Exhibit 10.6

 

 

 

$60,000,000

TERM LOAN CREDIT AGREEMENT

Dated as of September 20, 2016

Among

CLAIRE’S (GIBRALTAR) HOLDINGS LIMITED,

as Borrower,

THE LENDERS PARTY HERETO,

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Administrative Agent

 

 

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

Definitions

1

  

  

  

SECTION 1.01.

  Defined Terms      1   

SECTION 1.02.

  Terms Generally      27   

ARTICLE II

The Loans

28

  

  

  

SECTION 2.01.

  Debt Exchange      28   

SECTION 2.02.

  [Reserved]      28   

SECTION 2.03.

  Procedure for Closing      28   

SECTION 2.04.

  [Reserved]      28   

SECTION 2.05.

  [Reserved]      28   

SECTION 2.06.

  [Reserved]      28   

SECTION 2.07.

  [Reserved]      28   

SECTION 2.08.

  [Reserved]      28   

SECTION 2.09.

  Repayment of Loans; Evidence of Debt      28   

SECTION 2.10.

  [Reserved]      29   

SECTION 2.11.

  Prepayment of Loans      29   

SECTION 2.12.

  [Reserved]      29   

SECTION 2.13.

  Interest      29   

SECTION 2.14.

  [Reserved]      30   

SECTION 2.15.

  [Reserved]      30   

SECTION 2.16.

  [Reserved]      30   

SECTION 2.17.

  Taxes      30   

SECTION 2.18.

  Payments Generally; Pro Rata Treatment; Sharing of Setoffs      32   

SECTION 2.19.

  Mitigation Obligations; Replacement of Lenders      34   

SECTION 2.20.

  AHYDO      35   

SECTION 2.21.

  OID      35   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE III

Representations and Warranties

36

  

  

  

SECTION 3.01.

  Organization; Powers      36   

SECTION 3.02.

  Authorization      36   

SECTION 3.03.

  Enforceability      36   

SECTION 3.04.

  Governmental Approvals      37   

SECTION 3.05.

  Financial Statements      37   

SECTION 3.06.

  Subsidiaries      37   

SECTION 3.07.

  Litigation      37   

SECTION 3.08.

  Investment Company Act      37   

SECTION 3.09.

  [Reserved]      37   

SECTION 3.10.

  Tax Returns      37   

SECTION 3.11.

  Employee Benefit Plans      38   

SECTION 3.12.

  Labor Matters      38   

SECTION 3.13.

  Insurance      38   

SECTION 3.14.

  No Default      38   

SECTION 3.15.

  Intellectual Property; Licenses, Etc      39   

SECTION 3.16.

  Anti-Money Laundering and Economic Sanctions Laws      39   

SECTION 3.17.

  Anti-corruption Laws      40   

SECTION 3.18.

  Federal Reserve Regulations      40   

ARTICLE IV

Conditions of Closing Date

40

  

  

  

SECTION 4.01.

  Closing Date      40   

ARTICLE V

Affirmative Covenants

42

  

  

  

SECTION 5.01.

  Existence; Businesses and Properties      43   

SECTION 5.02.

  Insurance      43   

SECTION 5.03.

  Taxes      43   

SECTION 5.04.

  Financial Statements, Reports, etc      43   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 5.05.

  Litigation and Other Notices      45   

SECTION 5.06.

  Compliance with Laws      45   

SECTION 5.07.

  Maintaining Records; Access to Properties and Inspections      45   

SECTION 5.08.

  [Reserved]      45   

SECTION 5.09.

  Fiscal Year; Accounting      46   

ARTICLE VI

Negative Covenants

46

  

  

  

SECTION 6.01.

  Indebtedness      46   

SECTION 6.02.

  Liens      50   

SECTION 6.03.

  Sale and Leaseback Transactions      54   

SECTION 6.04.

  Investments, Loans and Advances      54   

SECTION 6.05.

  Mergers, Consolidations, Sales of Assets and Acquisitions      58   

SECTION 6.06.

  Restricted Payments      60   

SECTION 6.07.

  Transactions with Affiliates      61   

SECTION 6.08.

  Business of the Borrower and the Subsidiaries      64   

SECTION 6.09.

  Limitation on Payments and Modifications of Indebtedness; Modifications of
Certificate of Incorporation, By-Laws and Certain Other Agreements; etc      64
  

ARTICLE VII

Events of Default

66

  

  

  

SECTION 7.01.

  Events of Default      66   

SECTION 7.02.

  Exclusion of Immaterial Subsidiaries      68   

ARTICLE VIII

The Administrative Agent

69

  

  

  

SECTION 8.01.

  Appointment      69   

SECTION 8.02.

  Delegation of Duties      69   

SECTION 8.03.

  Exculpatory Provisions      70   

SECTION 8.04.

  Reliance by Administrative Agent      71   

SECTION 8.05.

  Notice of Default      72   

SECTION 8.06.

  Non-Reliance on Administrative Agent and Other Lenders      72   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 8.07.

  Indemnification      73   

SECTION 8.08.

  Agent in Its Individual Capacity      74   

SECTION 8.09.

  Successor Administrative Agent      74   

SECTION 8.10.

  [Reserved]      74   

SECTION 8.11.

  Withholding Taxes      74   

ARTICLE IX

Miscellaneous

75

  

  

  

SECTION 9.01.

  Notices; Communications      75   

SECTION 9.02.

  Survival of Agreement      77   

SECTION 9.03.

  Binding Effect      77   

SECTION 9.04.

  Successors and Assigns      77   

SECTION 9.05.

  Expenses; Indemnity      82   

SECTION 9.06.

  Right of Setoff      83   

SECTION 9.07.

  Applicable Law      83   

SECTION 9.08.

  Waivers; Amendment      84   

SECTION 9.09.

  Interest Rate Limitation      84   

SECTION 9.10.

  Entire Agreement      85   

SECTION 9.11.

  WAIVER OF JURY TRIAL      85   

SECTION 9.12.

  Severability      85   

SECTION 9.13.

  Counterparts      85   

SECTION 9.14.

  Headings      86   

SECTION 9.15.

  Jurisdiction; Consent to Service of Process      86   

SECTION 9.16.

  Confidentiality      87   

SECTION 9.17.

  Platform; Borrower Materials      87   

SECTION 9.18.

  [Reserved]      88   

SECTION 9.19.

  Judgment Currency      88   

SECTION 9.20.

  USA PATRIOT Act Notice      89   

SECTION 9.21.

  Affiliate Lenders      89   

SECTION 9.22.

  No Advisory or Fiduciary Responsibility      90   

SECTION 9.23.

  Acknowledgement and Consent to Bail-In of EEA Financial Institutions      90
  

 

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Exhibits and Schedules

 

Exhibit A

    

Form of Assignment and Acceptance

Exhibit B

    

Form of Joinder

Exhibit C

    

Form of Permitted Loan Purchase Assignment and Acceptance

Schedule 1.01A

    

Immaterial Subsidiaries

Schedule 1.01B

    

Unrestricted Subsidiaries

Schedule 2.01

    

Initial Lenders

Schedule 3.01

    

Organization and Good Standing

Schedule 3.04

    

Governmental Approvals

Schedule 3.06(a)

    

Subsidiaries

Schedule 3.06(b)

    

Subscriptions

Schedule 3.10

    

Taxes

Schedule 3.15

    

Intellectual Property

Schedule 3.16

    

Anti-Money Laundering Laws

Schedule 6.01

    

Indebtedness

Schedule 6.02(a)

    

Liens

Schedule 6.04

    

Investments

Schedule 6.07

    

Transactions with Affiliates

Schedule 9.01

    

Notice Information

 

 

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TERM LOAN CREDIT AGREEMENT, dated as of September 20, 2016 (this “Agreement”),
among CLAIRE’S (GIBRALTAR) HOLDINGS LIMITED, a Gibraltar private limited
liability company (the “Borrower”), the LENDERS party hereto from time to time,
and Wilmington Trust, National Association, as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”).

WHEREAS, the Borrower, the Administrative Agent and the Lenders have agreed to
enter into this Agreement, pursuant to which the Lenders will provide Loans (as
defined below) to the Borrower subject to the terms and conditions of this
Agreement.

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

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement (including the recitals
hereto), the following terms shall have the meanings specified below:

“Additional Term Loan Facility” shall mean an additional credit facility entered
into on or about the Closing Date consisting of term loans to the Borrower in an
aggregate principal amount not to exceed $40 million; provided, that the
Additional Term Loan Facility shall be pari passu with the Loans hereunder.

“Administrative Agent” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

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

“Affiliate” shall mean (a) when used with respect to a specified person, another
person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the person specified and (b)
when used with respect to the Borrower, in addition to any “Affiliate” specified
in the foregoing clause (a), shall include the Fund and any person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Fund.

“Affiliate Lender” shall have the meaning assigned to such term in Section
9.21(a).

“Affiliate Loan” shall have the meaning assigned to such term in Section
2.13(a).

“Agreement” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

“Anti-Money Laundering Laws” shall mean any and all laws, judgments, orders,
executive orders, decrees, ordinances, rules, regulations, statutes, case law or
treaties applicable

 

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to the Borrower, its Subsidiaries or Affiliates related to terrorism financing
or money laundering, including any applicable provision of Title III of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001 (Title III of
Pub. L. 107-56) and The Currency and Foreign Transactions Reporting Act (also
known as the “Bank Secrecy Act”, 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§
1818(s), 1820(b) and 1951-1959).

“Approved Fund” shall have the meaning assigned to such term in Section 9.04(b).

“Asset Sale” shall mean any loss, damage, destruction or condemnation of, or any
sale, transfer or other disposition (including any sale and leaseback of assets
and any mortgage or lease of Real Property) to any person of any asset or assets
of the Borrower or any Subsidiary.

“Assignee” shall have the meaning assigned to such term in Section 9.04(b).

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an Assignee, and acknowledged by the Administrative Agent and
the Borrower (if required by Section 9.04), in the form of Exhibit A to this
Agreement or such other form as shall be approved by the Administrative Agent
and reasonably satisfactory to the Borrower.

“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers
by the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

“Bail-In Legislation” shall mean, with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law for such EEA Member
Country from time to time which is described in the EU Bail-In Legislation
Schedule.

“Bankruptcy Event” shall mean, with respect to any person, when such person
files a petition or application seeking relief under the U.S. Bankruptcy Code
(or other insolvency law) or becomes the subject of a bankruptcy or insolvency
or examinership proceeding, or has had a receiver, interim receiver, receiver
and manager, conservator, trustee, administrator, custodian, assignee for the
benefit of creditors, examiner or similar person charged with the reorganization
or liquidation of its business, appointed for it, or, in the good faith
determination of the Administrative Agent (acting at the written direction of
the Required Lenders), has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment,
provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such person
by a Governmental Authority or instrumentality thereof, unless such ownership
interest results in or provides such person with immunity from the jurisdiction
of courts within the U.S. or any other applicable jurisdiction or from the
enforcement of judgments or writs of attachment on its assets or permits such
person (or such Governmental Authority or instrumentality), to reject,
repudiate, disavow or disaffirm any contracts or agreements made by such person.

 

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“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America.

“Board of Directors” shall mean, as to any person, the board of directors or
other governing body of such person, or if such person is owned or managed by a
single entity, the board of directors or other governing body of such entity.

“Borrower” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

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

“Capital Lease Obligations” of any person shall mean the obligations of such
person to pay rent or other amounts under any lease of (or other similar
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for purposes hereof, the amount of such obligations at any time shall be
the capitalized amount thereof accounted for as a liability at such time
determined in accordance with GAAP.

A “Change in Control” shall be deemed to occur if:

(a) at any time, (i) Claire’s Stores shall fail to own, directly or indirectly,
beneficially and of record, 100% of the issued and outstanding Equity Interests
of the Borrower, (ii) a majority of the seats (other than vacant seats) on the
Board of Directors of the Borrower shall at any time be occupied by persons who
were neither (A) nominated or approved by the Board of Directors of Claire’s
Stores or the Borrower or a Permitted Holder, (B) appointed by directors so
nominated or approved nor (C) appointed by a Permitted Holder or (iii) a “change
of control” (or similar event) shall occur under any Material Indebtedness or
any Permitted Refinancing Indebtedness incurred to Refinance any of the
foregoing or any Disqualified Stock (to the extent the aggregate amount of the
applicable Disqualified Stock exceeds $35 million); or

(b) any combination of Permitted Holders shall fail to own beneficially (within
the meaning of Rule 13d-5 of the Exchange Act as in effect on the Closing Date),
directly or indirectly, in the aggregate Equity Interests representing at least
a majority of the aggregate ordinary voting power represented by the issued and
outstanding Equity Interests of the Borrower.

“Charges” shall have the meaning assigned to such term in Section 9.09.

“Claire’s Stores” shall mean Claire’s Stores, Inc., a Florida corporation.

“Closing Date” shall mean the date on which the conditions precedent set forth
in Article IV have been satisfied.

 

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“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time and the regulations promulgated and rulings issued thereunder.

“Conduit Lender” shall mean any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender; provided,
further, that no Conduit Lender shall be entitled to receive any greater amount
pursuant to Section 2.17 or 9.05 than the designating Lender would have been
entitled to receive in respect of the extensions of credit made by such Conduit
Lender.

“Consolidated Debt” at any date shall mean the sum of (without duplication) the
principal or face amount, regardless of whether GAAP would require a different
amount to be recited on the balance sheet of the Borrower, of all Indebtedness
(other than letters of credit or bank guarantees, to the extent undrawn)
consisting of Capital Lease Obligations, Indebtedness for borrowed money,
Disqualified Stock and Indebtedness in respect of the deferred purchase price of
property or services of the Borrower and the Subsidiaries, in each case, as
determined on a consolidated basis on such date.

“Consolidated Net Income” shall mean, with respect to any person for any period,
the aggregate of the Net Income of such person and its subsidiaries for such
period, on a consolidated basis; provided, however, that, without duplication,

(i) any net after tax extraordinary, nonrecurring or unusual gains or losses or
income or expense or charge (less all fees and expenses relating thereto)
including, without limitation, any severance, relocation or other restructuring
expenses, any expenses related to any reconstruction, decommissioning,
recommissioning or reconfiguration of fixed assets for alternative uses, fees,
expenses or charges relating to new product lines, plant shutdown costs,
curtailments or modifications to pension and post-retirement employee benefit
plans, excess pension charges, acquisition integration costs, facilities opening
costs, and expenses or charges related to any offering of Equity Interests or
debt securities of Holdings or any Parent Entity, any Investment, acquisition,
disposition, recapitalization or issuance, repayment, refinancing, amendment or
modification of Indebtedness (in each case, whether or not successful), in each
case, shall be excluded;

(ii) any net after tax income or loss from abandoned, closed or discontinued
operations and any net after tax gain or loss on disposal of disposed,
abandoned, transferred, closed or discontinued operations shall be excluded;

(iii) any net after tax gain or loss (less all fees and expenses or charges
relating thereto) attributable to business dispositions or asset dispositions
other than in the ordinary course of business (as determined in good faith by
the Borrower) shall be excluded;

 

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(iv) any net after tax income or loss (less all fees and expenses or charges
relating thereto) attributable to the early extinguishment of indebtedness, Swap
Agreements or other derivative instruments resulting from fair-value accounting
required by the applicable standards under GAAP shall be excluded;

(v) (A) the equity interest in the Net Income for such period of any person that
is not a subsidiary of such person, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to the referent person or a
subsidiary thereof in respect of such period and (B) the Net Income for such
period shall include any ordinary course dividend, distribution or other payment
in cash received from any person in excess of the amounts included in clause
(A);

(vi) Consolidated Net Income for such period shall not include the cumulative
effect of a change in accounting principles during such period;

(vii) effects of purchase accounting adjustments (including the effects of such
adjustments pushed down to such person and its subsidiaries) in component
amounts required or permitted by GAAP, resulting from the application of
purchase accounting in relation to any acquisition consummated after the Closing
Date or the amortization or write-off of any amounts thereof, net of taxes,
shall be excluded;

(viii) any non-cash impairment charges or asset write-offs, in each case
pursuant to GAAP, and the amortization of intangibles, including key money
amortization, arising pursuant to GAAP shall be excluded;

(ix) any non-cash expenses realized or resulting from stock option plans,
employee benefit plans or post-employment benefit plans, or grants or sales of
stock, stock appreciation or similar rights, stock options, restricted stock,
preferred stock or other rights shall be excluded;

(x) expenses associated with additional accruals and reserves that were
established or adjusted within twelve months after February 28, 2012 and that
are so required to be established or adjusted in accordance with GAAP or as a
result of adoption or modification of accounting policies shall be excluded;

(xi) non-cash gains, losses, income and expenses resulting from fair value
accounting required by the applicable standards under GAAP and related
interpretations shall be excluded;

(xii) to the extent otherwise included in Consolidated Net Income any currency
translation gains and losses related to currency remeasurements of Indebtedness,
and any net loss or gain resulting from Swap Agreements for currency exchange
risk, shall be excluded;

 

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(xiii) (i) the non-cash portion of “straight-line” rent expense shall be
excluded, (ii) the cash portion of “straight-line” rent expense which exceeds
the amount expensed in respect of such rent expense shall be included, (iii) the
non-cash amortization of tenant allowances shall be excluded and (iv) cash
received from landlords for tenant allowances shall be included;

(xiv) an amount equal to the amount of any Restricted Payments actually made to
any parent or equity holder of such person in respect of such period in
accordance with Section 6.06 shall be included as though such amounts had been
paid as income taxes directly by such person for such period;

(xv) any (a) one-time non-cash compensation charges, (b) costs and expenses
after February 28, 2012 related to employment of terminated employees (including
but not limited to change of control payments, “gross up” payments under Code
Sections 280G and 4999 and the acceleration of options) or (c) costs or expenses
realized in connection with or resulting from stock appreciation or similar
rights, stock options or other rights existing on February 28, 2012 of officers,
directors and employees, in each case of such person or any of its Subsidiaries,
shall be excluded; and

(xvi) solely for the purpose of determining the amount available for Restricted
Payments under clause (b) of the definition of Cumulative Credit, the
difference, if positive, of the Taxes of the Borrower and its consolidated
Subsidiaries on a consolidated basis calculated in accordance with GAAP and the
actual Taxes paid in cash by the Borrower and its consolidated Subsidiaries
during such period shall be included.

“Consolidated Total Assets” shall mean, as of any date, the total assets of the
Borrower and the consolidated Subsidiaries, determined in accordance with GAAP,
as set forth on the consolidated balance sheet of the Borrower as of such date.

“Control” shall mean 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 ownership of voting securities, by contract or otherwise, and
“Controlling” and “Controlled” shall have meanings correlative thereto.

“Cumulative Credit” shall mean, at any date, an amount, not less than zero in
the aggregate, determined on a cumulative basis equal to, without duplication:

(a) $50 million, plus:

(b) solely to the extent that (x) the Fixed Charge Coverage Ratio of the
Borrower after giving effect to the applicable use of the Cumulative Credit
would be at least 2.0:1.0 on a Pro Forma Basis and (y) the Borrower’s
Consolidated Leverage Ratio (as defined in the Senior Secured First Lien Notes
Indenture as in effect on the Closing Date) would be less than 6.0:1.0 on a Pro
Forma Basis consistent with such definition of Consolidated Leverage Ratio (it
being understood that if any amount is utilized pursuant to this clause (b),
such amount shall continue to be taken into account for purposes of determining
the Cumulative Credit notwithstanding whether the foregoing ratios are satisfied
at the time of any subsequent determination), 50% of the Consolidated Net

 

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Income of the Borrower and its Subsidiaries for the period (taken as one
accounting period, the “Reference Period”) from January 29, 2012, to the end of
the Borrower’s most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, in the case
such Consolidated Net Income for such period is a deficit, minus 100% of such
deficit), plus

(c) 100% of the aggregate amount, including cash and the fair market value (as
determined in good faith by the Borrower) of property other than cash, received
by the Borrower and its Subsidiaries after February 28, 2012 (other than any
amount that was relied upon as the basis for the permissibility of any
transaction pursuant to Section 6.04(x) or Section 6.09(b)(i)(B)) from the issue
or sale of Equity Interests of the Borrower (other than Disqualified Stock),
including Equity Interests issued upon exercise of warrants or options, plus

(d) 100% of the aggregate amount of contributions to the capital of the Borrower
and its Subsidiaries received in cash and the Fair Market Value (as determined
in good faith by the Borrower) of property other than cash after February 28,
2012 (other than any amount that was relied upon as the basis for the
permissibility of any transaction pursuant to any other provision of Section
6.04, Section 6.06 or Section 6.09 other than the Cumulative Credit), plus

(e) 100% of the principal amount of any Indebtedness, or the liquidation
preference or maximum fixed repurchase price, as the case may be, of any
Disqualified Stock of the Borrower or any Subsidiary issued after February 28,
2012 (other than Indebtedness or Disqualified Stock issued to a Subsidiary and
other than Junior Financing converted pursuant to Section 6.09(b)(i)(C)) which
has been converted into or exchanged for Equity Interests in the Borrower (other
than Disqualified Stock), Claire’s Stores or any Parent Entity (provided in the
case of Claire’s Stores or any Parent Entity, such Indebtedness or Disqualified
Stock is retired or extinguished), plus

(f) 100% of the aggregate amount received by the Borrower or any Subsidiary in
cash and the fair market value (as determined in good faith by the Borrower) of
property other than cash received by the Borrower or any Subsidiary from:

(1) the sale or other disposition (other than to the Borrower or a Subsidiary of
the Borrower) of Investments made by the Borrower and its Subsidiaries in
reliance on the Cumulative Credit and from repurchases and redemptions of such
Investments from the Borrower and its Subsidiaries by any person (other than the
Borrower or any of its Subsidiaries) and from repayments of loans or advances,
and releases of guarantees, which constituted Investments in reliance on the
Cumulative Credit,

(2) the sale (other than to the Borrower or a Subsidiary of the Borrower) of the
Equity Interests of an Unrestricted Subsidiary to the extent of any Investment
therein from the Cumulative Credit, or

 

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(3) a distribution or dividend from an Unrestricted Subsidiary to the extent of
any Investment therein from the Cumulative Credit, plus

(g) in the event any Unrestricted Subsidiary of the Borrower has been
redesignated as a Subsidiary that is not an Unrestricted Subsidiary or has been
merged, consolidated or amalgamated with or into, or transfers or conveys its
assets to, or is liquidated into, the Borrower or any other Subsidiary, the Fair
Market Value (as determined in good faith by the Borrower) of the Investment of
the Borrower in such Unrestricted Subsidiary that was made in reliance on the
Cumulative Credit at the time of such redesignation, combination or transfer (or
of the assets transferred or conveyed, as applicable); minus

(h) the aggregate amount of Investments made pursuant to Section 6.04(b)(iii)(y)
and (j)(ii) and payments in respect of Junior Financing made pursuant to Section
6.09(b)(i)(E) following the Closing Date.

“Debt Fund Affiliate Lender” shall mean entities managed by the Fund or funds
advised by its affiliated management companies that are primarily engaged in, or
advises funds or other investment vehicles that are engaged in, making,
purchasing, holding or otherwise investing in commercial loans, bonds and
similar extensions of credit or securities in the ordinary course and for which
no personnel making investment decisions in respect of any equity fund which has
a direct or indirect equity investment in the Borrower has the right to make any
investment decisions.

“Default” shall mean any event or condition which, but for the giving of notice,
lapse of time or both would constitute an Event of Default.

“Designated Non-Cash Consideration” shall mean the Fair Market Value of non-cash
consideration received by the Borrower or one of the Subsidiaries in connection
with an Asset Sale that is so designated as Designated Non-Cash Consideration
pursuant to a certificate of a Responsible Officer, setting forth the basis of
such valuation, less the amount of cash or cash equivalents received in
connection with a subsequent sale of such Designated Non-Cash Consideration.

“Disinterested Director” shall mean, with respect to any person and transaction,
a member of the Board of Directors of such person who does not have any material
direct or indirect financial interest in or with respect to such transaction.

“Disqualified Stock” shall mean, with respect to any person, any Equity
Interests of such person that, by its terms (or by the terms of any security or
other Equity Interests into which it is convertible or for which it is
redeemable or exchangeable), or upon the happening of any event or condition (a)
matures or is mandatorily redeemable (other than solely for Qualified Equity
Interests), pursuant to a sinking fund obligation or otherwise (except as a
result of a change of control or asset sale so long as any rights of the holders
thereof upon the occurrence of a change of control or asset sale event shall be
subject to the prior repayment in full of the Loans and all other Obligations
that are accrued and payable), (b) is redeemable at the option of the holder
thereof (other than solely for Qualified Equity Interests), in whole or in part,
(c) provides

 

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for the scheduled payments of dividends in cash or (d) either mandatorily or at
the option of the holders thereof, is or becomes convertible into or
exchangeable for Indebtedness or any other Equity Interests that would
constitute Disqualified Stock, in each case, prior to the date that is
ninety-one (91) days after the earlier of (x) the Final Maturity Date and (y)
the date on which the Loans and all other Obligations that are accrued and
payable are repaid in full; provided, however, that only the portion of the
Equity Interests that so mature or are mandatorily redeemable, are so
convertible or exchangeable or are so redeemable at the option of the holder
thereof prior to such date shall be deemed to be Disqualified Stock; provided
further, however, that if such Equity Interests are issued to any employee or to
any plan for the benefit of employees of the Borrower or the Subsidiaries or by
any such plan to such employees, such Equity Interests shall not constitute
Disqualified Stock solely because they may be required to be repurchased by the
Borrower in order to satisfy applicable statutory or regulatory obligations or
as a result of such employee’s termination, death or disability; provided
further, however, that any class of Equity Interests of such person that by its
terms authorizes such person to satisfy its obligations thereunder by delivery
of Equity Interests that are not Disqualified Stock shall not be deemed to be
Disqualified Stock.

“Dollars” or “$” shall mean lawful money of the United States of America.

