Inventory or Books relating to the Collateral,
in each case, in form and substance satisfactory to Agent.
          “Collections” means all cash, checks, notes, instruments, and other
items of payment relating to the Collateral.
          “Commitment” means, with respect to each Lender, its Revolver
Commitment and, with respect to all Lenders, their Revolver Commitments, as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of
Section 14.1 or pursuant to Section 2.2.
          “Compliance Certificate” means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.
          “Concentration Accounts” has the meaning set forth in Section 2.7(a).
          “Consignee/Bailee Location” means real property owned or leased by a
Person constituting a “bailee” or “consignee” for purposes of the Code with
respect to Inventory of the Credit Parties, other than in-transit Inventory, in
excess of $2,500,000 in the aggregate for all such Consignee/Bailee Locations
and $1,000,000 in respect of any particular Person constituting a “bailee” or
“consignee”; provided that no Pool Location shall be considered a
Consignee/Bailee Location for purposes of this Agreement.
          “Consolidated” means, when used to modify a financial term, test,
statement, or report of a Person, the application or preparation of such term,
test, statement or report (as applicable) based upon the consolidation, in
accordance with GAAP, of the financial condition or operating results of such
Person and its Subsidiaries.
          “Consolidated EBITDA” means Consolidated EBITDAR minus the amount, if
any, of rental expense added to Consolidated Net Income in calculating
Consolidated EBITDAR.
          “Consolidated EBITDAR” means, with respect to any Person for any
period, Consolidated Net Income for such Person and its Subsidiaries for such
period, plus (a) the sum of the following, without duplication and, in each
case, to the extent deducted in determining such Consolidated Net Income:
(i) any provision for income taxes, (ii) all interest expense (net of interest
income), (iii) depreciation, amortization and rental expense,
(iv) extraordinary, unusual or non-recurring charges, expenses or losses
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on the sales
of assets outside of the ordinary course of

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business), (v) losses or charges resulting from hedging activities, including
but not limited to any decrease in the fair value of interest rate swap
agreements and any losses on foreign currency contracts not entered into for
speculative purposes, (vi) the amount of all non-cash charges for such period
(including any impairment or writeoff of goodwill or other intangible assets but
excluding any such non-cash charge, expense or loss to the extent that it
represents an accrual of or reserve for cash expenses in any future period or an
amortization of a prepaid cash expense that was paid in a prior period),
(vii) the amortization of any financing costs or fees or original issue discount
incurred in connection with any Indebtedness, (viii) any non-cash expenses due
to purchase accounting associated with any future Permitted Acquisitions,
(ix) any non-cash compensation charge or expense arising from any grant of
stock, stock options or other equity based awards and (x) to the extent
non-recurring and not capitalized, costs, fees, charges and expenses (including
legal and consulting fees) incurred in connection with or written off as a
result of (1) the Loans, (2) Permitted Acquisitions and other investments
permitted under the Loan Documents, (3) issuances of Stock or Stock Equivalents,
and (4) disposition, incurrence or refinancing of any Indebtedness, including in
each case, all deferred financing costs written off and premiums paid or other
expenses incurred directly in connection with any early extinguishment of
Indebtedness and any net loss from any write-off or forgiveness of Indebtedness;
less (b) the sum of the following to the extent included in determining
Consolidated Net Income (i) income tax benefits for such period, (ii) any
extraordinary, unusual or non-recurring income or gains for such period
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business and any net gain from any
write-off or forgiveness of Indebtedness), (iii) other non-cash income or gains
(other than the accrual of revenue in the ordinary course), and (iv) gains
resulting from hedging activities, including but not limited to any increase in
the fair value of interest rate swap agreements and any gains on foreign
currency contracts not entered into for speculative purpose.
          “Consolidated Fixed Charge Coverage Ratio” means, at any date of
determination, the ratio of (a) (i) Consolidated EBITDA for such period minus
(ii) Capital Expenditures to (b) the sum of (i) Debt Service Charges plus
(ii) the aggregate amount of all Restricted Payments, plus (iii) the aggregate
amount of Federal, state, local and foreign income taxes paid in cash, in each
case, of or by the Parent and its Restricted Subsidiaries for the most recently
completed period, all as determined on a Consolidated basis in accordance with
GAAP.
          “Consolidated Funded Indebtedness” means, as of any date of
determination, the sum (without duplication) of (a) the aggregate principal
amount of Indebtedness of the Parent and the Restricted Subsidiaries outstanding
as of such date, in the amount that would be reflected on a balance sheet
prepared as of such date on a Consolidated basis in accordance with GAAP, and
(b) the aggregate principal amount of Indebtedness outstanding as of such date
of Persons other than the Parent or a Restricted Subsidiary, in the amount that
would be reflected on a balance sheet of any such Person prepared as of such
date on a

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Consolidated basis in accordance with GAAP, to the extent such Indebtedness is
guaranteed by the Parent or a Restricted Subsidiary. For purposes of determining
the Senior Secured Leverage Ratio and the Total Leverage Ratio for any Test
Period, Consolidated Funded Indebtedness in respect of Indebtedness outstanding
under this Agreement shall be the average outstanding amount of such
Indebtedness during such Test Period.
          “Consolidated Interest Charges” means, for any period, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including capitalized interest) or
in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs
under Swap Contracts, but excluding (i) any non-cash or deferred interest
financing costs and (ii) interest expenses treated as such pursuant solely to
Fin 48, (b) all interest paid or payable with respect to discontinued operations
and (c) the portion of rent expense with respect to such period under Capital
Lease Obligations that is treated as interest in accordance with GAAP, in each
case of or by the Parent and its Restricted Subsidiaries for the most recently
completed period, all as determined on a Consolidated basis in accordance with
GAAP.
          “Consolidated Net Income” means, with respect to any Person and its
Subsidiaries, for any period, the net income (or loss) of such Person and its
Subsidiaries for such period, determined on a Consolidated basis in accordance
with GAAP; provided that there shall be excluded from the calculation of
Consolidated Net Income (a) except as otherwise provided in the credit
documentation with respect to calculations to be made on a pro forma basis, the
net income (or loss) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person’s Subsidiaries, (b) the net income (or loss) of any Person that is an
Unrestricted Subsidiary or in which such Person has a minority ownership
interest, except to the extent any such income has actually been received by
such Person in the form of cash dividends or distributions, and (c) the
cumulative effect of a change in accounting principles.
          “Consolidated Net Tangible Assets” means, at any date of
determination, (i) the consolidated net book value of all assets of Parent and
its Subsidiaries, minus (ii) the consolidated total net book value of all assets
of Parent and its Subsidiaries which would be treated as intangibles under GAAP,
including goodwill and trademarks, all as determined on a consolidated basis in
accordance with GAAP.
          “Consolidated Store Deposit Accounts” has the meaning set forth in
Section 2.7(a).
          “Continuing Director” means the directors of the Parent on the Closing
Date and each other director of the Parent, if, in each case, such other
director’s nomination for election to the board of directors of the Parent is
recommended by at least 51% of the then Continuing Directors.

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          “Contractual Obligation” of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which any
of its property is subject.
          “Contributing Guarantors” has the meaning set forth in Section 17.2.
          “Control Exercise Notice” has the meaning set forth in Section 2.7(g).
          “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
          “Covenant Triggering Period” means a period commencing on the earliest
to occur of (i) the occurrence and continuation of an Event of Default, or
(ii) the date on which Excess Availability for the preceding five Business Day
consecutive period shall either be less than 12.5% of the Line Cap or less than
$25,000,000, and continuing until the Excess Availability for the preceding
thirty day consecutive period shall be more than the greater of (i) 12.5% of the
Line Cap or (ii) $25,000,000 and Pro Forma and Projected Excess Availability for
the subsequent sixty day consecutive period shall either be more than the
greater of (i) 12.5% of the Line Cap or (ii) $25,000,000.
          “Credit Card Agreements” means those certain credit card receipts
agreements, each in form and substance reasonably satisfactory to Agent, and
each of which is among Agent, the applicable Credit Party, and one of such
Credit Party’s Credit Card Processors, whereby, among other things, such Credit
Card Processor is irrevocably directed and agrees to transfer all proceeds of
credit card charges for sales by such Credit Party received by it (or other
amounts payable by such Credit Card Processor) into a designated Concentration
Account on a daily basis or such other periodic basis as Agent may otherwise
direct.
          “Credit Card Processor” means any Person (including an issuer of a
credit card) that acts as a credit card clearinghouse or remits payments due to
any Credit Party with respect to credit card charges accepted by such Credit
Party.
          “Credit Card Receivables” means, on any date of determination thereof,
Accounts consisting of rights of any Credit Party to payment by any Credit Card
Processor in connection with consumer retail sales for which such Credit Party
has accepted payment by means of charges to debit cards or major credit cards
(MasterCard, VISA), American Express, Discover, Japan Credit Bureau, Ahorro A
Toda Hora Banco Popular (“ATH”) Card, EBT Cards (so long as Eligible Accounts
relating to EBT Cards do not exceed, in the

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aggregate, $250,000) and such other bank or non-bank credit or debit cards as
may be approved by Agent in its Permitted Discretion).
          “Credit Party” means the Borrower and each Guarantor.
          “Customs Broker” means Expeditors International, or such other Persons
as may be selected by Borrower after the date hereof who are reasonably
acceptable to Agent in its Permitted Discretion to perform port of entry
services to accept and process Inventory imported by any Credit Party and who
have executed and delivered a Customs Broker Agreement.
          “Customs Broker Agreement” means a customs broker agreement in form
and substance satisfactory to Agent in its Permitted Discretion, duly executed
and delivered to Agent by a Customs Broker and the applicable Credit Party.
          “Daily Balance” means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
          “Debt Service Charges” means for any period, the sum of
(a) Consolidated Interest Charges paid or required to be paid for such period,
plus (b) principal payments required to be made and actually made on account of
Indebtedness (excluding the Obligations and the Term Loan Obligations but
including, without limitation, Capital Lease Obligations), in each case of or by
the Parent and its Restricted Subsidiaries for the most recently completed
period, all as determined on a Consolidated basis in accordance with GAAP.
          “Default” means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.
          “Defaulting Lender” means any Lender that (a) has failed to fund any
portion of an Advance, participations in L/C Undertakings or participations in
Swing Loans required to be funded by it hereunder within two Business Days of
the date required to be funded by it hereunder, (b) has otherwise failed to pay
over to the Agent or any other Lender any other amount required to be paid by it
hereunder within two Business Days of the date when due, or (c) is insolvent or
becomes the subject of a bankruptcy or insolvency proceeding.
          “Defaulting Lender Rate” means (a) for the first 3 days from and after
the date the relevant payment is due, the Base Rate, and (b) thereafter, the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Applicable Margin applicable thereto).
          “Deposit Account” means any deposit account (as that term is defined
in the Code).

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          “Deposit Account Control Agreement” has the meaning specified in the
Pledge and Security Agreement.
          “Designated Account” means the Deposit Account of each Credit Party
identified on Schedule D-1 to the Closing Compliance Certificate.
          “Designated Account Bank” has the meaning ascribed thereto on
Schedule D-1 to the Closing Compliance Certificate.
          “Deteriorating Lender” means any Defaulting Lender or any Lender as to
which (a) the Issuing Lender or the Swing Lender believes, in its Permitted
Discretion, that such Lender has defaulted in fulfilling its obligations under
one or more other syndicated credit facilities, or (b) a Person that Controls
such Lender is insolvent or becomes the subject of a bankruptcy, insolvency or
similar proceeding.
          “Disbursement Letter” means an instructional letter executed and
delivered by Borrower to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is satisfactory to Agent.
          “Disqualified Stock” shall mean any Stock or Stock Equivalent which,
by its terms (or by the terms of any Security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, (a) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Maturity Date, (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any Stock or Stock Equivalent referred
to in clause (a) above, in each case at any time on or prior to the first
anniversary of the Maturity Date, or (c) contains any repurchase obligation
which may come into effect prior to payment in full of all Obligations;
provided, however, that any Stock or Stock Equivalents that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof (or the
holders of any security into or for which such Stock or Stock Equivalents is
convertible, exchangeable or exercisable) the right to require the issuer
thereof to redeem such Stock or Stock Equivalents upon the occurrence of a
change in control or an asset sale occurring prior to the first anniversary of
the Maturity Date shall not constitute Disqualified Stock if such Stock or Stock
Equivalents provide that the issuer thereof will not redeem any such Stock or
Stock Equivalents pursuant to such provisions prior to the repayment in full of
the Obligations; provided further, however, that any Stock or Stock Equivalents
owned by a Group Member in a Joint Venture shall not constitute Disqualified
Stock solely due to repurchase obligations triggered upon such Group Member’s
failure to make a required capital contribution.
          “Disregarded Entity” means any entity that, for U.S. federal tax
purposes, is disregarded as an entity separate from its owner or is otherwise
fiscally transparent.

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          “Dollars” or “$” means United States dollars.
          “Dominion Triggering Period” means a period commencing on the earliest
to occur of (i) the occurrence and continuation of an Event of Default, or
(ii) the date on which Excess Availability for the preceding five Business Day
consecutive period shall either be less than 15% of the Line Cap or less than
$25,000,000, and continuing until the Excess Availability for the preceding
thirty day consecutive period shall either be more than the greater of (i) 15%
of the Line Cap or (ii) $25,000,000; provided, that the Credit Parties shall not
be permitted to cure an event giving rise to a Dominion Triggering Period more
than twice in any fiscal year.
          “EBT Cards” means those cards subject to an electronic benefit
transfer system that allows the user to authorize the transfer of the user’s
government benefits from a Federal account to a retailer account in order to pay
for products received.
          “Eligible Accounts” means those Accounts (other than Eligible Credit
Card Accounts) that are created by any Credit Party in the ordinary course of
its business, that arise out of such Credit Party’s sale of goods or rendition
of services, that comply with each of the representations and warranties
respecting Eligible Accounts made in the Loan Documents, and that are not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth below; provided, however, that such criteria may be revised from time to
time by Agent in its Permitted Discretion to address the results of any audit
performed by Agent from time to time after the Closing Date. In determining the
amount to be included, Eligible Accounts shall be calculated at face value.
Eligible Accounts shall not include the following:
               (a) Accounts that the Account Debtor has failed to pay within
90 days of original invoice date (or such longer period not to exceed 120 days
in the Agent’s discretion) or Accounts with selling terms of more than 60 days,
               (b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
               (c) Accounts with respect to which the Account Debtor is an
Affiliate of Borrower or an employee or agent of Borrower or any Affiliate of
Borrower,
               (d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
               (e) Accounts that are not payable in Dollars,

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               (f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States, or
(ii) is not organized under the laws of the United States or any state thereof,
or (iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent in its Permitted Discretion (as to form, substance, and issuer or domestic
confirming bank) that has been delivered to Agent and is directly drawable by
Agent, or (z) the Account is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent in its Permitted Discretion,
               (g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which Borrower
has complied, to the reasonable satisfaction of Agent, with the Assignment of
Claims Act, 31 USC §3727), or (ii) any state of the United States,
               (h) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, or as to which any Credit Party has
received notice of an imminent Insolvency Proceeding or a material impairment of
the financial condition of such Account Debtor,
               (i) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor’s financial
condition,
               (j) Accounts that are not subject to a valid and perfected first
priority Agent’s Lien, or
               (k) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor.
               “Eligible Credit Card Accounts” means those Eligible Accounts
consisting of Credit Card Receivables in each case (for all such Accounts) that
are created by any Credit Party in the ordinary course of its business, that
arise out of such Credit Party’s sale of goods or rendition of services, that
comply with each of the representations and warranties respecting Eligible
Accounts made in the Loan Documents, and that are not excluded as ineligible by
virtue of one or more of the excluding criteria set forth below; provided,
however, that such criteria may be revised from time to time by Agent in its
Permitted Discretion to address the results of any audit performed by Agent from
time to time after the Closing Date. In determining the amount to be included,
Eligible Accounts shall be calculated at face value. Eligible Accounts shall not
include the following:

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               (a) Credit Card Receivables that the applicable Credit Card
Processor has failed to pay within 5 Business Days after the applicable sale
date;
               (b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
               (c) Accounts that are not payable in Dollars,
               (d) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States, or
(ii) is not organized under the laws of the United States or any state thereof,
or (iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent in its Permitted Discretion (as to form, substance, and issuer or domestic
confirming bank) that has been delivered to Agent and is directly drawable by
Agent, or (z) the Account is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent in its Permitted Discretion,
               (e) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, or as to which any Credit Party has
received notice of an imminent Insolvency Proceeding or a material impairment of
the financial condition of such Account Debtor,
               (f) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor’s financial
condition, or
               (g) Accounts that are not subject to a valid and perfected first
priority Agent’s Lien, and, at any time after the 90th day following the Closing
Date are not subject to a Credit Card Agreement.
          “Eligible In-Transit Inventory” means, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) which
has been shipped from a location outside the United States for receipt by a
Credit Party to a location listed on Schedule E-1 to the Closing Compliance
Certificate within 45 days of the date of determination, but which has not yet
been delivered to a Credit Party, (b) for which payment has been made by a
Credit Party and title has passed to a Credit Party, (c) for which the document
of title reflects a Credit Party as consignee (along with delivery to a Credit
Party of the documents of title with respect thereto), (d) (x) is being
transported pursuant to a nonnegotiable document of title within the meaning of
the Code and (y) as to which, at any time after the 90th day following the
Closing Date, Agent has control over the documents of title which evidence
ownership of the subject Inventory by the delivery of a Customs Broker
Agreement, (e) such Inventory is insured against types of loss, damage, hazards,
and risks,

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and in amounts satisfactory to Agent in its Permitted Discretion, and (f) which
otherwise would constitute Eligible Landed Inventory.
          “Eligible Inventory” means Eligible Landed Inventory, Eligible L/C
Inventory, Eligible In-Transit Inventory or Eligible U.S. Territory Inventory,
less any Reserves imposed by the Agent; provided, that, in any event, Inventory
shall not constitute Eligible Inventory to the extent that such Inventory is
(i) not insured against types of loss, damage, hazards and risks, and in
amounts, satisfactory to Agent in its Permitted Discretion or (ii) insured with
captive insurance subsidiaries with a policy limit in excess of $1,000,000 per
occurrence.
          “Eligible Landed Inventory” means Inventory consisting of finished
goods held for sale in the ordinary course of each Credit Party’s business that
complies with each of the representations and warranties respecting Eligible
Inventory made in the Loan Documents, and that is not excluded as ineligible by
virtue of the one or more of the excluding criteria set forth below; provided,
however, that such criteria may be revised from time to time by Agent in its
Permitted Discretion to address the results of any audit or appraisal performed
by Agent from time to time after the Closing Date. In determining the amount to
be so included, Inventory shall be valued at the lower of cost (determined on a
perpetual basis) or market on a basis consistent with such Credit Party’s
historical accounting practices, but excluding, for purposes of any such
determination, the value of any capitalized costs unrelated to the acquisition
of Inventory. An item of Inventory shall not be included in Eligible Landed
Inventory if:
               (a) a Credit Party does not have good, valid, and marketable
title thereto,
               (b) it is not located at one of the locations in the United
States set forth on Schedule E-1 to the Closing Compliance Certificate or a Pool
Location (or in transit from one such location to another such location) as such
locations are updated by the Borrower from time to time by written notice to
Agent,
               (c) it is located on real property leased by any Credit Party or
in a contract warehouse, Pool Location, or Consignee/Bailee Location, unless
(i) it is segregated or otherwise separately identifiable from goods of others,
if any, stored on the premises, (ii) with respect to any Credit Party’s chief
executive office, Non-Owned Storage Facilities and any Consignee/Bailee Location
is subject to a Collateral Access Agreement and (iii), in the case of Inventory
held by a bailee or consignee at a Consignee/Bailee Location, notice of Agent’s
security interest in the Collateral has been sent to each secured creditor
having a security interest in inventory of such bailee or consignee provided
that, notwithstanding clause (ii) and (iii) above, Inventory located on real
property leased by any Credit Party or in a contract warehouse, Pool Location,
or Consignee/Bailee Location shall not be ineligible solely due to the inability
or failure to obtain a landlord or bailee waiver or other third party consent or
document, including a Collateral Access Agreement (provided that the Agent shall
be entitled to establish a reserve against Availability under the Borrowing Base
equal to

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the lesser of the value of such Inventory or up to three (3) months’ rent for
such location if such waiver is not received),
               (d) it is not subject to a valid and perfected first priority
Agent’s Lien,
               (e) it consists of goods returned or rejected by any Credit
Party’s customers unless such goods are repackaged and ready for sale in the
ordinary course of such Credit Party’s business, or
               (f) it consists of goods that are obsolete or slow moving (i.e.
more than three (3) seasons old (it being understood that the Borrower has only
two seasons in each calendar year)), restrictive or custom items,
work-in-process, mismatches, goods on display, return to vendor goods, raw
materials, or goods that constitute spare parts, packaging and shipping
materials, supplies used or consumed in any Credit Party’s business, bill and
hold goods, defective goods, “seconds” or Inventory acquired on consignment.
          “Eligible L/C Inventory” means, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory (a) not yet
delivered to a Credit Party, (b) the purchase of which is supported by a
Qualified Import Letter of Credit, (c) for which the document of title reflects
a Credit Party as consignee (along with delivery to a Credit Party or the
Issuing Bank, as applicable, of the documents of title with respect thereto),
(d) with respect to which the Underlying Letter of Credit has been drawn upon in
full and the Underlying Issuer has honored such drawing and Agent has honored
its obligations to the Underlying Issuer under the applicable Qualified Import
Letter of Credit, (e) (x) is being transported pursuant to a nonnegotiable
document of title within the meaning of the Code and (y) as to which Agent has
control over the documents of title which evidence ownership of the subject
Inventory by the delivery of a Customs Broker Agreement, (f) such Inventory is
insured against types of loss, damage, hazards and risks, and in amounts,
satisfactory to Agent in its Permitted Discretion, and (g) which upon completion
of manufacture otherwise would constitute Eligible Landed Inventory.
          “Eligible Transferee” means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) any
other Person approved by Agent and, so long as no Event of Default has occurred
and is continuing, Borrower (which approval of Borrower shall not be
unreasonably withheld, delayed, or conditioned).

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          “Eligible U.S. Territory Inventory” means, as of the date of
determination thereof, without duplication of other Eligible Inventory,
Inventory consisting of finished goods for which a Credit Party or Subsidiary of
a Credit Party has good, valid and marketable title, held for sale in the
ordinary course of a Credit Party’s or its Subsidiary’s business and that
complies with each of the representations and warranties respecting Eligible
Inventory made in the Loan Documents and that is either (a) shipped from a
location outside of the U.S. Territories for receipt by a Credit Party or
Subsidiary of a Credit Party in a U.S. Territory and for which (i) payment has
been made by a Credit Party or Subsidiary of a Credit Party for such Inventory
and (ii) such Inventory is insured against types of loss, damage, hazards, and
risks, and in amounts satisfactory to Agent in its Permitted Discretion; or
(b) located on real property in a U.S. Territory leased or owned by a Credit
Party or Subsidiary of a Credit Party.
          “Environmental Actions” means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication, each, by or
from any Governmental Authority, or any third party involving (x) violations of
Environmental Laws or (y) releases of Hazardous Materials (a) from any assets,
properties, or businesses of any Credit Party, or any of their predecessors in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by any Credit Party, or
any of their predecessors in interest.
          “Environmental Law” means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Credit Party, relating to the environment, employee health and safety, or
Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 USC § 1251 et seq; the Toxic Substances Control Act, 15 USC § 2601 et
seq; the Clean Air Act, 42 USC § 7401 et seq.; the Safe Drinking Water Act, 42
USC § 3803 et seq.; the Oil Pollution Act of 1990, 33 USC § 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC § 11001
et seq.; the Hazardous Material Transportation Act, 49 USC § 1801 et seq.; and
the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
          “Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand

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by any Governmental Authority or any third party, and which relate to any
Environmental Action.
          “Environmental Lien” means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
          “Equipment” means equipment (as that term is defined in the Code) and
includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
          “ERISA Affiliate” means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of any
Credit Party under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Credit Party under IRC Section 414(c), (c) solely for purposes
of Section 302 of ERISA and Section 412 of the IRC, any organization subject to
ERISA that is a member of an affiliated service group of which any Credit Party
is a member under IRC Section 414(m), or (d) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party
to an arrangement with any Credit Party and whose employees are aggregated with
the employees of any Credit Party under IRC Section 414(o).
          “Event of Default” has the meaning set forth in Section 8.
          “Excess Availability” means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of the Credit Parties aged in excess of historical levels with respect
thereto and all book overdrafts of the Credit Parties in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.
          “Exchange Act” means the Securities Exchange Act of 1934, as in effect
from time to time.
          “Excluded Assets” means (a) any lease, license, contract, property
right or agreement to which any Credit Party is a party or any of its rights or
interests thereunder if and to the extent that a security interest is prohibited
by or in violation of (i) any law, rule or regulation applicable to such Credit
Party, or (ii) a term, provision or condition of or under, any such lease,
license, contract, property right or agreement (unless in either clause (i) or
(ii) above such law, rule or regulation or such term, provision or condition
would be rendered unenforceable against the Loans pursuant to Sections 9-406,
9-407, or 9-408 of the

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applicable Uniform Commercial Code); (b) any Stock or Stock Equivalents
representing more than 66% of the outstanding voting stock issued by any entity
organized under the laws of a jurisdiction other than the United States or a
state thereof; (c) any assets of an Unrestricted Subsidiary or any assets of or
Stock or Stock Equivalents in any of an Unrestricted Subsidiary’s direct or
indirect subsidiaries; or (d) any assets of any Immaterial Subsidiary that is
not a Credit Party.
          “Excluded Subsidiary” means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any state
thereof or the District of Columbia.
          “Executive Order” has the meaning set forth in Section 5.23.
          “Existing Lenders” has the meaning set forth in the Recitals hereto.
          “Fair Share” has the meaning set forth in Section 17.2.
          “Fair Share Contribution Amount” has the meaning set forth in
Section 17.2.
          “Fair Share Shortfall” has the meaning set forth in Section 17.2.
          “FATCA” means current Section 1471 through 1474 of the IRC or any
amended version or successor provision that is substantively similar and, in
each case, any regulations promulgated thereunder and any interpretation and
other guidance issued in connection therewith.
          “Fee Letter” means that certain fee letter, dated as of even date
herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
          “FEIN” means Federal Employer Identification Number.
          “Fin 48” means the Financial Accounting Standards Board Interpretation
No. 48.
          “Funding Date” means the date on which a Borrowing occurs.
          “Funding Guarantor” has the meaning set forth in Section 17.2.
          “Funding Losses” has the meaning set forth in Section 2.13(b)(ii).
          “GAAP” means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
          “General Intangibles” means the following general intangibles of any
Credit Party: payment intangibles, contract rights, rights to payment, rights
arising under common

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law, statutes, or regulations, choses or things in action, goodwill, patents,
trade names, trade secrets, trademarks, service marks, copyrights, blueprints,
drawings, purchase orders, customer lists, route lists, computer programs,
information contained on computer disks or tapes, software, literature, reports
and catalogs, and any and all supporting obligations of any Credit Party in
respect thereof.
          “Governing Documents” means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
          “Governmental Authority” means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
          “Gross Collateral Availability” means, as of any date of
determination, the Borrowing Base, less the Letter of Credit Usage, less the
then extant amount of outstanding Advances.
          “Group Concentration Account” means the Deposit Account over which
Agent has control pursuant to a deposit account control agreement that acts as
the repository for the disbursement and funding of a subsidiary or group of
subsidiaries and described on Schedule D-2 to the Closing Compliance
Certificate.
          “Group Members” has the meaning set forth in Section 5.24.
          “Guaranteed Obligations” has the meaning set forth in Section 17.1.
          “Guarantor” means Parent and any Wholly Owned Domestic Subsidiary of
Borrower that is a Restricted Subsidiary or any Restricted Subsidiary of the
Parent that guarantees or otherwise provides direct credit support for any
Indebtedness of the Parent of the type listed in clause (a) or (b) of the
definition of Indebtedness, each party to the Guaranty.
          “Guaranty” means the guaranty of each Guarantor set forth in
Section 17.
          “Hazardous Materials” means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in

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any form or electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million.
          “Hedge Agreement” means any and all agreements or documents now
existing or hereafter entered into by any Credit Party that provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging such Credit Party’s exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security, or
currency valuations or commodity prices.
          “Holdout Lender” has the meaning set forth in Section 15.2(a).
          “Home Office Account” has the meaning set forth in Section 2.7(a).
          “Immaterial Subsidiary” means any Subsidiary of the Parent designated
in writing by Borrower to the Agent whose total assets or revenues (in each case
on a Consolidated basis with its Subsidiaries) are less than 3% of the total
assets or revenues of Parent and the Restricted Subsidiaries, taken as a whole;
provided, however, that the aggregate total assets or revenues of all such
subsidiaries designated as “Immaterial Subsidiaries” (on a Consolidated basis
with their Subsidiaries), shall not exceed 5% of the total assets or revenue of
the Parent and the Restricted Subsidiaries, taken as a whole.
          “Indebtedness” means, without duplication, (a) all obligations for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations in respect
of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d)
all obligations or liabilities of others secured by a Lien on any asset of a
Person or its Subsidiaries, irrespective of whether such obligation or liability
is assumed, (e) all obligations to pay the deferred purchase price of assets
(other than trade payables incurred in the ordinary course of business), (f) all
obligations owing under Hedge Agreements, and (g) any obligation guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (f) above.
          “Indemnified Liabilities” has the meaning set forth in Section 11.3.
          “Indemnified Person” has the meaning set forth in Section 11.3.
          “Indenture” means that certain Indenture dated as of July 28, 2003 by
and among Borrower, the guarantors named therein and Wells Fargo Bank Minnesota,
National Association, as trustee, as amended, restated, supplemented or
otherwise modified from time to time as permitted hereby.

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          “Individual Store Accounts” has the meaning set forth in
Section 2.7(a).
          “Insolvency Proceeding” means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
          “Intangible Assets” means, with respect to any Person, that portion of
the book value of all of such Person’s assets that would be treated as
intangibles under GAAP.
          “Intellectual Property” has the meaning given such term in the Pledge
and Security Agreement.
          “Intercreditor Agreement” means that certain Intercreditor Agreement,
dated as of August 17, 2007, among Agent, Citicorp North America, Inc. as
administrative agent for the lenders under the Term Loan Agreement, Borrower and
the Credit Parties.
          “Interest Period” means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter, as elected by the
Borrower pursuant to Section 2.13 and subject to Section 2.13(d)(ii)(y);
provided, however, that (a) if any Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended (subject to clauses
(c)-(e) below) to the next succeeding Business Day, (b) interest shall accrue at
the applicable rate based upon the LIBOR Rate from and including the first day
of each Interest Period to, but excluding, the day on which any Interest Period
expires, (c) any Interest Period that would end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day, (d) with respect to an 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), the Interest Period shall end on the last Business Day of
the calendar month that is 1, 2, 3, or 6 months after the date on which the
Interest Period began, as applicable, and (e) Borrower may not elect an Interest
Period which will end after the Maturity Date.
          “Inventory” means inventory (as that term is defined in the Code).
          “Investment” means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such

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other Person (or of any division or business line of such other Person), and any
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
          “Investment Property” means investment property (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
          “IRC” means the Internal Revenue Code of 1986, as in effect from time
to time.
          “Issuing Lender” means Wells Fargo or any Affiliate thereof or any
other Lender that, at the request of Borrower and with the consent of Agent,
agrees, in such Lender’s sole discretion, to become an Issuing Lender for the
purpose of issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
          “Joint Venture” means a corporation, limited liability company, joint
venture or similar limited liability legal entity formed in order to conduct a
common venture or enterprise between two or more Persons.
          “L/C” has the meaning set forth in Section 2.12(a).
          “L/C Disbursement” means a payment made by the Issuing Lender pursuant
to a Letter of Credit.
          “L/C Undertaking” has the meaning set forth in Section 2.12(a).
          “Leased Store Location” means any store for which any Credit Party has
a leasehold interest.
          “Lender” and “Lenders” have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
          “Lender Group” means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
          “Lender Group Expenses” means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by any Credit Party under any
of the Loan Documents that are paid, advanced, or incurred by the Lender Group,
(b) reasonable fees or charges paid or incurred by Agent in connection with the
Lender Group’s transactions with any Credit Party, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches),
filing, recording, publication, appraisal (including periodic collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) set forth in the Loan Documents),
(c) reasonable costs and expenses

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incurred by Agent in the disbursement of funds to any Credit Party or other
members of the Lender Group (by wire transfer or otherwise), (d) reasonable
charges paid or incurred by Agent resulting from the dishonor of checks,
(e) reasonable costs and expenses paid or incurred by the Lender Group to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Agent related to audit examinations of the Books (provided that,
Borrower will not be required to reimburse such expenses unless a Default or
Event of Default has occurred and is continuing, in which case Borrower will be
responsible for the expenses of all such audits or in the event that Revolver
Usage is in excess of $100,000,000 or Excess Availability is less than or equal
to $100,000,000, in which case Agent shall be limited to reimbursement for a
maximum of two (2) such audit examinations per annum) to the extent of the fees
and charges (and up to the amount of any limitation) set forth in the Loan
Documents, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with any Credit Party, (h) Agent’s
reasonable costs and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, syndicating, or amending the
Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
“workout,” a “restructuring,” or an Insolvency Proceeding concerning any Credit
Party or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
          “Lender-Related Person” means, with respect to any Lender, such
Lender, together with such Lender’s Affiliates, officers, directors, employees,
attorneys, and agents.
          “Letter of Credit” means an L/C or an L/C Undertaking, as the context
requires.
          “Letter of Credit Usage” means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
          “LIBOR Deadline” has the meaning set forth in Section 2.13(b)(i).
          “LIBOR Notice” means a written notice in the form of Exhibit L-1.
          “LIBOR Option” has the meaning set forth in Section 2.13(a).
          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum determined by Agent (rounded upwards, if necessary, to the
next 1/100%) by

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dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100% minus the
Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective
day of any change in the Reserve Percentage.
          “LIBOR Rate Loan” means each portion of an Advance that bears interest
at a rate determined by reference to the LIBOR Rate.
          “Lien” means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract,
(b) such interest is recorded or perfected, and (c) such interest is contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances. Without limiting the generality of the
foregoing, the term “Lien” includes the lien or security interest arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
          “Line Cap” means, at any time of determination, the lesser of (i) the
Maximum Revolver Amount at such time, and (ii) the Borrowing Base then in
effect.
          “Loans” means Base Rate Loans and LIBOR Rate Loans.
          “Loan Account” has the meaning set forth in Section 2.10.
          “Loan Documents” means this Agreement, the Intercreditor Agreement,
the Collateral Documents, the Cash Management Agreements, the Credit Card
Agreements, the Customs Broker Agreements, the Disbursement Letter, the Fee
Letter, the Letters of Credit, any note or notes executed by Borrower in
connection with this Agreement and payable to a member of the Lender Group, and
any other agreement entered into, now or in the future, by any Credit Party and
the Lender Group in connection with this Agreement or otherwise relating to the
Obligations.
          “Material Adverse Change” means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Borrower, the Parent and the Restricted
Subsidiaries taken as a whole, (b) a material impairment of the Credit Parties’
ability to perform their obligations under the Loan Documents to which they are
parties or of the Lender Group’s ability to enforce the Obligations or realize
upon the Collateral, or (c) a material impairment of the enforceability or
priority of the Agent’s Liens with respect to the Collateral as a result of an
action or failure to act on the part of any Credit Party.