“EBITDA” shall mean, with respect to the Borrower and the Subsidiaries on a
consolidated basis for any period, the Consolidated Net Income of the Borrower
and the Subsidiaries for such period plus (a) the sum of (in each case without
duplication and to the extent the respective amounts described in subclauses (i)
through (xii) of this clause (a) reduced such Consolidated Net Income (and were
not excluded therefrom) for the respective period for which EBITDA is being
determined):

(i) provision for Taxes based on income, profits or capital of the Borrower and
the Subsidiaries for such period, including, without limitation, state,
franchise and similar Taxes and foreign withholding Taxes (including any
penalties and interest related to such Taxes or arising from Tax examinations),

(ii) Interest Expense (and to the extent not included in Interest Expense, (x)
all cash dividend payments (excluding items eliminated in consolidation) on any
series of preferred stock or Disqualified Stock and (y) costs of surety bonds in
connection with financing activities) of the Borrower and the Subsidiaries for
such period (net of interest income of the Borrower and the Subsidiaries for
such period),

(iii) depreciation and amortization expenses of the Borrower and the
Subsidiaries for such period including the amortization of intangible assets,
key money expense, deferred financing fees and capitalized software expenditures
and amortization of unrecognized prior service costs and actuarial gains and
losses related to pensions and other post-employment benefits,

(iv) any expenses or charges (other than depreciation or amortization expense as
described in the preceding clause (iii)) related to any issuance of Equity
Interests, Investment, acquisition, disposition, recapitalization or the
incurrence, modification or repayment of Indebtedness permitted to be incurred
by this Agreement (including a

 

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refinancing thereof) (whether or not successful), including (x) such fees,
expenses or charges related to the Obligations and (y) any amendment or other
modification of the Obligations or other Indebtedness and (iv) commissions,
discounts, yield and other fees and charges (including any interest expense)
related to any Permitted Receivables Financing,

(v) restructuring charges or reserves,

(vi) any other non-cash charges; provided, that, for purposes of this subclause
(vi) of this clause (a), any non-cash charges or losses shall be treated as cash
charges or losses in any subsequent period during which cash disbursements
attributable thereto are made (but excluding, for the avoidance of doubt,
amortization of a prepaid cash item that was paid in a prior period and any
other item specifically identified in the definition of “Consolidated Net
Income” or in this definition of “EBITDA”),

(vii) the amount of management, consulting, monitoring, transaction and advisory
fees and related expenses paid to the Fund or any Fund Affiliate (or any
accruals related to such fees and related expenses) during such period;
provided, that such amount shall not exceed in any four quarter period the sum
of (i) the greater of $6 million and 2.0% of EBITDA for such four quarter
period, plus any reasonable out of pocket costs and expenses in connection
therewith and unpaid amounts accrued for prior periods, plus (ii) the amount of
deferred fees (to the extent such fees would otherwise have been permitted to be
included in clause (i) if paid, but were not included in such clause (i)), plus
(iii) 2.0% of the value of transactions permitted hereunder and entered into by
Holdings and the Subsidiaries with respect to which the Fund or any Fund
Affiliate provides any of the aforementioned types of services, plus (iv) the
payment of the present value of all amounts payable pursuant to any agreement
described in this subclause (vii) of this clause (a) in connection with the
termination of such agreement,

(viii) the amount of loss on sale of receivables and related assets to a Special
Purpose Receivables Subsidiary in connection with a Permitted Receivables
Financing,

(ix) any costs or expense incurred pursuant to any management equity plan or
stock option plan or any other management or employee benefit plan or agreement,
to the extent that such cost or expenses are funded with cash proceeds
contributed to the capital of the Borrower solely to the extent that such net
cash proceeds are excluded from the calculation of Cumulative Credit (including
any payment of dividend equivalent rights to option holders),

(x) non-cash stock compensation expense including GAAP charges associated with
any long-term incentive plan now in effect or later established,

(xi) any non-cash charges associated with any income or loss from disposed,
abandoned, discontinued operations or store closures to the extent not already
captured in (a)(ii) of the definition of “Consolidated Net Income”, and

(xii) Exchange Transaction Expenses,

 

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minus (b) the sum of (without duplication and to the extent the amounts
described in this clause (b) increased such Consolidated Net Income for the
respective period for which EBITDA is being determined) non-cash items
increasing Consolidated Net Income of the Borrower and the Subsidiaries for such
period (but excluding any such items (A) in respect of which cash was received
in a prior period or will be received in a future period or (B) which represent
the reversal of any accrual of, or cash reserve for, anticipated cash charges
that reduced EBITDA in any prior period).

“Economic Sanctions Laws” shall mean those laws, executive orders, enabling
legislation or regulations administered and enforced by the United States or
other Governmental Authority pursuant to which Sanctions have been imposed on
any person, entity, organization, country or regime, including without
limitation the Trading with the Enemy Act, the International Emergency Economic
Powers Act, the Iran Sanctions Act, the Sudan Accountability and Divestment Act.

“EEA Financial Institution” shall mean (a) any credit institution or investment
firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member
Country which is a parent of an institution described in clause (a) of this
definition, or (c) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (a) or (b)
of this definition and is subject to consolidated supervision with its parent.”

“EEA Member Country” shall mean any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” shall mean any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

“Embargoed Person” shall mean (i) any country or territory that is the subject
of a sanctions program administered by the U.S. Treasury Department’s Office of
Foreign Assets Control (“OFAC”) or (ii) any party that (w) is publicly
identified on the most current list of “Specially Designated Nationals and
Blocked Persons” published by OFAC, (x) is a “designated national” pursuant to
OFAC’s Cuban Assets Control Regulations (31 C.F.R. 515.305), (y) resides, is
organized or chartered, or has a place of business in a country or territory
that is the subject of a sanctions program administered by OFAC or (z) is
publicly identified as prohibited from doing business with the United States
under the International Emergency Economic Powers Act, the Trading With the
Enemy Act, or any other requirement of law.

“environment” shall mean ambient and indoor air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, natural resources such as flora and fauna, the workplace or
as otherwise defined in any applicable law (including common law), rules,
regulations, codes, ordinances, orders, decrees or judgments, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the generation,
management, release or threatened release of, or exposure to, any hazardous
material or to occupational health and safety matters (to the extent relating to
the environment or hazardous materials).

 

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“Equity Interests” of any person shall mean any and all shares, interests,
rights to purchase or otherwise acquire, warrants, options, participations or
other equivalents of or interests in (however designated) equity or ownership of
such person, including any preferred stock, any limited or general partnership
interest and any limited liability company membership interest, and any
securities or other rights or interests convertible into or exchangeable for any
of the foregoing.

“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

“Event of Default” shall have the meaning assigned to such term in Section 7.01.

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

“Exchange Transaction Documents” shall mean the Offer to Exchange by Claire’s
Stores, Inc., CLSIP LLC, Claire’s (Gibraltar) Holdings Limited, dated August 12,
2016 (as may be amended or supplemented), and all documents related to the
exchange contemplated therein, including, without limitation, each of the “Term
Loan Credit Agreements” referred to in such Offer to Exchange and attached
thereto as Annexes A-1, A-2 and A-3, together with all collateral agreements,
intercreditor agreements and other documents entered into in connection with any
of the foregoing.

“Exchange Transaction Expenses” shall mean any fees or expenses incurred or paid
by the Fund, Holdings, the Borrower (or any direct or indirect parent of the
Borrower) or any of the Subsidiaries directly or indirectly in connection with
the Exchange Transactions, this Agreement and the other Loan Documents
(including expenses in connection with Swap Agreements) and the transactions
contemplated hereby and thereby including, without limitation, payments which
are accelerated or increased by reason of the consummation of the Exchange
Transactions.

“Exchange Transactions” shall mean, collectively, the transactions that have or
will occur pursuant to the Exchange Transaction Documents.

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower under any Loan Document, (a) any income Taxes imposed
on (or measured by) its net income (however denominated or franchise Taxes
imposed in lieu of net income Taxes) by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office is located or any
other jurisdiction as a result of such recipient engaging in a trade or business
in such jurisdiction for tax purposes, (b) any branch profits Tax or any similar
Tax that is imposed by any jurisdiction described in clause (a) above, (c) in
the case of a Lender making a Loan, (x) except in the case of a Lender that is
an assignee pursuant to a request by the Borrower under Section 2.19, any
withholding Tax that is in effect and would apply to amounts payable hereunder
to such Lender at the time such Lender becomes a party to such Loan (or
designates a new lending office) except to the extent that such Lender (or its
assignor, if any) was entitled,

 

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immediately before the designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to any withholding Tax
pursuant to Section 2.17(a) or Section 2.17(c) or (y) any withholding Tax that
is attributable to such Lender’s failure to comply with Section 2.17(e) or
Section 2.17(f) with respect to such Loan, and (d) any Taxes imposed under
FATCA.

“Existing European Revolving Credit Agreement” shall mean that certain
Multicurrency Revolving Facility Agreement, as originally dated as of October 2,
2014, as amended on July 15, 2015 and as amended and restated on September 20,
2016, by and among Claire’s (Gibraltar) Intermediate Holdings Limited, the
guarantors party thereto and HSBC Bank PLC, as lender (as amended, restated,
modified, replaced or refinanced from time to time).

“Existing Indebtedness” shall mean any of Claire’s Stores’ issued and
outstanding 8.875% Senior Secured Second Lien Notes due 2019, 7.750% Senior
Notes due 2020, 10.500% Senior Subordinated Notes due 2017 and PIK Senior
Subordinated Notes exchanged for Loans hereunder in the Exchange Transactions.

“Fair Market Value” shall mean, with respect to any asset or property, the price
which could be negotiated in an arms’-length transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.

“FATCA” shall mean Sections 1471 through 1474 of the Code (including, for the
avoidance of doubt, any agreements entered into pursuant to Section 1471(b)(1)
of the Code) as of the date of this Agreement (or any amended or successor
version that is substantively comparable and not materially more onerous to
comply with) and any current or future regulations or official interpretations
thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code
and any fiscal or regulatory legislation rules or practices adopted pursuant to
any intergovernmental agreement entered into in connection with the
implementation of such Sections of the Code.

“FCPA” shall mean the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder.

“Fee Letter” shall mean that certain fee letter, dated as of even date herewith,
between the Borrower and Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent.

“Federal Funds Rate” shall mean, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, that if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day.

 

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“Financial Officer” of any person shall mean the Chief Financial Officer,
principal accounting officer, Treasurer, Assistant Treasurer or Controller (or
the equivalents in the relevant jurisdictions) of such person.

“Final Maturity Date” shall mean September 20, 2021.

“Fixed Charge Coverage Ratio” shall have the definition ascribed to such term in
the Senior Secured First Lien Notes Indenture as of the Closing Date.

“Fund” shall mean Apollo Management VI, L.P. and other affiliated co-investment
partnerships.

“Fund Affiliate” shall mean (i) each Affiliate of the Fund and (ii) any
individual who is a partner or employee of Apollo Management, L.P. or the Fund.

“GAAP” shall mean generally accepted accounting principles in effect from time
to time in the United States, applied on a consistent basis, subject to the
provisions of Section 1.02; provided that any reference to the application of
GAAP in Sections 3.10(b), 3.12, 5.03, 5.07 and 6.02(e) to a Subsidiary (and not
as a consolidated Subsidiary of the Borrower) shall mean generally accepted
accounting principles in effect from time to time in the jurisdiction of
organization of such Subsidiary.

“Governmental Authority” shall mean any federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory or legislative
body.

“Guarantee” of or by any person (the “guarantor”) shall mean (a) any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation payable or
performable by another person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take or pay or otherwise) or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness or other obligations, (ii) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, (iv) entered into for the purpose of assuring
in any other manner the holders of such Indebtedness or other obligation of the
payment thereof or to protect such holders against loss in respect thereof (in
whole or in part) or (v) as an account party in respect of any letter of credit,
bank guarantee or other letter of guaranty issued to support such Indebtedness
or other obligation, or (b) any Lien on any assets of the guarantor securing any
Indebtedness (or any existing right, contingent or otherwise, of the holder of
Indebtedness to be secured by such a Lien) of any other person, whether or not
such Indebtedness or other obligation is assumed by the guarantor; provided,
however, the term “Guarantee” shall not include endorsements for deposit or
collection in the ordinary course of business or customary and reasonable
indemnity obligations in effect on the Closing Date or

 

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entered into in connection with any acquisition or disposition of assets
permitted by this Agreement (other than such obligations with respect to
Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal
to the stated or determinable amount of the Indebtedness in respect of which
such Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such person is required to
perform thereunder) as determined by such person in good faith.

“guarantor” shall have the meaning assigned to such term in the definition of
the term “Guarantee.”

“Holdings” shall mean Claire’s Inc., a Delaware corporation.

“Immaterial Subsidiary” shall mean any Subsidiary that (a) did not, as of the
last day of the fiscal quarter of the Borrower most recently ended, have assets
with a value in excess of 5.0% of the Consolidated Total Assets or revenues
representing in excess of 5.0% of total revenues of the Borrower and the
Subsidiaries on a consolidated basis for the applicable Test Period, and (b)
taken together with all Immaterial Subsidiaries as of the last day of the fiscal
quarter of the Borrower most recently ended, did not have assets with a value in
excess of 10.0% of Consolidated Total Assets or revenues representing in excess
of 10.0% of total revenues of the Borrower and the Subsidiaries on a
consolidated basis for the applicable Test Period. Each Immaterial Subsidiary as
of the Closing Date shall be set forth in Schedule 1.01A.

“Indebtedness” of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person under conditional sale or title retention agreements
relating to property or assets purchased by such person, (d) all obligations of
such person issued or assumed as the deferred purchase price of property or
services, to the extent the same would be required to be shown as a long-term
liability on a balance sheet prepared in accordance with GAAP, (e) all Capital
Lease Obligations of such person, (f) all net payments that such person would
have to make in the event of an early termination, on the date Indebtedness of
such person is being determined, in respect of outstanding Swap Agreements, (g)
the principal component of all obligations, contingent or otherwise, of such
person as an account party in respect of letters of credit and bank guarantees,
(h) the principal component of all obligations of such person in respect of
bankers’ acceptances, (i) all Guarantees by such person of Indebtedness
described in clauses (a) to (h) above) and (j) the amount of all obligations of
such person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock (excluding accrued dividends that have not increased the
liquidation preference of such Disqualified Stock); provided, that Indebtedness
shall not include (A) trade payables, accrued expenses and intercompany
liabilities arising in the ordinary course of business, (B) prepaid or deferred
revenue arising in the ordinary course of business, (C) purchase price holdbacks
arising in the ordinary course of business in respect of a portion of the
purchase prices of an asset to satisfy unperformed obligations of the seller of
such asset or (D) earn-out obligations until such obligations become a liability
on the balance sheet of such person in accordance with GAAP. The Indebtedness of
any person shall include the Indebtedness of any partnership in which such
person is a general partner, other than to the extent that the instrument or
agreement evidencing such Indebtedness expressly limits the liability of such
person in respect thereof. To the extent not otherwise included, Indebtedness
shall include the amount of any Receivables Net Investment.

 

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“Indemnified Taxes” shall mean all Taxes other than Excluded Taxes and Other
Taxes.

“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

“Initial Lenders” shall mean each person specified on Schedule 2.01 that (a)
becomes party hereto by executing and delivering a Joinder pursuant to Section
2.03 and (b) holds a Loan pursuant to Section 2.01 on the Closing Date.

“Interest Expense” shall mean, with respect to any person for any period, the
sum of (a) gross interest expense of such person for such period on a
consolidated basis, including (i) the amortization of debt discounts, (ii) the
amortization of all fees (including fees with respect to Swap Agreements)
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense and (iii) the portion of any payments or accruals with
respect to Capital Lease Obligations allocable to interest expense, (b)
capitalized interest of such person, and (c) commissions, discounts, yield and
other fees and charges incurred in connection with any Permitted Receivables
Financing which are payable to any person other than the Borrower. For purposes
of the foregoing, gross interest expense shall be determined after giving effect
to any net payments made or received and costs incurred by the Borrower and the
Subsidiaries with respect to Swap Agreements, and interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Borrower to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP.

“Interest Payment Date” shall mean each February 15 and August 15, provided,
that if any such date is not a Business Day, the Interest Payment Date shall be
the next Business Day after such date.

“Investment” shall have the meaning assigned to such term in Section 6.04.

“Joinder” shall mean a Joinder Agreement substantially in the form of Exhibit B
to this Agreement.

“Junior Financing” shall have the meaning assigned to such term in
Section 6.09(b).

“Lender” shall mean each Initial Lender (other than any such person that has
ceased to be a party hereto pursuant to an Assignment and Acceptance in
accordance with Section 9.04), as well as any person that becomes a “Lender”
hereunder pursuant to Section 9.04.

“lending office” shall mean, as to any Lender, the applicable branch, office or
Affiliate of such Lender designated by such Lender to make Loans.

“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, hypothecation, pledge, charge, security interest or similar encumbrance in
or on such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title

 

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retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset; provided that
in no event shall an operating lease or an agreement to sell be deemed to
constitute a Lien.

“Loan Documents” shall mean this Agreement and any Note issued under Section
2.09(d).

“Loans” shall mean, collectively, the term loans made by the Lenders pursuant to
Section 2.01.

“Local Time” shall mean New York City time.

“Management Group” shall mean the group consisting of the directors, executive
officers and other management personnel of Claire’s Stores, the Borrower and the
Subsidiaries, as the case may be, on the Closing Date together with (x) any new
directors whose election by such boards of directors or whose nomination for
election by the shareholders of the Borrower or Claire’s Stores, as the case may
be, was approved by a vote of a majority of the directors of the Borrower or
Claire’s Stores, as the case may be, then still in office who were either
directors on the Closing Date or whose election or nomination was previously so
approved and (y) executive officers and other management personnel of Claire’s
Stores, the Borrower and the Subsidiaries, as the case may be, hired at a time
when the directors on the Closing Date together with the directors so approved
constituted a majority of the directors of the Borrower or Claire’s Stores, as
the case may be.

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

“Material Adverse Effect” shall mean a material adverse effect on the business,
property, operations or condition of the Borrower and the Subsidiaries, taken as
a whole, or the validity or enforceability of any of the material Loan Documents
or the rights and remedies of the Administrative Agent and the Lenders
thereunder.

“Material Indebtedness” shall mean Indebtedness (other than Loans) of the
Borrower or any Subsidiary in an aggregate principal amount exceeding $30
million.

“Material Subsidiary” shall mean any Subsidiary other than Immaterial
Subsidiaries.

“Maturity Date” shall mean the earlier of (a) the date on which the outstanding
Obligations become due and payable in accordance with the terms of this
Agreement and (b) the Final Maturity Date.

“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

“Moody’s” shall mean Moody’s Investors Service, Inc.

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

 

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“Non-Consenting Lender” shall have the meaning assigned to such term in Section
2.19(c).

“Note” shall have the meaning assigned to such term in Section 2.09(d).

“Notes Offering Memorandum” shall mean the Offering Memorandum, dated September
6, 2012, in respect of additional Senior Secured First Lien Notes.

“Obligations” shall mean (a) the due and punctual payment by the Borrower of (i)
the unpaid principal of and interest (including PIK Interest and interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans made to the Borrower, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and (ii) all other monetary obligations of the Borrower to any of the
Administrative Agent or Lenders under this Agreement and each of the other Loan
Documents, including obligations to pay fees, expense and reimbursement
obligations and indemnification obligations, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) and
(b) the due and punctual performance of all other obligations of the Borrower
under or pursuant to this Agreement and each of the other Loan Documents.

“OID” shall have the meaning assigned to such term in Section 2.21.

“Other Taxes” shall mean any and all present or future stamp or documentary
Taxes or any other excise, transfer, sales, property, intangible, mortgage
recording, or similar Taxes arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, the Loan
Documents, and any and all interest, penalties and additions related thereto
(but not Excluded Taxes).

“Parent Entity” shall mean any direct or indirect parent of the Borrower.

“Participant” shall have the meaning assigned to such term in Section 9.04(d).

“Permitted Business Acquisition” shall mean any acquisition of all or
substantially all the assets of, or all the Equity Interests (other than
directors’ qualifying shares) in, or merger, consolidation or amalgamation with,
a person or division or line of business of a person (or any subsequent
investment made in a person, division or line of business previously acquired in
a Permitted Business Acquisition), if immediately after giving effect
thereto: (i) no Event of Default shall have occurred and be continuing or would
result therefrom; (ii) all transactions related thereto shall be consummated in
accordance with applicable laws; (iii) any acquired or newly formed Subsidiary
shall not be liable for any Indebtedness except for Indebtedness permitted by
Section 6.01; (iv) any person acquired in such acquisition, if acquired by the
Borrower, shall be merged into the Borrower, and (v) the aggregate amount of
such acquisitions and investments in assets that are not owned by the Borrower
shall not exceed the greater of (x) 4.5% of Consolidated Total Assets as of the
end of the fiscal quarter immediately prior to the date of such acquisition or
investment for which financial statements have been delivered pursuant to
Section 5.04 and (y) $150 million.

 

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“Permitted Holder” shall mean each of (i) the Fund and the Fund Affiliates, and
(ii) the Management Group.

“Permitted Investments” shall mean:

(a) direct obligations of the United States of America or any member of the
European Union or any agency thereof or obligations guaranteed by the United
States of America or any member of the European Union or any agency thereof, in
each case with maturities not exceeding two years;

(b) time deposit accounts, certificates of deposit and money market deposits
maturing within 180 days of the date of acquisition thereof issued by a bank or
trust company that is organized under the laws of the United States of America,
any state thereof or any foreign country recognized by the United States of
America having capital, surplus and undivided profits in excess of $250.0
million and whose long term debt, or whose parent holding company’s long term
debt, is rated A by S&P or A by Moody’s;

(c) repurchase obligations with a term of not more than 180 days for underlying
securities of the types described in clause (a) above entered into with a bank
meeting the qualifications described in clause (b) above;

(d) commercial paper, maturing not more than one year after the date of
acquisition, issued by a corporation (other than an Affiliate of the Borrower)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of P 1 (or higher) according to
Moody’s, or A 1 (or higher) according to S&P;

(e) securities with maturities of two years or less from the date of acquisition
issued or fully guaranteed by any State, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least A by S&P or A by Moody’s;

(f) shares of mutual funds whose investment guidelines restrict 95% of such
funds’ investments to those satisfying the provisions of clauses (a) through (e)
above;

(g) money market funds that (i) comply with the criteria set forth in Rule 2a 7
under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by
Moody’s and (iii) have portfolio assets of at least $5 billion;

(h) time deposit accounts, certificates of deposit and money market deposits in
an aggregate face amount not in excess of 0.5% of the total assets of the
Borrower and the Subsidiaries, on a consolidated basis, as of the end of the
Borrower’s most recently completed fiscal year; and

(i) instruments equivalent to those referred to in clauses (a) through (h) above
denominated in any foreign currency comparable in credit quality and tenor to
those referred to above and commonly used by corporations for cash management
purposes in any jurisdiction outside the United States to the extent reasonably
required in connection with any business conducted by any Subsidiary organized
in such jurisdiction.

 

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“Permitted Liens” shall have the meaning assigned to such term in Section 6.02.

“Permitted Loan Purchase” shall have the meaning assigned to such term in
Section 9.04(h).

“Permitted Loan Purchase Assignment and Acceptance” shall mean an assignment and
acceptance entered into by a Lender as an Assignor and an Affiliate Lender as an
Assignee, as acknowledged by the Administrative Agent (if required by Section
9.04) in the form of Exhibit C or such other form as shall be approved by the
Administrative Agent and the Borrower (such approval not to be unreasonably
withheld or delayed).

“Permitted Receivables Documents” shall mean all documents and agreements
evidencing, relating to or otherwise governing a Permitted Receivables
Financing.

“Permitted Receivables Financing” shall mean one or more transactions pursuant
to which (i) Receivables Assets or interests therein are sold to or financed by
one or more Special Purpose Receivables Subsidiaries, and (ii) such Special
Purpose Receivables Subsidiaries finance their acquisition of such Receivables
Assets or interests therein, or the financing thereof, by selling or borrowing
against Receivables Assets; provided, that (A) recourse to the Borrower or any
Subsidiary (other than the Special Purpose Receivables Subsidiaries) in
connection with such transactions shall be limited to the extent customary for
similar transactions in the applicable jurisdictions (including, to the extent
applicable, in a manner consistent with the delivery of a “true sale”/“absolute
transfer” opinion with respect to any transfer by the Borrower or any Subsidiary
(other than a Special Purpose Receivables Subsidiary) and (B) the aggregate
Receivables Net Investment since the Closing Date shall not exceed $50 million
at any time outstanding.

“Permitted Refinancing Indebtedness” shall mean any Indebtedness issued in
exchange for, or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund (collectively, “Refinance”), the Indebtedness being
Refinanced (or previous refinancings thereof constituting Permitted Refinancing
Indebtedness); provided, that such Indebtedness: (a) except with respect to
Section 6.01(j), has a weighted average life to maturity at the time such
Permitted Refinancing Indebtedness is incurred that is not less than the shorter
of (i) the remaining weighted average life to maturity of the Indebtedness being
Refinanced and (ii) the weighted average life to maturity that would result if
all payments of principal on the Indebtedness being Refinanced that were due on
or after the date that is one year following the Final Maturity Date were
instead due on such date one year following the Final Maturity Date; (b) has a
stated final maturity that is not earlier than the earlier of (x) the final
stated maturity of the Indebtedness being Refinanced or (y) 91 days following
the Final Maturity Date; (c) to the extent such Permitted Refinancing
Indebtedness is used to Refinance (i) Indebtedness junior in right of payment to
the Loans or any Guarantee of the Loans, as applicable, such Permitted
Refinancing Indebtedness is junior in right of payment to the Loans or such
Guarantee, as applicable; and (d) shall not include Indebtedness of the Borrower
that Refinances Indebtedness of an Unrestricted Subsidiary; provided, further,
that clauses (a) and (b) above will not apply to any Refinancing of Indebtedness
secured by a Lien.

 

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“Permitted Senior Indebtedness” shall mean Indebtedness under the Existing
European Revolving Credit Agreement or otherwise designated by the Borrower as
Permitted Senior Indebtedness, not to exceed $50,000,000 in aggregate principal
amount outstanding at any one time.

“person” shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or
government, individual or family trusts, or any agency or political subdivision
thereof.

“PIK Amount” shall have the meaning assigned to such term in Section 2.13(a).

“PIK Interest” shall have the meaning assigned to such term in Section 2.13(a).

“PIK Senior Subordinated Notes” shall mean $183,556,002 aggregate principal
amount of the Borrower’s 10.500% PIK Senior Subordinated Notes due 2017 issued
pursuant to the PIK Senior Subordinated Notes Indenture and outstanding on the
Closing Date.

“PIK Senior Subordinated Notes Indenture” shall mean the Indenture dated as of
May 4, 2016, by and among the Borrower, the guarantors party thereto and The
Bank of New York Mellon Trust Company, N.A., as trustee, under which the PIK
Senior Subordinated Notes were issued, as amended, restated, supplemented or
otherwise modified from time to time in accordance with the requirements thereof
and of this Agreement.

“Platform” shall have the meaning assigned to such term in Section 9.17.

“Preferred Stock” shall mean any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution or winding up.

“primary obligor” shall have the meaning given such term in the definition of
the term “Guarantee.”

“Pro Forma Basis” shall mean, as to any person, for any events as described
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 four consecutive fiscal quarter period ended on or before the occurrence of
such event (the “Reference Period”): (i) in making any determination of EBITDA,
effect shall be given to any Asset Sale, any acquisition, Investment,
disposition, merger, amalgamation, consolidation (or any similar transaction or
transactions not otherwise permitted under Section 6.04 or 6.05 that require a
waiver or consent of the Required Lenders and such waiver or consent has been
obtained), any dividend, distribution or other similar payment, any designation
of any Subsidiary as an Unrestricted Subsidiary and any Subsidiary
Redesignation, and any restructurings of the business of the Borrower or any of
the Subsidiaries that the Borrower or any of the Subsidiaries has determined to
make and/or made and are expected to have a continuing impact and are factually
supportable, which would include cost savings

 

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resulting from head count reduction, closure of facilities and similar
operational and other cost savings, which adjustments the Borrower determines
are reasonable as set forth in a certificate of a Financial Officer of the
Borrower (the foregoing, together with any transactions related thereto or in
connection therewith, the “relevant transactions”), in each case that occurred
during the Reference Period (or (x) in the case of restructurings determined to
be made, will occur within twelve months after the date of such certificate or
(y) in the case of determinations made pursuant to the definition of the term
“Permitted Business Acquisition” or pursuant to any other calculation of the
Total Net Secured Leverage Ratio, occurring during the Reference Period or
thereafter and through and including the date upon which the respective
Permitted Business Acquisition or incurrence of Indebtedness or Liens or other
relevant transaction is consummated), (ii) in making any determination on a Pro
Forma Basis, (x) all Indebtedness (including Indebtedness issued, incurred or
assumed as a result of, or to finance, any relevant transactions and for which
the financial effect is being calculated, whether incurred under this Agreement
or otherwise, but excluding normal fluctuations in revolving Indebtedness
incurred for working capital purposes and amounts outstanding under any
Permitted Receivables Financing, in each case not to finance any acquisition)
issued, incurred, assumed or permanently repaid during the Reference Period (or,
in the case of determinations made pursuant to the definition of the term
“Permitted Business Acquisition” or any other calculation of the Total Net
Secured Leverage Ratio, occurring during the Reference Period or thereafter and
through and including the date upon which the respective Permitted Business
Acquisition or incurrence of Indebtedness or Liens or other relevant transaction
is consummated) shall be deemed to have been issued, incurred, assumed or
permanently repaid at the beginning of such period 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 and (iii) (A) any Subsidiary
Redesignation then being designated, effect shall be given to such Subsidiary
Redesignation and all other Subsidiary Redesignations after the first day of the
relevant Reference Period and on or prior to the date of the respective
Subsidiary Redesignation then being designated, collectively, and (B) any
designation of a Subsidiary as an Unrestricted Subsidiary, effect shall be given
to such designation and all other designations of Subsidiaries as Unrestricted
Subsidiaries after the first day of the relevant Reference Period and on or
prior to the date of the then applicable designation of a Subsidiary as an
Unrestricted Subsidiary, collectively.

Pro forma calculations made pursuant to the definition of the term “Pro Forma
Basis” shall be determined in good faith by a Responsible Officer of the
Borrower and may include, (i) for any fiscal period ending on or prior to the
second anniversary of any relevant pro forma event, adjustments to reflect (1)
operating expense reductions and other operating improvements, synergies or cost
savings reasonably expected to result from such relevant pro forma event
(including, to the extent applicable, the Exchange Transactions) and (2) all
adjustments of the type used in connection with the calculation of Adjusted
EBITDA as set forth in footnote 2 to the “Summary Historical Consolidated
Financial Information” under “Summary” in the Notes Offering Memorandum to the
extent such adjustments, without duplication, continue to be applicable. The
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer of the Borrower setting forth such demonstrable or additional operating
expense reductions and other operating improvements, synergies or cost savings
and information and calculations supporting them in reasonable detail.

 

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For purposes of this definition, any amount in a currency other than Dollars
will be converted to Dollars based on the average exchange rate for such
currency for the most recent twelve month period immediately prior to the date
of determination in a manner consistent with that used in calculating EBITDA for
the applicable period.

“Qualified Equity Interests” shall mean any Equity Interests other than
Disqualified Stock.

“Real Property” shall mean, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned in fee or leased by the Borrower, together with, in each
case, all easements, hereditaments and appurtenances relating thereto, and all
improvements and appurtenant fixtures incidental to the ownership or lease
thereof.

“Receivables Assets” shall mean accounts receivable (including any bills of
exchange) and related assets and property from time to time originated, acquired
or otherwise owned by the Borrower or any Subsidiary.

“Receivables Net Investment” shall mean the aggregate cash amount paid by the
lenders or purchasers under any Permitted Receivables Financing in connection
with their purchase of, or the making of loans secured by, Receivables Assets or
interests therein, as the same may be reduced from time to time by collections
with respect to such Receivables Assets or otherwise in accordance with the
terms of the Permitted Receivables Documents (but excluding any such collections
used to make payments of items included in clause (c) of the definition of
Interest Expense); provided, however, that if all or any part of such
Receivables Net Investment shall have been reduced by application of any
distribution and thereafter such distribution is rescinded or must otherwise be
returned for any reason, such Receivables Net Investment shall be increased by
the amount of such distribution, all as though such distribution had not been
made.

“Reference Period” shall have the meaning assigned to such term in the
definition of the term “Pro Forma Basis.”

“Refinance” shall have the meaning assigned to such term in the definition of
the term “Permitted Refinancing Indebtedness,” and “Refinanced” shall have a
meaning correlative thereto.

“Register” shall have the meaning assigned to such term in Section 9.04(b).

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

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“Related Parties” shall mean, with respect to any specified person, such
person’s Affiliates and the respective directors, trustees, officers, employees,
agents and advisors of such person and such person’s Affiliates.

“Remaining Present Value” shall mean, as of any date with respect to any lease,
the present value as of such date of the scheduled future lease payments with
respect to such lease, determined with a discount rate equal to a market rate of
interest for such lease reasonably determined at the time such lease was entered
into.

“Required Lenders” shall mean, at any time, Lenders having a majority in the
aggregate principal amount of the outstanding Loans of all Lenders; provided,
that prior to a Bankruptcy Event, the portion of any Loans held by Debt Fund
Affiliate Lenders in the aggregate in excess of 49.9% of the Required Amount of
Loans shall be disregarded in determining Required Lenders at any time. For
purposes of the foregoing, “Required Amount of Loans” means, at any time, the
amount of Loans required to be held by Lenders in order for such Lenders to
constitute “Required Lenders” without giving effect to the foregoing proviso.

“Responsible Officer” of the Administrative Agent shall mean any officer within
the department of the Administrative Agent administering this matter, including
any vice president, assistant vice president, senior associate, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Administrative Agent who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any such matter is referred because of such person’s knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Agreement; and (b) of any other person shall mean
any executive officer or Financial Officer of such person and any other officer
or similar official thereof responsible for the administration of the
obligations of such person in respect of this Agreement.

“Restricted Payments” shall have the meaning assigned to such term in Section
6.06.

“S&P” shall mean Standard & Poor’s Ratings Group, Inc.

“Sale and Leaseback Transaction” shall have the meaning assigned to such term in
Section 6.03.

“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.

“Senior Secured Debt” at any date shall mean (i) the aggregate principal amount
of Consolidated Debt of the Borrower and the Subsidiaries outstanding at such
date that consists of, without duplication, (A) Indebtedness that in each case
is then secured by a Lien and (B) Indebtedness of the Subsidiaries, less (ii)
without duplication, the sum of (x) Unrestricted Cash and Permitted Investments
of the Borrower and the Subsidiaries on such date plus (y) the lesser of (A) the
Unrestricted Cash and Permitted Investments that would appear on an
unconsolidated balance sheet of the Borrower on such date and (B) 25% of EBITDA
for the relevant four quarter period used in calculating the Total Net Secured
Leverage Ratio.

 

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“Senior Secured First Lien Notes Indenture” shall mean, collectively, the
Indenture dated as of February 28, 2012 under which Claire’s Stores issued its
9.00% Senior Secured First Lien Notes due 2019 in an aggregate principal amount
of $1,125 million and the Indenture dated as of March 15, 2013 under which
Claire’s Stores issued its 6.125% Senior Secured First Lien Notes due 2020 in
the principal amount of $210 million, in each case, among Claire’s Stores,
certain of its subsidiaries party thereto and the trustee named therein from
time to time, as each may be amended, restated, supplemented or otherwise
modified from time to time.

“Special Purpose Receivables Subsidiary” shall mean a direct or indirect
Subsidiary of the Borrower established in connection with a Permitted
Receivables Financing for the acquisition of Receivables Assets or interests
therein, and which is organized in a manner intended to reduce the likelihood
that it would be substantively consolidated with the Borrower or any of the
Subsidiaries (other than Special Purpose Receivables Subsidiaries) in the event
the Borrower or any such Subsidiary becomes subject to a proceeding under the
U.S. Bankruptcy Code (or other insolvency law).

“subsidiary” shall mean, with respect to any person (herein referred to as the
“parent”), any corporation, partnership, association or other business entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, directly or indirectly, owned, Controlled or held, or (b) that is, at the
time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.

“Subsidiary” shall mean, unless the context otherwise requires, a subsidiary of
the Borrower. Notwithstanding the foregoing (and except for purposes of Sections
3.07, 3.10, 3.11, 5.03 and 5.09, and the definition of Unrestricted Subsidiary
contained herein), an Unrestricted Subsidiary shall be deemed not to be a
Subsidiary of the Borrower or any of the Subsidiaries for purposes of this
Agreement.

“Subsidiary Redesignation” shall have the meaning provided in the definition of
“Unrestricted Subsidiary” contained in this Section 1.01.

“Swap Agreement” shall mean any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided, that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
Claire’s Stores, the Borrower or any of the Subsidiaries shall be a Swap
Agreement.

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties
(including stamp duties), deductions, withholdings or similar charges (including
ad valorem charges) imposed by any Governmental Authority and any and all
interest, penalties and additions related thereto.

 

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“Test Period” shall mean, on any date of determination, the period of four
consecutive fiscal quarters of the Borrower then most recently ended (taken as
one accounting period).

“Total Net Secured Leverage Ratio” shall mean, on any date, the ratio of (a)
Senior Secured Debt as of such date to (b) EBITDA for the period of four
consecutive fiscal quarters of the Borrower most recently ended as of such date,
all determined on a consolidated basis in accordance with GAAP; provided, that
EBITDA shall be determined for the relevant Test Period on a Pro Forma Basis.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as the same may
from time to time be in effect in the State of New York or the Uniform
Commercial Code (or similar code or statute) of another jurisdiction, to the
extent applicable.

“Unrestricted Cash” shall mean cash or cash equivalents of the Borrower or any
of the Subsidiaries that would not appear as “restricted” on a consolidated
balance sheet of the Borrower or any of the Subsidiaries; provided, that, solely
for purposes of clause (ii)(y)(A) of the definition of “Senior Secured Debt”,
“Unrestricted Cash” shall mean cash or cash equivalents of Claire’s Stores or
any of the Subsidiaries (other than the Borrower and its Subsidiaries) that
would not appear as “restricted” on a consolidated balance sheet of Claire’s
Stores or any of the Subsidiaries.

“Unrestricted Subsidiary” shall mean (1) any Subsidiary identified on
Schedule 1.01B and (2) any Subsidiary designated by the Borrower as an
Unrestricted Subsidiary hereunder by written notice to the Administrative Agent;
provided, that the Borrower shall only be permitted to so designate a new
Unrestricted Subsidiary after the Closing Date and so long as (a) no Default or
Event of Default has occurred and is continuing or would result therefrom, (b)
such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by
the Borrower or any of the Subsidiaries) through Investments as permitted by,
and in compliance with, Section 6.04(j), and any prior or concurrent Investments
in such Subsidiary by the Borrower or any of the Subsidiaries shall be deemed to
have been made under Section 6.04(j) and (c) without duplication of clause (b),
any assets owned by such Unrestricted Subsidiary at the time of the initial
designation thereof shall be treated as Investments pursuant to Section 6.04(j);
provided, further, that at the time of the initial Investment by the Borrower or
any of the Subsidiaries in such Subsidiary, the Borrower shall designate such
entity as an Unrestricted Subsidiary in a written notice to the Administrative
Agent. The Borrower may designate any Unrestricted Subsidiary to be a Subsidiary
for purposes of this Agreement (each, a “Subsidiary Redesignation”); provided,
that (i) such Unrestricted Subsidiary, both before and after giving effect to
such designation, shall be a Wholly Owned Subsidiary of the Borrower, (ii) no
Default or Event of Default has occurred and is continuing or would result
therefrom, (iii) all representations and warranties contained herein and in the
Loan Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties have been made on and as of
the date of such Subsidiary Redesignation (both before and after giving effect
thereto), unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date, (iv) both before and after giving effect to
such designation, the Borrower could incur $1.00 of additional Indebtedness
pursuant to Section 6.01(z) and (v) the Borrower shall have delivered

 

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to the Administrative Agent an officer’s certificate executed by a Responsible
Officer of the Borrower, certifying to the best of such officer’s knowledge,
compliance with the requirements of preceding clauses (i) through (iv),
inclusive. Unrestricted Subsidiaries shall not be subject to the affirmative or
negative covenants, or, except as specified in the definition of “Subsidiary,”
Event of Default provisions contained in this Agreement.

“U.S. Bankruptcy Code” shall mean Title 11 of the United States Code, as
amended, or any similar federal or state law for the relief of debtors.

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

“Wholly Owned Subsidiary” of any person shall mean a subsidiary of such person,
all of the Equity Interests of which (other than directors’ qualifying shares or
nominee or other similar shares required pursuant to applicable law) are owned
by such person or another Wholly Owned Subsidiary of such person.

“Write-Down and Conversion Powers” shall mean, with respect to any EEA
Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule.

SECTION 1.02. Terms Generally. The definitions set forth or referred to in
Section 1.01 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. Except
as otherwise expressly provided herein, any reference in this Agreement to any
Loan Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time in accordance with the requirements hereof
and thereof. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided, that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the Closing Date in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

 

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ARTICLE II

The Loans

SECTION 2.01. Debt Exchange. On the Closing Date, upon the satisfaction of the
conditions set forth in Article IV, each Initial Lender severally agrees to
deliver Existing Indebtedness in exchange for Loans in a principal amount for
each such Initial Lender set forth opposite its name on Schedule 2.01
hereto. Once repaid, the Loans may not be reborrowed.

SECTION 2.02. [Reserved].

SECTION 2.03. Procedure for Closing. Each Initial Lender shall deliver Existing
Indebtedness held by it in an amount set forth in the Joinder delivered by such
Initial Lender in connection with the Exchange Transactions. Each Initial Lender
that has taken the actions described in the preceding sentence shall be deemed
to have made on the Closing Date, and shall have made, a Loan in the aggregate
principal amount set forth opposite its name on Schedule 2.01 hereto. For the
avoidance of doubt, the cashless exchange of Loans for Existing Indebtedness
shall be the only means by which the Lenders shall make the Loans hereunder, and
nothing in this Agreement shall (i) require any Lender to make its Loans by
making funds available to the Administrative Agent or the Borrower or (ii)
require the Administrative Agent to make any Loans or make funds available to
the Borrower.

SECTION 2.04. [Reserved].

SECTION 2.05. [Reserved].

SECTION 2.06. [Reserved].

SECTION 2.07. [Reserved].

SECTION 2.08. [Reserved].

SECTION 2.09. Repayment of Loans; Evidence of Debt.

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

(b) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) any amount received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

(c) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided, that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

 

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(d) Any Lender may request that Loans made by it be evidenced by a promissory
note (a “Note”). In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by such Lender and reasonably acceptable to the
Borrower. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

(e) The outstanding unpaid principal balance and all accrued and unpaid interest
on the Loans shall be due and payable on the Maturity Date.

SECTION 2.10. [Reserved].

SECTION 2.11. Prepayment of Loans.

(a) The Borrower shall have the right at any time and from time to time to
prepay the Loans in whole or in part, without premium or penalty in an aggregate
principal amount that is an integral multiple of $500,000 and not less than
$1,000,000. Prior to any prepayment of the Loans, the Borrower shall notify the
Administrative Agent in writing not later than 2:00 p.m., Local Time, one (1)
Business Day before the scheduled date of such prepayment, which notice shall be
irrevocable except to the extent conditioned on a refinancing of all or any
portion of the Loans. Each prepayment of Loans shall be applied to the Loans
such that each Lender receives its ratable share of such prepayment (based upon
the respective Loans held by the Lenders at the time of such
prepayment). Prepayments of Loans shall be accompanied by accrued interest on
the amount repaid.

SECTION 2.12. [Reserved].

SECTION 2.13. Interest.

(a) The Loans shall bear interest at a rate of 9.00% per annum. Subject to the
immediately following sentence, accrued interest on each Loan shall be payable
in arrears on each Interest Payment Date and upon the Maturity Date; provided,
that (x) interest accrued pursuant to Section 2.13(b) shall be payable on demand
and (y) in the event of any repayment or prepayment of any Loan, accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment. Notwithstanding the foregoing, interest accrued
(such interest, the “PIK Amount”) on each Loan held by a Lender that is an
Affiliate of the Borrower (each such Loan, an “Affiliate Loan”) shall not be
payable in cash on each Interest Payment Date and upon the Maturity Date, but
shall instead automatically be added to the principal amount of such Affiliate
Loan on each Interest Payment Date and upon the Maturity Date and shall
thereafter constitute principal for all purposes of this Agreement (such amount,
inclusive of all PIK Amounts, the “PIK Interest”). The principal amount of the
Loans increased by the addition of any PIK Amount may be evidenced in writing
only by the Administrative Agent (at the direction of the Required Lenders),
which writing shall be deemed to be correct absent manifest error.

 

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(b) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fees or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraph of
this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to Loans as provided in paragraph (a) of this Section; provided, that
this paragraph (b) shall not apply to any Event of Default that has been waived
by the Lenders pursuant to Section 9.08.

(c) All interest hereunder shall be computed on the basis of a year of 365 days
or 366, as applicable, and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

SECTION 2.14. [Reserved].

SECTION 2.15. [Reserved].

SECTION 2.16. [Reserved].

SECTION 2.17. Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower
under any Loan Document shall be made free and clear of and without deduction
for any Taxes, except where required by applicable law. If any applicable
withholding agent shall be required by applicable law to deduct any Taxes from
such payments, then (i) to the extent the deduction is on account of Indemnified
Taxes or Other Taxes, the sum payable by the Borrower shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.17) the
Administrative Agent or any Lender, as applicable, receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
applicable withholding agent shall make such deductions and (iii) the applicable
withholding agent shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

(b) In addition, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c) The Borrower shall indemnify the Administrative Agent and each Lender within
10 days after written demand therefor, for the full amount of any Indemnified
Taxes payable by the Administrative Agent or such Lender, as applicable, on or
with respect to any payment by or on account of any obligation of the Borrower
under any Loan Document and any Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.17) and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Administrative Agent on its own behalf, on
behalf of another Agent or on behalf of a Lender shall be conclusive absent
manifest error.

 

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(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

(e) Any Lender that is entitled to an exemption from or reduction of withholding
Tax or backup withholding Tax with respect to payments under any Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), to the
extent such Lender is legally eligible to do so, at the time or times prescribed
by applicable law, such properly completed and executed documentation prescribed
by applicable law, or as may reasonably be requested by the Borrower or the
Administrative Agent to permit such payments to be made without such withholding
tax or at a reduced rate. In addition, each Lender shall deliver such forms, if
legally eligible to deliver such forms, promptly upon the obsolescence,
expiration or invalidity of any form previously delivered by such Lender. Each
Lender shall promptly notify the Borrower and the Administrative Agent at any
time it determines that it is no longer in a position to provide any previously
delivered certificate.

(f) Without limiting the generality of Section 2.17(e) above:

(A) (i) If a payment made to a Lender under any Loan Document would be subject
withholding Tax imposed by FATCA if such Lender were to fail to comply with the
applicable reporting requirements of FATCA (including those contained in Section
1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the
Borrower and the Administrative Agent at the time or times prescribed by law and
at such time or times reasonably requested by the Borrower or the Administrative
Agent such documentation prescribed by applicable law (including as prescribed
by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower and the Administrative Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount to deduct and
withhold from such payment. Solely for purposes of this Section 2.17(f), “FATCA”
shall include any amendments made to FATCA after the date of this Agreement.

(ii) Notwithstanding anything herein to the contrary, the Borrower hereby agrees
that the Administrative Agent shall be entitled to make any withholding or
deduction from payments to the extent necessary to comply with FATCA for which
the Administrative Agent shall not have liability. The Borrower agrees to
indemnify and hold harmless the Administrative Agent for any losses it may
suffer due to actions it takes to comply with FATCA. The terms of this section
shall survive the termination of this Agreement and the resignation or removal
of the Administrative Agent.

 

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(B) Each Lender that is a United States Person shall deliver to the Borrower and
the Administrative Agent two executed originals of Internal Revenue Service Form
W 9 (or any subsequent versions thereof or successors thereto) on or before the
date such Lender becomes a party and upon the expiration of any form previously
delivered by such Lender.

(C) Notwithstanding any other provision of this Section 2.17, a Lender shall not
be required to deliver any form pursuant to this section that such Lender is not
legally eligible to deliver.

(g) If the Administrative Agent or Lender has received a refund (in cash or as
an offset against other Taxes of the same type payable) of any Indemnified Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section 2.17, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes
giving rise to such refund), net of all out of pocket expenses of the
Administrative Agent or such Lender (including any Taxes imposed with respect to
such refund) as is determined by the Administrative Agent, such Lender in good
faith and in its sole discretion, and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund);
provided, that the Borrower, upon the request of the Administrative Agent or
such Lender, agrees to repay as soon as reasonably practicable the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Administrative Agent or such Lender
in the event the Administrative Agent, such Lender is required to repay such
refund to such Governmental Authority. This Section 2.17 shall not be construed
to require the Administrative Agent or any Lender to make available its Tax
returns (or any other information relating to its Taxes which it deems in good
faith to be confidential) to the Borrower or any other person.

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs.

(a) Unless otherwise specified, the Borrower shall make each payment required to
be made by it hereunder (whether of principal, interest, fees, or of amounts
payable under Section 2.17 or otherwise) prior to 2:00 p.m., Local Time, on the
date when due, in immediately available funds, without condition or deduction
for any defense, recoupment, set off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent to the applicable account designated to the Borrower by the
Administrative Agent, except that payments pursuant to Sections 2.17 and 9.05
shall be made directly to the persons entitled thereto. The Administrative Agent
shall distribute any such payments received by it for the account of any other
person to the appropriate recipient promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, then unless
otherwise provided with respect to such payment, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension. All payments under the Loan Documents shall be made in Dollars. Any
payment required to be made by the Administrative Agent hereunder

 

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shall be deemed to have been made by the time required if the Administrative
Agent shall, at or before such time, have taken the necessary steps to make such
payment in accordance with the regulations or operating procedures of the
clearing or settlement system used by the Administrative Agent to make such
payment.

(b) If at any time insufficient funds are received by and available to the
Administrative Agent from the Borrower to pay fully all amounts of principal,
interest and fees then due from the Borrower hereunder, such funds shall be
applied first, to all fees and expenses then due and payable to the
Administrative Agent, second, to all fees and expenses then due and payable to
the Lenders, third, to accrued and unpaid interest on the Loans until paid in
full, fourth, to the aggregate outstanding principal amount of the Loans until
paid in full, fifth, to all other outstanding Obligations until paid in full,
and sixth, to the Borrower or otherwise in accordance with applicable law.

(c) If any Lender shall, by exercising any right of set off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans; provided, that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph (c) shall not be construed
to apply to any payment made by the Borrower pursuant to and in accordance with
the express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
(c) shall apply). The Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

(d) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption (but shall be under no obligation to do so), distribute to the
Lenders the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.

 

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(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.18(d), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders.

(a) If the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender with respect to
Indemnified Taxes pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or Affiliates, if, in the reasonable judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.17 in the future and (ii) would not
subject such Lender to any material unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender in any material respect. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

(b) If the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender with respect to
Indemnified Taxes pursuant to Section 2.17, then the Borrower may, at its sole
expense and effort, upon written notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided, that (i) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (ii)
in the case of any such assignment resulting from payments required to be made
with respect to Indemnified Taxes pursuant to Section 2.17, such assignment will
result in a reduction in such compensation or payments.

(c) If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent
to a proposed amendment, waiver, discharge or termination which pursuant to the
terms of Section 9.08 requires the consent of all of the Lenders affected and
with respect to which the Required Lenders shall have granted their consent,
then the Borrower shall have the right (unless such Non Consenting Lender grants
such consent) at its sole expense (including with respect to the processing and
recordation fee referred to in Section 9.04(b)(ii)(B)) to replace such Non
Consenting Lender by deeming such Non Consenting Lender to have assigned its
Loans hereunder to one or more assignees; provided, that: (a) all Obligations of
the Borrower owing to such Non Consenting Lender being replaced shall be paid in
full to such Non Consenting Lender concurrently with such assignment and (b) the
replacement Lender shall purchase the foregoing by paying to such Non Consenting
Lender a price equal to the principal amount thereof plus accrued and unpaid
interest thereon. No action by or consent of the Non-Consenting Lender shall be
necessary in connection with such assignment, which shall be immediately and

 

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automatically effective upon payment of such purchase price. In connection with
any such assignment the Borrower, Administrative Agent, such Non Consenting
Lender and the replacement Lender shall otherwise comply with Section 9.04;
provided, that if such Non-Consenting Lender does not comply with Section 9.04
within three Business Days after Borrower’s request, compliance with Section
9.04 shall not be required to effect such assignment.

SECTION 2.20. AHYDO. Notwithstanding anything to the contrary contained in this
Agreement, if (1) the Loans remain outstanding after the fifth anniversary of
the Closing Date and (2) the aggregate amount of the accrued but unpaid interest
on the Loans (including any amounts treated as interest for federal income tax
purposes, such as “original issue discount”) as of any Testing Date (as defined
below) occurring after such fifth anniversary exceeds an amount equal to the
Maximum Accrual (as defined below), then all such accrued but unpaid interest on
the Loans (including any amounts treated as interest for federal income tax
purposes, such as “original issue discount”) as of such time in excess of an
amount equal to the Maximum Accrual shall be paid in cash by the Borrower to the
Lenders on such Testing Date, it being the intent of the parties hereto that the
Loans will not be treated as an “applicable high yield debt obligation” under
Sections 163(e)(5) and Section 163(i) of the Code and shall be interpreted
consistently with such intent. For these purposes, the “Maximum Accrual” is an
amount equal to the product of the Loans’ issue price (as defined in Code
Sections 1273(b) and 1274(a)) and their yield to maturity, and a “Testing Date”
is any regularly scheduled date on which interest is required to be paid
hereunder and the date on which any “accrual period” (within the meaning of
Section 1272(a)(5) of the Code) closes. Any accrued interest which for any
reason has not theretofore been paid shall be paid in full on the date on which
the final principal payment on the Loans is made.