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          “Material Adverse Effect” means an effect that results in or causes,
or would reasonably be expected to result in or cause, a Material Adverse
Change.
          “Material Credit Party” means each of Borrower, Parent, Payless
Missouri and any other Credit Party other than Immaterial Subsidiaries.
          “Maturity Date” has the meaning set forth in Section 3.4.
          “Maximum Revolver Amount” means $300,000,000 plus the amount, if any,
of any increase permitted by Section 2.2 (after which increase, the Maximum
Revolver Amount shall not exceed $375,000,000).
          “Mortgages” means the mortgages, deeds of trust or other real estate
security documents made or required herein to be made by the Borrower or any
other Credit Party, each in form and substance reasonably satisfactory to the
Agent.
          “Mortgage Supporting Documents” means, with respect to any Mortgage
for a parcel of owned Real Property, each document (including title policies or
marked-up unconditional insurance binders (in each case, together with copies of
all documents referred to therein), maps, ALTA or TLTA, if applicable, as-built
surveys, in form and as to date that is sufficiently acceptable to the title
insurer issuing title insurance to the Agent for such title insurer to deliver
endorsements to such title insurance as reasonably requested by the Agent,
environmental assessments and reports and evidence regarding recording and
payment of fees, insurance premium and taxes) that the Agent may reasonably
request, to create, register, perfect, maintain, evidence the existence,
substance, form or validity of or enforce a valid and enforceable first priority
Lien on such parcel of owned Real Property in favor of the Agent for the benefit
of the Secured Parties (as defined in the Pledge and Security Agreement),
subject only to such Liens as the Agent may approve.
          “Net Liquidation Percentage” means the percentage of the perpetual
value of each Credit Party’s Eligible Inventory that is estimated to be
recoverable in an orderly liquidation of such Inventory, such percentage to be
calculated as an average of the then current month’s average Net Liquidation
Percentage and the average Net Liquidation Percentage for the preceding month as
determined from time to time by a qualified appraisal company selected by Agent
with Borrower’s consent, which consent shall not be unreasonably withheld.
          “Non-Domestic Restructuring” shall mean, subject to the proviso set
forth below, (A) the creation of one or more holding companies (each a “Holding
Company”) that are Excluded Subsidiaries owned directly by a Loan Party and
Wholly-Owned Restricted Subsidiaries of the Borrower, (B) the direct or indirect
transfer, contribution, dividend or sale of the Stock of certain Wholly-Owned
Excluded Subsidiaries of the Borrower to one or more of such Holding Companies;
provided, however, the foregoing transactions described above shall not
constitute a “Non-Domestic Restructuring”, unless (x) after giving effect to
such

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transactions, no Default or Event of Default shall have occurred and be
continuing and (y) the following conditions, as applicable, shall be satisfied
at all times from and after the consummation of such transactions: (1) any
intercompany note or debenture payable to any Credit Party issued in connection
with a Non-Domestic Restructuring shall be pledged to the Administrative Agent
as additional Collateral under the Pledge and Security Agreement, (2) in
connection with the consummation of a Non-Domestic Restructuring, no Credit
Party shall be required to make any cash Investment in any Holding Company or in
any Restricted Subsidiary that holds, directly or indirectly, any Stock in the
target other than such amounts required by statute or for initial capitalization
in an amount not to exceed $100,000 in each instance or any other amount that
would be permitted under Section 7.10 hereof, (3) each Holding Company shall not
incur any Indebtedness (other than the intercompany Indebtedness or debenture
described above) or Liens and shall not engage in any business or activity
(other than holding the Stock of its Subsidiaries, paying taxes, dividends,
distributions, interest or other business expenses, preparing reports to
Governmental Authorities and to its equity holders and holding directors and
shareholders meetings, preparing corporate records and other corporate
activities required to maintain its separate corporate, limited liability or
limited partnership structure) and (4) each Holding Company shall remain
Wholly-Owned Restricted Subsidiaries of the Borrower.
          “Non-Owned Storage Facility” means any distribution center or
warehouse facility leased by any Credit Party, together with any other location
where Inventory of any Credit Party is stored or held pursuant to a lease,
bailment, warehousing or similar arrangement, which location (a) is not owned by
a Credit Party, and (b) is not a Leased Store Location or a Pool Location.
          “Obligations” means all loans, Advances, debts, principal, interest
(including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrower’s Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or
expenses that, but for the commencement of an Insolvency Proceeding, would have
accrued), Banking Services Obligations, lease payments, guaranties, covenants,
and duties of any kind and description owing by any Credit Party to the Lender
Group pursuant to or evidenced by the Loan Documents and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and including all
interest not paid when due and all Lender Group Expenses that the Credit Parties
are required to pay or reimburse by the Loan Documents, by law, or otherwise.
Any reference in this Agreement or in the Loan Documents to the Obligations
shall include all extensions, modifications, renewals, or alterations thereof,
both prior and subsequent to any Insolvency Proceeding.
          “Obligee Guarantor” has the meaning set forth in Section 17.7.

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          “Originating Lender” has the meaning set forth in Section 14.1(e).
          “Overadvance” has the meaning set forth in Section 2.5.
          “Parent” means Collective Brands, Inc., a Delaware corporation.
          “Participant” has the meaning set forth in Section 14.1(e).
          “Patriot Act” has the meaning set forth in Section 18.10.
          “Payless Missouri” means Payless ShoeSource, Inc., a Missouri
corporation.
          “Permitted Acquisition” means any Proposed Acquisition subject to the
satisfaction of each of the following conditions at or prior to the consummation
of the Proposed Acquisition: (a) the Agent shall receive prior written notice of
such Proposed Acquisition, which notice shall include, without limitation, a
reasonably detailed description of such Proposed Acquisition; (b) immediately
after giving effect to such Investment, either (i) Pro Forma and Projected
Excess Availability is at least 25% of the Pro Forma and Projected Line Cap or
(ii) Pro Forma and Projected Excess Availability is at least 15% but less than
25% of the Pro Forma and Projected Line Cap and the Pro Forma Consolidated Fixed
Charge Coverage Ratio is greater than 1.00 to 1.00; (c) the Borrower (or the
Parent or the Subsidiary making such Proposed Acquisition) and the Proposed
Acquisition Target shall have executed such documents and taken such actions as
may be required under Section 5.14; (d) the Agent shall have received copies of
the agreements, related contracts, instruments and all opinions, certificates,
lien search results and other documents, in each case to the extent actually
received by any Credit Party (and subject to agreement to such additional
confidentiality requirements as may be required to permit such Credit Party to
deliver such copies), in each case reasonably requested by the Agent; or (e) at
the time of such Proposed Acquisition and after giving effect thereto, (i) no
Default or Event of Default shall have occurred and be continuing and (ii) all
representations and warranties contained in Article V and in the other Loan
Documents shall be true and correct in all material respects.
          “Permitted Discretion” means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured, asset-based
lender) business judgment, based upon a change in circumstances or new
information after the Closing Date.
          “Permitted Dispositions” means (a) sales or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing, sublicensing or other similar ordinary course transfers of
intellectual property rights (on an exclusive or non-exclusive basis) to the
extent that the foregoing occurs on an arms-length basis, (e) Store Closings in
any fiscal year of the Borrower not in excess of the Store Closing Basket,
(f) the settlement, release or surrender of

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tort or other litigation claims, whether pending or threatened and (g) transfers
or sales of intellectual property to third parties in an aggregate amount not to
exceed a book value for all such transfers or sales of $25,000,000.
          “Permitted Investments” means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection,
(c) advances made in connection with purchases of goods or services in the
ordinary course of business, (d) Investments made by one Credit Party in another
Credit Party, (e) Investments received in settlement of amounts due to any
Credit Party effected in the ordinary course of business or owing to any Credit
Party as a result of Insolvency Proceedings involving an Account Debtor or upon
the foreclosure or enforcement of any Lien in favor of such Credit Party,
(f) Subordinated Indebtedness or guaranties of Subsidiaries, in each case to the
extent permitted by Section 7.1, and (g) Investments in bonds issued by a
Governmental Authority in connection with the lease of property or equipment by
any Credit Party from such Governmental Authority, provided that such bonds are
secured by the lease payments required to be made by such Credit Party with
respect to such leased property and are issued in transactions which are in form
and substance substantially similar to those in which the Investments described
on Schedule 7.10 to the Closing Compliance Certificate were made. For purposes
of determining the value of any Investment outstanding for purposes of any
subclause of Section 7.10, such amount, when aggregated with the amount of all
other Investments made pursuant to such subclause, shall deemed to be the amount
of all such Investments when made, purchased or acquired on or after the Closing
Date less the amount of any returns received by the Credit Parties after the
Closing Date on such Investments (without duplication but not to exceed the
aggregate of the original amounts invested pursuant to such subclause) and, in
the case of any Investments made pursuant to clauses (e)(v) or (i)(B) of
Section 7.10, less the amount of any returns received by the Credit Parties
after the Closing Date on any Investments in Qualified Restricted Subsidiaries
identified on Schedule 7.10 to the Closing Compliance Certificate.
          “Permitted Liens” means (a) Liens held by Agent, (b) Liens for unpaid
taxes, assessments or governmental charges or levies that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens existing on the date of this Agreement
and set forth on Schedule P-1 to the Closing Compliance Certificate, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof,
(f) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests, (g) Liens arising from deposits or pledges made
or letters of credit issues in connection with obtaining worker’s compensation
or other unemployment insurance or to comply with any applicable law, rule or
regulation regarding

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social security, unemployment or other employee benefits, (h) Liens, pledges or
deposits to secure performance of bids, tenders, leases, licenses, trade
contracts, statutory obligations, customs, surety, stay, performance and appeal
bonds, and other obligations incurred in the ordinary course of business and not
in connection with the borrowing of money; provided that the Credit Parties may
elect to post cash and obtain cash secured letters of credit in lieu of posting
cash directly under this clause, (i) Liens resulting from any judgment or award
that is not an Event of Default hereunder, (j) with respect to any Real
Property, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof,
(k) encumbrances arising under leases or subleases of Real Property that do not,
in the aggregate, materially detract from the value of such Real Property or
interfere with the ordinary conduct of the business conducted and proposed to be
conducted at such Real Property, (l) 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, (m) Liens resulting from the filing of
precautionary UCC financing statements relating to operating leases of any
Credit Party which are entered into in the ordinary course of business and which
are limited solely to the assets subject thereto, (n) Liens incurred in
connection with the licensing of patents, trademarks, copyrights, and other
intellectual property rights of the Credit Parties and their Subsidiaries in the
ordinary course of business to Persons outside the United States or any U.S.
Territory for use solely outside of the United States or any U.S. Territory,
(o) Liens on Collateral held by the Term Loan Agent to secure the Term Loan
Obligations to the extent permitted by the Intercreditor Agreement and (p) Liens
on Collateral held by any agent under any Qualified Refinancing Indebtedness to
secure such Qualified Refinancing Indebtedness to the extent permitted by any
Qualified Refinancing Intercreditor Agreement.
          “Permitted Protest” means the right of any Credit Party to protest any
Lien (other than any Lien that secures the Obligations), taxes (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books in such amount as is required under GAAP,
(b) any such protest is instituted promptly and prosecuted diligently by such
Credit Party, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent’s Liens.
          “Permitted Purchase Money Indebtedness” means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of
$75,000,000.
          “Permitted Reserves” means reserves on Availability imposed from time
to time by the Agent in its Permitted Discretion.
          “Permitted Sale-Leasebacks” has the meaning assigned to that term in
Section 7.16.

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          “Person” means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
          “Pledge and Security Agreement” means an agreement, in substantially
the form of Exhibit G hereto, executed by the Borrower and each Guarantor.
          “Pledged Stock” has the meaning specified in the Pledge and Security
Agreement.
          “Pool Location” means any of the locations in the United States listed
on Schedule E-2 to the Closing Compliance Certificate, as such schedule is
updated pursuant to Section 6.13.
          “Prior Loan Agreement” has the meaning set forth in the Recitals
hereto.
          “Pro Forma and Projected Excess Availability” means, for any date of
calculation, after giving effect to the applicable transaction or payment, the
pro forma and projected Excess Availability for the subsequent six (6) month
period, determined as of the last day of each fiscal month in such period and
based on Borrower’s good faith projections that are used to run the business of
the Borrower and prepared in accordance with past practice and otherwise
reasonably satisfactory to the Agent.
          “Pro Forma and Projected Line Cap” means, for any date of calculation,
after giving effect to the applicable transaction or payment, the pro forma and
projected Line Cap for the subsequent six (6) month period, determined as of the
last day of each fiscal month in such period and based on Borrower’s good faith
projections that are used to run the business of the Borrower and prepared in
accordance with past practice and otherwise reasonably satisfactory to the
Agent.
          “Pro Forma Consolidated Fixed Charge Coverage Ratio” means, for any
date of calculation, the Consolidated Fixed Charge Coverage Ratio as of the last
day of the most recently completed fiscal quarter for which financial statements
pursuant to Section 6.3 are available (the “Reference Date”), after giving pro
forma effect to any applicable transaction or payment as if such transaction or
payment had occurred on the first day of the four fiscal quarter period ending
on the Reference Date.
          “Projections” means Parent’s and its Subsidiaries’ forecasted
(a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a basis consistent with Parent’s historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

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          “Proposed Acquisition” means the proposed acquisition by the Borrower,
the Parent or any of the Restricted Subsidiaries of all or substantially all of
the assets or Stock of any Proposed Acquisition Target, or the merger of any
Proposed Acquisition Target with or into the Borrower, the Parent or any
Subsidiary of the Parent (and, in the case of a merger with the Borrower, with
the Borrower being the surviving corporation).
          “Proposed Acquisition Target” means any Person or group of Persons
engaged in a particular line of business or any operating division thereof
subject to a Proposed Acquisition.
          “Pro Forma Basis” means, as to any Person, for any events as described
in clauses (i) and (ii) below that occur subsequent to the commencement of a
period for which the financial effect of such events is being calculated, and
giving effect to the events for which such calculation is being made, such
calculation as will give pro forma effect to such events as if such events
occurred on the first day of the applicable Test Period:
          (i) in making any determination of Consolidated EBITDA or Consolidated
EBITDAR, pro forma effect shall be given to any Asset Sale and to any Permitted
Acquisition (or to any similar transaction or transactions that require a waiver
or consent of the Required Lenders pursuant to Section 7.3 or Section 7.10), in
each case that occurred during the Test Period (or, in the case of
determinations made pursuant to the definition of “Permitted Acquisition”
occurring during the Test Period or thereafter and through and including the
date upon which the respective Permitted Acquisition is consummated); and
          (ii) in making any determination on a Pro Forma Basis, (x) all
Indebtedness (including Indebtedness incurred or assumed and for which the
financial effect is being calculated, whether incurred under this Agreement or
otherwise incurred or permanently repaid during the Test Period (or, in the case
of determinations made pursuant to the definition of “Permitted Acquisition”,
occurring during the Test Period and through and including the date upon which
the respective Permitted Acquisition is consummated) shall be deemed to have
been incurred or repaid at the beginning of such period (if such Indebtedness
was incurred under this Agreement, such Indebtedness shall be deemed to be
outstanding for the entire Test Period for purposes of determining the Senior
Secured Leverage Ratio and the Total Leverage Ratio) and (y) interest expense of
such Person attributable to interest on any Indebtedness, for which pro forma
effect is being given as provided in preceding clause (x), bearing floating
interest rates shall be computed on a pro forma basis as if the rates that would
have been in effect during the period for which pro forma effect is being given
had been actually in effect during such periods.
          Pro forma calculations made pursuant to the definition of “Pro Forma
Basis” shall be determined in good faith by a Responsible Officer of the
Borrower and, for any fiscal period ending on or prior to the first anniversary
of a Permitted Acquisition or Asset

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Sale (or any similar transaction or transactions that require a waiver or
consent of the Required Lenders pursuant to Section 7.3 or Section 7.10), may
include adjustments to reflect operating expense reductions and other operating
improvements or synergies implemented or planned to be implemented and
reasonably expected to result from such Permitted Acquisition, Asset Sale or
other similar transaction, to the extent that the Borrower delivers to the Agent
(i) a certificate of the Borrower signed by a Responsible Officer setting forth
such operating expense reductions and other operating improvements or synergies
and (ii) information and calculations supporting in reasonable detail such
estimated operating expense reductions and other operating improvements or
synergies.
          “Pro Rata Share” means, as of any date of determination: (i) prior to
the Revolver Commitments being terminated or reduced to zero, the percentage
obtained by dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate
Revolver Commitments of all Lenders that are neither Defaulting Lenders nor
Deteriorating Lenders, and (ii) from and after the time that the Revolver
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the aggregate outstanding principal amount of such Lender’s
Advances plus such Lender’s ratable portion of the Risk Participation Liability
with respect to outstanding Letters of Credit by (z) the aggregate outstanding
principal amount of all Advances plus the aggregate amount of the Risk
Participation Liability with respect to outstanding Letters of Credit.
          “Purchase Money Indebtedness” means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof, together with any
refinancings under Section 7.1(d).
          “Qualified Import Letter of Credit” means a Letter of Credit that
(a) is issued to facilitate the purchase by any Credit Party of Eligible
Inventory, (b) has an expiry date of less than 90 days and is otherwise in form
and substance acceptable to Agent, and (c) is issued to support an Underlying
Letter of Credit that only is drawable by the beneficiary thereof by the
presentation of, among other documents, such applicable documents satisfactory
to Agent as evidencing such Credit Party’s title to the subject Inventory.
          “Qualified Capital Stock” of any Person shall mean any Stock or Stock
Equivalents of such Person that is not Disqualified Stock.
          “Qualified Refinancing Indebtedness” means Indebtedness incurred to
refinance, in whole or in part, the Term Loan Obligations and / or the
obligations incurred pursuant to the Subordinated Notes Indenture, so long as
(i) the aggregate principal amount of the Term Loan Obligations and the
obligations incurred pursuant to the Subordinated Notes Indenture do not exceed
$650,000,000, (ii) the terms and conditions of such refinancings, renewals, or
extensions (including scheduled amortization and mandatory prepayments) do not,
in Agent’s Permitted Discretion, materially impair the prospects of repayment of
the Obligations by Borrower, (iii) such refinancings, renewals, or extensions do

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not result in an increase in the then extant principal amount of the
Indebtedness so refinanced, renewed, or extended, plus fees, expenses and other
transaction costs of such refinancings, renewals or extensions, (iv) in the case
of the refinancing of the Term Loan Obligations and / or the obligations
incurred pursuant to the Subordinated Notes Indenture that seek to provide a
Lien on the Collateral, the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include intercreditor terms and conditions that are
at least as favorable to the Lender Group as those contained in the
Intercreditor Agreement and otherwise must be reasonably satisfactory to Agent
in its Permitted Discretion (any such intercreditor agreement being a “Qualified
Refinancing Intercreditor Agreement”) and (v) such modification, refinancing,
refunding, renewal or extension shall not include: (A) Indebtedness of a
Subsidiary of the Borrower that is not a Guarantor that refinances Indebtedness
of the Borrower, (B) Indebtedness of a Subsidiary of the Borrower that is not a
Guarantor that refinances Indebtedness of a Guarantor or (C) Indebtedness of the
Borrower or a Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary.
          “Qualified Refinancing Intercreditor Agreement” has the meaning set
forth in the definition of Qualified Refinancing Indebtedness.
          “Qualified Restricted Subsidiary” means any Restricted Subsidiary that
is not a Credit Party and (a) is set forth on Schedule 1.1(b) to the Closing
Compliance Certificate and (b) that satisfies each of the following
requirements: (i) there are no restrictions, directly or indirectly, on the
ability of such Restricted Subsidiary to pay dividends or make distributions to
the holders of its Stock and Stock Equivalents; and (ii) the Stock and Stock
Equivalents of such Restricted Subsidiary consist of Stock and Stock Equivalents
majority owned by the Parent and its Qualified Restricted Subsidiaries.
          “Real Property” means any estates or interests in real property now
owned or hereafter acquired by any Credit Party and the improvements thereto.
          “Record” means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
          “Recovery Event” means any settlement of or payment in respect of any
property or casualty insurance claim or any taking under power of eminent domain
or by condemnation or similar proceeding of or relating to any property or asset
of the Parent or any of its Restricted Subsidiaries other than any settlement,
payment, taking or proceeding that results in cash consideration of less than
$1,000,000, individually.
          “Related Documents” means the Subordinated Notes Indenture, the Term
Loan Agreement and each other document and instrument executed with respect to
any of the foregoing.
          “Remedial Action” means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the

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indoor or outdoor environment, (b) prevent or minimize a release or threatened
release of Hazardous Materials so they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment,
(c) perform any pre-remedial studies, investigations, or post-remedial operation
and maintenance activities, or (d) conduct any other actions authorized by 42
USC § 9601.
          “Replacement Lender” has the meaning set forth in Section 15.2(a).
          “Report” has the meaning set forth in Section 16.17.
          “Reporting Triggering Period” means the period following the earliest
to occur of (i) the occurrence and continuation of an Event of Default, or
(ii) the date on which Excess Availability for the preceding five Business Day
consecutive period shall be less than or equal to $100,000,000 or Revolver Usage
is greater than $100,000,000 for the preceding five Business Day consecutive
period, and continuing until the Excess Availability shall be greater than
$100,000,000 for the preceding thirty-day consecutive period and the Revolver
Usage shall be less than or equal to $100,000,000 for the preceding thirty-day
consecutive period and Pro Forma and Projected Excess Availability for the
subsequent sixty-day consecutive period shall be greater than $100,000,000 and
pro forma and projected Revolver Usage shall be less than or equal to
$100,000,000 for the subsequent sixty-day consecutive period.
          “Required Closing Availability” means that Excess Availability is
equal to or exceeds $100,000,000.
          “Required Lenders” means, at any time, Lenders whose aggregate Pro
Rata Shares equal or exceed 50.1%; provided that the Commitment of, and the
portion of the aggregate Pro Rata Shares held or deemed held by, any Defaulting
Lender or Deteriorating Lender shall be excluded for purposes of making a
determination of Required Lenders.
          “Requirement of Law” means, with respect to any Person, the common law
and all federal, state, local and foreign laws, treaties, rules and regulations,
orders, judgments, decrees and other determinations of, concessions, grants,
franchises, licenses and other contractual obligations with, any Governmental
Authority or arbitrator, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
          “Reserve Percentage” means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as “eurocurrency liabilities”) of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.

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          “Reserves” has the meaning set forth in Section 2.1(b).
          “Responsible Officer” means, with respect to any Person, any of the
principal executive officers, managing members or general partners of such
Person but, in any event, with respect to financial matters, the chief financial
officer, treasurer or controller of such Person.
          “Restricted Payment” means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any Stock of any Credit Party
now or hereafter outstanding, except a dividend payable solely in shares of that
class of Stock to the holders of that class; (b) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of Stock of a Credit Party now or
hereafter outstanding; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire any
Stock of any Credit Party now or hereafter outstanding; (d) any prepayment of
principal to any Term Loans or any Qualified Refinancing Indebtedness (other
than any prepayment from the proceeds of Collateral as permitted by the
Intercreditor Agreement or any Qualified Refinancing Intercreditor Agreement or
any scheduled or mandatory prepayment); and (e) any payment or prepayment or
refinancing of principal of, premium, if any, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Subordinated Indebtedness or
Qualified Refinancing Indebtedness which refinances Subordinated Indebtedness;
provided that the term “Restricted Payments” shall not include the refinancing
of the Subordinated Indebtedness, the Term Loans or Qualified Refinancing
Indebtedness pursuant to any Qualified Refinancing Indebtedness.
          “Restricted Subsidiary” means any Subsidiary of the Borrower that is
not an Unrestricted Subsidiary.
          “Revolver Commitment” means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 to the Closing Compliance Certificate or
in the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1 and as such amounts
may be increased pursuant to Section 2.2.
          “Revolver Increase” has the meaning assigned to that term in
Section 2.2.
          “Revolver Increase Notice” has the meaning assigned to that term in
Section 2.2.
          “Revolver Usage” means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.

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          “Risk Participation Liability” means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
          “Sale-Leasebacks” has the meaning assigned to that term in
Section 7.16.
          “SEC” means the United States Securities and Exchange Commission and
any successor thereto.
          “Secured Obligations” has the meaning specified in the Pledge and
Security Agreement.
          “Securities Account Control Agreement” has the meaning specified in
the Pledge and Security Agreement.
          “Senior Secured Leverage Ratio” means, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness of the Parent
and the Restricted Subsidiaries that is secured by Liens outstanding as of such
date (minus the cash and Cash Equivalents of the Credit Parties that are not
subject to any Lien securing Indebtedness other than the Obligations or Term
Loan Obligations) to (b) the aggregate amount of Consolidated EBITDA of the
Parent and the Restricted Subsidiaries for the most recently ended Test Period.
          “Senior Subordinated Notes” means (i) those certain 8.25% Series A
Senior Subordinated Notes due 2013 and (ii) those certain 8.25% Series B Senior
Subordinated Notes due 2013, each issued by Borrower pursuant to the Indenture,
in each case as amended, restated, supplemented or otherwise modified from time
to time as permitted hereby.
          “Settlement” has the meaning set forth in Section 2.3(f)(i).
          “Settlement Date” has the meaning set forth in Section 2.3(f)(i).
          “Solvent” means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person’s assets is greater than all of
such Person’s debts.
          “Stock” means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other “equity security” (as such term is

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defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
SEC under the Exchange Act).
          “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.
          “Store Closing Basket” means, with respect to any fiscal year of the
Borrower, Store Closings, net of Store Openings, in an amount up to 500 Store
Closings in such fiscal year, provided that in the event that the Credit Parties
are closing more than 100 stores at any one time, the Borrower shall, at Agent’s
request, hire a qualified inventory liquidation company reasonably satisfactory
to the Agent to conduct such Store Closings on terms satisfactory to Agent in
its Permitted Discretion; provided, that at no time will the total number of
stores owned or franchised by the Group Members be lower than 3,500.
          “Store Closings” means the closing, sale, sublease or franchise or
other disposition of stores operated by Borrower or any Restricted Subsidiary in
a manner consistent with the past business practices of the Borrower and the
Restricted Subsidiaries or the Closing Date Business Plan (involving store
closing sales and liquidations of store inventory on site).
          “Store Openings” means the opening of stores, including the purchase
of a franchise, operated by Borrower or any Restricted Subsidiary in a manner
consistent with the past business practices of the Borrower and the Restricted
Subsidiaries or the Closing Date Business Plan (involving store openings).
     “Subordinated Indebtedness” means (a) all Indebtedness under the Indenture
and (b) (i) any other public Indebtedness of the Credit Parties subordinated in
right of payment to the Obligations pursuant to documentation containing
material terms, including subordination provisions substantially similar to
those set forth in the Indenture and (ii) all private Indebtedness of the Credit
Parties subordinated in right of payment to the Obligations pursuant to
documentation containing market terms and conditions consistent with private
subordinated indebtedness of such type, in each case pursuant to this clause
(b), satisfactory to Agent in its Permitted Discretion.
          “Subordinated Notes Indenture” means the Indenture, dated as of
July 28, 2003, between Borrower and Wells Fargo Bank Minnesota, National
Association, as trustee.
          “Subordinated Notes Prepayment Test” has the meaning set forth in
Section 3.4.
          “Subordinated Notes Prepayment Test Date” has the meaning set forth in
Section 3.4.

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          “Subordinated Notes Prepayment Test Period” has the meaning set forth
in Section 3.4.
          “Subsidiary” of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
          “Swing Lender” means Wells Fargo or any other Lender that, at the
request of Borrower and with the consent of Agent agrees, in such Lender’s sole
discretion, to become the Swing Lender under Section 2.3(d).
          “Swing Loan” has the meaning set forth in Section 2.3(d)(i).
          “Taxes” has the meaning set forth in Section 16.11(e).
          “Term Agent” means Citicorp North America, Inc., in its capacity as
administrative agent under the Term Loan Agreement.
          “Term Loan Agreement” means that certain Term Loan Agreement, dated as
of August 17, 2007, among the Borrower, the Credit Parties, the Term Agent as
administrative agent and lender thereunder and the other lenders party thereto.
          “Term Loan Documents” means, collectively, the Term Loan Agreement,
all guaranties, pledges, security agreements and similar agreements entered into
in connection therewith to guaranty or secure any Term Loan Obligations and each
other certificate, agreement and other document entered into in connection
therewith (other than the Intercreditor Agreement)
          “Term Loan Obligations” has the meaning set forth in Section 7.1(b).
          “Term Loans” means those loans outstanding under the Term Loan
Agreement, as amended, modified or supplemented from time to time to the extent
permitted pursuant to Section 7.14 hereof and pursuant to the Intercreditor
Agreement, and any refinancing permitted pursuant to Section 7.1(d) hereof.
          “Term Priority Collateral” has the meaning set forth in the
Intercreditor Agreement.
          “Test Period” shall mean, for any determination under this Agreement,
the period of the most recently ended four consecutive fiscal quarters of the
Parent for which financial statements have been delivered to the Agent pursuant
to Section 6.3.

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          “Total Assets” means the total amount of all assets of the Borrower,
the Parent and the Restricted Subsidiaries, determined on a Consolidated basis
as shown on the most recent balance sheet of the Parent.
          “Total Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness of the Parent and the Restricted
Subsidiaries outstanding as of such date (minus the cash and Cash Equivalents of
the Loan Parties that are not subject to any Lien securing Indebtedness other
than the Obligations or Term Loan Obligations) to (b) the aggregate amount of
Consolidated EBITDA of the Parent and the Restricted Subsidiaries for the most
recently ended Test Period.
          “Trading with the Enemy Act” has the meaning set forth in
Section 18.11.
          “United States” and “U.S.” mean the United States of America.
          “Underlying Issuer” means a third Person which is the beneficiary of
an L/C Undertaking or Qualified Import Letter of Credit and which has issued a
letter of credit at the request of the Issuing Lender for the benefit of any
Credit Party.
          “Underlying Letter of Credit” means a letter of credit that has been
issued by an Underlying Issuer.
          “Unrestricted Subsidiary” shall mean any Subsidiary of the Parent that
is acquired or created after the Closing Date and designated by the board of
directors of the Parent as an “Unrestricted Subsidiary” hereunder by written
notice to the Agent and listed on Schedule 6.15 to the Closing Compliance
Certificate hereto, any Subsidiary of such Unrestricted Subsidiary and any
Subsidiary designated as an “Unrestricted Subsidiary” under the Term Loan
Agreement.
          “U.S. Territory” means each of the U.S. Virgin Islands, Guam and
Saipan.
          “Voidable Transfer” has the meaning set forth in Section 18.7.
          “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).
          “Wells Fargo” means Wells Fargo Bank, National Association, a national
banking association.
          “WFCF” means Wells Fargo Capital Finance, LLC, a Delaware limited
liability company.

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          “Wholly-Owned” means, with respect to a Subsidiary of any Person, any
Subsidiary of such Person, all of the Stock of which (other than director’s
qualifying shares, as may be required by law) is owned by such Person, either
directly or indirectly through one or more Wholly-Owned Subsidiaries of such
Person.
          “Wholly Owned Domestic Subsidiary” means each Subsidiary of the
Borrower or any Guarantor (other than Subsidiaries of Excluded Subsidiaries and
Subsidiaries of Unrestricted Subsidiaries), 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 Subsidiaries of such
Person, that is organized under the laws of the United States of America or any
State or political subdivision thereof.
          “Winston” has the meaning set forth in Section 16.20.
     1.2 Accounting Terms
               (a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term “financial
statements” shall include the notes and schedules thereto. Whenever the term
“Borrower” is used in respect of a financial covenant or a related definition,
it shall be understood to mean Borrower and its Subsidiaries on a consolidated
basis unless the context clearly requires otherwise.
               (b) If any change in the accounting principles used in the
preparation of the most recent financial statements referred to in Section 6.3
is hereafter required or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or any successors thereto) and such change is
adopted by the Borrower with the agreement of the Borrower’s accountants and
results in a change in any of the calculations required by Article VII that
would not have resulted had such accounting change not occurred, the parties
hereto agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such change such that the criteria for evaluating
compliance with such covenants by the Borrower shall be the same after such
change as if such change had not been made; provided, however, that no change in
GAAP that would affect a calculation that measures compliance with any covenant
contained in Article VII shall be given effect until such provisions are amended
to reflect such changes in GAAP.
     1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.

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     1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term “including” is
not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.” The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to the repayment in full or satisfaction
in full of the Obligations shall mean the repayment in full in cash (or cash
collateralized in accordance with the terms hereof) of all Obligations other
than contingent indemnification Obligations that, at such time, are allowed by
the applicable member of the Lender Group to remain outstanding and are not
required to be repaid or cash collateralized pursuant to the provisions of this
Agreement. Any reference herein to any Person shall be construed to include such
Person’s successors and assigns. Any requirement of a writing contained herein
or in the other Loan Documents shall be satisfied by the transmission of a
Record and any Record transmitted shall constitute a representation and warranty
as to the accuracy and completeness of the information contained therein.
     1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
     2.1 Revolver Advances.
               (a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender agrees (severally, not jointly or
jointly and severally) to make advances (“Advances”) to Borrower in an amount at
any one time outstanding not to exceed such Lender’s Pro Rata Share of an amount
equal to the lesser of (i) the Maximum Revolver Amount less the Letter of Credit
Usage, or (ii) the Borrowing Base less the Letter of Credit Usage.
          Anything to the contrary in this Section 2.1 notwithstanding, Agent
shall have the right to establish and modify Permitted Reserves against
Availability in such amounts, and with respect to such matters, as Agent in its
Permitted Discretion shall deem necessary or appropriate, including with respect
to (i) shrinkage (so as to bring perpetual records in line with historical
levels), (ii) potential liabilities to customers, including without limitation,
in connection with merchandise deposits, returns, merchandise credits, gift
certificates, and

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frequent shopper programs, (iii) bad debt write-downs, discounts, advertising
allowances, credits, or increases in other dilutive items with respect to
Accounts, (iv) unpaid freight charges, warehousing or storage charges, taxes,
duties, and other similar unpaid costs associated with the acquisition of
Inventory, (v) sums that any Credit Party is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, (vi) damaged goods, refurbished
goods, goods returned for resale and similar goods, (vii) Eligible U.S.
Territory Inventory, (viii) amounts owing by any Credit Party to any Person to
the extent secured by a Lien on, or trust over, any of the Collateral (other
than any existing Permitted Lien set forth on Schedule P-1 to the Closing
Compliance Certificate which is specifically identified thereon as entitled to
have priority over the Agent’s Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent’s Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral and (ix) during any Subordinated
Notes Prepayment Test Period, Agent shall be entitled to implement a reserve in
the full amount of the obligations due and owing in respect of such Senior
Subordinated Notes (net of Borrower’s unrestricted cash on hand) until such
Senior Subordinated Notes are paid in full or refinanced as otherwise permitted
hereunder. In addition to the foregoing, Agent shall have the right, subject to
the any other limitations contained herein or in the Loan Documents, to have the
Collateral reappraised by a qualified company selected by Agent from time to
time after the Closing Date; provided that, Borrower will not be required to
reimburse such costs unless a Default or Event of Default has occurred and is
continuing, in which case Borrower will be responsible for the expenses of all
such appraisals or, in the event that Revolver Usage is in excess of
$100,000,000 or Excess Availability is less than or equal to $100,000,000, in
which case Agent shall be limited to reimbursement for a maximum of two (2) such
appraisals or audits in any 12 month period.
               (b) The Lenders shall have no obligation to (i) make additional
Advances hereunder to the extent such additional Advances would cause the
Revolver Usage to exceed the Maximum Revolver Amount and (ii) make any Advance
hereunder which would cause the sum of all of its outstanding Advances to exceed
such Lender’s respective Revolver Commitment.
               (c) Amounts borrowed pursuant to this Section 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
     2.2 Revolver Increase. On and after the Closing Date and until (but not
including) the Maturity Date, Borrower may, at its option at any time on a
single occasion, seek to increase (the “Revolver Increase”) the Maximum Revolver
Amount by up to $75,000,000 (after giving effect to which the Maximum Revolver
Amount shall not exceed $375,000,000

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less the aggregate amount of reductions to the Revolver Commitments effected on
or prior to the date of the Revolver Increase) upon at least 30 days (but not
more than 45 days) written notice (“Revolver Increase Notice”) to the Agent
(which notice Agent shall promptly deliver to the Lenders). The Revolver
Increase Notice shall (a) specify the date upon which the Revolver Increase is
requested to occur, (b) be delivered at a time when no Default or Event of
Default has occurred and is continuing (and the effectiveness of the Revolver
Increase shall be subject to no Default or Event of Default existing of the time
of the Revolver Increase) and (c) certify that the Revolver Increase will not
violate or conflict with the terms of any Indebtedness or any other contract,
agreement, instrument or obligation of any Credit Party (and which notice will
be accompanied by an opinion of counsel to Credit Parties on terms satisfactory
to Agent in its Permitted Discretion to the effect that, among other matters,
the Revolver Increase constitutes a “Senior Claim” under and as defined in the
Intercreditor Agreement and that there is no conflict with the Credit Parties’
other Indebtedness or any such contract, agreement, instrument or obligation).
Borrower shall, after giving a Revolver Increase Notice, offer the Revolver
Increase (i) first on a pro-rata basis to the Lenders, which each Lender may in
its sole and absolute discretion accept or decline (it being understood that any
Lender not affirmatively committing in writing to its pro-rata portion shall be
deemed to have declined), (ii) second, if any Lender has declined its pro rata
share or any part thereof, such remaining amounts on a non pro-rata basis to the
Lenders accepting their pro rata share of the Revolver Increase and (iii) third,
to other Eligible Transferees. Agent agrees to use its reasonable efforts to
syndicate any remaining portion of the Revolver Increase to other Eligible
Transferees; provided, however, that the minimum final allocated Revolver
Commitment of each Eligible Transferee that is not a Lender shall be equal to or
in excess of $5,000,000. No increase in the Maximum Revolver Amount shall become
effective until all existing and new Lenders committing to the Revolver Increase
have delivered to the Agent a writing in form reasonably satisfactory to the
Agent pursuant to which such existing Lenders state the amount of their Revolver
Increase and any such new Lenders state the amount of their Revolver Commitment
and agree to assume and accept the obligations and rights of a Lender hereunder
and any such new and increasing Lenders agree to make an Advance such that the
outstanding Advances of such new Lender or increasing Lender constitute a
proportional amount of the aggregate outstanding Advances based on the Revolver
Commitment of such new Lender. Any Advance as a result of an increase to the
Revolver Commitment pursuant to this Section 2.2 shall be subject to the terms
and conditions contained in this Agreement. Upon the increase of the Revolver
Commitment pursuant to this Section 2.2, Schedule C-1 to the Closing Compliance
Certificate shall be deemed amended and replaced with a new Schedule C-1
reflecting the new Revolver Commitments hereunder.
     2.3 Borrowing Procedures and Settlements.
               (a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 1:00 p.m. (New York time) on the