SECTION 2.21. OID. The Borrower and the Lenders agree that: (i) the Loans are
debt for federal income tax purposes; (ii) the Loans of each Lender constitute a
single debt instrument for purposes of Sections 1271 through 1275 of the Code
and the Treasury Regulations thereunder (pursuant to Treasury Regulations
Section 1.1275-2(c)), such debt instrument is treated as issued with original
issue discount (“OID”) solely as a result of the PIK Interest, and such debt
instrument is described in Treasury Regulations Section 1.1272-1(c)(2) and
therefore is governed by the rules set out in Treasury Regulations Section
1.1272-1(c), including Section 1.1272-1(c)(5), and is not governed by the rules
set out in Treasury Regulations Section 1.1275-4; (iii) any calculation by the
Borrower regarding the amount of OID for any accrual period on the Loans shall
be subject to the review and approval of the Lenders; and (iv) they will adhere
to this Agreement for federal income tax purposes and not take any action or
file any tax return, report or declaration inconsistent herewith unless
otherwise required due to a change in law. The inclusion of this Section 2.21 is
not an admission by any Lender that it is subject to United States taxation.

 

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ARTICLE III

Representations and Warranties

On the Closing Date, immediately after giving effect to the Exchange
Transactions, the Borrower represents and warrants to the Administrative Agent
and each of the Lenders that:

SECTION 3.01. Organization; Powers. Except as set forth on Schedule 3.01, the
Borrower and each of the Material Subsidiaries (a) is a partnership, limited
liability company or corporation duly organized, validly existing and in good
standing (or in any foreign jurisdiction where an equivalent status exists,
enjoys the equivalent status under the laws of such foreign jurisdiction of
organization outside of the United States) under the laws of the jurisdiction of
its organization, (b) has all requisite power and authority to own its property
and assets and to carry on its business as now conducted, (c) is qualified to do
business in each jurisdiction where such qualification is required, except where
the failure so to qualify would not reasonably be expected to have a Material
Adverse Effect, and (d) has the power and authority to execute, deliver and
perform its obligations under each of the Loan Documents and each other
agreement or instrument contemplated thereby to which it is or will be a party
and, in the case of the Borrower, to borrow and otherwise obtain credit
hereunder.

SECTION 3.02. Authorization. The execution, delivery and performance by the
Borrower of each of the Loan Documents to which it is a party, and the
borrowings hereunder and the transactions forming a part of the Exchange
Transactions (a) have been duly authorized by all corporate, stockholder,
partnership or limited liability company action required to be obtained by the
Borrower and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents (including any partnership, limited liability company or
operating agreements) or by laws of the Borrower, (B) any applicable order of
any court or any rule, regulation or order of any Governmental Authority or (C)
any provision of any indenture, certificate of designation for preferred stock,
agreement or other instrument to which the Borrower is a party or by which it or
any of its property is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under, give rise to a right of or result in any cancellation or
acceleration of any right or obligation (including any payment) or to a loss of
a material benefit under any such indenture, certificate of designation for
preferred stock, agreement or other instrument, or (iii) result in the creation
or imposition of any Lien upon or with respect to any property or assets now
owned or hereafter acquired by the Borrower, other than Permitted Liens.

SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by the Borrower will constitute, a legal, valid and
binding obligation of the Borrower enforceable against it in accordance with its
terms, subject to (i) the effects of bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other similar laws affecting creditors’
rights generally, (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (iii)
implied covenants of good faith and fair dealing.

 

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SECTION 3.04. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Exchange Transactions, except for (a)
such as have been made or obtained and are in full force and effect, (b) such
actions, consents and approvals the failure of which to be obtained or made
would not reasonably be expected to have a Material Adverse Effect and (c)
filings or other actions listed on Schedule 3.04.

SECTION 3.05. Financial Statements. The summary condensed consolidated financial
information of the Borrower (i) as of and for the fiscal year ended, January 31,
2016, and (ii) as of and for the three months ended April 30, 2016, which in
each case has been derived from consolidating schedules to Claire’s Stores’
consolidated financial statements as of the same date and for the same period,
copies of which have heretofore been furnished to each Lender, were prepared in
accordance with GAAP consistently applied throughout the period covered thereby
and present fairly in all material respects the consolidated financial position
of the Borrower as at such date and the consolidated results of operations and
cash flows of the Borrower for the fiscal year then ended.

SECTION 3.06. Subsidiaries.

(a) Schedule 3.06(a) sets forth as of the Closing Date the name and jurisdiction
of incorporation, formation or organization of each subsidiary of the Borrower
other than Immaterial Subsidiaries and, as to each such subsidiary, the
percentage of each class of Equity Interests owned by the Borrower or by any
such subsidiary.

(b) As of the Closing Date, there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees or directors and directors’ qualifying shares) of
any nature relating to any Equity Interests of the Borrower or any of the
Subsidiaries, except rights of employees to purchase Equity Interests of the
Borrower or as set forth on Schedule 3.06(b).

SECTION 3.07. Litigation.

(a) There are no actions, suits or proceedings at law or in equity or by or on
behalf of any Governmental Authority or in arbitration now pending, or, to the
knowledge of the Borrower, threatened in writing against or affecting the
Borrower or any of the Subsidiaries or any business, property or rights of any
such person which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

SECTION 3.08. Investment Company Act. None of the Borrower and the Subsidiaries
is an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended.

SECTION 3.09. [Reserved].

SECTION 3.10. Tax Returns. Except as set forth on Schedule 3.10:

(a) Except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, each of the Borrower and the
Subsidiaries has filed or caused to be filed all Tax returns required to have
been filed by it and each such Tax return is true and correct;

 

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(b) Each of the Borrower and the Subsidiaries has timely paid or caused to be
timely paid all Taxes shown to be due and payable by it on the returns referred
to in clause (a) and all other Taxes or assessments (or made adequate provision
(in accordance with GAAP) for the payment of all Taxes due) with respect to all
periods or portions thereof ending on or before the Closing Date (except Taxes
or assessments that are being contested in good faith by appropriate proceedings
in accordance with Section 5.03 and for which the Borrower or any of the
Subsidiaries (as the case may be) has set aside on its books adequate reserves
in accordance with GAAP), except for Taxes, which if not paid or adequately
provided for, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and

(c) Other than as would not be, individually or in the aggregate, reasonably
expected to have a Material Adverse Effect: as of the Closing Date, with respect
to each of the Borrower and the Subsidiaries, there are no claims being asserted
in writing with respect to any Taxes.

SECTION 3.11. Employee Benefit Plans. The Borrower and the Subsidiaries are in
compliance with (i) all applicable provisions of law and all applicable
regulations and published interpretations thereunder with respect to any
employee pension benefit plan or other employee benefit plan governed by the
laws of the jurisdiction of such entity and (ii) with the terms of any such
plan, except, in each case, for such noncompliance that would not reasonably be
expected to have a Material Adverse Effect.

SECTION 3.12. Labor Matters. Except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes pending or threatened against the Borrower or
any of the Subsidiaries; (b) the hours worked and payments made to employees of
the Borrower and the Subsidiaries have not been in violation of applicable labor
law dealing with fair labor standards; and (c) all payments due from the
Borrower or any of the Subsidiaries or for which any claim may be made against
the Borrower or any of the Subsidiaries on account of wages and employee health
and welfare insurance and other benefits have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary to the extent required
by GAAP. Except as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, the consummation of the Exchange
Transactions will not give rise to a right of termination or right of
renegotiation on the part of any union under any material collective bargaining
agreement to which the Borrower or any of the Subsidiaries (or any predecessor)
is a party or by which the Borrower or any of the Subsidiaries is bound.

SECTION 3.13. Insurance. As of the Closing Date, all material insurance
maintained by or on behalf of the Borrower and the Subsidiaries is in full force
and effect.

SECTION 3.14. No Default. No Default or Event of Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

 

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SECTION 3.15. Intellectual Property; Licenses, Etc. Except as would not
reasonably be expected to have a Material Adverse Effect and as set forth in
Schedule 3.15, (a) the Borrower and each of the Subsidiaries owns, or possesses
the right to use, all of the patents, registered trademarks, registered service
marks or trade names, registered copyrights or mask works, domain names,
applications and registrations for any of the foregoing that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other person.

SECTION 3.16. Anti-Money Laundering and Economic Sanctions Laws.

(a) Except as could not reasonably be expected to have a Material Adverse
Effect, none of the Borrower or any of its Subsidiaries or its Affiliates and
none of the respective officers, directors or agents of the Borrower or such
Subsidiary or Affiliate has violated or is in violation of any applicable
Anti-Money Laundering Laws. None of the Borrower or any of its Subsidiaries or
its Affiliates or any director, officer, employee, agent, Affiliate or
representative of the Borrower or such Subsidiary or Affiliate (each, a
“Specified Person”) is an individual or entity currently the subject of any
sanctions administered or enforced by OFAC, the United Nations Security Council,
the European Union, Her Majesty’s Treasury or other relevant sanctions authority
(collectively, “Sanctions”), nor is the Borrower or any of its Subsidiaries or
its Affiliates located, organized or resident in a country or territory that is
the subject of Sanctions.

(b) No Specified Person will use any proceeds of the Loans or lend, contribute
or otherwise make available such proceeds to any person for the purpose of
financing the activities of or with any person or in any country or territory
that, at the time of funding, is an Embargoed Person.

(c) Except to the extent conducted in accordance with applicable law, neither
Borrower nor any of its Subsidiaries and Affiliates and none of the respective
officers, directors, brokers or agents of the Borrower, such Subsidiary or such
Affiliate acting or benefiting in any capacity in connection with the Loans (i)
conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Embargoed Person, (ii)
deals in, or otherwise engages in any transaction related to, any property or
interests in property blocked pursuant to any Sanctions 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 applicable
prohibitions set forth in any Economic Sanctions Laws.

(d) Except as otherwise disclosed in Schedule 3.16, to the Borrower’s knowledge,
within the past five years, each of the Borrower and its Subsidiaries is in
compliance in all material respects with and has not committed any material
violation of applicable law or regulation, permit, order or other decision or
requirement having the force or effect of law or regulation of any governmental
entity concerning the importation of products, the exportation or re-exportation
of products (including technology and services), the terms and conduct of
international transactions and the making or receiving of international
payments, including, as applicable, the Tariff Act of 1930, as amended, and
other laws, regulations and programs administered or enforced by U.S. Customs
and Border Protection and U.S. Immigration and Customs Enforcement, and their
predecessor agencies, the Export Administration Act of 1979, as

 

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amended, the Export Administration Regulations, the International Emergency
Economic Powers Act, as amended, the Trading With the Enemy Act, as amended, the
Arms Export Control Act, as amended, the International Traffic in Arms
Regulations, Executive Orders of the President regarding embargoes and
restrictions on transactions with designated entities, the embargoes and
restrictions administered by the U.S. Office of Foreign Assets Control, the
anti-boycott laws administered by the U.S. Department of Commerce and the
anti-boycott laws administered by the U.S. Department of the Treasury.

SECTION 3.17. Anti-corruption Laws. None of the Borrower and its Subsidiaries
nor any director, officer, agent, employee or Affiliate of the Borrower or such
Subsidiary is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the FCPA or any other applicable
anti-corruption laws, including, without limitation, making use of the mails or
any means or instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization or approval of the payment of
any money, or other property, gift, promise to give or authorization of the
giving of anything of value, directly or indirectly, to any “foreign official”
(as such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office in contravention of the
FCPA or any other applicable anti-corruption laws. The Borrower and its
Subsidiaries and their respective Affiliates have conducted their businesses in
compliance with applicable anti-corruption laws and the FCPA and will maintain
policies and procedures designed to promote and achieve compliance with such
laws and with the representation and warranty contained herein.

SECTION 3.18. Federal Reserve Regulations.

(a) Neither the Borrower nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.

(b) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose that entails a violation of,
or that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or Regulation X.

ARTICLE IV

Conditions of Closing Date

SECTION 4.01. Closing Date. The obligations of the Lenders to make Loans shall
become effective on the first date on which:

(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of each
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include electronic transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.

 

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(b) The Administrative Agent shall have received an executed Joinder from each
Initial Lender.

(c) The Exchange Transactions have been consummated in accordance with their
terms and all conditions precedent thereto have been satisfied or waived.

(d) The Administrative Agent shall have received, on behalf of itself and the
Lenders on the Closing Date, a favorable written opinion (or opinions) of
Morgan, Lewis & Bockius LLP, special New York counsel for the Borrower, and of
Hassans International Law Firm, special Gibraltar counsel for the Borrower, in
each case, in form and substance reasonably satisfactory to the Administrative
Agent and the Lenders (A) dated the Closing Date, (B) addressed to the
Administrative Agent and the Lenders and (C) covering such matters relating to
the Loan Documents as the Lenders shall reasonably request.

(e) The Administrative Agent shall have received from the Borrower each of the
items referred to in clauses (i), (ii), (iii) and (iv) below:

(i) a copy of the certificate of incorporation and the memorandum and articles
of incorporation of the Borrower, including all amendments thereto, certified as
of a recent date by the corporate secretary of the Borrower, and a certificate
as to the good standing of the Borrower as of a recent date issued by the
Registrar of Companies in Gibraltar;

(ii) a certificate of a director or similar officer of such person dated the
Closing Date and certifying:

(A) that attached thereto is a true and complete copy of resolutions duly
adopted by the board of directors of the Borrower authorizing the execution,
delivery and performance of the Loan Documents and the borrowings hereunder, and
that such resolutions have not been modified, rescinded or amended and are in
full force and effect on the Closing Date,

(B) that the certificate of incorporation and the memorandum and articles of
incorporation of the Borrower have not been amended since the date of the last
amendment thereto disclosed pursuant to clause (i) above,

(C) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of the Borrower, and

(D) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of the Borrower, and

 

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(E) as to the absence of any pending proceeding for the dissolution or
liquidation of such person;

(iii) a certificate of a director or another officer as to the incumbency and
specimen signature of the director or similar officer executing the certificate
pursuant to clause (ii) above; and

(iv) such other documents as the Administrative Agent, the Lenders on the
Closing Date may reasonably request (including without limitation, tax
identification numbers and addresses).

(f) The Administrative Agent shall have received all documentation and other
information required by regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including without
limitation, the USA PATRIOT Act.

(g) The representations and warranties set forth in the Loan Documents shall be
true and correct in all material respects as of such date, as applicable, with
the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date).

(h) No Event of Default or Default shall have occurred and be continuing.

(i) The Administrative Agent shall have received the Fee Letter executed by the
Borrower.

For purposes of determining compliance with the conditions specified in this
Article IV, each Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lenders unless a Responsible Officer of the Administrative Agent shall have
received notice from such Lender prior to the Closing Date specifying its
objection thereto.

ARTICLE V

Affirmative Covenants

The Borrower covenants and agrees with the Administrative Agent and each Lender
that so long as this Agreement shall remain in effect (other than in respect of
contingent indemnification and expense reimbursement obligations for which no
claim has been made) and until the principal of and interest on each Loan, all
fees and all other expenses or amounts payable under any Loan Document shall
have been paid in full, unless the Required Lenders shall otherwise consent in
writing, the Borrower will, and will cause each of the Material Subsidiaries to:

 

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SECTION 5.01. Existence; Businesses and Properties.

(a) Do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence, except, in the case of a Subsidiary,
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect and except as otherwise expressly permitted under Section 6.05;
provided that the Borrower may liquidate or dissolve one or more Subsidiaries if
the assets of such Subsidiaries to the extent they exceed estimated liabilities
are acquired by the Borrower or a Wholly Owned Subsidiary of the Borrower in
such liquidation or dissolution.

(b) Except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect, do or cause to be done all things necessary to (i)
lawfully obtain, preserve, renew, extend and keep in full force and effect the
permits, franchises, authorizations, patents, trademarks, service marks, trade
names, copyrights, licenses and rights with respect thereto necessary to the
normal conduct of its business, and (ii) at all times maintain and preserve all
property necessary to the normal conduct of its business and keep such property
in good repair, working order and condition and from time to time make, or cause
to be made, all needful and proper repairs, renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in
connection therewith, if any, may be properly conducted at all times (in each
case except as expressly permitted by this Agreement).

SECTION 5.02. Insurance.

(a) Maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by similarly situated companies engaged in the same or similar businesses
operating in the same or similar locations.

SECTION 5.03. Taxes. Pay and discharge promptly when due all material Taxes
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims which, if unpaid, might give rise to a Lien (other than a Permitted Lien)
upon such properties or any part thereof; provided, however, that such payment
and discharge shall not be required with respect to any such Tax so long as (a)
the validity or amount thereof shall be contested in good faith by appropriate
proceedings and (b) the Borrower or the affected Subsidiary, as applicable,
shall have set aside on its books reserves in accordance with GAAP with respect
thereto.

SECTION 5.04. Financial Statements, Reports, etc. Furnish to the Administrative
Agent (which will promptly furnish such information to the Lenders):

(a) Within 90 days (or such other time period as specified in the SEC’s rules
and regulations with respect to non-accelerated filers for the filing of annual
reports on Form 10-K), for each fiscal year (commencing with the fiscal year
ending on or about January 31, 2017), a condensed consolidated balance sheet and
related statements of operations, comprehensive income and stockholder’s equity
which in each case has been derived from consolidating schedules to Claire’s
Stores’ consolidated financial statements as of the same date and for the same
period showing the financial position of

 

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the Borrower and the Subsidiaries as of the close of such fiscal year and the
condensed consolidated results of their operations during such year, which
condensed consolidated balance sheet and related statements of operations,
comprehensive income and stockholder’s equity shall be, as derived from
consolidating schedules to Claire’s Stores’ consolidated financial statements as
of the same date and for the same period, audited by independent public
accountants of recognized national standing and accompanied by an opinion of
such accountants (which shall not be qualified as to scope of audit or as to the
status of the Borrower or any Material Subsidiary as a going concern) to the
effect that such condensed consolidated financial statements fairly present, in
all material respects, the financial position and results of operations of the
Borrower and the Subsidiaries on a condensed consolidated basis in accordance
with GAAP, subject to exceptions consistent with the presentation of financial
information contained in the Notes Offering Memorandum (it being understood that
the filing with the SEC of annual reports on Form 10-K of Claire’s Stores and
its consolidated Subsidiaries, or delivery by the Claire’s Stores of such
reports, shall satisfy the requirements of this Section 5.04(a) to the extent
such annual reports include the information specified herein);

(b) Within 45 days (or such other time period as specified in the SEC’s rules
and regulations with respect to non-accelerated filers for the filing of
quarterly reports on Form 10-Q), for each of the first three fiscal quarters of
each fiscal year, a condensed consolidated balance sheet and related statements
of operations and comprehensive income showing the financial position of the
Borrower and the Subsidiaries as of the close of such fiscal quarter and the
condensed consolidated results of their operations during such fiscal quarter
and the then-elapsed portion of the fiscal year, all of which shall be in
reasonable detail and which condensed consolidated balance sheet and related
statements of operations and comprehensive income shall be certified by a
Financial Officer of the Borrower on behalf of the Borrower as fairly
presenting, in all material respects, the financial position and results of
operations of the Borrower and the Subsidiaries on a condensed consolidated
basis in accordance with GAAP (subject to normal year-end audit adjustments and
the absence of footnotes, and to exceptions consistent with the presentation of
financial information contained in the Notes Offering Memorandum (it being
understood that the filing with the SEC of quarterly reports on Form 10-Q of
Claire’s Stores and its subsidiaries, or the delivery by Claire’s Stores of such
reports, shall satisfy the requirements of this Section 5.04(b) to the extent
such quarterly reports include the information specified herein);

(c) (x) concurrently with any delivery of financial statements under paragraphs
(a) or (b) above, a certificate of a Financial Officer of the Borrower (i)
certifying that no Event of Default or Default has occurred or, if such an Event
of Default or Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto, (ii)
setting forth the calculation and uses of the Cumulative Credit for the fiscal
period then ended if the Borrower shall have used the Cumulative Credit for any
purpose during such fiscal period and (iii) certifying a list of names of all
Immaterial Subsidiaries, that each Subsidiary set forth on such list
individually qualifies as an Immaterial Subsidiary and that all such
Subsidiaries in the aggregate do not exceed the limitation set forth in clause
(b) of the definition of the term “Immaterial Subsidiary”; (y) certifying a list
of names of all Unrestricted

 

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Subsidiaries and that each Subsidiary set forth on such list qualifies as an
Unrestricted Subsidiary and (z) concurrently with any delivery of financial
statements under paragraph (a) above, if the accounting firm is not restricted
from providing such a certificate by its policies, a certificate of the
accounting firm opining on or certifying such statements stating whether they
obtained knowledge during the course of their examination of such statements of
any Default or Event of Default (which certificate may be limited to accounting
matters and disclaim responsibility for legal interpretations); and

(d) Within 15 days after filed with the SEC, any reports of Claire’s Stores
filed on Form 8-K (it being understood that the filing with the SEC of reports
on Form 8-K of Claire’s Stores and its subsidiaries, or the delivery by Claire’s
Stores of such reports, shall satisfy the requirements of this Section 5.04(d)).

SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative Agent
(which will promptly thereafter furnish to the Lenders) written notice of the
following promptly after any Responsible Officer of the Borrower obtains actual
knowledge thereof:

(a) any Event of Default or Default, specifying the nature and extent thereof
and the corrective action (if any) proposed to be taken with respect thereto;
and

(b) the filing or commencement of, or any written threat or notice of intention
of any person to file or commence, any action, suit or proceeding, whether at
law or in equity or by or before any Governmental Authority or in arbitration,
against the Borrower or any of the Subsidiaries as to which an adverse
determination is reasonably probable and which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect.

SECTION 5.06. Compliance with Laws. Comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect; provided, that
this Section 5.06 shall not apply to laws related to Taxes, which are the
subject of Section 5.03.

SECTION 5.07. Maintaining Records; Access to Properties and Inspections.
Maintain all financial records in accordance with GAAP and permit any persons
designated by the Administrative Agent (acting at the written direction of
Required Lenders) or, upon the occurrence and during the continuance of an Event
of Default, any Lender to visit and inspect the financial records and the
properties of the Borrower at reasonable times, upon reasonable prior notice to
the Borrower, and as often as reasonably requested and to make extracts from and
copies of such financial records, and permit any persons designated by the
Administrative Agent (acting at the written direction of Required Lenders) or,
upon the occurrence and during the continuance of an Event of Default, any
Lender upon reasonable prior notice to the Borrower to discuss the affairs,
finances and condition of the Borrower with the officers thereof and independent
accountants therefor (subject to reasonable requirements of confidentiality,
including requirements imposed by law or by contract).

SECTION 5.08. [Reserved].

 

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SECTION 5.09. Fiscal Year; Accounting. Cause its fiscal year to end on the
Saturday closest to January 31, unless prior written notice of a change is given
to the Administrative Agent.

ARTICLE VI

Negative Covenants

The Borrower covenants and agrees with each the Administrative Agent and Lender
that, so long as this Agreement shall remain in effect (other than in respect of
contingent indemnification and expense reimbursement obligations for which no
claim has been made) and until the principal of and interest on each Loan, all
fees and all other expenses or amounts payable under any Loan Document have been
paid in full, unless the Required Lenders shall otherwise consent in writing,
the Borrower will not, and will not permit any of the Subsidiaries to:

SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:

(a) Indebtedness existing on the Closing Date and set forth on Schedule 6.01 and
any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness
(other than intercompany indebtedness Refinanced with Indebtedness owed to a
person not affiliated with the Borrower or any Subsidiary);

(b) Indebtedness created hereunder and under the other Loan Documents, the
Additional Term Loan Facility, the Permitted Senior Indebtedness and any
Permitted Refinancing Indebtedness incurred to Refinance any such Indebtedness;

(c) Indebtedness of the Borrower or any Subsidiary pursuant to Swap Agreements;

(d) [Reserved];

(e) Indebtedness owed to (including obligations in respect of letters of credit
or bank guarantees or similar instruments for the benefit of) any person
providing workers’ compensation, health, disability or other employee benefits
or property, casualty or liability insurance to the Borrower or any Subsidiary,
pursuant to reimbursement or indemnification obligations to such person, in each
case in the ordinary course of business; provided, that upon the incurrence of
Indebtedness with respect to reimbursement obligations regarding workers’
compensation claims, such obligations are reimbursed not later than 30 days
following such incurrence;

(f) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower; provided, that (i) Indebtedness of any Subsidiary owing to the
Borrower shall be subject to Section 6.04(b) and (ii) Indebtedness of the
Borrower to any Subsidiary shall, to the greatest extent permitted by applicable
law, be subordinated to the Obligations on substantially the same terms as
intercompany loans are required to be subordinated under the credit agreement
for the Additional Term Loan Facility;

 

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(g) Indebtedness in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and completion guarantees and similar obligations, in each case
provided in the ordinary course of business, including those incurred to secure
health, safety and environmental obligations in the ordinary course of business;

(h) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business or other cash management services in
the ordinary course of business; provided, that (x) such Indebtedness (other
than credit or purchase cards) is extinguished within ten Business Days of
notification to the Borrower of its incurrence and (y) such Indebtedness in
respect of credit or purchase cards is extinguished within 60 days from its
incurrence;

(i) Capital Lease Obligations or other obligations incurred by the Borrower or
any Subsidiary in respect of any Sale and Leaseback Transaction that is
permitted under Section 6.03, and any Permitted Refinancing Indebtedness in
respect thereof;

(j) Indebtedness of a Subsidiary acquired after the Closing Date or an entity
merged into or consolidated or amalgamated with the Borrower or any Subsidiary
after the Closing Date and Indebtedness assumed in connection with the
acquisition of assets, which Indebtedness in each case exists at the time of
such acquisition, merger, consolidation or amalgamation and is not created in
contemplation of such event and where such acquisition, merger, consolidation or
amalgamation is permitted by this Agreement and (ii) any Permitted Refinancing
Indebtedness incurred to Refinance such Indebtedness; provided, that (A) in each
case, no Default or Event of Default shall have occurred and be continuing or
would result therefrom and (B) the amount of Indebtedness incurred pursuant to
this paragraph (j) shall not exceed the greater of $75 million and 2.25% of
Consolidated Total Assets as of the end of the fiscal quarter immediately prior
to the date of such incurrence for which financial statements have been
delivered pursuant to Section 5.04;

(k) Capital Lease Obligations, mortgage financings and purchase money
Indebtedness incurred by the Borrower or any Subsidiary prior to or within 270
days after the acquisition, lease or improvement of the respective property
(real or personal, and whether through the direct purchase of property or the
Equity Interests of any person owning such property) permitted under this
Agreement in order to finance such acquisition, lease or improvement, and any
Permitted Refinancing Indebtedness in respect thereof; provided, that, if
immediately after giving effect to such transaction, the Total Net Secured
Leverage Ratio of the Borrower on a Pro Forma Basis would be greater than
5.00:1.00, then the amount of Indebtedness incurred pursuant to this paragraph
(k), when combined with the Remaining Present Value of outstanding leases
permitted under Section 6.03, shall not exceed the greater of $75 million and
2.25% of Consolidated Total Assets as of the end of the fiscal quarter
immediately prior to the date of such incurrence for which financial statements
have been delivered pursuant to Section 5.04; provided, further, that any lease
arrangements that are not (or, if entered into after the Closing Date, would not
have been) Capital Lease Obligations as of the Closing Date but subsequently
become Capital Lease Obligations whether as a result of (x) any

 

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changes in GAAP or (y) any changes in the terms of such arrangements required in
connection with the ordinary course renewal or extension thereof, shall not
constitute Capital Lease Obligations hereunder or for any other provision of
this Agreement;

(l) [Reserved];

(m) intercompany loans and advances from the Borrower to Claire’s Stores;

(n) other Indebtedness of the Borrower or any Subsidiary, in an aggregate
principal amount that at the time of, and after giving effect to, the incurrence
thereof, would not exceed the greater of $100 million and 3.0% of Consolidated
Total Assets as of the end of the fiscal quarter immediately prior to the date
of such incurrence for which financial statements have been delivered pursuant
to Section 5.04;

(o) Guarantees (i) by the Borrower of any indebtedness or obligations of the
Borrower permitted to be incurred under this Agreement, (ii) by the Borrower of
Indebtedness otherwise permitted hereunder of any Subsidiary to the extent such
Guarantees are permitted by Section 6.04 (other than Section 6.04(v), (iii) by
any Subsidiary of Indebtedness of another Subsidiary and (iv) by the Borrower of
Indebtedness of Subsidiaries incurred for working capital purposes in the
ordinary course of business on ordinary business terms so long as such
Indebtedness is permitted to be incurred under Section 6.01(z) to the extent
such Guarantees are permitted by Section 6.04 (other than Section 6.04(v));
provided, that Guarantees by the Borrower under this Section 6.01(o) of any
other Indebtedness of a person that is subordinated to other Indebtedness of
such person shall be expressly subordinated to the Obligations;

(p) Indebtedness arising from agreements of the Borrower or any Subsidiary
providing for indemnification, adjustment of purchase or acquisition price or
similar obligations, in each case, incurred or assumed in connection with any
Permitted Business Acquisition or the disposition of any business, assets or a
Subsidiary not prohibited by this Agreement, other than Guarantees of
Indebtedness incurred by any person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;

(q) Indebtedness in respect of letters of credit, bank guarantees, warehouse
receipts or similar instruments issued to support performance obligations and
trade letters of credit (other than obligations in respect of other
Indebtedness) in the ordinary course of business;

(r) Indebtedness consisting of (i) the financing of insurance premiums or (ii)
take or pay obligations contained in supply arrangements, in each case, in the
ordinary course of business;

(s) unsecured Indebtedness in respect of obligations of the Borrower or any
Subsidiary to pay the deferred purchase price of goods or services or progress
payments in connection with such goods and services; provided, that such
obligations are incurred in connection with open accounts extended by suppliers
on customary trade terms (which require that all such payments be made within 60
days after the incurrence of the related obligations) in the ordinary course of
business and not in connection with the borrowing of money or any Swap
Agreements;

 

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(t) Indebtedness representing deferred compensation to employees of the Borrower
or any Subsidiary incurred in the ordinary course of business;

(u) Indebtedness in connection with Permitted Receivables Financings;

(v) [Reserved];

(w) Indebtedness incurred on behalf of, or representing Guarantees of
Indebtedness of, joint ventures not in excess, at any one time outstanding, of
the greater of $25 million or 1.0% of Consolidated Total Assets as of the end of
the fiscal quarter immediately prior to the date of such incurrence for which
financial statements have been delivered pursuant to Section 5.04;

(x) Indebtedness issued by the Borrower or any Subsidiary to any Parent Entity
permitted by Section 6.06;

(y) Indebtedness consisting of obligations of the Borrower or any Subsidiary
under deferred compensation or other similar arrangements incurred by such
person in connection with Permitted Business Acquisitions or any other
Investment permitted hereunder;

(z) (i) Other Indebtedness incurred by the Borrower; provided that (A) at the
time of the incurrence of such Indebtedness and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom; and (B) (x) the Fixed Charge Coverage Ratio of the Borrower
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred would have been at least 2.00:1.00
determined on a Pro Forma Basis, as if the additional Indebtedness had been
incurred and the application of proceeds therefrom had occurred at the beginning
of such four quarter period, and (ii) Permitted Refinancing Indebtedness
incurred to Refinance such Indebtedness;

(aa) Indebtedness of Subsidiaries (other than Indebtedness owed to the Borrower
or another Subsidiary) in an aggregate amount not to exceed at any time
outstanding the greater of $50 million and 1.5% of Consolidated Total Assets at
the time of such incurrence;

(bb) Indebtedness of (x) the Borrower or any Subsidiary incurred to finance an
acquisition or (y) Persons that are being acquired by the Borrower or any
Subsidiary or merged, consolidated or amalgamated with or into the Borrower or
any Subsidiary in accordance with the terms of this Agreement; provided, that
after giving effect to such acquisition or merger, consolidation or
amalgamation, either (A) the Borrower would be permitted to incur at least $1.00
of additional Indebtedness under Section 6.01(z) or (B) the Fixed Charge
Coverage Ratio of the Borrower would be equal to or greater than immediately
prior to such acquisition or merger, consolidation or amalgamation; and

 

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(cc) all premium (if any, including tender premiums), defeasance costs, interest
(including post-petition interest), fees, expenses, charges and additional or
contingent interest on obligations described in paragraphs (a) through (bb)
above.

For purposes of determining compliance with this Section 6.01:

(i) in the event that an item of Indebtedness, Disqualified Stock or Preferred
Stock (or any portion thereof) meets the criteria of one or more of the
categories of permitted Indebtedness described in clauses (a) through (y) above,
the Borrower shall, in its sole discretion, classify or reclassify, or later
divide, classify or reclassify, such item of Indebtedness, Disqualified Stock or
Preferred Stock (or any portion thereof) in any manner and at any time that
complies with this Section 6.01; and

(ii) the amount of any Indebtedness denominated in any currency other than
Dollars shall be calculated based on customary currency exchange rates in
effect, in the case of such Indebtedness incurred (in respect of term
Indebtedness) or committed (in respect of revolving Indebtedness) on or prior to
the Closing Date, on the Closing Date and, in the case of such Indebtedness
incurred (in respect of term Indebtedness) or committed (in respect of revolving
Indebtedness) after the Closing Date, on the date that such Indebtedness was
incurred (in respect of term Indebtedness) or committed (in respect of revolving
Indebtedness); provided that if such Indebtedness is incurred to refinance other
Indebtedness denominated in a currency other than Dollars (or in a different
currency from the Indebtedness being refinanced), and such refinancing would
cause the applicable Dollar-denominated restriction to be exceeded if calculated
at the relevant currency exchange rate in effect on the date of such
refinancing, such Dollar-denominated restriction shall be deemed not to have
been exceeded so long as the principal amount of such refinancing Indebtedness
does not exceed (i) the outstanding or committed principal amount, as
applicable, of such Indebtedness being refinanced plus (ii) the aggregate amount
of fees, underwriting discounts, premiums (including tender premiums),
defeasance costs and other costs and expenses incurred in connection with such
refinancing.

SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien (other
than a Permitted Lien (as defined below)) on any property or assets (including
stock or other securities of any person, including the Borrower and any
Subsidiary) at the time owned by it or on any income or revenues or rights in
respect of any thereof unless the Loans are equally and ratably secured with (or
on a senior basis, in the case of obligations subordinated in right of payment
to the Loans) the obligations secured until such time as such obligations are
no longer secured by a Lien; provided, however, that the provisions of this
Section 6.02 shall not apply to the following (collectively, “Permitted Liens”):

(a) Liens on property or assets of the Borrower and the Subsidiaries existing on
the Closing Date securing Indebtedness of the Borrower and the Subsidiaries (i)
set forth on Schedule 6.02(a) and any modifications, replacements, renewals or
extensions of such Indebtedness and (ii) permitted under Section 6.01(b) and
Liens securing Permitted Refinancing Indebtedness incurred to Refinance such
Indebtedness as permitted by Section 6.01; provided, that (i) Liens securing
Indebtedness set forth on Schedule 6.02(a)

 

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shall not subsequently apply to any other property or assets of the Borrower or
any Subsidiary other than (A) after-acquired property that is affixed or
incorporated into the property covered by such Lien and (B) proceeds and
products thereof and (ii) Indebtedness permitted under Section 6.01(b) secured
by Liens as of the Closing Date (and Permitted Refinancing Indebtedness incurred
to Refinance such Indebtedness) may be secured by Liens on after-acquired
property or assets to the extent otherwise permitted under this Section 6.02;

(b) [Reserved];

(c) any Lien on any property or asset of the Borrower or any Subsidiary securing
Indebtedness or Permitted Refinancing Indebtedness permitted by Section 6.01(j);
provided, that such Lien (i) does not apply to any other property or assets of
the Borrower or any of the Subsidiaries not securing such Indebtedness at the
date of the acquisition of such property or asset (other than after acquired
property subjected to a Lien securing Indebtedness and other obligations
incurred prior to such date and which Indebtedness and other obligations are
permitted hereunder that require a pledge of after acquired property, it being
understood that such requirement shall not be permitted to apply to any property
to which such requirement would not have applied but for such acquisition), (ii)
such Lien is not created in contemplation of or in connection with such
acquisition and (iii) in the case of a Lien securing Permitted Refinancing
Indebtedness, any such Lien is permitted, subject to compliance with clause (d)
of the definition of the term “Permitted Refinancing Indebtedness”;

(d) Liens for Taxes, assessments or other governmental charges or levies not yet
delinquent or that are being contested in compliance with Section 5.03;

(e) Liens imposed by law, including landlord’s, carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s, construction or other like Liens arising
in the ordinary course of business, securing obligations that are not overdue by
more than 30 days or that are being contested in good faith by appropriate
proceedings and in respect of which, if applicable, the Borrower or any
Subsidiary shall have set aside on its books reserves in accordance with GAAP;

(f) (i) pledges and deposits and other Liens made in the ordinary course of
business in compliance with any workers’ compensation, unemployment insurance
and other social security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements in respect of
such obligations and (ii) pledges and deposits and other Liens securing
liability for reimbursement or indemnification obligations of (including
obligations in respect of letters of credit or bank guarantees for the benefit
of) insurance carriers providing property, casualty or liability insurance to
the Borrower or any Subsidiary;

(g) deposits and other Liens to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance and return of money
bonds, bids, leases, government contracts, trade contracts, agreements with
utilities, and other

 

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obligations of a like nature (including letters of credit in lieu of any such
bonds or to support the issuance thereof) incurred by the Borrower or any
Subsidiary in the ordinary course of business, including those incurred to
secure health, safety and environmental obligations in the ordinary course of
business;

(h) restrictions, survey exceptions and such matters as an accurate survey would
disclose, easements, trackage rights, leases (other than Capital Lease
Obligations), licenses, special assessments, rights of way, covenants,
conditions, restrictions and declarations on or with respect to the use of Real
Property, servicing agreements, development agreements, site plan agreements and
other similar encumbrances incurred in the ordinary course of business and title
defects or irregularities that are of a minor nature and that, in the aggregate,
do not interfere in any material respect with the ordinary conduct of the
business of the Borrower or any Subsidiary;

(i) Liens securing Indebtedness permitted by Section 6.01(k) (limited to the
assets subject to such Indebtedness);

(j) Liens arising out of capitalized lease transactions permitted under Section
6.03, so long as such Liens attach only to the property sold and being leased in
such transaction and any accessions thereto or proceeds thereof and related
property;

(k) Liens securing judgments that do not constitute an Event of Default under
Section 7.01(j);

(l) Liens on not more than $30 million of deposits securing Swap Agreements;

(m) any interest or title of a lessor or sublessor under any leases or subleases
entered into by the Borrower or any Subsidiary in the ordinary course of
business;

(n) Liens that are contractual rights of set off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar
obligations incurred in the ordinary course of business of the Borrower or any
Subsidiary or (iii) relating to purchase orders and other agreements entered
into with customers of the Borrower or any Subsidiary in the ordinary course of
business;

(o) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set off or similar rights;

(p) Liens securing obligations in respect of trade related letters of credit,
bank guarantees or similar obligations permitted under Section 6.01(g), (k) or
(n) and covering the property (or the documents of title in respect of such
property) financed by such letters of credit, bank guarantees or similar
obligations and the proceeds and products thereof;

 

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(q) leases or subleases, licenses or sublicenses (including with respect to
intellectual property and software) granted to others in the ordinary course of
business not interfering in any material respect with the business of the
Borrower and the Subsidiaries, taken as a whole;

(r) 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;

(s) Liens solely on any cash earnest money deposits made by the Borrower or any
of the Subsidiaries in connection with any letter of intent or purchase
agreement in respect of any Investment permitted hereunder;

(t) Liens with respect to property or assets or Equity Interests, of any
Subsidiary securing Indebtedness of a Subsidiary permitted under Section 6.01;

(u) other Liens securing Indebtedness permitted to be incurred pursuant to
Section 6.01; provided, that with respect to Liens securing obligations
permitted under this Section 6.02(u), at the time of incurrence and after giving
pro forma effect to such Indebtedness, the Total Net Secured Leverage Ratio of
the Borrower would not exceed 4.75:1.00;

(v) the prior rights of consignees and their lenders under consignment
arrangements entered into in the ordinary course of business;

(w) Liens arising from precautionary Uniform Commercial Code financing
statements or consignments entered into in connection with any transaction
otherwise permitted under this Agreement;

(x) Liens on Equity Interests in joint ventures securing obligations of such
joint venture;

(y) Liens on securities that are the subject of repurchase agreements
constituting Permitted Investments under clause (c) of the definition thereof;

(z) Liens in respect of Permitted Receivables Financings that extend only to the
receivables subject thereto;

(aa) Liens on goods or inventory the purchase, shipment or storage price of
which is financed by a documentary letter of credit, bank guarantee or bankers’
acceptance issued or created for the account of the Borrower or any Subsidiary
in the ordinary course of business; provided, that such Lien secures only the
obligations of the Borrower or such Subsidiaries in respect of such letter of
credit, bank guarantee or banker’s acceptance to the extent permitted under
Section 6.01;

(bb) Liens securing insurance premiums financing arrangements, provided, that
such Liens are limited to the applicable unearned insurance premiums;

(cc) Liens in favor of the Borrower or any Subsidiary;

 

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(dd) Liens on not more than $30 million of deposits securing Swap Agreements;
and

(ee) other Liens with respect to property or assets of the Borrower or any
Subsidiary securing obligations in an aggregate principal amount outstanding at
any time not to exceed $30 million.

SECTION 6.03. Sale and Leaseback Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property being sold or transferred, in each case, whether or not treated as a
“sale-leaseback” under GAAP (a “Sale and Leaseback Transaction”); provided, that
a Sale and Leaseback Transaction shall be permitted (a) with respect to property
owned (i) by the Borrower or any Subsidiary that is acquired after the Closing
Date so long as such Sale and Leaseback Transaction is consummated within 270
days of the acquisition of such property, and (b) with respect to any property
owned by the Borrower or any Subsidiary, if at the time the lease in connection
therewith is entered into, and after giving effect to the entering into of such
lease, the Remaining Present Value of such lease, together with Indebtedness
outstanding pursuant to Sections 6.01(k) and the Remaining Present Value of
outstanding leases previously entered into under this Section 6.03(b), would not
exceed the greater of $150 million and 5.0% of Consolidated Total Assets as of
the end of the fiscal quarter immediately prior to the date the lease was
entered into for which financial statements have been delivered pursuant to
Section 5.04.

SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire
(including pursuant to any merger, consolidation or amalgamation with a person
that is not a Wholly Owned Subsidiary immediately prior to such merger,
consolidation or amalgamation) any Equity Interests, evidences of Indebtedness
or other securities of, make or permit to exist any loans or advances to or
Guarantees of the obligations of, or make or permit to exist any investment or
any other interest in (each, an “Investment”), any other person, except:

(a) intercompany loans and advances from the Borrower to Claire’s Stores;

(b) (i) Investments by the Borrower or any Subsidiary in the Equity Interests of
the Borrower or any Subsidiary; (ii) intercompany loans from the Borrower or any
Subsidiary to the Borrower or any Subsidiary; and (iii) Guarantees by the
Borrower of Indebtedness otherwise expressly permitted hereunder of the Borrower
or any Subsidiary; provided, that the sum of (A) Investments (valued at the time
of the making thereof and without giving effect to any write downs or write offs
thereof) made after the Closing Date by the Borrower pursuant to clause (i) in
Subsidiaries plus (B) net intercompany loans made after the Closing Date to
Subsidiaries pursuant to clause (ii), plus (C) Guarantees of Indebtedness after
the Closing Date of Subsidiaries pursuant to clause (iii), shall not exceed an
aggregate net amount equal to (x) the greater of (1) $150 million and (2) 5.0%
of Consolidated Total Assets as of the end of the fiscal quarter immediately
prior to the date of such Investment for which financial statements have been
delivered pursuant to Section 5.04 (plus any return of capital actually received
by the respective

 

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investors in respect of Investments theretofore made by them pursuant to this
paragraph (b)), plus (y) the portion, if any, of the Cumulative Credit on the
date of such election that the Borrower elects to apply to this Section
6.04(b)(y); provided, further, that (x) intercompany current liabilities
incurred in the ordinary course of business in connection with the cash
management operations of the Borrower and the Subsidiaries and (y) intercompany
loans, advances or Indebtedness having a term not exceeding 364 days (inclusive
of any roll-overs or extensions of terms) and made in the ordinary course of
business consistent with past practice shall not be included in calculating the
limitation in this paragraph at any time;

(c) Permitted Investments and Investments that were Permitted Investments when
made;

(d) Investments arising out of the receipt by the Borrower or any Subsidiary of
noncash consideration for the sale of assets permitted under Section 6.05;

(e) loans and advances to officers, directors, employees or consultants of the
Borrower or any Subsidiary (i) in the ordinary course of business not to exceed
the greater of $5 million and 0.25% of Consolidated Total Assets as of the end
of the fiscal quarter immediately prior to the date of such loan or advance for
which financial statements have been delivered pursuant to Section 5.04 in the
aggregate at any time outstanding (calculated without regard to write downs or
write offs thereof), (ii) in respect of payroll payments and expenses in the
ordinary course of business and (iii) in connection with such person’s purchase
of Equity Interests of Claire’s Stores (or any Parent Entity) solely to the
extent that the amount of such loans and advances shall be contributed to the
Borrower in cash as common equity;

(f) accounts receivable, security deposits and prepayments arising and trade
credit granted in the ordinary course of business and any assets or securities
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss and any prepayments and other credits to suppliers made in the
ordinary course of business;

(g) Swap Agreements permitted pursuant to Section 6.01;

(h) Investments existing on, or contractually committed as of, the Closing Date
and set forth on Schedule 6.04 and any extensions, renewals or reinvestments
thereof, so long as the aggregate amount of all Investments pursuant to this
clause (h) is not increased at any time above the amount of such Investment
existing or committed on the Closing Date (other than pursuant to an increase as
required by the terms of any such Investment as in existence on the Closing
Date);

(i) Investments resulting from pledges and deposits under Sections 6.02(f), (g),
(k), (r), (s), (u) and (ee);

(j) other Investments by the Borrower or any Subsidiary in an aggregate amount
(valued at the time of the making thereof, and without giving effect to any
write downs or write offs thereof) not to exceed (i) the greater of $150 million
and 5.0% of

 

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Consolidated Total Assets as of the end of the fiscal quarter immediately prior
to the date of such incurrence for which financial statements have been
delivered pursuant to Section 5.04 (plus any returns of capital actually
received by the respective investor in respect of investments theretofore made
by it pursuant to this paragraph (j)) plus, (ii) the portion, if any, of the
Cumulative Credit on the date of such election that the Borrower elects to apply
to this Section 6.04(j)(ii); provided that if any Investment pursuant to this
clause (j) is made in any person that is not a Subsidiary of the Borrower at the
date of the making of such Investment and such person becomes a Subsidiary of
the Borrower after such date pursuant to another Investment the amount of which,
when taken together with the amount of the prior Investment, would be permitted
under another provision of this Section 6.04, any Investment in such person
outstanding under this Section 6.04(j) shall thereafter be deemed to have been
made pursuant to such other provision and shall cease to have been made pursuant
to this clause (j) for so long as such person continues to be a Subsidiary of
the Borrower;

(k) Investments constituting Permitted Business Acquisitions;

(l) intercompany loans between Subsidiaries and Guarantees by Subsidiaries
permitted by Section 6.01(o);

(m) Investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with or judgments against,
customers and suppliers, in each case in the ordinary course of business or
Investments acquired by the Borrower or any of the Subsidiaries as a result of a
foreclosure by the Borrower or any of the Subsidiaries with respect to any
secured Investments or other transfer of title with respect to any secured
Investment in default;

(n) Investments of a Subsidiary acquired after the Closing Date or of an entity
merged into, or consolidated or amalgamated with, the Borrower or merged into or
consolidated or amalgamated with a Subsidiary after the Closing Date, in each
case, (i) to the extent permitted under this Section 6.04 and, (ii) in the case
of any acquisition, merger, consolidation or amalgamation, in accordance with
Section 6.05 and (iii) to the extent that such Investments were not made in
contemplation of or in connection with such acquisition, merger, consolidation
or amalgamation and were in existence on the date of such acquisition, merger,
consolidation or amalgamation;

(o) acquisitions by the Borrower of obligations of one or more officers or other
employees of Claire’s Stores, any Parent Entity, the Borrower or the
Subsidiaries in connection with such officer’s or employee’s acquisition of
Equity Interests of Claire’s Stores or any Parent Entity, so long as no cash is
actually advanced by the Borrower or any of the Subsidiaries to such officers or
employees in connection with the acquisition of any such obligations;

(p) Guarantees by the Borrower or any Subsidiary of operating leases (other than
Capital Lease Obligations) or of other obligations that do not constitute
Indebtedness, in each case entered into by the Borrower or any Subsidiary in the
ordinary course of business;

 

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(q) Investments to the extent that payment for such Investments is made with
Equity Interests of Claire’s Stores (or any Parent Entity);

(r) Investments consisting of the redemption, purchase, repurchase or retirement
of any Equity Interests permitted under Section 6.06;

(s) Investments in connection with the consummation of the Exchange
Transactions;

(t) Investments in the ordinary course of business consisting of Uniform
Commercial Code Article 3 endorsements for collection or deposit and Uniform
Commercial Code Article 4 customary trade arrangements with customers consistent
with past practices;

(u) Investments by the Borrower and the Subsidiaries, including loans and
advances to any direct or indirect parent of the Borrower, if the Borrower or
any other Subsidiary would otherwise be permitted to make a Restricted Payment
in such amount (provided that the amount of any such Investment shall also be
deemed to be a Restricted Payment under the appropriate clause of Section 6.06
of this Agreement);

(v) Guarantees permitted under Section 6.01 (except to the extent such Guarantee
is expressly subject to this Section 6.04);

(w) advances in the form of a prepayment of expenses, so long as such expenses
are being paid in accordance with customary trade terms of the Borrower or such
Subsidiary;

(x) Investments received substantially contemporaneously in exchange for Equity
Interests of Claire’s Stores; provided, that such Investments are not included
in any determination of Cumulative Credit;

(y) Investments arising as a result of Permitted Receivables Financings;

(z) Investments consisting of the licensing or contribution of intellectual
property pursuant to joint marketing arrangements with other persons;

(aa) purchases and acquisitions of inventory, supplies, materials and equipment
or purchases of contract rights or licenses or leases of intellectual property
in each case in the ordinary course of business, to the extent such purchases
and acquisitions constitute Investments;

(bb) Investments in joint ventures not in excess of the greater of $65 million
and 2.0% of Consolidated Total Assets as of the end of the fiscal quarter
immediately prior to the date of such Investment for which financial statements
have been delivered pursuant to Section 5.04 in the aggregate at any time
outstanding (calculated without regard to write-downs or write-offs thereof);
provided that if any Investment pursuant to this clause (bb) is made in any
person that is not a Subsidiary of the Borrower at the date of the making of
such Investment and such person becomes a Subsidiary of the Borrower

 

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after such date pursuant to another Investment the amount of which, when taken
together with the amount of the prior Investment, would be permitted under
another provision of this Section 6.04, any Investment in such person
outstanding under this Section 6.04(bb) shall thereafter be deemed to have been
made pursuant to such other provision and shall cease to have been made pursuant
to this clause (bb) for so long as such person continues to be a Subsidiary of
the Borrower.

The amount of Investments that may be made at any time pursuant to Section
6.04(b) or 6.04(j) (such Sections, the “Related Sections”) may, at the election
of the Borrower, be increased by the amount of Investments that could be made at
such time under the other Related Section; provided that the amount of each such
increase in respect of one Related Section shall be treated as having been used
under the other Related Section.

SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions. Merge
into, or consolidate or amalgamate with any other person, or permit any other
person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any part of its assets (whether now owned or hereafter acquired), or issue,
sell, transfer or otherwise dispose of any Equity Interests of the Borrower or
any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person or any division or business unit of any other person unless (i) the
Borrower or any of its Restricted Subsidiaries, as the case may be, receives
consideration at the time of the Asset Sale at least equal to the Fair Market
Value (as determined in good faith by the Borrower) of the assets sold or
otherwise disposed of, and (ii) at least 75% of the consideration therefor
received by the Borrower or such Restricted Subsidiary, as the case may be, is
in the form of cash equivalents; provided that (x) any liabilities (as shown on
the Borrower’s or such Restricted Subsidiary’s most recent balance sheet or in
the notes thereto) of the Borrower or any Restricted Subsidiary of the Borrower
(other than liabilities that are by their terms subordinated to the Loans) that
are assumed by the transferee of any such assets, (y) any notes or other
obligations or other securities or assets received by the Borrower or such
Restricted Subsidiary of the Borrower from such transferee that are converted by
the Borrower or such Restricted Subsidiary into cash within 180 days of receipt
thereof (to the extent of the cash received) and (z) any Designated Non-Cash
Consideration received by the Borrower or any of its Restricted Subsidiaries in
such Asset Sale having an aggregate Fair Market Value (as determined in good
faith by the Borrower), taken together with all others Designated Non-cash
Consideration received pursuant to this clause (z) that is at that time
outstanding, not to exceed the greater of 3.0% of Consolidated Total Assets and
$100 million at the time of the receipt of such Designated Non-Cash
Consideration (with the Fair Market Value of each item of Designated Non-Cash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), in each case, shall be deemed to be cash
equivalents for the purposes of this Section 6.05; and provided, further, that
this Section 6.05 shall not prohibit:

(a) (i) the purchase and sale of inventory in the ordinary course of business by
the Borrower or any Subsidiary, (ii) the acquisition or lease (pursuant to an
operating lease) of any other asset in the ordinary course of business by the
Borrower or any Subsidiary, (iii) the sale of surplus, obsolete, damaged or worn
out equipment or other property in the ordinary course of business by the
Borrower or any Subsidiary or (iv) the sale of Permitted Investments in the
ordinary course of business;

 

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(b) if at the time thereof and immediately after giving effect thereto no Event
of Default shall have occurred and be continuing or would result therefrom, (i)
the merger, consolidation or amalgamation of any Subsidiary of the Borrower into
or with the Borrower in a transaction in which the Borrower is the survivor and
no person other than the Borrower receives any consideration, (ii) the merger,
consolidation or amalgamation of any Subsidiary into or with any other
Subsidiary, (iii) the liquidation or dissolution or change in form of entity of
any Subsidiary if the Borrower determines in good faith that such liquidation,
dissolution or change in form is in the best interests of the Borrower and is
not materially disadvantageous to the Lenders or (iv) any Subsidiary may merge,
consolidate or amalgamate into or with any other person in order to effect an
Investment permitted pursuant to Section 6.04 so long as the continuing or
surviving person shall be a Subsidiary;

(c) sales, transfers, leases or other dispositions to the Borrower or a
Subsidiary (upon voluntary liquidation or otherwise); provided, that any sales,
transfers, leases or other dispositions by the Borrower to a Subsidiary in
reliance on this paragraph (c) shall be made in compliance with Section 6.07;

(d) [Reserved];

(e) Sale and Leaseback Transactions permitted by Section 6.03;

(f) Investments permitted by Section 6.04, Permitted Liens and Restricted
Payments permitted by Section 6.06;

(g) the sale of defaulted receivables in the ordinary course of business and not
as part of an accounts receivables financing transaction;

(h) sales, transfers, leases, licenses or other dispositions of assets not
otherwise permitted by this Section 6.05 (or required to be included in this
clause (h) pursuant to Section 6.05(c)); provided, that (i) the aggregate gross
proceeds (including noncash proceeds) of any or all assets, sold, transferred,
leased or otherwise disposed of in reliance under this paragraph (h) shall not
exceed, in any fiscal year of the Borrower, the greater of (x) $200 million and
(y) 6.5% of Consolidated Total Assets as of the end of the fiscal quarter
immediately prior to the date of such sale, transfer, lease or license or other
disposition for which financial statements have been delivered pursuant to
Section 5.04 and (ii) no Default or Event of Default exists or would result
therefrom;

(i) Permitted Business Acquisitions (including any merger, consolidation or
amalgamation in order to effect a Permitted Business Acquisition); provided,
that following any such merger, consolidation or amalgamation (i) involving the
Borrower, the Borrower is the surviving corporation and (ii) involving a
Subsidiary, the surviving or resulting entity shall be a Wholly Owned
Subsidiary;

 

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(j) leases, licenses, or subleases or sublicenses of any real or personal
property in the ordinary course of business;

(k) sales, leases or other dispositions of inventory of the Borrower and the
Subsidiaries determined by the management of the Borrower to be no longer useful
or necessary in the operation of the business of the Borrower or any of the
Subsidiaries;

(l) Permitted Business Acquisitions and purchases of assets useful in the
business of the Borrower and its Subsidiaries made within 18 months following
any Asset Sale in an amount not to exceed the proceeds from such Asset Sale;

(m) the purchase and sale or other transfer (including by capital contribution)
of Receivables Assets pursuant to Permitted Receivables Financings;

(n) any exchange of assets for services and/or other assets of comparable or
greater value; provided, that (i) at least 90% of the consideration received by
the transferor consists of assets that will be used in a business or business
activity permitted hereunder, (ii) in the event of a swap with a fair market
value in excess of $10 million, the Administrative Agent shall have received a
certificate from a Responsible Officer of the Borrower with respect to such fair
market value and (iii) in the event of a swap with a fair market value in excess
of $25 million, such exchange shall have been approved by at least a majority of
the Board of Directors of the Borrower; provided, further, that (A) no Default
or Event of Default exists or would result therefrom and (B) the aggregate gross
consideration (including exchange assets, other noncash consideration and cash
proceeds) of any or all assets exchanged in reliance upon this paragraph (n)
shall not exceed, in any fiscal year of the Borrower, the greater of
$200 million and 6.5% of Consolidated Total Assets as of the end of the fiscal
quarter immediately prior to the date of such incurrence for which financial
statements have been delivered pursuant to Section 5.04; and

(o) any disposition of Equity Interests of a Subsidiary pursuant to an agreement
or other obligation with or to a person (other than the Borrower and the
Subsidiaries) from whom such Subsidiary was acquired or from whom such
Subsidiary acquired its business and assets (having been newly formed in
connection with such acquisition), made as part of such acquisition and in each
case comprising all or a portion of the consideration in respect of such sale or
acquisition; provided, that the net investment in the Equity Interests of the
Subsidiary would be permitted by Section 6.04 if made on the date of such
disposition.

SECTION 6.06. Restricted Payments. Declare or pay any dividend or make any other
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, with respect to any of its Equity Interests
(other than dividends and distributions on Equity Interests payable solely by
the issuance of additional Equity Interests (other than Disqualified Stock) of
the person paying such dividends or distributions) or directly or indirectly
redeem, purchase, retire or otherwise acquire for value (or permit any
Subsidiary to purchase or acquire) any of its Equity Interests or set aside any
amount for any such purpose (other than through the issuance of additional
Equity Interests (other than Disqualified Stock) of the person redeeming,
purchasing, retiring or acquiring such shares) (the foregoing, “Restricted
Payments”); provided, however, that:

 

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(a) any Subsidiary of the Borrower may make Restricted Payments to the Borrower
or to any Wholly Owned Subsidiary of the Borrower (or, in the case of non-Wholly
Owned Subsidiaries, to the Borrower or any Subsidiary that is a direct or
indirect parent of such Subsidiary and to each other owner of Equity Interests
of such Subsidiary on a pro rata basis (or more favorable basis from the
perspective of the Borrower or such Subsidiary) based on their relative
ownership interests so long as any repurchase of its Equity Interests from a
person that is not the Borrower or a Subsidiary is permitted under Section
6.04);

(b) the Borrower may make Restricted Payments, in the form of cash,
cash equivalents or dividends in kind constituting Indebtedness, to any Parent
Entity; and

(c) the Borrower may make Restricted Payments on or following the Closing Date
in connection with the consummation of the Exchange Transactions.

SECTION 6.07. Transactions with Affiliates.

(a) Sell or transfer any property or assets to, or purchase or acquire any
property or assets from, or otherwise engage in any other transaction with, any
of its Affiliates or any known direct or indirect holder of 10% or more of any
class of Equity Interests of the Borrower in a transaction involving aggregate
consideration in excess of $10 million, unless such transaction is (i) otherwise
permitted (or required) under this Agreement, (ii) upon terms no less favorable
to the Borrower or such Subsidiary, as applicable, than would be obtained in a
comparable arm’s length transaction with a person that is not an Affiliate or
(iii) with respect to any Affiliate transaction or series of related Affiliate
transactions involving aggregate consideration in excess of $25 million, the
Borrower delivers to the Administrative Agent a resolution adopted in good faith
by the majority of the Board of Directors of the Borrower, approving such
Affiliate transaction and set forth in a certificate of a Responsible Officer
certifying that such Affiliate transaction complies with clause (i) of this
Section 6.07(a).

(b) The foregoing paragraph (a) shall not prohibit, to the extent otherwise
permitted under this Agreement:

(i) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
equity purchase agreements, stock options and stock ownership plans approved by
the Board of Directors of Claire’s Stores or of the Borrower,

(ii) loans or advances to employees or consultants of Claire’s Stores (or any
Parent Entity), the Borrower or any of the Subsidiaries in accordance with
Section 6.04(e),

(iii) transactions among the Borrower or any Subsidiary or any entity that
becomes a Subsidiary as a result of such transaction (including via merger,
consolidation or amalgamation in which a Subsidiary is the surviving entity),

 

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(iv) the payment of fees, reasonable out-of-pocket costs and indemnities to
directors, officers, consultants and employees of Claire’s Stores, any Parent
Entity, the Borrower and the Subsidiaries in the ordinary course of business
(limited, in the case of Claire’s Stores or any Parent Entity, to the portion of
such fees and expenses that are allocable to the Borrower and the Subsidiaries),

(v) (A) transactions pursuant to the Exchange Transaction Documents and (B)
permitted transactions, agreements and arrangements in existence on or following
the Closing Date and set forth on Schedule 6.07 or any amendment thereto (to the
extent such amendment is not adverse to the Lenders in any material respect, as
determined in good faith by the Borrower) or transaction contemplated thereby,

(vi) (A) any employment agreements entered into by the Borrower or any of the
Subsidiaries in the ordinary course of business, (B) any subscription agreement
or similar agreement pertaining to the repurchase of Equity Interests pursuant
to put/call rights or similar rights with employees, officers or directors, and
(C) any employee compensation, benefit plan or arrangement, any health,
disability or similar insurance plan which covers employees, and any reasonable
employment contract and transactions pursuant thereto,

(vii) Restricted Payments permitted under Section 6.06, including payments to
Claire’s Stores (and any Parent Entity);

(viii) any purchase by the Borrower of the Equity Interests of the Subsidiaries;

(ix) payments by the Borrower or any of the Subsidiaries to the Fund or any Fund
Affiliate made for any financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including in
connection with acquisitions or divestitures, which payments are approved by the
majority of the Board of Directors of the Borrower, or a majority of the
Disinterested Directors of the Borrower, in good faith,

(x) transactions with Claire’s Stores, subsidiaries of Claire’s Stores or Wholly
Owned Subsidiaries for the purchase or sale of goods, products, parts and
services entered into in the ordinary course of business in a manner consistent
with past practice,

(xi) any transaction in respect of which the Borrower delivers to the
Administrative Agent (for delivery to the Lenders) a letter addressed to the
Board of Directors of the Borrower from an accounting, appraisal or investment
banking firm, in each case of nationally recognized standing that is (A) in the
good faith determination of the Borrower qualified to render such letter and (B)
reasonably satisfactory to the Administrative Agent (acting at the written
direction of Required Lenders), which letter states that such transaction is on
terms that are no less favorable to the Borrower or such Subsidiary, as
applicable, than would be obtained in a comparable arm’s length transaction with
a person that is not an Affiliate,

(xii) [Reserved],

 

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(xiii) transactions with joint ventures for the purchase or sale of goods,
equipment and services entered into in the ordinary course of business and in a
manner consistent with past practice,

(xiv) any agreement to pay, and the payment of, monitoring, consulting,
management, transaction, advisory or similar fees payable to the Fund or any
Fund Affiliate (A) in an aggregate amount in any fiscal year not to exceed the
sum of (1) the greater of $6.0 million and 2.0% of EBITDA for such fiscal year,
plus reasonable out of pocket costs and expenses in connection therewith and
unpaid amounts accrued for prior periods; plus (2) any deferred fees (to the
extent such fees were within such amount in clause (A) (1) above originally),
plus (B) 2.0% of the value of transactions with respect to which the Fund or any
Fund Affiliate provides any transaction, advisory or other services,

(xv) the issuance, sale, transfer of Equity Interests of the Borrower to
Claire’s Stores,

(xvi) payments by Claire’s Stores (and any Parent Entity), the Borrower and the
Subsidiaries pursuant to tax sharing agreements among Claire’s Stores (and any
such Parent Entity), the Borrower and the Subsidiaries on customary terms that
require each party to make payments when such taxes are due or refunds received
of amounts equal to the income tax liabilities and refunds generated by each
such party calculated on a separate return basis and payments to the party
generating tax benefits and credits of amounts equal to the value of such tax
benefits and credits made available to the group by such party,

(xvii) transactions pursuant to any Permitted Receivables Financing,

(xviii) payments or loans (or cancellation of loans) to employees or consultants
that are (i) approved by a majority of the Disinterested Directors of the Board
of Directors of Claire’s Stores or the Borrower in good faith, (ii) made in
compliance with applicable law and (iii) otherwise permitted under this
Agreement,

(xix) transactions with customers, clients, suppliers, or purchasers or sellers
of goods or services, in each case in the ordinary course of business and
otherwise in compliance with the terms of this Agreement that are fair to the
Borrower or the Subsidiaries,

(xx) transactions between the Borrower or any of the Subsidiaries and any
person, a director of which is also a director of the Borrower or any direct or
indirect parent company of the Borrower, provided, however, that (A) such
director abstains from voting as a director of the Borrower or such direct or
indirect parent company, as the case may be, on any matter involving such other
person and (B) such person is not an Affiliate of the Borrower for any reason
other than such director’s acting in such capacity,

(xxi) transactions permitted by, and complying with, the provisions of (x)
Section 6.04(b) and Section 6.05(b), or

 

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(xxii) intercompany transactions undertaken in good faith (as certified by a
Responsible Officer of the Borrower in a certificate delivered to the
Administrative Agent) for the purpose of improving the consolidated tax
efficiency of the Borrower and the Subsidiaries and not for the purpose of
circumventing any covenant set forth herein.

SECTION 6.08. Business of the Borrower and the Subsidiaries. Notwithstanding any
other provisions hereof, engage at any time in any business or business activity
other than any business or business activity conducted by any of them on
the Closing Date and any business or business activities incidental or related
thereto, or any business or activity that is reasonably similar or complementary
thereto or a reasonable extension, development or expansion thereof or ancillary
thereto, and in the case of a Special Purpose Receivables Subsidiary, Permitted
Receivables Financings.

SECTION 6.09. Limitation on Payments and Modifications of Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and Certain Other
Agreements; etc.

(a) Amend or modify in any manner materially adverse to the Lenders, or grant
any waiver or release under or terminate in any manner (if such granting or
termination shall be materially adverse to the Lenders), the articles or
certificate of incorporation, by laws, limited liability company operating
agreement, partnership agreement or other organizational documents of the
Borrower or any of the Subsidiaries.

(b) (i) Make, or agree or offer to pay or make, directly or indirectly, any
payment or other distribution (whether in cash, securities or other property) of
or in respect of principal of or interest on any Indebtedness which is
contractually subordinated to the Loans or any Permitted Refinancing
Indebtedness incurred to Refinance any of the foregoing or any Preferred Stock
or any Disqualified Stock (“Junior Financing”), or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination in respect of any Junior
Financing except for (A) payments of regularly scheduled interest, and, to the
extent this Agreement is then in effect, principal on the scheduled maturity
date of any Junior Financing, (B) payments or distributions in respect of all or
any portion of the Junior Financing with the proceeds contributed to the
Borrower by Claire’s Stores from the issuance, sale or exchange by Claire’s
Stores (or any direct or indirect parent of Claire’s Stores) of Equity Interests
made within eighteen months prior thereto, (C) the conversion of any Junior
Financing to Equity Interests of Claire’s Stores or any of its direct or
indirect parents, (D) payments in respect of Indebtedness of Claire’s Stores,
(E) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, payments or distributions in respect of Junior
Financings prior to their scheduled maturity made, in an aggregate amount, not
to exceed the sum of (x) $50 million and (y) the Cumulative Credit which the
Borrower elects to apply and (F) Refinancings permitted by Section 6.01(n) or
6.01(z); or

(ii) Amend or modify, or permit the amendment or modification of, any provision
of Junior Financing, any Permitted Receivables Document, or any agreement,
document or instrument evidencing or relating thereto, other than amendments or
modifications that (A) are not in any manner materially adverse to Lenders and
that do not affect the subordination or payment provisions thereof (if any) in a
manner adverse to the Lenders or (B) otherwise comply with the definition of
“Permitted Refinancing Indebtedness”.

 

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(c) Permit any Subsidiary to enter into any agreement or instrument that by its
terms restricts the payment of dividends or distributions or the making of cash
advances to the Borrower or any Subsidiary that is a direct or indirect parent
of such Subsidiary other than those arising under any Loan Document, except
restrictions existing by reason of:

(A) restrictions imposed by applicable law;

(B) contractual encumbrances or restrictions in effect on the Closing Date under
Indebtedness existing on the Closing Date and set forth on Schedule 6.01 or
listed in Section 6.01(b) or any agreements related to any Permitted Refinancing
Indebtedness incurred to Refinance such Indebtedness that does not expand the
scope of any such encumbrance or restriction;

(C) any restriction on a Subsidiary imposed pursuant to an agreement entered
into for the sale or disposition of the Equity Interests or assets of a
Subsidiary;

(D) customary provisions in joint venture agreements, similar agreements
applicable to joint ventures and other similar agreements entered into in the
ordinary course of business;

(E) any restrictions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement to the extent that such restrictions apply only to
the property or assets securing such Indebtedness;

(F) any restrictions imposed by any agreement relating to Indebtedness incurred
pursuant to Sections 6.01(n) or 6.01(z) or Permitted Refinancing Indebtedness
incurred to Refinance such Indebtedness;

(G) customary provisions contained in leases or licenses of intellectual
property and other similar agreements entered into in the ordinary course of
business;

(H) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest;

(I) customary provisions restricting assignment of any agreement entered into in
the ordinary course of business;

(J) customary restrictions and conditions contained in any agreement relating to
the sale, transfer, lease or other disposition of any asset permitted under
Section 6.05 pending the consummation of such sale, transfer, lease or other
disposition;

(K) customary restrictions and conditions contained in the document relating to
any Lien, so long as (1) such Lien is a Permitted Lien and such restrictions or
conditions relate only to the specific asset subject to such Lien, and (2) such
restrictions and conditions are not created for the purpose of avoiding the
restrictions imposed by this Section 6.09;

 

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(L) customary net worth provisions contained in Real Property leases entered
into by Subsidiaries of the Borrower, so long as the Borrower has determined in
good faith that such net worth provisions would not reasonably be expected to
impair the ability of the Borrower and its Subsidiaries to meet their ongoing
obligations;

(M) any agreement in effect at the time such subsidiary becomes a Subsidiary, so
long as such agreement was not entered into in contemplation of such person
becoming a Subsidiary;

(N) restrictions in agreements representing Indebtedness permitted under Section
6.01 of a Subsidiary of the Borrower;

(O) customary restrictions on leases, subleases, licenses or Equity Interests or
asset sale agreements otherwise permitted hereby as long as such restrictions
relate to the Equity Interests and assets subject thereto;

(P) restrictions on cash or other deposits imposed by customers under contracts
entered into in the ordinary course of business;

(Q) restrictions contained in any Permitted Receivables Document with respect to
any Special Purpose Receivables Subsidiary; or

(R) any encumbrances or restrictions of the type referred to in Sections
6.09(b)(i) and 6.09(b)(ii) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in clauses
(A) through (Q) above; provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Borrower, no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.

ARTICLE VII

Events of Default

SECTION 7.01. Events of Default. In case of the happening of any of the
following events (each, an “Event of Default”):

(a) any representation or warranty made or deemed made by the Borrower herein or
in any other Loan Document or any certificate or document delivered pursuant
hereto or thereto shall prove to have been false or misleading in any material
respect when so made or deemed made;

 

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(b) default shall be made in the payment of any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise;

(c) default shall be made in the payment of any interest on any Loan or in the
payment of any Fee or any other amount (other than an amount referred to in (b)
above) due under any Loan Document, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;

(d) default shall be made in the due observance or performance by the Borrower
of any covenant, condition or agreement contained in Article VI;

(e) default shall be made in the due observance or performance by the Borrower
of any covenant, condition or agreement contained in any Loan Document (other
than those specified in paragraphs (b), (c) and (d) above) and such default
shall continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower;

(f) (i) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf shall cause such Material Indebtedness to become
due prior to its scheduled maturity as a result of an event of default
thereunder (with all applicable grace periods having expired) or (ii) the
Borrower or any of the Subsidiaries shall fail to pay the principal of any
Material Indebtedness at the stated final maturity thereof; provided, that this
clause (f) shall not apply to secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness if such sale or transfer is permitted hereunder and under the
documents providing for such Indebtedness;

(g) there shall have occurred a Change in Control;

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of the Borrower or any of the Subsidiaries, or of a substantial part of
the property or assets of the Borrower or any Subsidiary, under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official the Borrower or any of the Subsidiaries or for a
substantial part of the property or assets of the Borrower or any of the
Subsidiaries or (iii) the winding up or liquidation of the Borrower or any
Subsidiary (except, in the case of any Subsidiary, in a transaction permitted by
Section 6.05); and such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered;

(i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest

 

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in a timely and appropriate manner, any proceeding or the filing of any petition
described in paragraph (h) above, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any of the Subsidiaries or for a substantial part of the
property or assets of the Borrower or any Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
become unable or admit in writing its inability or fail generally to pay its
debts as they become due;

(j) the failure by the Borrower or any Subsidiary to pay one or more final
judgments aggregating in excess of $35 million (to the extent not covered by
insurance), which judgments are not discharged or effectively waived or stayed
for a period of 45 consecutive days, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment; or

(k) any material provision of any Loan Document shall for any reason be asserted
in writing by the Borrower or any Subsidiary not to be a legal, valid and
binding obligation of any party thereto;

then, and in every such event (other than an event with respect to the Borrower
described in paragraph (h) or (i) above), and at any time thereafter during the
continuance of such event, the Administrative Agent acting at the written
direction of the Required Lenders, shall, by notice to the Borrower, take any or
all of the following actions, at the same or different times: (i) declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (h) or (i) above, the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.

SECTION 7.02. Exclusion of Immaterial Subsidiaries. Solely for the purposes of
determining whether an Event of Default has occurred under clause (h), (i) or
(j) of Section 7.01, any reference in any such clause to any Subsidiary shall be
deemed not to include any Immaterial Subsidiary affected by any event or
circumstance referred to in any such clause.

 

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ARTICLE VIII

The Administrative Agent

SECTION 8.01. Appointment.

(a) Each Lender (in its capacity as a Lender) hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or 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 the
Administrative Agent.

(b) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Borrower, (i) the Administrative Agent
(irrespective of whether the principal of any Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or otherwise
(A) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of any or all of the Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Administrative Agent, and (B) to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same, and (ii) any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Lender to make such
payments to the Administrative Agent and, if the Administrative Agent shall
consent to the making of such payments directly to the Lenders, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under the Loan
Documents. Nothing contained herein shall be deemed to authorize the
Administrative Agent to authorize or consent to or accept or adopt on behalf of
any Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

SECTION 8.02. Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

 

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SECTION 8.03. Exculpatory Provisions. (a) Neither the Administrative Agent or
its Affiliates nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (a) liable for any action
lawfully taken or omitted to be taken by it or such person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from its or such person’s own
gross negligence or willful misconduct) or (b) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by the Borrower or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of the Borrower to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not 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 properties,
books or records of the Borrower. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or Event of Default has occurred and is
continuing, and (b) the Administrative Agent shall not, except as expressly set
forth herein and in the other Loan Documents, have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Affiliates that is communicated to or obtained by the
person serving as the Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall be deemed not to have knowledge of any
Default or Event of Default unless and until written notice describing such
Default or Event of Default is given to a Responsible Officer of the
Administrative Agent in writing by the Borrower or a Lender. The Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default or Event of Default, or (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document.

(b) The Administrative Agent shall not be responsible for (i) perfecting,
maintaining, monitoring, preserving or protecting the security interest or lien
granted under this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, (ii) the filing, re-filing,
recording, re-recording or continuing or any document, financing statement,
mortgage, assignment, notice, instrument of further assurance or other
instrument in any public office at any time or times or (iii) providing,
maintaining, monitoring or preserving insurance on or the payment of taxes with
respect to any collateral. The actions described in items (i) through (iii)
shall be the sole responsibility of the Borrower.

(c) The Administrative Agent has accepted and is bound by this Agreement and the
other Loan Documents executed by the Administrative Agent as of the date of this

 

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Agreement and, as directed in writing by the Required Lenders, the
Administrative Agent shall execute additional Loan Documents delivered to it
after the date of this Agreement; provided, however, that such additional Loan
Documents do not adversely affect the rights, privileges, benefits and
immunities of the Administrative Agent. The Administrative Agent will not
otherwise be bound by, or be held obligated by, the provisions of any loan
agreement, indenture or other agreement governing the Obligations (other than
this Agreement and the other Loan Documents to which the Administrative Agent is
a party).

(d) No written direction given to the Administrative Agent by the Required
Lenders or the Borrower that in the sole judgment of the Administrative Agent
imposes, purports to impose or might reasonably be expected to impose upon the
Administrative Agent any obligation or liability not set forth in or arising
under this Agreement and the other Loan Documents will be binding upon the
Administrative Agent unless the Administrative Agent elects, at its sole option,
to accept such direction.

(e) The Administrative Agent shall not be responsible or liable for any failure
or delay in the performance of its obligations under this Agreement or the other
Loan Documents arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including, without limitation, acts
of God; earthquakes; fire; flood; terrorism; wars and other military
disturbances; sabotage; epidemics; riots; business interruptions; loss or
malfunctions of utilities, computer (hardware or software) or communication
services; accidents; labor disputes; acts of civil or military authority and
governmental action.

(f) In no event shall the Administrative Agent be responsible or liable for
special, indirect, or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit) irrespective of whether the
Administrative Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.

(g) The Administrative Agent shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Administrative Agent.

(h) Delivery of any reports, information and documents to the Administrative
Agent is for informational purposes only and the Administrative Agent’s receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Borrower’s compliance with any of its covenants hereunder.

(i) The Administrative Agent shall not be (i) required to qualify in any
jurisdiction in which it is not presently qualified to perform its obligations
as Administrative Agent or (ii) required to take any enforcement action against
the Borrower or any other obligor outside of the United States.