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Business Day prior to the date that is the requested Funding Date (subject to
Section 2.13(b)(i) in the case of any LIBOR Rate Loan) specifying (i) the amount
of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day; provided, however, that in the case of a request for Swing Loan in
an amount of $35,000,000, or less, such notice will be timely received if it is
received by Agent no later than 1:00 p.m. (New York time) on the Business Day
that is the requested Funding Date) specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At Agent’s
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent electronic notice of such request by the
required time. In such circumstances, Borrower agrees that any such electronic
notice will be confirmed in writing within 24 hours of the giving of such notice
and the failure to provide such written confirmation shall not affect the
validity of the request.
               (b) Agent’s Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that (i) if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing; and (ii) if
a notice requesting a LIBOR Rate Loan has been timely delivered per
Section 2.13(b)(i), Agent shall not have the option to request Swing Lender to
make such Borrowing as a Swing Loan.
               (c) Making of Loans.
     (i) In the event that Agent shall elect to have the terms of this Section
2.3(c) apply to a requested Borrowing as described in Section 2.3(b), then
promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a),
Agent shall notify the Lenders, not later than 4:00 p.m. (New York time) on the
Business Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds, to
Agent’s Account, not later than 1:00 p.m. (New York time) on the Funding Date
applicable thereto. After Agent’s receipt of the proceeds of such Advances,
Agent shall make the proceeds thereof available to Borrower on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
received by Agent to Borrower’s Designated Account; provided, however, that,
subject to the provisions of Section 2.3(i), Agent shall not request any Lender
to make, and no Lender shall have the obligation to make, any Advance if Agent
shall have actual

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knowledge that (1) one or more of the applicable conditions precedent set forth
in Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (2) the requested
Borrowing would exceed the Availability on such Funding Date.
     (ii) Unless Agent receives notice from a Lender on or prior to the Closing
Date or, with respect to any Borrowing after the Closing Date, prior to noon
(New York time) on the date of such Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the account of Borrower
the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume
that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrower such amount, that such
Lender shall on the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting Lender Rate for
each day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to Agent shall
constitute such Lender’s Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent on the Business
Day following the Funding Date, Agent will notify Borrower of such failure to
fund and, upon demand by Agent, Borrower shall pay such amount to Agent for
Agent’s account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The failure of
any Lender to make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such Funding Date, but
no Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on any Funding Date.
                    (d) Making of Swing Loans.
     (i) In the event Agent shall elect, with the consent of Swing Lender, as a
Lender, to have the terms of this Section 2.3(d) apply to a requested Borrowing
as described in Section 2.3(b), Swing Lender as a Lender shall make such Advance
in the amount of such Borrowing (any such Advance made solely by Swing Lender as
a Lender pursuant to this Section 2.3(d) being referred to as a “Swing Loan” and
such Advances being referred to

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collectively as “Swing Loans”) available to Borrower on the Funding Date
applicable thereto by transferring immediately available funds to Borrower’s
Designated Account; provided, however, the aggregate amount of the Swing Loans
at any one time outstanding shall not exceed $35,000,000. Each Swing Loan shall
be deemed to be an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that no such Swing Loan shall be
eligible to be a LIBOR Rate Loan and all payments on any Swing Loan shall be
payable to Swing Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.3(i), Agent shall not request
Swing Lender as a Lender to make, and Swing Lender as a Lender shall not make,
any Swing Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (ii) the requested Borrowing would exceed the Availability
on such Funding Date. Swing Lender as a Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to making, in
its sole discretion, any Swing Loan.
     (ii) The Swing Loans shall be secured by the Agent’s Liens, constitute
Obligations hereunder, and bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
                    (e) Agent Advances.
     (i) Agent hereby is authorized by Borrower and the Lenders, from time to
time in Agent’s sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Section 3 have not been
satisfied, to make Advances to Borrower on behalf of the Lenders in an amount
not exceeding the lesser of (x) 5% of Gross Collateral Availability and (y)
$10,000,000 that Agent, in its Permitted Discretion deems necessary or desirable
(A) to preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Obligations, or (C) to pay any other
amount chargeable to any Credit Party pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses described in
Section 10 (any of the Advances described in this Section 2.3(e) shall be
referred to as “Agent Advances”); provided, however, that (i) no Agent Advances
shall be outstanding for a period exceeding thirty (30) consecutive days and
(ii) there shall be no more than two separate Agent Advances during any twelve
month period. Each Agent Advance shall be

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deemed to be an Advance hereunder, except that no such Agent Advance shall be
eligible to be a LIBOR Rate Loan and all payments thereon shall be payable to
Agent solely for its own account.
     (ii) The Agent Advances shall be repayable on demand, secured by the
Agent’s Liens granted to Agent under the Loan Documents, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
               (f) Settlement. It is agreed that each Lender’s funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender’s
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
     (i) Agent shall request settlement (“Settlement”) with the Lenders on a
weekly basis, or on a more frequent basis if so determined by Agent, (1) on
behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with respect to any Credit
Party’s Collections received by Agent, as to each by notifying the Lenders by
telecopy, telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. (New York time) on the Business Day
immediately prior to the date of such requested Settlement (the date of such
requested Settlement being the “Settlement Date”). Such notice of a Settlement
Date shall include a summary statement of the amount of outstanding Advances,
Swing Loans, and Agent Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender’s balance of the Advances (including Swing Loans
and Agent Advances) exceeds such Lender’s Pro Rata Share of the Advances
(including Swing Loans and Agent Advances) as of a Settlement Date, then Agent
shall, by no later than 3:00 p.m. (New York time) on the Settlement Date,
transfer in immediately available funds to a Deposit Account of such Lender (as
such Lender may designate), an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro Rata Share of
the Advances (including Swing Loans and Agent Advances), and (z) if a Lender’s
balance of the Advances (including Swing Loans and Agent Advances) is less than
such Lender’s Pro Rata Share of the Advances (including Swing Loans and Agent
Advances) as of a Settlement Date, such Lender shall no later than 2:00 p.m.
(New York time) on the Settlement Date transfer in immediately available funds
to the

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Agent’s Account, an amount such that each such Lender shall, upon transfer of
such amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Agent Advances). Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall be applied against
the amounts of the applicable Swing Loans or Agent Advances and, together with
the portion of such Swing Loans or Agent Advances representing Swing Lender’s
Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such
amount is not made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate.
     (ii) In determining whether a Lender’s balance of the Advances, Swing
Loans, and Agent Advances is less than, equal to, or greater than such Lender’s
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable any Credit Party and allocable to
the Lenders hereunder, and proceeds of the Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net amount shall
be distributed by Agent to that Lender as part of such next Settlement.
     (iii) Between Settlement Dates, Agent, to the extent no Agent Advances or
Swing Loans are outstanding, may pay over to Swing Lender any payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender’s Pro Rata
Share of the Advances. If, as of any Settlement Date, Collections of any Credit
Party received since the then immediately preceding Settlement Date have been
applied to Swing Lender’s Pro Rata Share of the Advances other than to Swing
Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent
for the accounts of the Lenders, and Agent shall pay to the Lenders, to be
applied to the outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such Settlement Date, its
Pro Rata Share of the Advances. During the period between Settlement Dates,
Swing Lender with respect to Swing Loans, Agent with respect to Agent Advances,
and each Lender (subject to the effect of letter agreements between Agent and
individual Lenders) with respect to the Advances other than Swing Loans and
Agent Advances, shall be entitled to interest at the applicable rate or rates
payable under this Agreement on the daily amount of funds employed by Swing
Lender, Agent, or the Lenders, as applicable.

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               (g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. In addition, each Lender is
authorized, at such Lender’s option, to note the date and amount of each payment
or prepayment of principal of such Lender’s Advances in its books and records,
including computer records.
               (h) Lenders’ Failure to Perform. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
2.4 Payments.
          (a) Payments by Borrower.
          (i) Except as otherwise expressly provided herein, all payments by
Borrower shall be made to Agent’s Account for the account of the Lender Group
and shall be made in immediately available funds, no later than 2:00 p.m. (New
York time) on the date specified herein. Any payment received by Agent later
than 2:00 p.m. (New York time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.
          (ii) Unless Agent receives notice from Borrower prior to the date on
which any payment is due to the Lenders that Borrower will not make such payment
in full as and when required, Agent may assume that Borrower has made (or will
make) such payment in full to Agent on such date in immediately available funds
and Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrower does not make such payment in
full to Agent on the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together with interest thereon
at the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
          (b) Apportionment and Application of Payments.

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     (i) Except as otherwise provided with respect to Defaulting Lenders and
except as otherwise provided in the Loan Documents (including letter agreements
between Agent, individual Lenders and Borrower), aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent’s separate account, after giving effect to any
letter agreements between Agent and individual Lenders) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. All payments shall be remitted to
Agent and all such payments, and all proceeds of the Collateral received by
Agent, shall be applied as follows:
     (A) first, to pay any Lender Group Expenses then due to Agent under the
Loan Documents, until paid in full,
     (B) second, to pay any Lender Group Expenses then due to the Lenders under
the Loan Documents, on a ratable basis, until paid in full,
     (C) third, to pay any fees then due to Agent (for its separate account,
after giving effect to any letter agreements between Agent and individual
Lenders) under the Loan Documents until paid in full,
     (D) fourth, to pay any fees then due to any or all of the Lenders (after
giving effect to any letter agreements between Agent and individual Lenders)
under the Loan Documents, on a ratable basis, until paid in full,
     (E) fifth, to pay interest due in respect of all Agent Advances until paid
in full,
     (F) sixth, ratably to pay interest due in respect of the Advances (other
than Agent Advances) and the Swing Loans, until paid in full,
     (G) seventh, to pay the principal of all Agent Advances until paid in full,
     (H) eighth, to pay the principal of all Swing Loans until paid in full,
     (I) ninth, so long as no Event of Default has occurred and is continuing,
to pay the principal of all Advances until paid in full,

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     (J) tenth, if an Event of Default has occurred and is continuing, ratably
(i) to pay the principal of all Advances until paid in full and (ii)to Agent, to
be held by Agent, for the ratable benefit of Issuing Lender and those Lenders
having a Revolver Commitment, as cash collateral an amount up to 105% of the
then extant Letter of Credit Usage until paid in full,
     (K) eleventh, if an Event of Default has occurred and is continuing, to pay
any other Obligations (including, without limitation, Banking Services
Obligations), and
     (L) twelfth, to Borrower (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.
     (ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive, subject to a Settlement delay as provided in
Section 2.3(f).
     (iii) In each instance, so long as no Event of Default has occurred and is
continuing, this Section 2.4(b) shall not be deemed to apply to any payment by
Borrower specified by Borrower to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement.
     (iv) For purposes of the foregoing, “paid in full” means payment of all
amounts owing under the Loan Documents according to the terms thereof, including
loan fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
     (v) In the event of a direct conflict between the priority provisions of
this Section 2.4 and other provisions contained in any other Loan Document, it
is the intention of the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest extent possible,
to be in concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
               (c) Mandatory Prepayment. At any time that a Default shall have
occurred and be continuing hereunder, the Borrower shall promptly prepay the

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Loans with all proceeds arising from the sale or other realization upon the ABL
Facility Primary Collateral (as such term is defined in the Intercreditor
Agreement).
     2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by the Credit Parties to the Lender Group pursuant to
Section 2.1 or Section 2.12 is greater than either the Dollar or percentage
limitations set forth in Section 2.1 or Section 2.12, as applicable (an
“Overadvance”), Borrower shall within three (3) Business Days pay to Agent, in
cash, the amount of such excess, which amount shall be used by Agent to reduce
the Obligations in accordance with the priorities set forth in Section 2.4(b).
In addition, Borrower hereby promises to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full as and when
due and payable under the terms of this Agreement and the other Loan Documents.
          2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
               (a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows (i) if the relevant Obligation is an Advance that is
a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the
Applicable Margin for LIBOR Rate Loans and (ii) otherwise, at a per annum rate
equal to the Base Rate plus the Applicable Margin for Base Rate Loans.
               (b) Letter of Credit Fees. Borrower shall pay Agent (for the
ratable benefit of the Lenders), Letter of Credit fees (in addition to the
charges, commissions, fees, and costs set forth in Section 2.12(e)) (i) with
respect to standby Letters of Credit, which shall accrue at a rate equal to the
Applicable Margin then in effect for standby Letters of Credit times the Daily
Balance of the undrawn amount of all such outstanding standby Letters of Credit,
and (ii) with respect to documentary Letters of Credit, which shall accrue at a
rate equal to the Applicable Margin then in effect for documentary Letters of
Credit times the Daily Balance of the undrawn amount of all such outstanding
documentary Letters of Credit.
               (c) Default Rate. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),
          (i) all Obligations (except for undrawn Letters of Credit) that have
been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable hereunder, and

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          (ii) the Letter of Credit fee provided for above shall be increased to
2 percentage points above the per annum rate otherwise applicable hereunder.
               (d) Payment. Except as provided to the contrary in
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrower hereby
authorizes Agent, from time to time without prior notice to Borrower, to charge
such interest and fees, all Lender Group Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in Section 2.11 (as
and when accrued or incurred), and all other payments as and when due and
payable with respect to the Obligations to Borrower’s Loan Account, which
amounts thereafter shall constitute Advances hereunder and shall accrue interest
at the rate then applicable to Advances hereunder. Any interest not paid when
due shall be compounded by being charged to Borrower’s Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder.
               (e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
               (f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
          (a) Each Credit Party shall establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 5.17 to the Closing Compliance Certificate (each, a
“Cash Management Bank”),

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and, in connection therewith, establish and maintain at such Cash Management
Banks pursuant to the terms hereof one or more accounts designated (either in
Schedule 5.17 to the Closing Compliance Certificate or pursuant to
Section 2.7(h)) as concentration accounts (the “Concentration Accounts”) and
additional accounts designated (either in Schedule 5.17 to the Closing
Compliance Certificate or pursuant to Section 2.7(h)) as (i) consolidated store
deposit accounts (the “Consolidated Store Deposit Accounts”), (ii) individual
store deposit accounts (the “Individual Store Accounts”) and (iii) the home
office deposit account (the “Home Office Account” and together with the
Concentration Accounts, the Consolidated Store Deposit Accounts and the
Individual Store Accounts, the “Cash Management Accounts”).
          (b) Except as otherwise specifically permitted in this Section 2.7,
each Credit Party shall (1) request in writing and otherwise take such
reasonable steps to ensure that all of its Account Debtors forward payment of
the amounts owed by them directly to a Cash Management Bank for deposit into a
Concentration Account, (2) deposit or cause to be deposited promptly, and in any
event no later than the first Business Day after the date of receipt thereof
(and subject to Section 2.7(g) with respect to payments from Credit Card
Processors), all such available Collections from Account Debtors (including
those sent directly to a Cash Management Bank) into a Concentration Account, and
(3) deposit or cause to be deposited promptly, and in any event no later than
the first Business Day after the date of receipt thereof, all other available
Collections (including cash, checks, drafts and all other forms of daily store
receipts or other similar items of payment) received by or otherwise under its
control into a Cash Management Account provided, so long as no Dominion
Triggering Period shall have occurred and be continuing, (i) the Credit Parties
may maintain Collections in other Deposit Accounts as permitted under this
Section 2.7, and (ii) the Agent shall permit all funds in any Concentration
Account to be forwarded, by daily sweeps, to the Designated Account. For
purposes of clarification, funds that need not be swept to the extent
specifically provided in this Section 2.7 and after funds are swept pursuant to
any provision of this Section 2.7 to the Designated Account, they may be used by
the Borrower for its general corporate purposes.
          (c) Each Credit Party further agrees to cause each of its stores which
utilize a Consolidated Store Deposit Account to cause all Collections for such
store to be deposited into a Consolidated Store Deposit Account and each Credit
Party agrees that with respect to each Consolidated Store Deposit Account, it
shall, at all times require each applicable Cash Management Bank to forward, by
automatic periodic transfers on a daily basis, if practicable, and otherwise,
once every three (3) Business Days, all available amounts in each such
Consolidated Store Deposit Account into a Concentration Account; provided,
(i) immediately after giving effect to each such transfer from any Consolidated
Store Deposit Account into a Concentration Account, each Credit Party may
maintain an amount not to exceed (x) $100,000 of available funds in any such
Consolidated Store Deposit Account and (y) $5,000,000 in available funds in the
aggregate in all such Consolidated Store Deposit Accounts, (ii) so long as no
Dominion Triggering Period shall have occurred and be

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continuing, Agent shall permit all funds in any Concentration Account to be
forwarded, by daily sweeps, to the Designated Account.
          (d) Each Credit Party further agrees that with respect to each store
which utilizes an Individual Store Account, such store shall cause all
Collections for such store to be deposited into such Individual Store Account
and each Credit Party agrees that with respect to each Individual Store Account
it shall, at all times require each applicable Cash Management Bank to forward,
by automatic periodic transfers on a regular basis, but in no event less
frequently than once in any ten (10) day period, all available amounts in each
such Individual Store Account into a Concentration Account; provided, however,
that (i) such automatic transfers of funds therein shall be required only at any
time the available balance thereof should exceed $5,000, (ii) immediately after
giving effect to each such transfer from such Individual Store Account into a
Concentration Account, the Credit Parties may maintain an available amount not
to exceed $5,000 in such Individual Store Account, and (iii) so long as no
Dominion Triggering Period shall have occurred and be continuing, Agent shall
permit all funds in any Concentration Account to be forwarded, by daily sweeps,
to the Designated Account.
          (e) Each Credit Party further agrees that with respect to the Home
Office Account, it shall, at all times require the applicable Cash Management
Bank to forward, by automatic periodic transfers on a regular basis, but in no
event less frequently than once in any ten (10) day period, all available
amounts in the Home Office Account into (either directly or indirectly) a
Concentration Account or another account under the control of Wells Fargo or any
of its Affiliates; provided, however, that (x) such automatic transfers of funds
therein shall be required only at any time the available balance thereof should
exceed $100,000, (y) immediately after giving effect to each such transfer from
the Home Office Account into a Concentration Account or such other account under
the control of Wells Fargo or any of its Affiliates, the Credit Parties may
maintain an available amount not to exceed $100,000 in such Home Office Account,
and (z) so long as no Dominion Triggering Period shall have occurred and be
continuing, Agent shall permit all funds in any Concentration Account to be
forwarded, by daily sweeps, to the Designated Account.
          (f) Each Credit Party further agrees that with respect to the Group
Concentration Account, it shall, at all times require the applicable Cash
Management Bank to forward, by automatic periodic transfers on a daily basis,
all available amounts in the Group Concentration Account into (either directly
or indirectly) a Concentration Account; provided, however, that (x) such
automatic transfers of funds therein shall be required only at any time the
available balance thereof should exceed $5,000,000, (y) immediately after giving
effect to each such transfer from the Group Concentration Account into a
Concentration Account, the Credit Parties may maintain an available amount not
to exceed $5,000,000 in such Group Concentration Account, and (z) so long as no
Dominion Triggering Period shall have occurred and be continuing, Agent shall
permit all funds in any Concentration Account to be forwarded, by daily sweeps,
to the Designated Account.

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          (g) With respect to each Concentration Account, each Cash Management
Bank shall establish and maintain Cash Management Agreements with Agent and the
applicable Credit Party, in form and substance acceptable to Agent in its
Permitted Discretion; provided; however, that, with respect to Consolidated
Store Deposit Accounts, Individual Store Accounts and the Home Office Account no
Credit Party shall be obligated to establish a Cash Management Agreement. Each
Cash Management Agreement shall provide, among other things, that (i) all items
of payment deposited in such Concentration Account and proceeds thereof are
subject to the control of Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Concentration
Account other than for payment of its service fees and other charges directly
related to the administration of such Concentration Account and for returned
checks or other items of payment, and (iii) from and after the date that it
receives written notification from Agent (a “Control Exercise Notice”), it
immediately will forward by daily sweep all amounts in the applicable
Concentration Account to the Agent’s Account or as otherwise directed by Agent
to prepay the Obligations in such order as set forth in Section 2.4(b);
provided, that any such prepayments of the Loans pursuant to this Section 2.7(g)
may be reborrowed subject to Section 3.3. Anything contained herein or in any
other Loan Document to the contrary notwithstanding, Agent agrees that it shall
not provide a Control Exercise Notice to the Cash Management Banks except during
a Dominion Triggering Period. At any time during a Dominion Triggering Period
but only during a Dominion Triggering Period, Agent shall be free to exercise
its right to issue a Control Exercise Notice. Agent shall deliver to Borrower
and the applicable Credit Party a copy of any such Control Exercise Notice
promptly after delivery thereof to the applicable Cash Management Bank;
provided, however that a non-willful failure to so do shall not affect the
validity of any such Control Exercise Notice or otherwise limit Agent’s right to
send any other Control Exercise Notice. Upon the subsequent termination of such
Dominion Triggering Period, Agent shall withdraw such Control Exercise Notice
and permit funds to be transferred as set forth above, including permitting each
Credit Party access to funds in any Concentration Account (and daily sweeps
thereof into any Designated Account), but subject in all events to the right of
Agent to deliver a Control Exercise Notice during any subsequent Dominion
Triggering Period.
          (h) Each Credit Party may establish and maintain Credit Card
Agreements with Agent and each Credit Card Processor. Each such Credit Card
Agreement shall provide, among other things, that each such Credit Card
Processor shall transfer all proceeds of credit card charges for sales by each
Credit Party received by it (or other amounts payable by such Credit Card
Processor) into a designated Concentration Account on a daily basis or such
other periodic basis as Agent may otherwise direct. No Credit Party shall change
any direction or designation set forth in the Credit Card Agreements regarding
payment of charges without the prior written consent of Agent.
          (i) So long as no Event of Default has occurred and is continuing,
Borrower may amend Schedule 5.17 to the Closing Compliance Certificate to add or
replace a Cash Management Bank or Cash Management Account; provided, however,
that in the

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case of any Concentration Account, (i) such prospective Cash Management Bank
shall be reasonably satisfactory to Agent and Agent shall have consented in
writing in advance to the opening of such Concentration Account with the
prospective Cash Management Bank (which consent shall not be required with
respect to any additional Concentration Account at an existing Cash Management
Bank and otherwise shall not be unreasonably withheld), and (ii) prior to the
time of the opening of any Concentration Account, the applicable Credit Party
and such prospective Cash Management Bank shall have executed and delivered to
Agent a Cash Management Agreement. Each Credit Party shall close any of its
Concentration Accounts (and establish replacement cash management accounts in
accordance with the foregoing sentence) promptly and in any event within 45 days
of notice from Agent (or such longer period as such Credit Party and Agent may
agree) that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent’s reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent (or such longer period as such
Credit Party and Agent may agree) that the operating performance, funds
transfer, or availability procedures or performance of the Cash Management Bank
with respect to Concentration Accounts or Agent’s liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in
Agent’s reasonable judgment.
          The Cash Management Accounts shall be cash collateral accounts, with
all cash, checks and similar items of payment in such accounts securing payment
of the Obligations, and in which each Credit Party hereby grants a Lien to
Agent.
     2.8 Crediting Payments. The receipt of any payment item by Agent (whether
from transfers to Agent by the Cash Management Banks pursuant to the Cash
Management Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available funds made
to the Agent’s Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for
payment, then the applicable Credit Party shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent’s Account on a Business Day on or
before 2:00 p.m. (New York time). If any payment item is received into the
Agent’s Account on a non-Business Day or after 2:00 p.m. (New York time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
     2.9 Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.6(d). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by Agent or the

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Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance,
Agent Advance, or Swing Loan requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.
     2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrower (the “Loan Account”) on
which Borrower will be charged with all Advances (including Agent Advances and
Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for
Borrower’s account, the Letters of Credit issued by Issuing Lender for
Borrower’s account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrower or for Borrower’s
account, including all amounts received in the Agent’s Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrower and the Lender
Group unless, within 30 days after receipt thereof by Borrower, Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
     2.11 Fees. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
               (a) Unused Line Fee. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.375% per
annum times the result of (i) the Maximum Revolver Amount, less (ii) the sum of
(A) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month,
               (b) Fee Letter Fees. As and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter.
     2.12 Letters of Credit.
               (a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an “L/C”) or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an “L/C Undertaking”) with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrower. To request the

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issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or
extension of an outstanding L/C or L/C Undertaking), Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment, renewal, or
extension) a notice requesting the issuance of an L/C or L/C Undertaking, or
identifying the L/C or L/C Undertaking to be amended, renewed, or extended,
specifying the date of issuance, amendment, renewal, or extension (which shall
be a Business Day), the date on which such L/C or L/C Undertaking is to expire,
the amount of such L/C or L/C Undertaking, the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as
applicable), and such other information as shall be necessary to prepare, amend,
renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrower also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the issuance
of such requested Letter of Credit:
     (i) the Letter of Credit Usage would exceed the Borrowing Base less the
then extant amount of outstanding Advances,
     (ii) the Letter of Credit Usage would exceed $200,000,000, or
     (iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount
less the then extant amount of outstanding Advances.
          Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 2:00 p.m., New York time, on the date that such L/C Disbursement is made,
if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 1:00 p.m., New York time, on such date, or, if such notice
has not been received by Borrower prior to such time on such date, then not
later than 2:00 p.m., New York time, on the Business Day that Borrower receives
such notice, if such notice is received prior to 1:00 p.m., New York time, on
the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans under Section 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower’s obligation to
reimburse such L/C Disbursement shall be discharged and replaced

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by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrower pursuant to this paragraph, Agent shall distribute such payment to
the Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interests may appear.
               (b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender’s Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share of each L/C Disbursement made by
the Issuing Lender pursuant to this Section 2.12(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any such Lender fails to make
available to Agent the amount of such Lender’s Pro Rata Share of each L/C
Disbursement made by the Issuing Lender in respect of such Letter of Credit as
provided in this Section, such Lender shall be deemed to be a Defaulting Lender
and Agent (for the account of the Issuing Lender) shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.
               (c) Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the

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gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Borrower agrees to be bound by the Underlying Issuer’s
regulations and interpretations of any Underlying Letter of Credit or by Issuing
Lender’s interpretations of any L/C issued by Issuing Lender to or for
Borrower’s account, even though this interpretation may be different from
Borrower’s own, and Borrower understands and agrees that no member of the Lender
Group shall be liable for any error, negligence, or mistake, whether of omission
or commission (except, as to any member of the Lender Group, to the extent
caused by its gross negligence or willful misconduct), in following Borrower’s
instructions or those contained in the Letter of Credit or any modifications,
amendments, or supplements thereto. Borrower understands that the L/C
Undertakings may require Issuing Lender to indemnify the Underlying Issuer for
certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group under any
L/C Undertaking as a result of the Lender Group’s indemnification of any
Underlying Issuer; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group.
               (d) Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender’s instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
               (e) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
               (f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):

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     (i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or
     (ii) there shall be imposed on the Underlying Issuer or the Lender Group
any other condition regarding any Underlying Letter of Credit or any Letter of
Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
          (g) Borrower acknowledges and agrees that certain of the Qualified
Import Letters of Credit may provide for the presentation of time drafts to the
Underlying Issuer. If an Underlying Issuer accepts such a time draft that is
presented under an Underlying Letter of Credit, it is acknowledged and agreed
that (i) the Letter of Credit will require the Issuing Lender to reimburse the
Underlying Issuer for amounts paid on account of such time draft on or after the
maturity date thereof, (ii) the pricing provisions hereof (including
Sections 2.6(b) and2.12(e)) shall continue to apply, until payment of such time
draft on or after the maturity date thereof, as if the Underlying Letter of
Credit were still outstanding, and (iii) on the date on which Issuing Lender
makes payment to the Underlying Issuer of the amounts paid on account of such
time draft, Borrower immediately shall reimburse such amount to Issuing Lender
and such amount shall constitute an L/C Disbursement hereunder.
     2.13 LIBOR Option.
               (a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the “LIBOR Option”) to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the date that is one month after the
commencement of the applicable Interest Period, (iii) the occurrence of an Event
of Default in consequence of which the Required Lenders or Agent on behalf
thereof elect to accelerate the maturity of all or any portion of the
Obligations, or (iv) termination of this Agreement pursuant to the terms hereof.
On the last day of each applicable Interest Period in respect of a LIBOR Rate
Loan,

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unless Borrower properly has exercised the LIBOR Option with respect thereto,
the interest rate applicable to such LIBOR Rate Loan automatically shall convert
to the rate of interest then applicable to Base Rate Loans of the same type
hereunder. At any time that an Event of Default has occurred and is continuing,
Borrower no longer shall have the option to request that Advances bear interest
at the LIBOR Rate and Agent shall have the right to convert the interest rate on
all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
                    (b) LIBOR Election.
     (i) Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent prior to 2:00 p.m. (New York time) at least 3 Business Days
prior to the commencement of the proposed Interest Period (the “LIBOR
Deadline”). Notice of Borrower’s election of the LIBOR Option for a permitted
portion of the Advances and an Interest Period pursuant to this Section shall be
made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR
Deadline, or by telephonic notice received by Agent before the LIBOR Deadline
(to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior
to 5:00 p.m. (New York time) on the same day). Promptly upon its receipt of each
such LIBOR Notice, Agent shall provide a copy thereof to each of the Lenders
having a Revolver Commitment.
     (ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Agent and the Lenders harmless against any loss, cost, or expense incurred by
Agent or any Lender as a result of (a) the payment of any principal of any LIBOR
Rate Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any LIBOR
Rate Loan other than on the last day of the Interest Period applicable thereto,
or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such losses,
costs, and expenses, collectively, “Funding Losses”). Funding Losses shall, with
respect to Agent or any Lender, be deemed to equal the amount determined by
Agent or such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate Loan had such
event not occurred, at the LIBOR Rate that would have been applicable thereto,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert, or
continue, for the period that would have been the Interest Period therefor),
minus (ii) the amount of interest that would accrue on such principal amount for
such period at the interest rate which Agent or such Lender would be offered
were it to be

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offered, at the commencement of such period, Dollar deposits of a comparable
amount and period in the London interbank market. A certificate of Agent or a
Lender delivered to Borrower setting forth any amount or amounts that Agent or
such Lender is entitled to receive pursuant to this Section 2.13 shall be
conclusive absent manifest error.
     (iii) Borrower shall have not more than 15 LIBOR Rate Loans in effect at
any given time. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans
of at least $1,000,000 and integral multiples of $500,000 in excess thereof.
               (c) Prepayments. Borrower may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of each Credit Party’s Collections in
accordance with Section 2.4(b) or for any other reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with clause (b)(ii) above.
               (d) Special Provisions Applicable to LIBOR Rate.
     (i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs
due to changes in applicable law occurring subsequent to the commencement of the
then applicable Interest Period, including changes in tax laws (except changes
of general applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the Federal Reserve
System (or any successor), excluding the Reserve Percentage, which additional or
increased costs would increase the cost of funding loans bearing interest at the
LIBOR Rate. In any such event, the affected Lender shall give Borrower and Agent
notice of such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice from the
affected Lender, Borrower may, by notice to such affected Lender (y) require
such Lender to furnish to Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause (b)(ii) above).
     (ii) In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the interpretation
of

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application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in such
Lender’s notice shall be deemed to be the last day of the Interest Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrower shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to do so.
Each Lender at such time having as its lending office an office outside the
United States agrees to use reasonable efforts to designate a different lending
office if such designation will avoid the need for such a notice of changed
circumstances and would not, in the good faith judgment of such Lender,
otherwise be disadvantageous to such Lender.
               (e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
          2.14 Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof (it being understood and
agreed that for purposes of this Agreement, the Dodd-Frank Wall Street Reform
and Consumer Protection Act and all requests, guidelines or directives in
connection therewith are deemed to have gone into effect and been adopted after
the Closing Date), or (ii) compliance by such Lender or its parent bank holding
company with any guideline, request, or directive of any such entity regarding
capital adequacy (whether or not having the force of law), has the effect of
reducing the return on such Lender’s or such holding company’s capital as a
consequence of such Lender’s Commitments hereunder to a level below that which
such Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration such Lender’s or such holding
company’s then existing policies with respect to capital adequacy and assuming
the full utilization of such entity’s capital) by any amount deemed by such
Lender to be material,

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then such Lender may notify Borrower and Agent thereof. Following receipt of
such notice, Borrower agrees to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender’s calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). Notwithstanding anything to the
contrary in this Section, Borrower will not be required to compensate any Lender
pursuant to this Section for any reduction incurred more than 270 days before
such Lender notified Borrower of the change in law (or other circumstance)
giving rise to such reduction. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
     3.1 Conditions Precedent to the Initial Extension of Credit. The obligation
of the Lender Group (or any member thereof) to make the initial Advance (or
otherwise to extend any credit provided for hereunder), is subject to the
fulfillment, to the satisfaction of Agent in its Permitted Discretion, of each
of the conditions precedent set forth below:
                    (a) the Closing Date shall occur on or before August 16,
2011;
                    (b) Agent shall have received appropriate financing
statements on Form UCC-1 duly filed in such office or offices as may be
necessary or, in the opinion of Agent, desirable to perfect the Agent’s Liens in
and to the Collateral, and Agent shall have received searches reflecting the
filing of all such financing statements;
                    (c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent in its Permitted
Discretion, duly executed, and each such document shall be in full force and
effect:
     (i) the Disbursement Letter;
     (ii) the Closing Compliance Certificate;
     (iii) the Fee Letter; and
     (iv) a reaffirmation of the Collateral Documents, together with each of the
following:
                    (A) evidence reasonably satisfactory to the Agent that, upon
the filing and recording of instruments delivered on or before the Closing Date,
the Agent, for the benefit of the Secured Parties (as defined in the Pledge and
Security Agreement) shall have a valid and perfected security interest (having
the priority set forth in the Intercreditor Agreement) in the Collateral,
including (x) the

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filing of financing statements under the Code (y) copies of search reports as of
a recent date listing all effective financing statements that name any Credit
Party as debtor, together with copies of such financing statements, none of
which shall cover the Collateral except for those that shall be terminated on
the Closing Date or are otherwise permitted hereunder and (z) such other such
documents duly executed by each Credit Party as the Agent may reasonably request
with respect to the perfection of its security interests in the Collateral
(including patent, trademark and copyright security agreements suitable for
filing with the Patent and Trademark Office or the Copyright Office, as the case
may be, and other applicable documents under the laws of any jurisdiction with
respect to the perfection of Liens created by the Pledge and Security
Agreement);
                    (B) all Deposit Account Control Agreements not previously
delivered to the Agent, duly executed by the corresponding Deposit Account Bank
and the applicable Credit Party; and
                    (C) all Securities Account Control Agreements not previously
delivered to the Agent, duly executed by the applicable Credit Party and (1) all
“securities intermediaries” (as defined in the Code) with respect to all
Securities Accounts (as defined in the Code) and securities entitlements of the
Borrower and each Guarantor and (2) all “commodities intermediaries” (as defined
in the UCC) with respect to all commodities contracts and commodities accounts
held by the Borrower and each Guarantor;
               (d) Mortgages for all of the Real Property of the Credit Parties
(except as may be agreed to by the Agent) identified on Schedule 3.1(d) to the
Closing Compliance Certificate, together with all Mortgage Supporting Documents
relating thereto;
               (e) Agent shall have received a certificate from the Secretary of
each Credit Party attesting to the resolutions of such Credit Party’s Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Credit Party is a party and
authorizing specific officers of such Credit Party to execute the same;
               (f) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.7, the form
and substance of which shall be satisfactory to Agent in its Permitted
Discretion;
               (g) Agent shall have received opinions of counsel, including
certain local counsel in such jurisdictions as required by Agent, for the Credit
Parties, each in form and substance satisfactory to Agent in its Permitted
Discretion;