SECTION 8.04. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website
posting or other distribution) or conversation believed by it to be genuine and
to have been signed, sent or otherwise authenticated by the

 

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proper person. The Administrative Agent also may rely upon any statement made to
it orally or by telephone and believed by it to have been made by the proper
person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the Closing Date, that by its terms
must be fulfilled to the satisfaction of a Lender, the Administrative Agent may
presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such Lender
prior to the Closing Date. The Administrative Agent may consult with legal
counsel (including counsel to the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. The Administrative Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless the
Administrative Agent shall first receive such advice or concurrence of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances provided herein) and until such instructions
are received, the Administrative Agent shall act, or refrain from acting, as it
deems advisable. If the Administrative Agent so requests, it shall first be
indemnified to its reasonable satisfaction by the Lenders or Required Lenders,
as applicable, against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders. No
provision of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby or the transactions contemplated
hereby or thereby shall require the Administrative Agent to: (i) expend or risk
its own funds or provide indemnities in the performance of any of its duties
hereunder or the exercise of any of its rights or power or (ii) otherwise incur
any financial liability in the performance of its duties or the exercise of any
of its rights or powers.

SECTION 8.05. Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless a Responsible Officer of the Administrative Agent has received written
notice from a Lender or the Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a “notice of
default.” In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders. Subject to
Section 8.04, the Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all or other Lenders); provided,
that unless and until the Administrative Agent shall have received such
directions, the Administrative 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 in the best interests of the
Lenders.

SECTION 8.06. Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken,

 

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including any review of the affairs of the Borrower or any Affiliate of the
Borrower, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and their Affiliates and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower and its
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower or any Affiliate of the Borrower that may come into the possession
of the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.

SECTION 8.07. Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such upon demand (and with respect to any EEA Financial
Institution, such amounts shall be deemed due and payable no later than six (6)
days after demand therefor) (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), in the amount of its
pro rata share (based on its Loans hereunder) (determined at the time such
indemnity is sought), from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, charges,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided, that no Lender shall be liable
for the payment of any portion of such claims, liabilities, obligations, losses,
damages, penalties, actions, judgments, charges, suits, costs, expenses or
disbursements to the extent found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the Administrative Agent’s
gross negligence or willful misconduct. The failure of any Lender to reimburse
the Administrative Agent promptly upon demand for its ratable share of any
amount required to be paid by the Lenders to the Administrative Agent as
provided herein shall not relieve any other Lender of its obligation hereunder
to reimburse the Administrative Agent for its ratable share of such amount, but
no Lender shall be responsible for the failure of any other Lender to reimburse
the Administrative Agent for such other Lender’s ratable share of such
amount. The agreements in this Section shall survive the resignation or removal
of the Administrative Agent, the payment of the Loans and all other amounts
payable hereunder and the exercise of Write-Down and Conversion Powers by an EEA
Resolution Authority with respect to any Lender that is an EEA Financial
Institution.

 

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SECTION 8.08. Agent in Its Individual Capacity. The Administrative Agent and its
Affiliates may make loans to, accept deposits from, and generally engage in any
kind of business with the Borrower as though the Administrative Agent were not
the Administrative Agent. With respect to its Loans made or renewed by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall
include the Administrative Agent in its individual capacity.

SECTION 8.09. Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days’ notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7.01(b), (c),
(h) or (i) shall have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term “Administrative Agent” shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 10 days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective, and the
Lenders shall assume and perform all of the duties of the Administrative Agent
until such time, if any, as the Required Lenders appoint a successor
administrative agent. After any retiring Administrative Agent’s resignation as
Administrative Agent, the provisions of this Section 8.09 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.

SECTION 8.10. [Reserved].

SECTION 8.11. Withholding Taxes. To the extent required by any applicable laws,
the Administrative Agent may withhold from any payment to any Lender an amount
equivalent to any applicable withholding Tax. Without limiting or expanding the
provisions of Section 2.17, each Lender shall indemnify and hold harmless the
Administrative Agent against, within 10 days after written demand therefor, any
and all Taxes and any and all related losses, claims, liabilities and expenses
(including fees, charges and disbursements of any counsel for the Administrative
Agent) incurred by or asserted against the Administrative Agent by the Internal
Revenue Service or any other Governmental Authority as a result of the failure
of the Administrative Agent to properly withhold Tax from amounts paid to or for
the account of any Lender for any reason (including, without limitation, because
the appropriate form was not delivered or not properly executed, or because such
Lender failed to notify the Administrative Agent of a change in circumstance
that rendered the exemption from, or reduction of, withholding Tax
ineffective). A certificate as to the amount of such payment or liability
delivered to any Lender by the Administrative Agent shall be conclusive absent
manifest error. Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under this
Agreement or any other Loan Document

 

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against any amount due the Administrative Agent under this Section 8.11. The
agreements in this Section 8.11 shall survive the resignation and/or replacement
of the Administrative Agent, any assignment of rights by, or the replacement of,
a Lender and the repayment, satisfaction or discharge of all other Obligations.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices; Communications.

(a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and except as provided in Section 9.01(b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

(i) if to the Borrower or the Administrative Agent, to the address, telecopier
number, electronic mail address or telephone number specified for such person on
Schedule 9.01; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices to any Lender pursuant to
Article II if such Lender, as applicable, has notified the Administrative Agent
that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.

(c) Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received. Notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in Section 9.01(b) above shall be effective as provided in such Section
9.01(b).

(d) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto.

(e) Documents required to be delivered pursuant to Section 5.04 (to the extent
any such documents are included in materials otherwise filed with the SEC) may
be delivered electronically (including as set forth in Section 9.17) and if so
delivered, shall be deemed to have

 

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been delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the website
address listed on Schedule 9.01, or (ii) on which such documents are posted on
the Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided,
that (A) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender, and (B) the Borrower shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail) of
the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such
documents. Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the certificates required
by Section 5.04(c) to the Administrative Agent. Except for such certificates
required by Section 5.04(c), the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

(f) The Administrative Agent shall have the right to accept and act upon
instructions, including funds transfer instructions (“Instructions”) given
pursuant to this Agreement and delivered using Electronic Means; provided,
however, that the Borrower shall provide to the Administrative Agent an
incumbency certificate listing authorized officers and containing specimen
signatures of such authorized officers, which incumbency certificate shall be
amended by the Borrower whenever a person is to be added or deleted from the
listing. If the Borrower elects to give the Administrative Agent Instructions
using Electronic Means and the Administrative Agent in its discretion elects to
act upon such Instructions, the Administrative Agent’s understanding of such
Instructions shall be deemed controlling. The Borrower understands and agrees
that the Administrative Agent cannot determine the identity of the actual sender
of such Instructions and that the Administrative Agent shall conclusively
presume that directions that purport to have been sent by an authorized officer
listed on the incumbency certificate provided to the Administrative Agent have
been sent by such authorized officer. The Borrower shall be responsible for
ensuring that only authorized officers transmit such Instructions to the
Administrative Agent and that the Borrower and all authorized officers are
solely responsible to safeguard the use and confidentiality of applicable user
and authorization codes, passwords and/or authentication keys upon receipt by
the Borrower. The Administrative Agent shall not be liable for any losses, costs
or expenses arising directly or indirectly from such Agent’s reliance upon and
compliance with such Instructions notwithstanding such directions conflict or
are inconsistent with a subsequent written instruction. The Borrower agrees: (i)
to assume all risks arising out of the use of Electronic Means to submit
Instructions to the Administrative Agent, including without limitation the risk
of the Administrative Agent acting on unauthorized Instructions, and the risk of
interception and misuse by third parties; (ii) that it is fully informed of the
protections and risks associated with the various methods of transmitting
Instructions to the Administrative Agent and that there may be more secure
methods of transmitting Instructions than the method(s) selected by the
Borrower; (iii) that the security procedures (if any) to be followed in
connection with its transmission of Instructions provide to it a commercially
reasonable degree of protection in light of its particular needs and

 

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circumstances; and (iv) to notify the Administrative Agent immediately upon
learning of any compromise or unauthorized use of the security
procedures. “Electronic Means” shall mean the following communications methods:
S.W.I.F.T., e-mail, facsimile transmission, secure electronic transmission
containing applicable authorization codes, passwords and/or authentication keys
issued by the Administrative Agent, or another method or system specified by the
Administrative Agent as available for use in connection with its services
hereunder.

SECTION 9.02. Survival of Agreement. All covenants, agreements, representations
and warranties made by the Borrower herein, in the other Loan Documents and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans and the execution and delivery of the Loan Documents, regardless of
any investigation made by such persons or on their behalf, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any Fee or any other amount payable under this Agreement or any other
Loan Document is outstanding and unpaid. Without prejudice to the survival of
any other agreements contained herein, indemnification and reimbursement
obligations contained herein (including pursuant to Sections 2.17 and 9.05)
shall survive the payment in full of the principal and interest hereunder or the
termination of this Agreement.

SECTION 9.03. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have received copies hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Administrative Agent and each Lender and their respective permitted successors
and assigns.

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender
(and any attempted assignment or transfer by the Borrower without such consent
shall be null and void), and (ii) no Lender may assign or otherwise transfer its
rights or obligations hereunder except in accordance with this Section
9.04. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants (to the extent provided in
paragraph (d) of this Section 9.04), and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement or the other Loan Documents.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees (each, an “Assignee”) all or a
portion of its rights and obligations under this Agreement (including all or a
portion of the Loans at the time owing to it) with the prior written consent or,
with respect to the Administrative Agent, acknowledgment (such consent or
acknowledgement not to be unreasonably withheld or delayed) of:

 

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(A) the Borrower; provided, that no consent of the Borrower shall be required
for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as
defined below) or, if an Event of Default under Sections 7.01(b), (c), (h) or
(i) has occurred and is continuing, any other person (other than a natural
person) that is engaged in making, purchasing, holding or investing in bank
loans and similar extensions of credit in the ordinary course; and

(B) the Administrative Agent; provided, that no acknowledgement of the
Administrative Agent shall be required for an assignment of all or any portion
of a Loan to the Borrower or an Affiliate of the Borrower made in accordance
with
Section 9.04(h).

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an affiliate of a Lender or
an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Loans, the amount of the Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $1.0 million, unless the Borrower otherwise
consents; provided, that (1) no such consent of the Borrower shall be required
if an Event of Default under Sections 7.01(b), (c), (h) or (i) has occurred and
is continuing and (2) such amounts shall be aggregated in respect of each Lender
and its Affiliates or Approved Funds (with simultaneous assignments to or by two
or more Approved Funds shall be treated as one assignment), if any;

(B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance via an electronic settlement
system acceptable to the Administrative Agent (or, if previously agreed with the
Administrative Agent, manually), and shall pay to the Administrative Agent a
processing and recordation fee of $3,500 (which fee may be waived or reduced in
the sole discretion of the Administrative Agent); provided that only one such
fee shall be due in respect of a simultaneous assignment to more than one
Affiliate of a Lender or Approved Fund;

(C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and any tax forms required
to be delivered pursuant to Section 2.17; and

(D) the Assignee shall not be the Borrower or any Affiliate of the Borrower
except in accordance with Section 9.04(h).

For the purposes of this Section 9.04, “Approved Fund” means any person (other
than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
and that is administered or managed by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages
a Lender. The Administrative Agent shall have no responsibility to determine
whether an assignee is an Approved Fund.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v)
below, from and after the effective date specified in each Assignment and
Acceptance the

 

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Assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.17 and 9.05). Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 9.04 shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (d) of this Section 9.04.

(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders and principal amount of the Loans owing to each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders shall treat each person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an Assignee, the Assignee’s completed Administrative
Questionnaire (unless the Assignee shall already be a Lender hereunder), all
applicable tax forms, the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent promptly
shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment, whether or not evidenced by a promissory
note, shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph (b)(v).

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that the
outstanding balances of its Loans, in each case without giving effect to
assignments thereof which have not become effective, are as set forth in such
Assignment and Acceptance, (ii) except as set forth in clause (i) above, 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,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or

 

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any other instrument or document furnished pursuant hereto; (iii) the Assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) the Assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 3.05 (or delivered pursuant to Section 5.04),
and 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; (v) the Assignee will independently and without reliance upon the
Administrative 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; (vi) the Assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by the terms
of this Agreement, together with such powers as are reasonably incidental
thereto; and (vii) the Assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.

(d) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of the Loans owing to it);
provided, that (A) such Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement and the
other Loan Documents; provided, that (x) such agreement may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver that (1) requires the consent of each Lender directly
affected thereby pursuant to Section 9.04(a)(i) or clauses (i), (ii), (iii) or
(iv) of the first proviso to Section 9.08(b) and (2) directly affects such
Participant and (y) no other agreement with respect to amendment, modification
or waiver may exist between such Lender and such Participant. Subject to
paragraph (d)(ii) of this Section 9.04, the Borrower agrees that each
Participant shall be entitled to the benefits of Section 2.17 (subject to the
requirements and limitations of such Sections) to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to paragraph (b)
of this Section 9.04. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 9.06 as though it were a Lender,
provided such Participant shall be subject to Section 2.18(c) as though it were
a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.17 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent (not to be unreasonably withheld or delayed) or the entitlement to
receive a greater payment results from a change in law that occurs after the
Participant acquired the participation. Each Lender that sells a participation
shall, acting solely for this purpose as an agent of the Borrower, maintain a

 

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register on which it enters the name and address of each Participant and the
principal amounts (and interest amounts) of each Participant’s interest in the
Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any loans
or its other obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such loan or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error.

(e) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank and in the case of any Lender that is an Approved Fund, any pledge
or assignment to any holders of obligations owed, or securities issued, by such
Lender, including to any trustee for, or any other representative of, such
holders, and this Section 9.04 shall not apply to any such pledge or assignment
of a security interest; provided, that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or Assignee for such Lender as a party hereto.

(f) The Borrower, upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender requiring Notes to facilitate transactions
of the type described in paragraph (d) above.

(g) Notwithstanding the foregoing, any Conduit Lender may assign any or all of
the Loans it may have funded hereunder to its designating Lender without the
consent of the Borrower or the Administrative Agent. Each of the Borrower, each
Lender and the Administrative Agent hereby confirms that it will not institute
against a Conduit Lender or join any other person in instituting against a
Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding under any state bankruptcy or similar law, for one year
and one day after the payment in full of the latest maturing commercial paper
note issued by such Conduit Lender; provided, however, that each Lender
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto and the Borrower for any loss, cost, damage or
expense arising out of its inability to institute such a proceeding against such
Conduit Lender during such period of forbearance.

(h) Notwithstanding anything to the contrary in this Agreement, including
Section 2.18(c) (which provisions shall not be applicable to this Section
9.04(h)), the Borrower or any Affiliate of the Borrower may purchase by way of
assignment and become an Assignee with respect to Loans at any time and from
time to time from Lenders in accordance with Section 9.04(b) hereof (each, a
“Permitted Loan Purchase”); provided, that, in respect of any Permitted Loan
Purchase, (A) upon consummation of any such Permitted Loan Purchase, any Loans
purchased by the Borrower or any of its Subsidiaries shall be deemed to be
automatically and immediately cancelled and extinguished and the Borrower will
promptly notify the Administrative Agent that the Register be updated to record
such event as if it were a prepayment of the Loans purchased by the Borrower,
(B) in connection with any such Permitted

 

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Loan Purchase, the Borrower or Affiliate of the Borrower, as applicable, and
such Lender that is the Assignor shall execute and deliver to the Administrative
Agent a Permitted Loan Purchase Assignment and Acceptance (and for the avoidance
of doubt, (x) shall make the representations and warranties set forth in the
Permitted Loan Purchase Assignment and Acceptance and (y) shall not be required
to execute and deliver an Assignment and Acceptance pursuant to Section
9.04(b)(ii)(B)) and shall otherwise comply with the conditions to Assignments
under this Section 9.04 and (D) no Default or Event of Default would exist
immediately after giving effect on a Pro Forma Basis to such Permitted Loan
Purchase.

SECTION 9.05. Expenses; Indemnity.

(a) The Borrower agrees to pay (i) all reasonable out of pocket expenses
(including Other Taxes) incurred by the Administrative Agent in connection with
the preparation of this Agreement and the other Loan Documents, or by the
Administrative Agent in connection with the syndication of the Loans or the
administration of this Agreement (including expenses incurred in connection with
due diligence and the reasonable fees, disbursements and charges of counsel to
the Administrative Agent) or in connection with the administration of this
Agreement and any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the Exchange Transactions hereby contemplated shall
be consummated), including the reasonable fees, charges and disbursements of
Lindquist & Vennum LLP, counsel for the Administrative Agent and, if necessary,
the reasonable fees, charges and disbursements of such additional counsel as the
Administrative Agent may require, and (ii) all out of pocket expenses (including
Other Taxes) incurred by the Administrative Agent or any Lender in connection
with the enforcement or protection of their rights in connection with this
Agreement and the other Loan Documents, in connection with the Loans made
hereunder, including the fees, charges and disbursements of counsel for the
Administrative Agent (including any special and local counsel).

(b) The Borrower agrees to indemnify the Administrative Agent, each Lender, each
of their respective Affiliates and each of their respective directors, trustees,
officers, employees, agents, trustees and advisors (each such person being
called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, obligations, liabilities, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind, including
reasonable counsel fees, charges and disbursements (except the allocated costs
of in-house counsel), imposed or, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
and thereto of their respective obligations thereunder or the consummation of
the Exchange Transactions and the other transactions contemplated hereby, (ii)
the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto and regardless of whether such matter is initiated
by a third party or by the Borrower or any of their subsidiaries or Affiliates;
provided, that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, obligations, liabilities,
penalties, actions, judgments, suits, costs, expenses or disbursements are
determined by a final, non-appealable judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Indemnitee (for purposes of this proviso only, each of the Administrative
Agent or any Lender shall be treated as several and separate

 

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Indemnitees, but each of them together with its respective Related Parties,
shall be treated as a single Indemnitee). None of the Indemnitees (or any of
their respective affiliates) shall be responsible or liable to the Fund, the
Borrower or any of their respective subsidiaries, Affiliates or stockholders or
any other person or entity for any special, indirect, consequential or punitive
damages. The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the resignation or removal
of the Administrative Agent, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent or any Lender.

(c) Except as expressly provided in Section 9.05(a) with respect to Other Taxes,
which shall not be duplicative with any amounts paid pursuant to Section 2.17,
this Section 9.05 shall not apply to Taxes other than Taxes that represent
losses, claims, damages, liabilities and expenses with respect to a non-Tax
claim.

(d) To the fullest extent permitted by applicable law, the Borrower shall not
assert, and hereby waive, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or the use of the proceeds thereof. No Indemnitee shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby.

(e) The agreements in this Section 9.05 shall survive the resignation or removal
of the Administrative Agent, the replacement of any Lender and the repayment,
satisfaction or discharge of all the other Obligations and the termination of
this Agreement.

SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower or any Subsidiary against any of and all
the obligations of the Borrower now or hereafter existing under this Agreement
or any other Loan Document held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or such other Loan
Document and although the obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) that such Lender may have.

SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.

 

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SECTION 9.08. Waivers; Amendment.

(a) No failure or delay of the Administrative Agent or any Lender in exercising
any right or power hereunder or under any Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent and
the Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on the Borrower in any case shall entitle
such person to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any other Loan Document nor any provision hereof
or thereof may be waived, amended or modified except (x) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrower and the Required Lenders, and (y) in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by each
party thereto and the Administrative Agent and consented to by the Required
Lenders; provided, however, that no such agreement shall

(i) decrease or forgive the principal amount of, or extend the final maturity
of, or decrease the rate of interest on any Loan without the prior written
consent of each Lender directly affected thereby,

(ii) decrease the fees of any Lender or the Administrative Agent without the
prior written consent of such Lender or the Administrative Agent, as applicable,

(iii) extend any date on which payment of interest on any Loan or any fees is
due, without the prior written consent of each Lender adversely affected
thereby, or

(iv) amend or modify the provisions of this Section 9.08 or the definition of
the terms “Required Lenders” or any other provision hereof specifying the number
or percentage of Lenders required to waive, amend or modify any rights hereunder
or make any determination or grant any consent hereunder, without the prior
written consent of each Lender adversely affected thereby;

provided, further, that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent hereunder without the
prior written consent of the Administrative Agent acting as such at the
effective date of such agreement, as applicable. Each Lender shall be bound by
any waiver, amendment or modification authorized by this Section 9.08 and any
consent by any Lender pursuant to this Section 9.08 shall bind any assignee of
such Lender.

SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the applicable interest rate, together with all fees
and charges that are

 

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treated as interest under applicable law (collectively, the “Charges”), as
provided for herein or in any other document executed in connection herewith, or
otherwise contracted for, charged, received, taken or reserved by any Lender,
shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted
for, charged, taken, received or reserved by such Lender in accordance with
applicable law, the rate of interest payable hereunder, together with all
Charges payable to such Lender, shall be limited to the Maximum Rate; provided,
that such excess amount shall be paid to such Lender on subsequent payment dates
to the extent not exceeding the legal limitation.

SECTION 9.10. Entire Agreement. This Agreement, the other Loan Documents and the
agreements regarding certain fees referred to herein constitute the entire
contract between the parties relative to the subject matter hereof. Any previous
agreement among or representations from the parties or their Affiliates with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Notwithstanding the foregoing, any fee letter entered into
between the Borrower and any Agent in connection with this Agreement shall
survive the execution and delivery of this Agreement and remain in full force
and effect. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.

SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

SECTION 9.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute but one contract, and shall become effective as
provided in Section 9.03. Delivery of an executed counterpart to this Agreement
by facsimile transmission (or other electronic transmission pursuant to
procedures approved by the Administrative Agent) shall be as effective as
delivery of a manually signed original.

 

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SECTION 9.14. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

SECTION 9.15. Jurisdiction; Consent to Service of Process. Each party hereto
hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
general and exclusive jurisdiction of the Supreme Court of the State of New York
for the County of New York (the “New York Supreme Court”), and the United States
District Court for the Southern District of New York (the “Federal District
Court”, and together with the New York Supreme Court, the “New York Courts”),
and appellate courts from either of them;

(b) consents that any such action or proceeding may be brought in such courts
and waives, to the maximum extent not prohibited by law, any objection that it
may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient
forum and agrees not to plead or claim the same;

(c) agrees that the New York Courts and appellate courts from either of them
shall be the exclusive forum for any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, and that it shall
not initiate (or collusively assist in the initiation or prosecution of) any
such action or proceeding in any court other than the New York Courts and
appellate courts from either of them; provided that

(i) if all such New York Courts decline jurisdiction over any Person, or decline
(or in the case of the Federal District Court, lack) jurisdiction over the
subject matter of such action or proceeding, a legal action or proceeding may be
brought with respect thereto in another court having such jurisdiction;

(ii) in the event that a legal action or proceeding is brought against any party
hereto or involving any of its property or assets in another court (without any
collusive assistance by such party or any of its Subsidiaries or Affiliates),
such party shall be entitled to assert any claim or defense (including any claim
or defense that this Section 9.15(c) would otherwise require to be asserted in a
legal action or proceeding in a New York Court) in any such action or
proceeding; and

(iv) any party hereto may bring any legal action or proceeding in any
jurisdiction for the recognition and enforcement of any judgment;

(d) each party hereto agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower, the applicable Lender or the Administrative Agent, as the case may be,
at the address specified in Section 9.01 or at such other address of which the
Administrative Agent, any such Lender and the Borrower shall have been notified
pursuant thereto; and

 

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(e) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or (subject to the preceding clause
(c)) shall limit the right to sue in any other jurisdiction.

SECTION 9.16. Confidentiality. Each of the Lenders and the Administrative Agent
agrees that it shall maintain in confidence any information relating the
Borrower and any Subsidiary furnished to it by or on behalf of the Borrower or
any Subsidiary (other than information that (a) has become generally available
to the public other than as a result of a disclosure by such party in violation
of this Section 9.16, (b) has been independently developed by such Lender or the
Administrative Agent without violating this Section 9.16 or (c) was available to
such Lender or the Administrative Agent from a third party having, to such
person’s knowledge, no obligations of confidentiality to the Borrower) and shall
not reveal the same other than to its directors, trustees, officers, employees,
accountants, auditors and attorneys and advisors with a need to know or to any
person that approves or administers the Loans on behalf of such Lender (so long
as each such person shall have been instructed to keep the same confidential in
accordance with this Section 9.16), except: (A) to the extent necessary to
comply with law or any legal process or the requirements of any Governmental
Authority, the National Association of Insurance Commissioners or of any
securities exchange on which securities of the disclosing party or any Affiliate
of the disclosing party are listed or traded, (B) as part of normal reporting or
review procedures to, or examinations by, Governmental Authorities or
self-regulatory authorities, including the National Association of Insurance
Commissioners or the National Association of Securities Dealers, Inc., (C) to
its parent companies, Affiliates or auditors (so long as each such person shall
have been instructed to keep the same confidential in accordance with this
Section 9.16), (D) in order to enforce its rights under any Loan Document in a
legal proceeding, (E) to other Lenders and to any pledgee under Section 9.04(d)
or any other prospective assignee of, or prospective Participant in, any of its
rights under this Agreement (so long as such person is subject to this Section
9.16 or shall have been instructed to keep the same confidential in accordance
with this Section 9.16) and (F) to any direct or indirect contractual
counterparty in Swap Agreements or such contractual counterparty’s professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section 9.16).

SECTION 9.17. Platform; Borrower Materials. The Borrower hereby acknowledges
that (a) the Administrative Agent will make available to the Lenders materials
and/or information provided by or on behalf of the Borrower hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”), and (b)
certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not
wish to receive material non-public information with respect to the Borrower or
its securities) (each, a “Public Lender”). The Borrower hereby agrees that it
will use commercially reasonable efforts to identify that portion of the
Borrower Materials that may be distributed to the Public Lenders and that (i)
all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the
Borrower shall be deemed to have authorized the Administrative Agent and the
Lenders to treat

 

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such Borrower Materials as either publicly available information or not material
information (although it may be sensitive and proprietary) with respect to the
Borrower or its securities for purposes of United States Federal and state
securities laws, (iii) all Borrower Materials marked “PUBLIC” are permitted to
be made available through a portion of the Platform designated “Public
Investor;” and (iv) the Administrative Agent shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.” THE
PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENTS DO NOT WARRANT THE
ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS, OR THE ADEQUACY OF THE
PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY THE AGENTS IN CONNECTION WITH THE BORROWER MATERIALS OR THE
PLATFORM. IN NO EVENT SHALL THE AGENTS HAVE ANY LIABILITY TO THE BORROWER, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND INCLUDING DIRECT OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF BORROWER MATERIALS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT IS FOUND IN A FINAL
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED,
HOWEVER, THAT IN NO EVENT SHALL ANY AGENT HAVE ANY LIABILITY TO ANY BORROWER,
ANY LENDER OR ANY OTHER PERSON FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES).

SECTION 9.18. [Reserved].