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               (h) Borrower shall have delivered a Borrowing Base Certificate,
dated as of the Closing Date based on the most recent completed fiscal month,
and Borrower shall have the Required Closing Availability after giving effect to
the initial extensions of credit hereunder and the payment of all fees and
expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;
               (i) Borrower shall have paid all documented Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
provided that Agent shall have given notice to Borrower at least two days prior
to the Closing Date with respect thereto;
               (j) each Credit Party shall have received all licenses, approvals
or evidence of other actions required by any material Governmental Authority in
connection with the execution and delivery by each such Credit Party of the Loan
Documents or with the consummation of the transactions contemplated thereby, and
all applicable governmental filings have been made and all applicable waiting
periods shall have expired without, in either case, any action being taken by
any competent authority, all applicable appeal periods shall have expired and
there shall be no action by any Governmental Authority that would reasonably be
expected to restrain, prevent or impose burdensome conditions on such
transactions;
               (k) all other documents and legal matters required in connection
with the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent
in its Permitted Discretion;
               (l) Agent shall have received the Borrower’s Closing Date
Business Plan;
               (m) the representations and warranties contained in Article V
shall be true and complete in all material respects; and
               (n) there shall not have occurred any Material Adverse Effect
since January 29, 2011.
     3.2 [Intentionally Omitted]
     3.3 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder at any time
(or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
          (a) the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and

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as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date or as otherwise specified therein);
               (b) no Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof;
               (c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against any Credit Party, Agent, any Lender, or any of their Affiliates; and
               (d) no Material Adverse Change shall have occurred.
     3.4 Term. This Agreement shall continue in full force and effect for a term
ending on the date (the “Maturity Date”) which is the earliest to occur of
(i) August 16, 2016 and (ii) any day which is ninety (90) days prior to the
stated maturity (as such stated maturity may be extended or refinanced as
permitted hereunder) of any of (a) the Term Loan Obligations, (b) any Qualified
Refinancing Indebtedness, or (c) the Senior Subordinated Notes, unless, solely
in the case of such Senior Subordinated Notes, Borrower can demonstrate on such
date (and on each of the dates which are 60, 30 and 1 days prior to such stated
maturity (each of such dates being a “Subordinated Notes Prepayment Test Date”)
and such 90 day period being the “Subordinated Notes Prepayment Test Period”)
that both before and after giving effect to a prepayment of all of the Senior
Subordinated Notes (assuming for purposes of this calculation that they are
prepaid on such date and separately on their stated maturity date) Borrower
would be able to make $1 of Restricted Payments pursuant to the second paragraph
of Section 7.8 hereof (the “Subordinated Notes Prepayment Test”); provided,
compliance with the Subordinated Notes Prepayment Test will be evidenced by a
certificate delivered by the Borrower to Agent on each Subordinated Notes
Prepayment Test Date, which certificate will be in form and substance reasonably
satisfactory to the Agent; and provided, further, that if on any Subordinated
Notes Prepayment Test Date the Borrower is no longer in compliance with the
Subordinated Notes Prepayment Test, such date shall be deemed to be the Maturity
Date. The foregoing notwithstanding, the Lender Group, upon the election of the
Required Lenders, shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
     3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all other Obligations)
immediately shall become due and payable without notice or demand (including
either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender. No termination of this Agreement, however,
shall relieve or discharge any Credit Party of its duties, Obligations, or
covenants hereunder

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and the Agent’s Liens in the Collateral shall remain in effect until all
Obligations have been paid in full (including by the provision of cash
collateral set forth above) and the Lender Group’s obligations to provide
additional credit hereunder have been terminated. When this Agreement has been
terminated and all of the Obligations have been paid in full (including by the
provision of cash collateral set forth above) and the Lender Group’s obligations
to provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrower’s sole expense, execute and deliver any
pay-off letter, UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent’s Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
     3.6 Early Termination by Borrower. Borrower has the option, at any time
upon 5 Business Days prior written notice to Agent, to (A) permanently reduce
the Revolver Commitment in the minimum amount of $1,000,000 and integral
multiples of $500,000 in excess thereof and (B) terminate this Agreement in its
entirety by paying to Agent, in cash, the Obligations (including either (i)
providing cash collateral to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the then extant Letter
of Credit Usage, or (ii) causing the original Letters of Credit to be returned
to the Issuing Lender. If Borrower has sent a notice of termination pursuant to
the provisions of this Section, then the Commitments shall terminate and
Borrower shall be obligated to repay the Obligations (including either
(i) providing cash collateral to be held by Agent for the benefit of those
Lenders with a Revolver Commitment in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, on the date set forth as the date of termination
of this Agreement in such notice.
4. [INTENTIONALLY OMITTED].
5. REPRESENTATIONS AND WARRANTIES.
          In order to induce the Lender Group to enter into this Agreement, each
Credit Party jointly and severally makes the following representations and
warranties to the Lender Group which shall be true, correct, and complete, in
all material respects, as of the date hereof, and shall be true, correct, and
complete, in all material respects, as of the Closing Date, and at and as of the
date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
     5.1 No Encumbrances. Except as disclosed on Schedule P-1 to the Closing
Compliance Certificate, each Credit Party has good and indefeasible title to its
owned

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personal property assets and good and marketable title to its owned Real
Property (subject to exceptions that do not, in the aggregate, materially impair
the use of the personal property and Real Property of the Credit Parties taken
as a whole), and in the case of the Collateral, free and clear of Liens except
for Permitted Liens.
     5.2 Eligible Accounts. The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory or
the rendition of services in the ordinary course of each Credit Party’s
business, owed to such Credit Party without any known defenses, disputes,
offsets, counterclaims, or rights of return or cancellation, except where the
existence of such defenses, disputes, offsets, counterclaims, or rights of
return or cancellation would not cause a Material Adverse Change. As to each
Account that is identified by Borrower as an Eligible Account in a borrowing
base report submitted to Agent, to the knowledge of Borrower, each such Account
is not excluded as ineligible by virtue of one or more of the excluding criteria
set forth in the definition of Eligible Accounts.
     5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
quality, free from known defects, except where the existence of such defects
would not cause a Material Adverse Change. As to each item of Inventory that is
identified by Borrower as Eligible Inventory in a Borrowing Base Certificate
submitted to Agent, to the knowledge of Borrower, such Inventory is not excluded
as ineligible by virtue of one or more of the excluding criteria set forth in
the definition of Eligible Inventory.
     5.4 Location of Inventory. All Eligible Inventory of each Credit Party is
located only at, or in-transit between (or with respect to Eligible In-Transit
Inventory which has been shipped from a location outside of the United States,
in transit to), the locations identified on Schedule 5.4 to the Closing
Compliance Certificate (as such Schedule may be updated pursuant to Sections 6.8
and 6.13) other than Inventory located at any Pool Location and Inventory, the
value of which, in the aggregate, does not exceed $1,000,000. Schedule 5.4 to
the Closing Compliance Certificate separately identifies each Leased Store
Location and each Non-Owned Storage Facility.
     5.5 Inventory Records. Borrower keeps materially correct and accurate
records itemizing and describing the type, quality, and quantity of its
consolidated Inventory and the book value thereof.
     5.6 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number. (a) The jurisdiction of organization of each Credit
Party is set forth on Schedule 5.6(a) to the Closing Compliance Certificate.
          (b) The chief executive office of each Credit Party is located at the
address indicated on Schedule 5.6(b) to the Closing Compliance Certificate (as
such Schedule may be updated pursuant to Section 6.7).

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          (c) Each Credit Party’s FEIN and organizational identification number,
if any, are identified on Schedule 5.6(c) to the Closing Compliance Certificate.
     5.7 Due Organization and Qualification; Subsidiaries.
               (a) Each Credit Party is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
               (b) As of the Closing Date, other than as described on
Schedule 5.7(b) to the Closing Compliance Certificate, and except for employee
stock options, there are no subscriptions, options, warrants, or calls relating
to any shares of any Credit Party’s capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Except as set forth on Schedule 5.7(b) to the Closing Compliance Certificate, as
of the Closing Date, no Credit Party is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
               (c) Set forth on Schedule 5.7(c) to the Closing Compliance
Certificate is a complete and accurate list of each Credit Party’s direct and
indirect Subsidiaries showing (i) with respect to all Subsidiaries other than
Excluded Subsidiaries and Unrestricted Subsidiaries, (A) the jurisdiction of
their organization, (B) the number of shares of each class of common and
preferred Stock authorized for each Credit Party, and (C) the percentage of the
outstanding shares of each such class owned directly or indirectly by such
Credit Party and (ii) with respect to all Excluded Subsidiaries and Unrestricted
Subsidiaries, (x) the jurisdiction of their organization and (y) the percentage
of Stock owned directly or indirectly by any Credit Party in such Excluded
Subsidiaries. All of the outstanding capital Stock of each such Restricted
Subsidiary has been validly issued and is fully paid and non-assessable.
     5.8 Due Authorization; No Conflict.
               (a) The execution, delivery, and performance by each Credit Party
of this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Credit Party.
               (b) The execution, delivery, and performance by each Credit Party
of this Agreement and the other Loan Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or regulation
applicable to such Credit Party, the Governing Documents of such Credit Party,
or any order, judgment, or decree of any court or other Governmental Authority
binding on such Credit Party, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of such Credit Party, including, without
limitation, the Indenture or Senior Subordinated Notes,

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(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Credit Party, other than
Permitted Liens, or (iv) require any approval of such Credit Party’s equity
holders or any approval or consent of any Person under any material contractual
obligation of such Credit Party, other than consents or approvals that have been
obtained and that are still in force and effect, unless such violation,
imposition of Lien or failure to obtain approval or consent would not reasonably
be expected to result in a Material Adverse Change.
               (c) Other than the filing of financing statements, the execution,
delivery, and performance by each Credit Party of this Agreement and the other
Loan Documents to which each such Credit Party is a party do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority, other than consents or approvals
that have been obtained and that are still in force and effect.
               (d) This Agreement and the other Loan Documents to which each
Credit Party is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by such Credit Party will be the legally
valid and binding obligations of such Credit Party, enforceable against such
Credit Party in accordance with their respective terms, except as may be limited
by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors’ rights generally.
               (e) The Agent’s Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
     5.9 Litigation. Other than those matters disclosed on Schedule 5.9 to the
Closing Compliance Certificate, there are no actions, suits, or proceedings
pending or, to the best knowledge of each Credit Party, threatened against any
Credit Party, except for (a) matters that are fully covered by insurance
(subject to customary deductibles), and (b) matters that are not reasonably
likely to be decided adversely to any Credit Party or, if decided adversely to
any Credit Party, reasonably could not be expected to result in a Material
Adverse Change.
     5.10 No Material Adverse Change. All financial statements relating to the
Credit Parties that have been delivered by Borrower to the Lender Group have
been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) in the case of the Borrower and any Wholly Owned Domestic
Subsidiary, or, in the case of the financial statements of any Excluded
Subsidiary, have been prepared or maintained in accordance with generally
accepted accounting principles of its country of origin and, in addition, have
been prepared for consolidation in accordance with GAAP and present fairly in
all material respects, the financial condition of Parent and its Subsidiaries as
of the date thereof and results of operations for the period then ended. There
has not been a Material Adverse Change since

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the date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
     5.11 Fraudulent Transfer
               (a) The Credit Parties taken as a whole are Solvent and each
Material Credit Party is Solvent.
               (b) No transfer of property is being made by any Credit Party and
no obligation is being incurred by any Credit Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Credit Party.
     5.12 Employee Benefits. As of the date hereof, no Credit Party or any of
their ERISA Affiliates maintains or contributes to any Benefit Plan other than
as listed on Schedule 5.12 to the Closing Compliance Certificate.
     5.13 Environmental Condition. Except for matters described on Schedule 5.13
to the Closing Compliance Certificate and except for other matters that would
not reasonably be expected to result in a Material Adverse Change, (a) to each
Credit Party’s knowledge, no owned Real Property of any Credit Party has ever
been used by any Credit Party or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation of applicable Environmental Law, (b) to each Credit
Party’s knowledge, no Credit Party’s owned Real Property has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) no Credit Party has received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by any Credit Party, and
(d) no Credit Party has received a summons, citation, notice, or directive from
the U.S. Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by any Credit Party
resulting in the releasing or disposing of Hazardous Materials into the
environment in violation of any applicable Environmental Law.
     5.14 Investment Company Act. None of the Credit Parties is an “investment
company,” or “promoter” or “principal underwriter” for an “investment company,”
as such terms are defined in the Investment Company Act of 1940, as amended.
     5.15 Intellectual Property. Except as disclosed on Schedule 5.15 to the
Closing Compliance Certificate, each Credit Party owns, or holds licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the conduct of the business of the Credit Parties, taken
as a whole, as currently conducted, except where the failure to do so, in the
aggregate, would not result in a Material Adverse Change.

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     5.16 Leases. Except where the failure to do so would not cause a Material
Adverse Change, each Credit Party enjoys peaceful and undisturbed possession
under all leases material to its business and to which it is a party or under
which it is operating. Except to the extent that such default would not cause a
Material Adverse Change, all of such leases are valid and subsisting and no
material default by any Credit Party exists under any of them.
     5.17 Deposit Accounts. Set forth on Schedule 5.17 to the Closing Compliance
Certificate are all of each Credit Party’s Deposit Accounts at which the
Collateral is or may be held, including, with respect to each bank (i) the name
and address of such Person, and (ii) the account numbers of the Deposit Accounts
maintained with such Person. Schedule 5.17 to the Closing Compliance Certificate
separately identifies each Concentration Account, Consolidated Store Deposit
Account, Individual Store Account and the Home Office Account.
     5.18 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of any Credit Party in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any Credit Party in writing to Agent or any Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Business Plan represents, and as
of the date on which any other Projections are delivered to Agent, such
additional Projections represent each Credit Party’s good faith best estimate of
its future performance for the periods covered thereby, it being understood that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any projections may
differ from the projected results and no assurance can be given that the
Projections will be realized.
     5.19 Indebtedness. Set forth on Schedule 5.19 to the Closing Compliance
Certificate is a true and complete list of all Indebtedness (other than Term
Loan Obligations and the Senior Subordinated Notes) of each Credit Party
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness (other than Term Loan Obligations, the
Senior Subordinated Notes and Indebtedness of any Credit Party owing to any
other Credit Party).
     5.20 Credit Card Receipts. Schedule 5.20 to the Closing Compliance
Certificate sets forth each Credit Party’s Credit Card Processors and all
material arrangements to which any Credit Party is a party with respect to the
payment to any Credit Party of the proceeds of credit card charges for sales by
such Credit Party.

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     5.21 Margin Stock. No Credit Party is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System), and no
proceeds of any Advance or drawings under any Letter of Credit will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
     5.22 Senior Debt. All Obligations hereunder constitute “Senior Debt” (as
such term is defined in the Indenture) permitted under the Indenture and each of
the Credit Parties acknowledge that Agent and each Lender are entering into this
Agreement and are extending the Commitments in reliance on this Section 5.22.
     5.23 Anti-Terrorism Laws.
     (i) None of the Credit Parties or, to the knowledge of any of the Credit
Parties, any of their Affiliates, is in violation of any laws relating to
terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order
No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive
Order”), and the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law
107-56.
     (ii) No Credit Party or, to the knowledge of any of the Credit Parties, any
of their Affiliates or their respective brokers or other agents acting or
benefiting in any capacity in connection with the Obligations, is any of the
following:
     (A) a Person or entity that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order;
     (B) a Person or entity owned or controlled by, or acting for or on behalf
of, any Person or entity that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order;
     (C) a Person or entity with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
     (D) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order; or
     (E) a Person or entity that is named as a “specially designated national
and blocked person” on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website or any
replacement website or other replacement official publication of such list.

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     (iii) No Credit Party or to the knowledge of any Credit Party, any of its
brokers or other agents acting in any capacity in connection with the
Obligations (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Person
described in clause (b) above, (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order, or (iii) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
     5.24 Related Documents
                    (a) The execution, delivery and performance by Borrower,
Parent and each Restricted Subsidiary (collectively, the “Group Members” and
each individually a “Group Member”) of the Related Documents to which it is a
party and the consummation of the transactions contemplated thereby by such
Group Member:
     (i) are within such Group Member’s respective corporate, limited liability
company, partnership or other powers;
     (ii) on or prior to the Closing Date will have been duly authorized by all
necessary corporate or other action, including the consent of stockholders where
required;
     (iii) do not and will not (A) contravene or violate such Group Member’s
Governing Documents, (B) violate any other Requirement of Law applicable to such
Group Member, or any order or decree of any Governmental Authority or
arbitrator, (C) conflict with or result in the breach of, constitute a default
under, or result in or permit the termination or acceleration of, any
Contractual Obligation of such Group Member, except for those that, in the
aggregate, would not have a Material Adverse Effect or (D) result in the
creation or imposition of any Lien upon any property of such Group Member (or
any other Group Member) other than a Lien permitted under Section 7.2; and
     (iv) do not require the consent of, authorization by, approval of, notice
to, or filing or registration with, any Governmental Authority or any other
Person, other than those that (A) will have been obtained at the Closing Date,
each of which will be in full force and effect on the Closing Date, none of
which will on the Closing Date impose materially adverse conditions upon the
exercise of control by Borrower over any Group Members and (B) in the aggregate,
if not obtained, would not have a Material Adverse Effect.

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                    (b) None of the Related Documents has been amended or
modified in any respect and no provision therein has been waived, except in each
case to the extent permitted by Section 7.14.
                    (c) The Obligations constitute “Senior Debt” as defined in
the Subordinated Notes Indenture.
6. AFFIRMATIVE COVENANTS.
          Each Credit Party jointly and severally covenants and agrees that,
until termination of all of the Commitments and payment in full of the
Obligations, each Credit Party shall do all of the following:
     6.1 Accounting System. Maintain a system of accounting that enables the
Parent and its Subsidiaries to produce consolidated financial statements in
accordance with GAAP and maintain consolidated records pertaining to the
Collateral that contain information as from time to time reasonably may be
requested by Agent (or, in the case of any Restricted Subsidiary that is an
Excluded Subsidiary, such consolidated records shall be maintained in accordance
with the generally accepted accounting principles of its country of origin and,
in addition, shall have been prepared for consolidation in accordance with
GAAP). Parent or one or more Credit Parties also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to Inventory of the Credit Parties and their
Subsidiaries.
     6.2 Collateral Reporting. Provide Agent with the documents as required by
Section 18.12 in accordance with the delivery schedule set forth thereon. In
addition, each Credit Party agrees to cooperate fully with Agent to facilitate
and implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth in Section 18.12.
     6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
               (a) as soon as available, but in any event within, 45 days after
the end of each of the Borrower’s first three fiscal quarters:
     (i) a company prepared unaudited consolidated balance sheet, income
statement, and statement of cash flow covering Borrower’s and Parent’s and its
Subsidiaries’ operations during such period,
     (ii) a Compliance Certificate signed by the chief financial officer of
Borrower to the effect that:

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     (A) the financial statements delivered hereunder have been prepared in
accordance with GAAP (except for the lack of footnotes and being subject to
quarterly and year-end audit adjustments) and fairly present in all material
respects the financial condition of Parent and its Subsidiaries,
     (B) the representations and warranties of each Credit Party contained in
this Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date),
     (C) there does not exist any condition or event that constitutes an Event
of Default, Reporting Triggering Period or Dominion Triggering Period (or, to
the extent of any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action the Credit Parties have taken, are
taking, or propose to take with respect thereto),
     (D) demonstrating, in reasonable detail, the calculations used in
determining, when applicable, compliance with the financial covenant contained
in Section 7.17, and
               provided that, during a Reporting Triggering Period, the Borrower
shall provide unaudited consolidated financial statements of the Borrower and
its Subsidiaries, including balance sheet, income statement and cash flow
statement on a monthly basis within 30 days of month-end,
               (b) as soon as available, but in any event within 90 days after
the end of each of Borrower’s fiscal years, for such fiscal year and for the
fourth fiscal quarter then most recently ended, consolidated financial
statements of Parent and its Subsidiaries (and consolidating financial
statements of Parent and its Subsidiaries, to the extent produced by Parent in
the normal course of its operations) for each such fiscal year, audited by
independent certified public accountants reasonably acceptable to Agent and
certified, without any qualifications, by such accountants to have been prepared
in accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared, such
accountants’ letter to management),
               (c) as soon as available, but in any event within 60 days after
the start of each of Borrower’s fiscal years, copies of the Projections, in form
and substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for such fiscal year, quarter by quarter (or by
such shorter periods as are reasonably requested by the Agent), which
Projections shall represent Borrower’s good

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faith best estimate of the financial performance of Parent and its Subsidiaries
during the period covered thereby, it being understood that such Projections as
to future events are not to be viewed as facts and that actual results during
the period or periods covered by any Projections may differ from the projected
results and no assurance can be given that the Projections will be realized,
                    (d) if and when filed by Parent,
     (i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports,
     (ii) any other filings made by Parent with the SEC, and
     (iii) any other information that is provided by Parent to its shareholders
generally
          (provided, that for purposes of this clause (d), any information to be
delivered hereunder shall be deemed to have been delivered when posted on the
Parent’s website or otherwise made available on the website of the SEC),
               (e) as soon as practicable, and in any event within five days
after a Responsible Officer of the Parent or the Borrower has actual knowledge
of the existence of any Default, Event of Default or other event having had a
Material Adverse Effect, the Borrower shall give the Agent notice specifying the
nature of such Default or Event of Default or other event and a statement of the
curative action that Borrower or such other Credit Party proposes to take with
respect thereto,
               (f) within 30 days after the later of (i) the service of process
with respect thereto on any Credit Party or (ii) such time as exposure of the
Credit Party could be reasonably determined, notice of all actions, suits, or
proceedings brought by or against any Credit Party before any Governmental
Authority which, if determined adversely to such Credit Party, reasonably would
be expected to result in a Material Adverse Change, and
               (g) upon the request of Agent, any other report reasonably
requested relating to the financial condition of any Credit Parties; provided
that such reports shall not be overly burdensome for any Credit Party to
prepare.
          Borrower agrees to cooperate with Agent to allow Agent to consult with
its independent certified public accountants if Agent reasonably requests the
right to do so (and Agent shall notify Borrower as to the timing of such
consultations and permit Borrower to be present thereat or to otherwise
participate therein) and that, in such connection, its independent certified
public accountants are authorized to communicate with Agent and to

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release to Agent whatever financial information concerning any Credit Party that
Agent reasonably may request.
     6.4 Returns. Cause returns and allowances, as between any Credit Party and
their Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the Credit Parties, as they exist at the time of the
execution and delivery of this Agreement, except where failure to do so could
not reasonably be expected to result in a Material Adverse Change.
     6.5 Maintenance of Properties. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, except where
failure to do so could not reasonably be expected to result in a Material
Adverse Change.
     6.6 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against each
Credit Party or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except where the
failure to do so, individually or in the aggregate, would not result in a
Material Adverse Change. Each Credit Party will make timely payment or deposit
of all tax payments and withholding taxes required of it and them by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, except where the failure to do so,
individually or in the aggregate, would not result in a Material Adverse Effect.
     6.7 Insurance.
               (a) At each Credit Party’s expense, maintain insurance respecting
such Credit Party’s assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks, and maintain business
interruption, public liability, and product liability insurance, as well as
insurance against larceny, embezzlement, and criminal misappropriation, all as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. All such policies of insurance shall be in such commercially
reasonable amounts which are customary for Persons engaged in the same or
similar business and with nationally recognized insurance companies or with a
captive insurance subsidiary. Each Credit Party shall deliver copies of all such
policies to Agent with a customary lender’s loss payable endorsement naming
Agent as loss payee (with respect to the Collateral) or additional insured, as
appropriate. Each such policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy.
               (b) Each Credit Party shall give Agent prompt notice of any loss
of the Collateral valued in excess of $2 million covered by such insurance.
Agent shall have the exclusive right to adjust any losses of the Collateral
claimed under any such

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insurance policies during the continuation of an Event of Default, without any
liability to such Credit Party whatsoever in respect of such adjustments. Any
monies received as payment for any loss of the Collateral under any insurance
policy mentioned above (other than liability insurance policies) during any
Dominion Triggering Period or during the continuation of an Event of Default,
shall be paid over to Agent to be applied to the prepayment of the Obligations
with amounts so prepaid available to be reborrowed subject to Section 3.3.
               (c) No Credit Party will take out separate insurance concurrent
in form or contributing in the event of loss of the Collateral with that
required to be maintained under this Section 6.7, unless Agent is included
thereon as named insured with the loss payable to Agent under a lender’s loss
payable endorsement or its equivalent. Each Credit Party immediately shall
notify Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and copies of such policies promptly shall be provided to Agent.
     6.8 Location of Inventory/Chief Executive Offices. Keep each Credit Party’s
Inventory only at the locations identified on Schedule 5.4 to the Closing
Compliance Certificate (except for Inventory that (i) in the aggregate has a
value of less than $1,000,000 or (ii) is in transit between the locations
identified on Schedule 5.4 to the Closing Compliance Certificate) and their
chief executive offices only at the locations identified on Schedule 5.6(b);
provided, however, that Borrower may amend (a) Schedule 5.4 to the Closing
Compliance Certificate, on behalf of any Credit Party as contemplated by
Section 6.13, and (b) Schedule 5.6 to the Closing Compliance Certificate, on
behalf of any Credit Party, provided in the case of clause (b) hereof so long as
(i) such amendment occurs by written notice to Agent not less than 30 days prior
to the date such chief executive office is relocated and (ii) such new location
is within the United States or any U.S. Territory. Within a commercially
reasonable time following written notification with respect to any Non-Owned
Warehouse, Borrower shall provide Agent a Collateral Access Agreement with
respect thereto and if such agreement has not been obtained, Borrower’s Eligible
Landed Inventory at that location shall be subject to the establishment of
Reserves as set forth in the definition of “Eligible Landed Inventory”.
     6.9 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Change.
     6.10 Leases. Pay when due all rents and other amounts payable under any
leases to which any Credit Party is a party or by which any Credit Party’s
properties and assets are bound, unless such payments are the subject of a
Permitted Protest or unless nonpayment of

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such rents and other amounts, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.
     6.11 Existence. At all times preserve and keep in full force and effect
each Credit Party’s valid existence and good standing and any rights and
franchises material to their businesses.
     6.12 Environmental. Except for such Environmental Liens, failures to
comply, releases, Environmental Actions, notices, citations or orders which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Change: (a) keep any property either owned or operated by any
Credit Party free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply with all applicable Environmental Laws and
provide to Agent documentation of such compliance which Agent reasonably
requests, (c) promptly notify Agent of any release of a Hazardous Material in
any reportable quantity from or onto property owned or operated by any Credit
Party and take any Remedial Actions required to abate said release or otherwise
to come into compliance with applicable Environmental Law, and (d) promptly, but
in any event within 5 days of its receipt thereof, provide Agent with written
notice of any of the following: (i) notice that an Environmental Lien has been
filed against any of the real or personal property of any Credit Party, (ii)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Credit Party, and (iii) notice of any violation,
citation, or other administrative order received by any Credit Party.
     6.13 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made; provided, that with respect to Schedules E-1 (in respect of Pool
Locations), E-2, 1.1(b), 5.4, 5.17, and 5.20, in each case, to the Closing
Compliance Certificate, Borrower shall provide updates to such Schedules as
necessary in its discretion to reflect material changes thereto occurring before
any quarterly update thereto, but in any event no less than quarterly; provided,
further, that any reference herein to any Schedule(s) shall be deemed to be a
reference to such Schedule(s) as updated pursuant hereto. The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
affect of amending or modifying this Agreement or any of the Schedules hereto.
     6.14 Formation of Subsidiaries. At the time that any Credit Party forms or
acquires any direct or indirect Wholly Owned Domestic Subsidiary after the
Closing Date (other than an Excluded Subsidiary or Unrestricted Subsidiary),
such Credit Party shall (a) cause such new Wholly Owned Domestic Subsidiary to
provide to Agent a joinder to this

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Agreement (as a Guarantor and Credit Party), together with such other security
documents, as well as appropriate UCC-1 financing statements, all in form and
substance satisfactory to Agent (including being sufficient to grant Agent a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Wholly Owned Domestic Subsidiary (other than any such
assets that would not be required to be subject to Agent’s Liens if they were
assets of any Credit Party)) and (b) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, which in its
reasonable opinion is appropriate with respect to the execution and delivery of
the applicable documentation referred to above. Any document, agreement, or
instrument executed or issued pursuant to this Section 6.14 shall be a Loan
Document. Notwithstanding the foregoing, the Loan Documents shall not require
the creation or perfection of, pledges of or security interests in, or the
obtaining of title insurance or legal opinions with respect to, any Excluded
Assets, any Stock or Stock Equivalents in, or assets of, any Restricted
Subsidiary of the Parent that was formed under the laws of the United States or
any state of the United States or the District of Columbia, all of the Stock of
which is held by any Person who is not a “United States person” under and as
defined in Section 770l(a)(30) of the IRC, or any leaseholds, commercial tort
claims, motor vehicles or any other asset subject to certificates of title or
letter of credit rights (other than any such rights constituting “supporting
obligations” as defined in the Code).
     6.15 Designation of Subsidiaries
          The board of directors of the Parent may at any time designate any
Restricted Subsidiary (other than the Borrower) as an Unrestricted Subsidiary or
any Unrestricted Subsidiary as a Restricted Subsidiary; provided that
(a) immediately before and after such designation, no Default or Event of
Default shall have occurred and be continuing, (b) no Restricted Subsidiary may
be designated an Unrestricted Subsidiary if it previously had been designated as
an Unrestricted Subsidiary, (c) any such designation shall be deemed to be an
Investment requiring compliance with Section 7.10 (or reduction in an
outstanding Investment, in the case of a designation of an Unrestricted
Subsidiary as a Restricted Subsidiary), on the date of such designation in an
amount equal to the sum of (i) the Parent’s direct or indirect equity ownership
percentage of the net worth of such designated Restricted Subsidiary immediately
prior to such designation (such net worth to be calculated without regard to any
guarantee provided by such designated Restricted Subsidiary of the Parent’s,
Borrower’s or another Restricted Subsidiary’s Indebtedness) and (ii) without
duplication, the aggregate principal amount of any Indebtedness owed by such
designated Restricted Subsidiary to the Parent, Borrower or any other Restricted
Subsidiary immediately prior to such designation, all calculated, except as set
forth in the parenthetical to clause (i) above, on a Consolidated basis in
accordance with GAAP, and (c) no Subsidiary may be designated as an Unrestricted
Subsidiary if it is a “Restricted Subsidiary” for the purpose of any other
Indebtedness of the Parent. The designation of any Unrestricted Subsidiary as a
Restricted Subsidiary shall constitute the incurrence at the time of designation
of any Indebtedness or Liens of such Subsidiary existing at such time.

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     6.16 Segregation of Collateral
          The proceeds of any Term Facility Priority Collateral (as defined in
the Intercreditor Agreement) in connection with an Asset Sale permitted by the
terms of Section 8.4 of the Term Loan Agreement shall be segregated in a
separate deposit account designated by Borrower to Agent.
7. NEGATIVE COVENANTS.
          Each Credit Party, jointly and severally, covenants and agrees that,
until termination of all of the Commitments and payment in full of the
Obligations, such Credit Party will not and will not permit any of its
Restricted Subsidiaries, to do any of the following:
     7.1 Indebtedness. Create, incur, assume, guarantee, or otherwise become,
directly or indirectly, liable (“incur” or “incurrence”) with respect to any
Indebtedness, provided, however that a Credit Party may incur Indebtedness in
any jurisdiction so long as (a) no Default or Event of Default shall have
occurred and be continuing (either before or immediately after giving effect to
the incurrence thereof), (b) immediately after giving effect to the incurrence
thereof the Pro Forma Consolidated Fixed Charge Coverage Ratio shall be greater
than 1.00 to 1.00 (excluding, solely for purposes of such computation, (i) any
voluntary prepayment of Term Loan Obligations, Senior Subordinated Notes or
Qualified Refinancing Indebtedness and (ii) the payment of the outstanding
principal amount of the Senior Subordinated Notes upon the stated maturity
thereof, in each case as otherwise permitted by Section 7.8 hereof), and (c) Pro
Forma and Projected Excess Availability is at least 15% of the Line Cap after
giving effect to the incurrence of such Indebtedness, provided further that the
provisions of this Section 7.1 shall not prohibit the incurrence of any of the
following:
               (a) Indebtedness evidenced by this Agreement and the other Loan
Documents, including the Guaranteed Obligations, together with Indebtedness owed
to Underlying Issuers with respect to Underlying Letters of Credit and any other
Obligations that constitute Indebtedness, including all Indebtedness under any
Incremental Facility;
               (b) Indebtedness evidenced by the Term Loan Agreement and the
other Term Loan Documents, together with all Obligations as defined in the Term
Loan Agreement, including all Indebtedness under any Incremental Term Loans as
provided for under the Term Loan Agreement as in effect as of the date hereof
(the “Term Loan Obligations”);
               (c) Indebtedness consisting of Senior Subordinated Notes;

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               (d) Indebtedness consisting of Qualified Refinancing
Indebtedness;
               (e) Indebtedness existing as of the date hereof and set forth on
Schedule 5.19 to the Closing Compliance Certificate,
               (f) Permitted Purchase Money Indebtedness,
               (g) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (e) and (f) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent’s
Permitted Discretion, materially impair the prospects of repayment of the
Obligations by Borrower or materially impair Borrower’s creditworthiness,
(ii) such refinancings, renewals, or extensions do not result in an increase in
the then extant principal amount of the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are not materially more
unfavorable to the Lender Group as those that were applicable to the refinanced,
renewed, or extended Indebtedness, (v) the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended, (vi) no Event of
Default shall have occurred and be continuing (vii) the collateral, if
applicable, granted pursuant to any such refinancing Indebtedness is the same or
less than the collateral under the Indebtedness being extended, renewed or
replaced and (viii) such modification, refinancing, refunding, renewal or
extension shall not include: (A) Indebtedness of a Subsidiary of the Borrower
that is not a Guarantor that refinances Indebtedness of the Borrower,
(B) Indebtedness of a Subsidiary of the Borrower that is not a Guarantor that
refinances Indebtedness of a Guarantor or (C) Indebtedness of the Borrower or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary,
               (h) Indebtedness (i) of any Credit Party to any other Credit
Party and Indebtedness of a Credit Party guaranteeing Indebtedness of another
Credit Party otherwise permitted under this Section 7.1 (ii) arising from
intercompany loans (A) among Qualified Restricted Subsidiaries, (B) among
Restricted Subsidiaries that are not Qualified Restricted Subsidiaries or
Guarantors; (C) from any Restricted Subsidiary to any Credit Party; provided,
however, any such loans shall be subordinated to the Obligations on terms that
expressly prohibit payment of any amount thereof (including interest thereon) at
any time an Event of Default has occurred and is continuing; (D)

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from any Credit Party to any Restricted Subsidiary, (E) from any Credit Party or
Qualified Restricted Subsidiary to any Restricted Subsidiary that is not a
Credit Party or Qualified Restricted Subsidiary or to any Unrestricted
Subsidiary, and (F) from any Restricted Subsidiary that is not a Qualified
Restricted Subsidiary or a Guarantor to any Unrestricted Subsidiary; provided,
however, with respect to clauses (D) through (F), the aggregate amount of
Indebtedness outstanding at any given time shall not exceed $5,000,000;
               (i) Indebtedness of the Borrower and the Restricted Subsidiaries
which may be deemed to exist pursuant to any guaranties, performance, surety,
statutory, appeal or similar bonds or obligations incurred in the ordinary
course of business;
               (j) Indebtedness in respect of netting services, overdraft
protections and otherwise in connection with Deposit Accounts or securities
accounts maintained in the ordinary course of business;
               (k) guaranties in the ordinary course of business of the
obligations of suppliers, customers, franchisees and licensees of any Credit
Party;
               (l) endorsement of instruments or other payment items for
deposit;
               (m) Indebtedness under Capital Leases arising out of Permitted
Sale-Leasebacks made in compliance with Section 7.16, in an aggregate amount not
to exceed at any time $50,000,000;
               (n) Indebtedness under Hedge Agreements incurred for bona fide
hedging purposes and not for speculation;
               (o) other Indebtedness of the Parent and the Restricted
Subsidiaries in an aggregate principal amount not to exceed $100,000,000 at any
time outstanding; provided, however, that Indebtedness of Persons which are not
Credit Parties pursuant to this clause (o) shall not exceed an aggregate
principal amount of $50,000,000 at any time outstanding; and
               (p) intercompany Indebtedness incurred by any Group Member to any
other Group Member in connection with or arising from or under a Non-Domestic
Restructuring.
     7.2 Liens. Create, incur, or assume, directly or indirectly, any Lien on or
with respect to any of its assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except:

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               (a) Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 7.1(d) or (p) and so long as the replacement
Liens only encumber those assets that secured the refinanced, renewed, or
extended Indebtedness);
               (b) Liens on assets other than the Collateral securing
Indebtedness in an aggregate amount not to exceed $50,000,000 at any time
outstanding; and
               (c) Liens existing on the assets of any Person that becomes a
Restricted Subsidiary (or is a Restricted Subsidiary that survives a merger with
such Person), or existing on assets acquired, pursuant to a Permitted
Acquisition to the extent the Liens on such assets secure Indebtedness permitted
by Section 7.1(n); provided that such Liens attach at all times only to the same
assets to which such Liens attached (and after-acquired property that is affixed
or incorporated into the property covered by such Lien), and secure only the
same Indebtedness or obligations that such Liens secured, immediately prior to
such Permitted Acquisition and any refinancing thereof permitted by
Section 7.1(d).
     7.3 Restrictions on Fundamental Changes/Disposal of Assets. Enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, assets or property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, whether now owned or hereafter acquired, except:
               (a) any Credit Party may be merged with or into a Credit Party,
or be liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to any Credit
Party; provided, (i) at the time of any such merger, no Event of Default shall
exist or shall result from such merger, and (ii) in the case of such a merger, a
Credit Party shall be the continuing or surviving Person;
               (b) Permitted Dispositions;
               (c) Asset Sales not otherwise permitted hereunder; provided that
(i) the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof; (ii) at the time of any such Asset Sale,
no Event of Default shall exist or shall result from such Asset Sale; (iii) in
the case of Asset Sales consisting of the Collateral and in the case of any
Asset Sale if Availability is less than $60,000,000 at the time of such Asset
Sale, no less than 80% of the consideration therefor shall be paid in cash; and
(iv) at the time of such Asset Sale and after giving effect thereto, the
aggregate sales price of all Asset Sales, together, since the Closing Date shall
not exceed, in the case of Asset Sales consisting of the Collateral, (A) if
availability is less than $60,000,000 at the time of such Asset Sale, 5% of the
Consolidated Net Tangible Assets of the Parent and its Subsidiaries determined
in

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accordance with GAAP and (B) if Availability is equal to or in excess of
$60,000,000 at the time of such Asset Sale, 10% of the Consolidated Net Tangible
Assets of the Parent and its Subsidiaries determined in accordance with GAAP, in
each case as aggregated with all other Asset Sales occurring after the Closing
Date;
               (d) Asset Sales of stores developed by any Credit Party in
connection with Permitted Sale-Leasebacks, provided that the proceeds of any
such Permitted Sale-Leaseback shall be entirely in cash and shall not be less
than 100% of the fair market value of the property or equipment being sold;
               (e) dispositions listed on Schedule 7.3 to the Closing Compliance
Certificate; and
          (f) any Non-Domestic Restructuring (including any Asset Sale among
Group Members in connection therewith or arising therefrom).
     7.4 Change Name. Change the name, FEIN, organizational identification
number, state of organization or organizational identity of any Credit Party;
provided, however, that any Credit Party may change any of the foregoing upon at
least 30 days prior written notice to Agent of such change and so long as, at
the time of such written notification, such Credit Party provides any financing
statements necessary to perfect and continue perfected the Agent’s Liens.
     7.5 Nature of Business. Make any material change in the principal nature of
its or their business. Any change in the types of products sold or the methods
or channels of distribution shall not constitute a material change in the
principal nature of the business of the Credit Parties.
     7.6 Amendments. Amend or otherwise change the terms of (i) any Subordinated
Indebtedness if the effect of such amendment or other change is to increase the
interest rate on such Indebtedness, change (to earlier dates) any dates upon
which payments of principal or interest are due thereon, change any event of
default or change any condition to an event of default with respect thereto
(other than to eliminate any such event of default or increase any grace period
related thereto or otherwise modify the same in a manner favorable to the Credit
Parties), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or if
the effect of any such amendment or change, together with all other amendments
or changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Indebtedness (or a trustee or representative on their behalf) which would be
adverse to any Credit Party or the Lenders or (ii) any Term Loan Documents if
the effect is to accelerate the dates for any scheduled amortization or
mandatory prepayment. Notwithstanding the foregoing, the Borrower may enter into
the Qualified Refinancing Indebtedness.