SECTION 9.19. Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business
Day preceding that on which final judgment is given. The obligation of the
Borrower in respect of any such sum due from it to the Administrative Agent or
the Lenders hereunder or under the other Loan Documents shall, notwithstanding
any judgment in a currency (the “Judgment Currency”) other than that in which
such sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent of any sum
adjudged to be so due in the Judgment Currency, the Administrative Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency. If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Administrative Agent or the Lenders from
the Borrower in the Agreement Currency, the Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the
Administrative Agent or the person to whom such obligation was owing against

 

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such loss. If the amount of the Agreement Currency so purchased is greater than
the sum originally due to the Administrative Agent in such currency, the
Administrative Agent agrees to return the amount of any excess to the Borrower
(or to any other person who may be entitled thereto under applicable law).

SECTION 9.20. USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower that pursuant to the requirements of
the USA PATRIOT Act, it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of
the Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrower in accordance with
the USA PATRIOT Act.

SECTION 9.21. Affiliate Lenders.

(a) Each Lender who is an Affiliate of the Borrower, excluding (x) the Borrower
and its Subsidiaries and (y) any Debt Fund Affiliate Lender (each, an “Affiliate
Lender”; it being understood that (x) any Loan purchased by the Borrower or its
Subsidiaries shall be automatically cancelled and extinguished pursuant to
Section 9.04(h) and (y) Debt Fund Affiliate Lenders and Affiliate Lenders may be
Lenders hereunder in accordance with Section 9.04(h), subject in the case of
Affiliate Lenders, to this Section 9.21), in connection with any (i) consent (or
decision not to consent) to any amendment, modification, waiver, consent or
other action with respect to any of the terms of any Loan Document, (ii) other
action on any matter related to any Loan Document or (iii) direction to the
Administrative Agent or any Lender to undertake any action (or refrain from
taking any action) with respect to or under any Loan Document, in each case
prior to a Bankruptcy Event, agrees that, except with respect to any amendment,
modification, waiver, consent or other action (1) described in clauses (i),
(ii), (iii) or (iv) of the first proviso of Section 9.08(b) or (2) that
adversely affects such Affiliate Lender (in its capacity as a Lender) in a
disproportionally adverse manner as compared to other Lenders, such Affiliate
Lender shall be deemed to have voted its interest as a Lender without discretion
in such proportion as the allocation of voting with respect to such matter by
Lenders who are not Affiliate Lenders. Each Affiliate Lender hereby irrevocably
appoints the Administrative Agent (such appointment being coupled with an
interest) as such Affiliate Lender’s attorney-in-fact, with full authority in
the place and stead of such Affiliate Lender and in the name of such Affiliate
Lender, from time to time in the Administrative Agent’s discretion to take any
action and to execute any instrument that the Administrative Agent may deem
reasonably necessary to carry out the provisions of this clause (a), it being
understood that the Administrative Agent may only act in such capacity prior to
the occurrence of a Bankruptcy Event.

(b) Notwithstanding anything to the contrary in this Agreement, no Affiliate
Lender shall have any right to (1) attend (including by telephone) any meeting
or discussions (or portion thereof) among the Administrative Agent or any Lender
to which representatives of the Borrower are not then present, (2) receive any
information or material prepared by or on behalf of the Administrative Agent or
any Lender or any communication by or among Administrative Agent and/or one or
more Lenders, except to the extent such information or materials have been made
available to the Borrower or its representatives or (3) make or bring (or
participate in, other than as a passive participant in or recipient of its pro
rata benefits of) any claim, in its capacity as

 

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a Lender, against Administrative Agent or any other Lender with respect to any
duties or obligations or alleged duties or obligations of such Agent or any
other such Lender under the Loan Documents. It shall be a condition precedent to
each assignment to an Affiliate Lender that such Affiliate Lender shall have
represented to the assigning Lender in the applicable assignment and assumption
agreement, and notified the Administrative Agent in writing that it is (or will
be, following the consummation of such assignment) an Affiliate Lender.

SECTION 9.22. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrower acknowledges (on its own behalf and on behalf of its
Affiliates) and agrees that (i) (A) the arranging and other services regarding
this Agreement provided by the Administrative Agent and the Lenders are
arm’s-length commercial transactions between the Borrower and its respective
Affiliates, on the one hand, and the Administrative Agent and the Lenders, on
the other hand, (B) the Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and (C) the
Borrower is capable of evaluating, and understands and accepts, the terms, risks
and conditions of the transactions contemplated hereby and by the other Loan
Documents; (ii) (A) each of the Administrative Agent and the Lenders is and has
been acting solely as a principal and has not been, is not and will not be
acting as an advisor, agent or fiduciary for the Borrower, any of its Affiliates
or any other person and (B) none of the Administrative Agent or the Lenders has
any obligation to the Borrower or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; and (iii) the Administrative Agent or
the Lenders and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower and
its Affiliates, and none of the Administrative Agent or the Lenders has any
obligation to disclose any of such interests to the Borrower or any of its
Affiliates. To the fullest extent permitted by applicable law, the Borrower
hereby waives and releases any claims that it may have against the
Administrative Agent or the Lenders with respect to any breach or alleged breach
of agency or fiduciary duty in connection with any aspect of any transaction
contemplated hereby.

SECTION 9.23. Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any Lender that is an EEA
Financial Institution arising under any Loan Document, to the extent such
liability is unsecured, may be subject to the write-down and conversion powers
of an EEA Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any Lender that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if
applicable:

(i) a reduction in full or in part or cancellation of any such liability;

 

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(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.

[Signature pages follow.]

 

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have
duly executed this Agreement as of the date first set forth above.

 

      BORROWER:       CLAIRE’S (GIBRALTAR) HOLDINGS LIMITED      

By:

 

LOGO [g437016snap3.jpg]

 

          Name: Stephen Sernett           Title: Director  

Signature Page to Claire’s (Gibraltar) Term Loan Credit Agreement

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

     

WILMINGTON TRUST, NATIONAL ASSOCIATION

     

as Administrative Agent

     

By:

 

LOGO [g437016snap1.jpg]

 

       

Name: Meghan H. McCauley

       

Title Assistant Vice President

 

Signature Page to Claire’s (Gibraltar) Term Loan Credit Agreement

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

EXHIBIT A

[FORM OF]

ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Acceptance as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below (i) all of the Assignor’s rights and obligations in
its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including any guarantees included in such facilities) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender) against
any person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby or in any way based on or related to
any of the foregoing, including contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to the
rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Acceptance, without representation or warranty by the
Assignor.

 

1.   

Assignor:

 

 

2.   

Assignee:

 

 

     [and is an Affiliate/Approved Fund of [identify Lender]1 3.   

Borrower:

  Claire’s (Gibraltar) Holdings Limited 4.   

Administrative Agent:

  Wilmington Trust, National Association, as administrative agent for the
Lenders under the Credit Agreement.

 

 

1  Select as applicable.

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

5.   

Credit Agreement:

  Credit Agreement, dated as of September 20, 2016 (as the same may be further
amended, restated, amended and restated, supplemented or otherwise modified from
time to time), among Claire’s (Gibraltar) Holdings Limited, a Gibraltar private
limited liability company, (the “Borrower”), the Lenders party thereto from time
to time and Wilmington Trust, National Association, as Administrative Agent for
the Lenders. 6.   

Assigned Interest:

 

 

Aggregate Amount of Loans

  Amount of Loans Assigned     Percentage Assigned of Loans2   $   $          %
  

Effective Date:              , 20     [TO BE INSERTED BY THE ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR].

 

 

2  Set forth, to at least 9 decimals, as a percentage of the Loans of all
Lenders thereunder.

 

2

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

The terms set forth in this Assignment and Acceptance are hereby agreed to:

 

ASSIGNOR     [NAME OF ASSIGNOR]   By:  

 

    Name:     Title: ASSIGNEE     [NAME OF ASSIGNEE]   By:  

 

    Name:     Title:

[Acknowledged:]3

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Administrative Agent

 

By:  

 

  Name:   Title:

 

 

3  To be added only if the acknowledgment of the Administrative Agent is
required pursuant to Section 9.04 of the Credit Agreement.

 

3

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

[Consented to:]4

[CLAIRE’S (GIBRALTAR) HOLDINGS LIMITED]

 

By:  

 

  Name:   Title:

 

 

4  To be added only if the consent of the Borrower is required pursuant to
Section 9.04 of the Credit Agreement.

 

4

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

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim, (iii) the
outstanding balances of its Loans, without giving effect to assignments thereof
which have not become effective, are as set forth herein, and (iv) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Acceptance and to consummate the transactions contemplated
hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents, (iii)
the financial condition of the Borrower, any of its Subsidiaries or Affiliates
or any other person obligated in respect of any Loan Document or (iv) the
performance or observance by the Borrower, any of its Subsidiaries or Affiliates
or any other Person of any of their respective obligations under any Loan
Document.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it is an
eligible Assignee and has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the
Credit Agreement that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date,
it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.04 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Agent or any other
Lender, and (v) if it is a Foreign Lender, attached to the Assignment and
Acceptance is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, (ii) it appoints and authorizes each Agent to take such action on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to such Agent, by the terms thereof, together with such powers as are reasonably
incidental thereto, and (iii) 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.

 

5

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

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Acceptance shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Acceptance may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Acceptance by
facsimile shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be
construed in accordance with and governed by the laws of the State of New York.

 

6

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EXHIBIT B

[FORM OF]

JOINDER AGREEMENT

Reference is made to the Term Loan Credit Agreement (as amended, supplemented or
otherwise modified prior to the Closing Date, the “Credit Agreement”), among
Claire’s (Gibraltar) Holdings Limited, a Gibraltar private limited liability
company (the “Borrower”), Wilmington Trust, National Association, as the
administrative agent for the Lenders (in such capacity, the “Administrative
Agent”) and the lenders from time to time party thereto.

SECTION 1.01. Defined Terms. Capitalized terms not defined herein (including in
the caption hereto) shall have the meanings ascribed to them in the Credit
Agreement.

SECTION 1.02. Joinder. (a) By execution of this Joinder Agreement (this
“Joinder”), the undersigned (the “Joining Party”) shall, on the date on which
the conditions set forth below in Section 1.04 have been satisfied (such date,
the “Joinder Effective Date”), become a Lender of Loans under the Credit
Agreement in an amount of Loans such Joining Party is entitled to receive
pursuant to the Exchange Transactions in respect of its Notes (as defined
below), which will be set forth on Schedule 2.01 to the Credit Agreement
delivered to the Administrative Agent on or prior to the Closing Date and which
amount such Joining Party hereby acknowledges to be true and accurate.

(b) The Joining Party, by execution of this Joinder, hereby agrees to all the
terms and provisions of the Credit Agreement applicable to it as a Lender under
the Credit Agreement from and after the Effective Date.

SECTION 1.03. Representations and Warranties. By execution of this Joinder, the
Joining Party hereby represents and warrants:

(a) [that the Joining Party is an “Eligible Holder” as such term is defined in
the Exchange Transaction Documents;]1

(b) that this Joinder has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligations, enforceable against it in
accordance with its terms;

(c) that it has furnished (or, prior to the Closing Date, will furnish) to the
Administrative Agent the Administrative Questionnaire and an executed (i) IRS
Form W-9 or (ii) appropriate IRS Form W-8 (including a certificate of
incorporation or other governing document in the case of delivery of an
appropriate IRS Form W-8);

(d) that it has, independently and without reliance upon the Administrative
Agent or any Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Joinder and become party to the Credit Agreement and each other Loan Document as
a Lender; and

 

 

1  Do not include if Borrower has agreed to waive this requirement with respect
to the Joining Party as notified by the Borrower to the Administrative Agent.

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

(e) that set forth on Schedule A hereto, opposite the name of such Joining
Party, is the amount of the Borrower’s Notes (as defined in the Exchange
Transaction Documents) tendered by such Joining Party in the Exchange
Transactions and the individual Voluntary Offer Instruction Number (each, a “VOI
Number”) corresponding to the tender of such notes through The Depository Trust
Company’s Automated Tender Offer Program (e.g., “ATOP”); provided, that
notwithstanding the amount set forth on Schedule A, the amount of Loans the
Joining Party is entitled to receive pursuant to the Exchange Transactions in
respect of such Joining Party’s Notes will be set forth on Schedule 2.01 to the
Credit Agreement.2

SECTION 1.04. Conditions. The Joinder Effective Date is subject to the
satisfaction of the following condition precedent on or before the Closing Date:
the Administrative Agent shall have executed a counterpart signature page to
this Joinder and delivered it to the Joining Party.

SECTION 1.05. Applicable Law. THIS JOINDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 1.06. Counterparts. This Joinder may be executed in two or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute but one contract, and shall become effective as
provided in Section 1.02. Delivery of an executed counterpart to this Joinder by
facsimile transmission (or other electronic transmission pursuant to procedures
approved by the Administrative Agent) shall be as effective as delivery of a
manually signed original.

SECTION 1.07. Headings. The Section headings used herein are for convenience of
reference only, are not part of this Joinder and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Joinder.

SECTION 1.08. Administrative Agent. The parties hereto agree that the
Administrative Agent shall be afforded all of the rights, protections,
indemnities, immunities and privileges afforded to it under the Credit Agreement
in connection with the execution of this Joinder and performance of its
obligations hereunder.

[Remainder of Page Left Intentionally Blank]

 

 

2  To be modified if Borrower has agreed to alternative delivery mechanic.

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

IN WITNESS WHEREOF, the parties hereto have duly executed this Joinder as of the
date set forth on the signature pages hereto.

 

JOINING PARTY:    [NAME OF INSTITUTION]    By:
                                         
                                                    Name:       Title:      
Date:       If a second signature is necessary    By:
                                         
                                                    Name:       Title:   

SCHEDULE A

 

    

Amount of 8.875%
Senior Secured Second
Lien Notes due 2019
Tendered ($)

   VOI
Number  

[NAME OF INSTITUTION]

          

Amount of 7.750%
Senior Notes due
2020 Tendered ($)

   VOI
Number  

[NAME OF INSTITUTION]

          

Amount of 10.500%
Senior Subordinated
Notes due 2017
Tendered ($)

   VOI
Number  

[NAME OF INSTITUTION]

     

[Signature Page to Claire’s Gibraltar Joinder Agreement]

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

BORROWER:    CLAIRE’S (GIBRALTAR) HOLDINGS LIMITED          By:
                                         
                                                    Name:       Title:      
Date:   

[Signature Page to Claire’s Gibraltar Joinder Agreement]

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

Accepted and agreed:

 

ADMINISTRATIVE AGENT:  

WILMINGTON TRUST, NATIONAL

ASSOCIATION,

  as Administrative Agent   By:                                          
                                               Name:     Title:     Date:  

[Signature Page to Claire’s Gibraltar Joinder Agreement]

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

EXHIBIT C

[FORM OF]

PERMITTED LOAN PURCHASE ASSIGNMENT AND ACCEPTANCE

Reference is made to the Term Loan Credit Agreement, dated as of September 20,
2016 (as may be amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among Claire’s
(Gibraltar) Holdings Limited, a Gibraltar private limited liability company (the
“Borrower”), the lenders from time to time party thereto (“Lenders”), and
Wilmington Trust, National Association, as administrative agent for the Lenders
(in such capacity, the “Administrative Agent”). Capitalized terms used and not
otherwise defined herein have the meanings ascribed to such terms in the Credit
Agreement.

The Assignor identified on Schedule l hereto (the “Assignor”) and the
[                    ]1 agree as follows:

1. The Assignor hereby irrevocably sells and assigns to the Assignee without
recourse to the Assignor, and the Assignee hereby irrevocably purchases and
assumes from the Assignor without recourse to the Assignor, as of the Effective
Date (as defined below) and pursuant to the terms and conditions set forth in
the Credit Agreement for Permitted Loan Purchases (including, without
limitation, Section 9.04(h)), the interest described in Schedule 1 hereto in and
to the Assignor’s rights and obligations under the Credit Agreement in a
principal amount of the Loans as set forth on Schedule 1 hereto (the “Assigned
Interest”).

2. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Permitted Loan Purchase Assignment and Acceptance and to consummate the
transactions contemplated hereby; (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 Credit Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(c) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any other obligor or the
performance or observance by the Borrower or any other obligor of any of their
respective obligations under the Credit Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto; and (d)
attaches any Notes held by it evidencing the Assigned Interest. To the extent
the Assignor has retained any interest in the Obligations under the Credit
Agreement and holds a Note evidencing such interest, the Assignor hereby
requests that the Administrative Agent exchange the attached Note or Notes for a
new Note or Notes payable to the Assignor, in each case, in amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).

 

 

1  Specify Borrower or applicable Affiliate of the Borrower.

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

3. The Assignee (a) represents and warrants that it is legally authorized to
enter into this Permitted Loan Purchase Assignment and Acceptance and has taken
all action necessary to execute and deliver this Permitted Loan Purchase
Assignment and Acceptance and to consummate the transaction contemplated hereby;
and (b) represents and warrants that it satisfied the requirements, if any,
specified in the Credit Agreement that are required to be satisfied in order to
make a Permitted Loan Purchase of the Assigned Interest.

4. The effective date of this Permitted Loan Purchase Assignment and Acceptance
shall be the Effective Date of Assignment described in Schedule 1 hereto (the
“Effective Date”). [Following the execution of this Permitted Loan Purchase
Assignment and Acceptance, the Assigned Interest shall be deemed to be
automatically and immediately (contributed to the Borrower, if applicable, and)
cancelled and extinguished. The Administrative Agent shall update the Register,
effective as of the Effective Date, to record such event as if it were a
prepayment of such Assigned Interest pursuant to Section 9.04(h) of the Credit
Agreement.]2

5. Upon such acceptance and recording, from and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued prior to the Effective Date. No payments
in respect of the Assigned Interest (which shall be deemed to have been
cancelled and extinguished as of the Effective Date) shall be due to the
Assignor or the Assignee from and after the Effective Date.

6. As of the Effective Date, the Assignor shall, to the extent provided in this
Permitted Loan Purchase Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

7. This Permitted Loan Purchase Assignment and Acceptance shall be binding upon,
and inure to the benefit of the parties hereto and their respective successors
and assigns. This Permitted Loan Purchase Assignment and Acceptance may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Permitted Loan Purchase Assignment and Acceptance by electronic means shall be
effective as delivery of a manually executed counterpart of this Permitted Loan
Purchase Assignment and Acceptance.

8. This Permitted Loan Purchase Assignment and Acceptance shall be governed by
and construed in accordance with the laws of the State of New York.

[Signature page follows.]

 

 

2  Include bracketed language in Section 4 if the Assignee is the Borrower or a
Subsidiary.

 

2

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

IN WITNESS WHEREOF, the parties hereto have caused this Permitted Loan Purchase
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers.

 

[INSERT NAME],

as Assignor

By:                                                              

     Name:

     Title:

[INSERT NAME],

as Assignee

By:                                                              

     Name:

     Title:

[Signature Page to the Permitted Loan Purchase Assignment and Acceptance]

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

SCHEDULE 1

Assigned Interests

 

Amount of Loans
Assigned   Aggregate Amount of
Outstanding Loans     Percentage Assigned of
Outstanding Loans3                  

 

3  Set forth, to at least 9 decimals, as a percentage of the outstanding Loans
of all Lenders under the Credit Agreement.

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

Schedules to $60MM Gibraltar Agreement

SCHEDULE 1.01A

Immaterial Subsidiaries

 

Claire’s China Services Claire’s European Distribution Limited Claire’s
Netherlands B.V. Claire’s Poland Sp. Z o.o. Claire’s Hungary Kft. Claire’s Czech
Republic s.r.o. WhiteClaire’s Accessorrios Portugal Unipessoal LDA RSI
International Ltd. BMS Fashion Corp. Claire’s Stores (Shanghai) Limited Claire’s
Stores Hong Kong Limited Claire’s European Services Limited Claire’s Luxembourg
S.a.r.l.

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

SCHEDULE 1.01B

Unrestricted Subsidiaries

None.

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

SCHEDULE 2.01

Initial Lenders

 

Lender

   Commitment in $  

SC Credit Opportunities Mandate LLC

     141,498.60   

Brigade Opportunistic Credit LBG Fund Ltd.

     868,505.05   

Big River Group Fund SPC Limited - Bond Segregated Portfolio

     73,462.40   

Brigade Leveraged Capital Structures Fund Ltd.

     2,952,061.50   

Brigade Credit Fund II Ltd.

     2,320,326.60   

Texas Absolute Credit Opportunities Strategy LP

     120,524.25   

Brigade Opportunistic Credit Fund - ICIP, Ltd.

     269,640.40   

Brigade Opportunistic Credit Fund 16 LLC

     170,403.55   

Saba Capital Series LLC Series 1

     94,114.11   

Saba Capital Master Fund, Ltd.

     52834.85   

Brigade Distressed Value Master Fund Ltd.

     386,616.75   

The Coca-Cola Company Master Retirement Trust

     303,032.40   

U.S. High Yield Bond Fund

     65,844.85   

Elliot International, L.P.

     9,363,740.53   

The Liverpool Limited Partnership

     4,406,507.57   

SEI Institutional Investments Trust-High Yield Bond Fund

     334,546.10   

SEI Institutional Managed Trust-High Yield Bond Fund

     245,639.90   

Blue Falcon Limited

     75,653.75   

Delta Master Trust

     245,118.15   

JPMorgan Chase Retirement Plan

     66,784.00   

AllianceBernstein Multi-Manager Alternative Strategies Fund

     12,000.25   

Goldman Sachs Trust II - Goldman Sachs Multi Manager Alternatives Fund

     204,212.95   

Los Angeles County Employees Retirement Association

     513,923.75   

Goldman Sachs Funds II SICAV - Goldman Sachs Global Multi-Manager Alternatives
Portfolio

     34,331.15   

FedEx Corporation Employees’ Pension Trust

     236,248.40   

Tasman Fund LP

     581,542.55   

Future Directions Credit Opportunities Fund

     84,940.90   

SEI Global Master Fund Plc the SEI High Yield Fixed Income Fund

     128,141.80   

Solus Opportunities Fund 5 LP

     12,000.25   

VII Peaks Co-Optivist Income BDC II, Inc.

     187,990.55   

Sola Ltd.

     317,224.00   

Ultra Master Ltd.

     24,000.50   

VII Peaks Co-Optivist B Fund II, LLC

     20,556.95   

VII Peaks Co-Optivist R Fund I, LLC

     1,356.55   

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

State Street Global Advisors

     445,991.90   

Morgan Stanley + Co LLC

     208.70   

Saba Capital Leveraged Master Fund, Ltd

     33,962.46   

Saba Capital Master Fund II, Ltd

     248,445.08   

FFI Fund Ltd.

     821,646.00   

Ares Special Situations Fund III, L.P.

     516,984.88   

Ares Special Situations Fund IV, L.P.

     3,456,782.10   

FYI Ltd.

     156,504.00   

Claire’s Inc.*

     3,828,739.94   

AAA Co-Invest VI BC, LTD.*

     308,095.93   

AAA Co-Invest VI (EHS-BC), LLC*

     163,004.65   

Apollo Overseas Partners (Delaware 892) VI, L.P. *

     361,561.41   

Apollo Investment Fund VI, L.P.*

     1,288,869.00   

Apollo Overseas Partners (Germany) VI, L.P. *

     6,039.75   

Apollo Overseas Partners VI, L.P.*

     354,286.26   

Apollo Overseas Partners (Delaware) VI, L.P.*

     146,807.14   

Euro VI (BC) S.à r.l.*

     9,341,022.75   

TOTAL COMMITMENT:

   $ 46,394,277.81   

Lenders with a * denotes an Affiliate Lender

 

2

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

SCHEDULE 3.01

Organization and Good Standing

None.

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

SCHEDULE 3.04

Governmental Approvals

None.

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

SCHEDULE 3.06(a)

Subsidiaries*

 

Name

  

Jurisdiction

  

Owner of Equity Interests

Claire’s Fashion Property Corp.

   Cayman    100% CSI Luxembourg S.a.r.l.

Claire’s Holding Gmbh

   Switzerland    100% Claire’s Holdings S.a.r.l.

Claire’s Accessories UK Ltd

   United Kingdom    100% Claire’s Holding Gmbh

CSI Luxembourg S.a.r.l.

   Luxembourg    100% Claire’s Holding Gmbh

Claire’s Switzerland Gmbh

   Switzerland    100% Claire’s Holding Gmbh

Claire’s Accessories Spain, S.L.

   Spain    100% Claire’s Accessories UK Ltd

Claire’s France S.A.S.

   France    100% Claire’s Accessories UK Ltd

Claire’s (Gibraltar) Intermediate Holdings Limited

   Gibraltar    100% Claire’s (Gibraltar) Holdings Limited

Claire’s Holdings S.a.r.l.

   Luxembourg    100% Claire’s (Gibraltar) Intermediate Holdings Limited

Claire’s Germany GmbH

   Germany    100% Claire’s Holding Gmbh

Claire’s Italy S.R.L.

   Italy    100% Claire’s Accessories UK, Ltd.

Claire’s Belgium B.V.B.A.

   Austria    100% Claire’s Accessories UK, Ltd.

Claire’s Austria Gmbh

   Belgium    100% Claire’s Holding Gmbh

* This list excludes Immaterial Subsidiaries listed on Schedule 1.01A

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

SCHEDULE 3.06(b)

Subscriptions

None.

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

SCHEDULE 3.10

Taxes

None.

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

SCHEDULE 3.15

Intellectual Property

None.

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

SCHEDULE 3.16

Anti-Money Laundering Laws

None.

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

SCHEDULE 6.01

Indebtedness

Subsidiaries have bank credit facilities totaling approximately $2.3 million.
These facilities have been arranged in accordance with customary lending
practices in their respective countries of operation. As of April 30, 2016,
Subsidiaries had a reduction of $2.1 million for outstanding bank guarantees,
which reduces the borrowing availability to $0.2 million as of that date.

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

SCHEDULE 6.02(a)

Liens

None.

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

SCHEDULE 6.04

Investments

Key money deposits in the amount of $53,000,000 for leases in France.

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

SCHEDULE 6.07

Transactions with Affiliates

None.

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

SCHEDULE 9.01

Notice Information

Administrative Agent or Collateral Agent:

Wilmington Trust, National Association

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention of: Meghan McCauley

Telephone No.: (612) 217-5647

Facsimile No.: (612) 217-5651

E-mail: mmccauley@wilmingtontrust.com

with a copy to:

Lindquist & Vennum LLP

4200 IDS Center

80 South 8th Street

Minneapolis, MN 55402

Attention of: Mark C. Dietzen

Telephone No.: (612) 371-2452

Facsimile No.: (612) 371-3207

E-mail: mdietzen@lindquist.com

Borrower:

Claire’s (Gibraltar) Holdings Limited

3 SW 129th Avenue

Suite 400

Attention: Stephen Sernett, Director

Pembroke Pines, FL 33027

Fax No.: (954) 433-3999

Website: http://www.clairestores.com/phoenix.zhtml?c=68915&p=irol-sec