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     7.7 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
     7.8 Distributions. Make or set apart any sum for any Restricted Payment,
except that (i) Parent may make regularly scheduled payments of interest in
respect of the Senior Subordinated Notes in accordance with the subordination
provisions contained in the Indenture; (ii) any Credit Party may make Restricted
Payments to any other Credit Party; (iii) Parent may make Restricted Payments
consisting of the repurchase of Parent stock in connection with the exercise of
employee stock options in the ordinary course of business on a basis that is
“net of taxes” or any equivalent gross exercise and repurchase to fund tax
liabilities to the extent required under applicable employee contractual
arrangements; and (iv) any Group Member may make Restricted Payments to another
Group Member in connection with or arising from or under a Non-Domestic
Restructuring.
          Notwithstanding the foregoing, Borrower or any Restricted Subsidiary
may make any Restricted Payment (or commit to make any Restricted Payment within
one hundred and twenty (120) days provided that with respect to any such
commitment to make a Restricted Payment, Agent will be entitled to implement a
reserve against the Borrowing Base in the amount of such Restricted Payment) so
long as (a) either (i) Pro Forma and Projected Excess Availability is at least
25% of the Pro Forma and Projected Line Cap or (ii) Pro Forma and Projected
Excess Availability is at least 15% but less than 25% of the Pro Forma and
Projected Line Cap and the Pro Forma Consolidated Fixed Charge Coverage Ratio is
greater than 1.00 to 1.00 and (b) no Default or Event of Default is continuing
or would result therefrom; provided, that Borrower shall give Agent prompt
notice of any such Restricted Payment in an amount greater than $25,000,000.
     7.9 Accounting Methods; Fiscal Year. Modify or change (a) its fiscal year,
or (b) its method of accounting (other than as may be required to conform to
GAAP or as otherwise permitted by GAAP and disclosed to the Lenders and the
Agent), in each case other than as set forth in Schedule 7.9 to the Closing
Compliance Certificate; provided that it is understood and agreed that (i) any
Subsidiary of the Parent may move its fiscal year end to align with the fiscal
year end of the Parent and (ii) the Parent and its Subsidiaries may move from
the retail basis of accounting to a cost basis of accounting; provided that in
the event of any such change in accounting method, the Agent shall be entitled
to conduct an updated appraisal on the Collateral at the Borrower’s cost and
expense, which updated appraisal shall not be subject to the limitations set
forth in Section 2.1(b) nor count against the number of reimbursable appraisals
permitted thereby.
     7.10 Investments. Directly or indirectly, make or acquire any Investment or
incur any liabilities (including contingent obligations) for or in connection
with any Investment; provided, however that a Credit Party may directly or
indirectly make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any such Investment in any
jurisdiction, so long as (a) immediately after giving effect to

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such Investment, either (i) Pro Forma and Projected Excess Availability is at
least 25% of the Pro Forma and Projected Line Cap or (ii) Pro Forma and
Projected Excess Availability is at least 15% but less than 25% of the Pro Forma
and Projected Line Cap and the Pro Forma Consolidated Fixed Charge Coverage
Ratio is greater than 1.00 to 1.00 and (b) no Default or Event of Default shall
have occurred and be continuing (either before or immediately after giving
effect to such Investment); provided further, that Borrower shall give Agent
prompt notice of any such Investment in an amount greater than $25,000,000; and
provided further, that the provisions of this Section 7.10 shall not prohibit
the following:
               (a) Investments existing on the date of this Agreement and
disclosed on Schedule 7.10 to the Closing Compliance Certificate;
               (b) Investments in cash and Cash Equivalents;
               (c) Investments in payment intangibles, chattel paper (each as
defined in the Uniform Commercial Code) and Accounts, notes receivable and
similar items arising or acquired in the ordinary course of business consistent
with the past practice of the Group Members;
               (d) Investments received in settlement of amounts due to any
Group Member effected in the ordinary course of business;
               (e) Investments (i) among Credit Parties, (ii) among Qualified
Restricted Subsidiaries, (iii) among Restricted Subsidiaries that are not
Qualified Restricted Subsidiaries or Guarantors, (iv) from any Restricted
Subsidiary to any Credit Party, (v) by a Group Member in another Group Member in
connection with or arising from or under a Non-Domestic Restructuring and
(vi) from any Restricted Subsidiary to a Group Member in an aggregate amount not
to exceed $5,000,000 at any time outstanding;
               (f) Investments in respect of (i) Hedge Agreements permitted
under Section 7.18 and (ii) any note hedge transaction entered into in
connection with any issuance of Qualified Refinancing Indebtedness;
               (g) loans or advances to employees of the Borrower or any
Restricted Subsidiary in the ordinary course of business as presently conducted
other than any loans or advances that would be in violation of Section 402 of
the Sarbanes-Oxley Act; provided, however, that the aggregate principal amount
of all loans and advances permitted pursuant to this clause (g) shall not exceed
$10,000,000 at any time;
               (h) Obligations in respect of guarantees permitted by
Section 7.1;
               (i) Investments in connection with Permitted Acquisitions;

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               (j) Permitted Investments;
               (k) Investments consisting of contributions to joint ventures or
franchises of the Parent and its Restricted Subsidiaries in an aggregate amount
not to exceed $5,000,000 at any time outstanding;
               (l) solely to the extent that amounts hereunder are otherwise
unavailable, additional Investments in an aggregate amount not to exceed
$5,000,000 at any time; and
               (m) Investments permitted by Section 7.1(o).
     7.11 Transactions with Affiliates. Other than as set forth on Schedule 7.11
to the Closing Compliance Certificate or as necessary to effect a Non-Domestic
Restructuring, the Parent shall not, nor shall Parent permit Borrower or any
Restricted Subsidiary to effect any transaction with any of Parent’s respective
Affiliates (other than the Borrower or a Restricted Subsidiary) that is not a
Restricted Subsidiary on a basis less favorable to the Borrower or such
Restricted Subsidiary than would at the time be obtainable for a comparable
transaction in arms-length dealing with an unrelated third party; provided, that
such transaction is otherwise permitted hereunder.
     7.12 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
     7.13 Limitations on Restrictions on Subsidiary Distributions; No New
Negative Pledge
          Except pursuant to the Loan Documents and any agreements governing
Purchase Money Indebtedness or Capital Lease Obligations permitted by
Section 7.1(l) (in the case of agreements permitted by such clause, any
prohibition or limitation shall only be effective against the assets financed
thereby), the Parent shall not, and shall not permit the Borrower or any of the
Restricted Subsidiaries to, (a) agree to enter into or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of such Restricted Subsidiary to pay dividends or make any other distribution or
transfer of funds or assets or make loans or advances to or other Investments
in, or pay any Indebtedness owed to, the Borrower or any other Restricted
Subsidiary or (b) enter into or suffer to exist or become effective any
agreement prohibiting or limiting the ability of any Restricted Subsidiary,
other than customary provisions in Joint Venture agreements and other similar
agreements relating solely to the securities, assets and revenues of such Joint
Venture, to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, to secure
the Obligations, including

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any agreement requiring any other Indebtedness or Contractual Obligation to be
equally and ratably secured with the Obligations.
     7.14 Modification of Governing Documents
          Change its capital structure (including in the terms of its
outstanding Stock) or otherwise amend its Governing Documents, except (a) for
changes and amendments that do not materially affect the rights and privileges
of any Restricted Subsidiary and do not materially affect the interests of the
Secured Parties under the Loan Documents or in the Collateral and (b) as
necessary to effect a Non-Domestic Restructuring.
     7.15 Modification of Related Documents.
          Alter, rescind, terminate, amend, supplement, waive or otherwise
modify any provision of any Related Document (except (a) for modifications that
do not materially affect the rights and privileges of any Restricted Subsidiary
under such Related Document and that do not materially affect the interests of
the Secured Parties under the Loan Documents or in the Collateral and (b) as
necessary to effect a Non-Domestic Restructuring).
     7.16 Sales and Lease-Backs. Directly or indirectly, enter into or become
liable as lessee or as a guarantor or other surety with respect to any lease of
any property (whether real, personal or mixed), whether now owned or hereafter
acquired (a “Sale-Leaseback”), which such Credit Party (a) has sold or
transferred or is to sell or transfer to any other Person (other than a Credit
Party), or (b) intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by such Credit Party to
any Person (other than another Credit Party) in connection with such lease;
provided, however that a Credit Party may enter into Sale-Leasebacks not
involving the Collateral at market rates and subject to compliance with
Section 7.3(b)(iv) provided that the aggregate amount of such Sale-Leasebacks
since the Closing Date shall not exceed $30,000,000 (“Permitted
Sale-Leasebacks”). For the avoidance of doubt, Sale-Leasebacks that result in
Capital Leases shall be treated as Indebtedness for all purposes of this
Agreement.
     7.17 Minimum Fixed Charge Coverage Ratio
          At any time that a Covenant Triggering Period has occurred and is
continuing, Parent and its Restricted Subsidiaries shall have on a consolidated
basis at the end of each fiscal month, a Consolidated Fixed Charge Coverage
Ratio for the 12-month period then ended of not less than 1.0:1.0 (excluding,
solely for purposes of such computation, (i) any voluntary prepayment of Term
Loan Obligations, Senior Subordinated Notes or Qualified Refinancing
Indebtedness and (ii) the payment of the outstanding principal amount of the
Senior Subordinated Notes upon the stated maturity thereof, in each case as
otherwise permitted by Section 7.8 hereof).
     7.18 No Speculative Transactions

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          The Parent shall not, nor shall it permit any Restricted Subsidiary
to, engage in any speculative transaction or in any transaction involving Hedge
Agreements except for the sole purpose of hedging in the normal course of
business and consistent with industry practices; provided, for the avoidance of
doubt, the provisions of this Section 7.18 shall not apply to (a) any note hedge
transaction entered into in connection with the issuance of any Qualified
Refinancing Indebtedness, (b) any warrant transaction entered into concurrently
with any note hedge transaction described in clause (a) above, (c) any use of
derivative financial instruments to repurchase the common stock of the Parent or
(d) any use of derivative financial instruments in connection with the
acquisition of a controlling interest in another business entity, subject to
Sections 7.3 and 7.10 hereof.
8. EVENTS OF DEFAULT.
          Any one or more of the following events shall constitute an event of
default (each, an “Event of Default”) under this Agreement:
     8.1 If Borrower fails to pay (a) when due any installment of principal of
any Obligations, whether at stated maturity, by acceleration or otherwise,
(b) when due any amount payable to Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or (c) any interest on any Obligations or any
fee or any other amount due with respect to the Obligations within three (3)
Business Days after the date due;
     8.2 If Borrower:
               (a) fails to perform, keep, or observe any term, provision,
condition, covenant, or agreement contained in Sections 6.7(a), 6.11, and 7.1
through 7.18 of this Agreement;
               (b) fails or neglects to perform, keep, or otherwise observe any
term, provision, condition, covenant, or agreement contained in Sections 2.7(b),
2.7(g), 2.7(h), 2.7(i), 6.2 or 6.9 of this Agreement and such failure continues
for a period of 15 days; or
               (c) fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant, or agreement contained in this Agreement,
or in any of the other Loan Documents (giving effect to any grace periods, cure
periods, or required notices, if any, expressly provided for in such Loan
Documents), in each case, other than any such term, provision, covenant, or
agreement that is the subject of another provision of this Section 8 (in which
event such other provision of this Section 8 shall govern), and such failure
continues for a period of 30 days from the earlier of (a) a Responsible Officer
of the Borrower becoming aware of such failure or (b) notice thereof from Agent
or a Lender;

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     8.3 If any money judgment, writ or warrant of attachment or similar process
involving individually or in the aggregate, an amount in excess of $25,000,000
to the extent not adequately covered by insurance shall be entered or filed
against the Borrower, the Parent or any of the Restricted Subsidiaries or any of
their respective assets and shall remain unpaid, undischarged, unvacated,
unbonded or unstayed for a period of sixty (60) days;
     8.4 If an Insolvency Proceeding is commenced by Borrower, Parent or any of
the Restricted Subsidiaries or Borrower admits in writing its inability to, or
is generally unable to, pay its debts as such debts become due;
     8.5 If an Insolvency Proceeding is commenced against Borrower, Parent, or
any Restricted Subsidiary, and any of the following events occur: (a) Borrower,
Parent or such Restricted Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted; provided, however, that, during the
pendency of such period, each member of the Lender Group shall be relieved of
its obligations to extend credit hereunder, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
each member of the Lender Group shall be relieved of its obligations to extend
credit hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, Borrower, Parent or any Restricted
Subsidiary, or (e) an order for relief shall have been entered therein;
     8.6 If there is a default in one or more agreements to which Borrower,
Parent, or any Restricted Subsidiary is a party relative to Indebtedness of the
Borrower, Parent, or any Restricted Subsidiary having a principal amount in
excess of $25,000,000, or more, and such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
the obligations of the Borrower, Parent, or any Restricted Subsidiary thereunder
or to terminate such agreement;
     8.7 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Credit Party, or any officer, employee, agent, or director
of any Credit Party;
     8.8 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby; or
     8.9 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower, Parent, or any Restricted Subsidiary, or a proceeding
shall be commenced by Borrower, Parent, or any Restricted Subsidiary, or by any
Governmental Authority having

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jurisdiction over Borrower, Parent, or any Restricted Subsidiary, seeking to
establish the invalidity or unenforceability thereof, or Borrower, Parent, or
any Restricted Subsidiary shall deny that it has any liability or obligation
purported to be created under any Loan Document.
9. THE LENDER GROUP’S RIGHTS AND REMEDIES.
     9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by each Credit Party:
                    (a) Declare all Obligations (or any portion thereof),
whether evidenced by this Agreement, by any of the other Loan Documents, or
otherwise, immediately due and payable;
                    (b) Cease (or restrict) advancing money or extending credit
to or for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and the Lender Group;
                    (c) Upon notice to Borrower (except with respect to an Event
of Default under Sections 8.4 or 8.5, in which case no notice shall be
required), terminate this Agreement and any of the other Loan Documents as to
any future liability or obligation of the Lender Group, but without affecting
any of the Agent’s Liens in the Collateral and without affecting the
Obligations;
                    (d) Settle or adjust disputes and claims directly with any
Credit Party’s Account Debtors for amounts and upon terms which Agent considers
advisable, and in such cases, Agent will credit Borrower’s Loan Account with
only the net amounts received by Agent in payment of such disputed Accounts
after deducting all Lender Group Expenses incurred or expended in connection
therewith;
                    (e) Cause any Credit Party to hold all of its returned
Inventory in trust for the Lender Group and segregate all such Inventory from
all other assets of such Credit Party or in such Credit Party’s possession;
                    (f) Without notice to or demand upon any Credit Party, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Credit Party agrees to
assemble the Collateral if Agent so requires, and to make the Collateral
available to Agent at a place that Agent may designate which is reasonably
convenient to both parties. Each Credit Party authorizes Agent to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or

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compromise any Lien that in Agent’s determination appears to conflict with the
Agent’s Liens in and to the Collateral and to pay all expenses incurred in
connection therewith and to charge Borrower’s Loan Account therefor. With
respect to any of any Credit Party’s owned or leased premises, each Credit Party
hereby grants Agent a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of the Lender Group’s
rights or remedies provided herein, at law, in equity, or otherwise;
                    (g) Without notice to any Credit Party (such notice being
expressly waived), and without constituting an acceptance of any collateral in
full or partial satisfaction of an obligation (within the meaning of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
any Credit Party held by the Lender Group (including any amounts received in the
Cash Management Accounts), or (ii) Indebtedness at any time owing to or for the
credit or the account of any Credit Party held by the Lender Group;
                    (h) Hold, as cash collateral, any and all balances and
deposits of any Credit Party held by the Lender Group, and any amounts received
in the Cash Management Accounts, to secure the full and final repayment of all
of the Obligations;
                    (i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Each Credit Party hereby grants to Agent a non-exclusive
license or other right to use, without charge, such Credit Party’s instruments
and General Intangibles, including, without limitation, labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, merchandising systems, inventory locations, fixed assets or
any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and
such Credit Party’s rights under all licenses and all franchise agreements shall
inure to the Lender Group’s benefit;
                    (j) Sell the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including any Credit Party’s premises) as
Agent determines is commercially reasonable. It is not necessary that the
Collateral be present at any such sale;
                    (k) Agent shall give notice of the disposition of the
Collateral as follows:
     (i) Agent shall give Borrower on behalf of the Credit Parties, a notice in
writing of the time and place of public sale, or, if the sale is a private sale
or some other disposition other than a public sale is to be made of the

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Collateral, the time on or after which the private sale or other disposition is
to be made; and
     (ii) The notice shall be personally delivered or mailed, postage prepaid,
to Borrower as provided in Section 12, at least 10 days before the earliest time
of disposition set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Collateral that is perishable or threatens to
decline speedily in value or that is of a type customarily sold on a recognized
market;
                    (l) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale;
                    (m) Agent may seek the appointment of a receiver or keeper
to take possession of all or any portion of the Collateral or to operate same
and, to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing; and
                    (n) The Lender Group shall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document.
; provided, however, that upon the occurrence of any Event of Default described
in Section 8.4 or Section 8.5, in addition to the remedies set forth above,
without any notice to any Credit Party or any other Person or any act by the
Lender Group, the Commitments shall automatically terminate and the Obligations
then outstanding, together with all accrued and unpaid interest thereon and all
fees and all other amounts due under this Agreement and the other Loan
Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly
waived by each Credit Party.
     9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
          If any Credit Party fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then,

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Agent, in its sole discretion and without prior notice to Borrower, may do any
or all of the following: (a) make payment of the same or any part thereof,
(b) set up such Reserves in Borrower’s Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 6.7 hereof, obtain and maintain
insurance policies of the type described in Section 6.7 and take any action with
respect to such policies as Agent deems prudent. Any such amounts paid by Agent
shall constitute Lender Group Expenses and any such payments shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
     11.1 Demand; Protest; etc. Each Credit Party waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which each such Credit Party may in any way be liable.
     11.2 The Lender Group’s Liability for Collateral. Each Credit Party hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by the Credit
Parties.
     11.3 Indemnification. Each Credit Party shall jointly and severally pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons, and each Participant (each, an “Indemnified Person”) harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration (including
any restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of each Credit Party’s compliance with the terms of the Loan
Documents, and (b) with respect to any investigation, litigation, or proceeding
related to this Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any Indemnified

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Person is a party thereto), or any act, omission, event, or circumstance in any
manner related thereto (all the foregoing, collectively, the “Indemnified
Liabilities”). The foregoing to the contrary notwithstanding, no Credit Party
shall have any obligation to any Indemnified Person under this Section 11.3 with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence (as opposed to
negligence) or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which any
Credit Party was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by such Credit Party with respect thereto.
12. NOTICES.
          Unless otherwise provided in this Agreement, all notices or demands by
the Credit Parties or Agent to the other relating to this Agreement or any other
Loan Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to the Credit Parties or Agent, as the
case may be, at its address set forth below:

     
If to any Credit Party:
  COLLECTIVE BRANDS FINANCE, INC.
 
  3231 Southeast Sixth Avenue
 
  Topeka, Kansas 66607-2207
 
  Attn: General Counsel
 
  Fax No. (785) 368-7524
 
   
With a copy to:
  SULLIVAN & CROMWELL LLP
 
  1888 Century Park East, 21st Floor
 
  Los Angeles, California 90067
 
  Attn: Hydee Feldstein
 
  Fax No. (310) 712-8800
 
   
If to Agent:
  WELLS FARGO BANK, NATIONAL ASSOCIATION
 
  One Boston Place, 18th Floor
 
  Boston, Massachusetts, 02108
 
  Attn: Joseph Burt
 
  Fax No. (617) 523-4032
 
   
With a copy to:
  WINSTON & STRAWN LLP

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  35 West Wacker Drive
 
  Chicago, Illinois 60601
 
  Attn: Matthew D. O’Meara
 
  Fax No. (312) 558-7500

          Agent and any Credit Party may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Credit Party acknowledges and agrees that notices sent
by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
                    (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
                    (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK
COUNTY IN THE STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE
CREDIT PARTIES AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT

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ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
                    (c) EACH OF THE CREDIT PARTIES AND THE LENDER GROUP HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF THE
CREDIT PARTIES AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
     14.1 Assignments and Participations.
                    (a) Any Lender may assign and delegate to one or more
assignees (each an “Assignee”) that are Eligible Transferees all, or any ratable
part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount of $5,000,000; provided, however, that Borrower and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to Borrower
and Agent an Assignment and Acceptance, and (iii) the assignor Lender or
Assignee has paid to Agent for Agent’s separate account a processing fee in the
amount of $5,000. Anything contained herein to the contrary notwithstanding, the
payment of any fees shall not be required and the Assignee need not be an
Eligible Transferee if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of the assigning Lender.
                    (b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall,

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to the extent that rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (except with respect to Section 11.3 hereof) and be
released from any future obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between Borrower and the Assignee; provided,
however, that nothing contained herein shall release any assigning Lender from
obligations that survive the termination of this Agreement, including such
assigning Lender’s obligations under Article 16 and Section 17.8 of this
Agreement.
                    (c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto,
(3) such Assignee confirms that it has received a copy of this Agreement,
together with such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender 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,
(5) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement as are delegated to Agent, by the
terms hereof, together with such powers as are reasonably incidental thereto,
and (6) such Assignee agrees that it will perform all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
                    (d) Immediately upon Agent’s receipt of the required
processing fee payment and the fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.

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                    (e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a “Participant”) participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the “Originating Lender”) hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
“Lender” for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a “Lender” hereunder or under the other Loan
Documents and the Originating Lender’s obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would
(A) extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collections of any
Credit Party, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves. Notwithstanding the foregoing, for
purposes of Section 16.11, a Participant shall be treated as a Lender that is an
assignee of the Originating Lender.

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                    (f) In connection with any such assignment or participation
or proposed assignment or participation, a Lender may, subject to the provisions
of Section 18.8, disclose all documents and information which it now or
hereafter may have relating to Borrower and its Subsidiaries and their
respective businesses.
                    (g) Any other provision in this Agreement notwithstanding,
any Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement, including without
limitation, in favor of any Federal Reserve Bank in accordance with Regulation A
of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24 (and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law).
                    (h) Agent, acting solely for this purpose as an agent of
Borrower, shall maintain at one of its offices in the United States a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of each Lender, and the Revolving
Commitments of, and principal amount of the Advances owing to, such Lender
pursuant to the terms hereof. The entries in such register shall be conclusive,
and Borrower, Agent and Lenders may treat each Person whose name is recorded
therein pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. Such register shall be
available for inspection by Borrower and any Lender, at any reasonable time upon
reasonable prior notice to Agent.
     14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that no Credit Party may assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Credit Party from its Obligations. A Lender may assign this
Agreement and the other Loan Documents and its rights and duties hereunder and
thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Credit Party is
required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
     15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by any Credit Party therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by Agent at the
written request of the Required Lenders) and each Credit Party 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 such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
affected thereby and each Credit Party, do any of the following:

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                    (a) increase or extend any Commitment of any Lender,
                    (b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
                    (c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
                    (d) change the percentage of the Commitments that is
required to take any action hereunder,
                    (e) amend or modify this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
                    (f) release the Collateral other than as permitted by
Section 16.12,
                    (g) change the definition of “Required Lenders” or “Pro Rata
Share”,
                    (h) contractually subordinate any of the Agent’s Liens other
than with respect to a release of the Collateral otherwise permitted by
Section 16.12,
                    (i) release any Credit Party from any obligation for the
payment of money, other than, with respect to any Credit Party other than the
Parent, Borrower or Payless Missouri, as would be permitted with respect to a
release of the Collateral permitted by Section 16.12, or
                    (j) change the definition of Borrowing Base or the
definitions of Eligible Accounts, Eligible Inventory, Eligible In-Transit
Inventory, Eligible Landed Inventory, Maximum Revolver Amount, or change
Section 2.1(b) (provided that Agent’s establishment and adjustment of the
Reserves as permitted by Section 2.1(b) shall not be considered a change for
purposes of this Section 15.1(j)),
                    (k) amend any of the provisions of Section 16, or
                    (l) amend Section 7.14,
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the

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Lender Group among themselves, and that does not affect the rights or
obligations of any Credit Party, shall not require consent by or the agreement
of such Credit Party. For purposes of clarification, other than as required by
Section 2.2, no Lender consent will be required with respect to the Revolver
Increase (other than the requirement for any individual Lender to increase its
Commitment hereunder). Notwithstanding anything to the contrary herein, no
Deteriorating Lender or Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.
     15.2 Replacement of Holdout Lender.
                    (a) (i) If any action to be taken by the Lender Group or
Agent hereunder requires the unanimous consent, authorization, or agreement of
all Lenders, and a Lender fails to give its consent, authorization, or
agreement, (ii) if any Lender gives notice to Borrower pursuant to Section 2.14
or (iii) or if any Lender is a Defaulting Lender (in each case, a “Holdout
Lender”), then Borrower or Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a “Replacement Lender”), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
                    (b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance, subject only to the Holdout Lender being repaid its
share of the outstanding Obligations (including an assumption of its Pro Rata
Share of the Risk Participation Liability) without any premium or penalty of any
kind whatsoever. If the Holdout Lender shall refuse or fail to execute and
deliver any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender’s Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
     15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the

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extent specifically stated. No waiver by Agent or any Lender on any occasion
shall affect or diminish Agent’s and each Lender’s rights thereafter to require
strict performance by each Credit Party of any provision of this Agreement.
Agent’s and each Lender’s rights under this Agreement and the other Loan
Documents will be cumulative and not exclusive of any other right or remedy that
Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
     16.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints Wells Fargo as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 (other than Section 16.11 and the release
provisions in Section 16.12) are solely for the benefit of Agent, and the
Lenders, and the Credit Parties shall have no rights as a third party
beneficiary of any of the provisions contained herein. Any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word “Agent” is for
convenience only, that Wells Fargo is merely the representative of the Lenders,
and only has the contractual duties set forth herein. Except as expressly
otherwise provided in this Agreement, Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of each Credit Party, and
related matters, (b) execute or file any and all financing or similar statements
or notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents,
(c) make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
each Credit Party as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the

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Collections of each Credit Party, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to each Credit Party,
the Obligations, the Collateral, the Collections of each Credit Party, or
otherwise related to any of same as provided in the Loan Documents, and
(g) incur and pay such Lender Group Expenses as Agent may deem necessary or
appropriate for the performance and fulfillment of its functions and powers
pursuant to the Loan Documents.
     16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
     16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Credit Party, or any officer
or director thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Credit Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Books or properties of any Credit Party or the books or records or properties of
any Credit Party or its Affiliates.
     16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Credit
Party or counsel to any Lender), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting,

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under this Agreement or any other Loan Document in accordance with a request or
consent of the requisite Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.
     16.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.” Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
     16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of any
Credit Party or its Affiliates, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of each
Credit Party and any other Person party to a Loan Document, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to Borrower.
Each Lender also represents that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of each Credit Party and any other
Person party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agent and
the Borrowing Base Certificate, Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of

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any Credit Party and any other Person party to a Loan Document that may come
into the possession of any of the Agent-Related Persons.
     16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not any Credit Party is obligated to
reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of each Credit Party received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses from the Collections of each Credit Party received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender’s Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of any Credit Party and without limiting the obligation of any Credit
Party to do so), according to their Pro Rata Shares, from and against any and
all Indemnified Liabilities; provided, however, that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person’s gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender’s Pro Rata Share of any costs or out-of-pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of a Credit Party. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
     16.8 Agent in Individual Capacity. Wells Fargo and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with any Credit Party and
its Affiliates and any other Person party to any Loan Documents as though Wells
Fargo were not Agent hereunder, and, in each case, without notice to or consent
of the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, Wells Fargo or

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its Affiliates may receive information regarding any Credit Party or its
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of such Credit Party or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver Agent will use its reasonable
best efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms “Lender” and “Lenders” include Wells Fargo in its
individual capacity.
     16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders and Borrower. If Agent resigns under this Agreement, the Required
Lenders shall, in consultation with Borrower, appoint a successor Agent for the
Lenders. If no successor Agent is appointed and shall have accepted such
appointment prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders and Borrower, a successor Agent. If
Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders chosen
in consultation with Borrower. In any such event (whether an appointment by
Agent or by the Required Lenders) described in the two immediately preceding
sentences, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term “Agent” shall mean such successor Agent and the
retiring Agent’s appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
     16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with any
Credit Party and its Affiliates and any other Person party to any Loan Documents
as though such Lender were not a Lender hereunder without notice to or consent
of the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding any Credit Party or its Affiliates
and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of such Credit Party or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver such Lender will use its
reasonable best efforts to obtain), such Lender not shall be under any
obligation to provide

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such information to them. With respect to the Swing Loans and Agent Advances,
Swing Lender shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the sub-agent of
Agent.
     16.11 Withholding Taxes.
                    (a) If any Lender is a “foreign person” within the meaning
of the IRC and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees with
and in favor of Agent and Borrower, to deliver to Agent and Borrower:
     (i) if such Lender claims an exemption from withholding tax pursuant to its
portfolio interest exception, (A) a statement of the Lender, signed under
penalty of perjury, that it is not a (I) a “bank” as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower (within the
meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to Borrower within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN, before the first
payment of any interest under this Agreement to the Lender and at any other time
reasonably requested by Agent or Borrower;
     (ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed and
executed IRS Form W-8BEN before the first payment of any interest to the Lender
under this Agreement and at any other time reasonably requested by Agent or
Borrower;
     (iii) if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form W-8ECI before the first payment of any interest
to the Lender is due under this Agreement and at any other time reasonably
requested by Agent or Borrower; and
     (iv) such other form or forms as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding tax, as reasonably requested by Agent or Borrower at
times reasonably requested by Agent or Borrower.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
                    (b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and

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such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrower to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrower to such Lender. To the extent of such
percentage amount, Agent will treat such Lender’s IRS Form W-8BEN as no longer
valid.
                    (c) Subject to Section 16.11(e), if any Lender is entitled
to a reduction in the applicable withholding tax, Agent may withhold from any
interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not delivered to
Agent, then Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
                    (d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
                    (e) All payments made by Borrower hereunder or under any
note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). To the
extent permitted by applicable law, all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction (other than the United States) or
by any political subdivision or taxing authority thereof or therein (other than
of the United States) with respect to such payments (but excluding, (x) any tax
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein (i) measured by or based on the net income or net profits of
a Lender, or (ii) to the extent that such tax results from a change in the
circumstances of the Lender, including a change in the residence, place of
organization, or principal place of business of the Lender, or a change in the
branch or lending office of the Lender participating in the transactions set
forth herein and (y) any U.S. federal withholding tax imposed under FATCA) and
all interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees,

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assessments or other charges being referred to collectively as “Taxes”). If any
Taxes are so levied or imposed, Borrower agrees to pay the full amount of such
Taxes, and such additional amounts as may be necessary so that every payment of
all amounts due under this Agreement or under any note, including any amount
paid pursuant to this Section 16.11(e) after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein;
provided, however, that Borrower shall not be required to increase any such
amounts payable to Agent or any Lender (i) that is not organized under the laws
of the United States, if such Person fails to comply with the other requirements
of this Section 16.11, (ii) if the increase in such amount payable results from
Agent’s or such Lender’s own willful misconduct or gross negligence or (iii) as
provided in Section 16.11(f). Borrower will furnish to Agent as promptly as
possible after the date the payment of any Taxes is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by Borrower.
                    (f) Notwithstanding anything in this Section 16.11, Borrower
will not be required to make payments under this Section 16.11 (including any
increased payments under Section 16.11(e)) with respect to taxes that are
imposed on amounts payable to the Lender at the time the Lender becomes a party
to this Agreement (or designates a new lending office outside the United
States), except to the extent that such Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from Borrower with respect to such withholding tax
pursuant to Section 16.11.
                    (g) If any payment by the Borrower is made to or for the
account of the Lender after deduction for or on account of any Taxes, and
increased payments are made by Borrower pursuant to this Section 16.11, then, if
the Lender reasonably determines that it has received or been granted a refund
of, credit against or remission of such Taxes, such Lender shall reimburse to
Borrower such amount as such Lender shall determine to be attributable to the
relevant Taxes or deduction or withholding; provided, that (i) such Lender shall
not be obligated to disclose to Borrower any information regarding its tax
affairs and computations, and (ii) nothing herein shall be construed so as to
interfere with the right of such Lender to arrange its tax affairs as it deems
appropriate. If the Lender reasonably determines that a refund or credit is
disallowed or reduced, Borrower shall promptly reimburse the Lender to the
extent of such disallowance or reduction (and any interest paid to any
applicable taxing authority).
     16.12 Collateral Matters.
                    (a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion (it being understood that such release shall
be mandatory under the circumstances described in clauses (ii) and

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(iv) below if no Event of Default has occurred and is continuing at the time of
such circumstances described in clause (ii) and (iv) below), to release any Lien
on any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Obligations, (ii) constituting property
being sold or disposed of if a release is required or desirable in connection
therewith and if Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.3 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry) in
which case Agent shall release such Collateral at the request of Borrower,
(iii) constituting property in which no Credit Party owned any interest at the
time the Agent’s Lien was granted nor at any time thereafter, or
(iv) constituting property leased to any Credit Party under a lease that has
expired or is terminated in a transaction permitted under this Agreement. Except
as provided above, Agent will not execute and deliver a release of any Lien on
any Collateral without the prior written authorization of (y) if the release is
of all or substantially all of the Collateral, all of the Lenders, or
(z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any
time, the Lenders will confirm in writing Agent’s authority to release any such
Liens on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent’s opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of any Credit Party in respect of) all interests retained
by each Credit Party, including, the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
                    (b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by a Credit Party or is
cared for, protected, or insured or has been encumbered, or that the Agent’s
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent’s own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
     16.13 Restrictions on Actions by Lenders; Sharing of Payments.
                    (a) Each of the Lenders agrees that it shall not, without
the express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to

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do so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to Borrower or any deposit accounts of any Credit
Party now or hereafter maintained with such Lender. Each of the Lenders further
agrees that it shall not, unless specifically requested to do so in writing by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.
                    (b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of the Collateral or
any payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender’s ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
     16.14 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent’s Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession or control. Should any Lender
obtain possession or control of any such Collateral, such Lender shall notify
Agent thereof, and, promptly upon Agent’s request therefor shall deliver
possession or control of such Collateral to Agent or in accordance with Agent’s
instructions.
     16.15 Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, or interest of the Obligations.
     16.16 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other

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Loan Documents. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
     16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
                    (a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a “Report” and collectively, “Reports”) prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
                    (b) expressly agrees and acknowledges that each of Agent and
Borrower (i) do not make any representation or warranty as to the accuracy of
any Report, and (ii) shall not be liable for any information contained in any
Report, except with respect to Borrower to the extent that it has supplied
materially false or misleading information contained in any Report,
                    (c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding the
applicable Credit Party and will rely significantly upon the Books, as well as
on representations of such Credit Party’s personnel,
                    (d) agrees to keep all Reports and other material,
non-public information regarding each Credit Party and its operations, assets,
and existing and contemplated business plans in a confidential manner in
accordance with Section 18.8, and
                    (e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to any
Credit Party, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a loan or loans of any Credit Party, and (ii) to pay and
protect, and indemnify, defend and hold Agent, and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including, attorneys fees and
costs) incurred by Agent and any such other Lender preparing a Report as the
direct

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or indirect result of any third parties who might obtain all or part of any
Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by any Credit Party to Agent that has not been
contemporaneously provided by such Credit Party to such Lender, and, upon
receipt of such request, Agent promptly shall provide a copy of same to such
Lender, (y) to the extent that Agent is entitled, under any provision of the
Loan Documents, to request additional reports or information from any Credit
Party, any Lender may, from time to time, reasonably request Agent to exercise
such right as specified in such Lender’s notice to Agent, whereupon Agent
promptly shall request of such Credit Party the additional reports or
information reasonably specified by such Lender, and, upon receipt thereof from
Borrower, Agent promptly shall provide a copy of same to such Lender, and
(z) any time that Agent renders to such Credit Party a statement regarding the
Loan Account, Agent shall send a copy of such statement to each Lender.
     16.18 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Credit Party or any other Person for any
failure by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
     16.19 Defaulting or Deteriorating Lender.
                    (a) If for any reason any Lender shall become a Defaulting
Lender or shall fail or refuse to abide by its obligations under this Agreement,
including without limitation its obligation to fund its Pro Rata Share of any
Advances, expenses or setoff or purchase a participation interest in the Swing
Loans and such failure is not cured within one (1) Business Day after receipt
from the Agent of written notice thereof, then, in addition to the rights and
remedies that may be available to the other

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Credit Parties or any other party at law or in equity, and not at limitation
thereof, (i) such Defaulting Lender’s right to participate in the administration
of, or decision-making rights related to, the Obligations, this Agreement or the
other Loan Documents shall be suspended during the pendency of such failure or
refusal, (ii) at the Borrower’s option and to the extent permitted by applicable
law, any prepayment of the Loans, whether on account of outstanding Advances,
interest, fees or otherwise, shall be applied to the Obligations of the
non-Defaulting Lenders as if such Defaulting Lender had no outstanding
Obligations, and (iii) any Defaulting Lender hereunder shall not be entitled to
accrue or be paid any fees or interest (whether on account of principal or
otherwise) on account of any of its Obligations for so long as such Defaulting
Lender is in default. The Defaulting Lender’s decision-making and participation
rights and rights to payments as set forth in clauses (i), (ii) and
(iii) hereinabove shall be restored only upon the payment by the Defaulting
Lender of its Pro Rata Share of any Obligations, any participation obligation,
or expenses as to which it is delinquent, together with interest thereon at the
Defaulting Lender Rate from the date when originally due until the date upon
which any such amounts are actually paid.
                    (b) The non-Defaulting Lenders shall also have the right,
but not the obligation, in their respective, sole and absolute discretion, to
cause the termination and assignment, without any further action by the
Defaulting Lender for no cash consideration (pro rata, based on the respective
Commitments of those Lenders electing to exercise such right), of the Defaulting
Lender’s Commitment to fund future Advances. Upon any such purchase of the Pro
Rata Share of any Defaulting Lender, the Defaulting Lender’s share in future
Advances and its rights under the Loan Documents with respect thereto shall
terminate on the date of purchase, and the Defaulting Lender shall promptly
execute all documents reasonably requested to surrender and transfer such
interest, including, if so requested, an Assignment and Acceptance; provided,
however, that any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender Groups’ or any
Credit Party’s rights or remedies against any such Defaulting Lender arising out
of or in relation to such failure to fund.
                    (c) Each Defaulting Lender shall indemnify the Agent and
each non-Defaulting Lender from and against any and all loss, damage or
expenses, including but not limited to reasonable attorneys’ fees and funds
advanced by the Agent or by any non-Defaulting Lender, on account of a
Defaulting Lender’s failure to timely fund its Pro Rata Share of an Advance or
to otherwise perform its obligations under the Loan Documents.
                    (d) If any outstanding Swing Loans or Letters of Credit
exist at the time a Lender becomes a Defaulting Lender then:

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     (A) all or any part of such outstanding Swing Loans or Letters of Credit
shall be reallocated among the non-Defaulting Lenders in accordance with their
respective Pro Rata Shares but only to the extent (x) the sum of all
non-Defaulting Lenders’ outstanding Advances plus such Defaulting Lender’s
outstanding Swing Loans and Letters of Credit does not exceed the total of all
non-Defaulting Lenders’ Revolver Commitment and (y) the conditions set forth in
Section 3.3 are satisfied at such time; and
     (B) if the reallocation described in paragraph (A) above cannot, or can
only partially be effected, the Borrower shall within one Business Day following
notice by the Agent (x) first, prepay such Defaulting Lender’s outstanding Swing
Loans (after giving effect to any partial reallocation pursuant to paragraph
(A) above) and (y) second, cash collateralize such Defaulting Lender’s
outstanding Letters of Credit (after giving effect to any partial reallocation
pursuant to paragraph (A) above) in accordance with the terms hereof and for so
long as any such Letters of Credit are outstanding;
     (C) if the Borrower cash collateralizes any portion of such Defaulting
Lender’s outstanding Letters of Credit, the Borrower shall not be required to
pay any fees to such Defaulting Lender pursuant to Section 2.6(b) during the
period such Defaulting Lender’s outstanding Letters of Credit are cash
collateralized;
     (D) if the outstanding Letters of Credit of the non-Defaulting Lenders are
reallocated pursuant to this Section 16.19(d), then the fees payable to the
Lenders pursuant to Sections 2.6(b) and 2.12(e) shall be adjusted in accordance
with such non-Defaulting Lenders’ Pro Rata Share; or
     (E) if any Defaulting Lender’s outstanding Letters of Credit are not cash
collateralized, prepaid or reallocated pursuant to this Section 16.19(d) then,
without prejudice to any rights or remedies of the Issuing Lender or any Lender
hereunder, all facility fees that otherwise would have been payable to such
Defaulting Lender (solely with respect to the portion of such Defaulting
Lender’s Revolver Commitment that was utilized by such outstanding Letters of
Credit) and letter of credit fees payable under Section 2.6(b) with respect to
such Defaulting Lender’s outstanding Letters of Credit shall be payable to the
Issuing Lender until such Defaulting Lender’s outstanding Letters of Credit are
cash collateralized.

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                    (e) So long as any Lender is a Defaulting Lender, no Swing
Lender and no Issuing Lender shall be required to issue, extend, create, incur,
amend or increase any Letter of Credit unless it is satisfied that the related
exposure will be 100% covered by the Revolver Commitment of the non-Defaulting
Lenders and/or cash collateral will be provided by the Borrower in accordance
with Section 16.19(d), and participating interests in any such newly issued,
extended or created Letter of Credit or newly made Swing Loan shall be allocated
among non-Defaulting Lenders in a manner consistent with Section 16.19(d)(A)
(and Defaulting Lenders shall not participate therein).
                    (f) This Section shall remain effective with respect to such
Defaulting Lender until (x) the Obligations under this Agreement shall have been
declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and the Credit Parties shall have waived such
Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes its
Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by any Credit Party of its duties and obligations hereunder to Agent or to the
Lenders other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting Lender
of this Agreement.
     16.20 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Winston & Strawn
LLP (“Winston”) only has represented and only shall represent Wells Fargo in its
capacity as Agent and as a Lender. Each other Lender hereby acknowledges that
Winston does not represent it in connection with any such matters.
17. GUARANTY.
     17.1 Guaranty of the Obligations. Subject to the provisions of
Section 17.2, Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty to Agent for the ratable benefit of the Lender Group
the due and punctual payment in full of all Obligations when the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. Section 362(a)) (collectively, the “Guaranteed Obligations”).
     17.2 Contribution by Guarantors. All Guarantors desire to allocate among
themselves (collectively, the “Contributing Guarantors”), in a fair and
equitable manner, their obligations arising under this Guaranty. Accordingly, in
the event any payment or

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distribution is made on any date by a Guarantor (a “Funding Guarantor”) under
this Guaranty that exceeds its Fair Share as of such date, such Funding
Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the amount of such other Contributing Guarantor’s
Fair Share Shortfall as of such date, with the result that all such
contributions will cause each Contributing Guarantor’s Aggregate Payments to
equal its Fair Share as of such date. “Fair Share” means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to
(a) the ratio of (i) the Fair Share Contribution Amount with respect to such
Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution
Amounts with respect to all Contributing Guarantors multiplied by (b) the
aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the Guaranteed Obligations. “Fair
Share Shortfall” means, with respect to a Contributing Guarantor as of any date
of determination, the excess, if any, of the Fair Share of such Contributing
Guarantor over the Aggregate Payments of such Contributing Guarantor. “Fair
Share Contribution Amount” means, with respect to a Contributing Guarantor as of
any date of determination, the maximum aggregate amount of the obligations of
such Contributing Guarantor under this Guaranty that would not render its
obligations hereunder or thereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any comparable applicable provisions of state law; provided, solely for
purposes of calculating the “Fair Share Contribution Amount” with respect to any
Contributing Guarantor for purposes of this Section 17.2, any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Contributing Guarantor. “Aggregate Payments” means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to
(a) the aggregate amount of all payments and distributions made on or before
such date by such Contributing Guarantor in respect of this Guaranty (including,
without limitation, in respect of this Section 17.2), minus (b) the aggregate
amount of all payments received on or before such date by such Contributing
Guarantor from the other Contributing Guarantors as contributions under this
Section 17.2. The amounts payable as contributions hereunder shall be determined
as of the date on which the related payment or distribution is made by the
applicable Funding Guarantor. The allocation among Contributing Guarantors of
their obligations as set forth in this Section 17.2 shall not be construed in
any way to limit the liability of any Contributing Guarantor hereunder. Each
Guarantor is a third party beneficiary to the contribution agreement set forth
in this Section 17.2.
     17.3 Payment by Guarantors. Subject to Section 17.2, Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any member of the Lender Group may have at
law or in equity against any Guarantor by virtue hereof, that upon the failure
of Borrower to pay any of the Guaranteed Obligations when and as the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11

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U.S.C. Section 362(a)), Guarantors will upon demand pay, or cause to be paid, in
cash, to Agent for the ratable benefit of the Lender Group, an amount equal to
the sum of the unpaid principal amount of all Guaranteed Obligations then due as
aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including
interest which, but for Borrower’s becoming the subject of a case under the
Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or
not a claim is allowed against Borrower for such interest in the related
bankruptcy case) and all other Guaranteed Obligations then owed to the Lender
Group as aforesaid.
     17.4 Liability of Guarantors Absolute. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
                    (a) this Guaranty is a guaranty of payment when due and not
of collectability. This Guaranty is a primary obligation of each Guarantor and
not merely a contract of surety;
                    (b) Agent may enforce this Guaranty upon the occurrence of
an Event of Default notwithstanding the existence of any dispute between
Borrower and any member of the Lender Group with respect to the existence of
such Event of Default;
                    (c) the obligations of each Guarantor hereunder are
independent of the obligations of Borrower and the obligations of any other
guarantor (including any other Guarantor) of the obligations of Borrower, and a
separate action or actions may be brought and prosecuted against such Guarantor
whether or not any action is brought against Borrower or any of such other
guarantors and whether or not Borrower is joined in any such action or actions;
                    (d) payment by any Guarantor of a portion, but not all, of
the Guaranteed Obligations shall in no way limit, affect, modify or abridge any
Guarantor’s liability for any portion of the Guaranteed Obligations which has
not been paid. Without limiting the generality of the foregoing, if Agent is
awarded a judgment in any suit brought to enforce any Guarantor’s covenant to
pay a portion of the Guaranteed Obligations, such judgment shall not be deemed
to release such Guarantor from its covenant to pay the portion of the Guaranteed
Obligations that is not the subject of such suit, and such judgment shall not,
except to the extent satisfied by such Guarantor, limit, affect, modify or
abridge any other Guarantor’s liability hereunder in respect of the Guaranteed
Obligations;
                    (e) Any member of the Lender Group, upon such terms as it
deems appropriate, without or demand and without affecting the validity or

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enforceability hereof or giving rise to any reduction, limitation, impairment,
discharge or termination of any Guarantor’s liability hereunder, from time to
time may (i) renew, extend, accelerate, increase the rate of interest on, or
otherwise change the time, place, manner or terms of payment of the Guaranteed
Obligations; (ii) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guaranteed
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations; (iii) request and accept other
guaranties of the Guaranteed Obligations and take and hold security for the
payment of the Guaranteed Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of the Guaranteed
Obligations, any other guaranties of the Guaranteed Obligations, or any other
obligation of any Person (including any other Guarantor) with respect to the
Guaranteed Obligations; (v) enforce and apply any security now or hereafter held
by or for the benefit of such member of the Lender Bank Group in respect hereof
or the Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that such member of the Lender Bank Group may
have against any such security, in each case as such member of the Lender Bank
Group in its discretion may determine consistent herewith and any applicable
security agreement, including foreclosure on any such security pursuant to one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, and even though such action operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of any Guarantor against Borrower or any security for the Guaranteed
Obligations; and (vi) exercise any other right available to it under the Loan
Documents; and
                    (f) this Guaranty and the obligations of Guarantors
hereunder shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any reason
(other than payment in full of the Guaranteed Obligations), including the
occurrence of any of the following, whether or not any Guarantor shall have had
notice or knowledge of any of them: (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy (whether
arising under the Loan Documents or at law, in equity or otherwise) with respect
to the Guaranteed Obligations or any agreement relating thereto, or with respect
to any other guaranty of or security for the payment the Guaranteed Obligations
(ii) any rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including provisions relating to
events of default) hereof, any of the other Loan Documents, or any agreement or
instrument executed pursuant thereto, or of any other guaranty or security for
the Guaranteed Obligations, in each case whether or not in accordance with the
terms hereof or such Loan Document, or any agreement relating to such other
guaranty or security; (iii) the Guaranteed Obligations

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or any agreement relating thereto, at any time being found to be illegal invalid
or unenforceable in any respect; (iv) the application of payments received from
any source (other than payments received pursuant to the other Loan Documents or
from the proceeds of any security for the Guaranteed Obligations, except to the
extent such security also serves as collateral for Indebtedness other than the
Guaranteed Obligations) to the payment of Indebtedness other than the Guarantee
Obligations, even though any member of the Lender Group might have elected to
apply such payment to any part or all of the Guaranteed Obligations; (v) any
member of the Lender Group’s consent to the change, reorganization or
termination of the corporate structure or existence of any Credit Party and to
any corresponding restructuring of the Guaranteed Obligations; (vi) any failure
to perfect or continue perfection of a security interest in any collateral which
secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or
counterclaims which Borrower may allege or assert against any member of the
Lender Group in respect of the Guaranteed Obligations, including failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury; and (viii) any other act or
thing or omission, or delay to do any other act or thing, which may or might in
any manner or to any extent vary the risk of any Guarantor as an obligor in
respect of the Guaranteed Obligations.
     17.5 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit
of the Lender Group: (a) any right to require any member of the Lender Group, as
a condition of payment or performance by such Guarantor, to (i) proceed against
Borrower, any other guarantor (including any other Guarantor) of the Guaranteed
Obligations or any other Person, (ii) proceed against or exhaust any security
held from Borrower, any such other guarantor or any other Person, (iii) proceed
against or have resort to any balance of any Deposit Account or credit on the
books of any member of the Lender Group in favor of Borrower or any other
Person, or (iv) pursue any other remedy in the power of any member of the Lender
Group whatsoever; (b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Borrower or any other Guarantor
including any defense based on or arising out of the lack of validity or the
unenforceability of the Guaranteed Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of Borrower or
any other Guarantor from any cause other than payment in full of the Guaranteed
Obligations; (c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (d) any defense based
upon any member of the Lender Group’s errors or omissions in the administration
of the Guaranteed Obligations, except behavior which amounts to bad faith; (e)
(i) any principles or provisions of law, statutory or otherwise, which are or
might be in conflict with the terms hereof and any legal or equitable discharge
of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of
limitations affecting such Guarantor’s liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims, and
(iv) promptness, diligence and any requirement that any member of the Lender
Group protect, secure, perfect or insure any security interest or lien or any
property subject thereto; (f) notices, demands,

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presentments, protests, notices of protest, notices of dishonor and notices of
any action or inaction, including acceptance hereof, notices of default
hereunder, or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Guaranteed Obligations or any
agreement related thereto, notices of any extension of credit to Borrower and
notices of any of the matters referred to in Section 17.4 and any right to
consent to any thereof; and (g) any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms hereof.
     17.6 Guarantors’ Rights of Subrogation, Contribution, Etc. Until the
Guaranteed Obligations shall have been indefeasibly paid in full and the
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled, each Guarantor hereby waives any claim, right or remedy,
direct or indirect, that such Guarantor now has or may hereafter have against
Borrower or any other Guarantor or any of its assets in connection with this
Guaranty or the performance by such Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute, under common law or otherwise and including without limitation
(a) any right of subrogation, reimbursement or indemnification that such
Guarantor now has or may hereafter have against Borrower with respect to the
Guaranteed Obligations, (b) any right to enforce, or to participate in, any
claim, right or remedy that any member of the Lender Group now has or may
hereafter have against Borrower, and (c) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by any member
of the Lender Group. In addition, until the Guaranteed Obligations shall have
been indefeasibly paid in full and the Commitments shall have terminated and all
Letters of Credit shall have expired or been cancelled, each Guarantor shall
withhold exercise of any right of contribution such Guarantor may have against
any other guarantor (including any other Guarantor) of the Guaranteed
Obligations, including, without limitation, any such right of contribution as
contemplated by Section 17.2. Each Guarantor further agrees that, to the extent
the waiver or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against Borrower or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights any member of the Lender Group may have
against Borrower, to all right, title and interest any member of the Lender
Group may have in any such collateral or security, and to any right any member
of the Lender Group may have against such other guarantor. If any amount shall
be paid to any Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all Guaranteed
Obligations shall not have been finally and indefeasibly paid in full, such
amount shall be held in trust for Agent on behalf of the Lender Group and shall
forthwith be paid over to Agent for the benefit of the Lender Group to be
credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms hereof.

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     17.7 Subordination Of Other Obligations. Any Indebtedness of Borrower or
any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”)
is hereby subordinated in right of payment to the Guaranteed Obligations, and
any such indebtedness collected or received by the Obligee Guarantor after an
Event of Default has occurred and is continuing shall be held in trust for Agent
on behalf of the Lender Group and shall forthwith be paid over to Agent for the
benefit of the Lender Group to be credited and applied against the Guaranteed
Obligations but without affecting, impairing or limiting in any manner the
liability of the Obligee Guarantor under any other provision hereof.
     17.8 Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guaranteed Obligations shall have been finally
and indefeasibly paid in full and the Commitments shall have terminated and all
Letters of Credit shall have expired or been cancelled. Each Guarantor hereby
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guaranteed Obligations.
     17.9 Authority of Guarantors or Borrower. It is not necessary for any
member of the Lender Group to inquire into the capacity or powers of any
Guarantor or Borrower or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
     17.10 Financial Condition of Borrower. Any Advance may be made to Borrower
or continued from time to time, and any other agreements relating to the
Obligations may be entered into from time to time, in each case without notice
to or authorization from any Guarantor regardless of the financial or other
condition of Borrower at the time of any such grant or continuation or at the
time such other agreement is entered into, as the case may be. No member of the
Lender Group shall have any obligation to disclose or discuss with any Guarantor
its assessment, or any Guarantor’s assessment, of the financial condition of
Borrower. Each Guarantor has adequate means to obtain information from Borrower
on a continuing basis concerning the financial condition of Borrower and its
ability to perform its obligations under the Loan Documents and each Guarantor
assumes the responsibility for being and keeping informed of the financial
condition of Borrower and of all circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and
relinquishes any duty on the part of any member of the Lender Group to disclose
any matter, fact or thing relating to the business, operations or conditions of
Borrower now known or hereafter known by any member of the Lender Group.
     17.11 Bankruptcy, Etc.
                    (a) The obligations of Guarantors hereunder shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
case or proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement of Borrower
or any other Guarantor or by any defense which Borrower or any other Guarantor
may have by reason of the order, decree or decision of any court or
administrative body resulting from any such proceeding.

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                    (b) Each Guarantor acknowledges and agrees that any interest
on any portion of the Guaranteed Obligations which accrues after the
commencement of any case or proceeding referred to in clause (a) above (or, if
interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of such case or proceeding, such
interest as would have accrued on such portion of the Guaranteed Obligations if
such case or proceeding had not been commenced) shall be included in the
Guaranteed Obligations because it is the intention of Guarantors and the Lender
Group that the Guaranteed Obligations which are guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of law or order
which may relieve Borrower of any portion of such Guaranteed Obligations.
Guarantors will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay
Agent, or allow the claim of Agent in respect of, any such interest accruing
after the date on which such case or proceeding is commenced.
                    (c) In the event that all or any portion of the Guaranteed
Obligations are paid by Borrower, the obligations of Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from any member of the Lender Group as a
preference, fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Guaranteed Obligations for all purposes
hereunder.
18. GENERAL PROVISIONS.
     18.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by each Credit Party, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
     18.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
     18.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or the Credit
Parties, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
     18.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

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     18.5 Amendments in Writing. This Agreement only can be amended by a writing
signed by Agent (on behalf of the requisite Lenders pursuant to Section 15.1)
and each Credit Party.
     18.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
     18.7 Revival and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by any Credit Party or the transfer to the Lender Group of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of such Credit
Party automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made.
     18.8 Confidentiality. The Agent and the Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding any Credit Party, its operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, who are advised about the confidentiality of such information
(b) to Subsidiaries and Affiliates of any member of the Lender Group, provided
that any such Subsidiary or Affiliate shall have agreed to receive such
information hereunder subject to the terms of this Section 18.8 or similar
confidentiality agreement, (c) as may be required by statute, decision, or
judicial or administrative order, rule, or regulation (with prompt notice to
Borrower so that Borrower may seek a protective order or other appropriate
remedy and/or waive Agent’s or any Lender’s compliance with the provisions of
this Section 18.8), (d) as may be agreed to in advance by such Credit Party or
as requested or required by any Governmental Authority pursuant to any subpoena
or other legal process regulation (with prompt notice to Borrower

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so that Borrower may seek a protective order or other appropriate remedy and/or
waive Agent’s or any Lender’s compliance with the provisions of this Section
18.8), (e) as to any such information that is or becomes generally available to
the public (other than as a result of prohibited disclosure by or on behalf of
Agent or the Lenders), (f) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participations,
or pledge or prospective pledge of any Lender’s interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall have agreed in writing to receive such information hereunder subject to
the terms of this Section, and (g) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents; provided, that the disclosing party
shall use its best efforts to ensure that such documents are filed under seal.
The provisions of this Section 18.8 shall survive the payment in full of the
Obligations. Anything contained herein or in any other Loan Document to the
contrary notwithstanding, the obligations of confidentiality contained herein
and therein, as they relate to the transactions contemplated hereby, shall not
apply to the federal tax structure or federal tax treatment of such
transactions, and each party hereto (and any employee, representative, or agent
of any party hereto) may disclose to any and all Persons, without limitation of
any kind, the federal tax structure and federal tax treatment of such
transactions (including all written materials related to such tax structure and
tax treatment). The preceding sentence is intended to cause the transactions
contemplated hereby to not be treated as having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
IRC, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the tax structure of the transactions contemplated hereby or any tax
matter or tax idea related thereto.
     18.9 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
     18.10 USA Patriot Act Notice
          . Each Lender that is subject to the Act (as hereinafter defined) and
the Agent (for itself and not on behalf of any Lender) hereby notifies the
Credit Parties that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”),
it is required to obtain, verify and record information that identifies each
Credit Party, which information includes the name and address of each Credit
Party and other information that will allow such Lender or the Agent, as
applicable, to identify each Credit Party in accordance with the Patriot Act.
Each Credit Party is in compliance, in all material respects, with the Patriot
Act. No part of the proceeds of the

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Loans will be used by the Credit Parties, directly or indirectly, for any
payments to any governmental official or employee, political party, official of
a political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.
     18.11 Foreign Asset Control Regulations
     . The use of the proceeds of any Loan will not violate the Trading With the
Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”)
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets
Control Regulations”) or any enabling legislation or executive order relating
thereto (which for the avoidance of doubt shall include, but shall not be
limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore,
none of the Group Members (a) is or will become a “blocked person” as described
in the Executive Order, the Trading With the Enemy Act or the Foreign Assets
Control Regulations or (b) engages or will engage in any dealings or
transactions, or be otherwise associated, with any such “blocked person” or in
any manner violative of any such order.
     18.12 Collateral Reporting.
Borrower shall provide Agent with the following documents at the following times
in form reasonably satisfactory to Agent:
                    (a) Borrowing Base Certificate. On a quarterly basis within
20 Business Days of the end of each of Borrower’s fiscal quarters for the
immediately preceding fiscal quarter; provided, however, that during any
Reporting Triggering Period the deliveries required by this clause (a) shall be
on a monthly basis, not later than fifteen Business Days from the fiscal month
end, Borrower shall provide to Agent a signed borrowing base certificate based
on the most recent completed fiscal month, in form as approved by Agent and
including a detailed calculation of the Borrowing Base (including detail
regarding those Accounts of the Credit Parties that are not Eligible Accounts)
in the form of Exhibit M to this Agreement (a “Borrowing Base Certificate”);
provided, further, that, during any Reporting Triggering Period where Excess
Availability is less than or equal to $50,000,000, Agent may request such
borrowing base certificate (or any component thereof) on a more frequent basis
as Agent may determine in its Permitted Discretion and Borrower shall use its
commercially reasonable efforts to provide such information on a basis more
frequently than monthly. Such certificate may be sent to Agent electronically
(with an electronic signature) or by facsimile transmission, provided, that in
each case, upon request by

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Agent, the original thereof is forwarded to Agent on the date of such
transmission. No adjustments to the borrowing base certificate may be made
without supporting documentation and such other documentation as may be
reasonably requested by Agent from time to time.
                    (b) Borrowing Base Certificate Supporting Documents. At any
such time as Borrower shall deliver a Borrowing Base Certificate to Agent
pursuant to subsection (a) above, Borrower shall provide to Agent each of the
following documents in support thereof:
          (i) the store stock ledger and warehouse stock ledger reports of the
Credit Parties;
          (ii) a summary report of the in-transit Inventory of the Credit
Parties;
          (iii) a report of the gift card balances from the general ledger; and
          (iv) a report of the Credit Card Receivables of the Credit Parties.
                    (c) Additional Documentation. In addition to subsections
(a) and (b) above, Agent may, in its Permitted Discretion, from time to time
require Borrower to deliver to Agent any of the following documents:
          (i) a detailed aging, by total, of the Inventory of the Credit
Parties, together with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent;
          (ii) additional supporting documentation for the Borrowing Base
Collateral as may be available, including copies of invoices in connection with
Credit Parties’ Accounts, credit memos, remittance advices, deposit slips,
shipping and delivery documents in connection with Credit Parties’ Accounts and,
for Inventory acquired by any Credit Party, purchase orders and invoices;
          (iii) a detailed aging, by total, of the Accounts of the Credit
Parties, together with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent;
          (iv) Inventory reports specifying the cost and the retail value of
Inventory, by category, with additional detail showing additions to and
deletions therefrom;
          (v) “flash sales report”;
          (vi) reconciliation of the stock ledger to the general ledger; and

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     (vii) such other reports or documents as to the Collateral or the financial
condition of the Credit Parties, as reasonably requested by Agent.
     18.13 Amendment and Restatement.
                    (a) On the Closing Date, the Prior Loan Agreement shall be
amended, restated and superseded in its entirety. The parties hereto acknowledge
and agree that (i) this Agreement and the Loan Documents executed and delivered
in connection herewith do not constitute a novation, payment and reborrowing, or
termination of the “Obligations” (as defined in the Prior Loan Agreement) under
the Prior Loan Agreement as in effect prior to the Closing Date; (ii) such
“Obligations” are in all respects continuing with only the terms thereof being
modified as provided in this Agreement; (iii) the Liens as granted under the
Collateral Documents securing payment of such “Obligations” are in all respects
continuing and in full force and effect and secure the payment of the
Obligations (as defined in this Agreement) and are hereby fully ratified and
affirmed; and (iv) upon the effectiveness of this Agreement all loans and
letters of credit outstanding under the Prior Loan Agreement immediately before
the effectiveness of this Agreement will be part of the Loans and Letters of
Credit hereunder on the terms and conditions set forth in this Agreement.
Without limitation of the foregoing, each of Borrower and each other Credit
Party hereby fully and unconditionally ratifies and affirms all Collateral
Documents and agrees that all Collateral granted under the Prior Loan Agreement
shall from and after the Closing Date secure all Obligations hereunder.
                    (b) Notwithstanding the modifications effected by this
Agreement of the representations, warranties and covenants of the Credit Parties
contained in the Prior Loan Agreement, each of Borrower and each other Credit
Party acknowledges and agrees that any causes of action or other rights created
in favor of any Lender and its successors arising out of the representations and
warranties of any Credit Party contained in or delivered (including
representations and warranties delivered in connection with the making of the
loans or other extensions of credit thereunder) in connection with the Prior
Loan Agreement or any other Loan Document executed in connection therewith shall
survive the execution and delivery of this Agreement; provided, that the
Obligations under the other Loan Documents shall also continue in full force and
effect including, without limitation, the Obligations of each Credit Party
pursuant to the Guaranty.
                    (c) All indemnification obligations of each Credit Party
pursuant to the Prior Loan Agreement (including any arising from a breach of the
representations and warranties thereunder) shall survive the amendment and
restatement of the Prior Loan Agreement pursuant to this Agreement.

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                    (d) On and after the Closing Date, each reference in the
Loan Documents to the “Loan Agreement”, “thereunder”, “thereof” or similar words
referring to the Loan Agreement shall mean and be a reference to this Agreement.
[Signature pages to follow]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.

           
AGENT:

WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Agent and as a Lender
      By:   /s/ Joseph Burt         Name:   Joseph Burt        Title:  
Director     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            SIEMENS FINANCIAL SERVICES, INC.,
as a Lender
      By:  /s/ Anthony Casciano         Name:   Anthony Casciano        Title:  
Managing Director              By:   /s/ Paul Ramseur         Name:   Paul
Ramseur        Title:   Vice President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            JPMORGAN CHASE BANK, N.A.,
as Documentation Agent and a Lender
      By:   /s/ Bradford Kuhn         Name:   Bradford Kuhn        Title:   Vice
President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            BANK OF AMERICA, N.A.,
as Syndication Agent and a Lender
      By:   /s/ Roger Malouf         Name:   Roger Malouf        Title:   Vice
President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            PNC BANK, NATIONAL ASSOCIATION,
as a Lender
      By:   /s/ John Wenzinger         Name:   John Wenzinger        Title:  
Vice President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            CREDIT PARTIES:

COLLECTIVE BRANDS FINANCE, INC.,
as Borrower
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President and Treasurer       
COLLECTIVE BRANDS, INC., a Delaware
corporation, as Parent
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief
Financial Officer and Treasurer        COLLECTIVE LICENSING, LP,
a Delaware limited partnership

By:Payless Collective GP, LLC, its Managing Member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        COLLECTIVE LICENSING INTERNATIONAL,
LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        DYELIGHTS, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            PAYLESS COLLECTIVE GP, LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PAYLESS NYC, INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PAYLESS PURCHASING SERVICES, INC.,

a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer       
PAYLESS SHOESOURCE DISTRIBUTION,
INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PAYLESS SHOESOURCE GOLD VALUE,
INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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PAYLESS SHOESOURCE LEASING, LLC,
a Delaware limited liability company

By: Payless ShoeSource, Inc., its sole member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief
Financial Officer and Treasurer        PAYLESS SHOESOURCE
MERCHANDISING, INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PAYLESS SHOESOURCE WORLDWIDE,
INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief
Financial Officer and Treasurer        PAYLESS SHOESOURCE, INC.,
a Missouri corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief
Financial Officer and Treasurer        PSS CANADA, INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            PSS DELAWARE COMPANY 2, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        COLLECTIVE BRANDS SERVICES, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PSS DELAWARE COMPANY 4, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PSS INVESTMENT I, INC.,
a Nevada corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PSS INVESTMENT III, INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        ROBEEZ LOGISTICS INC.,
a Nevada corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            ROBEEZ US HOLDINGS INC.,
a Nevada corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        ROBEEZ U.S., INC.,
a Washington corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SAUCONY UK, INC.,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SAUCONY, INC.,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SAUCONY/ECOM, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SHOE SOURCING, INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            SPERRY TOP-SIDER, LLC,
a Massachusetts limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SR HOLDINGS, LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        STRIDE RITE INTERNATIONAL CORP.,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SR/ECOM, INC.,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SRCG LLC,
a Delaware limited liability company

By: Stride Rite Investment Corporation, its sole member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SRCG/ECOM, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            SRL, LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SRR, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        STRIDE RITE CHILDREN’S GROUP, LLC,
a Massachusetts limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        STRIDE RITE INTERNATIONAL LLC,
a Delaware limited liability company

By: Saucony UK, Inc., its sole member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        STRIDE RITE INVESTMENT
CORPORATION,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        PAYLESS CUSTOMER SERVICE
SOLUTION, LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            STRIDE RITE SOURCING
INTERNATIONAL, INC.,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        STS/ECOM, INC.,
a Delaware corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        KEDS, LLC,
a Massachusetts limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        TOMMY HILFIGER FOOTWEAR, LLC,
a Massachusetts limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        KEDS SERVICES, LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        EASTBOROUGH, INC.,
a Kansas corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            PSS US INVESTMENTS, LP,
a Nevada limited partnership
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        PSS US HOLDINGS, LLC,
a Nevada limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        COLLECTIVE BRANDS, LLC,
a Kansas limited liability company

By: Payless ShoeSource Worldwide, Inc., its sole        member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief
Financial Officer and Treasurer        COLLECTIVE BRANDS FRANCHISING
SERVICES, LLC,
a Kansas limited liability company

By: Payless ShoeSource Worldwide, Inc., its sole        member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief Financial Officer and Treasurer 
   

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            PAYLESS INTERNATIONAL
FRANCHISING, LLC,
a Kansas limited liability company

By: Payless ShoeSource Worldwide, Inc., its sole member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Division Senior Vice President — Chief
Financial Officer and Treasurer        COLLECTIVE BRANDS INTERNATIONAL
FRANCHISING, LLC,
a Kansas limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        COLLECTIVE INDONESIA
FRANCHISING, LLC,
a Kansas limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        CLINCH, LLC,
a Delaware limited liability company
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President and Treasurer        COLLECTIVE BRANDS PERFORMANCE +
LIFESTYLE GROUP CANADA
DISTRIBUTION, LLC,
a Kansas limited liability company

By:Stride Rite Canada Limited, its sole member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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            SAUCONY CORPORATE SERVICES, LLC,
a Massachusetts limited liability company

By: Stride Rite Investment Corporation, its sole
member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        SPERRY TOP-SIDER CORPORATE
SERVICES, LLC,
a Massachusetts limited liability company

By: Stride Rite Investment Corporation, its sole
member
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President        THE STRIDE RITE CORPORATION,
a Massachusetts corporation
      By:   /s/ Douglas G. Boessen         Name:   Douglas G. Boessen       
Title:   Vice President     

Signature Page to Second Amended and Restated Loan and Guaranty Agreement

 

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EXHIBIT A-1
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
     This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is
entered into as of between ________________, a ___________ ____________
(“Assignor”), and ________________, a ___________ ____________ (“Assignee”).
Reference is made to the agreement described in Annex I annexed hereto (the
“Loan Agreement”). Capitalized terms used herein and in Annex I and not
otherwise defined shall have the meanings ascribed to them in the Loan
Agreement.
     1. In accordance with the terms and conditions of the Loan Agreement,
Assignor hereby sells and assigns to Assignee, and Assignee hereby purchases and
assumes from Assignor, solely that interest in and to Assignor’s rights and
obligations under the Loan Documents as of the date hereof with respect to
Assignor’s amount, portion and share of the Revolver Commitment [and/or
Obligations]1 as specified in Annex I. After giving effect to such sale and
assignment, Assignee’s amount, portion and share of the Revolver Commitment
[and/or Obligations]1 will be as set forth in Annex I.
     2. Assignor (a) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (b) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any other instrument or document furnished pursuant
thereto; and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under the Loan Documents or any other instrument or document furnished pursuant
thereto.
     3. Assignee (a) confirms that it has received copies of the Loan Agreement
and the other Loan Documents, together with copies of the financial statements
referred to therein and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement; (b) agrees that it will, independently and without
reliance upon Agent, Assignor, or any other Lender, based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents;
(c) confirms that it is eligible as an assignee under the terms of the Loan
Agreement; (d) appoints and authorizes Agent to take such action as Agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (e) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.
     4. Following the execution of this Assignment Agreement by the Assignor
 

1   To be modified by Agent as applicable with respect to any assignment of
Obligations separate from assignment of Revolver Commitments.

 

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and Assignee, it will be delivered by the Assignor to the Agent for
(i) recording by the Agent and (ii) delivery by the Agent of a copy thereof to
Borrower. The effective date of this Assignment (the “Settlement Date”) shall be
the later of (a) the date of the execution hereof by the Assignor and the
Assignee, the payment by Assignor or Assignee to Agent for Agent’s sole and
separate account a processing fee in the amount of $5,000, and the receipt of
any required consent of the Agent [and Borrower]2, and (b) the date specified in
Annex I.
     5. Upon recording by Agent, as of the Settlement Date and pursuant to the
terms of the Loan Agreement (a) Assignee shall be a party to the Loan Agreement
and, to the extent of the interest assigned pursuant to this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under the
other Loan Documents, and (b) Assignor shall, to the extent of the interest
assigned pursuant to this Assignment Agreement, relinquish its rights and be
released from its obligations under the Loan Agreement and the other Loan
Documents.
     6. Upon recording by Agent, from and after the Settlement Date, Agent shall
make all payments under the Loan Agreement and the other Loan Documents in
respect of the interest assigned hereby to Assignee. On the Settlement Date,
Assignee shall pay to Assignor the Purchase Price (as set forth in Annex I).
Assignor and Assignee shall make all appropriate adjustments in payments under
the Loan Agreement and the other Loan Documents for periods prior to the
Settlement Date directly between themselves on the Settlement Date.
     7. This Assignment Agreement may be executed in counterparts and by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument. This Assignment Agreement may be executed and delivered
by telecopier or other facsimile transmission all with the same force and effect
as if the same were a fully executed and delivered original manual counterpart.
     8. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Remainder of page left intentionally blank.]
 

2   Include only if Borrower has right of approval pursuant to Loan Agreement.

 

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          IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement and Annex I hereto to be executed by their respective officers as of
the first date written above.

            [ASSIGNOR] __________________________,
a as Assignor    

                  By:           Name:           Title:        

            [ASSIGNEE] __________________________,
a as Assignee    

                  By:           Name:           Title:        

ACCEPTED THIS _____ DAY OF _______, ____
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Agent

            By:           Name:           Title:        

[COLLECTIVE BRANDS FINANCE, INC.
as Borrower

            By:           Name:           Title:      ] 2    

 

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ANNEX I
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT

1.   Borrower: Collective Brands Finance, Inc.   2.   Name and Date of Loan
Agreement:

      Second Amended and Restated Loan and Guaranty Agreement, dated as of
August 16, 2011, as amended, restated, supplemented or otherwise modified from
time to time, among Borrower, the other Credit Parties from time to time party
thereto, the lenders from time to time Party thereto (the “Lenders”), Wells
Fargo Bank, National Association, as administrative agent for the Lenders and
Wells Fargo Capital Finance, LLC, as sole lead arranger and sole bookrunner.

         
3.
  Date of Assignment Agreement:    
 
      ________
 
       
4.
  Amounts:    
 
       
 
  a. Assigned Amount of the [Revolver Commitment]3   $______
 
       
 
  b. Assignee’s Resulting [Revolver Commitment]3   $______
 
       
5.
  Purchase Price   $______
 
       
6.
  Settlement Date:   ________
 
       
7.
  Notice and Payment Instructions, etc.    

         
 
  Assignee:   Assignor:
 
       
 
  Wiring Instructions:   Wiring Instructions:

 

3   To be modified by Agent as applicable with respect to any assignment of
Obligations separate from assignment of Revolver Commitments.

 

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8.   Agreed and Accepted:

             
 
  [ASSIGNEE] _____________       [ASSIGNOR] _____________
 
  a ________, as Assignee       a _________, as Assignor
 
           
 
  By:

      By:

 
         Name:

             Name:

 
         Title:

             Title:

Accepted:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent

            By:           Name:         Title:     

 

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EXHIBIT C-l
(Form of Compliance Certificate)
[on Borrower’s letterhead]

     
To:
  Wells Fargo Bank, National Association
One Boston Place
18th Floor
Boston, Massachusetts 02108
Attn: Joseph Burt

             
 
  Re:   Compliance Certificate dated _________________

Ladies and Gentlemen:
     Reference is made to that certain Second Amended and Restated Loan and
Guaranty Agreement, dated as of August 16, 2011 (the “Loan Agreement”), among
Collective Brands Finance, Inc., a Nevada corporation (“Borrower”), the other
credit parties signatory thereto (together with Borrower, the “Credit Parties”)
the lenders signatory thereto (the “Lenders”), and Wells Fargo Bank, National
Association, as the administrative agent for the Lenders (“Agent”). Capitalized
terms used in this Compliance Certificate have the meanings set forth in the
Loan Agreement unless specifically defined herein.
     Pursuant to Section 6.3 of the Loan Agreement, the undersigned chief
financial officer of Borrower hereby certifies that:
     1. Such officer has reviewed the terms of the Loan Agreement and has made,
or caused to be made under his/her supervision, a review in reasonable detail of
the transactions and condition of Borrower during the accounting period covered
by the financial statements delivered pursuant to Section 6.3 of the Loan
Agreement (with respect to which this Compliance Certificate is being
delivered).
     2. The financial information of Parent and its Subsidiaries furnished in
Schedule 1 attached hereto has been prepared in accordance with GAAP (except for
the lack of footnotes and being subject to quarterly and year-end audit
adjustments) and fairly presents in all material respects the financial
condition of Parent and its Subsidiaries.
     3. There does not exist any condition or event that constitutes an Event of
Default, Reporting Triggering Period or Dominion Triggering Period, except for
such conditions or events listed on Schedule 2 attached hereto (specifying the
nature and period of existence thereof and what action Borrower and/or the
applicable Credit Party has taken, is taking, or proposes to take with respect
thereto).
     4. The representations and warranties of each Credit Party contained in the
Loan Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof, as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date).
     5. The calculations used by the undersigned in determining the Consolidated
Fixed

 

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Charge Coverage Ratio as of the date hereof are set forth on Schedule 3 hereto.
     [6. The Minimum Fixed Charge Covered Ratio of the Parent and its Restricted
Subsidiaries measured as of the month ended _________, ____ is ____:1.00 which
ratio [is/is not] less than the Minimum Fixed Charge Coverage Ratio set forth in
Section 7.17 of the Loan Agreement.]4
 

4   This Paragraph 6 and the calculations and certification required hereunder
shall only be included in this Compliance Certificate at such time that a
Covenant Triggering Period has occurred and is continuing.

 

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          IN WITNESS WHEREOF, this Compliance Certificate is executed by the
undersigned this __ day of _________, 20_.

            COLLECTIVE BRANDS
FINANCE, INC., as Borrower
      By:           Name:           Title:        

Signature Page to Compliance Certificate

 

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SCHEDULE 1
TO COMPLIANCE CERTIFICATE
[Attach Financial Statements]

 

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

 

SCHEDULE 2
TO COMPLIANCE CERTIFICATE
[Include required information relating to Events of Default, Reporting
Triggering
Period or Dominion Triggering Period]

 

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

 

SCHEDULE 3
TO COMPLIANCE CERTIFICATE
[Attach Calculation of Consolidated Fixed Charge Coverage Ratio]

 

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EXHIBIT C-2
(Form of Closing Date Compliance Certificate)
[on Borrower’s letterhead]

To:   Wells Fargo Bank, National Association
One Boston Place
18th Floor
Boston, Massachusetts 02108
Attn: Joseph Burt

Re:   Compliance Certificate dated August 16, 2011

Ladies and Gentlemen:
     Reference is made to that certain Second Amended and Restated Loan and
Guaranty Agreement, dated as of August 16, 2011 (the “Loan Agreement”), among
Collective Brands Finance, Inc., a Nevada corporation (“Borrower”), the other
credit parties signatory thereto (together with Borrower, the “Credit Parties”)
the lenders signatory thereto (the “Lenders”), and Wells Fargo Bank, National
Association, as the administrative agent for the Lenders (“Agent”). Capitalized
terms used in this Compliance Certificate have the meanings set forth in the
Loan Agreement unless specifically defined herein.
     Pursuant to Section 6.3 of the Loan Agreement, the undersigned chief
financial officer of Borrower hereby certifies that:
     1. Such officer has reviewed the terms of the Loan Agreement and has made,
or caused to be made under his/her supervision, a review in reasonable detail of
the transactions and condition of Borrower during the accounting period covered
by the financial statements delivered pursuant to Section 6.3 of the Loan
Agreement (with respect to which this Compliance Certificate is being
delivered).
     2. The financial information of Parent and its Subsidiaries furnished in
Schedule 1 attached hereto has been prepared in accordance with GAAP (except for
the lack of footnotes and being subject to quarterly and year-end audit
adjustments) and fairly presents in all material respects the financial
condition of Parent and its Subsidiaries.
     3. There does not exist any condition or event that constitutes an Event of
Default, Reporting Triggering Period or Dominion Triggering Period, except for
such conditions or events listed on Schedule 2 attached hereto (specifying the
nature and period of existence thereof and what action Borrower and/or the
applicable Credit Party has taken, is taking, or proposes to take with respect
thereto).
     4. The representations and warranties of each Credit Party contained in the
Loan Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof, as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date).
     5. The calculations used by the undersigned in determining the Consolidated
Fixed

 

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Charge Coverage Ratio as of the date hereof are set forth on Schedule 3 hereto.
     6. Attached hereto are the schedules required to be delivered pursuant to
the Loan Agreement all of which are true and correct as of the date hereof.
     7. [The Minimum Fixed Charge Covered Ratio of the Parent and its Restricted
Subsidiaries measured as of the month ended _________, ____ is ____:1.00 which
ratio [is/is not] less than the Minimum Fixed Charge Coverage Ratio set forth in
Section 7.17 of the Loan Agreement.]5
 

5   This Paragraph 6 and the calculations and certification required hereunder
shall only be included in this Compliance Certificate at such time that a
Covenant Triggering Period has occurred and is continuing.

 

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

 

     IN WITNESS WHEREOF, this Compliance Certificate is executed by the
undersigned this __ day of _________, 20.

            COLLECTIVE BRANDS FINANCE, INC., as Borrower
      By:           Name:           Title:        

Signature Page to Compliance Certificate

 

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SCHEDULE 1
TO CLOSING DATE COMPLIANCE CERTIFICATE
[Attach Financial Statements]

 

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

 

SCHEDULE 2
TO CLOSING DATE COMPLIANCE CERTIFICATE
[Include required information relating to Events of Default, Reporting
Triggering
Period or Dominion Triggering Period]

 

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

 

SCHEDULE 3
TO CLOSING DATE COMPLIANCE CERTIFICATE
[Attach Calculation of Consolidated Fixed Charge Coverage Ratio]

 

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

 

SCHEDULE 4
TO CLOSING DATE COMPLIANCE CERTIFICATE
[Attach Schedules]

 

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EXHIBIT G
FORM OF PLEDGE AND SECURITY AGREEMENT

 

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

 

PLEDGE AND SECURITY AGREEMENT
Dated as of August 17, 2007
among
Collective Brands Finance, Inc.
as a Grantor
and
Each Other Grantor
From Time to Time Party Hereto
and
Wells Fargo Retail Finance, LLC
as Administrative Agent

 

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           Pledge and Security Agreement, dated as of August 17, 2007, by
Collective Brands Finance, Inc., a Nevada corporation (formerly known as Payless
ShoeSource Finance, Inc.) (the “Borrower”), and each of the other entities
listed on the signature pages hereof or that becomes a party hereto pursuant to
Section 7.10 (Additional Grantors) (each a “Grantor” and, collectively, the
“Grantors”), in favor of Wells Fargo Retail Finance, LLC (“WFRF”), as agent (in
such capacity, the “Administrative Agent”) for the Secured Parties (as defined
below).
W i t n e s s e t h:
          Whereas, pursuant to the Amended and Restated Loan and Guaranty
Agreement, dated as of August 17, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”),
among the Borrower, the Guarantors party thereto, the Lenders party thereto and
WFRF, as agent for the Lenders, the Lenders have severally agreed to make
extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;
          Whereas, the Grantors other than the Borrower are Guarantors under the
Loan Agreement, whereby they have guaranteed the Obligations of the Borrower;
and
          Whereas, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Loan
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent;
          Now, Therefore, in consideration of the premises and to induce the
Lenders and the Administrative Agent to enter into the Loan Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent as follows:
     ARTICLE I Defined Terms
          Section 1.1 Definitions
          (a) Unless otherwise defined herein, terms defined in the Loan
Agreement and used herein have the meanings given to them in the Loan Agreement.
          (b) Terms used herein without definition that are defined in the UCC
have the meanings given to them in the UCC, including the following terms (which
are capitalized herein):
          “Account Debtor”
          “Account”
          “Certificated Security”
          “Chattel Paper”
          “Commercial Tort Claim”
          “Commodity Account”
          “Control Account”
          “Deposit Account”
          “Documents”
          “Entitlement Holder”

1

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Pledge and Security Agreement
Collective Brands Finance, Inc.
          “Entitlement Order”
          “Equipment”
          “Financial Asset”
          “General Intangible”
          “Goods”
          “Instruments”
          “Inventory”
          “Investment Property”
          “Letter-of-Credit Right”
          “Proceeds”
          “Securities Account”
          “Securities Intermediary”
          “Security”
          “Security Entitlement”
          (c) The following terms shall have the following meanings:
          “Additional Pledged Collateral” means any Pledged Collateral acquired
by any Grantor after the date hereof and in which a security interest is granted
pursuant to Section 2.2 (Grant of Security Interest in Collateral), including,
to the extent a security interest is granted therein pursuant to Section 2.2
(Grant of Security Interest in Collateral), (i) all Stock and Stock Equivalents
of any Person that are acquired by any Grantor after the date hereof, together
with all certificates, instruments or other documents representing any of the
foregoing and all Security Entitlements of any Grantor in respect of any of the
foregoing, (ii) all additional Indebtedness from time to time owed to any
Grantor by any obligor on the Pledged Debt Instruments and the Instruments
evidencing such Indebtedness and (iii) all interest, cash, Instruments and other
property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any of the foregoing. “Additional
Pledged Collateral” may be General Intangibles, Instruments or Investment
Property.
          “Agreement” means this Pledge and Security Agreement.
          “Approved Securities Intermediary” means a “securities intermediary”
or “commodity intermediary” (as such terms are defined in the UCC) selected or
approved by the Administrative Agent.
          “Collateral” has the meaning specified in Section 2.1 (Collateral).
          “Collateral Agents” means the Administrative Agent, in its capacity as
collateral agent for the Secured Parties, and the Term Agent, in its capacity as
collateral agent to the Term Facility Secured Parties.
          “Copyright Licenses” means any written agreement naming any Grantor as
licensor or licensee granting any right under any Copyright, including the grant
of any right to copy, publicly perform, create derivative works, manufacture,
distribute, exploit or sell materials derived from any Copyright.
          “Copyrights” means (a) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof and all applications in

2

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Pledge and Security Agreement
Collective Brands Finance, Inc.
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any foreign counterparts thereof,
and (b) the right to obtain all renewals thereof.
          “Deposit Account Control Agreement” means a letter agreement,
substantially in the form of Annex 1 (Form of Deposit Account Control Agreement)
(with such changes as may be agreed to by the Administrative Agent), executed by
the Grantor, the Administrative Agent and the relevant financial institution.
          “Domestic Person” means any “United States person” under and as
defined in Section 7701(a)(30) of the IRC.
          “Excluded Equity” means any Voting Stock in excess of 66% of the total
outstanding Voting Stock of any direct Subsidiary of any Grantor that is a
Non-U.S. Person. For the purposes of this definition, “Voting Stock” means, as
to any issuer, the issued and outstanding shares of each class of capital stock
or other ownership interests of such issuer entitled to vote (within the meaning
of Treasury Regulations § 1.956-2(c)(2)).
          “Excluded Property” means, collectively, (i) Excluded Equity, (ii) any
lease, license, contract, property right or agreement to which any Grantor is a
party or any of its rights or interests thereunder if and to the extent that a
security interest is prohibited by or in violation of (a) any Requirement of Law
applicable to such Grantor, or (b) a term, provision or condition of or under,
any such lease, license, contract, property right or agreement (unless in either
clause (a) or (b) above such law, rule or regulation or such term, provision or
condition would be rendered unenforceable against the Loans pursuant to
Sections 9-406, 9-407, or 9-408 of the applicable UCC), (iii) any “intent to
use” Trademark applications for which a statement of use has not been filed (but
only until such statement is filed), (iv) Equipment owned by any Grantor that is
subject to a purchase money Lien or a Capital Lease if the contract or other
agreement in which such Lien is granted (or in the documentation providing for
such Capital Lease) prohibits or requires the consent of any Person other than
the Borrower and its Affiliates as a condition to the creation of any other Lien
on such Equipment, (v) any assets of any Unrestricted Subsidiary or any assets
of or equity interests in any of an Unrestricted Subsidiary’s direct or indirect
subsidiaries, and (vi) any assets of any Immaterial Subsidiary that is not a
Credit Party; provided, however, “Excluded Property” shall not include any
Proceeds, substitutions or replacements of Excluded Property (unless such
Proceeds, substitutions or replacements would constitute Excluded Property).
          “Intellectual Property” means, collectively, all rights, priorities
and privileges of any Grantor relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses, trade secrets and Internet domain names, and all rights to sue at law
or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
          “Intercompany Note” means any promissory note evidencing loans made by
any Grantor or any of its Subsidiaries to any of its Subsidiaries or another
Grantor.
          “Intercreditor Agreement” means that certain Intercreditor Agreement,
dated as of the date hereof among the Administrative Agent, the Term Agent, the
Borrower and the other Credit Parties, and any amendments thereto.

3

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Pledge and Security Agreement
Collective Brands Finance, Inc.
          “LLC” means each limited liability company in which a Grantor has an
interest, including those set forth on Schedule 2 (Pledged Collateral).
          “LLC Agreement” means each operating agreement with respect to a LLC,
as each agreement has heretofore been, and may hereafter be, amended, restated,
supplemented or otherwise modified from time to time.
          “Material Intellectual Property” means trademark rights in the
Trademarks “Payless ShoeSource”, “Airwalk”, “Stride Rite”, “Keds”, “Sperry” and
“Saucony”, in each case as they relate to footwear or retail shoe store services
in the United States and Canada and such other Intellectual Property owned by or
licensed to a Grantor the loss or impairment of which would reasonably be
expected to have a Material Adverse Effect.
          “Non-U.S. Person” means any Person that is not a Domestic Person.
          “Partnership” means each partnership in which a Grantor has an
interest, including those set forth on Schedule 2 (Pledged Collateral).
“Partnership Agreement” means each partnership agreement governing a
Partnership, as each such agreement has heretofore been, and may hereafter be,
amended, restated, supplemented or otherwise modified.
          “Patents” means (a) all letters patent of the United States, any other
country or any political subdivision thereof and all reissues and extensions
thereof, (b) all applications for letters patent of the United States or any
other country and all divisionals, continuations and continuations-in-part
thereof and (c) all rights to obtain any reissues, continuations or
continuations-in-part of the foregoing.
          “Patent License” means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, have
manufactured, use, import, sell or offer for sale any invention covered in whole
or in part by a Patent.
          “Pledged Certificated Stock” means all Certificated Securities and any
other Stock and Stock Equivalent of a Person (other than Excluded Equity)
evidenced by a certificate, Instrument or other equivalent document, in each
case owned by any Grantor, including all Stock listed on Schedule 2 (Pledged
Collateral). “Pledged Collateral” means, collectively, the Pledged Stock,
Pledged Debt Instruments, any other Investment Property of any Grantor, all
chattel paper, certificates or other Instruments representing any of the
foregoing and all Security Entitlements of any Grantor in respect of any of the
foregoing. Pledged Collateral may be General Intangibles, Instruments or
Investment Property. For the purposes of this Agreement the term “Pledged
Collateral” shall not include any Excluded Property.
          “Pledged Debt Instruments” means all right, title and interest of any
Grantor in Instruments evidencing any Indebtedness owed to such Grantor (other
than Excluded Property), including all Indebtedness described on Schedule 2
(Pledged Collateral), issued by the obligors named therein.

4

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Pledge and Security Agreement
Collective Brands Finance, Inc.
          “Pledged Stock” means all Pledged Certificated Stock and all Pledged
Uncertificated Stock. For purposes of this Agreement, the term “Pledged Stock”
shall not include any Excluded Equity.
          “Pledged Uncertificated Stock” means any Stock or Stock Equivalent of
any Person that is not a Pledged Certificated Stock or that is not Excluded
Equity, including all right, title and interest of any Grantor as a limited or
general partner in any Partnership or as a member of any LLC and all right,
title and interest of any Grantor in, to and under any Partnership Agreement or
LLC Agreement to which it is a party.
          “Secured Obligations” means, in the case of the Borrower, the
Obligations and, in the case of any other Credit Party, the obligations of such
Credit Party incurred pursuant to the Guaranty under the Loan Agreement and
pursuant to the other Loan Documents to which it is a party.
          “Secured Parties” means the Lenders, the Administrative Agent and any
other holder of any Secured Obligation.
          “Securities Account Control Agreement” means a letter agreement,
substantially in the form of Annex 2 (Form of Securities Account Control
Agreement) (with such changes as may be agreed to by the Administrative Agent),
executed by the relevant Grantor, the Administrative Agent and the relevant
Approved Securities Intermediary.
          “Securities Act” means the Securities Act of 1933, as amended.
          “Senior Collateral Transition Date” has the meaning set forth in the
Intercreditor Agreement.
          “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.
          “Term Agent” means Citicorp North America, Inc., in its capacity as
administrative agent under the Term Loan Agreement.
          “Term Facility Secured Parties” shall mean the “Lenders” (as defined
in the Term Loan Agreement) and the Term Agent.
          “Term Loan Agreement” means that certain Term Loan Agreement, dated as
of August 17, 2007 by and among the Borrower, Collective Brands, Inc., the
lenders party thereto and the Term Agent.
          “Term Loan Security Agreement” means that certain Pledge and Security
Agreement, dated as of August 17, 2007 by and among the Borrower, each other
Grantor party thereto from time to time and the Term Agent.
          “Trademark License” means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark.

5

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Pledge and Security Agreement
Collective Brands Finance, Inc.
          “Trademarks” means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and, in each case, all
goodwill associated therewith, whether now existing or hereafter adopted or
acquired, all registrations and recordings thereof and all applications in
connection therewith, in each case whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, and (b) the right to
obtain all renewals thereof.
          “UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York; provided, however, that, in the event that, by reason
of mandatory provisions of law, any of the attachment, perfection or priority of
the Administrative Agent’s and the Secured Parties’ security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
          “Vehicles” means all vehicles covered by a certificate of title law of
any state.
          Section 1.2 Certain Other Terms
          (a) 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.”
          (b) 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.
          (c) References herein to an Annex, Schedule, Article, Section,
subsection or clause refer to the appropriate Annex or Schedule to, or Article,
Section, subsection or clause in this Agreement.
          (d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
          (e) Where the context requires, provisions relating to any Collateral,
when used in relation to a Grantor, shall refer to such Grantor’s Collateral or
any relevant part thereof.
          (f) Any reference in this Agreement to a Loan Document shall include
all appendices, exhibits and schedules thereto, and, unless specifically stated
otherwise all amendments, restatements, supplements or other modifications
thereto, and as the same may be in effect at any time such reference becomes
operative.
          (g) The term “including” means “including without limitation” except
when used in the computation of time periods.
          (h) The terms “Lender,” “Administrative Agent” and “Secured Party”
include their respective successors.

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Pledge and Security Agreement
Collective Brands Finance, Inc.
          (i) References in this Agreement to any statute shall be to such
statute as amended or modified and in effect from time to time.
     ARTICLE II            Grant of Security Interest
          Section 2.1 Collateral
          For the purposes of this Agreement, all of the following property now
owned or at any time hereafter acquired by a Grantor or in which a Grantor now
has or at any time in the future may acquire any right, title or interests is
collectively referred to as the “Collateral”:
          (a) all Accounts;
          (b) all Chattel Paper;
          (c) all Deposit Accounts;
          (d) all Documents;
          (e) all Equipment;
          (f) all General Intangibles;
          (g) all Instruments;
          (h) all Intellectual Property;
          (i) all Inventory;
          (j) all Investment Property;
          (k) all Letter-of-Credit Rights;
          (l) all Vehicles;
          (m) the Commercial Tort Claims described on Schedule 7 (Commercial
Tort Claims) and on any supplement thereto received by the Administrative Agent
pursuant to Section 4.9 (Notice of Commercial Tort Claims);
          (n) all books and records pertaining to the other property described
in this Section 2.1;
          (o) all property of any Grantor held by the Administrative Agent or
any other Secured Party, including all property of every description, in the
possession or custody of or in transit to the Administrative Agent or such
Secured Party for any purpose, including safekeeping, collection or pledge, for
the account of such Grantor;
          (p) all other Goods and personal property of such Grantor, whether
tangible or intangible and wherever located; and

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Pledge and Security Agreement
Collective Brands Finance, Inc.
          (q) to the extent not otherwise included, all Proceeds;
provided, however, that “Collateral” shall not include any Excluded Property;
and provided, further, that if and when any property shall cease to be Excluded
Property, such property shall be deemed at all times from and after the date
hereof to constitute Collateral.
          Section 2.2 Grant of Security Interest in Collateral
          Each Grantor, as collateral security for the full, prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations of such Grantor, hereby mortgages, pledges
and hypothecates to the Administrative Agent for the benefit of the Secured
Parties, and grants to the Administrative Agent for the benefit of the Secured
Parties a lien on and security interest in, all of its right, title and interest
in, to and under the Collateral of such Grantor; provided, however, that, if and
when any property that at any time constituted Excluded Property becomes
Collateral, the Administrative Agent shall have, and at all times from and after
the date hereof be deemed to have had, a security interest in such property.
          Section 2.3 Cash Management Accounts
          Each Grantor has established a Cash Management Account with an
appropriate Cash Management Bank in accordance with Section 2.7 of the Loan
Agreement. Each Cash Management Account will serve as a cash collateral account
securing payment of the Secured Obligations, and in which each Grantor hereby
grants a Lien to the Administrative Agent.
          ARTICLE III Representations and Warranties
          To induce the Lenders and the Administrative Agent to enter into the
Loan Agreement, each Grantor hereby represents and warrants each of the
following to the Administrative Agent, the Lenders and the other Secured
Parties:
          Section 3.1 Title; No Other Liens
          Except for the Lien granted to the Administrative Agent pursuant to
this Agreement, the Lien granted to the Term Agent pursuant to the Term Loan
Security Agreement and the other Liens permitted to exist on the Collateral
under the Loan Agreement, such Grantor (a) is the record and beneficial owner of
that portion of the Pledged Collateral pledged by it hereunder constituting
Instruments or Certificated Securities, (b) is the Entitlement Holder of all
such Pledged Collateral constituting Investment Property held in a Securities
Account and (c) has rights in or the power to transfer each other item of
Collateral in which a Lien is granted by it hereunder, free and clear of any
other Lien.
          Section 3.2 Perfection and Priority
          The security interest granted pursuant to this Agreement shall
constitute a valid and continuing perfected security interest in favor of the
Administrative Agent in the Collateral for which perfection is governed by the
UCC or filing with the United States Copyright Office upon (i) in the case of
all Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, the completion of the filings and other
actions specified on Schedule 3 (Filings) (which, in the case of all filings and
other documents referred to on such

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schedule, have been delivered to the Administrative Agent in completed and duly
executed form), (ii) the delivery to the Administrative Agent of Collateral
consisting of Instruments and Certificated Securities, in each case properly
endorsed for transfer to the Administrative Agent or in blank, (iii) the
execution of Securities Account Control Agreements with respect to Investment
Property not in certificated form and held in a securities account covered by
such agreement, (iv) the execution of Deposit Account Control Agreements with
respect to certain Deposit Accounts of a Grantor and (v) appropriate filings
having been made with the United States Copyright Office. Such perfected
security interests shall be prior to all other Liens on the Collateral except
for Permitted Liens having priority over the Administrative Agent’s Lien as
permitted under the Loan Agreement, Liens in favor of the Term Facility Secured
Parties subject to the provisions of the Intercreditor Agreement.
          Section 3.3 Jurisdiction of Organization; Chief Executive Office
          Such Grantor’s jurisdiction of organization, legal name,
organizational identification number, if any, and the location of such Grantor’s
chief executive office or sole place of business, in each case as of the date
hereof, is specified on Schedule 1 (Jurisdiction of Organization; Principal
Executive Office).
          Section 3.4 Inventory and Equipment
          On the date hereof, such Grantor’s Inventory and Equipment (other than
mobile goods and Inventory or Equipment in transit) are kept at the locations
listed on Schedule 4 (Location of Inventory and Equipment).
          Section 3.5 Pledged Collateral
          (a) The Pledged Stock pledged hereunder by such Grantor is listed on
Schedule 2 (Pledged Collateral) and constitutes that percentage of the issued
and outstanding equity of all classes of each issuer thereof as set forth on
Schedule 2 (Pledged Collateral).
          (b) All of the Pledged Stock (other than Pledged Stock in limited
liability companies and partnerships) has been duly authorized, validly issued
and is fully paid and nonassessable.
          (c) Each of the Pledged Debt Instruments constitutes the legal, valid
and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
          (d) All Pledged Collateral and, if applicable, any Additional Pledged
Collateral, consisting of Certificated Securities or Instruments has been
delivered to the Term Agent as agent for the Term Facility Secured Parties and,
pursuant to the Intercreditor Agreement, as bailee for the Secured Parties.
          (e) All Pledged Collateral held by a Securities Intermediary in a
Securities Account on the date hereof is subject to a Securities Account Control
Account.

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          (f) Other than Pledged Stock constituting General Intangibles, there
is no Pledged Collateral on the date hereof other than that represented by
Certificated Securities or Instruments in the possession of the Term Agent as
agent for the Term Facility Secured Parties and, pursuant to the Intercreditor
Agreement, as bailee for the Secured Parties, or that consist of Financial
Assets held in a Securities Account that is subject to a Securities Account
Control Agreement.
          (g) The Governing Documents of any Person governing any Pledged Stock
provide that, upon the occurrence and during the continuance of an Event of
Default, the Term Agent as agent for the Term Facility Secured Parties and,
pursuant to the Intercreditor Agreement, as bailee for the Secured Parties,
shall be entitled to exercise all of the rights of the Grantor granting the
security interest therein, and that a transferee or assignee of Stock of such
Person shall become a member, partner or, as the case may be, other holder of
such Pledged Stock to the same extent as the Grantor in such Person entitled to
participate in the management of such Person and, upon the transfer of the
entire interest of such Grantor, such Grantor ceases to be a member, partner or,
as the case may be, other holder of such Pledged Stock.
          Section 3.6 Accounts
          No amount in excess of $500,000 payable to such Grantor under or in
connection with any Account is evidenced by any Instrument or Chattel Paper that
has not been delivered within 10 days after the receipt thereof to the Term
Agent as agent for the Term Facility Secured Parties and, pursuant to the
Intercreditor Agreement, as bailee for the Secured Parties, properly endorsed
for transfer, to the extent delivery is required by Section 4.4 (Pledged
Collateral).
          Section 3.7 Intellectual Property
          (a) Schedule 5 (Intellectual Property) lists all Material Intellectual
Property of such Grantor on the Closing Date separately identifying that owned
by such Grantor and that licensed to such Grantor.
          (b) As of the Closing Date, all Material Intellectual Property owned
by such Grantor in the United States and Canada (i) is valid, subsisting,
unexpired and not unenforceable, has not been adjudged invalid and has not been
abandoned and (ii) the use thereof in the business of such Grantor does not
infringe, misappropriate, dilute or violate the intellectual property rights of
any other Person except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
          (c) As of the Closing Date, no holding, decision or judgment has been
rendered by any Governmental Authority in the United States or Canada that would
limit or cancel the validity of such Grantor’s rights in any Material
Intellectual Property.
          (d) Except as disclosed in any public filing or on Schedule 3.7(d)
(Certain Actions), no action or proceeding seeking to limit or cancel the
validity of any Material Intellectual Property owned by such Grantor or such
Grantor’s ownership interest therein, in each case in the United States or
Canada, is pending or, to the knowledge of such Grantor, threatened.

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          Section 3.8 Deposit Accounts; Securities Accounts
          The only Deposit Accounts or Securities Accounts maintained by any
Grantor on the date hereof are those listed on Schedule 6 (Bank Accounts;
Control Accounts), which sets forth such information separately for each
Grantor.
          Section 3.9 Commercial Tort Claims
          The only Commercial Tort Claims of any Grantor existing on the date
hereof (regardless of whether the amount, defendant or other material facts can
be determined and regardless of whether such Commercial Tort Claim has been
asserted, threatened or has otherwise been made known to the obligee thereof or
whether litigation has been commenced for such claims) are those listed on
Schedule 7 (Commercial Tort Claims), which sets forth such information
separately for each Grantor.
          ARTICLE IV Covenants
          Each Grantor agrees with the Administrative Agent to the following, as
long as any Obligation or Commitment remains outstanding and, in each case,
unless the Required Lenders otherwise consent in writing, or unless otherwise
provided in the Loan Agreement:
          Section 4.1 Generally
          Such Grantor shall not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement, any other Loan
Document, any Related Document, any Requirement of Law or any policy of
insurance covering the Collateral.
          Section 4.2 Maintenance of Perfected Security Interest; Further
Documentation
          (a) Such Grantor shall maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 3.2 (Perfection and Priority) and Section 2.2 (Grant of
Security Interests in Collateral) and shall defend such security interest and
such priority against the claims and demands of all Persons subject to the
Intercreditor Agreement.
          (b) Such Grantor shall furnish to the Administrative Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail and in
form and substance reasonably satisfactory to the Administrative Agent.
          (c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor
shall promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further action as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including the filing of any financing or continuation statement under the UCC
(or other similar laws) in effect in any jurisdiction with respect to the
security interest created hereby and the execution and delivery of Deposit
Account Control Agreements and Securities Account Control Agreements.

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          Section 4.3 Maintenance of Records.
          Such Grantor shall keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including a record of all
payments received and all credits granted with respect to the Collateral and all
other dealings with the Collateral. If requested by the Administrative Agent,
the security interest of the Administrative Agent shall be noted on the
certificate of title of each Vehicle.
          Section 4.4 Pledged Collateral
          (a) Such Grantor shall (i) deliver not later than 10 days following
the receipt thereof to the Term Agent as agent for the Term Facility Secured
Parties and, pursuant to the Intercreditor Agreement, as bailee for the Secured
Parties, all certificates and Instruments representing or evidencing any Pledged
Collateral (including Additional Pledged Collateral) which, in the case of
Pledged Debt Instruments is in the face amount of at least $1,000,000, whether
now existing or hereafter acquired, in suitable form for transfer by delivery
or, as applicable, accompanied by such Grantor’s endorsement, where necessary,
or duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agents, together, in respect of any
Additional Pledged Collateral, with a Pledge Amendment, duly executed by the
Grantor, in substantially the form of Annex 3 (Form of Pledge Amendment), an
acknowledgment and agreement to a Joinder Agreement duly executed by the
Grantor, in substantially the form in the form of Annex 4 (Form of Joinder
Agreement), or such other documentation acceptable to the Collateral Agents,
provided, that any Pledged Debt Instruments existing on the Closing Date that
represent indebtedness payable by one Grantor to another Grantor shall be
delivered to the Term Agent within 30 days after the Closing Date, and
(ii) maintain all other Pledged Collateral constituting Investment Property in a
Control Account. Such Grantor authorizes the Administrative Agent to attach each
Pledge Amendment to this Agreement. The Term Agent as agent for the Term
Facility Secured Parties and, pursuant to the Intercreditor Agreement, as bailee
for the Secured Parties, shall have the right, at any time in its discretion and
without notice to the Grantor, to transfer to or to register in its name or in
the name of its nominees any Pledged Collateral during the continuance of an
Event of Default. The Term Agent as agent for the Term Facility Secured Parties
and, pursuant to the Intercreditor Agreement, as bailee for the Secured Parties,
shall have the right at any time to exchange any certificate or instrument
representing or evidencing any Pledged Collateral for certificates or
instruments of smaller or larger denominations during the continuance of an
Event of Default.
          (b) Except as provided in Article V (Remedial Provisions), each
Grantor shall be entitled hereunder to receive all cash dividends paid in
respect of the Pledged Collateral (other than liquidating or distributing
dividends) with respect to the Pledged Collateral. Any sums paid upon or in
respect of any Pledged Collateral upon the liquidation or dissolution of any
issuer of any Pledged Collateral, any distribution of capital made on or in
respect of any Pledged Collateral or any property distributed upon or with
respect to any Pledged Collateral pursuant to the recapitalization or
reclassification of the capital of any issuer of Pledged Collateral or pursuant
to the reorganization thereof shall, unless otherwise subject to a perfected
security interest in favor of the Collateral Agents, be delivered to the Term
Agent as agent for the Term Facility Secured Parties and, pursuant to the
Intercreditor Agreement, as bailee for the Secured Parties, to be held by it
hereunder as additional collateral security for the Secured Obligations. If any
sum of money or property so paid or distributed in respect of any Pledged
Collateral shall be received by such Grantor as bailee, such Grantor shall,
until such money or property is paid or delivered to the Term Agent as agent for
the Term Facility Secured Parties and, pursuant to the

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Intercreditor Agreement, as bailee for the Secured Parties, hold such money or
property in trust for the Collateral Agents, segregated from other funds of such
Grantor, as additional security for the Secured Obligations.
          (c) Except as provided in Article V (Remedial Provisions), each
Grantor shall be entitled to exercise all voting, consent and corporate,
partnership, limited liability company and similar rights with respect to the
Pledged Collateral; provided, however, that no vote shall be cast, consent given
or right exercised or other action taken by such Grantor that would materially
impair the Collateral or violate the Loan Agreement.
          (d) Such Grantor shall not grant “control” (within the meaning of such
term under Article 9-106 of the UCC) over any Investment Property to any Person
other than, the Term Agent as agent for the Term Facility Secured Parties and,
pursuant to the Intercreditor Agreement, as bailee for the Secured Parties and
statutory control granted to the Securities Intermediary solely due to the
Securities Intermediary’s possession of such Investment Property in a Securities
Account.
          (e) In the case of each Grantor that is an issuer of Pledged
Collateral, such Grantor agrees to be bound by the terms of this Agreement
relating to the Pledged Collateral issued by it and shall comply with such terms
insofar as such terms are applicable to it. In the case of any Grantor that is a
holder of any Stock or Stock Equivalent in any Person that is an issuer of
Pledged Collateral during the continuance of an Event of Default, such Grantor
consents to (i) the exercise of the rights granted to the Collateral Agents
hereunder (including those described in Section 5.3 (Pledged Collateral)), and
(ii) the pledge by each other Grantor, pursuant to the terms hereof, of the
Pledged Stock in such Person and to the transfer of such Pledged Stock to the
Term Agent as agent for the Term Facility Secured Parties and, pursuant to the
Intercreditor Agreement, as bailee for the Secured Parties, or its nominee and
to the substitution of the Term Agent as agent for the Term Facility Secured
Parties and, pursuant to the Intercreditor Agreement, as bailee for the Secured
Parties, or its nominee as a holder of such Pledged Stock with all the rights,
powers and duties of other holders of Pledged Stock of the same class and, if
the Grantor having pledged such Pledged Stock hereunder had any right, power or
duty at the time of such pledge or at the time of such substitution beyond that
of such other holders, with all such additional rights, powers and duties. Such
Grantor agrees to execute and deliver to the Term Agent as agent for the Term
Facility Secured Parties and, pursuant to the Intercreditor Agreement, as bailee
for the Secured Parties, such certificates, agreements and other documents as
may be necessary to evidence, formalize or otherwise give effect to the consents
given in this clause (e).
          Section 4.5 Accounts
          (a) Such Grantor shall not, other than in the ordinary course of
business consistent with its past practice, (i) grant any extension of the time
of payment of any Account, (ii) compromise or settle any Account for less than
the full amount thereof, (iii) release, wholly or partially, any Person liable
for the payment of any Account, (iv) allow any credit or discount on any Account
or (v) amend, supplement or modify any Account in any manner that could
adversely affect the value thereof.
          (b) The Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and such Grantor shall furnish all such
assistance and information as the Administrative Agent

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may reasonably require in connection therewith. At any time and from time to
time, upon the Administrative Agent’s request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the Administrative Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts; provided, however, that in the case of any appraisal
or audit, such appraisal or audit may only be undertaken if Revolver Usage at
the time of such appraisal or audit is undertaken is in excess of $100,000,000
and provided further, that unless a Default or an Event of Default is continuing
or a Triggering Period has occurred and is continuing, the Administrative Agent
shall request no more than two such reports during any calendar year.
          Section 4.6 Delivery of Instruments and Chattel Paper
          Except as otherwise agreed by the Administrative Agent, if any amount
in excess of $1,000,000 payable under or in connection with any Collateral owned
by such Grantor shall be or become evidenced by an Instrument or Chattel Paper,
such Grantor shall deliver within 10 days following the receipt thereof such
Instrument or Chattel Paper to the Term Agent as agent for the Term Facility
Secured Parties and, pursuant to the Intercreditor Agreement, as bailee for the
Secured Parties, duly indorsed in a manner satisfactory to the Collateral
Agents, or, if consented to by the Collateral Agents, s shall mark all such
Instruments and Chattel Paper with the following legend: “This writing and the
obligations evidenced or secured hereby are subject to the security interest of
Wells Fargo Retail Finance, LLC, as Administrative Agent under that certain
Amended and Restated Loan and Guaranty Agreement, and Citicorp North America,
Inc., as Administrative Agent under that certain Term Loan Agreement”.
          Section 4.7 Intellectual Property
          (a) Such Grantor (either itself or through licensees) shall
(i) continue to use each Trademark that is Material Intellectual Property in
order to maintain such Trademark with respect to footwear and retail shoe store
services (if so used as of the date hereof), free from any claim of abandonment
for non-use, (ii) except as it may otherwise determine in the ordinary course of
its business, maintain as in the past the quality of products and services
offered under such Trademark, (iii) generally use such Trademark with
commercially reasonable notices of registration and regular notices and legends
required by applicable Requirements of Law and (iv) not (and not permit any
licensee or sublicensee thereof to) knowingly do any act or knowingly omit to do
any act whereby such Trademark (or any goodwill associated therewith) may become
destroyed or invalidated in any way.
          (b) Such Grantor (either itself or through licensees) shall not do any
act, or omit to do any act, whereby any Patent that is Material Intellectual
Property becomes forfeited, abandoned or dedicated to the public.
          (c) Such Grantor shall notify the Administrative Agent promptly if it
knows that any registration owned by such Grantor for any Material Intellectual
Property is likely to become forfeited, abandoned or dedicated to the public or
any action or proceeding is commenced seeking to limit in any material respect
or cancel such Grantor’s ownership of, right to use, interest in, or the
validity of, any Material Intellectual Property or such Grantor’s right to
register the same or to own and maintain the same.
          (d) Whenever such Grantor, either by itself or through any agent,
licensee or designee, shall file an application for the registration of any
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States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency within the United States or register any Internet
domain name, such Grantor shall report such filing to the Administrative Agent
within 60 days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Administrative Agent, such Grantor shall execute and
deliver, and have recorded in the United States, all agreements, instruments,
documents and papers as the Administrative Agent may request to evidence the
Administrative Agent’s security interest in any Copyright, Patent, Trademark or
Internet domain name and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby. The failure to provide or any omissions
from such report shall not constitute an Event of Default unless any Material
Intellectual Property is omitted therefrom. At the written request of the
Administrative Agent, each Grantor shall provide a true and complete list of all
Material Intellectual Property and United States copyright registrations
included in the Collateral.
          (e) Such Grantor shall take all reasonable actions necessary or
requested by the Administrative Agent, including in any proceeding before the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency and any Internet domain name registrar, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of any Copyright, Trademark, Patent or Internet
domain name that is Material Intellectual Property, and that is in such
Grantor’s reasonable judgment appropriate, including filing of applications for
renewal, affidavits of use, affidavits of incontestability.
          (f) In the event that any Material Intellectual Property is or has
been infringed upon or misappropriated or diluted by a third party, such Grantor
shall notify the Administrative Agent promptly after such Grantor learns
thereof. Such Grantor shall take appropriate action in response to such
infringement, misappropriation of dilution, including when bringing suit for
infringement, misappropriation or dilution and to recover all damages for such
infringement, misappropriation of dilution, and shall taking such other actions,
in each case as appropriate in such Grantor’s reasonable judgment under the
circumstances to protect such Material Intellectual Property.
          (g) Unless otherwise agreed to by the Administrative Agent, such
Grantor shall execute and deliver to the Administrative Agent for filing (i) in
the United States Copyright Office a short-form copyright security agreement in
the form attached hereto as Annex 5 (Form of Short Form Intellectual Property
Security Agreement), (ii) in the United States Patent and Trademark Office and
with the Secretary of State of all appropriate States of the United States a
short-form patent security agreement in the form attached hereto as Annex 5
(Form of Short Form Intellectual Property Security Agreement) and (iii) in the
United States Patent and Trademark Office a short-form trademark security
agreement in form attached hereto as Annex 5 (Form of Short Form Intellectual
Property Security Agreement).
          Section 4.8 Payment of Obligations
          Such Grantor shall pay and discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of income or profits therefrom, as well as all claims of any kind
(including claims for labor, materials and supplies) against or with respect to
the Collateral, except that no such charge need be paid if (i) the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in

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conformity with GAAP with respect thereto have been provided on the books of
such Grantor, or (ii) such proceedings could not reasonably be expected to
result in a Material Adverse Effect.
          Section 4.9 Notice of Commercial Tort Claims
          Such Grantor agrees that (i) within 60 days after the end of each
fiscal quarter, such Grantor shall provide to the Administrative Agent a report
setting forth all Commercial Tort Claims for which such Grantor has filed a
complaint in a court of competent jurisdiction with respect to which the
pleadings seek damages in excess of $1,000,000, if any, and (ii) the provisions
of Section 2.1 (Collateral) shall apply with respect to any such Commercial Tort
Claims. Any report delivered pursuant to this Section 4.9 (Notice of Commercial
Tort Claims) shall, after the receipt thereof by the Administrative Agent,
become part of Schedule 7 (Commercial Tort Claims) for all purposes hereunder
other than in respect of representations and warranties made prior to the date
of such receipt.
     ARTICLE V Remedial Provisions
          Section 5.1 Code and Other Remedies
          During the continuance of an Event of Default, the Administrative
Agent may exercise, in addition to all other rights and remedies granted to it
in this Agreement and in any other instrument or agreement securing, evidencing
or relating to the Secured Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law. Without limiting the generality
of the foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived to the extent permitted by law), may in such
circumstances forthwith collect, receive, appropriate and realize upon any
Collateral, and may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver any Collateral (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker’s board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent shall
have the right upon any such public sale or sales, and, to the extent permitted
by the UCC and other applicable law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption of any Grantor, which right or equity is hereby waived and
released to the fullest extent permitted by law. Each Grantor further agrees, at
the Administrative Agent’s request during the continuance of an Event of
Default, to assemble the Collateral and make it available to the Administrative
Agent at places that the Administrative Agent shall reasonably select, whether
at such Grantor’s premises or elsewhere. The Administrative Agent shall apply
the net proceeds of any action taken by it pursuant to this Section 5.1, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any Collateral or in any
way relating to the Collateral or the rights of the Administrative Agent and any
other Secured Party hereunder, including reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Loan Agreement shall prescribe, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, need the Administrative Agent account
for the surplus, if any, to any Grantor. To the extent permitted

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by applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Administrative Agent or any other Secured Party arising out
of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 Business Days before
such sale or other disposition.
          Section 5.2 Accounts and Payments in Respect of General Intangibles
          (a) In addition to, and not in substitution for, any similar
requirement in the Loan Agreement, if required by the Administrative Agent at
any time during the continuance of an Event of Default, any payment of Accounts
or payment in respect of General Intangibles, when collected by any Grantor,
shall be forthwith deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Administrative Agent, in a Cash Management
Account, subject to withdrawal by the Administrative Agent as provided in
Section 5.4 (Proceeds to be Turned Over To Administrative Agent). Until so
turned over, such payment shall be held by such Grantor in trust for the
Administrative Agent, segregated from other funds of such Grantor.
          (b) At the Administrative Agent’s request, during the continuance of
an Event of Default, each Grantor shall deliver to the Administrative Agent or,
at the Administrative Agent’s option, permit the Administrative Agent access to
obtain copies or original and other documents evidencing, and relating to, the
agreements and transactions that gave rise to the Accounts or payments in
respect of General Intangibles, including all original orders, invoices and
shipping receipts.
          (c) The Administrative Agent may, without notice to the Grantors, at
any time during the continuance of an Event of Default, limit or terminate the
authority of a Grantor to collect its Accounts or amounts due under General
Intangibles or any thereof.
          (d) The Administrative Agent in its own name or in the name of others
may at any time during the continuance of an Event of Default communicate with
Account Debtors to verify with them to the Administrative Agent’s satisfaction
the existence, amount and terms of any Account or amounts due under any General
Intangible.
          (e) Upon the request of the Administrative Agent at any time during
the continuance of an Event of Default, each Grantor shall notify Account
Debtors that the Accounts or General Intangibles have been collaterally assigned
to the Administrative Agent and that payments in respect thereof shall be made
directly to the Administrative Agent. In addition, the Administrative Agent may
at any time during the continuance of an Event of Default enforce such Grantor’s
rights against such Account Debtors and obligors of General Intangibles.
          (f) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Accounts and payments in respect of
General Intangibles to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. Neither the Administrative Agent nor any
other Secured Party shall have any obligation or liability under any agreement
giving rise to an Account or a payment in respect of a General Intangible by
reason of or arising out of this Agreement or the receipt by the Administrative
Agent or any other Secured Party of any payment relating thereto, nor shall the
Administrative Agent nor any other Secured Party be obligated in any manner to
perform any obligation of any Grantor under or pursuant to any agreement giving
rise to an Account or a payment in respect of a General Intangible, to make

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any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts that may have been assigned
to it or to which it may be entitled at any time or times.
          Section 5.3 Pledged Collateral
          (a) During the continuance of an Event of Default, at the request of,
and upon notice from the Administrative Agent to the relevant Grantor or
Grantors, (i) the Administrative Agent shall have the right to receive any
Proceeds of the Pledged Collateral and make application thereof to the
Obligations in the order set forth in the Loan Agreement and (ii) the Term Agent
as agent for the Term Facility Secured Parties and, pursuant to the
Intercreditor Agreement, as bailee for the Secured Parties, or its nominee may
exercise (A) any voting, consent, corporate and other right pertaining to the
Pledged Collateral at any meeting of shareholders, partners or members, as the
case may be, of the relevant issuer or issuers of Pledged Collateral or
otherwise and (B) any right of conversion, exchange and subscription and any
other right, privilege or option pertaining to the Pledged Collateral as if it
were the absolute owner thereof (including the right to exchange at its
discretion any of the Pledged Collateral upon the merger, amalgamation,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate or equivalent structure of any issuer of Pledged Stock, the right
to deposit and deliver any Pledged Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Collateral Agents may determine), all without liability except
to account for property actually received by it; provided, however, that the
Term Agent shall have no duty to any Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
          (b) During the continuance of an Event of Default, in order to permit
the Term Agent as agent for the Term Facility Secured Parties and, pursuant to
the Intercreditor Agreement, as bailee for the Secured Parties, to exercise the
voting and other consensual rights that it may be entitled to exercise pursuant
hereto and to receive all dividends and other distributions that it may be
entitled to receive hereunder, (i) each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to the Term Agent as agent for
the Term Facility Secured Parties and, pursuant to the Intercreditor Agreement,
as bailee for the Secured Parties, all such proxies, dividend payment orders and
other instruments as the Collateral Agents may from time to time reasonably
request and (ii) without limiting the effect of clause (i) above, such Grantor
hereby grants to the Term Agent as agent for the Term Facility Secured Parties
and, pursuant to the Intercreditor Agreement, as bailee for the Secured Parties,
an irrevocable proxy to vote all or any part of the Pledged Collateral and to
exercise all other rights, powers, privileges and remedies to which a holder of
the Pledged Collateral would be entitled (including giving or withholding
written consents of shareholders, partners or members, as the case may be,
calling special meetings of shareholders, partners or members, as the case may
be, and voting at such meetings), which proxy shall be effective, automatically
and without the necessity of any action (including any transfer of any Pledged
Collateral on the record books of the issuer thereof) by any other person
(including the issuer of such Pledged Collateral or any officer or agent
thereof) during the continuance of an Event of Default and which proxy shall
only terminate upon the payment in full of the Secured Obligations.
          (c) Each Grantor hereby expressly authorizes and instructs each issuer
of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with
any instruction received by it from any Collateral Agent in writing that
(A) states that an Event of Default has

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occurred and is continuing and (B) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that such issuer shall be fully protected in so complying
and (ii) unless otherwise expressly permitted hereby, pay any dividend or other
payment with respect to the Pledged Collateral directly to the Term Agent as
agent for the Term Facility Secured Parties and, pursuant to the Intercreditor
Agreement, as bailee for the Secured Parties.
          Section 5.4 Proceeds to be Turned Over To Administrative Agent
          Unless otherwise expressly provided in the Loan Agreement, all
Proceeds received by the Administrative Agent hereunder in cash or Cash
Equivalents shall be held by the Administrative Agent in a Cash Management
Account. All Proceeds while held by the Administrative Agent in a Cash
Management Account (or by such Grantor in trust for the Administrative Agent)
shall continue to be held as collateral security for the Secured Obligations and
shall not constitute payment thereof until applied as provided in the Loan
Agreement or in the Intercreditor Agreement.
          Section 5.5 Securities Laws
          (a) Each Grantor recognizes that the Term Agent as agent for the Term
Facility Secured Parties and, pursuant to the Intercreditor Agreement, as bailee
for the Secured Parties, may be unable to effect a public sale of any Pledged
Collateral by reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise or may determine that a public
sale is impracticable or not commercially reasonable and, accordingly, may
resort to one or more private sales thereof to a restricted group of purchasers
that shall be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Term Agent acting in the above-referenced capacities shall be under
no obligation to delay a sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such issuer would agree to do so.
          (b) During the continuance of an Event of Default, each Grantor agrees
to use commercially reasonable efforts to do or cause to be done all such other
acts as may be reasonably requested of it to make such sale or sales of all or
any portion of the Pledged Collateral pursuant to this Error! Reference source
not found. valid and binding and in compliance with all other applicable
Requirements of Law. Each Grantor further agrees that a breach of any covenant
contained in this Section 5.5 will cause irreparable injury to the Collateral
Agents, the Term Facility Secured Parties and the Secured Parties, that the
Collateral Agents, the Term Facility Secured Parties and the Secured Parties
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Error! Reference source not
found. shall be specifically enforceable against such Grantor, and such Grantor
hereby waives and agrees not to assert any defense against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred under the Loan Agreement or the Term Loan Agreement.

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          Section 5.6 Deficiency
          Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay the
Secured Obligations and the reasonable out-of-pocket fees and disbursements of
counsel employed by the Administrative Agent to collect such deficiency.
          Section 5.7 Remedies Subject to Intercreditor Agreement
          Notwithstanding the foregoing provisions, any rights and remedies and
all representations and covenants contained in this Article V (Remedial
Provisions) are qualified by and shall be subject to the terms of the
Intercreditor Agreement.
     ARTICLE VI The Administrative Agent
          Section 6.1 Administrative Agent’s Appointment as Attorney-in-Fact
          (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any appropriate action and to execute any document or
instrument that may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Grantor
hereby gives the Administrative Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any of the
following:
     (i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any check, draft, note, acceptance or
other instrument for the payment of moneys due under any Account or General
Intangible or with respect to any other Collateral and file any claim or take
any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any such
moneys due under any Account or General Intangible or with respect to any other
Collateral whenever payable;
     (ii) in the case of any Intellectual Property, execute and deliver, and
have recorded, any agreement, instrument, document or paper as the
Administrative Agent may deem appropriate to evidence the Administrative Agent’s
security interest in such Intellectual Property and the goodwill and General
Intangibles of such Grantor relating thereto or represented thereby;
     (iii) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repair or pay any insurance called for by the
terms of this Agreement (including all or any part of the premiums therefor and
the costs thereof);
     (iv) execute, in connection with any sale provided for in Section 5.1 (Code
and Other Remedies) or Section 5.5 (Securities Laws), any endorsement,
assignment or other instrument of conveyance or transfer with respect to the
Collateral; and

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     (v) (A) direct any party liable for any payment under any Collateral to
make payment of any moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall direct, (B) ask or
demand for, collect, and receive payment of and receipt for, any moneys, claims
and other amounts due or to become due at any time in respect of or arising out
of any Collateral, (C) sign and indorse any invoice, freight or express bill,
bill of lading, storage or warehouse receipt, draft against debtors, assignment,
verification, notice and other document in connection with any Collateral,
(D) commence and prosecute any suit, action or proceeding at law or in equity in
any court of competent jurisdiction to collect any Collateral and to enforce any
other right in respect of any Collateral, (E) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral,
(F) settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Administrative
Agent may deem appropriate, (G) assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Trademark pertains)
throughout the world for such term or terms, on such conditions, and in such
manner as the Administrative Agent shall in its sole discretion determine,
including the execution and filing of any document necessary to effectuate or
record such assignment and (H) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any Collateral as fully and
completely as though the Administrative Agent were the absolute owner thereof
for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things that
the Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent’s and the other Secured Parties’
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.
Anything in this clause (a) to the contrary notwithstanding, the Administrative
Agent agrees that it shall not exercise any right under the power of attorney
provided for in this clause (a) unless an Event of Default shall be continuing.
          (b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option during the
continuance of a Default or an Event of Default, but without any obligation so
to do, may perform or comply, or otherwise cause performance or compliance, with
such agreement.
          (c) The reasonable out-of-pocket expenses of the Administrative Agent
incurred in connection with actions undertaken as provided in this Section 6.1,
together with interest thereon at a rate per annum equal to the rate per annum
at which interest would then be payable on past due Loans that are Base Rate
Loans under the Loan Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Grantor, shall be payable by such
Grantor to the Administrative Agent on demand.
          (d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

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          Section 6.2 Duty of Administrative Agent
          The Administrative Agent’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. None of the Administrative Agent, any
other Secured Party nor any of their respective officers, directors, employees
or agents shall be liable for failure to demand, collect or realize upon any
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to any
Collateral. The powers conferred on the Administrative Agent hereunder are
solely to protect the Administrative Agent’s interest in the Collateral and
shall not impose any duty upon the Administrative Agent or any other Secured
Party to exercise any such powers. The Administrative Agent and the other
Secured Parties shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor any of their
respective officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
          Section 6.3 Authorization of Financing Statements
          Each Grantor authorizes the Administrative Agent and its Affiliates,
counsel and other representatives, at any time and from time to time, to file or
record financing statements, amendments to financing statements, and other
filing or recording documents or instruments with respect to the Collateral in
such form and in such offices as the Administrative Agent reasonably determines
appropriate to perfect the security interests of the Administrative Agent under
this Agreement, and such financing statements and amendments may describe the
Collateral covered thereby as “all assets of the debtor”, “all personal property
of the debtor” or words of similar effect. Each Grantor hereby also authorizes
the Administrative Agent and its Affiliates, counsel and other representatives,
at any time and from time to time, to file continuation statements with respect
to previously filed financing statements. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
          Section 6.4 Authority of Administrative Agent
          Each Grantor acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Administrative Agent and the other Secured Parties, be governed by
the Loan Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Administrative Agent and
the Grantors, the Administrative Agent shall be conclusively presumed to be
acting as agent for the Administrative Agent and the other Secured Parties with
full and valid authority so to act or refrain from acting, and no Grantor shall
be under any obligation, or entitlement, to make any inquiry respecting such
authority.

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     ARTICLE VII Miscellaneous
          Section 7.1 Amendments in Writing
          None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with
Section 15.1 (Amendments and Waivers) of the Loan Agreement; provided, however,
that annexes to this Agreement may be supplemented (but no existing provisions
may be modified and no Collateral may be released) through Pledge Amendments and
Joinder Agreements, in substantially the form of Annex 3 (Form of Pledge
Amendment) and Annex 4 (Form of Joinder Agreement) respectively, in each case
duly executed by the Administrative Agent and each Grantor directly affected
thereby.
          Section 7.2 Notices
          All notices, requests and demands to or upon the Administrative Agent
or any Grantor hereunder shall be effected in the manner provided for in
Section 12 (Notices) of the Loan Agreement; provided, however, that any such
notice, request or demand to or upon any Grantor shall be addressed to the
Borrower’s notice address set forth in such Section 12 (Notices) of the Loan
Agreement.
          Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies
          Neither the Administrative Agent nor any other Secured Party shall by
any act (except by a written instrument pursuant to Section 7.15 (Amendments in
Writing)), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any other Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Administrative Agent or any other Secured Party of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that the Administrative Agent or such other Secured Party would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
          Section 7.4 Successors and Assigns
          This Agreement shall be binding upon the successors and assigns of
each Grantor and shall inure to the benefit of the Administrative Agent and each
other Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent.
          Section 7.5 Counterparts
          This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), 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 counterparts and attached to a

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single counterpart so that all signature pages are attached to the same
document. Delivery of an executed counterpart by telecopy shall be effective as
delivery of a manually executed counterpart.
          Section 7.6 Severability
          Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
          Section 7.7 Section Headings
          The Article and Section titles contained in this Agreement are, and
shall be, without substantive meaning or content of any kind whatsoever and are
not part of the agreement of the parties hereto.
          Section 7.8 Entire Agreement
          This Agreement together with the other Loan Documents represents the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof.
          Section 7.9 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 7.10 Additional Grantors
          If, pursuant to Section 6.14 (Formation of Subsidiaries) of the Loan
Agreement, the Borrower shall be required to cause any Subsidiary that is not a
Grantor to become a Grantor hereunder, such Subsidiary shall execute and deliver
to the Administrative Agent a Joinder Agreement substantially in the form of
Annex 4 (Form of Joinder Agreement) and shall thereafter for all purposes be a
party hereto and have the same rights, benefits and obligations as a Grantor
party hereto on the Closing Date.
          Section 7.11 Release of Collateral
          (a) At the time provided in Section 16.12(a)(i) (Collateral Matters)
of the Loan Agreement, the Collateral shall be released from the Lien created
hereby and this Agreement and all obligations (other than those expressly stated
to survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantors. At the request and sole expense of any Grantor following any such
termination, the Administrative Agent shall deliver to such Grantor any
Collateral of such Grantor held by the Administrative Agent hereunder and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.

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          (b) If the Administrative Agent shall be directed or permitted
pursuant to Section 16.12(a)(ii), (iii) or (iv) (Collateral Matters) of the Loan
Agreement to release any Lien created hereby upon any Collateral (including any
Collateral sold or disposed of by any Grantor in a transaction permitted by the
Loan Agreement), such Collateral shall be released from the Lien created hereby
to the extent provided under, and subject to the terms and conditions set forth
in, Section 16.12(a)(ii), (iii) or (iv) (Collateral Matters) of the Loan
Agreement. In connection therewith, the Administrative Agent, at the request and
sole expense of the Borrower, shall execute and deliver to the Borrower all
releases or other documents, including, without limitation, UCC termination
statements, reasonably necessary or desirable for the release of the Lien
created hereby on such Collateral. At the request and sole expense of the
Borrower, a Grantor shall be released from its obligations hereunder in the
event that all the capital stock of such Grantor shall be so sold or disposed;
provided, however, that the Borrower shall have delivered to the Administrative
Agent, at least five Business Days prior to the date of the proposed release (or
such later date as may be acceptable to the Administrative Agent), a written
request for release identifying the relevant Grantor and the terms of the sale
or other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the Borrower
in form and substance satisfactory to the Administrative Agent stating that such
transaction is in compliance with the Loan Agreement and the other Loan
Documents.
          Section 7.12 Reinstatement
          Each Grantor further agrees that, if any payment made by any Credit
Party or other Person and applied to the Obligations is at any time annulled,
avoided, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
Collateral are required to be returned by any Secured Party to such Credit
Party, its estate, trustee, receiver or any other party, including any Grantor,
under any bankruptcy law, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, any Lien or other Collateral
securing such liability shall be and remain in full force and effect, as fully
as if such payment had never been made or, if prior thereto the Lien granted
hereby or other Collateral securing such liability hereunder shall have been
released or terminated by virtue of such cancellation or surrender), such Lien
or other Collateral shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect any Lien or other Collateral securing the obligations of any
Grantor in respect of the amount of such payment.
          Section 7.13 Intercreditor Agreement Governs
          Notwithstanding anything herein to the contrary, the Liens and
security interests granted to the Administrative Agent, for the benefit of the
Secured Parties, pursuant to this Pledge and Security Agreement and the exercise
of any right or remedy by the Administrative Agent and the other Secured Parties
hereunder are subject to the provisions of the Intercreditor Agreement. In the
event of any conflict or inconsistency between the provisions of the
Intercreditor Agreement and this Pledge and Security Agreement, the provisions
of the Intercreditor Agreement shall control.
          Section 7.14 Delivery of Collateral
          Prior to the Senior Collateral Transition Date, to the extent any
Grantor is required hereunder to deliver Collateral to the Administrative Agent
for purposes of possession and control and is unable to do so as a result of
having previously delivered such Collateral to the

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Term Agent in accordance with the terms of the Term Loan Security Agreement,
such Grantor’s obligations hereunder with respect to such delivery shall be
deemed satisfied by the delivery to the Term Agent, acting as gratuitous bailee
to the Administrative Agent.
[Signature Pages Follow]

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EXHIBIT L-l

FORM OF LIBOR NOTICE
Wells Fargo Bank, National Association
One Boston Place
  18th Floor
Boston, Massachusetts 02108
Attention: Joseph Burt
Ladies and Gentlemen:
     Reference is made to that certain Second Amended and Restated Loan and
Guaranty Agreement, dated as of August 16, 2011 (the “Loan Agreement”), among
Collective Brands Finance, Inc., a Nevada corporation (“Borrower”) the other
credit parties signatory thereto (together with Borrower, the “Credit Parties”),
the lenders signatory thereto (the “Lenders”), and Wells Fargo Bank, National
Association, as the administrative agent for the Lenders (“Agent”). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Loan Agreement.
     This LIBOR Notice represents Borrower’s request to elect the LIBOR Option
with respect to [outstanding] Advances in the amount of $____________ (the
“LIBOR Rate Loan”)[, and is a written confirmation of the telephonic notice of
such election given to Agent].
     Such LIBOR Rate Loan will have an Interest Period of [1, 2, 3, or 6]
month(s) commencing on ___________.
     This LIBOR Notice further confirms Borrower’s acceptance, for purposes of
determining the rate of interest based on the LIBOR Rate under the Loan
Agreement, of the LIBOR Rate as determined pursuant to the Loan Agreement.
     As to any advance requested hereby, Borrower represents and warrants that
(i) as of the date hereof, and as of the effective date of such Advance, each
representation or warranty of any Credit Party contained in or pursuant to any
Loan Document is true and correct in all material respects (except to the extent
any representation or warranty expressly related to an earlier date and except
to the extent that such representations and warranties relate to Schedules under
the Loan Agreement that require only quarterly updates thereto), (ii) no Default
or Event of Default has occurred and is continuing on the date hereof, nor will
any thereof occur after giving effect to the request above, (iii) no injunction,
writ, restraining order, or other order of any nature restricting or
prohibiting, directly or indirectly, the making of the Advance requested above
has been issued and remains in force by any Governmental Authority against any
Credit Party or any of its Affiliates, and (iv) no Material Adverse Change has
occurred.

 

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     As to any conversion or continuation requested hereby, Borrower represents
and warrants that no Event of Default has occurred and is continuing on the date
hereof, nor will any thereof occur after giving effect to the request above, in
each case except as to any such Event of Default for which Agent has received
written notice (pursuant to Section 16.5 of the Loan Agreement) within 10
Business Days prior to the date hereof.

                  Dated:   

      COLLECTIVE BRANDS FINANCE, INC., as Borrower
      By:          Name:    

      Title:    

   

          Acknowledged by:

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent
    By:         Name:    

    Title:    

   

[Signature Page to LIBOR Notice]

 

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EXHIBIT M

FORM OF BORROWING BASE CERTIFICATE

 

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Total Collective Brands Finance, Inc
  Cert. #:     000  
Borrowing Base Certificate
  Date:     07/30/11  
 
           
FAX To: Phil Carmichael @ 617-523-4029
  Updates:  
Quarterly

         
TOTAL BORROWING BASE — UNCAPPED
  $ 0  
 
       
TOTAL BORROWING BASE (capped at $300 Million)
  $ 0  

AVAILABILITY CALCULATION (due 10:30 am PST for same-day funding)

                             
Beginning Principal Balance as of:
            08/16/11         $ 0  
ADD:
  Advances through         08/16/11         $ 0  
 
  Fees as of         08/16/11         $ 0  
 
  Adjustments         08/16/11         $ 0  
LESS:
  Payments through         08/16/11         $ 0  
Ending Principal Balance Prior to Advance Request
                      $ 0  
 
                           
Net Availability Prior to Today’s Request
                      $ 0  
Today’s Advance Request:
                      $ 0  
Today’s Payment Request:
                      $ 0  
Ending Loan Balance
                      $ 0  
Total L/C’s Outstanding
  Doc:   $          0   Standby:     $          0 = $ 0  
Total Exposure
                      $ 0  
Excess Availability
                      $ 0  

Collective Brands Finance, Inc. (the “Borrower”) represents and warrants that
(a) all representations and warranties contained in the Loan Agreement and other
Loan Documents required to be made as of the date of a credit extension are true
in all material respects; (b) no “Event of Default” (as defined in the Loan and
Security Agreement) has occurred or is continuing as of the date hereof; (c) no
injunction, writ, restraining order, or other order of any nature restricting or
prohibiting the extending of credit has been issued by any Governmental
Authority and remains in force against any Credit Party, Agent, any Lender, or
any of their Affiliates; and (d) no Material Adverse Change has occurred.

                 
Authorized Signer:
  Printed Name:   Gary C. Madsen   Signature:    
 
               
WFRF Account Executive:
  Printed Name:       Signature: