Exhibit 10.1

EXECUTION COPY

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

March 30, 2012

among

THE GYMBOREE CORPORATION,

as the Lead Borrower,

THE OTHER BORROWERS PARTY HERETO

GIRAFFE INTERMEDIATE B, INC.,

THE OTHER FACILITY GUARANTORS PARTY HERETO,

THE LENDERS PARTY HERETO

and

BANK OF AMERICA, N.A.,

as Administrative Agent and Collateral Agent

and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

as Lead Arranger and Bookrunner

SUNTRUST ROBINSON HUMPHREY, INC., and

U.S. BANK NATIONAL ASSOCIATION,

as Joint Bookrunners

U.S. BANK NATIONAL ASSOCIATION

as Syndication Agent

SUNTRUST BANK,

as Documentation Agent

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I               

     1   

SECTION 1.01

    

Definitions

     1   

SECTION 1.02

    

Terms Generally

     64   

SECTION 1.03

    

Accounting Terms

     65   

SECTION 1.04

    

Rounding

     66   

SECTION 1.05

    

Times of Day

     66   

SECTION 1.06

    

Letter of Credit Amounts

     66   

SECTION 1.07

    

Certifications

     66   

SECTION 1.08

    

Currency Equivalents Generally

     66   

SECTION 1.09

    

Change of Currency

     67   

SECTION 1.10

    

Pro Forma Basis

     67   

ARTICLE II              AMOUNT AND TERMS OF CREDIT

     69   

SECTION 2.01

    

Commitment of the Lenders

     69   

SECTION 2.02

    

Increase in Total Commitments

     70   

SECTION 2.03

    

Reserves; Changes to Reserves

     72   

SECTION 2.04

    

Making of Revolving Credit Loans

     72   

SECTION 2.05

    

Overadvances

     74   

SECTION 2.06

    

Swingline Loans

     75   

SECTION 2.07

    

Notes

     76   

SECTION 2.08

    

Interest on Revolving Credit Loans

     76   

SECTION 2.09

    

Conversion and Continuation of Revolving Credit Loans

     77   

SECTION 2.10

    

Alternate Rate of Interest for Revolving Credit Loans

     78   

SECTION 2.11

    

Change in Legality

     78   

SECTION 2.12

    

Default Interest

     79   

SECTION 2.13

    

Letters of Credit

     79   

SECTION 2.14

    

Increased Costs

     85   

SECTION 2.15

    

Termination or Reduction of Commitments

     86   

SECTION 2.16

    

Optional Prepayment of Revolving Credit Loans; Reimbursement of Lenders

     87   

SECTION 2.17

    

Mandatory Prepayment; Commitment Termination; Cash Collateral

     89   

SECTION 2.18

    

Cash Management

     90   

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SECTION 2.19

    

Fees

     93   

SECTION 2.20

    

Maintenance of Loan Account; Statements of Account

     95   

SECTION 2.21

    

Payments; Sharing of Setoff

     95   

SECTION 2.22

    

Settlement Amongst Lenders

     96   

SECTION 2.23

    

Taxes

     98   

SECTION 2.24

    

Mitigation Obligations; Replacement of Lenders

     101   

SECTION 2.25

    

Designation of Lead Borrower as Borrowers’ Agent

     102   

SECTION 2.26

    

Canadian Credit Facility

     102   

SECTION 2.27

    

Extensions of Revolving Credit Commitments, Etc

     103   

SECTION 2.28

    

Obligations of the Lenders Several

     106   

SECTION 2.29

    

Cash Collateral Generally

     106   

ARTICLE III            REPRESENTATIONS AND WARRANTIES

     106   

SECTION 3.01

    

Existence, Qualification and Power; Compliance with Laws

     107   

SECTION 3.02

    

Authorization; No Contravention

     107   

SECTION 3.03

    

Governmental Authorization; Other Consents

     107   

SECTION 3.04

    

Binding Effect

     108   

SECTION 3.05

    

Financial Statements; No Material Adverse Effect

     108   

SECTION 3.06

    

Litigation

     109   

SECTION 3.07

    

No Default

     109   

SECTION 3.08

    

Ownership of Property; Liens

     109   

SECTION 3.09

    

Environmental Compliance

     109   

SECTION 3.10

    

Taxes

     111   

SECTION 3.11

    

ERISA; Plan Compliance

     111   

SECTION 3.12

    

Subsidiaries; Equity Interests

     112   

SECTION 3.13

    

Margin Regulations; Investment Company Act

     112   

SECTION 3.14

    

Disclosure

     112   

SECTION 3.15

    

Intellectual Property; Licenses, Etc

     113   

SECTION 3.16

    

Solvency

     113   

SECTION 3.17

    

Subordination of Junior Financing

     113   

SECTION 3.18

    

Labor Matters

     114   

SECTION 3.19

    

Compliance with Laws and Agreements

     114   

SECTION 3.20

    

Security Documents

     114   

ARTICLE IV            CONDITIONS

     115   

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SECTION 4.01

    

Conditions of Effectiveness of Credit Agreement

     115   

SECTION 4.02

    

Conditions Precedent to Each Revolving Credit Loan and Each Letter of Credit

     117   

ARTICLE V             AFFIRMATIVE COVENANTS

     118   

SECTION 5.01

    

Financial Statements

     118   

SECTION 5.02

    

Certificates; Other Information

     121   

SECTION 5.03

    

Notices

     123   

SECTION 5.04

    

Payment of Taxes, Etc

     124   

SECTION 5.05

    

Preservation of Existence, Etc

     124   

SECTION 5.06

    

Maintenance of Properties

     125   

SECTION 5.07

    

Maintenance of Insurance

     125   

SECTION 5.08

    

Compliance with Laws

     126   

SECTION 5.09

    

Books and Records

     126   

SECTION 5.10

    

Inspection Rights

     126   

SECTION 5.11

    

Covenant to Become a Loan Party and Give Security

     128   

SECTION 5.12

    

Compliance with Environmental Laws

     130   

SECTION 5.13

    

Further Assurances and Post-Closing Conditions

     130   

SECTION 5.14

    

Designation of Subsidiaries

     131   

SECTION 5.15

    

Information Regarding Collateral

     131   

SECTION 5.16

    

Physical Inventories

     131   

SECTION 5.17

    

Use of Proceeds of Credit Extensions

     132   

SECTION 5.18

    

[Reserved]

     132   

SECTION 5.19

    

[Reserved]

     132   

SECTION 5.20

    

Pension Plans

     132   

ARTICLE VI            NEGATIVE COVENANTS

     132   

SECTION 6.01

    

Liens

     133   

SECTION 6.02

    

Investments

     137   

SECTION 6.03

    

Indebtedness

     140   

SECTION 6.04

    

Fundamental Changes

     143   

SECTION 6.05

    

Dispositions

     145   

SECTION 6.06

    

Restricted Payments

     148   

SECTION 6.07

    

Change in Nature of Business

     152   

SECTION 6.08

    

Transactions with Affiliates

     152   

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SECTION 6.09

    

Burdensome Agreements

     153   

SECTION 6.10

    

Accounting Changes

     154   

SECTION 6.11

    

Prepayments, Etc., of Indebtedness

     155   

SECTION 6.12

    

Equity Interests of the Lead Borrower and Restricted Subsidiaries

     156   

SECTION 6.13

    

Amendment of Material Documents

     156   

SECTION 6.14

    

Designated Account

     156   

SECTION 6.15

    

Minimum Consolidated Fixed Charge Coverage Ratio

     157   

ARTICLE VII          EVENTS OF DEFAULT

     157   

SECTION 7.01

    

Events of Default

     157   

SECTION 7.02

    

Remedies Upon Event of Default

     160   

SECTION 7.03

    

Exclusion of Immaterial Subsidiaries

     161   

SECTION 7.04

    

Application of Proceeds

     161   

SECTION 7.05

    

Lead Borrower’s Right to Cure

     162   

ARTICLE VIII         THE ADMINISTRATIVE AGENT

     163   

SECTION 8.01

    

Appointment of Administrative Agent

     163   

SECTION 8.02

    

Appointment of Collateral Agent

     163   

SECTION 8.03

    

Reserved

     164   

SECTION 8.04

    

Sharing of Excess Payments

     164   

SECTION 8.05

    

Agreement of Applicable Lenders

     164   

SECTION 8.06

    

Liability of Agents

     165   

SECTION 8.07

    

Notice of Default

     166   

SECTION 8.08

    

Credit Decisions

     166   

SECTION 8.09

    

Reimbursement and Indemnification

     166   

SECTION 8.10

    

Rights of Agents

     167   

SECTION 8.11

    

Notice of Transfer

     167   

SECTION 8.12

    

Successor Agents

     167   

SECTION 8.13

    

Relation Among the Lenders

     168   

SECTION 8.14

    

Reports and Financial Statements

     168   

SECTION 8.15

    

Agency for Perfection

     169   

SECTION 8.16

    

Delinquent Lender

     169   

SECTION 8.17

    

Collateral Matters

     171   

SECTION 8.18

    

Additional Secured Parties

     172   

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SECTION 8.19

    

Syndication Agent, Documentation Agent, Arranger and Joint Bookrunners

     172   

SECTION 8.20

    

Intercreditor Agreements

     173   

ARTICLE IX            MISCELLANEOUS

     173   

SECTION 9.01

    

Amendments, Etc

     173   

SECTION 9.02

    

Notices and Other Communications; Facsimile Copies

     176   

SECTION 9.03

    

No Waiver; Cumulative Remedies

     177   

SECTION 9.04

    

Attorney Costs and Expenses

     177   

SECTION 9.05

    

Indemnification by the Lead Borrower

     178   

SECTION 9.06

    

Payments Set Aside

     179   

SECTION 9.07

    

Successors and Assigns

     180   

SECTION 9.08

    

Confidentiality

     183   

SECTION 9.09

    

Setoff

     184   

SECTION 9.10

    

Interest Rate Limitation

     185   

SECTION 9.11

    

Counterparts

     185   

SECTION 9.12

    

Integration

     185   

SECTION 9.13

    

Severability

     185   

SECTION 9.14

    

Governing Law

     186   

SECTION 9.15

    

Waiver of Right to Trial by Jury

     186   

SECTION 9.16

    

Binding Effect

     186   

SECTION 9.17

    

Judgment Currency

     187   

SECTION 9.18

    

Lender Action

     187   

SECTION 9.19

    

USA PATRIOT ACT, ETC.; PROCEEDS OF CRIME ACT

     187   

SECTION 9.20

    

No Advisory or Fiduciary Responsibility

     188   

SECTION 9.21

    

Foreign Asset Control Regulations

     188   

SECTION 9.22

    

Survival

     189   

SECTION 9.23

    

Press Releases and Related Matters

     189   

SECTION 9.24

    

Additional Waivers

     190   

SECTION 9.25

    

Intercreditor Agreement

     192   

SECTION 9.26

    

Assumption by Company

     192   

SECTION 9.27

    

Transitional Arrangements

     193   

SECTION 9.28

    

Ratification and Reaffirmation

     193   

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EXHIBITS

  

Exhibit A-1:

    

Form of Assignment and Acceptance (Tranche A)

  

Exhibit A-2:

    

Form of Assignment and Acceptance (FILO)

  

Exhibit B:

    

Form of Customs Broker Agreement

  

Exhibit C:

    

Form of Notice of Borrowing

  

Exhibit D:

    

Form of Revolving Credit Note

  

Exhibit E:

    

Form of Swingline Note

  

Exhibit F:

    

Form of Joinder

  

Exhibit G:

    

Form of Credit Card Notification

  

Exhibit H:

    

Form of Compliance Certificate

  

Exhibit I:

    

Form of Borrowing Base Certificate

  

Exhibit J:

    

Form of Solvency Certificate

  

Exhibit K-1

    

Form of Ropes & Gray LLP Legal Opinion

  

Exhibit K-2

    

Form of Holland & Knight LLP Legal Opinion

  

Exhibit L

    

Form of Foreign Lender Certificate

  

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SCHEDULES

 

Schedule 1.01:

 

Lenders and Commitments

Schedule 2.18(b):

 

Credit Card Arrangements

Schedule 2.18(c):

 

Blocked Accounts

Schedule 3.01:

 

Organization Information

Schedule 3.05(b):

 

Financial Performance Projections

Schedule 3.08(b)(i):

 

Owned Real Estate

Schedule 3.08(b)(ii):

 

Leased Real Estate

Schedule 3.09(b):

 

Environmental Matters

Schedule 3.09(d):

 

Environmental Investigation

Schedule 3.10:

 

Taxes

Schedule 3.11:

 

ERISA and Other Pension Matters

Schedule 3.12:

 

Subsidiaries; Equity Interests

Schedule 3.15:

 

Intellectual Property

Schedule 4.01(c):

 

Local Counsel Opinions

Schedule 5.02(f):

 

Reporting Requirements

Schedule 5.02:

 

Lead Borrower’s Website

Schedule 5.07:

 

Insurance

Schedule 5.14:

 

Unrestricted Subsidiaries

Schedule 6.01:

 

Permitted Encumbrances

Schedule 6.02:

 

Permitted Investments

Schedule 6.03:

 

Existing Indebtedness

Schedule 6.05:

 

Permitted Dispositions

Schedule 6.08:

 

Affiliate Transactions

Schedule 6.09:

 

Burdensome Agreements

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AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 30, 2012, is among
THE GYMBOREE CORPORATION, a Delaware corporation (the “Lead Borrower”), the
other Borrowers party hereto from time to time, GIRAFFE INTERMEDIATE B, INC., a
Delaware corporation (“Holdings”), and the other Facility Guarantors party
hereto from time to time, the Lenders (such term and each other capitalized term
used but not defined in this introductory statement having the meaning given it
in Article I), and BANK OF AMERICA, N.A., as administrative agent (in such
capacity, including any successor thereto, the “Administrative Agent”) and as
collateral agent (in such capacity, including any successor thereto, the
“Collateral Agent”) for the Lenders.

W I T N E S S E T H:

The Borrowers have previously entered into that certain Credit Agreement dated
as of November 23, 2010 (as amended prior to the date hereof, the “Existing
Credit Agreement”), among the Borrowers, the lenders party thereto (the
“Existing Lenders”), the Facility Guarantors, the Administrative Agent and the
Collateral Agent, pursuant to which the Existing Lenders have made loans and
other extensions of credit to the Borrowers.

The Lenders are willing to amend and restate the Existing Credit Agreement and
make loans and other extensions of credit to the Borrowers, all on the terms and
conditions set forth herein.

In consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged
(these recitals being an integral part of the Credit Agreement), the parties
hereto hereby agree that, as of the Closing Date, the Existing Credit Agreement
shall be amended and restated in its entirety and shall remain in full force and
effect only as set forth herein and the parties hereto hereby agree as follows:

ARTICLE I

SECTION 1.01 Definitions.

As used in this Agreement, the following terms have the meanings specified
below:

“ABL Priority Collateral” has the meaning set forth in the Intercreditor
Agreement.

“ACH” means automated clearing house transfers.

“Accommodation Payment” has the meaning provided in SECTION 9.24.

“Account(s)” means “accounts” as defined in the UCC, and also means a right to
payment of a monetary obligation, whether or not earned by performance, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, or
(c) arising out of the use of a credit or charge card or information contained
on or for use with the card. The term “Account” does not include (a) rights to

 

1

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payment evidenced by chattel paper or an instrument, (b) commercial tort claims,
(c) deposit accounts, (d) investment property, or (e) letter-of-credit rights or
letters of credit.

“Account Debtor” means the customer of a Loan Party who is obligated on or under
an Account.

“Acquisition” means, with respect to a specified Person, (a) an Investment in or
a purchase of a fifty percent (50%) or greater interest in the Capital Stock of
any other Person, (b) a purchase or acquisition of all or substantially all of
the assets of any other Person, (c) a purchase or acquisition of a Real Estate
portfolio or Stores from any other Person or assets constituting a business
unit, line of business or division of any other Person, or (d) any merger,
amalgamation or consolidation of such Person with any other Person or other
transaction or series of transactions resulting in the acquisition of all or
substantially all of the assets, or a fifty percent (50%) or greater interest in
the Capital Stock of, any Person, in each case in any transaction or group of
transactions which are part of a common plan.

“Additional Commitment Lender” shall have the meaning provided in SECTION
2.02(a).

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

“Adjustment Date” has the meaning provided in clause (b) of the definition of
“Applicable Margin.”

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

“Advisory Fees” means management, monitoring, consulting, transaction and
advisory fees (including termination fees) and related indemnities and expenses
paid or accrued pursuant to the Sponsor Management Agreement.

“Affiliate” means, with respect to a specified Person, any other Person that
directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with the Person specified.

“Agents” means collectively, the Administrative Agent and the Collateral Agent.

“Agreement” means this Amended and Restated Credit Agreement, as modified,
amended, supplemented or restated, and in effect from time to time.

“Amendment Expenses” means any fees or expenses incurred or paid by Holdings or
any of its Subsidiaries in connection with the negotiation, execution and
delivery of this Agreement.

“Applicable Law” means as to any Person: (a) any and all federal, state,
provincial, local, and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, codes, ordinances, decrees, permits, concessions, grants,
franchises, licenses, agreements, governmental restrictions

 

2

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or other requirements having the force of law; and (b) all court orders,
decrees, judgments, injunctions, enforceable notices, binding agreements and/or
rulings, in each case of or by any Governmental Authority which has jurisdiction
over such Person, or any property of such Person.

“Applicable Lenders” means the Required Lenders, all Lenders or affected
Lenders, in each case as applicable.

“Applicable Margin” means:

(a) From and after the Closing Date until the first Adjustment Date, the
percentages set forth in Level II of the pricing grid below; and

(b) On the first day of each Fiscal Quarter (each, an “Adjustment Date”),
commencing with the Fiscal Quarter beginning on July 29, 2012, the Applicable
Margin shall be determined from such pricing grid based upon Average Daily
Availability Percentage for the most recently ended Fiscal Quarter immediately
preceding such Adjustment Date.

 

Level

  

Average Daily

Availability

Percentage

   Tranche A
LIBO
Applicable
Margin     Tranche A
Prime Rate
Applicable
Margin     FILO LIBO
Applicable
Margin     FILO  Prime
Rate
Applicable
Margin  

I

   Greater than 66%      1.50 %      0.50 %      3.00 %      2.00 % 

II

   Less than or equal to 66% but greater than or equal to 33%      1.75 %     
0.75 %      3.25 %      2.25 % 

III

   Less than 33%      2.00 %      1.00 %      3.50 %      2.50 % 

Applicable Unused Fee Rate means:

(a) From and after the Closing Date until the first Fee Adjustment Date, the
percentage per annum set forth in Level I of the fee grid below; and

(b) On the first day of each Fiscal Quarter (each, a “Fee Adjustment Date”),
commencing with the Fiscal Quarter beginning on April 29, 2012, the applicable
percentage per annum set forth below determined by reference to the Average
Daily Used Commitment Percentage with respect to the Tranche A Commitments or
the FILO Commitments, as the case may be, for the most recently ended Fiscal
Quarter immediately preceding such Fee Adjustment Date:

 

Pricing

Level

  

Average Daily Used Commitment

Percentage

   Applicable Unused Fee
Rate  

I

  

Less than 40%

     0.375 % 

II

  

Greater than or equal to 40%

     0.250 % 

 

3

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“Appraised Value” means the net appraised recovery value of the Borrowers’
Inventory as set forth in the Borrowers’ stock ledger (expressed as a percentage
of the Cost of such Inventory) as reasonably determined from time to time by
reference to the most recent appraisal received by the Administrative Agent
conducted by an independent appraiser reasonably satisfactory to the
Administrative Agent.

“Approved Bank” has the meaning specified in clause (iii) of the definition of
“Cash Equivalents.”

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

“Arranger” means MLPF&S, in its capacity as lead arranger and bookrunner.

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by SECTION 9.07), and accepted by the Administrative Agent, in substantially the
form of Exhibit A-1 or Exhibit A-2, as applicable, or any other form approved by
the Administrative Agent.

“Assignment Taxes” shall have the meaning given to such term in SECTION 2.23(b).

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

“Audited Financial Statements” means the audited consolidated balance sheet of
the Lead Borrower and its Subsidiaries for the Fiscal Year ending January 29,
2011, and the related consolidated statements of income, stockholders’ equity
and cash flows of the Lead Borrower and its Subsidiaries.

“Availability” means the lesser of (a) and (b), where:

(a) is the result of:

(i) The Revolving Credit Ceiling,

Minus

(ii) The aggregate outstanding amount of Credit Extensions to, or for the
account of, the Borrowers; and

(b) is the result of the following, as applicable:

(i) if the FILO Commitments have been terminated, the result of:

(A) The Tranche A Borrowing Base, as determined from the most recent Borrowing
Base Certificate (delivered by the Lead Borrower to the

 

4

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Administrative Agent pursuant to SECTION 5.01(e) hereof (as may be adjusted from
time to time pursuant to SECTION 2.03 hereof));

Minus

(B) The aggregate outstanding amount of Credit Extensions to, or for the account
of, the Borrowers; or

(ii) as long as the FILO Commitments are outstanding, the result of:

(A) The FILO Borrowing Base, as determined from the most recent Borrowing Base
Certificate (delivered by the Lead Borrower to the Administrative Agent pursuant
to SECTION 5.01(e) hereof (as may be adjusted from time to time pursuant to
SECTION 2.03 hereof)),

Minus

(B) The aggregate outstanding amount of Credit Extensions to, or for the account
of, the Borrowers.

“Availability Reserves” means, without duplication of any other Reserves or
items that are otherwise addressed or excluded through eligibility criteria,
such reserves as the Administrative Agent, from time to time determines in its
Permitted Discretion (a) to reflect any impediments to the realization upon the
Collateral included in the Tranche A Borrowing Base or the FILO Borrowing Base
(including, without limitation, claims and liabilities that the Administrative
Agent determines will need to be satisfied in connection with the realization
upon such Collateral), (b) to reflect events, conditions, contingencies or risks
which adversely affect any component of the Tranche A Borrowing Base or the FILO
Borrowing Base, the Collateral or the validity or enforceability of this
Agreement or the other Loan Documents or any of the material rights or remedies
of the Secured Parties hereunder or thereunder, and (c) to reflect any
restrictions in the Senior Note Documents or the Term Loan Facility on the
incurrence of Indebtedness by the Loan Parties, but only to the extent that such
restrictions reduce, or with the passage of time could reduce, the amounts
available to be borrowed hereunder (including, without limitation as a result of
the Loan Parties’ receipt of net proceeds from asset sales) in order for the
Loan Parties to comply with the Senior Note Documents or the Term Loan Facility.
Availability Reserves shall include, without limitation, and without
duplication, the Cash Management Reserves and Bank Product Reserves. Without
limiting the foregoing, the initial Reserves in respect of leased locations as
of the Closing Date shall be in an amount equal to the sum of (a) all past due
rent for all of the Borrower’s leased locations plus (b) one (1) months’ rent
for all of (x) the Borrowers’ leased locations in Landlord Lien States (which,
as of the Closing Date, include the states of Washington, Virginia and
Pennsylvania), and (y) all of the Borrowers’ distributions centers or
warehouses, other than, in each case, such locations, distribution centers or
warehouses with respect to which the Administrative Agent has received a
Collateral Access Agreement in form and substance reasonably satisfactory to the
Administrative Agent.

“Average Daily Availability Percentage” for any period, the average of the
percentages calculated for each day during such period by dividing
(a) Availability by (b) the lesser of (i) the

 

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FILO Borrowing Base (or if the FILO Commitments have been terminated, the
Tranche A Borrowing Base) and (ii) the Revolving Credit Ceiling.

“Average Daily Used Commitment Percentage” for any period, the average of the
percentages calculated for each day during such period by dividing (a) as to the
Tranche A Lenders, (i) the sum of (A) the principal amount of Tranche A Loans
(other than Swingline Loans) of the Borrowers then outstanding, and (B) the then
Letter of Credit Outstandings by (ii) the then aggregate Tranche A Commitments;
and (b) as to the FILO Lenders, (i) the principal amount of FILO Loans of the
Borrowers then outstanding by (ii) the then aggregate FILO Commitments.

“Bank of America” means Bank of America, N.A., a national banking association,
and its Subsidiaries and Affiliates.

“Bank Products” means, collectively, (a) any services or facilities (other than
Cash Management Services) provided to any Loan Party or any of its Subsidiaries
by any Lender or any Affiliate of a Lender on account of (i) credit cards,
(ii) purchase cards, and (iii) merchant services constituting a line of credit,
and (b) any Swap Contracts provided to any Loan Party or any of its Subsidiaries
by any Swap Contract Secured Party, designated by the Lead Borrower at the time
such Swap Contract is entered into or a reasonable period thereafter as being
Obligations under this Agreement, provided that (x) any Bank Product for the
benefit of any Foreign Subsidiary shall name a Borrower as the party thereto and
(y) any Swap Contract provided by the Administrative Agent or its Affiliates
shall automatically be Obligations under this Agreement and no designation shall
be required on the part of the Lead Borrower.

“Bank Product Reserves” means such reserves as the Administrative Agent, from
time to time after the occurrence and during the continuation of a Cash Dominion
Event, determines in its Permitted Discretion as being appropriate to reflect
the reasonably anticipated liabilities and obligations of the Loan Parties with
respect to Bank Products then provided or outstanding.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.) as now or hereafter in effect, or any successor thereto.

“Blocked Account” has the meaning provided in SECTION 2.18(c).

“Blocked Account Agreement” has the meaning provided in SECTION 2.18(c).

“Blocked Account Banks” means the banks with whom Material DDAs are maintained
and with whom a Blocked Account Agreement has been, or is required to be,
executed in accordance with the terms hereof.

“Borrower Materials” has the meaning given to such term in the last paragraph of
SECTION 5.02.

“Borrower Notice” shall have the meaning given to such term in the definition of
“Collateral and Guarantee Requirement”.

 

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“Borrowers” means, collectively, the Lead Borrower, the Borrowers identified on
the signature pages hereto and each other Person (other than an Excluded
Subsidiary) who becomes a Borrower hereunder in accordance with the terms of
this Agreement. For the avoidance of doubt, the Lead Borrower may cause any
Restricted Subsidiary that is a wholly-owned Domestic Subsidiary to become a
Borrower hereunder by causing such Restricted Subsidiary to execute a joinder to
this Agreement and the other Loan Documents and taking such other actions, and
delivering such other documents, agreements and certificates as shall reasonably
be requested by the Administrative Agent, including under applicable “know your
customer” and anti-money laundering rules and regulations, including without
limitation the USA PATRIOT Act, and any applicable items described in SECTION
5.11(a), and any such Restricted Subsidiary shall, after such conditions have
been satisfied, be treated as a Borrower hereunder for all purposes.

“Borrowing” means (a) the incurrence of Revolving Credit Loans (other than
Swingline Loans) of a single Type, on a single date and having, in the case of
LIBO Loans, a single Interest Period, or (b) a Swingline Loan.

“Borrowing Base Certificate” has the meaning provided in SECTION 5.01(e).

“Borrowing Request” means a request by the Lead Borrower on behalf of any of the
Borrowers for a Borrowing in accordance with SECTION 2.04.

“Breakage Costs” has the meaning provided in SECTION 2.16(c).

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts and New York, New York are
authorized or required by law to remain closed (or are in fact closed),
provided, however, that when used in connection with a LIBO Loan, the term
“Business Day” shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

“Canadian Credit Facility” shall have the meaning given to such term in SECTION
2.26.

“Canadian Subsidiary” means any Subsidiary that is organized under the laws of
Canada or any province thereof.

“Capital Expenditures” means, for any period, the aggregate of (a) all amounts
that would be reflected as additions to property, plant or equipment on a
Consolidated statement of cash flows of the Lead Borrower and its Restricted
Subsidiaries in accordance with GAAP and (b) the value of all assets under
Capitalized Leases incurred by the Lead Borrower and its Restricted Subsidiaries
during such period; provided that the term “Capital Expenditures” shall not
include (i) any additions to property and equipment and other capital
expenditures made with the proceeds of any equity securities issued or capital
contributions received by any Loan Party or any Subsidiary, (ii) expenditures
made in connection with the replacement, substitution, restoration or repair of
assets to the extent financed with (x) insurance proceeds paid on account of the
loss of or damage to the assets being replaced, substituted, restored or
repaired or (y) awards of compensation arising from the taking by eminent domain
or condemnation of the assets being replaced, (iii) the purchase price of
equipment that is purchased substantially concurrently with the trade-in of
existing equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such equipment for the equipment

 

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being traded in at such time, (iv) the purchase of plant, property or equipment
to the extent financed with the proceeds of Dispositions that are not required
to be applied to prepay the Obligations or the Term Loan Facility or any
obligations under any Permitted Refinancing thereof, (v) expenditures that are
accounted for as capital expenditures by the Lead Borrower or any Restricted
Subsidiary and that actually are paid for by a Person other than the Lead
Borrower or any Restricted Subsidiary and for which none of the Lead Borrower or
any Restricted Subsidiary has provided or is required to provide or incur,
directly or indirectly, any consideration or obligation to such Person or any
other Person (whether before, during or after such period) other than rent and
similar or related obligations or (vi) expenditures that constitute Permitted
Acquisitions or other Investments permitted hereunder (but the term “Capital
Expenditures” shall include all expenditures made with the proceeds of such
Investments by the recipient thereof that would otherwise constitute Capital
Expenditures).

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

“Capital Stock” shall mean, as to any Person that is a corporation, the
authorized shares of such Person’s capital stock, including all classes of
common, preferred, voting and nonvoting capital stock, and, as to any Person
that is not a corporation or an individual, the membership or other ownership
interests in such Person, including, without limitation, the right to share in
profits and losses, the right to receive distributions of cash and other
property, and the right to receive allocations of items of income, gain, loss,
deduction and credit and similar items from such Person, whether or not such
interests include voting or similar rights entitling the holder thereof to
exercise Control over such Person, collectively with, in any such case, all
warrants, options and other rights to purchase or otherwise acquire, and all
other instruments convertible into or exchangeable for, any of the foregoing.

“Cash Collateral Account” means an interest bearing account established by the
Loan Parties with the Collateral Agent, for its own benefit and the benefit of
the other Secured Parties, under the sole and exclusive dominion and control of
the Collateral Agent, in the name of the Collateral Agent or as the Collateral
Agent shall otherwise direct, in which deposits are required to be made in
accordance with SECTION 2.13(j).

“Cash Dominion Event” means either (a) the occurrence and continuance of any
Specified Default, or (b) the failure of the Borrowers to maintain Availability
at least equal to the greater of (i) twelve and one-half percent (12.5)% of the
lesser of (A) the then FILO Borrowing Base (or, if the FILO Commitments have
been terminated, the then Tranche A Borrowing Base) and (B) the then Revolving
Credit Ceiling, and (ii) $25,000,000, in each case of this clause (b), for five
(5) consecutive Business Days. For purposes of this Agreement, the occurrence of
a Cash Dominion Event shall be deemed continuing (unless the Administrative
Agent otherwise agrees in its reasonable discretion that the circumstances
surrounding such Specified Default cease to exist) (a) so long as such Specified
Default is continuing or has not been waived, and/or (b) if the Cash Dominion
Event arises as a result of the Borrowers’ failure to achieve Availability as
required under clause (b) above, until Availability has exceeded the amount
required by clause

 

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(b) above for thirty (30) consecutive days, in which case a Cash Dominion Event
shall no longer be deemed to be continuing for purposes of this Agreement,
provided that a Cash Dominion Event occurring under clause (b) above may not be
so cured on more than three (3) occasions in any period of 365 consecutive days.

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

(a) Dollars, Australian Dollars, Canadian Dollars and euros;

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

(c) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of issuance thereof;

(d) investments in commercial paper maturing within 270 days from the date of
issuance thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s;

(e) investments in demand deposits, certificates of deposit, banker’s
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, the Administrative Agent or any domestic
office of any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus and
undivided profits of not less than $500,000,000 and that issues (or the parent
of which issues) commercial paper rated at least “Prime 1” (or the then
equivalent grade) by Moody’s or “A 1” (or the then equivalent grade) by S&P;

(f) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (c) above and entered into with a
financial institution satisfying the criteria of clause (e) above;

(g) investments in “money market funds” within the meaning of Rule 2a-7 of the
Investment Company Act of 1940, as amended, substantially all of whose assets
are invested in investments of the type described in clauses (a) through
(e) above; and

(h) other short-term investments utilized by Foreign Subsidiaries in accordance
with normal investment practices for cash management in investments of a type
analogous to the foregoing.

“Cash Management Reserves” means such reserves as the Administrative Agent, from
time to time after the occurrence and during the continuation of a Cash Dominion
Event, determines in its Permitted Discretion as being appropriate to reflect
the reasonably anticipated

 

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liabilities and obligations of the Loan Parties with respect to Cash Management
Services then provided or outstanding.

“Cash Management Services” means any one or more of the following types of
services or facilities provided to any Loan Party or any of its Subsidiaries by
any Lender or any Affiliate of a Lender: (a) ACH transactions, (b) treasury
and/or cash management services, including, without limitation, controlled
disbursement services, depository, overdraft and electronic funds transfer
services, (c) foreign exchange facilities, (d) credit or debit cards,
(e) deposit and other accounts, and (f) merchant services (other than those
constituting a line of credit). For the avoidance of doubt, Cash Management
Services do not include Swap Contracts.

“Cash Receipts” has the meaning provided in SECTION 2.18(d).

“Casualty Event” means any event that gives rise to the receipt by the Lead
Borrower or any of its Restricted Subsidiaries of any insurance proceeds or
condemnation awards in respect of any Inventory, equipment, fixed assets or Real
Estate (including any improvements thereon).

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

“Change in Control” means any of the following:

(a) at any time prior to a Qualifying IPO, one or more Permitted Holders (taken
collectively) 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 Capital Stock representing at least a majority of the aggregate
voting power represented by the issued and outstanding Capital Stock of
Holdings; or

(b) at any time after a Qualifying IPO, (i) any Person (other than a Permitted
Holder) or (ii) any Persons (other than one or more Permitted Holders)
constituting a “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the Closing Date) shall have, directly or
indirectly, acquired beneficial ownership of Capital Stock representing 35% or
more of the aggregate voting power represented by the issued and outstanding
Capital Stock of Holdings and the Permitted Holders shall own, directly or
indirectly, less than such Person or “group” of the aggregate voting power
represented by the issued and outstanding Capital Stock of Holdings or
(ii) during each period of twelve consecutive months, the board of directors of
Holdings shall not consist of a majority of the Continuing Directors; or

(c) any “Change in Control” (or any comparable term) in any document pertaining
to the Term Loan Facility, the Senior Notes or any other Material Indebtedness;
or

(d) the failure of Holdings to own one hundred percent (100%) of the Capital
Stock of the Lead Borrower.

 

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“Change in Law” means (a) the adoption of any Applicable Law after the Closing
Date, (b) any change in any Applicable Law or in the interpretation or
application thereof by any Governmental Authority after the Closing Date or
(c) compliance by any Credit Party (or, for purposes of SECTION 2.14, by any
lending office of such Credit Party or by such Credit Party’s holding company,
if any) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the Closing
Date applicable to the Loan Parties. Notwithstanding anything herein to the
contrary, (x) the Dodd Frank Wall Street Reform and Consumer Protection Act, and
all requests, regulations, rules, guidelines and directives promulgated
thereunder or issued in connection therewith and (y) all requests, regulations,
rules, guideline and directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to have been
adopted after the Closing Date, regardless of the date enacted or adopted.

“Closing Date” means March 30, 2012.

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

“Collateral” means any and all “Collateral”, “Pledged Collateral” or words of
similar intent as defined in any applicable Security Document.

“Collateral Access Agreement” means an agreement reasonably satisfactory in form
and substance to the Collateral Agent executed by (a) a bailee or other Person
in possession of Collateral, including, without limitation, any warehouseman and
(b) a landlord of Real Estate leased by any Loan Party (including, without
limitation, any warehouse or distribution center), pursuant to which such Person
(i) acknowledges the Collateral Agent’s Lien on the Collateral, (ii) releases or
subordinates such Person’s Liens in the Collateral held by such Person or
located on such Real Estate, (iii) agrees to furnish the Collateral Agent with
access to the Collateral in such Person’s possession or on the Real Estate for
the purposes of conducting a Liquidation, and (iv) makes such other agreements
with the Collateral Agent as the Collateral Agent may reasonably require.

“Collateral Agent” has the meaning provided in the preamble to this Agreement.

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

(a) on the Initial Closing Date, the Administrative Agent and the Collateral
Agent shall have received each Security Document to the extent required to be
delivered on the Initial Closing Date pursuant to SECTION 4.01(a) and SECTION
4.01(e) of the Existing Credit Agreement and this Agreement, subject to the
limitations and exceptions of this Agreement, duly executed by each Loan Party
party thereto;

(b) at all times on and after the Initial Closing Date, the Obligations be
secured by a perfected security interest in (i) all Capital Stock of (x) the
Lead Borrower and (y) each Subsidiary of Holdings directly owned by any Loan
Party and (ii) all intercompany debt directly owned by any Loan Party, in each
case subject to exceptions and limitations otherwise set forth

 

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in this Agreement and the Security Documents (to the extent appropriate in the
applicable jurisdiction);

(c) at all times on and after the Initial Closing Date, the Obligations be
secured by a perfected security interest in, and mortgage lien on, substantially
all tangible and intangible assets of the Lead Borrower and each Restricted
Subsidiary that is a Loan Party (including Capital Stock and intercompany debt,
accounts, inventory, equipment, investment property, contract rights, IP Rights,
other general intangibles, Material Real Estate and proceeds of the foregoing),
in each case, subject to exceptions and limitations otherwise set forth in this
Agreement and the Security Documents (to the extent appropriate in the
applicable jurisdiction);

(d) subject to limitations and exceptions of this Agreement and the Security
Documents, to the extent a security interest in and mortgage lien on any
Material Real Estate is required under SECTION 4.01 of the Existing Credit
Agreement and this Agreement or SECTION 5.11 (together with any Material Real
Estate that is subject to a Mortgage on the Closing Date, each, a “Mortgaged
Property”), the Collateral Agent shall have received (i) counterparts of a
Mortgage with respect to such Mortgaged Property duly executed and delivered by
the record owner of such property in form suitable for filing or recording in
all filing or recording offices that the Collateral Agent may reasonably deem
necessary or desirable in order to create a valid and subsisting perfected Lien
on the property and/or rights described therein in favor of the Collateral Agent
for the benefit of the Secured Parties, and evidence that all filing and
recording taxes and fees have been paid or otherwise provided for in a manner
reasonably satisfactory to the Collateral Agent (it being understood that if a
mortgage tax will be owed on the entire amount of the indebtedness evidenced
hereby, then the amount secured by the Mortgage shall be limited to 100% of the
fair market value of the property at the time the Mortgage is entered into if
such limitation results in such mortgage tax being calculated based upon such
fair market value), (ii) fully paid policies of title insurance (or marked-up
title insurance commitments having the effect of policies of title insurance) on
the Mortgaged Property (the “Mortgage Policies”) issued by a nationally
recognized title insurance company reasonably acceptable to the Collateral Agent
in form and substance and in an amount reasonably acceptable to the Collateral
Agent (not to exceed 100% of the fair market value of the Real Estate (or
interest therein, as applicable) covered thereby), insuring the Mortgages to be
valid subsisting Liens on the property described therein, free and clear of all
Liens other than Liens permitted pursuant to SECTION 6.01 each of which shall
(A) to the extent reasonably necessary, include such reinsurance arrangements
(with provisions for direct access, if reasonably necessary) as shall be
reasonably acceptable to the Collateral Agent, (B) contain a “tie-in” or
“cluster” endorsement, if available under applicable law (i.e., policies which
insure against losses regardless of location or allocated value of the insured
property up to a stated maximum coverage amount), (C) have been supplemented by
such endorsements (or where such endorsements are not available, opinions of
special counsel, architects or other professionals reasonably acceptable to the
Collateral Agent) as shall be reasonably requested by the Collateral Agent
(including endorsements on matters relating to usury, first loss, last dollar,
zoning, contiguity, revolving credit (if available after the applicable Loan
Party uses commercially reasonable efforts), doing business, non-imputation,
public road access, variable rate, environmental lien, subdivision, mortgage
recording tax, separate tax lot and so-called comprehensive coverage over
covenants and restrictions), (iii) either (1) an American Land Title
Association/American Congress of Surveying and Mapping (ALTA/ACSM) form of
survey for

 

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which all charges have been paid, dated a date, containing a certification and
otherwise being in form and substance reasonably satisfactory to the Collateral
Agent or (2) such documentation as is sufficient to omit the standard survey
exception to coverage under the Mortgage Policy with respect to such Mortgaged
Property and affirmative endorsements reasonably requested by the Collateral
Agent, including “same as” survey and comprehensive endorsements, (iv) legal
opinions, addressed to the Collateral Agent and the Secured Parties, reasonably
acceptable to the Collateral Agent as to such matters as the Collateral Agent
may reasonably request, and (v) in order to comply with the Flood Laws, the
following documents (the “Pre-Close Flood Documents”): (A) a completed standard
“life of loan” flood hazard determination form (a “Flood Determination Form”);
(B) if any of the improvement(s) to the improved Material Real Property is
located in a special flood hazard area, a notification thereof to the Lead
Borrower (“Borrower Notice”) and (if applicable) notification to the Lead
Borrower that flood insurance coverage under the National Flood Insurance
Program (“NFIP”) is not available because the community in which the property is
located does not participate in the NFIP; (C) documentation evidencing the Lead
Borrower’s receipt of the Borrower Notice (e.g., countersigned Borrower Notice,
return receipt of certified U.S. Mail, or overnight delivery); and (D) if the
Borrower Notice is required to be given and flood insurance is available in the
community in which the property is located, a copy of one of the following: the
flood insurance policy, the Lead Borrower’s application for a flood insurance
policy plus proof of premium payment, a declaration page confirming that flood
insurance has been issued, or such other evidence of flood insurance reasonably
satisfactory to the Collateral Agent (any of the foregoing being “Evidence of
Flood Insurance”); and

(e) after the Closing Date, each Restricted Subsidiary of the Lead Borrower that
is not an Excluded Subsidiary shall become a Borrower or a Facility Guarantor
and signatory to this Agreement pursuant to a joinder agreement in accordance
with SECTION 5.11 or SECTION 5.13; provided that notwithstanding the foregoing
provisions, any Subsidiary of the Lead Borrower that Guarantees the Senior
Notes, the Term Loan Facility or any Permitted Refinancing of any thereof shall
be a Loan Party hereunder for so long as it Guarantees such Indebtedness.

Notwithstanding the foregoing provisions of this definition or anything in this
Agreement or any other Loan Document to the contrary:

(A) the foregoing definition shall not require, unless otherwise stated in this
clause (A), the creation or perfection of pledges of, security interests in,
Mortgages on, or the obtaining of title insurance or taking other actions with
respect to, (i) any fee owned Real Estate that is not Material Owned Real Estate
or (ii) any leased Real Estate that is not Material Leased Real Estate,
provided, that if the grant of a security interest in or Mortgage on any leased
Real Estate requires the consent of a landlord, the grant of such security
interest or Mortgage shall not be required if such consent shall not have been
obtained notwithstanding the use by the Lead Borrower and its Restricted
Subsidiaries of commercially reasonable efforts (which shall not include the
provision of any economic or other material concession to such landlord to
secure such consent), (iii) motor vehicles and other assets subject to
certificates of title and commercial tort claims where the amount of damages
claimed by the applicable Loan Party is less than $5,000,000 and letter of
credit rights (it being understood that all such assets and proceeds thereof
shall constitute Collateral, even though perfection beyond a UCC filing is not
required hereunder, to the extent a security interest can be created therein
without a specific description

 

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thereof, without delivery of a supplement to a Security Document or without the
taking of any action or obtaining the consent of any Person, including any
Governmental Authority), (iv) any particular asset, if the pledge thereof or the
security interest therein is prohibited by Applicable Law other than to the
extent such prohibition is deemed ineffective under the UCC or other Applicable
Law notwithstanding such prohibition, (v) Capital Stock in any joint venture or
in any Subsidiary that is not a wholly owned Subsidiary, other than proceeds
thereof, but only to the extent that the creation of a security interest in such
Capital Stock is prohibited or restricted by the Organization Documents of such
Person or by any contractual restriction contained in any agreement with third
party holders of the other Capital Stock in such Person which holders are not
Affiliates of the Lead Borrower (except to the extent that any such prohibition
or restriction is deemed ineffective under the UCC or other applicable law),
(vi) any rights of a Loan Party arising under or evidenced by any contract,
lease, instrument, license or other agreement to the extent the pledges thereof
and security interests therein are prohibited or restricted by such contract,
lease, instrument, license or other agreement, other than proceeds and
receivables thereof, except to the extent the pledge of such rights is deemed
effective under the UCC or other Applicable Law or principle of equity
notwithstanding such prohibition or restriction, or such prohibition or
restriction is deemed ineffective under the UCC or other Applicable Law or
principle of equity, (vii) licenses and any other property and assets to the
extent that the Collateral Agent may not validly possess a security interest
therein under Applicable Laws (including, without limitation, rules and
regulations of any Governmental Authority) or the pledge or creation of a
security interest in which would require governmental consent, approval, license
or authorization (except that cash proceeds of dispositions thereof in
accordance with Applicable Law (including, without limitation, rules and
regulations of any Governmental Authority) shall constitute Collateral),
provided that Collateral shall include to the maximum extent permitted by
Applicable Law all rights incident or appurtenant to such licenses, property and
assets (except to the extent any Lien on such asset in favor of the Collateral
Agent requires consent, approval or authorization from any Governmental
Authority) and the right to receive all proceeds realized from the sale,
assignment or transfer of such licenses, property and assets, (viii) IP Rights
to the extent a security interest therein may not be perfected by filing of a
UCC financing statement and/or a filing in the United States Patent and
Trademark Office or the United States Copyright Office and (ix) any particular
assets if, in the reasonable judgment of the Administrative Agent or the
Collateral Agent evidenced in writing, determined in consultation with the Lead
Borrower, the burden, cost or consequences of creating or perfecting such
pledges or security interests in such assets is excessive in relation to the
practical benefits to be obtained therefrom by the Lenders under the Loan
Documents;

(B) (i) the foregoing definition shall not require control agreements (except as
provided under SECTION 2.18) or, except with respect to Capital Stock or
Indebtedness represented or evidenced by certificates or instruments and except
as provided under SECTION 2.18 hereof, perfection by “control” with respect to
any Collateral; (ii) no actions in any non-U.S. jurisdiction or required by the
laws of any non-U.S. jurisdiction shall be required in order to create any
security interests in assets located or titled outside of the U.S. or to perfect
such security interests (it being understood that there shall be no security
agreements or pledge agreements governed under the laws of any non-U.S.
jurisdiction); and (iii) except to the extent that perfection and priority may
be achieved (x) by the filing of a financing statement under the UCC with
respect to any Borrower or Facility Guarantor, (y) with respect to Real Estate
and the recordation of Mortgages in respect thereof, as contemplated by clauses
(A) above or (z) with

 

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respect to Capital Stock or Indebtedness, by the delivery of certificates or
instruments representing or evidencing such Capital Stock or Indebtedness along
with appropriate undated instruments of transfer executed in blank, the Loan
Documents shall not contain any requirements as to perfection or priority with
respect to any assets or property described in clause (A) above and this clause
(B);

(C) the Collateral Agent in its discretion may grant extensions of time for the
creation or perfection of security interests in, and Mortgages on, or obtaining
of title insurance or taking other actions with respect to, particular assets or
any other compliance with the requirements of this definition where it
reasonably determines in writing, in consultation with the Lead Borrower, that
the creation or perfection of security interests and Mortgages on, or obtaining
of title insurance or taking other actions, or any other compliance with the
requirements of this definition cannot be accomplished without undue delay,
burden or expense by the time or times at which it would otherwise be required
by this Agreement, or the Security Documents; provided that on or prior to the
Closing Date, (i) the Collateral Agent shall have received UCC financing
statements in appropriate form for filing under the UCC in the jurisdiction of
incorporation or organization of each Loan Party, and (ii) Term Loan Agent shall
have received (subject to the Intercreditor Agreement) any certificates or
instruments representing or evidencing Equity Interests of (x) the Lead Borrower
and (y) each wholly owned Domestic Subsidiary of the Lead Borrower or any Loan
Party that is not excluded from the Collateral, in each case accompanied by
instruments of transfer and stock powers undated and endorsed in blank; and

(D) Liens required to be granted from time to time pursuant to the Collateral
and Guarantee Requirement shall be subject to exceptions and limitations set
forth in this Agreement and the Security Documents.

(E) For so long as the Term Loan Facility or any Permitted Refinancing thereof
is outstanding, the Loan Parties shall only be required to grant Liens with
respect to any Term Priority Collateral, to perfect the Collateral Agent’s
security interest in any Term Priority Collateral or to take any other actions
or deliver any documents with respect to such grant or perfection, to the extent
that comparable actions have been taken or documents have been delivered to the
Term Loan Agent (or any agent or trustee with respect to any Permitted
Refinancing of the Term Loan Facility) with respect to such Term Priority
Collateral.

“Commercial Letter of Credit” means any Letter of Credit issued for the purpose
of providing the primary payment mechanism in connection with the purchase of
any materials, goods or services by a Borrower or a Restricted Subsidiary in the
ordinary course of business of such Borrower or Restricted Subsidiary.

“Commitment” shall mean, with respect to each Lender, the aggregate commitments
of such Lender hereunder to make Credit Extensions (including Tranche A Loans
and FILO Loans) to the Borrowers in the amount set forth opposite its name on
Schedule 1.01 hereto or as may subsequently be set forth in the Register from
time to time, as the same may be increased or reduced from time to time pursuant
to SECTIONS 2.02 and 2.15 of this Agreement.

“Commitment Increase” shall have the meaning provided in SECTION 2.02(a).

 

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“Commitment Increase Date” shall have the meaning provided in SECTION 2.02(e).

“Commitment Percentage” shall mean, with respect to each Lender, that percentage
of the Commitments of all Lenders hereunder to make Credit Extensions to the
Borrowers, in the amount set forth opposite such Lender’s name on Schedule 1.01
hereto or as may subsequently be set forth in the Register from time to time, as
the same may be increased or reduced from time to time pursuant to SECTIONS 2.02
and 2.15 of this Agreement, or if the Commitments have been terminated, such
percentage as calculated immediately prior to such termination.

“Compliance Certificate” has the meaning provided in SECTION 5.02(b).

“Company” shall mean the Lead Borrower.

“Concentration Account” has the meaning provided in SECTION 2.18(d).

“Consolidated” means, when used to modify a financial term, test, statement, or
report of a Person, the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial position, cash flows, or operating results of such Person and
its Subsidiaries.

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

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

(a) increased (without duplication of either (1) any item described in any other
clause, below, or (2) any item excluded in the calculation of Consolidated Net
Income) by:

(i) provision for taxes based on income or profits or capital, including,
without limitation, state, franchise and similar taxes (such as the Pennsylvania
capital tax and Texas margin tax) and foreign withholding taxes of such Person
paid or accrued during such period to the extent the same were deducted (and not
added back) in computing Consolidated Net Income; plus

(ii) Consolidated Interest Expense of such Person for such period plus
(A) amounts excluded from Consolidated Interest Expense as set forth in clauses
(i) through (vii) of the definition thereof, to the extent the same were
deducted (and not added back) in calculating such Consolidated Net Income and
(B) to the extent not reflected in Consolidated Interest Expense, letter of
credit fees and bank fees and costs of surety bonds in connection with financing
activities (whether amortized or immediately expensed); plus

(iii) Consolidated Depreciation and Amortization Expense of such Person for such
period to the extent the same were deducted (and not added back) in computing
Consolidated Net Income; plus

 

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(iv) any non-cash charges, including (i) any write offs or write downs,
(ii) equity based awards compensation expense, (iii) losses on sales, disposals
or abandonment of, or any impairment charges or asset write off, related to
intangible assets, long-lived assets and investments in debt and equity
securities, (iv) all losses from investments recorded using the equity method,
and (v) other non-cash charges, non-cash expenses or non-cash losses reducing
Consolidated Net Income for such period (provided that if any such non-cash
charges referred to in clauses (i) through (v) of this clause represent an
accrual or reserve for potential cash items in any future period, the cash
payment in respect thereof in such future period shall be subtracted from EBITDA
to such extent, and excluding amortization of a prepaid cash item that was paid
in a prior period); plus

(v) the amount of any minority interest expense consisting of Subsidiary income
attributable to minority equity interests of third parties in any
non-wholly-owned Subsidiary deducted (and not added back) in such period in
calculating Consolidated Net Income; plus

(vi) Advisory Fees paid or accrued in such period to the Sponsors to the extent
otherwise permitted hereunder and deducted (and not added back) in such period
in computing Consolidated Net Income; plus

(vii) the amount of net cost savings, operating expense reductions and synergies
(other than with respect to Specified Transactions) projected by the Lead
Borrower in good faith to be realized as a result of specified actions (1) taken
during the period for which Consolidated EBITDA is being determined (“EBITDA
Determination Period”) (but in any event taken no later than 24 months after the
Initial Closing Date) or (2) committed or expected, prior to or during the
EBITDA Determination Period, to be taken during such period or thereafter (but
in any event taken no later than 24 months after the Initial Closing Date)
(calculated on a Pro Forma Basis as though such cost savings operating expense
reductions and synergies had been realized on the first day of such period), net
of the amount of actual benefits realized during such period from such actions;
provided that (w) such cost savings, operating expense reductions and synergies
are reasonably identifiable, quantifiable and factually supportable in the good
faith judgment of the Lead Borrower, (x) such actions are taken, committed to be
taken or expected to be taken within 24 months after the Initial Closing Date,
(y) no cost savings operating expense reductions and synergies, operating
expense reductions and synergies shall be added pursuant to this clause (vii) to
the extent duplicative of any expenses or charges otherwise added to
Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for
such period and (z) the aggregate amount of such cost savings operating expense
reductions and synergies do not exceed in the aggregate the greater of
(A) $30,000,000 and (B) 10.0% of Consolidated EBITDA in any four consecutive
Fiscal Quarters; provided further that projected amounts (and not yet realized)
may no longer be added in calculating Consolidated EBITDA pursuant to this
clause (a)(vii) to the

 

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extent occurring more than four full fiscal quarters after the specified action
taken in order to realize such projected cost savings; plus

(viii) any costs or expense incurred by the Lead Borrower or a Restricted
Subsidiary pursuant to any management equity plan or stock option plan or any
other management or employee benefit plan or agreement or any stock subscription
or shareholder agreement, to the extent that such cost or expenses are funded
with cash proceeds contributed to the capital of the Lead Borrower or net cash
proceeds of an issuance of Capital Stock of the Lead Borrower (other than
Disqualified Capital Stock); plus

(ix) any net loss from disposed or discontinued operations; plus

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

(b) decreased by (without duplication)

(i) non-cash gains increasing Consolidated Net Income of such Person for such
period, excluding any non-cash gains to the extent they represent the reversal
of an accrual or reserve for a potential cash item that reduced Consolidated
EBITDA in any prior period and any non-cash gains with respect to cash actually
received in such period or received in a prior period so long as such cash did
not increase EBITDA in such prior period; plus

(ii) any net income from disposed or discontinued operations; and

(c) increased or decreased by (without duplication), as applicable, any
adjustments resulting from the application of FASB Interpretation No. 45
(Guarantees).

“Consolidated Fixed Charge Coverage Ratio” means, with respect to the Lead
Borrower and its Restricted Subsidiaries for any period, the ratio of
(a) (i) Consolidated EBITDA for such period, plus (ii) Net Proceeds of capital
contributions received or Permitted Equity Issuances made during such period to
the extent used to make payments on account of Debt Service Charges or Taxes,
minus (iii) Capital Expenditures paid in cash during such period and which are
not financed with Net Proceeds of Permitted Indebtedness (other than the
Obligations) or equity issuances during such period, minus (iv) federal, state
and foreign income Taxes paid in cash (net of cash refunds received) during such
period to (b) the sum of (i) Debt Service Charges payable in cash during such
period plus (ii) Restricted Payments permitted by SECTION 6.06(k) paid in cash
to the holders of Capital Stock of the Lead Borrower during such period (but
excluding Restricted Payments to the extent funded by an issuance by the Lead
Borrower of Permitted Indebtedness, a Permitted Equity Issuance or a capital
contribution to the Lead Borrower).

“Consolidated Interest Expense” means, with respect to the Lead Borrower and its
Restricted Subsidiaries on a Consolidated basis for any period, determined in
accordance with GAAP, (a) total interest expense payable in cash (including that
attributable to obligations with

 

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respect to Capitalized Leases in accordance with GAAP in effect on the Initial
Closing Date but excluding any imputed interest as a result of purchase
accounting) of the Lead Borrower and its Restricted Subsidiaries on a
Consolidated basis with respect to all outstanding Indebtedness of the Lead
Borrower and its Restricted Subsidiaries, including, without limitation, the
Obligations and all commissions, discounts and other fees and charges owed with
respect thereto, but excluding (i) any non-cash interest or deferred financing
costs, (ii) any amortization or write-down of deferred financing fees, debt
issuance costs, discounted liabilities, commissions, fees and expenses,
(iii) the accretion or accrual of discounted liabilities, (iv) all non-recurring
cash interest expense including liquidated damages for failure to timely comply
with registration rights obligations and any non-recurring expense or loss
attributable to the early extinguishment or conversion of Indebtedness, (v) in
connection with the determination of the Consolidated Fixed Charge Coverage
Ratio for any purpose other than clause (vi) below, any expensing of bridge,
commitment and other financing fees, (vi) in connection with the determination
of the Consolidated Fixed Charge Coverage Ratio for the purpose of determining
the amount available for Restricted Payments under SECTION 6.06 and for
prepayments of Indebtedness under SECTION 6.11, any expensing of bridge,
commitment and other financing fees only to the extent reasonably approved in
good faith by the Administrative Agent (which approval for purposes of SECTION
6.06 and SECTION 6.11 only, shall not be required if Availability at the time of
determination and after giving effect to the Specified Payment or RP Payment, as
applicable, is greater than or equal to the lesser of (x) fifteen percent
(15.00%) of the then FILO Borrowing Base (or if the FILO Commitments have been
terminated, the then Tranche A Borrowing Base) or (y) the then Revolving Credit
Ceiling), and (vii) penalties and interest related to Taxes, and reduced by
interest income received or receivable in cash for such period. For purposes of
the foregoing, interest expense of the Lead Borrower and its Restricted
Subsidiaries shall be determined after giving effect to any net payments made or
received by such Persons with respect to interest rate Swap Contracts.

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

(a) any after-tax effect of extraordinary, non-recurring or unusual gains or
losses (less all fees and expenses relating thereto) or expenses; Transaction
Expenses to the extent incurred on or prior to December 31 2011; Amendment
Expenses; Public Company Costs; severance; relocation costs; integration costs;
pre-opening, opening, consolidation and closing costs for facilities (including
Stores); signing, retention or completion bonuses; transition costs; costs
incurred in connection with acquisitions after the Initial Closing Date;
restructuring costs; and curtailments or modifications to pension and
post-retirement employee benefit plans shall be excluded; provided that in
connection with the determination of the Consolidated Fixed Charge Coverage
Ratio for the purpose of determining the amount available for Restricted
Payments under SECTION 6.06 and for prepayments of Indebtedness under SECTION
6.11, any such items which are cash gains, losses, costs or expenses shall be
excluded only to the extent reasonably approved in good faith by the
Administrative Agent (which approval for purposes of SECTION 6.06 and SECTION
6.11 shall not be required if Availability at the time of determination and
after giving effect to the Specified Payment or RP Payment, as applicable, is
greater than or equal to the lesser of (x) fifteen percent (15.00%) of the then
FILO Borrowing

 

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Base (or if the FILO Commitments have been terminated, the then Tranche A
Borrowing Base) or (y) the then Revolving Credit Ceiling);

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

(c) any net after-tax gains or losses on disposal of disposed, abandoned or
discontinued operations shall be excluded,

(d) any after-tax effect of gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course of
business, as determined in good faith by the Lead Borrower, shall be excluded,

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

(f) solely for the purpose of determining the amount available for Restricted
Payments under SECTION 6.06 and for prepayments of Indebtedness under SECTION
6.11, the Net Income for such period of any Restricted Subsidiary (other than
any Borrower or Facility Guarantor) shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of its Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or,
directly or indirectly, by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule, or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, unless
such restriction with respect to the payment of dividends or similar
distributions has been legally waived, provided that Consolidated Net Income of
the Lead Borrower will be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the extent
converted into cash) to the Lead Borrower or a Restricted Subsidiary thereof in
respect of such period, to the extent not already included therein,

(g) effects of fair value adjustments (including the effects of such adjustments
pushed down to the Lead Borrower and its Restricted Subsidiaries) in the
merchandise inventory, property and equipment, goodwill, intangible assets,
deferred revenue and debt line items in such Person’s consolidated financial
statements pursuant to GAAP resulting from the application of purchase
accounting in relation to the Transactions or any consummated acquisition or the
amortization or write-off or removal of revenue otherwise recognizable of any
amounts thereof, net of taxes, shall be excluded or included in the case of lost
revenue from fair value adjustments made to any deferred revenue or deferred
credit accounts,

(h) any after-tax effect of income (loss) from the early extinguishment or
conversion of Indebtedness or Swap Contracts or other derivative instruments
shall be excluded, provided that in connection with the determination of the
Consolidated Fixed Charge Coverage Ratio for the purpose of determining the
amount available for Restricted Payments under SECTION 6.06

 

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and for prepayments of Indebtedness under SECTION 6.11, any such items shall be
excluded only to the extent reasonably approved in good faith by the
Administrative Agent (which approval for purposes of SECTION 6.06 and SECTION
6.11 shall not be required if Availability at the time of determination and
after giving effect to the Specified Payment or RP Payment, as applicable, is
greater than or equal to the lesser of (x) fifteen percent (15.00%) of the then
FILO Borrowing Base (or if the FILO Commitments have been terminated, the then
Tranche A Borrowing Base) or (y) the then Revolving Credit Ceiling),

(i) any impairment charge or asset write-up, write-off or write-down, in each
case, pursuant to GAAP and the amortization of intangibles arising pursuant to
GAAP shall be excluded,

(j) any non-cash compensation charge or expense, including any such charge or
expense arising from the grant of stock appreciation or similar rights, stock
options, restricted stock or other equity-incentive programs and any cash
charges associated with the rollover, acceleration or payment of management
equity in connection with the Transactions shall be excluded,

(k) any fees and expenses incurred during such period, or any amortization or
write-off thereof for such period, in connection with any Acquisition,
Investment, Dispositions, issuance or repayment of Indebtedness, issuance of
Capital Stock, refinancing transaction or amendment or modification of any debt
instrument (in each case, including any such transaction consummated prior to
the Closing Date and any such transaction undertaken but not completed) and any
charges or non-recurring merger costs incurred during such period as a result of
any such transaction shall be excluded, provided that in connection with the
determination of the Consolidated Fixed Charge Coverage Ratio for the purpose of
determining the amount available for Restricted Payments under SECTION 6.06 and
for prepayments of Indebtedness under SECTION 6.11, any such items which are
cash fees, expenses, charges or costs shall be excluded only to the extent
reasonably approved in good faith by the Administrative Agent (which approval
for purposes of SECTION 6.06 and SECTION 6.11 shall not be required if
Availability at the time of determination and after giving effect to the
Specified Payment or RP Payment, as applicable, is greater than or equal to the
lesser of (x) fifteen percent (15.00%) of the then FILO Borrowing Base (or if
the FILO Commitments have been terminated, the then Tranche A Borrowing Base) or
(y) the then Revolving Credit Ceiling),

(l) any net gain or loss resulting from currency translation gains or losses
related to currency remeasurements of Indebtedness (including any net loss or
gain resulting from hedge agreements for currency exchange risk) and any foreign
currency translation gains or losses shall be excluded,

(m) any unrealized net gains and losses resulting from Swap Contracts and the
application of Statement of Financial Accounting Standards No. 133 shall be
excluded, and

(n) accruals and reserves that are established or adjusted within twelve months
after the Initial Closing Date that are so required to be established as a
result of the Transactions in accordance with GAAP or changes as a result of
adoption or modification of accounting policies in accordance with GAAP shall be
excluded.

 

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In addition, to the extent not already included in the Net Income of such Person
and its Restricted Subsidiaries, notwithstanding anything to the contrary in the
foregoing, Consolidated Net Income shall include the amount of proceeds received
from business interruption insurance and reimbursements of any expenses and
charges that are covered by indemnification or other reimbursement provisions in
connection with any Permitted Investment or any sale, conveyance, transfer or
other disposition of assets permitted under this Agreement.

“Continuing Directors” means the directors of Holdings on the Closing Date, and
each other director, if, in each case, such other directors’ nomination for
election to the board of directors of Holdings is recommended by a majority of
the then Continuing Directors or such other director receives the vote of the
Sponsor in his or her election by the stockholders of Holdings.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms “Controlling” and “Controlled” have meanings correlative thereto.

“Cost” means the cost of the Loan Parties’ Inventory as determined in accordance
with the Lead Borrower’s accounting policies as in effect on the Closing Date
and as reported on the Loan Parties’ stock ledger, as such policy may be
modified with the consent of the Administrative Agent, whose consent will not be
unreasonably withheld.

“Credit Card Advance Rate” means ninety percent (90%).

“Credit Card Notifications” has the meaning provided in SECTION 2.18(c).

“Credit Extensions” as of any day, shall be equal to the sum of (a) the
principal balance of all Revolving Credit Loans (including Swingline Loans) then
outstanding, and (b) the then amount of the Letter of Credit Outstandings.

“Credit Party” means (a) the Lenders, (b) the Agents and their respective
Affiliates and branches, (c) each Issuing Bank, (d) the Arranger and its
Affiliates and branches and (e) the successors and permitted assigns of each of
the foregoing.

“Credit Party Expenses” means, without limitation, all of the following to the
extent incurred in connection with this Agreement and the other Loan Documents:
(a) all reasonable out-of-pocket expenses incurred by the Administrative Agent,
the Collateral Agent and the Arranger, including the reasonable fees, charges
and disbursements of one counsel for the Administrative Agent, the Collateral
Agent and their Affiliates, taken as a whole (plus one local counsel in each
other relevant jurisdiction to the extent reasonably necessary), outside
consultants for the Administrative Agent and the Collateral Agent consisting of
one inventory appraisal firm and one commercial finance examination firm in
connection with the preparation and administration of the Loan Documents, the
syndication of the credit facilities provided for herein, or any amendments,
modifications or waivers requested by a Loan Party of the provisions hereof or
thereof (whether or not any such amendments, modifications or waivers shall be
consummated), (b) all reasonable out-of-pocket expenses incurred by any Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any

 

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demand for payment thereunder, (c) all reasonable out-of-pocket expenses
incurred by the Administrative Agent or the Collateral Agent and, subject to the
proviso below, any Lender and their respective Affiliates and branches,
including the reasonable fees, charges and disbursements of one counsel for the
Administrative Agent, the Collateral Agent and their Affiliates, taken as a
whole (plus one local counsel in each other relevant jurisdiction to the extent
reasonably necessary), and outside consultants for the Administrative Agent and
the Collateral Agent (including, without limitation, inventory appraisal firms
and commercial finance examination firms) in connection with the enforcement and
protection of their rights in connection with the Loan Documents, including all
such out-of-pocket expenses incurred during any workout, restructuring or
related negotiations in respect of such Revolving Credit Loans or Letters of
Credit; provided that the Lenders, the Administrative Agent or the Collateral
Agent or Affiliates of the Administrative Agent or the Collateral Agent shall be
entitled to reimbursement for no more than one counsel representing all such
Credit Parties (absent a conflict of interest in which case the Credit Parties
may engage and be reimbursed for additional counsel in each relevant
jurisdiction to the affected Credit Parties similarly situated taken as a
whole). Credit Party Expenses shall not include the allocation of any overhead
expenses of any Credit Party.

“Customer Credit Liabilities” means, at any time, the aggregate remaining
balance reflected on the books and records of the Loan Parties at such time of
(a) outstanding gift certificates and gift cards of the Loan Parties entitling
the holder thereof to use all or a portion of the gift certificate or gift card
to pay all or a portion of the purchase price for any Inventory, and
(b) outstanding merchandise credits and customer deposits of the Loan Parties.

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

“DDAs” means any checking or other demand deposit account maintained by the Loan
Parties. All funds in such DDAs shall be conclusively presumed to be Collateral
and proceeds of Collateral and the Agents or the Lenders shall have no duty to
inquire as to the source of the amounts on deposit in the DDAs.

“Debt Service Charges” means, for any period, the sum of (a) Consolidated
Interest Expense required to be paid or paid in cash, plus (b) scheduled
principal payments made or required to be made on account of Indebtedness for
borrowed money, including the full amount of any non-recourse Indebtedness
(after giving effect to any prepayments paid in cash that reduce the amount of
such required payments) (excluding the Obligations and any AHYDO Amount as
defined in the indenture for the Senior Notes, but including, without
limitation, obligations with respect to Capitalized Leases) for such period,
plus (c) scheduled mandatory payments on account of Disqualified Capital Stock
(whether in the nature of dividends, redemption,

 

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repurchase or otherwise) required to be made during such period, in each case
determined in accordance with GAAP.

“Default” means any event or condition described in SECTION 7.01 that
constitutes an Event of Default or that upon notice, lapse of any cure period
set forth in SECTION 7.01, or both, would, unless cured or waived, become an
Event of Default.

“Default Rate” has the meaning provided in SECTION 2.12.

“Delinquent Lender” has the meaning provided in SECTION 8.16.

“Deteriorating Lender” means any Delinquent Lender or any Lender as to which the
Administrative Agent and either of the Issuing Bank or the Swingline Lender
reasonably determines that such Lender has defaulted in fulfilling its
obligations under one or more other syndicated credit facilities.

“Designated Account” has the meaning provided in SECTION 2.18(d).

“Disbursement Accounts” has the meaning provided in SECTION 2.18(g).

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property
(including, without limitation, any Capital Stock of any other Person held by a
specified Person) by any Person, including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith.

“Disqualified Capital Stock” means any Capital Stock which, by its terms (or by
the terms of any security or other Capital Stock into which it is convertible or
for which it is exchangeable), is putable or exchangeable, or upon the happening
of any event or condition (a) matures or is mandatorily redeemable (other than
solely for Capital Stock (other than Disqualified Capital Stock)), 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 all Obligations and the termination of the Commitments),
(b) is redeemable at the option of the holder thereof (other than solely for
Capital Stock (other than Disqualified Capital Stock)), in whole or in part,
(c) provides for the scheduled payments of dividends in cash, or (d) is or
becomes convertible into or exchangeable for Indebtedness or any other Capital
Stock that would constitute Disqualified Capital Stock, in each case, prior to
the date that is ninety-one (91) days after the then Latest Maturity Date.

“Documentation Agent” means SunTrust Bank, in its capacity as Documentation
Agent.

“Documents” has the meaning assigned to such term in the Security Agreement.

“Dollars” or “$” refers to lawful money of the United States of America.

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

 

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shall exclude (x) Gymboree Island, LLC, a Puerto Rico entity, and (y) Gymboree,
Inc. (a corporation organized under the laws of the province of New
Brunswick)/Gymboree Canada, Inc. (a Delaware corporation), a dual status entity.

“Eligible Assignee” means a commercial bank, insurance company, or company
engaged in the business of making commercial loans or a commercial finance
company, which Person, together with its Affiliates, has a combined capital and
surplus in excess of $1,000,000,000, or any Affiliate of any Credit Party under
common control with such Credit Party, or an Approved Fund of any Credit Party,
provided that in any event, “Eligible Assignee” shall not include (x) any Loan
Party, (y) any natural person or (z) any member of the Sponsor Group or any of
their respective Affiliates; provided further that, members of the Sponsor Group
may make purchases of Loans to the extent that, after giving effect thereto, the
members of the Sponsor Group, collectively, would not hold in the aggregate more
than 20% of the then outstanding Credit Extensions and provided still further
that, any member of the Sponsor Group that holds Credit Extensions shall be
subject to the restrictions contained in the definition of Sponsor Lender
Limitations.

“Eligible Credit Card Receivables” means, as of any date of determination,
Accounts due to a Borrower or a Subsidiary Facility Guarantor from major credit
card and debit card processors (including, but not limited to, JCB, VISA,
Mastercard, American Express, Diners Club, DiscoverCard, Interlink, NYCE,
Star/Mac, Tyme, Pulse, Accel, AFF, Shazam, CU244, Alaska Option and Maestro) as
arise in the ordinary course of business and which have been earned by
performance and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below (without duplication of any Reserves established by
the Administrative Agent). None of the following shall be deemed to be Eligible
Credit Card Receivables:

(a) Accounts due from major credit card and debit card processors that have been
outstanding for more than five (5) Business Days from the date of sale, or for
such longer period(s) as may be approved by the Administrative Agent in its
Permitted Discretion;

(b) Accounts due from major credit card and debit card processors with respect
to which a Borrower or a Subsidiary Facility Guarantor does not have good, valid
and marketable title thereto, free and clear of any Lien (other than Liens
granted to the Collateral Agent for its own benefit and the benefit of the other
Secured Parties pursuant to the Security Documents, Liens in favor of the Term
Loan Agent and/or any other agent or trustee under the Term Loan Facility or any
Permitted Refinancing thereof, and Permitted Encumbrances);

(c) Accounts due from major credit card and debit card processors that are not
subject to a first priority security interest in favor of the Collateral Agent
for its own benefit and the benefit of the other Secured Parties (other than
Permitted Encumbrances having priority by operation of Applicable Law over the
Lien of the Collateral Agent) (the foregoing not being intended to limit the
ability of the Administrative Agent to change, establish or eliminate any
Reserves in its Permitted Discretion on account of any such Liens);

 

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(d) Accounts due from major credit card and debit card processors which are
disputed, or with respect to which a claim, counterclaim, offset or chargeback
(other than chargebacks in the ordinary course by the credit card processors)
has been asserted, by the related credit card processor (but only to the extent
of such dispute, counterclaim, offset or chargeback);

(e) Except as otherwise approved by the Administrative Agent, Accounts due from
major credit card and debit card processors as to which the credit card
processor or debit card processor has the right under certain circumstances to
require a Borrower or a Subsidiary Facility Guarantor to repurchase the Accounts
from such credit card or debit card processor;

(f) Except as otherwise approved by the Administrative Agent, Accounts arising
from any private label credit card program of a Borrower or a Subsidiary
Facility Guarantor; and

(g) Accounts due from major credit card and debit card processors (other than
JCB, Visa, Mastercard, American Express, Diners Club, DiscoverCard, Interlink,
NYCE, Star/Mac, Tyme, Pulse, Accel, AFF, Shazam, CU244, Alaska Option and
Maestro) which the Administrative Agent determines in its Permitted Discretion
and upon notice to the Lead Borrower to be unlikely to be collected.

“Eligible In-Transit Inventory” means, as of any date of determination, without
duplication of other Eligible Inventory or Eligible Letter of Credit Inventory,
Inventory of a Borrower or a Subsidiary Facility Guarantor which meets the
following criteria, as determined from time to time by the Administrative Agent
in its Permitted Discretion: (a) such Inventory has been shipped from any
foreign location for receipt by a Borrower or a Subsidiary Facility Guarantor
within sixty (60) days of the date of determination and has not yet been
received by a Borrower or a Subsidiary Facility Guarantor, (b) the purchase
order for such Inventory is in the name of a Borrower or a Subsidiary Facility
Guarantor and title has passed to a Borrower or a Subsidiary Facility Guarantor,
(c) either (i) such Inventory is subject to a negotiable document of title, in
form reasonably satisfactory to the Administrative Agent, which shall, except as
otherwise agreed by the Administrative Agent in its Permitted Discretion, have
been endorsed to the Administrative Agent or an agent acting on its behalf or
(ii) such Inventory is evidenced by a non-negotiable document of title in form
reasonably acceptable to the Administrative Agent, or other shipping document
reasonably acceptable to the Administrative Agent, which names a Borrower or a
Subsidiary Facility Guarantor as consignee, (d) (i) each relevant freight
carrier, freight forwarder, customs broker, shipping company or other Person in
possession of such Inventory and/or the documents relating to such Inventory, in
each case, as reasonably requested by Administrative Agent, shall have entered
into a Customs Broker Agreement and (ii) as reasonably requested by the
Administrative Agent, the documents relating to such Inventory shall be in the
possession of the Administrative Agent or an agent (or sub-agent) acting on its
behalf, (e) [reserved], (f) such Inventory is insured in accordance with the
provisions of this Agreement and the other Loan Documents, including, without
limitation marine cargo insurance, (g) such Inventory is subject, to the
reasonable satisfaction of the Administrative Agent, to a first priority
perfected security interest in and lien upon such Inventory in favor of the
Administrative Agent (subject to Permitted Encumbrances having priority by
operation of Applicable Law, and

 

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except for any possessory lien upon such goods in the possession of a freight
carrier or shipping company securing only the freight charges for the
transportation of such goods to such Borrower or Subsidiary Facility Guarantor)
(the foregoing not being intended to limit the ability of the Administrative
Agent to change, establish or eliminate any Reserves in its Permitted Discretion
on account of any such Liens), and (h) such Inventory is not excluded from the
definition of Eligible Inventory; provided that the Administrative Agent may, in
its Permitted Discretion and upon notice to the Lead Borrower, exclude any
particular Inventory from the definition of “Eligible In-Transit Inventory” in
the event that the Administrative Agent determines in its Permitted Discretion
and upon notice to the Lead Borrower that such Inventory is subject to any
Person’s right or claim which is (or is capable of being) senior to, or pari
passu with, the Lien of the Administrative Agent (such as, without limitation, a
right of reclamation or stoppage in transit), as applicable, or may otherwise
adversely impact the ability of the Collateral Agent to realize upon such
Inventory. Eligible In-Transit Inventory shall not include Inventory accounted
for as “in transit” by the Lead Borrower by virtue of such Inventory’s being in
transit between the Loan Parties’ locations or in storage trailers at Loan
Parties’ locations; rather such Inventory shall be treated as “Eligible
Inventory” if it satisfies the conditions therefor.

“Eligible Inventory” means, as of any date of determination, items of Inventory
of a Borrower or a Subsidiary Facility Guarantor that are finished goods,
merchantable and readily saleable to the public in the ordinary course that are
not excluded as ineligible by virtue of one or more of the criteria set forth
below (without duplication of any Reserves established by the Administrative
Agent) and which Inventory does not constitute Eligible Letter of Credit
Inventory or Eligible In-Transit Inventory. None of the following shall be
deemed to be Eligible Inventory:

(a) Inventory with respect to which a Borrower or a Subsidiary Facility
Guarantor does not have good, valid and marketable title thereto, free and clear
of any Lien (other than Liens granted to the Collateral Agent for its own
benefit and the benefit of the other Secured Parties pursuant to the Security
Documents, Liens in favor of the Term Loan Agent and/or any other agent or
trustee under the Term Loan Facility or any Permitted Refinancing thereof, and
Permitted Encumbrances (other than those described in SECTION 6.01(k)(ii))), or
is leased by or is on consignment to a Borrower or a Subsidiary Facility
Guarantor, or that is not solely owned by a Borrower or a Subsidiary Facility
Guarantor;

(b) Inventory (other than any Eligible In-Transit Inventory) that (i) is not
located in the United States of America, (ii) at a location that is not owned or
leased by a Borrower or a Subsidiary Facility Guarantor, except to the extent
that a Borrower or a Subsidiary Facility Guarantor has furnished the Collateral
Agent with (A) any UCC financing statements, registration statements or other
filings that the Collateral Agent may reasonably determine to be necessary to
perfect its security interest in such Inventory at such location, and (B) unless
otherwise agreed by the Administrative Agent (such agreement not to be
unreasonably withheld), a Collateral Access Agreement executed by the Person
owning any such location on terms reasonably acceptable to the Collateral Agent
or (iii) is located at a play and music location or owned by Gymboree Play
Programs, Inc.;

 

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(c) Inventory that represents goods which (i) are damaged, defective, “seconds,”
or otherwise unmerchantable, (ii) are to be returned to the vendor and which is
no longer reflected in a Borrower’s or a Subsidiary Facility Guarantor’s stock
ledger, (iii) are special-order items, work in process, raw materials, or that
constitute spare parts, shipping materials or supplies used or consumed in a
Borrower’s or a Subsidiary Facility Guarantor’s business, or (iv) are bill and
hold goods;

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

(e) Inventory that is not subject to a perfected first priority security
interest in favor of the Collateral Agent for its own benefit and the benefit of
the other Secured Parties (subject only to Permitted Encumbrances having
priority by operation of Applicable Law) (the foregoing not being intended to
limit the ability of the Administrative Agent to change, establish or eliminate
any Reserves in its Permitted Discretion on account of any such Liens);

(f) Inventory which consists of samples, labels, bags, packaging materials, and
other similar non-merchandise categories (for greater clarity, display models
are not deemed a non-merchandise category);

(g) Inventory as to which casualty insurance in compliance with the provisions
of SECTION 5.07 hereof is not in effect;

(h) Inventory which has been sold but not yet delivered or Inventory to the
extent that a Borrower or a Subsidiary Facility Guarantor has accepted a deposit
therefor and which is no longer reflected in a Borrower’s or a Subsidiary
Facility Guarantor’s stock ledger; and

(i) Inventory acquired in a Permitted Acquisition, unless the Administrative
Agent shall have received or conducted (A) appraisals, from appraisers
reasonably satisfactory to the Administrative Agent, of such Inventory to be
acquired in such Acquisition and (B) such other due diligence as the
Administrative Agent may reasonably require, all of the results of the foregoing
to be reasonably satisfactory to the Administrative Agent. As long as the
Administrative Agent has received reasonable prior notice of such Permitted
Acquisition and the Borrowers and the Subsidiary Facility Guarantors reasonably
cooperate (and cause the Person being acquired to reasonably cooperate) with the
Administrative Agent, the Administrative Agent shall use reasonable best efforts
to complete such due diligence and a related appraisal on or prior to the
closing date of such Permitted Acquisition.

“Eligible Letter of Credit Inventory” means, as of any date of determination
thereof, a Commercial Letter of Credit issued under this Agreement which
supports the purchase of Inventory, (i) which Inventory does not constitute
Eligible Inventory or Eligible In-Transit Inventory and for which no documents
of title have then been issued; (ii) which Inventory when

 

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the purchase thereof is completed would otherwise constitute Eligible In-Transit
Inventory, (iii) which Commercial Letter of Credit has an expiry, subject to the
proviso hereto, that is 120 days or less from the date of determination,
provided that ninety percent (90%) of the maximum Stated Amount of all such
Commercial Letters of Credit shall not, at any time, have an initial expiry
greater than ninety (90) days after the original date of issuance of such
Commercial Letters of Credit, and (iv) which Commercial Letter of Credit
provides that it may be drawn only after the Inventory is completed and after
documents of title have been issued for such Inventory reflecting a Borrower or
a Subsidiary Facility Guarantor or the Collateral Agent as consignee of such
Inventory; provided that the Administrative Agent may, in its Permitted
Discretion and upon notice to the Lead Borrower, exclude any particular
Inventory from the definition of “Eligible Letter of Credit Inventory” in the
event the Administrative Agent reasonably determines that such Inventory is
subject to any Person’s right or claim which is (or is capable of being) senior
to, or pari passu with, the Lien of the Collateral Agent (such as, without
limitation, a right of reclamation or stoppage in transit) or may otherwise
adversely impact the ability of the Collateral Agent to realize upon such
Inventory.

“Eligible Trade Receivables” means an Account owing to a Borrower or a
Subsidiary Facility Guarantor that arises in the ordinary course of business
from the sale of goods or rendition of services, is payable in Dollars and are
not excluded as ineligible by one or more of the criteria set forth below. No
Account shall be an Eligible Trade Receivable if:

(a) it is unpaid for more than 30 days after the original due date, or more than
60 days after the original invoice date;

(b) 30% or more of the Accounts owing by the Account Debtor are not Eligible
Trade Receivables under the foregoing clause;

(c) when aggregated with other Accounts owing by the Account Debtor, it exceeds
10% of the aggregate Eligible Trade Receivables (or such higher percentage as
the Administrative Agent may, in its Permitted Discretion, establish for the
Account Debtor from time to time) (it being understood that ineligibility shall
be limited to the amount of such excess);

(d) it does not conform in all material respects with representations and
warranties contained in the Loan Documents;

(e) it is owing by a creditor or supplier (unless such Person has waived any
right of setoff in a manner reasonably acceptable to the Administrative Agent),
or is otherwise subject to a potential offset, counterclaim, dispute, deduction,
discount, recoupment, reserve, defense, chargeback, credit or allowance (but in
each case, ineligibility shall be limited to the amount thereof);

(f) a proceeding under the Bankruptcy Code or other insolvency proceeding has
been commenced by or against the Account Debtor; or the Account Debtor has
failed, has suspended or ceased doing business, is liquidating, dissolving or
winding up its affairs, or is not solvent; or the relevant Borrower or
Subsidiary Facility Guarantor is not able to bring suit or enforce remedies
against the Account Debtor through judicial process;

 

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(g) the Account Debtor is organized or has its principal offices or assets
outside the United States, unless such Account is backed by a letter of credit
reasonably acceptable to the Administrative Agent (which issued by a bank
reasonably acceptable to the Administrative Agent) and such letter of credit is
subject to a first priority perfected Lien in favor of the Collateral Agent
(subject to Permitted Encumbrances having priority by operation of Applicable
Law) (the foregoing not being intended to limit the ability of the
Administrative Agent to change, establish or eliminate any Reserves in its
Permitted Discretion on account of any such Liens);

(h) it is owing by a Government Authority, unless the Account Debtor is the
United States or any department, agency or instrumentality thereof and the
Account has been assigned to Collateral Agent in compliance with the Assignment
of Claims Act;

(i) it is not subject to a duly perfected, first priority Lien in favor of Agent
(subject to Permitted Encumbrances having priority by operation of Applicable
Law) (the foregoing not being intended to limit the ability of the
Administrative Agent to change, establish or eliminate any Reserves in its
Permitted Discretion on account of any such Liens), or is subject to any other
Lien (other than a Lien in favor of the Term Loan Agent and/or an agent or
trustee under the Term Loan Facility or any Permitted Refinancing thereof
(subject to the Intercreditor Agreement) and Permitted Encumbrances);

(j) the goods giving rise to it have not been delivered to and accepted by the
Account Debtor, the services giving rise to it have not been accepted by the
Account Debtor, or it otherwise does not represent a final sale;

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

(l) its payment has been extended, the Account Debtor has made a partial
payment, or it arises from a sale on a cash-on-delivery basis;

(m) it arises from (x) a sale to an Affiliate (including Holdings and its
Restricted Subsidiaries, but excluding any other portfolio company of the
Sponsor (subject to the requirements of SECTION 6.08(b)), (y) a sale on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment,
or other repurchase or return basis, or (z) a sale to a Person for personal,
family or household purposes;

(n) it represents a progress billing or retainage, or relates to services for
which a performance, surety or completion bond or similar assurance has been
issued;

(o) it includes a billing for interest, fees or late charges, but ineligibility
shall be limited to the extent thereof; or

(p) it represents a construction allowance.

In calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 90 days old will be excluded.

 

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“Environmental Laws” means all Applicable Laws relating to pollution, the
protection of the environment, natural resources, or, to the extent relating to
exposure to Hazardous Materials, human health or to the release of any materials
into the environment, including those related to Hazardous Materials, air
emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise
(including, without limitation, any liability for damages, natural resource
damage, costs of environmental remediation, administrative oversight costs,
fines, penalties or indemnities), of any Loan Party directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or
threatened Release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with Lead Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means in the case of a Plan or Multiemployer Plan subject to
ERISA, (a) any “reportable event”, as defined in Section 4043 of ERISA with
respect to a Plan (other than an event for which the notice is waived); (b) the
existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA) that would
reasonably be expected to result in a Material Adverse Effect, whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Lead Borrower or any ERISA
Affiliate of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Lead Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Lead Borrower or any ERISA Affiliate of any
liability that would reasonably be expected to result in a Material Adverse
Effect with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Lead Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the Lead
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability that would reasonably be expected to result in a Material
Adverse Effect or a determination that a Multiemployer Plan is, or is expected
to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Event of Default” has the meaning provided in SECTION 7.01.

“Evidence of Flood Insurance” shall have the meaning given to such term in the
definition of “Collateral and Guarantee Requirement”.

 

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“Excess Amount” has the meaning provided in SECTION 2.13(f).

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

“Excluded Subsidiary” means (a) any Subsidiary that is not a wholly owned
Subsidiary of a Loan Party, (b) any Subsidiary of the Lead Borrower that does
not have total assets or annual revenues in excess of $20,000,000 individually;
provided that the aggregate amount of assets or annual revenues of subsidiaries
constituting Excluded Subsidiaries pursuant to this clause (b) shall not at any
time exceed $20,000,000, (c) any Subsidiary that is prohibited by Applicable Law
or contractual obligations existing on the Closing Date (or, in the case of any
newly acquired Subsidiary, in existence at the time of acquisition but not
entered into in contemplation thereof) from Guaranteeing the Obligations or if
Guaranteeing the Obligations would require governmental (including regulatory)
consent, approval, license or authorization, (d) any other Subsidiary with
respect to which, in the reasonable judgment of the Administrative Agent, in
consultation with the Lead Borrower, the burden or cost or other consequences
(including any material adverse tax consequences) of providing a Guarantee of
the Obligations shall be excessive in view of the benefits to be obtained by the
Lenders therefrom, (e) any Foreign Subsidiary of the Lead Borrower or of any
other direct or indirect Domestic Subsidiary or Foreign Subsidiary, (f) any
Unrestricted Subsidiary, (g) any special purpose securitization vehicle (or
similar entity), (h) any direct or indirect Domestic Subsidiary (x) that is
treated as a disregarded entity for federal income tax purposes and
(y) substantially all of the assets of which is the Capital Stock of a Foreign
Subsidiary and (i) any Domestic Subsidiary that is a Subsidiary of a Foreign
Subsidiary that is a controlled foreign corporation within the meaning of
Section 957 of the Code.

“Excluded Taxes” means, with respect to any Credit Party or any other recipient
of any payment to be made by or on account of any obligation of any Loan Party
hereunder, (a) income or franchise Taxes imposed on (or measured by) its gross
or net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or imposed as a result of any present or former connection between the
jurisdiction imposing such Tax and such recipient other than a connection
arising solely as a result of such recipient having performed its obligations or
received payment hereunder or under any Loan Document, or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which any Borrower or Facility Guarantor, as
applicable, is located, (c) other than with respect to any Credit Party that is
an assignee pursuant to a request by a Borrower under SECTION 2.24, any United
States Tax that is imposed on amounts payable to such Credit Party at the time
it becomes a party to this Agreement (or, in the case of a Foreign Lender,
designates a New Lending Office other than the designation of a New Lending
Office pursuant to SECTION 2.24), except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a New
Lending Office (or assignment), to receive additional amounts from the Borrowers
with respect to such Tax pursuant to SECTION 2.23(a), (d) Taxes attributable to
a failure to comply with SECTION 2.23(e), (e) Taxes imposed by a jurisdiction as
a result of any connection between such party and such jurisdiction other than
any connection arising from executing, delivering, being a party to, engaging in
any transactions pursuant to, performing its obligations under, or enforcing any
Loan Document, or (f) any U.S. federal withholding Taxes imposed pursuant to
FATCA.

 

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“Existing Credit Agreement” has the meaning provided in the introductory
statement to this Agreement.

“Existing Lenders” has the meaning provided in the introductory statement to
this Agreement.

“Extended Commitments” has the meaning provided in SECTION 2.27(a).

“Extending Lenders” has the meaning provided in SECTION 2.27(a).

“Extension” has the meaning provided in SECTION 2.27(a).

“Extension Offer” has the meaning provided in SECTION 2.27(a).

“Facility Guarantee” means any Guarantee of the Obligations executed by any of
the Loan Parties in favor of the Agents and the other Secured Parties.

“Facility Guarantors” means any Person (other than a Borrower) executing a
Facility Guarantee, but in all events shall not include the Excluded
Subsidiaries. As of the Closing Date, Holdings is the Facility Guarantor. For
the avoidance of doubt, the Lead Borrower may cause any Restricted Subsidiary to
become a Facility Guarantor hereunder by causing such Restricted Subsidiary to
execute a joinder to this Agreement and the other Loan Documents and taking such
other actions, and delivering such other documents, agreements and certificates
as shall reasonably be requested by the Administrative Agent, including under
applicable “know your customer” and anti-money laundering rules and regulations,
including without limitation the USA PATRIOT Act, and any applicable items
described in SECTION 5.11(a), and any such Restricted Subsidiary shall be
treated as a Facility Guarantor hereunder for all purposes.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as in effect on the
date hereof (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with) , and any applicable
Treasury regulation promulgated thereunder or published administrative guidance
implementing such Sections whether in existence on the Closing Date or
promulgated or published thereafter.

“FCCR Initial Test Date” means the date upon which an FCCR Trigger Event occurs.

“FCCR Test Period” means, for any date of determination under this Agreement,
the most recent period of four consecutive Fiscal Quarters of the Lead Borrower
ended on or prior to such date.

“FCCR Trigger Event” means, at any time, the failure of the Borrowers to
maintain Availability at least equal to the greater of (i) ten percent
(10.0%) of the lesser of (A) the then FILO Borrowing Base (or, if the FILO
Commitments have been terminated, the then Tranche A Borrowing Base) and (B) the
then Revolving Credit Ceiling, and (ii) $20,000,000. For purposes of this
Agreement, the occurrence of a FCCR Trigger Event shall be deemed continuing
until Availability has exceeded the amount required by the first sentence of
this definition for thirty (30) consecutive days, in which case a FCCR Trigger
Event shall no longer be deemed to be continuing for purposes of this Agreement.

 

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

“Fee Letter” means the Fee Letter dated March 2, 2012 by and among the Lead
Borrower, Bank of America, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and the other parties thereto, as amended, amended and restated supplemented or
replaced and in effect from time to time.

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

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

plus

(b) the face amount of Eligible Trade Receivables of the Loan Parties multiplied
by the Trade Receivables Advance Rate;

plus

(c) the Cost of Eligible Inventory of the Loan Parties (other than Eligible
In-Transit Inventory), net of Inventory Reserves, multiplied by the Inventory
Advance Rate for the FILO Borrowing Base multiplied by the Appraised Value of
Eligible Inventory of the Loan Parties;

plus

(d) the Cost of Eligible In-Transit Inventory of the Loan Parties, net of
Inventory Reserves, multiplied by the Inventory Advance Rate for the FILO
Borrowing Base multiplied by the Appraised Value of Eligible In-Transit
Inventory of the Loan Parties;

plus

(e) with respect to any Eligible Letter of Credit Inventory, the lesser of
(x) the Cost of such Eligible Letter of Credit Inventory, net of Inventory
Reserves, multiplied by the Inventory Advance Rate for the FILO Borrowing Base
for such Inventory when completed, multiplied by the Appraised Value of such
Eligible Letter of Credit Inventory or (y) the Stated Amount of the Letter of
Credit relating to such Eligible Letter of Credit

 

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Inventory, multiplied by the Inventory Advance Rate for the FILO Borrowing Base,
multiplied by the Appraised Value of such Eligible Letter of Credit Inventory;

minus

(f) the then amount of all Availability Reserves and any other Reserves taken in
accordance with Section 2.03(b).

“FILO Commitment” shall mean, with respect to each FILO Lender, the commitment
of such FILO Lender hereunder set forth as its FILO Commitment opposite its name
on Schedule 1.01 hereto or as may subsequently be set forth in the Register from
time to time, as the same may be reduced from time to time pursuant to this
Agreement. On the Closing Date, the aggregate FILO Commitments are $12,000,000.

“FILO Commitment Percentage” shall mean, with respect to each FILO Lender, that
percentage of the FILO Commitments of all Lenders hereunder to make FILO Loans
to the Borrowers in the amount set forth opposite its name on Schedule 1.01
hereto or as may subsequently be set forth in the Register from time to time, as
the same may be reduced from time to time pursuant to SECTION 2.15, or if the
FILO Commitments have been terminated, such percentage as calculated immediately
prior to such termination.

“FILO Credit Extensions” means FILO Loans and, if then applicable, the Excess
Amount of Letters of Credit issued hereunder.

“FILO Lender” means each Lender which holds a FILO Commitment and any other
Person who becomes a “FILO Lender” in accordance with the provisions of this
Agreement.

“FILO Loan” means, collectively, the Revolving Credit Loans made by the FILO
Lenders pursuant to SECTION 2.01(a)(vi).

“Financial Performance Projections” means (i) the projected consolidated balance
sheets, statements of income, and cash flows of the Lead Borrower and its
Restricted Subsidiaries, (ii) the projected FILO Borrowing Base and Tranche A
Borrowing Base and (iii) Availability forecasts, in each case, prepared by
Holdings and the Lead Borrower (x) on a monthly basis for the 2012 Fiscal Year
and (y) on an annual basis for each of the 2013, 2014 and 2015 Fiscal Years.

“Financial Officer” means, with respect to any Loan Party, the chief financial
officer, chief accounting officer, treasurer, assistant treasurer, controller,
assistant controller or other financial officer of such Loan Party.

“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall
generally consist of either four (4) or five (5) weeks and shall generally end
on the last Saturday of each calendar month in accordance with the fiscal
accounting calendar of the Lead Borrower and its Subsidiaries.

“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally consist of thirteen (13) weeks or fourteen (14) weeks and shall
generally end on the last

 

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Saturday of each April, July, October and January of such Fiscal Year in
accordance with the fiscal accounting calendar of the Lead Borrower and its
Subsidiaries.

“Fiscal Year” means any period of twelve (12) consecutive months ending on the
Saturday closest to January 31 of any calendar year.

“Flood Determination Form” shall have the meaning given to such term in the
definition of “Collateral and Guarantee Requirement”.

“Flood Laws” means the National Flood Insurance Reform Act of 1994 and related
legislation (including the regulations of the Board).

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia.

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the
District of Columbia. For greater certainty, each of (a) Gymboree Island, LLC,
an entity organized under the laws of Puerto Rico, and (b) Gymboree, Inc. (a
corporation organized under the laws of the province of New Brunswick)/Gymboree
Canada, Inc. (a Delaware corporation), a dual status entity, shall be a Foreign
Subsidiary for the purposes of the Loan Documents (other than for the purposes
of a pledge of Gymboree, Inc.’s Equity Interest by the Loan Parties).

“FRB” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Fronting Fee” shall have the meaning set forth in SECTION 2.19(e) hereof.

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

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time; provided, however, that if the Lead
Borrower notifies the Administrative Agent that the Lead 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 Lead
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; provided, further
that GAAP as applied herein with respect to Attributable Indebtedness and
Capitalized Leases shall be GAAP as in effect on the Initial Closing Date.

“General Intangibles” has the meaning assigned to such term in the Security
Agreement.

 

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“Governmental Authority” means any nation or government, any state, provincial,
municipal or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

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

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

“Holdings” has the meaning given to such term in the preamble to this Agreement.
The primary purpose of Holdings is to own one hundred percent (100%) of the
Capital Stock of the Lead Borrower.

“Immaterial Subsidiary” means any Subsidiary of the Lead Borrower that did not,
as of the last day of the most recent completed Fiscal Quarter of the Lead
Borrower, have assets with a

 

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fair market value in excess of $75,000,000 and did not, as of the four quarter
period ending on the last day of such Fiscal Quarter, have revenues exceeding 5%
of the total revenues of the Lead Borrower and its Restricted Subsidiaries (it
being agreed that all Restricted Subsidiaries affected by any event or
circumstance referred to in any such clause shall be considered together, as a
single consolidated Restricted Subsidiary, for purposes of determining whether
the condition specified above is satisfied).

“Incremental Availability” means the additional amount available to be borrowed
by the Borrowers based upon the difference between the FILO Borrowing Base and
the Tranche A Borrowing Base, as reflected on the most recent Borrowing Base
Certificate delivered by the Lead Borrower to the Administrative Agent pursuant
to SECTION 5.01(e) hereof.

“Indebtedness” means as to any Person at a particular time, without duplication,
all of the following:

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

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

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

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than (i) trade payables in the ordinary course of
business, (ii) any earn-out obligation until such earn-out obligation becomes
due and payable and only to the extent that the contingent consideration
relating to such earn-out is not paid within 30 days after such date and
(iii) liabilities accrued in the ordinary course);

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

(f) all Attributable Indebtedness;

(g) all obligations of such Person in respect of Disqualified Capital Stock;

(h) the principal and interest portions of all rental obligations of such Person
under any Synthetic Lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease in accordance with GAAP;

 

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whether or not the foregoing would constitute indebtedness or a liability in
accordance with GAAP; and

(i) to the extent not otherwise included above, all Guarantees of such Person in
respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Person’s
liability for such Indebtedness is otherwise limited The amount of any net
obligation under any Swap Contract on any date shall be deemed to be the Swap
Termination Value thereof as of such date. The amount of Indebtedness of any
Person for purposes of clause (e) that is limited in recourse to the property
encumbered thereby shall be deemed to be equal to the lesser of (i) the
aggregate unpaid amount of such Indebtedness and (ii) the fair market value of
the property encumbered thereby as determined by such Person in good faith.

“Indemnified Taxes” means Taxes other than (A) Excluded Taxes and (B) Other
Taxes.

“Indemnitee” has the meaning provided in SECTION 9.05.

“Information” has the meaning provided in SECTION 9.08.

“Initial Closing Date” means November 23, 2010.

“Instruments” has the meaning assigned to such term in the Security Agreement.

“Intellectual Property” means all present and future: trade secrets, know-how
and other proprietary information; trademarks, Internet domain names, service
marks, trade dress, trade names, business names, designs, logos, slogans (and
all translations, adaptations, derivations and combinations of the foregoing),
indicia and other source and/or business identifiers, all of the goodwill
related thereto, and all registrations and applications for registrations
thereof; works of authorship and other copyrighted works (including copyrights
for computer programs), and all registrations and applications for registrations
thereof; inventions (whether or not patentable) and all improvements thereto;
patents and patent applications, together with all continuances, continuations,
divisions, revisions, extensions, reissuances, and reexaminations thereof;
industrial design applications and registered industrial designs; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; all other intellectual property; all rights to sue and recover at law
or in equity for any past, present or future infringement, dilution or
misappropriation, or other violation thereof; and all common law and other
rights throughout the world in and to all of the foregoing.

“Intercreditor Agreement” means (i) that certain Intercreditor Agreement dated
as of the Initial Closing Date by and among the Administrative Agent, the
Collateral Agent and Credit Suisse AG, Cayman Islands Branch as administrative
agent under the Term Loan Facility, and the Loan Parties, as amended, amended
and restated, supplemented or otherwise modified and in effect from time to
time, or (ii) any other intercreditor agreement among the Administrative

 

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Agent, the Collateral Agent and any agent or trustee with respect to the Term
Loan Facility or any Permitted Refinancing thereof on terms no less favorable in
any material respect to the Secured Parties than those contained in the
intercreditor agreement described in clause (i) of this definition.

“Interest Payment Date” means (a) with respect to any Prime Rate Loan (including
a Swingline Loan), the first Business Day of each calendar quarter, and (b) with
respect to any LIBO Loan, the last day of the Interest Period applicable to the
Borrowing of which such LIBO Loan is a part, and in the case of a LIBO Loan with
an Interest Period of more than three months’ duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three months’
duration been applicable to such LIBO Loan.

“Interest Period” means, as to each LIBO Loan, the period commencing on the date
such LIBO Loan is disbursed or converted to or continued as a LIBO Loan and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is one (1), two
(2), three (3) or six (6) months thereafter (or, if agreed to by all of the
Lenders, seven (7) or fourteen (14) days thereafter or nine (9) or twelve
(12) months thereafter or any shorter period agreed by all applicable Lenders),
as selected by the Lead Borrower in its Borrowing Request; provided that:

 

  (a)

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

 

  (b)

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

 

  (c)

no Interest Period shall extend beyond the Maturity Date.

Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.

“Inventory” has the meaning assigned to such term in the Security Agreement.

“Inventory Advance Rate” means (a) for the Tranche A Borrowing Base, (x) during
the period commencing on September 15th of any year and ending on December 15th
of such year, ninety-two and one-half percent (92.5%) and (y) at all other
times, ninety percent (90%) and (b) for the FILO Borrowing Base, (x) at all
times prior to the second anniversary of the Closing Date, (1) during the period
commencing on September 15th of any year and ending on December 15th of such
year, ninety-seven and one-half percent (97.5%) and (2) at all other times,
ninety-five percent (95%) and (y) at all times on and after the second
anniversary of the Closing Date, (1) during the period commencing on
September 15th of any year and ending on December 15th

 

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of such year, ninety-five percent (95.0%) and (2) at all other times, ninety-two
and one-half percent (92.5%).

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

“Investment” means, as to any Person, any direct or indirect Acquisition or
investment by such Person, whether by means of (a) the purchase or other
Acquisition of Capital Stock or debt or other securities or equity interests of
another Person, (b) a loan, advance or capital contribution to, Guarantee or
assumption of Indebtedness of, or purchase or other acquisition of any other
debt or equity participation or interest in, another Person, including any
partnership or joint venture interest in such other Person or (c) any other
Acquisition. Notwithstanding the foregoing, neither the creation of accounts
receivable, credit card receivables and debit card receivables due to a Loan
Party nor the obtaining of trade credit and the deferred payment of other
expenses, in each case, incurred in the ordinary course of business, nor the
incurrence of contingent obligations or performance guaranties in the ordinary
course of business in respect of obligations not constituting Indebtedness,
shall be deemed “Investments.” For purposes of covenant compliance, the amount
of any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment less all cash
returns, cash dividends and cash distributions (or the fair market value of any
non-cash returns, dividends and distributions) received by such Person).

“Investor” means any one of the Sponsor and the Management Stockholders.

“IP Rights” shall have the meaning given such term in SECTION 3.15.

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

“Issuing Bank” means Bank of America and no more than one other Lender selected
by the Lead Borrower which have agreed to become an Issuing Bank hereunder and
have been approved by the Administrative Agent in its reasonable discretion. Any
Issuing Bank may, in its reasonable discretion, arrange for one or more Letters
of Credit to be issued by Affiliates of such Issuing Bank, in which case the
term “Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.

“Joinder Agreement” shall mean an agreement, in substantially the form attached
hereto as Exhibit F, pursuant to which, among other things, a Person becomes a
party to, and bound by the terms of, this Agreement and/or the other Loan
Documents in the same capacity and to the same extent as either a Borrower or a
Facility Guarantor, as the Administrative Agent may determine.

“Joint Bookrunners” means, collectively, SunTrust Robinson Humphrey, Inc. and
U.S. Bank National Association, in their respective capacity as Joint
Bookrunners.

 

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“Junior Financing” shall mean any other Indebtedness that is required to be
subordinated to the Obligations pursuant to the terms of the Loan Documents. For
avoidance of doubt, Subordinated Debt constitutes Junior Financing.

“Landlord Lien State” means any state in which a landlord’s claim for rent has
priority by operation of Applicable Law over the lien of the Collateral Agent in
any of the Collateral.

“Latest Maturity Date” shall mean, at any date of determination, the latest
maturity or expiration date applicable to any Commitment hereunder at such time,
including the latest maturity or expiration date of any Extended Commitment as
extended in accordance with this Agreement from time to time.

“Lead Borrower” has the meaning set forth in the preamble to this Agreement.

“Lease” means any agreement pursuant to which a Loan Party is entitled to the
use or occupancy of any space in a structure, land, improvements or premises for
any period of time.

“Lenders” means the Lenders having Commitments from time to time or at any time,
and each assignee that becomes a party to this Agreement as set forth in SECTION
9.07 and each Additional Commitment Lender that becomes a party to this
Agreement as set forth in SECTION 2.02.

“Letter of Credit” means (a) each Existing Letter of Credit, (b) a letter of
credit that (i) is issued by an Issuing Bank pursuant to this Agreement for the
account of a Borrower or a Restricted Subsidiary, (ii) constitutes a Standby
Letter of Credit or Commercial Letter of Credit (and for which such Issuing Bank
is not otherwise prohibited from issuing such letter of credit due to the
internal general policies of such Issuing Bank), and (iii) is in form reasonably
satisfactory to such Issuing Bank and (c) a bankers’ acceptance or time draft
issued by the Issuing Bank to a beneficiary of any letter of credit described in
foregoing clauses (a) or (b), in form reasonably satisfactory to such Issuing
Bank.

“Letter of Credit Disbursement” means a payment made by any Issuing Bank to the
beneficiary of, and pursuant to, a Letter of Credit.

“Letter of Credit Fees” means the fees payable in respect of Letters of Credit
pursuant to SECTION 2.19.

“Letter of Credit Outstandings” means, at any time, the sum of (a) the Stated
Amount of all Letters of Credit outstanding at such time, plus, without
duplication, (b) all amounts theretofore drawn or paid under Letters of Credit
for which the applicable Issuing Bank has not then been reimbursed.

“Letter-of-Credit Rights” has the meaning assigned to such term in the Security
Agreement.

“Letter of Credit Sublimit” means, at any time, $150,000,000, as such amount may
be increased or reduced in accordance with the provisions of this Agreement. The
Letter of Credit Sublimit is part of, and not in addition to, the Commitments.

 

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“LIBO Borrowing” means a Borrowing comprised of LIBO Loans.

“LIBO Loan” shall mean any Revolving Credit Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.

“LIBO Rate” means, with respect to any LIBO Borrowing for any Interest Period,

(a) the rate per annum equal to the offered rate that appears on the page of the
Telerate screen (or any successor thereto) that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, or

(b) if the rate referenced in the preceding clause (a) does not appear on such
page or service or such page or service shall not be available, the rate per
annum equal to the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such Interest Period) with
a term equivalent to such Interest Period, determined as of approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period, or

(c) if the rates referenced in the preceding clauses (a) and (b) are not
available, the rate per annum determined by the Administrative Agent as the rate
of interest at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the LIBO
Borrowing being made, continued or converted by Bank of America, N.A. and with a
term equivalent to such Interest Period would be offered by Bank of America’s
London Branch to major banks in the London interbank eurodollar market at their
request at approximately 4:00 p.m. (London time) two Business Days prior to the
first day of such Interest Period.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title to
real property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing) whether or not filed, recorded or perfected
under Applicable Law, and in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.

“Liquidation” means the exercise by the Administrative Agent or the Collateral
Agent of those rights and remedies accorded to the Administrative Agent or the
Collateral Agent under the Loan Documents and Applicable Law as a creditor of
the Loan Parties, including (after the occurrence and during the continuation of
an Event of Default) the conduct by any or all of the Loan Parties, acting with
the consent of the Administrative Agent, of any public, private or
“Going-Out-Of-Business Sale” or other Disposition of Collateral for the purpose
of liquidating the Collateral. Derivations of the word “Liquidation” (such as
“Liquidate”) are used with like meaning in this Agreement.

“Loan Account” has the meaning provided in SECTION 2.20.

 

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“Loan Documents” means this Agreement, the Notes, the Letters of Credit, the Fee
Letter, all Borrowing Base Certificates, the Blocked Account Agreements, the
Credit Card Notifications, the Security Documents, the Facility Guarantees, and
the Intercreditor Agreement, each as amended and in effect from time to time.

“Loan Party” or “Loan Parties” means the Borrowers and the Facility Guarantors.

“Management Stockholders” shall mean the members of management of Holdings, the
Lead Borrower or any of its Subsidiaries who are investors in Holdings or any
direct or indirect parent thereof.

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

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

“Material Adverse Effect” means any event, facts, development, circumstances, or
effect that, individually or in the aggregate with all other facts, events,
circumstances, developments, and effects has a material adverse effect on
(i) the business, operations, assets, liabilities (actual or contingent) or
financial condition of the Loan Parties taken as a whole, or (ii) the validity
or enforceability of this Agreement or the other Loan Documents, taken as a
whole, or the rights or remedies of the Secured Parties hereunder or thereunder,
taken as a whole.

“Material DDA” has the meaning given to such term in SECTION 2.18(c)(ii).

“Material Indebtedness” means Indebtedness (other than the Obligations) of the
Loan Parties, individually or in the aggregate, having an aggregate principal
amount exceeding $25,000,000. In any event, all Indebtedness under the Senior
Notes and the Term Loan Facility shall be deemed Material Indebtedness,
regardless of the outstanding balance thereunder from time to time.

“Material Leased Real Estate” means Real Estate (x) that is subject to a Lien in
favor of the Term Loan Agent (or any other agent or trustee with respect to any
Permitted Refinancing of the Term Loan Facility) or (y) in the event that the
Term Loan Facility or any Permitted Refinancing thereof is no longer
outstanding, (i) that is leased by any Loan Party, (ii) that is located in the
United States and, (iii) that is used as a distribution center in connection
with the business of the Lead Borrower and its Restricted Subsidiaries and
(iv) the failure of which to operate could reasonably be expected to materially
and adversely affect the ordinary conduct of the business of the Lead Borrower
and its Restricted Subsidiaries, taken as a whole.

“Material Owned Real Estate” means Real Estate (x) that is subject to a Lien in
favor of the Term Loan Agent (or any other agent or trustee with respect to any
Permitted Refinancing of the Term Loan Facility) or (y) in the event that the
Term Loan Facility or any Permitted Refinancing thereof is no longer
outstanding, (i) that is owned in fee by a Loan Party, (ii) is located in the
United States and (iii) has a fair market value in excess of $5,000,000, with
respect to any newly acquired Real Estate, at the time of its acquisition or,
with respect to any Real Estate owned by an entity that becomes a Loan Party, at
the time such Person becomes a Loan Party, in each case, as reasonably estimated
by the Lead Borrower in good faith.

 

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“Material Real Estate” shall mean any Material Owned Real Estate or Material
Leased Real Estate.

“Maturity Date” mean (i) March 30, 2017 or (ii) with respect to any tranche of
Extended Commitments, the final maturity date as specified in the applicable
Extension Offer accepted by the respective Lender or Lenders; provided that if
any such day is not a Business Day, the applicable Maturity Date shall be the
Business Day immediately succeeding such day.

“Maximum Rate” has the meaning provided in SECTION 9.10.

“Merger” has the meaning provided in the Existing Credit Agreement.

“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of
October 11, 2010, by and among Giraffe Holding, Inc., Merger Sub and the
Company.

“Merger Sub” means Giraffe Acquisition Corporation.

“Minimum Extension Condition” has the meaning provided in SECTION 2.27(c).

“Minority Lenders” has the meaning provided in SECTION 9.01.

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

“Mortgage Policies” shall have the meaning given to such term in the definition
of “Collateral and Guarantee Requirement”.

“Mortgaged Property” shall have the meaning given to such term in the definition
of “Collateral and Guarantee Requirement”.

“Mortgages” means the mortgages, charge/mortgage of land, collateral mortgages,
immovable hypothecs, and deeds of trust and any other security documents
granting a Lien on Real Estate between the Loan Party owning the Real Estate
encumbered thereby and the Collateral Agent for its own benefit and the benefit
of the other Secured Parties.

“MLPF&S” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, and its
Subsidiaries and Affiliates.

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

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

“Net Proceeds” means,

 

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(a) with respect to the Disposition of any asset by the Lead Borrower or any
Restricted Subsidiary or any Casualty Event, the excess, if any, of (i) the sum
of cash and Cash Equivalents received in connection with such Disposition or
Casualty Event (including any cash or Cash Equivalents received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received and, with respect to any Casualty
Event, any insurance proceeds or condemnation awards in respect of such Casualty
Event actually received by or paid to or for the account of the Lead Borrower or
any Restricted Subsidiary) over (ii) the sum of (A) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness that
is secured by the asset subject to such Disposition or Casualty Event, but only
to the extent that the Lien securing such Indebtedness is senior to the Lien of
the Collateral Agent and that is required to be repaid (and is timely repaid) in
connection with such Disposition or Casualty Event (other than Indebtedness
under the Loan Documents), (B) the out-of-pocket expenses (including attorneys’
fees, investment banking fees, survey costs, title insurance premiums, and
related search and recording charges, transfer taxes, deed or mortgage recording
taxes, other expenses and brokerage, consultant and other fees) actually
incurred by the Lead Borrower or such Restricted Subsidiary in connection with
such Disposition or Casualty Event, (C) taxes paid or reasonably estimated to be
actually payable in connection therewith (provided, that, if the amount of any
estimated taxes exceeds the amount of taxes actually required to be paid in
cash, the aggregate amount of such excess shall constitute Net Proceeds at the
time such taxes are actually paid), provided that the Administrative Agent may,
in its commercially reasonable discretion, establish an Availability Reserve in
the amount of any taxes so deducted in calculating Net Proceeds, and (D) any
reserve for adjustment in respect of (x) the sale price of such asset or assets
established in accordance with GAAP and (y) any liabilities associated with such
asset or assets and retained by the Lead Borrower or any Restricted Subsidiary
after such sale or other Disposition thereof, including pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction and it being understood that “Net Proceeds” shall include any cash
or Cash Equivalents (i) received upon the Disposition of any non-cash
consideration received by the Lead Borrower or any Restricted Subsidiary in any
such Disposition and (ii) upon the reversal (without the satisfaction of any
applicable liabilities in cash in a corresponding amount) of any reserve
described in clause (D) of the preceding sentence or, if such liabilities have
not been satisfied in cash and such reserve is not reversed within three hundred
and sixty-five (365) days after such Disposition or Casualty Event, the amount
of such reserve; and

(b) with respect to the incurrence or issuance of any Capital Stock or
Indebtedness by the Lead Borrower or any Restricted Subsidiary, the excess, if
any, of (i) the sum of the cash received in connection with such incurrence or
issuance over (ii) the sum of (a) the investment banking fees, underwriting
discounts, commissions, costs and other out-of-pocket expenses and other
expenses, incurred by the Lead Borrower or such Restricted Subsidiary in
connection with such incurrence or issuance and (b) taxes paid or reasonably
estimated to be actually payable in connection therewith, provided, that, if the
amount of any such estimated taxes exceeds the amount of taxes actually required
to be paid in cash in respect of such Disposition or Casualty Event, the
aggregate amount of such excess shall constitute Net Proceeds at the time such
taxes are actually paid.

“New Lending Office” shall have the meaning provided in SECTION 2.23(e)(i).

 

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“NFIP” shall have the meaning given to such term in the definition of
“Collateral and Guarantee Requirement”.

“Noncompliance Notice” shall have the meaning provided in SECTION 2.06(b).

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

“Non-Extended Commitments” shall have the meaning provided in SECTION 2.27(b).

“Notes” means, collectively, (i) Revolving Credit Notes and (ii) the Swingline
Note, each as may be amended, supplemented or modified from time to time.

“Not Otherwise Applied” means, with reference to any amount of Net Proceeds of
any transaction or event, that such amount (a) was not required to be applied to
prepay the Loans pursuant to SECTION 2.17, and (b) was not previously applied in
determining the permissibility of a transaction under the Loan Documents where
such permissibility was (or may have been) contingent on receipt of such amount
or utilization of such amount for a specified purpose. The Lead Borrower shall
promptly notify the Administrative Agent of any application of such amount as
contemplated by (b) above.

“NPL” means the National Priorities List under CERCLA.

“Obligations” means (x) advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party and its Subsidiaries arising under any
Loan Document or otherwise with respect to any Revolving Credit Loan, Swingline
Loan or Letter of Credit, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including charges, interest, expenses, fees, attorneys’
fees, indemnities and other amounts that accrue after the commencement by or
against any Loan Party or Subsidiary of any proceeding under the Bankruptcy Code
or any other federal, state, or provincial bankruptcy, insolvency, receivership
or similar law, naming such Person as the debtor in such proceeding, regardless
of whether such charges, interest, expenses, fees, attorneys’ fees, indemnities
and other amounts are allowed claims in such proceeding, and (y) obligations of
any Loan Party and its Subsidiaries arising with respect to any Other
Liabilities. Without limiting the generality of the foregoing, the Obligations
of the Loan Parties under the Loan Documents (and of their Subsidiaries to the
extent they have obligations under the Loan Documents) include (a) the
obligation (including guarantee obligations) to pay principal, interest, Letter
of Credit commissions, reimbursement obligations, charges, expenses, fees,
attorneys’ fees, indemnities and other amounts payable by any Loan Party or its
Subsidiaries under any Loan Document, including charges, interest, expenses,
fees, attorneys’ fees, indemnities and other amounts that accrue after the
commencement by or against any Loan Party or Subsidiary of any proceeding under
the Bankruptcy Code or any other federal, state, or provincial bankruptcy,
insolvency, receivership or similar law, naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding, and (b) the obligation of any Loan Party or any of its
Subsidiaries to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of such

 

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Loan Party or such Subsidiary in accordance with, and to the extent permitted,
by the Loan Documents.

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

“Other Liabilities” means outstanding liabilities with respect to or arising
from (a) any Cash Management Services furnished to any of the Loan Parties or
any of their Subsidiaries and/or (b) any transaction which arises out of any
Bank Product entered into with any Loan Party or any of their Subsidiaries, as
each may be amended from time to time.

“Other Secured Swap Providers” means Credit Suisse AG, Cayman Islands Branch,
Credit Suisse Securities (USA) LLC, and Morgan Stanley Capital Services Inc.

“Other Taxes” means any and all current or future stamp or documentary Taxes or
any other excise or property Taxes, charges or similar levies in the nature of a
Tax arising from any payment made under any Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, any Loan Document, but
not including, for the avoidance of doubt, any Excluded Taxes.

“Overadvance” means a Revolving Credit Loan, advance, or providing of credit
support (such as the issuance of a Letter of Credit) to the Borrowers to the
extent that, immediately after the making of such loan or advance or the
providing of such credit support, Availability is less than zero.

“Participant” shall have the meaning provided in SECTION 9.07(d).

“Payment Conditions” means, at the time of determination with respect to a
Specified Payment, that (a) no Event of Default then exists or would arise as a
result of the entering into such transaction or the making of such payment,
(b) the Pro Forma Availability Condition shall have been satisfied after giving
effect to such Specified Payment, and (c) after giving effect to such Specified
Payment, the Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for
the four Fiscal Quarters most recently preceding such transaction or payment
(provided that, if any such transaction or payment is to be consummated within
thirty (30) days after the end of any Fiscal Quarter, such calculation shall be
made with respect to the four Fiscal Quarters most recently preceding such
transaction or payment for which financial statements have been required to be
delivered pursuant to SECTIONS 5.01(a) and (b) hereof), is equal to or greater
than 1.00:1.00. In accordance with SECTION 5.02(i) hereof, at least five
(5) Business Days prior to the making of any Specified Payment, the Loan Parties
shall deliver to the

 

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Administrative Agent evidence reasonably satisfactory to the Administrative
Agent that the conditions contained in clauses (b) and (c) have been satisfied.
Notwithstanding anything to the contrary contained in this definition, the Loan
Parties shall not be required to comply with the requirements of clause
(c) contained herein in order to satisfy the “Payment Conditions” if
Availability following, and immediately after giving effect to, such Specified
Payment, will be greater than twenty-five percent (25%) of the lesser of (x) the
then FILO Borrowing Base (or if the FILO Commitments have been terminated, the
then Tranche A Borrowing Base), and (y) the then Revolving Credit Ceiling.

“Payment Intangibles” has the meaning assigned to such term in the Security
Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means an Acquisition in which each of the following
conditions are satisfied:

(a) No Event of Default then exists or would arise from the consummation of such
Acquisition;

(b) If the Acquisition is an Acquisition of Capital Stock, the Person being
acquired shall become a Subsidiary of the Lead Borrower and, unless such
Subsidiary is designated as an Unrestricted Subsidiary in accordance with
SECTION 5.14, such Subsidiary shall (i) become a Loan Party and (ii) provide
security to the Collateral Agent, in each of (i) and (ii), if and to the extent
required by SECTION 5.11;

(c) Any material assets acquired shall be utilized in, and if the Acquisition
involves a merger, amalgamation, consolidation or stock acquisition, the Person
which is the subject of such Acquisition shall be engaged in, a business
otherwise permitted to be engaged in by a Borrower under this Agreement; and

(d) The Borrowers shall have satisfied the Payment Conditions.

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

“Permitted Disposition” shall have the meaning set forth in SECTION 6.05.

“Permitted Encumbrances” has the meaning set forth in SECTION 6.01.

“Permitted Equity Issuance” means any sale or issuance of any Capital Stock of
Lead Borrower to the extent permitted hereunder (including any capital
contribution).

“Permitted Holder” means any of the Investors; provided that if the Management
Stockholders own beneficially or of record more than ten percent (10%) of the
outstanding voting stock of Holdings in the aggregate at any time, for purposes
of any determination of Permitted Holders (including pursuant to the definition
of “Change of Control”) at such time, the

 

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Management Stockholders shall be deemed to hold ten percent (10%) of the
outstanding voting stock of Holdings at such time.

“Permitted Indebtedness” has the meaning set forth in SECTION 6.03.

“Permitted Investments” has the meaning set forth in SECTION 6.02.

“Permitted Overadvance” means an Overadvance made by the Administrative Agent,
in its reasonable discretion, which:

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

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

(c) Is made to pay any other amount chargeable to any Borrower hereunder; and

(d) Together with all other Permitted Overadvances then outstanding, shall not
(i) exceed five percent (5%) of the then FILO Borrowing Base (or, if the FILO
Commitments have been terminated, the then Tranche A Borrowing Base) each at the
time, in the aggregate outstanding at any time or (ii) unless a Liquidation is
taking place, remain outstanding for more than forty-five (45) consecutive
Business Days;

provided however, that the foregoing shall not (i) modify or abrogate any of the
provisions of (A) SECTION 2.13(e) regarding any Lender’s obligations with
respect to Letter of Credit Disbursements, or (B) SECTION 2.06 and SECTION 2.22
regarding any Lender’s obligations with respect to participations in Swingline
Loans and settlements thereof, or (ii) result in any claim or liability against
the Administrative Agent (regardless of the amount of any Overadvance) for
“inadvertent Overadvances” (i.e., where an Overadvance results from changed
circumstances beyond the control of the Administrative Agent (such as a
reduction in the collateral value)), and further provided that in no event shall
the Administrative Agent make an Overadvance, if after giving effect thereto,
the principal amount of the Revolving Credit Extensions would exceed the
aggregate of the Commitments (as in effect prior to any termination of the
Commitments pursuant to SECTION 7.01 hereof).

“Permitted Refinancing” means, with respect to any Person, any modification,
refinancing, refunding, renewal or extension of any Indebtedness of such Person;
provided that (a) the principal amount (or accreted value, if applicable)
thereof does not exceed the principal amount (or accreted value, if applicable)
of the Indebtedness so modified, refinanced, refunded, renewed or extended
except by an amount equal to unpaid accrued interest and premium thereon
(including tender premiums) plus other amounts paid, and fees and expenses
incurred (including upfront fees and original issue discount), in connection
with such modification, refinancing, refunding, renewal or extension and by an
amount equal to any existing commitments unutilized thereunder, (b) other than
with respect to a Permitted Refinancing in respect of Indebtedness permitted
pursuant to SECTION 6.03(e), such modification, refinancing, refunding, renewal
or

 

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extension has a final maturity date equal to or later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being modified,
refinanced, refunded, renewed or extended (except by virtue of prior
amortization or prior prepayments of the Indebtedness being modified,
refinanced, refunded, renewed or extended), (c) other than with respect to a
Permitted Refinancing in respect of Indebtedness permitted pursuant to SECTION
6.03(e), at the time thereof, no Event of Default shall have occurred and be
continuing, (d) such modification, refinancing, refunding, renewal or extension
shall not include: (i) Indebtedness of a Subsidiary of the Lead Borrower that is
not a Facility Guarantor or a Borrower that refinances Indebtedness of the Lead
Borrower; (ii) Indebtedness of a Subsidiary of the Lead Borrower that is not a
Facility Guarantor or a Borrower that refinances Indebtedness of a Facility
Guarantor or a Borrower; or (iii) Indebtedness of the Lead Borrower or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary, (e) the collateral, if applicable, granted pursuant to any such
refinancing Indebtedness is the same or less than the collateral under the
Indebtedness being extended, renewed or replaced, (f) to the extent such
Indebtedness being modified, refinanced, refunded, renewed or extended is
subordinated in right of payment to the Obligations, (i) such modification,
refinancing, refunding, renewal or extension is subordinated in right of payment
to the Obligations on terms at least as favorable to the Lenders as those
contained in the documentation governing the Indebtedness being modified,
refinanced, refunded, renewed or extended, and (ii) the terms and conditions
(including, if applicable, as to collateral but excluding as to subordination,
interest rate, redemption premium and optional prepayment or optional
redemption) of any such modified, refinanced, refunded, renewed or extended
Indebtedness, taken as a whole, are not materially less favorable to the Loan
Parties and/or the Lenders than the terms and conditions of the Indebtedness
being modified, refinanced, refunded, renewed or extended and (g) to the extent
that the holders of such Indebtedness being modified, refinanced, refunded,
renewed or extended are subject to an intercreditor agreement or arrangement
with the Lenders, the holders of such refinancing Indebtedness shall enter into
a similar intercreditor agreement or arrangement with the Lenders on terms no
less favorable to the Lenders as those contained in the intercreditor agreement
or arrangement governing the Indebtedness being modified, refinanced, refunded,
renewed or extended (as determined by the Administrative Agent in its reasonable
discretion).

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

“Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by any Loan Party or any ERISA
Affiliate or to which any Loan Party or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five (5) plan years.

“Platform” has the meaning given to such term in the last paragraph of SECTION
5.02.

“Pre-Close Flood Documents” shall have the meaning given to such term in the
definition of “Collateral and Guarantee Requirement”.

 

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“Prepayment Event” means the occurrence of any of the following events:

(a) Any sale, transfer or other Disposition (including pursuant to a sale and
leaseback transaction) of any Collateral (other than the transfer of any
Collateral among Stores and other locations of the Loan Parties) unless the
proceeds therefrom are required to be paid to the holder of a Lien on such
property or asset having priority over the Lien of the Collateral Agent; or

(b) Any Casualty Event unless the proceeds therefrom are required to be paid to
the holder of a Lien on such property or asset having priority over the Lien of
the Collateral Agent.

“Prime Rate” means, as to any applicable Borrowing existing on or after the
Closing Date for any day, the highest of: (a) the variable annual rate of
interest then most recently announced by Bank of America, N.A. at its head
office in Charlotte, North Carolina as its “prime rate”; (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.50%) per
annum; or (c) the Adjusted LIBO Rate (calculated utilizing the LIBO Rate for a
one-month Interest Period as determined on such day) plus one percent
(1.00%) per annum; provided that, for the avoidance of doubt, the Adjusted LIBO
Rate for any day shall be based on the rate determined on such day at
approximately 11:00 a.m. (London time) by reference to the British Bankers’
Association Interest Settlement Rates for deposits in Dollars (as set forth by
any service selected by the Administrative Agent in manner consistent with that
described in the definition of “LIBO Rate”). The “prime rate” is a reference
rate and does not necessarily represent the lowest or best rate being charged by
Bank of America, N.A. to any customer. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
or the LIBO Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations thereof in accordance with
the terms hereof, the Prime Rate shall be determined without regard to clauses
(b) or (c), as applicable, of the first sentence of this definition, until the
circumstances giving rise to such inability no longer exist. Any change in the
Prime Rate due to a change in Bank of America’s “prime rate”, the Federal Funds
Effective Rate or the Adjusted LIBO Rate shall be effective on the effective
date of such change in Bank of America’s Prime Rate, the Federal Funds Effective
Rate or the Adjusted LIBO Rate, respectively.

“Prime Rate Loan” means any Revolving Credit Loan bearing interest at a rate
determined by reference to the Prime Rate in accordance with the provisions of
Article II.

“Pro Forma Availability” shall mean, for any date of calculation, Availability
as of the date of any Specified Payment or RP Payment, as applicable, and the
projected Availability at the end of each Fiscal Month during any projected six
(6) Fiscal Months.

“Pro Forma Availability Condition” shall mean, for any date of calculation with
respect to any Specified Payment or RP Payment, as applicable, the Pro Forma
Availability following, and after giving effect to, such Specified Payment or RP
Payment, as applicable, will be equal to or greater than the greater of
(a) fifteen percent (15%) of the lesser of (x) the then FILO Borrowing Base (or
if the FILO Commitments have been terminated, the then Tranche A Borrowing
Base), and (y) the then Revolving Credit Ceiling and (b) $35,000,000.

 

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“Pro Forma Basis” and “Pro Forma Compliance” shall have the meanings given such
terms in SECTION 1.10.

“Projections” shall have the meaning given such term in SECTION 5.01(d).

“Public Company Costs” means costs relating to compliance with the
Sarbanes-Oxley Act of 2002, as amended, and other expenses arising out of or
incidental to the Company’s status as a public company prior to November 23,
2010, including costs, fees and expenses (including legal, accounting and other
professional fees) relating to compliance with provisions of the Securities Act
and the Exchange Act, as applicable to companies with equity securities held by
the public, the rules of national securities exchange companies with listed
equity securities, directors’ compensation, fees and expense reimbursement,
shareholder meetings and reports to shareholders, directors’ and officers’
insurance and other executive costs, legal and other professional fees, and
listing fees in each case incurred or accrued prior to November 23, 2010.

“Public Lender” has the meaning given to such term in the last paragraph of
SECTION 5.02.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified
Capital Stock.

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

“Real Estate” means all Leases and all land, tenements, hereditaments and any
estate or interest therein, together with the buildings, structures, parking
areas, and other improvements thereon (including all fixtures), now or hereafter
owned by any Loan Party, including all easements, rights-of-way, and similar
rights relating thereto and all leases, tenancies, and occupancies thereof.

“Register” has the meaning provided in SECTION 9.07(c).

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

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

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

“Release” has the meaning provided in Section 101(22) of CERCLA.

“Reports” has the meaning provided in SECTION 8.14.

 

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“Required Lenders” means, at any time, Lenders (other than Delinquent Lenders)
having Commitments aggregating more than fifty percent (50%) of the Total
Commitments, or if the Commitments have been terminated, Lenders (other than
Delinquent Lenders) whose percentage of the outstanding Credit Extensions
(calculated assuming settlement and repayment of all Swingline Loans by the
Lenders) aggregate more than fifty percent (50%) of all such Credit Extensions.

“Reserves” means all (if any) Inventory Reserves, Availability Reserves, Cash
Management Reserves, Bank Product Reserves and reserves for Customer Credit
Liabilities.

“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, treasurer or assistant treasurer, director
of treasury or other similar officer of a Loan Party and, as to any document
delivered on the Closing Date, any secretary or assistant secretary of a Loan
Party. Any document delivered hereunder that is signed by a Responsible Officer
of a Loan Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such Loan
Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.

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

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

“Revolving Credit Ceiling” means the amount of the Total Commitments from time
to time in effect. On the Closing Date, the Revolving Credit Ceiling is
$225,000,000, as such amount may be increased or reduced in accordance with the
terms of this Agreement.

“Revolving Credit Loans” means all loans at any time made by any Lender
(including, without limitation, Tranche A Loans and FILO Loans) pursuant to
Article II and, to the extent applicable, shall include Swingline Loans made by
the Swingline Lender pursuant to SECTION 2.06.

“Revolving Credit Notes” means the promissory notes of the Borrowers
substantially in the form of Exhibit D, each payable to a Lender, evidencing the
Revolving Credit Loans made to the Borrowers.

“RP Payment” means any Restricted Payment or other transaction made subject to
satisfaction of the RP Payment Conditions or any component thereof.

“RP Payment Conditions” means, at the time of determination with respect to an
RP Payment, that (a) no Event of Default then exists or would arise as a result
of the making of such RP Payment, (b) the Pro Forma Availability Condition shall
have been satisfied after giving

 

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effect to such RP Payment, and (c) after giving effect to such RP Payment, the
Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for the four
Fiscal Quarters most recently preceding such RP Payment (provided that, if any
such RP Payment is to be consummated within thirty (30) days after the end of
any Fiscal Quarter, such calculation shall be made with respect to the four
Fiscal Quarters most recently preceding such RP Payment for which financial
statements have been required to be delivered pursuant to SECTIONS 5.01(a) and
(b) hereof), is equal to or greater than 1.10:1.00. In accordance with SECTION
5.02(i) hereof, at least five (5) Business Days prior to the making of any RP
Payment, the Loan Parties shall deliver to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent that the conditions
contained in clauses (b) and (c) have been satisfied. Notwithstanding anything
to the contrary contained in this definition, the Loan Parties shall not be
required to comply with the requirements of clause (c) contained herein in order
to satisfy the “RP Payment Conditions” if Availability following, and
immediately after giving effect to, such RP Payment, will be greater than
twenty-five percent (25%) of the lesser of (x) the then FILO Borrowing Base (or
if the FILO Commitments have been terminated, the then Tranche A Borrowing
Base), and (y) the then Revolving Credit Ceiling.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

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

“Secured Party” means (a) each Credit Party, (b) any Person providing Cash
Management Services or entering into or furnishing any Bank Products to or with
any Loan Party or any of their Subsidiaries, (c) the beneficiaries of each
indemnification obligation undertaken by any Loan Party under any Loan Document,
and (d) the successors and, subject to any limitations contained in this
Agreement, assigns of each of the foregoing.

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

“Security Agreement” means the Security Agreement dated as of the Initial
Closing Date among the Loan Parties and the Collateral Agent for its benefit and
for the benefit of the other Secured Parties, as amended and in effect from time
to time.

“Security Documents” means the Security Agreement, the Mortgages, the Facility
Guarantee and each other security agreement, pledge agreement or other
instrument or document executed and delivered pursuant to this Agreement or any
other Loan Document that creates a Lien in favor of the Collateral Agent to
secure any of the Obligations.

“Senior Note Documents” shall mean the indenture under which the Senior Notes
are issued and all other instruments, agreements and other documents evidencing
or governing the Senior Notes or providing for any Guarantee or other right in
respect thereof.

“Senior Notes” shall have the meaning assigned to such term in the introductory
statement to this Agreement.

 

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“Settlement Date” has the meaning provided in SECTION 2.22(b).

“Shares” shall mean the shares of common stock, $0.001 par value per share, of
the Company.

“Software” has the meaning assigned to such term in the Security Agreement.

“Specified Default” means the occurrence of any Event of Default specified in
SECTION 7.01(a), SECTION 7.01(b) (but only with respect to (i) SECTION 2.18(d),
(ii) SECTION 2.18(e), (iii) SECTION 2.18(f), (iv) the third sentence of SECTION
2.18(h), (v) SECTION 5.01(e), (vi) SECTION 5.07 (but only with respect to
casualty, loss and extended coverage policies maintained with respect to any
Collateral), (vii) SECTION 5.17, (viii) SECTION 5.18, (ix) SECTION 5.19, or
(x) SECTION 6.15), SECTION 7.01(d) (but only with respect to any representation
made or deemed to be made by or on behalf of any Loan Party in any Borrowing
Base Certificate or any Compliance Certificate), SECTION 7.01(f) or SECTION
7.01(g) hereof.

“Specified Equity Contribution” means any cash contribution to the common equity
of the Lead Borrower and/or any purchase or investment in the Capital Stock of
the Lead Borrower other than Disqualified Capital Stock.

“Specified Payment” means any Permitted Acquisition, Investment, loan, advance,
incurrence of or payment with respect to Indebtedness or other transaction made
subject to satisfaction of the Payment Conditions or any component thereof.

“Specified Transaction” shall mean any Investment that results in a Person
becoming a Restricted Subsidiary or an Unrestricted Subsidiary, any Permitted
Acquisition, any Disposition that results in a Restricted Subsidiary ceasing to
be a Subsidiary of the Lead Borrower, any Investment constituting an acquisition
of assets constituting a business unit, line of business or division of another
Person or a Store or any Disposition of a business unit, line of business or
division or a Store of the Lead Borrower or a Restricted Subsidiary, in each
case whether by merger, consolidation, amalgamation or otherwise.

“Sponsor” means any of Bain Capital Partners, LLC and its Affiliates, and any
fund or partnership managed or advised by any such Person, but not including,
however, any portfolio companies of any of the foregoing.

“Sponsor Group” means the Sponsor and the Sponsor Related Parties.

“Sponsor Lender Limitations” means, with respect to the Sponsor Group or any of
their respective Affiliates (other than Sponsor Related Investment Funds) that
becomes an assignee of any portion of the Obligations, such Person(s) shall have
executed and delivered to the Administrative Agent a representation and warranty
to the effect that it is not in possession of any information that has not been
made available to Lenders generally that could reasonably be expected to be
material to a decision to sell such Loans at the time of such assignment in form
and substance reasonably satisfactory to the Administrative Agent and a waiver
in form and substance reasonably satisfactory to the Administrative Agent
pursuant to which such Person(s) acknowledges and agrees that (a) for purposes
of any amendment, waiver or modification of any

 

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Loan Document or any plan of reorganization that does not in each case adversely
affect such Person as its capacity as a Lender in any material respect as
compared to other Lenders, such Person will be deemed to have voted in the same
proportion as non-affiliated Lenders voting on such matter and (b) it shall have
no right (i) to require the Agents or any Lender to undertake any action (or
refrain from taking any action) with respect to any Loan Document, (ii) to
attend any meeting with the Agents or any Lender or receive any information from
the Agents or any Lender, (iii) to the benefit of any advice provided by counsel
to the Agents or the other Lenders or to challenge the attorney-client privilege
of the communications between the Agents, such other Lenders and such counsel,
or (iv) to make or bring any claim, in its capacity as Lender, against any Agent
with respect to the fiduciary duties of such Agent or Lender and the other
duties and obligations of the Agents hereunder; except, that, no amendment,
modification or waiver to any Loan Document shall, without the consent of the
Sponsor Group or any of their respective Affiliates, deprive any such Person, as
assignee, of its pro rata share of any payments to which the Lenders as a group
are otherwise entitled hereunder.

“Sponsor Management Agreement” shall mean that certain Management Agreement,
dated as of October 23, 2010, by and among Giraffe Holding, Inc., Merger Sub and
Bain Capital Partners, LLC, as in effect on the Initial Closing Date and as the
same may be amended, supplemented or otherwise modified in a manner not
prohibited hereunder.

“Sponsor Related Investment Funds” means a Sponsor Related Party or an Affiliate
thereof which is an investment vehicle that is engaged in making, purchasing,
holding or otherwise investing in commercial loans, bonds and similar extensions
of credit in the ordinary course and with respect to which Bain Capital
Partners, LLC and investment vehicles managed or advised by Bain Capital
Partners, LLC that are not engaged primarily in making, purchasing, holding or
otherwise investing in commercial loans, bonds and similar extensions of credit
in the ordinary course do not, directly or indirectly, make investment decisions
for such entity.

“Sponsor Related Parties” means, with respect to any Person, (a) any Controlling
stockholder or partner (including, in the case of an individual Person who
possesses Control, the spouse or immediate family member of such Person;
provided that such Person retains Control of the voting rights, by stockholders
agreement, trust agreement or otherwise of the Capital Stock owned by such
spouse or immediate family member) or 80% (or more) owned Subsidiary, or (b) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding a 51% or more
Controlling interest of which consist of such Person and/or such Persons
referred to in the immediately preceding clause (a), or (c) the limited partners
of the Sponsors; provided further that “Sponsor Related Parties” does not
include Holdings nor any Person in which Holdings holds a Controlling interest.

“Standby Letter of Credit” means any Letter of Credit other than a Commercial
Letter of Credit.

“Stated Amount” means at any time the maximum amount for which a Letter of
Credit may be honored.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of

 

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the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the FRB to which
the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the FRB). Such reserve percentages shall include those imposed
pursuant to such Regulation D. LIBO Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.

“Stockholders’ Agreement” means the Stockholders’ Agreement, dated as of the
Initial Closing Date, by and among Giraffe Holding, Inc., Giraffe Intermediate
A, Inc., Holdings, the Company, Bain Capital Fund X L.P. and the other investors
from time to time party thereto, as in effect on the Initial Closing Date and as
the same may be amended, supplemented or otherwise modified in accordance with
its terms.

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

“Subordinated Indebtedness” means Indebtedness which is expressly subordinated
in right of payment to the prior payment in full of the Obligations on terms
reasonably acceptable to the Administrative Agent.

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

“Subsidiary Facility Guarantors” means any Person (other than a Borrower)
executing a Facility Guarantee which is a Subsidiary of the Lead Borrower, but
in all events shall not include (x) the Excluded Subsidiaries and (y) Holdings.
As of the Closing Date, there are no Subsidiary Facility Guarantors.

“Successor Lead Borrower” shall have the meaning given to such term in SECTION
6.04(g).

“Supermajority Consent of the FILO Lenders” means the consent of FILO Lenders
(other than Delinquent Lenders) holding at least sixty-six and two-thirds
percent (66.67%) of the FILO Commitments (other than FILO Commitments held by a
Delinquent Lender), or if the FILO Commitments have been terminated, the consent
of FILO Lenders (other than Delinquent Lenders) holding at least sixty-six and
two-thirds percent (66.67%) of the outstanding FILO

 

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Loans (to the extent applicable, calculated assuming settlement and repayment of
all Swingline Loans by the Lenders).

“Supermajority Consent of the Lenders” means the consent of Lenders (other than
Delinquent Lenders) holding at least sixty-six and two-thirds percent
(66.67%) of the Commitments (other than Commitments held by a Delinquent
Lender), or if the Commitments have been terminated, the consent of Lenders
(other than Delinquent Lenders) holding at least sixty-six and two-thirds
percent (66.67%) of the outstanding Credit Extensions (calculated assuming
settlement and repayment of all Swingline Loans by the Lenders).

“Supporting Obligations” has the meaning assigned to such term in the Security
Agreement.

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

“Swap Contract Secured Parties” means, with respect to any Swap Contract,
collectively, (a) the Administrative Agent or an Affiliate of the Administrative
Agent, (b) any Lender or any Affiliate of a Lender, (c) any Person who (i) was a
Lender or an Affiliate of a Lender at the time such Swap Contract was entered
into and who is no longer a Lender or an Affiliate of a Lender, and (ii) is, and
at all times remains, in compliance with the provisions of SECTION 8.14(a) and
(iii) agrees in writing that the Agents and the other Secured Parties shall have
no duty to such Person (other than the payment of any amounts to which such
Person may be entitled under SECTION 7.04) and acknowledges that the Agents and
the other Secured Parties may deal with the Loan Parties and the Collateral as
they deem appropriate (including the release of any Loan Party or all or any
portion of the Collateral) without notice or consent from such Person, whether
or not such action impairs the ability of such Person to be repaid its Other
Liabilities) and agrees to be bound by SECTION 8.18, and (d) any Other Secured
Swap Provider or Affiliate of any Other Secured Swap Provider who (i) is, and at
all times remains, in compliance with the provisions of SECTION 8.14(a) and
(ii) agrees in writing that the Agents and the other Secured Parties shall have
no duty to such Person (other than the payment of any amounts to which such
Person may be entitled under SECTION 7.04) and acknowledges that the Agents and
the other Secured Parties may deal with the Loan Parties and the Collateral as
they deem appropriate (including the release of any Loan Party or all or any
portion of the Collateral) without notice or

 

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consent from such Person, whether or not such action impairs the ability of such
Person to be repaid its Other Liabilities) and agrees to be bound by SECTION
8.18.

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

“Swingline Lender” means Bank of America, N.A., in its capacity as lender of
Swingline Loans hereunder to the Borrowers hereunder.

“Swingline Loan” means a Revolving Credit Loan made by the Swingline Lender to
the Borrowers pursuant to SECTION 2.06.

“Swingline Loan Ceiling” means $30,000,000, as such amount may be increased or
reduced in accordance with the provisions of this Agreement.

“Swingline Note” means the promissory note of the Borrowers substantially in the
form of Exhibit E, payable to the Swingline Lender, evidencing the Swingline
Loans made by the Swingline Lender to the Borrowers.

“Syndication Agent” means U.S. Bank National Association, in its capacity as
Documentation Agent.

“Synthetic Lease” means any lease or other agreement for the use or possession
of property creating obligations which do not appear as Indebtedness on the
balance sheet of the lessee thereunder but which, upon the insolvency or
bankruptcy of such Person, may be characterized as Indebtedness of such lessee
without regard to the accounting treatment.

“Taxes” means any and all current or future taxes, levies, imposts, duties
(including stamp duties), deductions, charges (including ad valorem charges) or
withholdings in the nature of taxes imposed by any Governmental Authority, and
any and all interest and penalties related thereto.

“Tender Offer” means a tender offer by Merger Sub to purchase for cash all of
the outstanding shares of common stock of the Company, in accordance with the
Tender Offer Documents.

“Tender Offer Documents” means (a) the Offer to Purchase for Cash, dated as of
October 25, 2010, from Merger Sub to the holders of the outstanding shares of
common stock of the Company and (b) all agreements and documents required to be
entered into or delivered pursuant to or in connection with such Offer to
Purchase for Cash or in connection with the Tender Offer.

 

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“Term Loan Agent” means Credit Suisse AG, Cayman Islands Branch as
administrative agent under the Term Loan Facility, and its successors and
assigns in such capacity.

“Term Loan Agreement” means that certain Credit Agreement dated as of the
Initial Closing Date by and among the Lead Borrower, as borrower, Holdings and
the other guarantors party thereto, Credit Suisse AG, Cayman Islands Branch as
administrative agent and the lenders identified therein.

“Term Loan Facility” means the term loan facility established pursuant to the
Term Loan Agreement, as amended, modified, or supplemented from time to time to
the extent permitted pursuant to SECTION 6.13 hereof and pursuant to the
Intercreditor Agreement.

“Term Loan Lenders” means the lenders under the Term Loan Facility.

“Term Priority Collateral” has the meaning set forth in the Intercreditor
Agreement.

“Termination Date” means the earlier to occur of (i) the Maturity Date, or
(ii) the date on which the maturity of the Obligations (other than the Other
Liabilities) is accelerated (or deemed accelerated) and the Commitments are
irrevocably terminated (or deemed terminated) in accordance with Article VII.

“Total Commitments” means the aggregate of the Commitments of all Lenders. The
Total Commitments on the Closing Date are $225,000,000.

“Trade Receivables Advance Rate” means eighty-five percent (85%).

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

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

plus

(b) the face amount of Eligible Trade Receivables of the Loan Parties multiplied
by the Trade Receivables Advance Rate;

plus

(c) the Cost of Eligible Inventory of the Loan Parties (other than Eligible
In-Transit Inventory), net of Inventory Reserves, multiplied by the Inventory
Advance Rate for the Tranche A Borrowing Base multiplied by the Appraised Value
of Eligible Inventory of the Loan Parties;

plus

(d) the Cost of Eligible In-Transit Inventory of the Loan Parties, net of
Inventory Reserves, multiplied by the Inventory Advance Rate for the Tranche A

 

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Borrowing Base multiplied by the Appraised Value of Eligible In-Transit
Inventory of the Loan Parties;

plus

(e) with respect to any Eligible Letter of Credit Inventory, the lesser of
(x) the Cost of such Eligible Letter of Credit Inventory, net of Inventory
Reserves, multiplied by the Inventory Advance Rate for the Tranche A Borrowing
Base for such Inventory when completed, multiplied by the Appraised Value of
such Eligible Letter of Credit Inventory or (y) the Stated Amount of the Letter
of Credit relating to such Eligible Letter of Credit Inventory, multiplied by
the Inventory Advance Rate for the Tranche A Borrowing Base, multiplied by the
Appraised Value of such Eligible Letter of Credit Inventory;

minus

(f) the then amount of all Availability Reserves and any other Reserves taken in
accordance with Section 2.03(b).

“Tranche A Commitment” shall mean, with respect to each Tranche A Lender, the
commitment of such Tranche A Lender hereunder set forth as its Tranche A
Commitment opposite its name on Schedule 1.01 hereto or as may subsequently be
set forth in the Register from time to time, as the same may be increased or
reduced from time to time pursuant to this Agreement. The aggregate Tranche A
Commitments on the Closing Date are $213,000,000.

“Tranche A Commitment Percentage” shall mean, with respect to each Tranche A
Lender, that percentage of the Tranche A Commitments of all Lenders hereunder to
make Tranche A Loans to the Borrowers in the amount set forth opposite its name
on Schedule 1.01 hereto or as may subsequently be set forth in the Register from
time to time, as the same may be increased or reduced from time to time pursuant
to SECTION 2.02 or SECTION 2.15, or if the Tranche A Commitments have been
terminated, such percentage as calculated immediately prior to such termination.

“Tranche A Credit Extensions” means Tranche A Loans and Letters of Credit issued
hereunder.

“Tranche A Lender” means each Lender which holds a Tranche A Commitment and any
other Person who becomes a “Tranche A Lender” in accordance with the provisions
of this Agreement.

“Tranche A Loans” means collectively, the Revolving Credit Loans (including
Swingline Loans) made by the Lenders pursuant to Article II, other than FILO
Loans.

“Transactions” means, collectively, (a) the consummation of the Tender Offer and
the Merger and the other transactions contemplated by the Tender Offer Documents
and the Merger Agreement on or prior to the Initial Closing Date, (b) the
execution and delivery by the Lead Borrower and the Subsidiaries party thereto
of the Senior Note Documents and the issuance of the Senior Notes on or prior to
the Initial Closing Date, (c) the execution and delivery by the Loan Parties of
the Loan Documents to which they are a party and the making of the Revolving

 

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Credit Loans and the issuance of Letters of Credit (if any) on the Initial
Closing Date, (d) the execution and delivery by Holdings, the Lead Borrower and
the Subsidiaries party thereto of the Term Loan Documents and the funding under
the Term Loan Facility on the Initial Closing Date, (e) the repayment of all
amounts due or outstanding under or in respect of, and the termination of the
commitments under, the Existing Credit Agreement (as such term is defined in the
Existing Credit Agreement) on the Initial Closing Date and (f) the payment of
the Transaction Expenses.

“Transaction Expenses” shall mean any fees or expenses incurred or paid by
Holdings or any of its Subsidiaries in connection with the Transactions
(including in connection with this Agreement and the other Loan Documents).

“Type”, when used in reference to any Revolving Credit Loan or Borrowing, refers
to whether the rate of interest on such Revolving Credit Loan, or on the
Revolving Credit Loans comprising such Borrowing, is determined by reference to
the Adjusted LIBO Rate, the Prime Rate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York provided, however, that if a term is defined in Article 9 of
the Uniform Commercial Code differently than in another Article thereof, the
term shall have the meaning set forth in Article 9; provided further that, if by
reason of mandatory provisions of law, perfection, or the effect of perfection
or non-perfection, of a security interest in any Collateral or the availability
of any remedy hereunder is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, “Uniform Commercial Code” means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy, as the case may be.

“Unaudited Financial Statements” means the unaudited consolidated balance sheets
and related statements of income and cash flows of the Lead Borrower and its
Subsidiaries for (a) the Fiscal Quarter ending October 29, 2011 and (b) the
Fiscal Months ending November 26, 2011 and December 31, 2011.

“Uncontrolled Cash” means an amount equal $10,000,000.

“Unfunded Pension Liability” means, at a point in time, the excess of a Plan’s
benefit liabilities, over the current value of that Plan’s assets, determined in
accordance with the assumptions used for funding the Plan pursuant to applicable
laws for the applicable plan year and includes any unfunded liability or
solvency deficiency as determined for the purposes of the PBA.

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

“Unrestricted Subsidiaries” means (i) each Subsidiary of the Lead Borrower
listed on Schedule 5.14 and (ii) any Subsidiary of the Lead Borrower designated
by the board of directors of the Lead Borrower as an Unrestricted Subsidiary
pursuant to SECTION 5.14 subsequent to the date hereof, provided that no
Subsidiary may be designated as an Unrestricted Subsidiary if any of its assets
are included in the calculation of the Tranche A Borrowing Base or the FILO

 

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Borrowing Base immediately prior to such Subsidiary’s being designated as an
Unrestricted Subsidiary.

“Unused Commitment” shall mean, on any day, (a) as to the Tranche A Lenders,
except as provided in SECTION 2.19(b) or 2.19(c), (i) the then aggregate Tranche
A Commitments, minus (ii) the sum of (A) the principal amount of Tranche A Loans
(other than Swingline Loans) of the Borrowers then outstanding, and (B) the then
Letter of Credit Outstandings; and (b) as to the FILO Lenders, (i) the then
aggregate FILO Commitments, minus (ii) the principal amount of FILO Loans of the
Borrowers then outstanding.

“Unused Fee” has the meaning provided in SECTION 2.19(b).

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

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part 1 of Subtitle E of Title IV of ERISA.

SECTION 1.02 Terms Generally.

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

(a) The definitions of terms herein shall apply equally to 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.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and permitted assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular

 

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provision thereof, (iv) all references in a Loan Document to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, the Loan Document in which such references
appear, (v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time,
(vi) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights,
(vii) all references to “$” or “dollars” or to amounts of money and all
calculations of Availability, Tranche A Borrowing Base, FILO Borrowing Base,
permitted “baskets” and other similar matters shall be deemed to be references
to the lawful currency of the United States of America, and (viii) references to
“knowledge” of any Loan Party means the actual knowledge of a Responsible
Officer.

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

(c) [Reserved];

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

(e) This Agreement and the other Loan Documents are the result of negotiation
among, and have been reviewed by counsel to, among others, the Loan Parties and
the Administrative Agent and are the product of discussions and negotiations
among all parties. Accordingly, this Agreement and the other Loan Documents are
not intended to be construed against the Administrative Agent or any of the
Lenders merely on account of the Administrative Agent’s or any Lender’s
involvement in the preparation of such documents.

(f) For purposes of determining compliance with SECTION 6.01, SECTION 6.02,
SECTION 6.03, SECTION 6.05, SECTION 6.06, SECTION 6.08, SECTION 6.09 and SECTION
6.11, in the event that any Lien, Investment, Indebtedness, Disposition,
Restricted Payment, affiliate transaction, contractual obligation or prepayment
of Indebtedness meets the criteria of more than one of the categories of
transactions permitted pursuant to any clause of such SECTION 6.01, SECTION
6.02, SECTION 6.03, SECTION 6.05, SECTION 6.06, SECTION 6.08, SECTION 6.09 and
SECTION 6.11, such transaction (or portion thereof) at any time shall be
permitted under one or more of such clauses as determined by the Lead Borrower
in its sole discretion at such time.

SECTION 1.03 Accounting Terms.

 

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

(b) The principal amount of any non-interest bearing or other discount security
at any date shall be the principal amount thereof that would be shown on a
balance sheet of the issuer dated such date prepared in accordance with GAAP.

SECTION 1.04 Rounding.

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

SECTION 1.05 Times of Day.

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

SECTION 1.06 Letter of Credit Amounts.

Unless otherwise specified, all references herein to the amount of a Letter of
Credit at any time shall be deemed to mean the maximum face amount of such
Letter of Credit after giving effect to all increases thereof contemplated by
such Letter of Credit, whether or not such maximum face amount is in effect at
such time.

SECTION 1.07 Certifications.

All certifications to be made hereunder by an officer or representative of a
Loan Party shall be made by such person in his or her capacity solely as an
officer or a representative of such Loan Party, on such Loan Party’s behalf and
not in such person’s individual capacity.

SECTION 1.08 Currency Equivalents Generally.

(a) Any amount specified in this Agreement (other than in Article 2) or any of
the other Loan Documents to be in Dollars shall also include the equivalent of
such amount in any currency other than Dollars, such equivalent amount to be
determined at the rate of exchange quoted by the Reuters World Currency Page for
the applicable currency at 11:00 a.m. (London time) on such day (or, in the
event such rate does not appear on any Reuters World Currency Page, by reference
to such other publicly available service for displaying exchange rates as may be
agreed upon by the Administrative Agent and the Lead Borrower, or, in the
absence of such agreement, such rate shall instead be the arithmetic average of
the spot rates of exchange of the Administrative Agent in the market where its
foreign currency exchange operations in respect of such currency are then being
conducted, at or about 10:00 a.m. (New York City time) on such date for the
purchase of Dollars for

 

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delivery two Business Days later). Notwithstanding the foregoing, for purposes
of determining compliance with SECTION 6.01, SECTION 6.02, SECTION 6.03, SECTION
6.05 and SECTION 6.06, (i) any amount in a currency other than Dollars will be
converted to Dollars based on the exchange rate for such currency as determined
above, and (ii) no Default shall be deemed to have occurred solely as a result
of changes in rates of exchange occurring after the time any transaction
described in any of such Sections is consummated; provided that, for the
avoidance of doubt, the foregoing provisions of this SECTION 1.08 shall
otherwise apply to such Sections, including with respect to determining whether
any such transaction described in such Sections may be consummated at any time
under such Sections.

(b) Notwithstanding the foregoing, for purposes of determining the Fixed Charge
Coverage Ratio, amounts denominated in a currency other than Dollars will be
converted to Dollars at the currency exchange rates used in preparing the Lead
Borrower’s financial statements for the period referred to in the definition of
“FCCR Test Period”.

SECTION 1.09 Change of Currency.

Each provision of this Agreement shall be subject to such reasonable changes of
construction as the Administrative Agent may from time to time specify with the
Lead Borrower’s consent to appropriately reflect a change in currency of any
country and any relevant market conventions or practices relating to such change
in currency.

SECTION 1.10 Pro Forma Basis.

(a) Notwithstanding anything to the contrary herein, the Consolidated Fixed
Charge Coverage Ratio shall be calculated in the manner prescribed by this
SECTION 1.10; provided, that notwithstanding anything to the contrary in clauses
(b), (c) or (d) of this SECTION 1.10, when calculating the Consolidated Fixed
Charge Coverage Ratio for purposes of determining actual compliance (and not
compliance on a Pro Forma Basis) with SECTION 6.15, the events described in this
SECTION 1.10 that occurred subsequent to the end of the applicable FCCR Test
Period shall not be given pro forma effect.

(b) For purposes of calculating the Consolidated Fixed Charge Coverage Ratio,
Specified Transactions (and the incurrence or repayment of any Indebtedness in
connection therewith) that have been made (i) during the applicable FCCR Test
Period or (ii) subsequent to such FCCR Test Period and prior to or
simultaneously with the event for which the calculation of the Consolidated
Fixed Charge Coverage Ratio is made shall be calculated on a pro forma basis
assuming that all such Specified Transactions (and any increase or decrease in
Consolidated EBITDA and the component financial definitions used therein
attributable to any Specified Transaction) had occurred on the first day of the
applicable FCCR Test Period. If since the beginning of any applicable FCCR Test
Period any Person that subsequently became a Restricted Subsidiary or was
merged, amalgamated or consolidated with or into the Lead Borrower or any of its
Restricted Subsidiaries since the beginning of such FCCR Test Period shall have
made any Specified Transaction that would have required adjustment pursuant to
this SECTION 1.10, then the Consolidated Fixed Charge Coverage Ratio shall be
calculated to give pro forma effect thereto in accordance with this SECTION
1.10.

 

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(c) Whenever pro forma effect is to be given to a Specified Transaction, the pro
forma calculations shall be made in good faith by a responsible financial or
accounting officer of the Lead Borrower and may include, for the avoidance of
doubt, the amount of cost savings, operating expense reductions and synergies
projected by the Lead Borrower in good faith to be realized as a result of
specified actions taken, committed to be taken, or expected to be taken
(calculated on a pro forma basis as though such cost savings, operating expense
reductions and synergies had been realized on the first day of such period and
as if such cost savings, operating expense reductions and synergies were
realized during the entirety of such period) relating to such Specified
Transaction, net of the amount of actual benefits realized during such period
from such actions; provided, that (A) such amounts are reasonably identifiable,
quantifiable and factually supportable in the good faith judgment of the Lead
Borrower, (B) such actions are taken, committed to be taken or expected to be
taken no later than 24 months after the date of such Specified Transaction,
(C) any cost savings, operating expense reductions and synergies that are not
actually realized during such period may no longer be added pursuant to this
clause (c) after the end of the fourth full fiscal quarter ending after the date
of such Specified Transaction, and (D) no amounts shall be added pursuant to
this clause (c) to the extent duplicative of any amounts that are otherwise
added back in computing Consolidated EBITDA, whether through a pro forma
adjustment or otherwise, with respect to such period. Notwithstanding the
foregoing, (A) all pro forma adjustments under this clause (c) shall not
increase pro forma Consolidated EBITDA by more than 10% for any FCCR Test Period
and (B) no pro forma adjustments under this clause (c) shall be made in respect
of the Transactions (the foregoing not being intended to limit the operation of
paragraph (a)(vii) of the definition of “Consolidated EBITDA”).

(d) In the event that the Lead Borrower or any Restricted Subsidiary incurs
(including by assumption or guarantees) or repays (including by redemption,
repayment, retirement or extinguishment) any Indebtedness included in the
calculation of the Consolidated Fixed Charge Coverage Ratio (in each case, other
than Indebtedness incurred or repaid under this Agreement in the ordinary course
of business for working capital purposes), (i) during the applicable FCCR Test
Period or (ii) subsequent to the end of the applicable FCCR Test Period and
prior to or simultaneously with the event for which the calculation of the
Consolidated Fixed Charge Coverage Ratio is made, then the Consolidated Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence or repayment of Indebtedness, to the extent required, as if the same
had occurred on the first day of the applicable FCCR Test Period. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the date of the event for which the calculation of the Consolidated
Fixed Charge Coverage Ratio is made had been the applicable rate for the entire
period (taking into account any hedging obligations applicable to such
Indebtedness). Interest on a Capitalized Lease shall be deemed to accrue at an
interest rate reasonably determined by a responsible financial or accounting
officer of the Lead Borrower to be the rate of interest implicit in such
Capitalized Lease in accordance with GAAP. Interest on Indebtedness that may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a London interbank offered rate, or other rate, shall be
determined to have been based upon the rate actually chosen, or if none, then
based upon such optional rate chosen as the Lead Borrower or Restricted
Subsidiary may designate.

(e) Whenever any provision of this Agreement requires the Lead Borrower to be in
compliance on a Pro Forma Basis (or in Pro Forma Compliance) with a specified
Consolidated Fixed Charge Coverage Ratio in connection with any action to be
taken the Lead Borrower hereunder, the

 

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Lead Borrower shall deliver to the Administrative Agent a certificate of a
Responsible Officer setting forth in reasonable detail the calculations
demonstrating such compliance.

ARTICLE II

Amount and Terms of Credit

SECTION 2.01 Commitment of the Lenders.

(a) Each Lender, severally and not jointly with any other Lender, agrees, upon
the terms and subject to the conditions herein set forth, to make Credit
Extensions to or for the benefit of the Borrowers, on a revolving basis, subject
in each case to the following limitations:

(i) The aggregate outstanding amount of the Credit Extensions to the Borrowers
shall not at any time cause Availability to be less than zero;

(ii) Letters of Credit shall be available from the Issuing Banks to the
Borrowers and their Restricted Subsidiaries, provided that the Borrowers shall
not at any time permit the aggregate Letter of Credit Outstandings at any time
to exceed the Letter of Credit Sublimit; and provided further that any Letter of
Credit issued for the benefit of any Foreign Subsidiary shall be issued naming
the Lead Borrower as the account party on any such Letter of Credit but such
Letter of Credit may contain a statement that it is being issued for the benefit
of such Foreign Subsidiary;

(iii) No Lender shall be obligated to make any Credit Extension to the Borrowers
in excess of such Lender’s Tranche A Commitment or FILO Commitment, as
applicable;

(iv) The aggregate outstanding amount of the Tranche A Credit Extensions shall
not exceed the lesser of the Tranche A Commitments or the Tranche A Borrowing
Base;

(v) The aggregate outstanding amount of the FILO Credit Extensions shall not
exceed the lesser of the FILO Commitments or Incremental Availability;

(vi) The Lead Borrower shall not request, and the Tranche A Lenders shall be
under no obligation to fund, any Tranche A Loan unless the Borrowers have
borrowed the full amount of the lesser of the FILO Commitments or Incremental
Availability (to the extent that such FILO Commitments have not been
terminated). Except as otherwise provided in SECTION 2.13(f), all FILO Credit
Extensions shall be FILO Loans and all Letters of Credit and Swingline Loans
shall constitute Tranche A Credit Extensions; and

(vii) Subject to all of the other provisions of this Agreement, Revolving Credit
Loans to the Borrowers that are repaid may be reborrowed prior to the
Termination Date.

 

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(b) Except as provided in SECTION 2.01(a)(vi), each Borrowing of Revolving
Credit Loans to the Borrowers (other than Swingline Loans) shall be made by the
Lenders pro rata in accordance with their respective Tranche A Commitments or
FILO Commitments, as applicable. The failure of any Lender to make any Revolving
Credit Loan to the Borrowers shall neither relieve any other Lender of its
obligation to fund its Revolving Credit Loan to the Borrowers in accordance with
the provisions of this Agreement nor increase the obligation of any such other
Lender.

SECTION 2.02 Increase in Total Commitments.

(a) Increase of Tranche A Commitments. At any time and from time to time on or
after the Closing Date, so long as no Default or Event of Default exists or
would arise therefrom, but without duplication of any increase permitted
pursuant to SECTION 2.02(c) hereof, the Lead Borrower shall have the right to
request an increase of the aggregate of the then outstanding Tranche A
Commitments by an amount not to exceed in the aggregate $125,000,000 (or, if
less, the amount permitted by the Term Loan Facility). The Administrative Agent
and the Lead Borrower shall determine the effective date of such requested
increase and any such requested increase shall be first made available to all
Tranche A Lenders on a pro rata basis. To the extent that, on or before the
tenth day following such request for an increase hereunder, such Tranche A
Lenders decline to increase their Tranche A Commitments, or decline to increase
their Tranche A Commitments to the amount requested by the Lead Borrower, the
Lead Borrower may arrange (or request the Administrative Agent, the Arranger or
any of its respective Affiliates to arrange) for other Persons to become a
Tranche A Lender hereunder and to issue commitments in an amount equal to the
amount of the increase in the Tranche A Commitments requested by the Lead
Borrower and not accepted by the existing Tranche A Lenders (each such increase
by either means, a “Commitment Increase,” and each Person issuing, or Lender
increasing, its Tranche A Commitment, an “Additional Commitment Lender”),
provided, however, that (i) no Tranche A Lender shall be obligated to provide a
Commitment Increase as a result of any such request by the Lead Borrower,
(ii) any Additional Commitment Lender which is not an existing Tranche A Lender
shall be subject to the approval of the Administrative Agent, the Issuing Banks,
the Swingline Lender and the Lead Borrower (which approval shall not be
unreasonably withheld), and (iii) without the consent of the Administrative
Agent, at no time shall the Tranche A Commitment of any Additional Commitment
Lender under this Agreement be less than $5,000,000. Each Commitment Increase
shall be in a minimum aggregate amount of at least $25,000,000 and in integral
multiples of $5,000,000 in excess thereof. Each Additional Commitment Lender
agreeing to provide a Commitment Increase pursuant to this SECTION 2.02(a) shall
be on the same terms and with the same maturity as provided for the Lenders
other than any upfront, underwriting, arrangement or similar fees as the Lead
Borrower and the Persons participating in the Commitment Increase (and the
arrangement thereof) shall agree.

(b) Reserved.

(c) Increase of Tranche A Commitments after Termination of FILO Commitments. At
the time of any reduction or termination of the FILO Commitments as set forth in
SECTION 2.15(c) hereof, but without duplication of any increase permitted
pursuant to SECTION 2.02(a) hereof, the FILO Commitments so reduced or
terminated may be added, in whole or in part, at the Lead Borrower’s option, to
the then outstanding Tranche A Commitments and shall thereafter become part of
the Tranche A Commitments, and the Tranche A Commitments of the Lenders whose
FILO

 

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Commitments are being so reduced or terminated shall be automatically increased
by the amount so reduced or terminated.

(d) Conditions to Effectiveness of each Commitment Increase. No Commitment
Increase shall become effective unless and until each of the following
conditions has been satisfied or waived:

(i) The Borrowers, the Administrative Agent, and any Additional Commitment
Lender shall have executed and delivered a joinder to the Loan Documents in such
form as the Administrative Agent shall reasonably require;

(ii) The Borrowers shall have paid such fees and other compensation to the
Additional Commitment Lenders and MLPF&S as the Lead Borrower and such
Additional Commitment Lenders and MLPF&S shall agree; provided, that MLPF&S
shall only be entitled to a fee or compensation, or to agree to the fees and
compensation paid by the Lead Borrower under this clause (ii), if it has
arranged the Commitment Increase;

(iii) If requested by the Administrative Agent, the Borrowers shall deliver to
the Administrative Agent and the Lenders an opinion or opinions, in form and
substance reasonably satisfactory to the Administrative Agent, from counsel to
the Borrowers and dated such date;

(iv) A Revolving Credit Note (to the extent requested) will be issued at the
Borrowers’ expense, to each such Additional Commitment Lender, to be in
conformity with requirements of SECTION 2.07 (with appropriate modification) to
the extent necessary to reflect the new Tranche A Commitment of each Additional
Commitment Lender;

(v) The Borrowers and each Additional Commitment Lender shall have delivered
such other instruments, documents and agreements as the Administrative Agent may
reasonably have requested in order to effectuate the foregoing; and

(vi) All representations and warranties contained in this Agreement and the
other Loan Documents or otherwise made in writing in connection herewith or
therewith shall be true and correct in all material respects on and as of the
effective date of each Commitment Increase with the same effect as if made on
and as of such date, other than representations and warranties that relate
solely to an earlier date, which shall be true and correct in all material
respects as of such earlier date, provided that any representation and warranty
which is qualified as to “materiality”, “Material Adverse Effect” or similar
language shall be true and correct in all respects on such respective dates.

(e) Notification by Administrative Agent. The Administrative Agent shall
promptly notify each Lender as to the effectiveness of each Commitment Increase
(with each date of such effectiveness being referred to herein as a “Commitment
Increase Date”), and at such time (i) the Tranche A Commitments under, and for
all purposes of, this Agreement shall be increased by the aggregate amount of
such Commitment Increases, (ii) Schedule 1.01 shall be deemed modified,

 

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without further action, to reflect the revised Tranche A Commitment Percentages
and Commitment Percentages of the relevant Tranche A Lenders, and (iii) this
Agreement shall be deemed amended, without further action, to the extent
necessary to reflect such increased Tranche A Commitments.

(f) Other Provisions. In connection with Commitment Increases hereunder, the
Lenders and the Borrowers agree that, notwithstanding anything to the contrary
in this Agreement, (i) the Borrowers shall, in coordination with the
Administrative Agent, (x) repay outstanding Tranche A Loans of certain Tranche A
Lenders, and obtain Tranche A Loans from certain other Tranche A Lenders
(including the Additional Commitment Lenders), or (y) take such other actions as
reasonably may be required by the Administrative Agent, in each case to the
extent necessary so that all of the Tranche A Lenders effectively participate in
each of the outstanding Tranche A Loans pro rata on the basis of their Tranche A
Commitment Percentages (determined after giving effect to any increase in the
Tranche A Commitments pursuant to this SECTION 2.02), and (ii) the Borrowers
shall pay to the Tranche A Lenders any costs of the type referred to in SECTION
2.16(c) in connection with any repayment and/or Tranche A Loans required
pursuant to preceding clause (i). Without limiting the obligations of the
Borrowers provided for in this SECTION 2.02, the Administrative Agent and the
Tranche A Lenders agree that they will use their commercially reasonable efforts
to attempt to minimize the costs of the type referred to in SECTION 2.16(c)
which the Borrowers would otherwise incur in connection with the implementation
of an increase in the Tranche A Commitments. In connection with any Commitment
Increase hereunder, upon the request of the Lead Borrower, the Letter of Credit
Sublimit may be increased with the approval of the Issuing Banks and the
Administrative Agent by an amount not to exceed the amount of such Commitment
Increase.

SECTION 2.03 Reserves; Changes to Reserves.

(a) The initial Inventory Reserves and Availability Reserves as of the Closing
Date shall be as set forth in the Borrowing Base Certificate dated March 9, 2012
and delivered to the Administrative Agent pursuant to Section 4.01(i) hereof.

(b) The Administrative Agent may hereafter establish additional Reserves or
change any of the Reserves set forth in the Borrowing Base Certificate referred
to in clause (a) above, in its Permitted Discretion; provided that such Reserves
shall not be established or changed except upon not less than six (6) Business
Days’ notice to the Lead Borrower (during which period the Administrative Agent
shall be available to discuss any such proposed Reserve with the Lead Borrower
and the Borrowers may take such action as may be required so that the event,
condition or matter that is the basis for such Reserve no longer exists, in a
manner and to the extent reasonably satisfactory to the Administrative Agent);
provided further that no such prior notice shall be required for changes to any
Reserves resulting solely by virtue of mathematical calculations of the amount
of the Reserve in accordance with the methodology of calculation previously
utilized (such as, but not limited to, rent and Customer Credit Liabilities).
The amount of any Reserve established by the Administrative Agent shall have a
reasonable relationship to the event, condition or other matter that is the
basis for the Reserve. Notwithstanding anything herein to the contrary, Reserves
shall not duplicate eligibility criteria contained in the definition of Eligible
Credit Card Receivables, Eligible In-Transit Inventory, Eligible Inventory,
Eligible Letter of Credit Inventory, Eligible Trade Receivables or reserves or
criteria deducted in computing the Appraised Value of Eligible Inventory.

SECTION 2.04 Making of Revolving Credit Loans.

 

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(a) Except as set forth in SECTION 2.09, SECTION 2.10 and SECTION 2.11,
Revolving Credit Loans (other than Swingline Loans) shall be either Prime Rate
Loans or LIBO Loans as the Lead Borrower on behalf of the Borrowers may request
(which request shall substantially be made in the form attached hereto as
Exhibit C) subject to and in accordance with this SECTION 2.04. All Swingline
Loans shall be only Prime Rate Loans. All Revolving Credit Loans made pursuant
to the same Borrowing shall, unless otherwise specifically provided herein, be
Revolving Credit Loans of the same Type. Each Lender may fulfill its Commitment
with respect to any Revolving Credit Loan by causing any lending office of such
Lender to make such Revolving Credit Loan; provided, however, that any such use
of a lending office shall not affect the obligation of the Borrowers to repay
such Revolving Credit Loan in accordance with the terms of the applicable
Revolving Credit Note. Each Lender shall, subject to its overall policy
considerations, use reasonable efforts to select a lending office which will not
result in the payment of increased costs by the Borrowers. Subject to the other
provisions of this SECTION 2.04 and the provisions of SECTION 2.10 and SECTION
2.11, Borrowings of Revolving Credit Loans of more than one Type may be incurred
at the same time, but in any event no more than ten (10) Borrowings of LIBO
Loans may be outstanding at any time.

(b) The Lead Borrower shall give the Administrative Agent (x) two (2) Business
Days’ prior telephonic notice (thereafter confirmed in writing) of each
Borrowing of LIBO Loans, and (y) prior telephonic notice (thereafter confirmed
in writing) of each Borrowing of Prime Rate Loans by the Borrowers on the same
Business Day requested for such Borrowing. Any such notice, to be effective,
must be received by the Administrative Agent not later than 1:00 p.m. on the
second Business Day in the case of LIBO Loans, and not later than 1:00 p.m. on
the same Business Day in the case of Prime Rate Loans, prior to or on, as the
case may be, the date on which such Borrowing is to be made. Such notice shall
be irrevocable (except to the extent set forth in SECTION 2.10 or SECTION 2.11
hereof), shall contain disbursement instructions and shall specify: (i) whether
the Borrowing then being requested is to be a Borrowing of Prime Rate Loans or
LIBO Loans and, if LIBO Loans, the Interest Period with respect thereto;
(ii) the amount of the proposed Borrowing (which shall be in an integral
multiple of $1,000,000, but not less than $5,000,000 in the case of LIBO Loans);
and (iii) the date of the proposed Borrowing (which shall be a Business Day). If
no election of Interest Period is specified in any such notice for a Borrowing
of LIBO Loans, such notice shall be deemed a request for an Interest Period of
one (1) month. If no election is made as to the Type of Revolving Credit Loan,
such notice shall be deemed a request for Borrowing of Prime Rate Loans. The
Administrative Agent shall promptly notify each Lender of its proportionate
share of such Borrowing, the date of such Borrowing, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto, as
appropriate. On the borrowing date specified in such notice, each Lender shall
make its share of the Borrowing available at the office of the Administrative
Agent at 100 Federal Street, Boston, Massachusetts 02110 (or such other place as
the Administrative Agent may request) no later than 3:00 p.m., in immediately
available funds. Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with this SECTION 2.04 and may, in
reliance upon such assumption, make available to the Borrowers a corresponding
amount. In the event a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrowers severally agree to pay to the Administrative Agent, forthwith on
demand such corresponding amount, with interest thereon for each day from and
including the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at

 

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(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation, or (ii) in the case of the Borrowers,
the interest rate applicable to Prime Rate Loans determined by reference to the
Prime Rate. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Revolving Credit Loan included in
such Borrowing. Upon receipt of the funds made available by the Lenders to fund
any borrowing hereunder, the Administrative Agent shall disburse such funds in
the manner specified in the notice of borrowing delivered by the Lead Borrower
and shall use reasonable efforts to make the funds so received from the Lenders
available to the Borrowers no later than 5:00 p.m.

(c) Notwithstanding anything to the contrary herein contained, all Revolving
Credit Loans to the Borrowers shall be FILO Loans (without regard to minimum or
integral amounts for such Loans) until the outstanding principal amount of such
Revolving Credit Loans equal the lesser of Incremental Availability or the then
FILO Commitments. If any FILO Loan is prepaid in part pursuant to SECTION
2.16(b), any Revolving Credit Loans to the Borrowers thereafter requested shall
be FILO Loans until the maximum principal amount of FILO Loans outstanding
equals the lesser of Incremental Availability or FILO Commitments and thereafter
all Revolving Credit Loans shall be Tranche A Loans.

(d) To the extent not paid by the Borrowers when due (after taking into
consideration any applicable grace period), the Administrative Agent, without
the request of the Lead Borrower, may advance any interest or fee payable
pursuant to SECTION 2.19 or other payment to which any Credit Party is entitled
from the Loan Parties pursuant hereto, any other Loan Document or any other
Obligations, and may charge the same to the Loan Account notwithstanding that an
Overadvance may result thereby; provided that the Administrative Agent may not
charge amounts owing in respect of Other Liabilities to the Loan Account to the
extent that an Overadvance may result thereby. The Administrative Agent shall
advise the Lead Borrower of any such advance or charge promptly after the making
thereof. Such action on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent’s rights and the Borrowers’
obligations under SECTION 2.17(a) or SECTION 2.17(b). Any amount which is added
to the principal balance of the Loan Account as provided in this SECTION 2.04(d)
shall bear interest at the interest rate then and thereafter applicable to Prime
Rate Loans determined by reference to the Prime.

SECTION 2.05 Overadvances.

(a) None of the Administrative Agent, the Collateral Agent and the Lenders shall
have any obligation to make any Revolving Credit Loan (including, without
limitation, any Swingline Loan) or to provide any Letter of Credit if an
Overadvance would result.

(b) The Administrative Agent may, in its discretion, make Permitted Overadvances
to the Borrowers without the consent of the Lenders and each Lender shall be
bound thereby. Any Permitted Overadvances may constitute Swingline Loans. The
making of a Permitted Overadvance is for the benefit of the Borrowers and shall
constitute a Revolving Credit Loan and an Obligation. Each Lender shall
participate in each Permitted Overadvance (including each Permitted Overadvance
made under SECTION 2.06(a) through the settlement thereof pursuant to SECTION
2.22). The obligation of each Lender to participate in each Permitted
Overadvance shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense

 

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or other right which such Lender may have against the Administrative Agent, any
Issuing Bank, the Swingline Lender, the Borrower or any other Person for any
reason whatsoever, (ii) the occurrence or continuance of a Default, or (iii) any
other occurrence, event or condition (including the failure to satisfy any
condition set forth in SECTION 4.02). The making of any such Permitted
Overadvance on any one occasion shall not obligate the Administrative Agent or
any Lender to make or permit any Permitted Overadvance on any other occasion or
to permit such Permitted Overadvances to remain outstanding, nor shall the
making of any such Permitted Overadvance modify or abrogate the Borrowers’
obligations under SECTION 2.17(a) and SECTION 2.17(b) hereof.

(c) The making by the Administrative Agent of a Permitted Overadvance shall not
modify or abrogate any of the provisions of (i) SECTION 2.13(g) regarding the
Lenders’ obligations to purchase participations with respect to Letter of Credit
Disbursements, or (ii) SECTION 2.06 and SECTION 2.22 regarding the Lenders’
obligations with respect to participations in Swingline Loans and settlements
thereof.

SECTION 2.06 Swingline Loans.

(a) The Swingline Lender is authorized by the Lenders to, and may in its sole
discretion make, Swingline Loans at any time (subject to SECTION 2.06(b)) to the
Borrowers up to the amount of the sum of (i) the Swingline Loan Ceiling, upon a
notice of Borrowing from Lead Borrower received by the Administrative Agent and
the Swingline Lender (which notice, at the Swingline Lender’s discretion, may be
submitted prior to 3:00 p.m. on the Business Day on which such Swingline Loan is
requested), plus (ii) any Permitted Overadvances; provided that the Swingline
Lender shall not be obligated to make any Swingline Loan. Swingline Loans shall
be Prime Rate Loans bearing interest with reference to the Prime Rate and shall
be subject to periodic settlement with the Lenders under SECTION 2.22 below. The
Lead Borrower may request, and the Swingline Lender may make, a Swingline Loan
notwithstanding that the Borrowers have not borrowed the full amount of the
lesser of the FILO Commitments or Incremental Availability at the time of such
request. Any Swingline Loan advanced by the Swingline Lender is made in reliance
on the agreements of the other Lenders set forth in this Agreement.

(b) The Lead Borrower’s request for a Swingline Loan shall be deemed a
representation that the applicable conditions for borrowing under SECTION 4.02
are satisfied (unless such conditions have been waived). If the conditions for
borrowing under SECTION 4.02 cannot in fact be fulfilled, (x) the Lead Borrower
shall give immediate notice (a “Noncompliance Notice”) thereof to the
Administrative Agent and the Swingline Lender, and the Administrative Agent
shall promptly provide each Lender with a copy of the Noncompliance Notice, and
(y) the Required Lenders may direct the Swingline Lender to, and the Swingline
Lender thereupon shall, cease making Swingline Loans (other than Permitted
Overadvances) until such conditions can be satisfied or are waived in accordance
with SECTION 9.01. Unless the Required Lenders so direct the Swingline Lender,
the Swingline Lender may, but is not obligated to, continue to make Swingline
Loans commencing one (1) Business Day after the Noncompliance Notice is
furnished to the Lenders. Notwithstanding the foregoing, no Swingline Loans
(other than Permitted Overadvances) shall be made pursuant to this SECTION
2.06(b) if the Tranche A Credit Extensions and/or the aggregate outstanding
amount of the Credit Extensions and Swingline Loans would exceed the limitations
set forth in SECTION 2.01.

 

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(c) Immediately upon the making of a Swingline Loan, each Tranche A Lender shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Swingline Lender a risk participation in such Swingline Loan in an
amount equal to the product of such Tranche A Lender’s Tranche A Commitment
Percentage times the amount of such Swingline Loan.

SECTION 2.07 Notes.

(a) Upon the request of any Lender, the Revolving Credit Loans made by such
Lender shall be evidenced by a Revolving Credit Note, duly executed on behalf of
the Borrowers, dated the Closing Date payable to such Lender in an aggregate
principal amount equal to such Lender’s Commitment.

(b) Upon the request of the Swingline Lender, the Revolving Credit Loans made by
the Swingline Lender with respect to Swingline Loans shall be evidenced by a
Swingline Note, duly executed on behalf of the Borrowers, dated the Closing
Date, payable to the Swingline Lender, in an aggregate principal amount equal to
the Swingline Loan Ceiling.

(c) Each Lender is hereby authorized by the Borrowers to endorse on a schedule
attached to each Note delivered to such Lender (or on a continuation of such
schedule attached to such Note and made a part thereof), or otherwise to record
in such Lender’s internal records, an appropriate notation evidencing the date
and amount of each Revolving Credit Loan from such Lender, each payment and
prepayment of principal of any such Revolving Credit Loan, each payment of
interest on any such Revolving Credit Loan and the other information provided
for on such schedule; provided, however, that the failure of any Lender to make
such a notation or any error therein shall not affect the obligation of any
Borrower to repay the Revolving Credit Loans made by such Lender in accordance
with the terms of this Agreement and the applicable Notes.

(d) Upon receipt of an affidavit and indemnity of a Lender as to the loss,
theft, destruction or mutilation of such Lender’s Note and upon cancellation of
such Note, the Borrowers will issue, in lieu thereof, a replacement Note in
favor of such Lender, in the same principal amount thereof and otherwise of like
tenor at such Lender’s expense.

SECTION 2.08 Interest on Revolving Credit Loans.

(a) Interest on Revolving Credit Loans.

(i) Subject to SECTION 2.12, each Prime Rate Loan made by a Lender shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as applicable) at a rate per annum that shall be equal to
the then Prime Rate plus the Applicable Margin for Prime Rate Loans.

(ii) Subject to SECTION 2.09 through SECTION 2.12, each LIBO Loan made by a
Lender shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal, during each Interest
Period applicable thereto, to the Adjusted LIBO Rate for such Interest Period,
plus the Applicable Margin for LIBO Loans.

 

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(b) Accrued interest on all Revolving Credit Loans shall be payable in arrears
on each Interest Payment Date applicable thereto, at the Termination Date and
after such Termination Date on demand.

SECTION 2.09 Conversion and Continuation of Revolving Credit Loans.

(a) The Lead Borrower shall have the right at any time, on three (3) Business
Days’ prior notice to the Administrative Agent (which notice, to be effective,
must be received by the Administrative Agent not later than 1:00 p.m. on the
third Business Day preceding the date of any conversion), (i) to convert any
outstanding Borrowings of Prime Rate Loans to Borrowings of LIBO Loans, or
(ii) to continue an outstanding Borrowing of LIBO Loans for an additional
Interest Period, or (iii) to convert any outstanding Borrowings of LIBO Loans to
a Borrowing of Prime Rate Loans, subject in each case to the following:

(i) No Borrowing of Revolving Credit Loans may be converted into, or continued
as, LIBO Loans at any time when any Event of Default has occurred and is
continuing (nothing contained herein being deemed to obligate the Borrowers to
incur Breakage Costs upon the occurrence and during the continuance of an Event
of Default unless the Obligations are accelerated);

(ii) If less than a full Borrowing of Revolving Credit Loans is converted, such
conversion shall be made pro rata among the Lenders based upon their Tranche A
Commitment Percentages (or FILO Commitment Percentages, as the case may be) in
accordance with the respective principal amounts of the Revolving Credit Loans
comprising such Borrowing held by such Lenders immediately prior to such
conversion;

(iii) The aggregate principal amount of Prime Rate Loans being converted into or
continued as LIBO Loans shall be in an integral of $1,000,000 and at least
$5,000,000;

(iv) Each Lender shall effect each conversion by applying the proceeds of its
new LIBO Loan or Prime Rate Loan, as the case may be, to its Revolving Credit
Loan being so converted;

(v) The Interest Period with respect to a Borrowing of LIBO Loans effected by a
conversion or in respect to the Borrowing of LIBO Loans being continued as LIBO
Loans shall commence on the date of conversion or the expiration of the current
Interest Period applicable to such continuing Borrowing, as the case may be;

(vi) A Borrowing of LIBO Loans may not be converted prior to the last day of an
Interest Period applicable thereto, unless the applicable Borrower pays all
Breakage Costs incurred in connection with such conversion; and

(vii) Each request for a conversion or continuation of a Borrowing of LIBO Loans
which fails to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one (1) month.

 

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(b) If the Lead Borrower does not give notice to convert any Borrowing of LIBO
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as LIBO Loans, in each case as provided in SECTION
2.09(a) above, such Borrowing shall automatically be converted to, or continued
as, as applicable, a Borrowing of LIBO Loans with an Interest Period of one
(1) month, at the expiration of the then-current Interest Period, provided that
if an Event of Default then exists and is continuing, such Borrowing shall be
converted to, or continued as a Prime Rate Loan. The Administrative Agent shall,
after it receives notice from the Lead Borrower, promptly give each Lender
notice of any conversion, in whole or part, of any Revolving Credit Loan made by
such Lender.

SECTION 2.10 Alternate Rate of Interest for Revolving Credit Loans.

If prior to the commencement of any Interest Period for a LIBO Borrowing, the
Administrative Agent:

(a) Reasonably determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate (in accordance with the terms of the definition thereof)
for such Interest Period; or

(b) Is advised by the Required Lenders that the Adjusted LIBO Rate for such
Interest Period will not adequately and fairly reflect the cost to such Required
Lenders of making or maintaining their Revolving Credit Loans included in such
Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Lead Borrower and
the Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Lead Borrower and the applicable
Lenders that the circumstances giving rise to such notice no longer exist (which
notice the Administrative Agent shall deliver promptly upon obtaining knowledge
of the same), (i) any Borrowing Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a LIBO Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a LIBO Borrowing, such
Borrowing shall be made as a Borrowing of Prime Rate Loans unless withdrawn by
the Lead Borrower.

SECTION 2.11 Change in Legality.

(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if any Change in Law occurring after the Closing Date shall make it
unlawful for a Lender to make or maintain a LIBO Loan or to give effect to its
obligations as contemplated hereby with respect to a LIBO Loan, then, by written
notice to the Lead Borrower, such Lender may (x) declare that LIBO Loans will
not thereafter be made by such Lender hereunder, whereupon any request by the
Lead Borrower for a LIBO Borrowing shall, as to such Lender only, be deemed a
request for a Prime Rate Loan unless such declaration shall be subsequently
withdrawn; and (y) require that all outstanding LIBO Loans made by such Lender
be converted to Prime Rate Loans, in which event all such LIBO Loans shall be
automatically converted to Prime Rate Loans as of the effective date of such
notice as provided in SECTION 2.09(b). In the event any Lender shall exercise
its rights hereunder, all payments and prepayments of principal which would
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Loans that would have been made by such Lender or the converted LIBO Loans of
such Lender, shall instead be applied to repay the Prime Rate Loans made by such
Lender in lieu of, or resulting from the conversion of, such LIBO Loans.

(b) For purposes of this SECTION 2.11, a notice to the Lead Borrower pursuant to
SECTION 2.11(a) above shall be effective, if lawful, and if any LIBO Loans shall
then be outstanding, on the last day of the then-current Interest Period; and
otherwise such notice shall be effective on the date of receipt by the Lead
Borrower.

SECTION 2.12 Default Interest.

Effective upon written notice from the Administrative Agent (which notice shall
be given only at the direction of the Required Lenders after the occurrence of
any Specified Default) and at all times thereafter while such Specified Default
is continuing, interest shall accrue on all overdue amounts owing by the
Borrowers (after as well as before judgment, as and to the extent permitted by
law) at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days as applicable) (the “Default Rate”) equal
to the rate (including the Applicable Margin for Tranche A Loans or FILO Loans,
as applicable) in effect from time to time plus two percent (2.00%) per annum
and such interest shall be payable on each Interest Payment Date (or any earlier
maturity of the Revolving Credit Loans).

SECTION 2.13 Letters of Credit.

(a) Upon the terms and subject to the conditions herein set forth, at any time
and from time to time after the date hereof and prior to the Termination Date,
the Lead Borrower on behalf of the Borrowers may request an Issuing Bank to
issue, and subject to the terms and conditions contained herein and in reliance
on the agreement of the Lenders set forth in this SECTION 2.13, the applicable
Issuing Bank shall issue, for the account of the Lead Borrower or a Restricted
Subsidiary, one or more Letters of Credit; provided, however, that no Letter of
Credit shall be issued if after giving effect to such issuance (i) the aggregate
Letter of Credit Outstandings shall exceed the Letter of Credit Sublimit, or
(ii) the Tranche A Credit Extensions and/or the aggregate Credit Extensions
(including Swingline Loans) would exceed the limitations set forth in SECTION
2.01(a); provided, further, that no Letter of Credit shall be issued unless an
Issuing Bank shall have received notice from the Administrative Agent that the
conditions to such issuance have been met (such notice shall be deemed given if
the Issuing Bank has not received notice that the conditions have not been met
within two Business Days of the initial request to the Issuing Bank and the
Administrative Agent pursuant to SECTION 2.13(h); provided further that any
Letter of Credit issued for the benefit of any Restricted Subsidiary that is not
a Borrower shall be issued naming the Lead Borrower as the account party on any
such Letter of Credit but such Letter of Credit may contain a statement that it
is being issued for the benefit of such Restricted Subsidiary; provided further
that an Issuing Bank shall not be required to issue any such Letter of Credit in
its reasonable discretion if: (A) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit, or any Applicable
Law relating to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for

 

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which the Issuing Bank is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the
Issuing Bank in good faith deems material to it, (B) the issuance of such Letter
of Credit would violate one or more policies of the Issuing Bank applicable to
letters of credit generally, or (C) any Lender is at such time a Deteriorating
Lender hereunder, unless the Issuing Bank has entered into reasonably
satisfactory arrangements with the Borrowers or such Lender to eliminate the
Issuing Bank’s risk of full reimbursement with respect to such Letter of Credit
and all other Letters of Credit as to which the Issuing Banks has actual or
potential fronting exposure with respect to such Deteriorating Lender (as
determined by each Issuing Bank in its sole discretion). A permanent reduction
of the Tranche A Commitments shall not require a corresponding pro rata
reduction in the Letter of Credit Sublimit; provided, however, that if the
Tranche A Commitments are reduced to an amount less than the Letter of Credit
Sublimit, then the Letter of Credit Sublimit shall be reduced to an amount equal
to (or, at Lead Borrower’s option, less than) the Tranche A Commitments. Any
Issuing Bank (other than Bank of America or any of its Affiliates) shall notify
the Administrative Agent in writing on each Business Day of all Letters of
Credit issued on the prior Business Day by such Issuing Bank. If the conditions
for borrowing under SECTION 4.02 cannot in fact be fulfilled, the Required
Lenders may direct the Issuing Banks to, and the Issuing Banks thereupon shall,
cease issue Letters of Credit (other than Permitted Overadvances) until such
conditions can be satisfied or are waived in accordance with SECTION 9.01.

(b) Each Standby Letter of Credit shall expire at or prior to the close of
business on the earlier of the date which is (i) one (1) year after the date of
the issuance of such Letter of Credit (or such other longer period of time as
the Administrative Agent and the applicable Issuing Bank may agree) (or, in the
case of any renewal or extension thereof, one (1) year after such renewal or
extension) and (ii) unless cash collateralized or otherwise credit supported to
the reasonable satisfaction of the Administrative Agent and the applicable
Issuing Bank (in which case, the expiry may extend no longer than twelve
(12) months after the then Latest Maturity Date), five (5) Business Days prior
to the then Latest Maturity Date; provided, however, that each Standby Letter of
Credit may, upon the request of the Lead Borrower, include a provision whereby
such Letter of Credit shall be renewed automatically (unless the applicable
Issuing Bank notifies the beneficiary thereof at least thirty (30) days prior to
the then-applicable expiration date that such Letter of Credit will not be
renewed) for additional consecutive periods of twelve (12) months or less (but
not beyond the date that is five (5) Business Days prior to the then Latest
Maturity Date, unless cash collateralized or otherwise credit supported to the
reasonable satisfaction of the Administrative Agent and the applicable Issuing
Bank (in which case, the expiry may extend no longer than twelve (12) months
after the then Latest Maturity Date)).

(c) Each Commercial Letter of Credit shall expire at or prior to the close of
business on the earlier of the date which is (i) one (1) year after the date of
the issuance of such Commercial Letter of Credit (or such other period as may be
acceptable to the Administrative Agent and the applicable Issuing Bank) and
(ii) unless cash collateralized or otherwise credit supported to the reasonable
satisfaction of the Administrative Agent and the applicable Issuing Bank (in
which case, the expiry may extend no longer than twelve (12) months after the
then Latest Maturity Date), five (5) Business Days prior to the then Latest
Maturity Date.

(d) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrowers by paying to the Administrative Agent an amount equal to such drawing
not later than 1:00 p.m. on the

 

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second Business Day immediately following the day that the Lead Borrower
receives notice of such drawing and demand for payment by the applicable Issuing
Bank, provided that (i) in the absence of written notice to the contrary from
the Lead Borrower, and subject to the other provisions of this Agreement, such
payments shall be financed when due with a Prime Rate Loan or Swingline Loan to
the applicable Borrower in an equivalent amount and, to the extent so financed,
the respective Borrower’s obligation to make such payment shall be discharged
and replaced by the resulting Prime Rate Loan or Swingline Loan, and (ii) in the
event that the Lead Borrower has notified the Administrative Agent that it will
not so finance any such payments, the applicable Borrowers will make payment
directly to the applicable Issuing Bank when due. The Administrative Agent shall
promptly remit the proceeds from any Loans made pursuant to clause (i) above in
reimbursement of a draw under a Letter of Credit to the applicable Issuing Bank.
Such Issuing Bank shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment under a Letter of Credit.
Such Issuing Bank shall promptly notify the Administrative Agent and the Lead
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether such Issuing Bank has made or will make payment thereunder; provided,
however, that any failure to give or delay in giving such notice shall not
relieve the Borrowers of their obligation to reimburse such Issuing Bank and the
Lenders with respect to any such payment.

(e) If any Issuing Bank shall make any Letter of Credit Disbursement, then,
unless the applicable Borrowers shall reimburse such Issuing Bank in full on the
date provided in SECTION 2.13(d) above, the unpaid amount thereof shall bear
interest at the rate per annum then applicable to Prime Rate Loans determined by
reference to the Prime Rate for each day from and including the date such
payment is made to, but excluding, the date that such Borrowers reimburse such
Issuing Bank therefor, provided, however, that, if such Borrowers fail to
reimburse any Issuing Bank when due pursuant to SECTION 2.13(d), then interest
shall accrue at the Default Rate. Interest accrued pursuant to this paragraph
shall be for the account of, and promptly remitted by the Administrative Agent,
upon receipt to, the applicable Issuing Bank, except that interest accrued on
and after the date of payment by any Lender pursuant to SECTION 2.13(g) to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.

(f) Immediately upon the issuance of any Letter of Credit by any Issuing Bank
(or the amendment of a Letter of Credit increasing the amount thereof), and
without any further action on the part of such Issuing Bank, such Issuing Bank
shall be deemed to have sold to each Tranche A Lender, and each such Tranche A
Lender shall be deemed unconditionally and irrevocably to have purchased from
such Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Tranche A Lender’s Tranche A Commitment
Percentage, in such Letter of Credit, each drawing thereunder and the
obligations of the Borrowers under this Agreement and the other Loan Documents
with respect thereto. Upon any change in the Tranche A Commitments pursuant to
SECTION 2.02, SECTION 2.15, SECTION 2.17 or SECTION 9.07 of this Agreement, it
is hereby agreed that with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations hereby created to reflect
the new Tranche A Commitment Percentages of the assigning and assignee Tranche A
Lenders and the Additional Commitment Lenders, if applicable. If any Letter of
Credit Outstandings remain upon the termination of the Tranche A Commitments,
and if the lesser of (i) FILO Commitments (determined without regard to any
concurrent termination of such FILO Commitments) or (ii) Incremental
Availability exceeds the FILO Credit Extensions (the “Excess Amount”), then upon
such termination of the Tranche A Commitments, the Tranche A Lenders shall be
deemed to have sold to each FILO Lender, and each FILO Lender shall be deemed
unconditionally

 

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and irrevocably to have so purchased from the Tranche A Lenders, without
recourse or warranty, an undivided interest and participation, to the extent of
such FILO Lender’s FILO Commitment Percentage in the lesser of such Excess
Amount or such undivided interest and participation of each Tranche A Lender in
the Letter of Credit Outstandings, each drawing thereunder and the obligations
of the Borrowers under this Agreement and the other Loan Documents with respect
thereto. Any action taken or omitted by any Issuing Bank under or in connection
with a Letter of Credit, if taken or omitted in the absence of gross negligence
or willful misconduct, shall not create for such Issuing Bank any resulting
liability to any Lender.

(g) In the event that any Issuing Bank makes any Letter of Credit Disbursement
and the Borrowers shall not have reimbursed such amount in full to such Issuing
Bank pursuant to this SECTION 2.13, such Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Tranche A Lender (or FILO
Lender, with respect to the Excess Amount, if applicable), of such failure, and
each Tranche A Lender (or FILO Lender, with respect to the Excess Amount, if
applicable) shall promptly and unconditionally pay to the Administrative Agent,
for the account of such Issuing Bank the amount of such Tranche A Lender’s (or
FILO Lender’s, with respect to the Excess Amount, if applicable) Tranche A
Commitment Percentage (or FILO Commitment Percentage, with respect to the Excess
Amount, if applicable) of such unreimbursed payment in Dollars and in same day
funds. If the applicable Issuing Bank so notifies the Administrative Agent and
the Administrative Agent so notifies the Tranche A Lenders (or FILO Lender, with
respect to the Excess Amount, if applicable) prior to 11:00 a.m. on any Business
Day, each such Tranche A Lender (or FILO Lender, with respect to the Excess
Amount, if applicable) shall make available to the applicable Issuing Bank such
Tranche A Lender’s (or FILO Lender’s, with respect to the Excess Amount, if
applicable) Tranche A Commitment Percentage (or FILO Commitment Percentage, with
respect to the Excess Amount, if applicable) of the amount of such payment on
such Business Day in same day funds (or if such notice is received by the
Tranche A Lenders (or FILO Lender, with respect to the Excess Amount, if
applicable) after 11:00 a.m. on the day of receipt, payment shall be made on the
immediately following Business Day in same day funds). If and to the extent such
Tranche A Lender (or FILO Lender, with respect to the Excess Amount, if
applicable) shall not have so made its Tranche A Commitment Percentage (or FILO
Commitment Percentage, with respect to the Excess Amount, if applicable) of the
amount of such payment available to the applicable Issuing Bank, such Tranche A
Lender (or FILO Lender, with respect to the Excess Amount, if applicable) agrees
to pay to such Issuing Bank forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent for the account of such Issuing Bank at the Federal
Funds Effective Rate. Each Tranche A Lender (or FILO Lender, with respect to the
Excess Amount, if applicable) agrees to fund its Tranche A Commitment Percentage
(or FILO Commitment Percentage, with respect to the Excess Amount, if
applicable) of such unreimbursed payment notwithstanding a failure to satisfy
any applicable lending conditions or the provisions of SECTION 2.01 or SECTION
2.06, or the occurrence of the Termination Date. The failure of any Tranche A
Lender (or FILO Lender, with respect to the Excess Amount, if applicable) to
make available to the applicable Issuing Bank its Tranche A Commitment
Percentage (or FILO Commitment Percentage, with respect to the Excess Amount, if
applicable) of any payment under any Letter of Credit shall neither relieve any
Tranche A Lender (or FILO Lender, with respect to the Excess Amount, if
applicable) of its obligation hereunder to make available to such Issuing Bank
its Tranche A Commitment Percentage (or FILO Commitment Percentage, with respect
to the Excess Amount, if applicable) of any payment under any Letter of Credit
on the date required, as specified above, nor increase the obligation of such
other Tranche A Lender (or FILO Lender, with respect to

 

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the Excess Amount, if applicable). Whenever any Tranche A Lender (or FILO
Lender, with respect to the Excess Amount, if applicable) has made payments to
any Issuing Bank in respect of any reimbursement obligation for any Letter of
Credit, such Tranche A Lender (or FILO Lender, with respect to the Excess
Amount, if applicable) shall be entitled to share ratably, based on its Tranche
A Commitment Percentage (or FILO Commitment Percentage, with respect to the
Excess Amount, if applicable), in all payments and collections thereafter
received on account of such reimbursement obligation.

(h) Whenever the Lead Borrower desires that any Issuing Bank issue a Letter of
Credit (or the amendment, renewal or extension (other than automatic renewal or
extensions) of an outstanding Letter of Credit), the Lead Borrower shall give to
the applicable Issuing Bank and the Administrative Agent at least two
(2) Business Days’ prior written (including, without limitation, by telegraphic,
telex, facsimile or cable communication) notice (or such shorter period as may
be agreed upon in writing by such Issuing Bank and the Lead Borrower) specifying
the date on which the proposed Letter of Credit is to be issued, amended,
renewed or extended (which shall be a Business Day), the Stated Amount of the
Letter of Credit so requested, the expiration date of such Letter of Credit, the
name and address of the beneficiary thereof, and the provisions thereof. If
requested by the applicable Issuing Bank, the Lead Borrower shall also submit
documentation on such Issuing Bank’s standard form in connection with any
request for the issuance, amendment, renewal or extension of a Letter of Credit,
provided that in the event of a conflict or inconsistency between the terms of
such documentation and this Agreement, the terms of this Agreement shall
supersede any inconsistent or contrary terms in such documentation and this
Agreement shall control.

(i) Subject to the limitations set forth below, the obligations of the Borrowers
to reimburse the Issuing Banks for any Letter of Credit Disbursement shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation
(it being understood that any such payment by the Borrowers shall be without
prejudice to, and shall not constitute a waiver of, any rights the Borrowers
might have or might acquire hereunder as a result of the payment by the
applicable Issuing Bank of any draft or the reimbursement by the Borrowers
thereof): (i) any lack of validity or enforceability of a Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right which a Borrower
may have at any time against a beneficiary of any Letter of Credit or against
any Issuing Bank or any of the Lenders, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged or fraudulent in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by any
Issuing Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not strictly comply with the terms of
such Letter of Credit; (v) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this SECTION 2.13, constitute a legal or equitable discharge of,
or provide a right of setoff against, any Loan Party’s obligations hereunder; or
(vi) the fact that any Event of Default shall have occurred and be continuing;
provided that the Borrowers shall have no obligation to reimburse any Issuing
Bank to the extent that such payment was made in error due to the gross
negligence, bad faith or willful misconduct of such Issuing Bank (as determined
by a court of competent jurisdiction or another independent tribunal having
jurisdiction). No Credit Party shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any

 

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error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the applicable Issuing Bank, provided that the foregoing shall
not be construed to excuse such Issuing Bank from liability to the Borrowers to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrowers to the extent permitted by
Applicable Law) suffered by the Borrowers that are caused by such Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence, bad faith or
willful misconduct on the part of any Issuing Bank (as determined by a court of
competent jurisdiction or another independent tribunal having jurisdiction),
such Issuing Bank shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
that appear on their face to be in compliance with the terms of a Letter of
Credit, the applicable Issuing Bank may, in its reasonable discretion, either
accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

(j) If any Specified Default shall occur and be continuing, on the Business Day
that the Lead Borrower receives notice from the Administrative Agent (which
notice may be given at the election of the Administrative Agent or at the
direction of the Required Lenders) demanding the deposit of cash collateral
pursuant to this paragraph, the applicable Loan Parties shall immediately
deposit in the applicable Cash Collateral Account an amount in cash equal to
103% of the Letter of Credit Outstandings owing by such Loan Parties as of such
date, plus any accrued and unpaid interest thereon. Each such deposit shall be
held by the Collateral Agent for the payment and performance of the Obligations.
The Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such Cash Collateral Account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and in the sole discretion of the Administrative Agent (at
the request of the Lead Borrower and at the Borrowers’ risk and expense), such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such Cash Collateral
Account shall be applied by the Administrative Agent to reimburse the Issuing
Banks for payments on account of drawings under Letters of Credit for which it
has not been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrowers for the Letter of
Credit Outstandings at such time or, if the maturity of the Revolving Credit
Loans has been accelerated, shall be applied to satisfy the other respective
Obligations of the applicable Borrower. If the applicable Borrower is required
to provide an amount of cash collateral hereunder as a result of the occurrence
and continuance of a Specified Default, such amount (to the extent not applied
as aforesaid) shall be returned promptly to the respective Borrower but in no
event later than two (2) Business Days after all Specified Defaults have been
cured or waived.

(k) [Reserved].

(l) Unless otherwise expressly agreed by the Issuing Bank and the Lead Borrower
when a Letter of Credit is issued (including any such agreement applicable to an
Existing Letter of Credit), (i) the rules of the ISP shall apply to each Standby
Letter of Credit, and (ii) the rules of the

 

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Uniform Customs and Practice for Documentary Credits, as most recently published
by the International Chamber of Commerce at the time of issuance shall apply to
each Commercial Letter of Credit.

SECTION 2.14 Increased Costs.

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender or any holding company of any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

(ii) impose on any Lender or any Issuing Bank or the London interbank market any
other condition affecting LIBO Loans made by such Lender or any Letter of Credit
or participation therein;

and the result of any of the foregoing shall be to increase the cost in any
material amount in excess of those incurred by similarly situated lenders to
such Lender of making or maintaining any LIBO Loan (or of maintaining its
obligation to make any such Revolving Credit Loan) or to increase the cost in
any material amount in excess of those incurred by similarly situated lenders to
such Lender or any Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount in any material respect of any sum
received or receivable by such Lender or such Issuing Bank hereunder (whether of
principal, interest or otherwise), then the Borrowers will pay to such Lender or
such Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or such Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.

(b) If any Lender or any Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or such Issuing Bank’s capital or on the capital of
such Lender’s or such Issuing Bank’s holding company, if any, as a consequence
of this Agreement or the Revolving Credit Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or
such Lender’s or such Issuing Bank’s holding company would have achieved but for
such Change in Law (taking into consideration such Lender’s or such Issuing
Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding
company with respect to capital adequacy), then from time to time the Borrowers
will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender’s or such Issuing Bank’s holding company for any such reduction
suffered.

(c) A certificate of a Lender or any Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or such Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
SECTION 2.14 and setting forth in reasonable detail the manner in which such
amount or amounts were determined shall be delivered to the Lead Borrower and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or such Issuing Bank, as the case may be, the amount shown as due on any such
certificate within fifteen (15) Business Days after receipt thereof.

 

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(d) Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this SECTION 2.14 shall not constitute a waiver of such
Lender’s or such Issuing Bank’s right to demand such compensation, provided that
the Borrowers shall not be required to compensate a Lender or any Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 90 days prior to the date that such Lender or such Issuing Bank, as the
case may be, notifies the Borrowers of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or such Issuing Bank’s
intention to claim compensation therefor, and provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 90 day period referred to above shall be extended to include the period
of retroactive effect thereof.

SECTION 2.15 Termination or Reduction of Commitments.

(a) Termination or Reduction of Tranche A Commitments. Upon at least two
(2) Business Days’ prior written notice to the Administrative Agent, the Lead
Borrower may, at any time, in whole permanently terminate, or from time to time
in part permanently reduce, the Tranche A Commitments. Each such reduction shall
be in the principal amount of $5,000,000 or any integral multiple thereof. Each
such reduction or termination shall (i) be applied ratably to the Tranche A
Commitments of each Lender and (ii) be irrevocable at the effective time of any
such termination or reduction. The Borrowers shall pay to the Administrative
Agent for application as provided herein (i) at the effective time of any such
termination (but not any partial reduction), all earned and unpaid fees under
the Fee Letter and all Unused Fees accrued on the Tranche A Commitments so
terminated, and (ii) at the effective time of any such reduction or termination,
all Breakage Costs incurred in connection therewith and any amount by which the
Tranche A Credit Extensions to the Borrowers outstanding on such date exceed the
amount to which the Tranche A Commitments are to be reduced effective on such
date.

(b) Reserved.

(c) Termination or Reduction of FILO Commitments after Closing Date. Upon at
least two (2) Business Days’ prior written notice to the Administrative Agent,
the Lead Borrower may reduce or terminate the FILO Commitments at any time
following the Closing Date and, notwithstanding any provisions of this Agreement
to the contrary, prepay the FILO Loans then outstanding without first repaying
the Tranche A Loans then outstanding, provided that after giving pro forma
effect to such termination and prepayment, and on a projected basis (on a
month-end basis) as of the end of each of the six (6) Fiscal Months thereafter,
Availability shall be greater than fifteen percent (15%) of the lesser of
(i) the then FILO Borrowing Base (or, if the FILO Commitments have been
terminated in whole, the then Tranche A Borrowing Base), and (ii) the then
Revolving Credit Ceiling. Each reduction of the FILO Commitments shall be in the
principal amount of $3,000,000 or any integral multiple thereof. The Borrowers
shall pay to the Administrative Agent for application as provided herein (i) at
the effective time of any such termination (but not any partial reduction), all
Unused Fees accrued on the FILO Commitments so terminated, and (ii) at the
effective time of any such reduction or termination, all Breakage Costs incurred
in connection therewith and any amount by which the FILO Credit Extensions to
the Borrowers outstanding on such date exceed the amount to which the FILO
Commitments are to be reduced effective on such date.

 

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(d) Termination of FILO Commitments Contemporaneously With Termination of
Tranche A Commitments. Notwithstanding the foregoing, in the event that all of
the Tranche A Commitments are terminated, the FILO Commitments shall be
terminated contemporaneously therewith, without further action by the
Administrative Agent, the Lead Borrower or any other Person.

(e) Termination Date. Upon the Termination Date, the Commitments of the Lenders
shall be terminated in full, and the Borrowers shall pay, in full and in cash,
all outstanding Revolving Credit Loans and all other outstanding Obligations
then owing by them to the Lenders (including, without limitation, all Breakage
Costs incurred in connection therewith).

SECTION 2.16 Optional Prepayment of Revolving Credit Loans; Reimbursement of
Lenders.

(a) Subject to the provisions of SECTION 2.16(b), the Borrowers shall have the
right at any time and from time to time to prepay without premium or penalty
(but subject to payment of Breakage Costs as provided herein) (without a
reduction in the Total Commitments) outstanding Revolving Credit Loans in whole
or in part, (x) with respect to LIBO Loans, upon at least two (2) Business Days’
prior written, telex or facsimile notice to the Administrative Agent, prior to
1:00 p.m., and (y) with respect to Prime Rate Loans, on the same Business Day as
such notice is furnished to the Administrative Agent, prior to 1:00 p.m.,
subject in each case to the following limitations:

(i) Subject to SECTION 2.17, all prepayments shall be paid to the Administrative
Agent for application (except as otherwise directed by the applicable Borrower),
first, to the prepayment of outstanding Swingline Loans, second, to the
prepayment of other outstanding Tranche A Loans (other than Swingline Loans)
ratably in accordance with each Tranche A Lender’s Tranche A Commitment
Percentage, third, to the prepayment of other outstanding FILO Loans ratably in
accordance with each FILO Lender’s FILO Commitment Percentage and fourth, if a
Specified Default then exists, to the funding of a cash collateral deposit in
the Cash Collateral Account in an amount equal to 103% of all Letter of Credit
Outstandings;

(ii) Subject to the foregoing, outstanding Prime Rate Loans of the Borrowers
shall be prepaid before outstanding LIBO Loans of the Borrowers are prepaid
(except as otherwise directed by the Lead Borrower). Each partial prepayment of
LIBO Loans shall be in an integral multiple of $1,000,000 (but in no event less
than $5,000,000). No prepayment of LIBO Loans shall be permitted pursuant to
this SECTION 2.16 prior to the last day of an Interest Period applicable
thereto, unless the Borrowers reimburse the Lenders for all Breakage Costs
associated therewith within five (5) Business Days of receiving a written demand
for such reimbursement which sets forth the calculation of such Breakage Costs
in reasonable detail. No partial prepayment of a Borrowing of LIBO Loans shall
result in the aggregate principal amount of the LIBO Loans remaining outstanding
pursuant to such Borrowing being less than $5,000,000 (unless all such
outstanding LIBO Loans are being prepaid in full); and

(iii) Each notice of prepayment shall specify the prepayment date, the principal
amount and Type of the Revolving Credit Loans to be prepaid and, in the case of
LIBO Loans, the Borrowing or Borrowings pursuant to which such Revolving Credit

 

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Loans were made. Each notice of prepayment shall be revocable, provided that,
within five (5) Business Days of receiving a written demand for such
reimbursement which sets forth the calculation of such Breakage Costs in
reasonable detail, the Borrowers shall reimburse the Lenders for all Breakage
Costs associated with the revocation of any notice of prepayment. The
Administrative Agent shall, promptly after receiving notice from the Lead
Borrower hereunder, notify each applicable Lender of the principal amount and
Type of the Revolving Credit Loans held by such Lender which are to be prepaid,
the prepayment date and the manner of application of the prepayment.

(b) Notwithstanding the provisions of SECTION 2.16(a) which generally permit
voluntary prepayments of the Revolving Credit Loans, except as provided in
SECTION 2.15(c) or SECTION 2.17, only if all Tranche A Loans are repaid in full
may the Borrowers repay or prepay amounts owed with respect to the FILO Loans,
provided, however, that any such repayment or prepayment shall not reduce or
terminate the FILO Commitments except to the extent provided in such Sections.
In addition, the Borrowers shall also repay the FILO Loans as required (i) under
SECTION 2.17 hereof, and (ii) upon any reduction or termination of the FILO
Commitments in accordance with the provisions of SECTION 2.15(d) hereof.

(c) The Borrowers shall reimburse each Lender as set forth below for any loss
incurred or to be incurred by the Lenders in the reemployment of the funds
(i) resulting from any prepayment (for any reason whatsoever, including, without
limitation, conversion to Prime Rate Loans or acceleration by virtue of, and
after, the occurrence and during the continuance of an Event of Default) of any
LIBO Loan required or permitted under this Agreement, if such Revolving Credit
Loan is prepaid prior to the last day of the Interest Period for such Revolving
Credit Loan or (ii) in the event that after the Lead Borrower delivers a notice
of borrowing under SECTION 2.04 in respect of LIBO Loans, such Revolving Credit
Loans are not made on the first day of the Interest Period specified in such
notice of borrowing for any reason other than a breach by such Lender of its
obligations hereunder or the delivery of any notice pursuant to SECTION 2.09,
SECTION 2.10 or SECTION 2.11, or (iii) in the event that after a Borrower
delivers a notice of commitment reduction under SECTION 2.15 or a notice of
prepayment under SECTION 2.16 in respect of LIBO Loans, such commitment
reductions or such prepayments are not made on the day specified in such notice
of reduction or prepayment. Such loss shall be the amount (herein, collectively,
“Breakage Costs”) as reasonably determined by such Lender as the excess, if any,
of (A) the amount of interest which would have accrued to such Lender on the
amount so paid, not prepaid or not borrowed at a rate of interest equal to the
Adjusted LIBO Rate for such Revolving Credit Loan (but specifically excluding
any Applicable Margin), for the period from the date of such payment or failure
to borrow or failure to prepay to the last day (x) in the case of a payment or
refinancing of a LIBO Loan with Prime Rate Loans prior to the last day of the
Interest Period for such Revolving Credit Loan or the failure to prepay a LIBO
Loan, of the then current Interest Period for such Revolving Credit Loan or
(y) in the case of such failure to borrow, of the Interest Period for such LIBO
Loan which would have commenced on the date of such failure to borrow, over
(B) the amount of interest which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the London interbank market. Any Lender demanding reimbursement for
such loss shall deliver to the Lead Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such Lender
and setting forth in reasonable detail the manner in which such amount was
determined and such amounts shall be due within ten (10) Business Days after the
receipt of such notice.

 

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(d) Whenever any partial prepayment of Revolving Credit Loans are to be applied
to LIBO Loans, such LIBO Loans shall be prepaid in the chronological order of
their Interest Payment Dates or as the Lead Borrower may otherwise designate in
writing.

SECTION 2.17 Mandatory Prepayment; Commitment Termination; Cash Collateral.

The outstanding Obligations shall be subject to prepayment as follows:

(a) If at any time the amount of the Tranche A Credit Extensions by the Tranche
A Lenders exceeds the lesser of the aggregate Tranche A Commitments or the
Tranche A Borrowing Base, the Borrowers will, immediately upon notice from the
Administrative Agent: (x) prepay the Tranche A Loans (including Swingline Loans)
in an amount necessary to eliminate such deficiency; and (y) if, after giving
effect to the prepayment in full of all outstanding Tranche A Loans such
deficiency has not been eliminated, deposit cash into the Cash Collateral
Account in an amount equal to 103% of the Letter of Credit Outstandings.

(b) If at any time the amount of the Credit Extensions by the Lenders causes
Availability to be less than zero, the Borrowers will, immediately upon notice
from the Administrative Agent: (x) prepay the Tranche A Loans in an amount
necessary to eliminate such deficiency; and (y) if, after giving effect to the
prepayment in full of all outstanding Tranche A Loans such deficiency has not
been eliminated, prepay the FILO Loans in an amount necessary to eliminate such
deficiency, and (z) if, after giving effect to the prepayment in full of all
outstanding Tranche A Loans and FILO Loans such deficiency has not been
eliminated, deposit cash into the Cash Collateral Account in an amount equal to
103% of the Letter of Credit Outstandings.

(c) The Revolving Credit Loans shall be repaid daily in accordance with (and to
the extent required under) the provisions of SECTION 2.18, to the extent then
applicable. All such payments shall be applied first to Tranche A Loans and
after prepayment in full thereof, to the FILO Loans.

(d) So long as a Liquidation has not been commenced and the conditions set forth
in SECTION 4.02 have been satisfied by the Loan Parties or waived by the
Administrative Agent, at the time of the delivery of each Borrowing Base
Certificate, Tranche A Loans shall be made by the Tranche A Lenders (without
regard to minimum or integral amounts for such Loans) to repay the FILO Credit
Extensions to extent the FILO Credit Extensions exceed the lesser of the FILO
Commitments or Incremental Availability as reflected in such Borrowing Base
Certificate.

(e) Except during the continuance of a Cash Dominion Event, any Net Proceeds,
Cash Receipts and other payments received by the Administrative Agent shall be
applied as the Lead Borrower shall direct the Administrative Agent in writing,
and otherwise consistent with the provisions of SECTION 2.16(b).

(f) Subject to the foregoing, except as otherwise directed by the Lead Borrower
(whose direction may be given only if a Cash Dominion Event has not occurred and
is not continuing), outstanding Prime Rate Loans shall be prepaid before
outstanding

 

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LIBO Loans are prepaid. No prepayment of LIBO Loans shall be permitted pursuant
to this SECTION 2.17 prior to the last day of an Interest Period applicable
thereto, unless the Borrowers reimburse the Lenders for all Breakage Costs
associated therewith within five (5) Business Days of receiving a written demand
for such reimbursement which sets forth the calculation of such Breakage Costs
in reasonable detail. In order to avoid such Breakage Costs, as long as no
Specified Default has occurred and is continuing, at the request of the Lead
Borrower, the Administrative Agent shall hold all amounts required to be applied
to LIBO Loans in the Cash Collateral Account and will apply such funds to the
applicable LIBO Loans at the end of the then pending Interest Period therefor
(provided that the foregoing shall in no way limit or restrict the
Administrative Agent’s or the Collateral Agent’s rights upon the occurrence and
during the continuance of any other Event of Default). No partial prepayment of
a Borrowing of LIBO Loans shall result in the aggregate principal amount of the
LIBO Loans remaining outstanding pursuant to such Borrowing being less than
$5,000,000. A prepayment of the Revolving Credit Loans pursuant to SECTION 2.16
or SECTION 2.17 shall not permanently reduce the Total Commitments.

(g) The Borrowers shall repay the Obligations as required pursuant to SECTION
2.15(e).

SECTION 2.18 Cash Management.

(a) Within thirty (30) days of the occurrence of a Specified Default, or
immediately upon the occurrence of any other Cash Dominion Event, the Borrowers,
upon the request of the Administrative Agent, shall deliver to the
Administrative Agent a schedule of all DDAs, that to the knowledge of the
Responsible Officers of the Loan Parties, are maintained by the Loan Parties,
which schedule includes, with respect to each depository (i) the name and
address of such depository; (ii) the account number(s) maintained with such
depository; and (iii) a contact person at such depository.

(b) Annexed hereto as Schedule 2.18(b) is a list describing, as of the Closing
Date, all arrangements to which any Loan Party is a party with respect to the
payment to such Loan Party of the proceeds of all credit card and debit card
charges for sales by such Loan Party.

(c) To the extent not previously delivered, each Loan Party shall:

(i) on or prior to the thirty (30) day anniversary of the Closing Date or such
later date as the Administrative Agent shall agree in writing, deliver to the
Collateral Agent notifications (each, a “Credit Card Notification”)
substantially in the form attached hereto as Exhibit G which have been executed
on behalf of such Loan Party and addressed to such Loan Party’s credit card and
debit card clearinghouses and processors listed on Schedule 2.18(b); and

(ii) on or prior to the ninety (90) day anniversary of the Closing Date or such
later date as the Administrative Agent shall agree in writing, in its sole
discretion (such date, the “Blocked Account Date”), enter into a blocked account
agreement (each, a “Blocked Account Agreement”), reasonably satisfactory to the
Administrative Agent, with any Blocked Account Bank with respect to the DDAs in
which material amounts (as

 

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reasonably determined by the Administrative Agent) of funds of any of the Loan
Parties from one or more DDAs are concentrated (excluding, for the avoidance of
doubt, the Designated Account (as defined below) and petty cash, payroll, trust
and tax withholding accounts subject to the limitations set forth in clause
(d) below) (including those existing as of the Closing Date and listed on
Schedule 2.18(c) attached hereto) (collectively, the “Material DDAs” and, to the
extent, subject to a Blocked Account Agreement, collectively, the “Blocked
Accounts”); provided that in the event that any DDA listed on Schedule 2.18(c)
is not subject to a Blocked Account Agreement on or prior to Blocked Account
Date, then not later than sixty (60) days after the Blocked Account Date or such
later date as the Administrative Agent shall agree in writing, in its sole
discretion, the Loan Parties shall cause any DDA which is not a Blocked Account
to be closed and have all funds therein transferred to a Blocked Account, and
all future deposits made to, a Blocked Account with the Collateral Agent or
another Lender.

(d) Each Credit Card Notification and Blocked Account Agreement entered into by
a Loan Party shall require (after delivery of notice to the Blocked Account Bank
from the Collateral Agent (which notice may (or shall at the direction of the
Required Lenders) be given by the Collateral Agent during the continuance of a
Cash Dominion Event)) the ACH or wire transfer on each Business Day (and whether
or not there is then an outstanding balance in the Loan Account) of all
available cash receipts (the “Cash Receipts”) (other than Uncontrolled Cash
which may be deposited into a segregated DDA which the Lead Borrower designates
in writing to the Administrative Agent as being the “Uncontrolled Cash
Account”(the “Designated Account”)) to the concentration account maintained by
the Administrative Agent at Bank of America (the “Concentration Account”), from:

(i) the sale of Inventory and other Collateral (whether or not constituting a
Prepayment Event, but excluding, until the Term Loan Facility is repaid in full,
any Term Priority Collateral);

(ii) all proceeds of collections of Accounts (whether or not constituting a
Prepayment Event);

(iii) all Net Proceeds on account of any Prepayment Event (other than, until the
Term Loan Facility or any Permitted Refinancing thereof is repaid in full, a
Prepayment Event arising in connection with the Term Priority Collateral);

(iv) each Blocked Account (including all cash deposited therein from each DDA,
net of any minimum balance as may be required to be kept in such DDA by the
institution at which such DDA is maintained to the extent set forth in the
applicable Blocked Account Agreement); and

(v) the cash proceeds of all credit card and debit card charges.

If any cash or Cash Equivalents owned by any Loan Party (other than (i) amounts
on deposit in the Designated Account, which funds, shall not be funded from, or
when withdrawn from the Designated Account, shall not be replenished by, funds
constituting proceeds of Collateral so long as such Cash Dominion Event
continues, (ii) petty cash accounts funded in the ordinary course of business,
the deposits in which shall not

 

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aggregate more than $10,000,000 or exceed $2,000,000 with respect to any one
account (or in each case, such greater amounts to which the Administrative Agent
may agree in its sole discretion), and (iii) payroll, trust and tax withholding
accounts funded in the ordinary course of business and required by Applicable
Law) are deposited to any account, or held or invested in any manner, otherwise
than in a Blocked Account (or a DDA which is swept daily to a Blocked Account),
then (a) the Borrowers shall cause all funds in such accounts or so held or so
invested to be transferred with such frequency as may be reasonably required by
the Administrative Agent to a Blocked Account (or a DDA which is swept daily to
a Blocked Account) and (b) the Collateral Agent may require the applicable Loan
Party to close such account and have all funds therein transferred to a Blocked
Account, and all future deposits made to a Blocked Account. In addition to the
foregoing, during the continuance of a Cash Dominion Event, the Loan Parties
shall provide the Collateral Agent with an accounting of the contents of the
Blocked Accounts, which shall identify, to the reasonable satisfaction of the
Collateral Agent, the proceeds from the Term Priority Collateral which were
deposited into a Blocked Account and swept to the Concentration Account. Upon
the receipt of (x) the contents of the Blocked Accounts, and (y) such
accounting, the Collateral Agent agrees to promptly remit to the agent under the
Term Loan Facility or any Permitted Refinancing thereof the proceeds of the Term
Priority Collateral received by the Administrative Agent.

(e) [Reserved].

(f) The Loan Parties may close Material DDAs or Blocked Accounts and/or open new
Material DDAs or Blocked Accounts, subject to the execution and delivery to the
Collateral Agent of appropriate Blocked Account Agreements (unless expressly
waived by the Collateral Agent) consistent with the provisions of this SECTION
2.18 and otherwise reasonably satisfactory to the Collateral Agent (provided
that, the Loan Parties shall not be required to deliver a Blocked Account
Agreement with respect to any Material DDA acquired by a Loan Party in
connection with a Permitted Acquisition until the date that is ninety (90) days
(or such later date as the Administrative Agent may agree) after the
consummation of such Permitted Acquisition). The Loan Parties shall furnish the
Collateral Agent with prior written notice of their intention to open or close a
Material DDA and the Collateral Agent shall promptly notify the Lead Borrower as
to whether the Collateral Agent shall require a Blocked Account Agreement with
the Person with whom such account will be maintained. Unless consented to in
writing by the Collateral Agent, the Borrowers shall not enter into any
agreements with credit card or debit card processors other than the ones
expressly contemplated herein unless contemporaneously therewith, a Credit Card
Notification, is executed and delivered to the Collateral Agent. The Borrowers
may also maintain one or more disbursement accounts (the “Disbursement
Accounts”) to be used by the Borrowers for disbursements and payments (including
payroll) in the ordinary course of business or as otherwise permitted hereunder.

(g) The Loan Parties shall establish and maintain cash management arrangements
and procedures, including Blocked Accounts, reasonably satisfactory to the
Administrative Agent.

(h) The Concentration Account shall at all times be under the sole dominion and
control of the Collateral Agent. Each Borrower hereby acknowledges and agrees
that (i) such Borrower has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall at all
times continue to be collateral security for all of the Obligations, and
(iii) the funds on deposit in the

 

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Concentration Account shall be applied as provided in this Agreement. In the
event that, notwithstanding the provisions of this SECTION 2.18, during the
continuation of a Cash Dominion Event, any Borrower receives or otherwise has
dominion and control of any such proceeds or collections, such proceeds and
collections shall be held in trust by such Borrower for the Collateral Agent,
shall not be commingled with any of such Borrower’s other funds or deposited in
any account of such Borrower and shall promptly be deposited into the
Concentration Account or dealt with in such other fashion as such Borrower may
be instructed by the Collateral Agent.

(i) Any amounts received in the Concentration Account at any time when all of
the Obligations then due have been and remain fully repaid shall be remitted to
the operating account of the Borrowers maintained with the Administrative Agent.

(j) The Collateral Agent shall promptly (but in any event within one Business
Day) furnish written notice to each Person with whom a Blocked Account is
maintained of any termination of a Cash Dominion Event.

(k) The following shall apply to deposits and payments under and pursuant to
this Agreement:

(i) Funds shall be deemed to have been deposited to the Concentration Account on
the Business Day on which deposited, provided that such deposit is available to
the Administrative Agent by 4:00 p.m. on that Business Day (except that if the
Obligations are being paid in full, by 2:00 p.m. Boston time, on that Business
Day);

(ii) Funds paid to the Administrative Agent, other than by deposit to the
Concentration Account, shall be deemed to have been received on the Business Day
when they are good and collected funds, provided that such payment is available
to the Administrative Agent by 4:00 p.m. on that Business Day (except that if
the Obligations are being paid in full, by 2:00 p.m. Boston time, on that
Business Day);

(iii) If a deposit to the Concentration Account or payment is not available to
the Administrative Agent until after 4:00 p.m. on a Business Day, such deposit
or payment shall be deemed to have been made at 9:00 a.m. on the then next
Business Day;

(iv) If any item deposited to the Concentration Account and credited to the Loan
Account is dishonored or returned unpaid for any reason, whether or not such
return is rightful or timely, the Administrative Agent shall have the right to
reverse such credit and charge the amount of such item to the applicable Loan
Account and the Borrowers shall indemnify the Secured Parties against all
out-of-pocket claims and losses resulting from such dishonor or return;

(v) All amounts received under this SECTION 2.18 shall be applied in the manner
set forth in SECTION 7.04.

SECTION 2.19 Fees.

 

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(a) The Borrowers shall pay to the Administrative Agent and MLPF&S, for their
respective accounts, the fees set forth in the Fee Letter as and when payment of
such fees is due as therein set forth.

(b) The Borrowers shall pay the Administrative Agent, for the account of the
Lenders, an aggregate fee (the “Unused Fee”) equal to the Applicable Unused Fee
Rate per annum (on the basis of actual days elapsed in a year of 360 days) of
the average daily balance of the Lenders’ respective Unused Commitment during
the Fiscal Quarter just ended (or relevant period with respect to the payment
being made on the Termination Date). The Unused Fee shall be paid in arrears, on
the first day of each Fiscal Quarter after the execution of this Agreement and
on the Termination Date. The Administrative Agent shall pay the Unused Fee to
the Lenders upon the Administrative Agent’s receipt of the Unused Fee based upon
each Lender’s pro rata share of the average daily balance of the Lenders’ Unused
Commitment.

(c) [Reserved].

(d) The Borrowers shall pay the Administrative Agent, for the account of the
Lenders who are then participating in the Letters of Credit, on the first day of
each Fiscal Quarter and on demand after the Termination Date, in arrears, a fee
calculated on the basis of a 360 day year, as applicable and actual days elapsed
(each, a “Letter of Credit Fee”), equal to the following per annum percentages
of the average face amount of the following categories of Letters of Credit
outstanding during the three month period then ended:

(i) Standby Letters of Credit: for the account of each Lender in accordance with
its Tranche A Commitment Percentage, at a per annum rate equal to the then
Applicable Margin for Tranche A Loans that are LIBO Loans;

(ii) Commercial Letters of Credit: for the account of each Lender in accordance
with its Tranche A Commitment Percentage, at a per annum rate equal to fifty
percent (50%) of the then Applicable Margin for Tranche A Loans that are LIBO
Loans;

(iii) After the occurrence and during the continuance of a Specified Default, at
any time that the Administrative Agent is not holding in the Cash Collateral
Account an amount in cash equal to 103% of the Letter of Credit Outstandings, as
of such date, plus accrued and unpaid interest on any unreimbursed drawings of
such Letter of Credit Outstandings, effective upon written notice from the
Administrative Agent (which notice may be given at the election of the
Administrative Agent or at the direction of the Required Lenders after the
occurrence of any Specified Default), the Letter of Credit Fees set forth in
clauses (i) and (ii) of this SECTION 2.19(d) shall be increased, at the option
of the Administrative Agent or the Required Lenders, by an amount equal to two
percent (2%) per annum.

(e) The Borrowers shall pay to each Issuing Bank, in addition to all Letter of
Credit Fees otherwise provided for herein, (i) the reasonable and customary fees
and charges of such Issuing Bank in connection with the negotiation, settlement
and amendment of each Letter of Credit issued by such Issuing Bank, and (ii) a
fronting fee (each, a “Fronting Fee”) equal to one-eighth of one percent
(0.125%) on the aggregate Stated Amount of all Letters of Credit. Each such
Fronting Fee shall be

 

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payable on the first day of each Fiscal Quarter and on demand after the
Termination Date, in arrears. In addition, the Borrowers shall pay directly to
each Issuing Bank for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
such Issuing Bank relating to letters of credit as from time to time in effect.

(f) All fees shall be paid on the dates due, in immediately available funds, to
the Administrative Agent for the account of the Administrative Agent and other
Credit Parties as provided herein. Once due, all fees shall be fully earned and
shall not be refundable under any circumstances.

SECTION 2.20 Maintenance of Loan Account; Statements of Account.

(a) The Administrative Agent shall maintain an account on its books in the name
of the Borrowers (each, the “Loan Account”) which will reflect (i) all Revolving
Credit Loans and other advances made by the Lenders to the Borrowers or for the
Borrowers’ account, (ii) all Letter of Credit Disbursements, fees and interest
that have become payable as herein set forth, and (iii) any and all other
monetary Obligations that have become payable.

(b) The Loan Account will be credited with all amounts received by the
Administrative Agent from the Borrowers or from other Persons for the Borrowers’
account, including all amounts received in the Concentration Account from the
Blocked Account Banks, and the amounts so credited shall be applied as set forth
in and to the extent required by SECTION 2.17 or SECTION 7.04, as applicable.
After the end of each month, the Administrative Agent shall send to the
Borrowers a statement accounting for the charges (including interest), loans,
advances and other transactions occurring among and between the Administrative
Agent, the Lenders and the Borrowers during that month. The monthly statements,
absent manifest error, shall be deemed presumptively correct.

SECTION 2.21 Payments; Sharing of Setoff.

(a) The Borrowers shall make each payment required to be made hereunder or under
any other Loan Document (whether of principal, interest, fees or reimbursement
of drawings under Letters of Credit, of amounts payable under SECTION 2.14,
SECTION 2.15(c), SECTION 2.16(c), SECTION 2.23, SECTION 9.04, SECTION 9.05 or
otherwise) prior to 2:00 p.m. on the date when due, in immediately available
funds, without condition or deduction for any defense, recoupment, setoff 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 at its offices at 100
Federal Street, Boston, Massachusetts (or such other place as the Administrative
Agent may direct), except payments to be made directly to each Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to SECTION 2.14, SECTION 2.15(a), SECTION 2.15(c), SECTION 2.15(e), SECTION
2.16(c), SECTION 2.23, SECTION 9.04 and SECTION 9.05 shall be made directly to
the Persons entitled thereto and payments pursuant to other Loan Documents shall
be made to the Persons specified therein. The Administrative Agent shall
distribute any such payments to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, except with respect to LIBO Borrowings, the date for
payment shall be extended to the next succeeding Business Day, and, if any
payment due with respect to LIBO Borrowings shall be due on a day that is not a

 

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Business Day, the date for payment shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is in the next calendar month,
in which event, the date of such payment shall be on the last Business Day of
subject calendar month, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.

(b) All funds received by and available to the Administrative Agent to pay
principal, unreimbursed drawings under Letters of Credit, interest, fees and
other amounts then due hereunder, shall be applied in accordance with the
provisions of SECTION 2.17 or SECTION 7.04 ratably among the parties entitled
thereto in accordance with the amounts of principal, unreimbursed drawings under
Letters of Credit, interest, fees and other amounts then due to such respective
parties, except to the extent that payments hereunder are provided to be made
solely to the FILO Lenders under SECTION 2.15. For purposes of calculating
interest due to a Lender, that Lender shall be entitled to receive interest on
the actual amount contributed by that Lender towards the principal balance of
the Revolving Credit Loans outstanding during the applicable period covered by
the interest payment made by the Borrowers. Any net principal reductions to the
Revolving Credit Loans received by the Administrative Agent in accordance with
the Loan Documents during such period shall not reduce such actual amount so
contributed, for purposes of calculation of interest due to that Lender, until
the Administrative Agent has distributed to the applicable Lender its Commitment
Percentage thereof. All credits against the Obligations shall be conditioned
upon final payment to the Administrative Agent of the items giving rise to such
credits. If any item credited to the Loan Account is dishonored or returned
unpaid for any reason, whether or not such return is rightful or timely, the
Administrative Agent shall have the right to reverse such credit and charge the
amount of such item to the Loan Account and the Borrowers shall indemnify the
Secured Parties against all claims and losses resulting from such dishonor or
return.

(c) Unless the Administrative Agent shall have received notice from the Lead
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Banks hereunder that the
Borrowers will not make such payment, the Administrative Agent may assume that
the Borrowers have made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the
applicable Issuing Bank, as the case may be, the amount due. In such event, if
the Borrowers have not in fact made such payment, then each of the Lenders or
the applicable Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank 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
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

(d) In accordance with the provisions of SECTION 8.16, if any Lender shall fail
to make any payment required to be made by it pursuant to this Agreement, 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 Section.

SECTION 2.22 Settlement Amongst Lenders.

 

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(a) The Swingline Lender may, at any time (but, in any event shall weekly, as
provided in SECTION 2.22(b)), on behalf of the Borrowers (which hereby authorize
the Swingline Lender to act on their behalf in that regard) request the
Administrative Agent to cause the Tranche A Lenders to make a Tranche A Loan
(which shall be a Prime Rate Loan) in an amount equal to such Lender’s Tranche A
Commitment Percentage of the outstanding amount of Swingline Loans made in
accordance with SECTION 2.06, which request may be made regardless of whether
the conditions set forth in Article IV have been satisfied but subject to the
last sentence of this SECTION 2.22(a). Upon such request, each Tranche A Lender
shall make available to the Administrative Agent the proceeds of such Tranche A
Loan for the account of the Swingline Lender. If the Swingline Lender requires a
Tranche A Loan to be made by the Tranche A Lenders and the request therefor is
received prior to 1:00 p.m. on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 p.m. that day; and, if the
request therefor is received after 1:00 p.m., then no later than 3:00 p.m. on
the next Business Day. The obligation of each such Tranche A Lender to transfer
such funds is irrevocable, unconditional and without recourse to or warranty by
the Administrative Agent or the Swingline Lender. If and to the extent any
Tranche A Lender shall not have so made its transfer to the Administrative
Agent, such Tranche A Lender agrees to pay to the Administrative Agent,
forthwith on demand, such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the Administrative Agent,
at the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation. In the event that the Borrowers have not borrowed the full amount
of the lesser of the FILO Commitments or Incremental Availability, the
Administrative Agent may (notwithstanding any contrary provision of this
Agreement but subject to SECTION 2.22(b)) require a settlement of any Swingline
Loan: first, from the making of FILO Loans, and thereupon the settlement
provisions of this SECTION 2.22(a) shall apply to such settlement by FILO
Lenders, mutatis mutandis, and second, from the making of Tranche A Revolver
Loans. If for any reason any Swingline Loan cannot be refinanced by a Tranche A
Loan in accordance with this SECTION 2.22(a) (including because the conditions
set forth in Article IV have not been satisfied), the request submitted by the
Swingline Lender as set forth above shall be deemed to be a request by the
Swingline Lender that each of the Tranche A Lenders fund its risk participation
in the relevant Swingline Loan and each Tranche A Lender’s payment to the
Administrative Agent for the account of the Swingline Lender described above
shall be deemed payment in respect of such participation.

(b) The amount of each Lender’s Tranche A Commitment Percentage or FILO
Commitment Percentage of outstanding Revolving Credit Loans (including
outstanding Swingline Loans) shall be computed weekly (or more frequently in the
Administrative Agent’s discretion) and shall be adjusted upward or downward
based on all Revolving Credit Loans (including Swingline Loans) and repayments
of Revolving Credit Loans (including Swingline Loans) received by the
Administrative Agent as of 3:00 p.m. on the first Business Day (such date, the
“Settlement Date”) following the end of the period specified by the
Administrative Agent.

(c) The Administrative Agent shall deliver to each of the Lenders promptly after
a Settlement Date a summary statement of the amount of outstanding Revolving
Credit Loans (including Swingline Loans) for the period and the amount of
repayments received for the period. As reflected on the summary statement,
(i) the Administrative Agent shall transfer to each Tranche A Lender or FILO
Lender, as applicable, its Tranche A Commitment Percentage or FILO Commitment
Percentage of repayments, and (ii) each Lender shall transfer to the
Administrative Agent (as provided below) or the Administrative Agent shall
transfer to each Lender, such amounts as are necessary to insure that,

 

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after giving effect to all such transfers, the amount of Revolving Credit Loans
made by each Tranche A Lender or FILO Lender, as applicable, with respect to
Revolving Credit Loans to the Borrowers (including Swingline Loans) shall be
equal to such Tranche A Lender’s Tranche A Commitment Percentage, or FILO
Lender’s FILO Commitment Percentage of Revolving Credit Loans, as applicable
(including Swingline Loans) outstanding as of such Settlement Date. If the
summary statement requires transfers to be made to the Administrative Agent by
the Lenders and is received prior to 1:00 p.m. on a Business Day, such transfers
shall be made in immediately available funds no later than 3:00 p.m. that day;
and, if received after 1:00 p.m., then no later than 3:00 p.m. on the next
Business Day. The obligation of each Lender to transfer such funds is
irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent. If and to the extent any Lender shall not have so made its
transfer to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Administrative Agent, at the Federal Funds Effective Rate.

SECTION 2.23 Taxes.

(a) Except as otherwise expressly provided in this SECTION 2.23, any and all
payments by or on account of any obligation of the Loan Parties hereunder or
under any other Loan Document shall be made free and clear of and without
deduction or withholding for any Indemnified Taxes or Other Taxes; provided,
however, that if a Loan Party or an Agent shall be required to deduct, withhold
or remit any such Taxes from such payments, then (i) in the case of any
Indemnified Taxes or Other Taxes, the sum payable shall be increased as
necessary so that after making all required deductions, withholdings, or
remittances for such Taxes (including deductions or withholdings applicable to
additional sums payable under this SECTION 2.23) the applicable Credit Party
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) the applicable withholding agent
shall make such deductions or withholdings, (iii) the applicable withholding
agent shall pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with Applicable Law and (iv) within thirty
(30) days after the date of such payment (or, if receipts or evidence are not
available within thirty (30) days, as soon as possible thereafter), if a
Borrower or any Facility Guarantor is the applicable withholding agent, the
applicable withholding agent shall furnish to such Agent or Lender (as the case
may be) the original or a copy of a receipt evidencing payment thereof or other
evidence acceptable to such Agent or Lender.

(b) In addition, the Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with Applicable Law, excluding, in each
case, such amounts that result from a Lender’s assignment, grant of a
participation, transfer or assignment to or designation of a new applicable New
Lending Office or other office for receiving payments under any Loan Document
(collectively, “Assignment Taxes”), except for Assignment Taxes resulting from
assignment or participation that is requested or required in writing by the
Borrower.

(c) (i) The Loan Parties shall indemnify each Credit Party, within ten (10) days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid or payable by such Credit Party on or with respect to any
payment by or on account of any obligation of the Loan Parties hereunder or
under any other Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this SECTION
2.23) and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto; provided that if any Loan Party reasonably believes that
such Taxes were not correctly or legally asserted, each Lender

 

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will use reasonable efforts to cooperate with such Loan Party to obtain a refund
of such Taxes so long as such efforts would not, in the sole determination of
such Lender, result in any unreimbursed additional costs, expenses or risks or
be otherwise disadvantageous to it; provided further, that the Loan Parties
shall not be required to compensate any Lender pursuant to this SECTION 2.23 for
any amounts incurred in any fiscal year for which such Lender is claiming
compensation if such Lender does not furnish notice of such claim within six
(6) months from the end of such fiscal year; provided further, that if the
circumstances giving rise to such claim have a retroactive effect, then the
beginning of such six (6) month period shall be extended to include such period
of retroactive effect. A certificate as to the amount of such payment or
liability delivered to the Lead Borrower by a Credit Party, or by the
Administrative Agent on its own behalf or on behalf of any other Credit Party,
setting forth in reasonable detail the manner in which such amount was
determined, shall be conclusive absent manifest error.

(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender
and the Issuing Bank shall, and does hereby, indemnify each Loan Party and each
Agent, and shall make payment in respect thereof within 10 days after demand
therefor, against any and all Excluded Taxes and any and all related losses,
claims, liabilities, penalties, interest and expenses (including the fees,
charges and disbursements of any counsel for such Loan Party or such Agent)
incurred by or asserted against such Loan Party or such Agent by any
Governmental Authority. Each Lender and the Issuing Bank hereby authorizes each
Agent and Loan Party to set off and apply any and all amounts at any time owing
to such Lender or the Issuing Bank, as the case may be, under this Agreement or
any other Loan Document against any amount due to the Administrative Agent under
this SECTION 2.23(e)(ii). The agreements in this SECTION 2.23(e)(ii) shall
survive the resignation and/or replacement of any Agent, any assignment of
rights by, or the replacement of, a Lender or the Issuing Bank, the termination
of the Commitments and the repayment, satisfaction or discharge of all other
Obligations.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by a Loan Party to a Governmental Authority, the Lead 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) (i) Each Lender (with respect to the relevant lending office) and Agent
shall, if reasonably requested by a Loan Party, deliver such documentation
prescribed by Applicable Law or as reasonably requested by such Loan Party, as
will enable such Loan Party to determine whether such Lender (with respect to
the relevant lending office) is subject to withholding under Applicable Law, is
entitled to an exemption from such withholding or is eligible for a reduced rate
of withholding with respect to payments to be made to such Lender under the Loan
Documents. In addition, each Lender (with respect to the relevant lending
office) and Agent shall deliver updated or appropriate documentation (including
any new documentation reasonably requested by the applicable withholding agent)
promptly upon the obsolescence or invalidity of any documentation previously
delivered by such party or promptly notify the Borrower. In addition, each
Lender (with respect to the relevant lending office) shall deliver to the
Borrowers and the Administrative Agent such other tax forms or other documents
as shall be prescribed by Applicable Law, to the extent applicable, (x) to
demonstrate that payments to such Lender (with respect to the relevant lending
office) under this Agreement and the other Loan Documents are exempt from any
United States federal withholding tax imposed pursuant to FATCA or (y) to allow
the Borrower and the Administrative Agent to determine the

 

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amount to deduct or withhold under FATCA from a payment hereunder. Solely for
purposes of the preceding sentence, “FATCA” shall include any amendments made to
FATCA after the date of this Agreement. Without limiting the foregoing:

(ii) Any Foreign Lender (with respect to the relevant lending office) and other
Credit Party shall deliver to the Lead Borrower and the Administrative Agent two
(2) originals of (i) either United States Internal Revenue Service Form W-8BEN
(claiming a treaty benefit) or Form W-8ECI, in each case, together with such
other documentation as is required under the Code, or any subsequent versions
thereof or successors thereto, or, (ii) in the case of a Foreign Lender (with
respect to the relevant lending office) claiming exemption from or reduction in
U.S. federal withholding Tax under Section 871(h) or 881(c) of the Code with
respect to payments of “portfolio interest” a (A) an appropriate Form W-8, or
any subsequent versions thereof or successors thereto and (B) a certificate in
the form attached hereto as Exhibit L, representing that such Foreign Lender
(with respect to the relevant lending office) or Credit Party (1) is not a bank
for purposes of Section 881(c) of the Code, (2) is not a 10 percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of any Loan Party and
(3) is not a controlled foreign corporation related to the Loan Parties (within
the meaning of Section 864(d)(4) of the Code)), in all cases, properly completed
and duly executed by such Foreign Lender or Credit Party claiming, as
applicable, complete exemption from or reduced rate of, U.S. federal withholding
tax on payments by the Loan Parties under this Agreement and the other Loan
Documents. Such forms shall be delivered by each Foreign Lender (with respect to
the relevant lending office) on or before the date it becomes a party to this
Agreement and on or before the date, if any, a Foreign Lender changes its
applicable lending office or uses an office not previously used to fund a
Revolving Credit Loan under this Agreement by designating a different lending
office (a “New Lending Office”). In addition, each such party shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by it. Notwithstanding any other provision of this SECTION 2.23(e), a
Lender shall not be required to deliver any form pursuant to this SECTION
2.23(e) that such Lender is not legally able to deliver.

(iii) Each Lender and other Credit Party that is a “United States person” as
defined under Section 7701(a)(30) of the Code (a “U.S. Lender”) shall deliver to
the Lead Borrower and the Administrative Agent such form or forms, certificates
or documentation, including two original copies of United States Internal
Revenue Service Form W-9, as reasonably requested by any Borrower to confirm or
establish that such Credit Party is not subject to deduction, withholding, or
backup withholding of United States federal income Tax with respect to any
payments to such Credit Party. Such forms shall be delivered by each Credit
Party to the Borrower on or before the date such Credit Party becomes a party to
this Agreement.

(f) [Reserved].

(g) If any Loan Party shall be required pursuant to this SECTION 2.23 to pay any
additional amount to, or to indemnify, any Credit Party, such Credit Party shall
use reasonable efforts to avoid or minimize any amounts which might otherwise be
payable pursuant to this SECTION 2.23(g); provided, however, that such efforts
shall not include the taking of any actions by such Credit Party that would
result in any Tax, costs or other expense to such Credit Party (other than a
Tax, cost or other expense for which such Credit Party shall have been
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Parties pursuant to this Agreement or otherwise) or any action which would or
might in the reasonable opinion of such Credit Party have an adverse effect upon
its business, operations or financial condition or otherwise be disadvantageous
to such Credit Party.

(h) [Reserved].

(i) If any Credit Party reasonably determines that it has actually and finally
realized, by reason of a refund, deduction or credit of any Taxes paid or
reimbursed by the Loan Parties pursuant to subsection (a), (b) or (c) above in
respect of payments under the Loan Documents (which refund, deduction or credit
is provided by the jurisdiction imposing such Taxes), a current monetary benefit
that it would otherwise not have obtained and that would result in the total
payments under this SECTION 2.23 exceeding the amount needed to make such Credit
Party whole, such Credit Party shall pay to the Lead Borrower, with reasonable
promptness following the date upon which it actually realizes such benefit, an
amount equal to the amount of such refund, deduction or credit, net of all out
of pocket expenses incurred in securing such refund, deduction or credit. This
SECTION 2.23(i) shall not be construed to require any Credit Party to make
available its Tax returns (or any other confidential information relating to its
Taxes) to any Loan Party.

SECTION 2.24 Mitigation Obligations; Replacement of Lenders.

(a) If any Lender requests compensation under SECTION 2.14 or cannot make
Revolving Credit Loans under SECTION 2.11, or if the Borrowers are required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to SECTION 2.23, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Revolving Credit 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 2.14 or SECTION 2.23, as
the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense. The Borrowers hereby agree to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment; provided, however, that the Borrowers shall not be
liable for such costs and expenses of a Lender requesting compensation if
(i) such Lender becomes a party to this Agreement on a date after the Closing
Date and (ii) the relevant Change in Law occurs on a date prior to the date such
Lender becomes a party hereto.

(b) (i) If any Lender requests compensation under SECTION 2.14 or cannot make
Revolving Credit Loans under SECTION 2.11 for thirty (30) consecutive days, or
(ii) if any Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to SECTION
2.23, or (iii) if any Lender becomes a Delinquent Lender or otherwise defaults
in its obligation to fund Revolving Credit Loans hereunder, then the Borrowers
may, at their sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
SECTION 9.07), 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, however, that (i) the
Lead Borrower shall have received the prior written consent of the
Administrative Agent, the Issuing Banks and the Swingline Lender, which consent
shall not be unreasonably withheld, (ii) such Lender shall have received payment
of an

 

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amount equal to the outstanding principal of its Revolving Credit Loans and
participations in unreimbursed drawings under Letters of Credit and Swingline
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 Borrowers (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under SECTION 2.14 or payments required to be made pursuant to
SECTION 2.23, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrowers to require such assignment
and delegation cease to apply.

SECTION 2.25 Designation of Lead Borrower as Borrowers’ Agent.

(a) Each Borrower hereby irrevocably designates and appoints the Lead Borrower
as such Borrower’s agent to obtain Revolving Credit Loans and Letters of Credit,
the proceeds of which shall be available to each Borrower for such uses as are
permitted under this Agreement. As the disclosed principal for its agent, each
Borrower shall be obligated to the Administrative Agent and each Lender on
account of Revolving Credit Loans so made and Letters of Credit so issued as if
made directly by the Lenders to such Borrower, notwithstanding the manner by
which such Revolving Credit Loans and Letters of Credit are recorded on the
books and records of the Lead Borrower and of any other Borrower.

(b) Each Borrower represents to the Credit Parties that it is an integral part
of a consolidated enterprise, and that each Loan Party will receive direct and
indirect benefits from the availability of the joint credit facility provided
for herein, and from the ability to access the collective credit resources of
the consolidated enterprise which the Loan Parties comprise. Each Borrower
recognizes that credit available to it hereunder is in excess of and on better
terms than it otherwise could obtain on and for its own account and that one of
the reasons therefor is its joining in the credit facility contemplated herein
with all other Borrowers. Consequently, each Borrower hereby assumes and agrees
to discharge all Obligations of each of the other Borrowers as if the Borrower
which is so assuming and agreeing were each of the other Borrowers.

(c) The Lead Borrower shall act as a conduit for each Borrower (including
itself, as a Borrower) on whose behalf the Lead Borrower has requested a
Revolving Credit Loan. None of the Agents nor any other Credit Party shall have
any obligation to see to the application of such proceeds.

(d) The authority of the Lead Borrower to request Revolving Credit Loans and
Letters of Credit on behalf of, and to bind, the Borrowers, shall continue
unless and until the Administrative Agent actually receives written notice of:
(i) the termination of such authority, and (ii) the subsequent appointment of a
successor Lead Borrower, which notice is signed by the respective Financial
Officers of each Borrower; and (iii) written notice from such successive Lead
Borrower accepting such appointment and acknowledging that from and after the
date of such appointment, the newly appointed Lead Borrower shall be bound by
the terms hereof, and that as used herein, the term “Lead Borrower” shall mean
and include the newly appointed Lead Borrower.

SECTION 2.26 Canadian Credit Facility.

 

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(a) Notwithstanding anything to the contrary contained in this Agreement, at any
time after the Closing Date, the Lead Borrower may request that one or more of
its Canadian Subsidiaries join this Credit Agreement as Canadian borrower(s)
pursuant to a separate Canadian credit facility provided by Canadian lenders
holding Canadian commitments that are subject to a separate Canadian borrowing
base (collectively, the “Canadian Credit Facility”); provided that the Canadian
Credit Facility (A) may be guaranteed by the Loan Parties so long as the
obligations in respect of any guarantee of the Canadian Credit Facility are
subordinate to the Obligations (other than any Cash Management Services, Bank
Products and other outstanding Other Liabilities) under SECTION 7.04; provided,
however, that if the Canadian Credit Facility is guaranteed by the Loan Parties
then the final maturity date of the Canadian Credit Facility shall not be
earlier than the then Latest Maturity Date; (B) shall be on terms and conditions
as determined by the Lead Borrower, the Canadian lenders and any collateral
agent for the Canadian lenders, subject to the approval of the Administrative
Agent (it being understood that (x) such terms and conditions may include,
without limitation, Canadian Credit Facility-specific borrowing base,
representations, warranties, covenants and Events of Default, interest rates,
fees, final maturity date, required prepayment provision as to the Canadian
borrowing base and post-Cash Dominion Event “waterfall” provisions with respect
to Canadian collateral and amendment and waiver provisions and (y) any upfront,
underwriting, arrangement or similar fees in respect of the Canadian Credit
Facility shall be agreed to by Lead Borrower and the Persons participating in
the Canadian Credit Facility and the arrangement thereof); (C) shall be subject
to closing conditions as may be determined by the Administrative Agent, the
Collateral Agent (or any of their respective Affiliates), the Canadian lenders
providing the Canadian Credit Facility and the Lead Borrower; (D) shall be
subject to the condition precedent that no Default shall have occurred and be
continuing immediately before or after giving effect thereto; (E) the aggregate
amount of the Canadian commitments under the Canadian Credit Facility shall not
exceed $50,000,000 and (F) all documentation in respect of the Canadian Credit
Facility shall be consistent with the foregoing and in form and substance
reasonably satisfactory to the Administrative Agent; and provided, further, that
no Lender shall be obligated to participate in the Canadian Credit Facility.

(b) The Lenders hereby irrevocably authorize the Administrative Agent and
Collateral Agent to enter into amendments to (including amendments and
restatements of) this Agreement and the other Loan Documents with the Loan
Parties, the Canadian Subsidiaries and the lenders participating in the Canadian
Credit Facility as may be necessary or desirable in order to establish the
Canadian Credit Facility, in each case on terms consistent with this SECTION
2.26. Notwithstanding the foregoing, each of the Administrative Agent and the
Collateral Agent shall have the right (but not the obligation) to seek the
advice or concurrence of the Required Lenders with respect to the Canadian
Credit Facility and any matter contemplated by this SECTION 2.26 and, if either
the Administrative Agent or the Collateral Agent seeks such advice or
concurrence, it shall be permitted to enter into such amendments in accordance
with any instructions actually received by such Required Lenders and shall also
be entitled to refrain from entering into such amendments unless and until it
shall have received such advice or concurrence; provided, however, that whether
or not there has been a request by the Administrative Agent or the Collateral
Agent for any such advice or concurrence, all such amendments entered into by
the Administrative Agent or the Collateral Agent under this SECTION 2.26 shall
be binding and conclusive on the Lenders.

SECTION 2.27 Extensions of Revolving Credit Commitments, Etc.

 

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(a) Notwithstanding anything to the contrary in this Agreement, pursuant to one
or more offers (each, an “Extension Offer”) made from time to time by the Lead
Borrower to all Lenders holding Tranche A Commitments or FILO Commitments, as
the case may be, with a like Maturity Date on a pro rata basis (based on the
aggregate Tranche A Commitments or FILO Commitments, as applicable, of all
Lenders with the same Maturity Date) and on the same terms to each such Lender,
the Lead Borrower may from time to time with the consent of any Lender that
shall have accepted such offer extend the maturity date of any Tranche A
Commitments or FILO Commitments, as the case may be, and otherwise modify the
terms of such Tranche A Commitments or FILO Commitments of such Lender pursuant
to the terms of the relevant Extension Offer (including, without limitation, by
increasing the interest rate or fees payable in respect of such Tranche A
Commitments or FILO Commitments and Credit Extensions made thereunder) (each, an
“Extension”, and each group of Tranche A Commitments or FILO Commitments as so
extended, as well as the original Tranche A Commitments or FILO Commitments not
so extended, being a “tranche”; any Extended Commitments (as defined below)
shall constitute a separate tranche of Commitments from the tranche of
Commitments from which they were converted), so long as the following terms are
satisfied: (i) no Default shall have occurred and be continuing at the time the
offering document in respect of an Extension Offer is delivered to the Lenders
or prior to or after giving effect to any Extended Commitments, (ii) except as
to interest rates, fees, final maturity date, premium, required prepayment dates
and participation in prepayments (which shall, subject to immediately succeeding
clauses (iii) and (iv), be determined by the Lead Borrower and MLPF&S and set
forth in the relevant Extension Offer), the Tranche A Commitments or FILO
Commitments of any Lender (an “Extending Lender”) extended pursuant to any
Extension (“Extended Commitments”) shall have the same terms as the tranche of
Commitments subject to such Extension Offer, (iii) the final maturity date of
any Extended Commitments shall be no earlier than the then Latest Maturity Date,
(iv) any Extended Commitments may participate on a pro rata basis or a less than
pro rata basis (but not greater than a pro rata basis) in any voluntary or
mandatory repayments or prepayments hereunder, in each case as specified in the
respective Extension Offer, (v) if the aggregate amount of Tranche A Commitments
or FILO Commitments in respect of which Lenders shall have accepted the relevant
Extension Offer shall exceed the maximum aggregate amount of Tranche A
Commitments or FILO Commitments offered to be extended by the Borrowers pursuant
to such Extension Offer, then the Tranche A Commitments or FILO Commitments (as
applicable) of such Lenders shall be extended ratably up to such maximum amount
based on the respective principal amounts (but not to exceed actual holdings of
record) with respect to which such Lenders have accepted such Extension Offer,
(vi) all documentation in respect of such Extension shall be consistent with the
foregoing and in form and substance reasonably satisfactory to the
Administrative Agent, (vii) any applicable Minimum Extension Condition shall be
satisfied unless waived by the Borrowers and (viii) any such Extension and
Extended Commitments (and the terms thereof) shall have been approved by the
Administrative Agent.

(b) If, at the time any Extension becomes effective, not all of the Revolving
Credit Commitments that were subject to the applicable Extension Offer shall
have been extended (such non-extended Revolving Credit Commitments with respect
to any Extension, the “Non-Extended Commitments”), then if the “effective
interest rate” (which, for this purpose, shall be reasonably determined by the
Administrative Agent and shall take into account any interest rate floors or
similar devices and be deemed to include (without duplication) all fees,
including upfront or similar fees or original issue discount (amortized over the
shorter of (x) the life of such new Extended Commitments and (y) the four years
following the date of the respective Extension) payable to Lenders with such new
Extended Commitments, but excluding any arrangement, structuring or other fees
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connection therewith that are not generally shared with the relevant extending
Lenders) in respect of extensions of credit under such new Extended Commitments
shall at any time (over the life of such new Extended Commitments) exceed the
“effective interest rate” applicable to extensions of credit under the
applicable Non-Extended Commitments by more than 1.00% (determined on the same
basis as provided in the first parenthetical in this sentence), then the
Applicable Margin applicable to extensions of credit under such Non-Extended
Commitments shall be increased to the extent necessary so that at all times
thereafter such Non-Extended Commitments do not receive less “effective interest
rate” than the “effective interest rate” applicable to extensions of credit
under such new Extended Commitments minus 1.00%.

(c) With respect to all Extensions consummated by the Lead Borrower pursuant to
this SECTION 2.27, (i) such Extensions shall not constitute voluntary or
mandatory payments or prepayments for purposes of SECTION 2.16 or SECTION 2.17
and (ii) no Extension Offer is required to be in any minimum amount or any
minimum increment, provided that the Lead Borrower may at its election specify
as a condition (a “Minimum Extension Condition”) to consummating any such
Extension that a minimum amount (to be determined and specified in the relevant
Extension Offer in the Borrowers’ sole discretion and may be waived by the
Borrowers) of Tranche A Commitments or FILO Commitments (as applicable) of any
or all applicable tranches be tendered. The Lenders hereby consent to the
Extensions and the other transactions contemplated by this SECTION 2.27
(including, for the avoidance of doubt, payment of any interest, fees or premium
in respect of any Extended Commitments on such terms as may be set forth in the
relevant Extension Offer) and hereby waive the requirements of any provision of
this Agreement or any other Loan Document that may otherwise prohibit any such
Extension or any other transaction contemplated by this SECTION 2.27.

(d) The Lenders hereby irrevocably authorize the Administrative Agent and
Collateral Agent to enter into amendments to this Agreement and the other Loan
Documents with the Borrowers and the other Loan Parties as may be necessary in
order to establish new tranches or sub-tranches in respect of Commitments so
extended and such technical amendments as may be necessary or appropriate in the
reasonable opinion of the Administrative Agent and the Borrowers in connection
with the establishment of such new tranches or sub-tranches, in each case on
terms consistent with this SECTION 2.27. Notwithstanding the foregoing, each of
the Administrative Agent and the Collateral Agent shall have the right (but not
the obligation) to seek the advice or concurrence of the Required Lenders with
respect to any matter contemplated by this SECTION 2.27(d) and, if either the
Administrative Agent or the Collateral Agent seeks such advice or concurrence,
it shall be permitted to enter into such amendments with the Borrowers in
accordance with any instructions actually received by such Required Lenders and
shall also be entitled to refrain from entering into such amendments with the
Borrowers unless and until it shall have received such advice or concurrence;
provided, however, that whether or not there has been a request by the
Administrative Agent or the Collateral Agent for any such advice or concurrence,
all such amendments entered into with the Lead Borrower by the Administrative
Agent or the Collateral Agent hereunder shall be binding and conclusive on the
Lenders. Without limiting the foregoing, in connection with any Extensions the
respective Loan Parties shall (at their expense) amend (and the Collateral Agent
is hereby directed to amend) any Mortgage that has a maturity date prior to the
then Latest Maturity Date so that such maturity date is extended to the then
Latest Maturity Date (or such later date as may be advised by local counsel to
the Collateral Agent).

 

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(e) In connection with any Extension, the Lead Borrower shall provide the
Administrative Agent at least 5 Business Days’ (or such shorter period as may be
agreed by the Administrative Agent in its sole discretion) prior written notice
thereof, and shall agree to such procedures, if any, as may be established by,
or acceptable to, the Administrative Agent, in each case acting reasonably to
accomplish the purposes of this SECTION 2.27.

(f) This SECTION 2.27 shall supersede any provisions in SECTION 2.21 or SECTION
9.01 to the contrary.

SECTION 2.28 Obligations of the Lenders Several. The obligations of the Lenders
hereunder to make Loans, to fund participations in Letters of Credit and
Swingline Loans and to make payments pursuant to hereunder are several and not
joint. The failure of any Lender to make any Loan, to fund any such
participation or to make any payment hereunder on any date required under this
Agreement shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan, to purchase its participation or to make its
payment hereunder.

SECTION 2.29 Cash Collateral Generally. All cash collateral required to be
maintained pursuant to SECTION 2.13, SECTION 2.16, SECTION 2.17, or SECTION 7.02
with respect to Letters of Credit, or pursuant to SECTION 8.16 with respect to a
Delinquent Lender (other than credit support not constituting funds subject to
deposit) shall be maintained in a cash collateral account. Each of the Loan
Parties, and to the extent provided by any Lender, such Lender, hereby grants to
(and subjects to the control of) the Administrative Agent, for the benefit of
the Administrative Agent, the Issuing Banks and the Lenders (including the
Swingline Lender), and agrees to maintain, a first priority security interest in
all such cash, deposit accounts and all balances therein, and all other property
so provided as collateral, and in all proceeds of the foregoing, all as security
for the obligations to which such cash collateral may be applied. If at any time
the Administrative Agent determines that such cash collateral is subject to any
right or claim of any Person other than the Administrative Agent as herein
provided, or that the total amount of such cash collateral is less than the
applicable obligations secured thereby, the Loan Parties or the relevant
Delinquent Lender will, promptly upon demand by the Administrative Agent, pay or
provide to the Administrative Agent additional cash collateral in an amount
sufficient to eliminate such deficiency. Notwithstanding anything to the
contrary contained in this Agreement, cash collateral provided under hereunder
in respect of Letters of Credit or Swingline Loans shall be held and applied to
the satisfaction of the specific obligations to fund participations in Letters
of Credit or Swingline Loans (including, as to cash collateral provided by a
Delinquent Lender, any interest accrued on such obligation) and other
obligations for which the cash collateral was so provided, prior to any other
application of such property as may be provided for herein.

ARTICLE III

Representations and Warranties

To induce the Credit Parties to make the Revolving Credit Loans (including
Swingline Loans) and to issue Letters of Credit, the Loan Parties, jointly and
severally, make the following representations and warranties to each Credit
Party with respect to each Loan Party:

 

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SECTION 3.01 Existence, Qualification and Power; Compliance with Laws.

Each Loan Party and each of its Restricted Subsidiaries (a) is a Person duly
organized or formed, validly existing and in good standing under the Applicable
Laws of the jurisdiction of its incorporation or organization, (b) has all
requisite power and authority to (i) own or lease its assets and carry on its
business and (ii) execute, deliver and perform its obligations under the Loan
Documents to which it is a party (including, with respect to the Borrowers, to
borrow money and request Letters of Credit hereunder), (c) is duly qualified and
in good standing under the Applicable Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, (d) is in compliance with all Applicable Laws,
orders, writs, injunctions and orders and (e) has all requisite governmental
licenses, authorizations, consents and approvals to operate its business as
currently conducted; except in each case referred to in clause (c), (d) or (e),
to the extent that failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Schedule 3.01 annexed
hereto sets forth, as of the Closing Date, each Loan Party’s name as it appears
in official filings in its state of incorporation or organization, its state of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization, and its federal employer
identification number.

SECTION 3.02 Authorization; No Contravention.

The execution, delivery and performance by each Loan Party of each Loan Document
to which such Person is a party (a) are within such Loan Party’s corporate or
other powers and have been duly authorized by all necessary corporate or other
organizational action, and (b) do not and will not (i) contravene the terms of
any of such Person’s Organization Documents, (ii) conflict with or result in any
breach or contravention of, or the creation of (or requirement to create) any
Lien (other than Liens permitted under SECTION 6.01) under or require any
payment to be made under (x) any contractual obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Restricted Subsidiaries or (y) any material order, injunction, writ or decree of
any Governmental Authority or any arbitral award to which such Person or its
property is subject; or (iii) violate any material Applicable Law; except with
respect to any conflict, breach or contravention or payment (but not creation of
Liens) referred to in clause (ii)(x), to the extent that such conflict, breach,
contravention or payment, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

SECTION 3.03 Governmental Authorization; Other Consents.

No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person is necessary
or required in connection with (a) the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document, (b) the grant by any Loan Party of the Liens granted by it pursuant to
the Security Documents, (c) the perfection or maintenance of the Liens created
under the Security Documents (including the priority thereof) or (d) the
exercise by the Administrative Agent, the Collateral Agent or any Lender of
their rights under the Loan Documents or the remedies in respect of the
Collateral pursuant to the Security Documents, except for (i) filings necessary
to perfect the Liens on the Collateral granted by the Loan Parties in favor of
the Secured Parties, (ii) the approvals, consents, exemptions, authorizations,
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notices and filings which have been duly obtained, taken, given or made and are
in full force and effect (except to the extent not required to be obtained,
taken, given or made or to be in full force and effect pursuant the Collateral
and Guarantee Requirement) and (iii) those approvals, consents, exemptions,
authorizations or other actions, notices or filings, the failure of which to
obtain or make, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

SECTION 3.04 Binding Effect.

This Agreement and each other Loan Document has been duly executed and delivered
by each Loan Party that is party thereto. This Agreement and each other Loan
Document constitutes, a legal, valid and binding obligation of each such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and by general principles of equity.

SECTION 3.05 Financial Statements; No Material Adverse Effect.

(a) (i) [Reserved].

(ii) The Audited Financial Statements fairly present in all material respects
the financial condition of the Lead Borrower and its Subsidiaries as of the
dates thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the periods covered
thereby, except as otherwise expressly noted therein.

(iii) The Unaudited Financial Statements fairly present in all material respects
the financial condition of the Lead Borrower and its Subsidiaries as of the
dates thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the periods covered
thereby, except as otherwise expressly noted therein.

(b) The Financial Performance Projections attached hereto as Schedule 3.05(b)
(which includes pro forma consolidated balance sheets, statements of income and
cash flows, the FILO Borrowing Base, the Tranche A Borrowing Base and
Availability prepared (i) on a monthly basis for the 2012 Fiscal Year and
(ii) on an annual basis for the 2013, 2014 and 2015 Fiscal Years), which have
been furnished to the Administrative Agent prior to the Closing Date, have been
prepared in good faith on the basis of the assumptions stated therein, which
assumptions were believed to be reasonable at the time of preparation of such
forecasts, it being understood that actual results may vary from such forecasts
and that such variations may be material.

(c) Since the January 29, 2011, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

(d) As of the Closing Date, neither Holdings, the Lead Borrower nor any
Restricted Subsidiary has any Indebtedness or other obligations or liabilities,
direct or contingent

 

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(other than (i) the liabilities reflected on Schedule 6.03, (ii) obligations
arising under this Agreement and the other Loan Documents, (iii) the Term Loan
Facility and the Senior Notes, and (iv) liabilities incurred in the ordinary
course of business) that, either individually or in the aggregate, have had or
could reasonably be expected to have a Material Adverse Effect.

SECTION 3.06 Litigation.

There are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of any Loan Party, threatened in writing or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, by or against
Holdings, the Lead Borrower or any of its Restricted Subsidiaries or against any
of their properties or revenues that (a) either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, or
(b) involve any of the Loan Documents, which could reasonably be expected to
have a Material Adverse Effect.

SECTION 3.07 No Default.

Neither Holdings, the Lead Borrower nor any Restricted Subsidiary is in default
under or with respect to, or a party to, any contractual obligation or Material
Indebtedness that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

SECTION 3.08 Ownership of Property; Liens.

(a) Each Loan Party and each of its Restricted Subsidiaries has good record and
marketable title in fee simple to, or valid leasehold interests in, or easements
or other limited property interests in, all real property necessary in the
ordinary conduct of its business, free and clear of all Liens except (i) for
minor defects in title that do not materially interfere with its ability to
conduct its business or to utilize such assets for their intended purposes,
(ii) Liens permitted by SECTION 6.01 and except (iii) where the failure to have
such title could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

(b) Schedule 3.08(b)(i) sets forth the address (including county) of all Real
Estate that is owned by the Loan Parties as of the Closing Date. Schedule
3.08(b)(ii) sets forth the address of all Real Estate that is leased by the Loan
Parties as of the Closing Date. Except as would not reasonably be expected to
result in a Material Adverse Effect, to the knowledge of the Responsible
Officers of the Loan Parties each of such Leases is in full force and effect and
the Loan Parties are not in default of the terms thereof.

(c) As of the Closing Date, except as otherwise disclosed in writing to the
Collateral Agent, (i) no Loan Party has received any notice of, nor has any
knowledge of, the occurrence (and still pending as of the Closing Date) or
pendency or contemplation of any Casualty Event affecting all or any portion of
a Mortgaged Property, and (ii) no Mortgage encumbers improved Mortgaged Property
that is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards within the meaning
of the Flood Laws unless Evidence of Flood Insurance has been delivered to the
Collateral Agent.

SECTION 3.09 Environmental Compliance.

 

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(a) There are no claims, actions, suits, or proceedings alleging potential
liability or responsibility for violation of, or otherwise relating to, any
Environmental Law that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(b) Except as specifically disclosed in Schedule 3.09(b) or except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (i) none of the properties currently or formerly owned, leased
or operated by any Loan Party or any of its Restricted Subsidiaries is listed or
proposed for listing on the NPL or on the CERCLIS or any analogous foreign,
state, provincial or local list or is adjacent to any such property; (ii) to the
knowledge of the Loan Parties, there are no, and never have been, any
underground or aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or have
been treated, stored or disposed of on any property currently owned, leased or
operated by any Loan Party or any of its Restricted Subsidiaries or, to its
knowledge, on any property formerly owned or operated by any Loan Party or any
of its Restricted Subsidiaries; (iii) to the knowledge of the Loan Parties,
there is no asbestos or asbestos-containing material, the renewal or remediation
of which is required by any Environmental Law, on any property currently owned
or operated by any Loan Party or any of its Restricted Subsidiaries; and (iv) to
the knowledge of the Loan Parties, Hazardous Materials have not been released,
discharged or disposed of by any Person on any property currently or formerly
owned, leased or operated by any Loan Party or any of its Restricted
Subsidiaries and Hazardous Materials have not otherwise been released,
discharged or disposed of by any of the Loan Parties and their Restricted
Subsidiaries at any other location.

(c) The properties owned, leased or operated by the Loan Parties and their
Restricted Subsidiaries do not contain any Hazardous Materials in amounts or
concentrations which (i) constitute, or constituted a violation of, (ii) require
remedial action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, remedial actions and liabilities,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

(d) Except as specifically disclosed in Schedule 3.09(d), neither any Loan Party
nor any of their Restricted Subsidiaries is undertaking, or has completed,
either individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law except
for such investigation or assessment or remedial or response action that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

(e) All Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
any Loan Party or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result, individually or in the aggregate, in a Material
Adverse Effect.

(f) Except as would not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, none of the Loan Parties and their
Subsidiaries has contractually assumed any liability or obligation under or
relating to any Environmental Law.

 

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(g) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not require any
notification, registration, filing, reporting, disclosure, investigation,
remediation or cleanup pursuant to any applicable Environmental Law, except for
any requirement the noncompliance with which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

(h) As of the Closing Date, the Lead Borrower has made available to the
Administrative Agent and the Lenders all material documents, studies, and
reports in the possession, custody or control of the Loan Parties concerning
compliance with or liability under Environmental Law, including those concerning
the actual or suspected existence of Hazardous Material at Real Estate or
facilities currently or formerly owned, operated, leased or used by the Loan
Parties which could reasonably be expected to have a Material Adverse Effect.

SECTION 3.10 Taxes.

Except as set forth in Schedule 3.10 and except as could not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, Holdings, the Lead Borrower and its Restricted Subsidiaries have
timely filed all federal, state, provincial and other tax returns and reports
required to be filed, and have timely paid all federal, state, provincial and
other Taxes, assessments, fees and other governmental charges levied or imposed
upon them or their properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate actions
diligently conducted and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed Tax deficiency or assessment known to
any Loan Party against any Loan Party or any Restricted Subsidiary that would,
if made, individually or in the aggregate, have a Material Adverse Effect.

SECTION 3.11 ERISA; Plan Compliance.

(a) Except as set forth in Schedule 3.11 or as could not, either individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
each Plan is in compliance in with the applicable provisions of ERISA, the Code
and other federal or state Applicable Laws (and the regulations and published
interpretations thereunder).

(b) (i) As of the Closing Date, no Plan is a Multiemployer Plan; nor is any Plan
subject to Section 302 or Title IV of ERISA or Section 412 of the Code; and
(ii) as of the Closing Date, neither any Loan Party nor any ERISA Affiliate nor
any predecessor thereof has in the past six years (A) sponsored, maintained or
contributed to, any Plan subject to Title IV of ERISA or (B) contributed to any
Multiemployer Plan.

(c) (i) No Plan has an “accumulated funding deficiency” (as defined in
Section 412 of the Code), whether or not waived; (ii) neither any Loan Party nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iii) neither any Loan Party nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (iv) neither any Loan Party nor any
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transaction that could be subject to Sections 4069 or 4212(c) of ERISA, except,
with respect to each of the foregoing clauses of this SECTION 3.11(c), as could
not reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.

(d) The Loan Parties are in compliance with the applicable provisions of ERISA,
the Code, and other federal or state Applicable Laws with respect to each Plan,
except where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect. No fact or situation that may reasonably be expected to
result in a Material Adverse Effect exists in connection with any Plan.

SECTION 3.12 Subsidiaries; Equity Interests.

As of the Closing Date, neither the Lead Borrower nor any Loan Party has any
Subsidiaries other than those specifically disclosed in Schedule 3.12, and all
of the outstanding Capital Stock in their respective Subsidiaries has been
validly issued, is fully paid and nonassessable and all Capital Stock owned by
the Lead Borrower or a Loan Party is owned free and clear of all Liens except
(i) those created under the Security Documents, (ii) those to secure the Term
Loan Facility (which Liens shall be subject to the Intercreditor Agreement), and
(iii) any nonconsensual Lien that is permitted under SECTION 6.01. As of the
Closing Date, Schedule 3.12 (a) sets forth the name and jurisdiction of each
Subsidiary, and (b) sets forth the ownership interest of the Lead Borrower and
any other Subsidiary in each Subsidiary, including the percentage of such
ownership.

SECTION 3.13 Margin Regulations; Investment Company Act.

(a) No Loan Party or Restricted Subsidiary is engaged nor will it engage,
principally or as one of its important activities, in the business of purchasing
or carrying Margin Stock, or extending credit for the purpose of purchasing or
carrying Margin Stock and no proceeds of any Revolving Credit Loan (including
Swingline Loans) or drawings under any Letter of Credit will be used for the
purpose of purchasing or carrying Margin Stock, or any other purpose that
violates Regulation U. The value of the Margin Stock at any time owned by the
Loan Parties and their Subsidiaries at any time a Credit Extension constitutes a
“purpose credit” (within the meaning of Regulation U) does not exceed
twenty-five percent (25%) of the value of the assets of the Loan Parties and
their Subsidiaries taken as a whole.

(b) None of Holdings, the Lead Borrower or any Subsidiary is or is required to
be registered as an “investment company”, or is subject to regulation (with
respect to which it is not otherwise exempt), under the Investment Company Act
of 1940.

SECTION 3.14 Disclosure.

No report, financial statement, confidential information, memorandum,
certificate or other written information furnished by or on behalf of any Loan
Party (other than information of a general economic nature) to any Credit Party
in connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder or under any other Loan Document (as
modified or supplemented by other information so furnished) when taken as a
whole contains or will contain any material misstatement of fact or omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances

 

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under which they were or will be made, not materially misleading; provided that
with respect to projected financial information and pro forma financial
information, each of Holdings and the Lead Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time of preparation; it being understood that such projections
may vary from actual results and that such variances may be material.

SECTION 3.15 Intellectual Property; Licenses, Etc.

Schedule 3.15 sets forth, as of the Closing Date, with respect to each Loan
Party a list of all of the registered Intellectual Property owned by such Loan
Party and all applications for the registrations or issuance thereof. Each such
registration and application that is reasonably necessary to the business of
such Loan Party is subsisting. Each of the Loan Parties and their Subsidiaries
own, license or possess the right to use, all of the trademarks, service marks,
trade names, domain names, copyrights, patents, patent rights, licenses,
technology, software, know-how database rights, design rights and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses as currently
conducted, and, without conflict with the rights of any Person, except to the
extent that such conflicts, or the failure to own, license or possess the right
to use such IP Rights, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. No IP Rights,
advertising, product, process, method, substance, part or other material used by
any Loan Party or any Subsidiary in the operation of their respective businesses
as currently conducted infringes upon any rights held by any Person except for
such infringements, individually or in the aggregate, which could not reasonably
be expected to have a Material Adverse Effect. No claim or litigation regarding
any of the IP Rights, is pending or, to the knowledge of the Lead Borrower,
threatened against any Loan Party or Subsidiary, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

SECTION 3.16 Solvency.

Immediately after giving effect to the consummation of the transactions
contemplated hereby to occur on the Closing Date, and on or about the date of
the making of each Revolving Credit Loan and the issuance of each Letter of
Credit hereunder, and immediately after giving effect to the application of the
proceeds of all such extensions of credit, (a) the fair value of the assets of
the Lead Borrower and its Subsidiaries, on a consolidated basis, exceeds, on a
consolidated basis, their debts and liabilities, subordinated, contingent or
otherwise; (b) the present fair saleable value of the property of the Lead
Borrower and its Subsidiaries, on a consolidated basis, is greater than the
amount that will be required to pay the probable liability, on a consolidated
basis, of their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(c) the Lead Borrower and its Subsidiaries, on a consolidated basis, are able to
pay their debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured; and (d) the Lead Borrower and its
Subsidiaries, on a consolidated basis, are not engaged in, and are not about to
engage in, business for which they have unreasonably small capital. For purposes
of this SECTION 3.16, the amount of any contingent liability at any time shall
be computed as the amount that would reasonably be expected to become an actual
and matured liability.

SECTION 3.17 Subordination of Junior Financing.

 

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The Obligations are “Senior Debt,” “Senior Indebtedness,” “Guarantor Senior
Debt” “Designated Senior Indebtedness” or “Senior Secured Financing” (or any
comparable term) under, and as defined in, any Junior Financing.

SECTION 3.18 Labor Matters.

Except as, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect or as disclosed in the Audited Financial Statements: (a) there
are no strikes or other labor disputes against any of Holdings, the Lead
Borrower or its Subsidiaries pending or, to the knowledge of the Lead Borrower,
threatened; (b) hours worked by and payment made to employees of each of
Holdings, the Lead Borrower or its Restricted Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other Applicable Laws dealing
with such matters; and (c) all payments due from any of Holdings, the Lead
Borrower or its Restricted Subsidiaries on account of employee health and
welfare insurance have been paid or accrued as a liability on the books of the
relevant party. Except as disclosed in the Audited Financial Statements, as of
the Closing Date no Loan Party is a party to or bound by any collective
bargaining agreement or any similar agreement. As of the Closing Date, there are
no representation proceedings pending or, to the actual knowledge of any
Responsible Officer of any Loan Party, threatened to be filed with the National
Labor Relations Board or other applicable Governmental Authority, and no labor
organization or group of employees of any Loan Party has made a pending demand
in writing for recognition. As of the Closing Date, the consummation of the
transactions contemplated by the Loan Documents will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Loan Party is bound to the extent
that such would be reasonably expected to result in a Material Adverse Effect.

SECTION 3.19 Compliance with Laws and Agreements.

Each Loan Party is in compliance with all Applicable Law, except where the
failure to comply, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect. Without limiting the generality
of the foregoing, each Loan Party has obtained all permits, licenses and other
authorizations which are required with respect to the ownership and operations
of its business, except where the failure to obtain such permits, licenses or
other authorizations, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Each Loan Party is in compliance
with all terms and conditions of all such permits, licenses, orders and
authorizations, except where the failure to comply with such terms or
conditions, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.

SECTION 3.20 Security Documents.

(a) The Security Documents (other than the Mortgages) create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral described therein as
security for the Obligations to the extent that a legal, valid, binding and
enforceable security interest in such Collateral may be created under any
Applicable Law of the United States of America and any states thereof,
including, without limitation, the applicable Uniform Commercial Code, and the
Security Documents

 

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constitute, or will upon the filing of financing statements and the obtaining of
“control”, in each case, as applicable, with respect to the relevant Collateral
as required under the applicable Uniform Commercial Code, the creation of a
fully perfected first priority Lien on, and security interest in, all right,
title and interest of the Borrowers and each Facility Guarantor thereunder in
such Collateral, in each case prior and superior in right to any other Person
(other than (x) Permitted Encumbrances having priority under Applicable Law and
(y) with respect to the Term Priority Collateral, which shall be subject to the
Intercreditor Agreement), except as permitted hereunder or under any other Loan
Document, in each case to the extent that a security interest may be perfected
by the filing of a financing statement under the applicable Uniform Commercial
Code, or by obtaining “control”.

(b) Upon recording thereof in the appropriate recording office, each Mortgage is
effective to create, in favor of the Collateral Agent, for its benefit and the
benefit of the Secured Parties, legal, valid and enforceable perfected Liens on,
and a security interest in, all of the Loan Parties’ right, title and interest
in and to the Mortgaged Property thereunder and the proceeds thereof, subject
only to Liens permitted hereunder, and when such Mortgage is filed in the
offices specified on Section I.H. to the Perfection Certificate dated the
Initial Closing Date (or, in the case of any Mortgage executed and delivered
after the date thereof in accordance with the provisions of SECTIONS 5.11 and
5.13, when such Mortgage is filed in the offices specified in the local counsel
opinion delivered with respect thereto in accordance with the provisions of
SECTIONS 5.11 and 5.13), such Mortgage shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Party to
such Mortgage in the Mortgaged Property described therein and the proceeds
thereof, in each case prior and superior in right to any other person, other
than Liens expressly permitted by SECTION 6.01.

Notwithstanding anything herein (including this SECTION 3.20) or in any other
Loan Document to the contrary, neither the Lead Borrower nor any other Loan
Party makes any representation or warranty as to (A) the effects of perfection
or non-perfection, the priority or the enforceability of any pledge of or
security interest in (other than with respect to those pledges and security
interests made under the laws of the jurisdiction of formation of the applicable
Foreign Subsidiary) any Equity Interests of any Foreign Subsidiary, or as to the
rights and remedies of the Agents or any Lender with respect thereto, under
foreign law, or (B) the pledge or creation of any security interest, or the
effects of perfection or non-perfection, the priority or the enforceability of
any pledge of or security interest to the extent such pledge, security interest,
perfection or priority is not required pursuant to the Collateral and Guarantee
Requirement.

ARTICLE IV

Conditions

SECTION 4.01 Conditions of Effectiveness of Credit Agreement.

The effectiveness of this Agreement is subject to the satisfaction by the Loan
Parties or the waiver of each of the following conditions precedent:

(a) The Administrative Agent (or its counsel) shall have received from each Loan
Party and each Lender either (i) a counterpart of this Agreement and an
amendment and reaffirmation

 

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of the other Loan Documents (each in form and substance reasonably satisfactory
to the Administrative Agent and each Lender) signed on behalf of each such party
thereto or (ii) written evidence reasonably satisfactory to the Administrative
Agent (which may include telecopy transmission or electronic .pdf copy of a
signed signature page of this Agreement or any other relevant Loan Document)
that each such party has signed a counterpart of this Agreement and all other
Loan Documents to which it is a party.

(b) The Administrative Agent shall have received a written opinion (addressed to
the Administrative Agent, the Collateral Agent and the Lenders and dated the
Closing Date) of Ropes & Gray LLP, counsel for the Loan Parties and each local
counsel to the Loan Parties set forth on Schedule 4.01(c), substantially to the
effect set forth in Exhibits K-1 and K-2, respectively. The Loan Parties hereby
request such counsel to deliver such opinions.

(c) The Administrative Agent shall have received (i) a copy of the certificate
or articles of incorporation or organization (or similar organizational
document), including all amendments thereto, of each Loan Party, certified, if
applicable, as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing (where relevant) of each
Loan Party as of a recent date, from such Secretary of State or similar
Governmental Authority; (ii) a certificate of the Secretary or Assistant
Secretary of each Loan Party dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws or operating (or
limited liability company) agreement of such Loan Party as in effect on the
Closing Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and complete
copy of resolutions duly adopted by the board of directors (or equivalent
governing body) of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such Person is a party and, in the
case of the Borrowers, the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and effect,
(C) that the certificate or articles of incorporation or organization (or
similar organization document) of such Loan Party have not been amended since
the date of the last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (i) above, and (E) 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 such Loan Party; and
(iii) a certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the certificate
pursuant to clause (ii) above.

(d) (i) The Administrative Agent shall have received the results of (x) searches
of the Uniform Commercial Code filings (or equivalent filings) and (y) judgment
and tax lien searches, made with respect to the Loan Parties in the states or
other jurisdictions of formation of such Person and with respect to such other
locations and names listed on the Perfection Certificate, together with (in the
case of clause (y)) copies of the financing statements (or similar documents)
disclosed by such search, and (ii) the Collateral Agent or the collateral agent
under the Term Loan Facility (pursuant to the Intercreditor Agreement) shall
have received (x) certificates, if any, representing the Pledged Equity of the
Borrowers and Subsidiary Facility Guarantors accompanied by undated stock powers
executed in blank (provided that, notwithstanding the foregoing, the Lead
Borrower shall be permitted to deliver the certificate(s) representing the
Capital Stock of Gymboree Hong Kong Services Limited that constitute Pledged
Equity, and all related stock powers, to the Collateral Agent or the collateral
agent under the Term Loan Facility (pursuant to the Intercreditor Agreement)
within thirty (30) days following the Closing Date or such longer period as the
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Discretion) and (y) documents and instruments to be recorded or filed that the
Collateral Agent may deem reasonably necessary to satisfy the Collateral and
Guarantee Requirement;

(e) The Administrative Agent shall have received a solvency certificate,
substantially in the form set forth in Exhibit J, from the chief financial
officer or other officer with equivalent duties of the Lead Borrower.

(f) The Administrative Agent shall have received, at least 5 days prior to the
Closing Date (or such later date as the Administrative Agent shall agree in
writing), all documentation and other information about the Loan Parties
required under applicable “know your customer” and anti-money laundering rules
and regulations, including without limitation the USA PATRIOT Act, that has been
requested in writing at least 10 days prior to the Closing Date.

(g) The Arranger shall have received the Audited Financial Statements, the
Unaudited Financial Statements and the Projected Financial Statements.

(h) Since January 29, 2011, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expect to
have a Material Adverse Effect.

(i) The Administrative Agent shall have received a Borrowing Base Certificate
dated March 9, 2012, executed by a Financial Officer of the Lead Borrower, and
the Administrative Agent shall be satisfied that, both before and after giving
effect to all borrowings to be made on the Closing Date, Availability shall not
be less than $75,000,000.

(j) The Administrative Agent, the Arranger and the Lenders shall have received
all applicable fees and other amounts due and payable on or prior to the Closing
Date, including, to the extent invoiced at least two Business Days prior to the
Closing Date (except as otherwise reasonably agreed by the Lead Borrower),
reimbursement or payment of all out of pocket expenses required to be reimbursed
or paid by the Borrowers hereunder or under any other Loan Document.

Without limiting the generality of the provisions of the last paragraph of
SECTION 8.06, for purposes of determining compliance with the conditions
specified in this SECTION 4.01, each Lender that has signed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent
shall have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

SECTION 4.02 Conditions Precedent to Each Revolving Credit Loan and Each Letter
of Credit.

The obligation of the Lenders to make each Revolving Credit Loan and of the
Issuing Banks to issue each Letter of Credit is subject to the satisfaction by
the Loan Parties or the waiver of each of the following conditions precedent:

(a) The Administrative Agent shall have received a notice with respect to such
Borrowing or issuance, as the case may be, as required by Article II, and in the
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a Letter of Credit, the applicable Issuing Bank shall have received notice with
respect thereto in accordance with SECTION 2.13.

(b) All representations and warranties contained in this Agreement and the other
Loan Documents or otherwise made in writing in connection herewith or therewith
shall be true and correct in all material respects on and as of the date of each
Borrowing or the issuance of each Letter of Credit hereunder with the same
effect as if made on and as of such date, other than representations and
warranties that relate solely to an earlier date, which shall be true and
correct in all material respects as of such earlier date, provided that any
representation and warranty which is qualified as to “materiality”, “Material
Adverse Effect” or similar language shall be true and correct in all respects on
such respective dates.

(c) Both before and after giving effect to each Borrowing or issuance of each
Letter of Credit hereunder, no Default or Event of Default shall have occurred
and be continuing.

The request by the Lead Borrower for, and the acceptance by any Borrower of,
each extension of credit hereunder shall be deemed to be a representation and
warranty by the Loan Parties that the conditions specified in this SECTION 4.02
have been satisfied at that time and that after giving effect to such extension
of credit the Borrowers shall continue to be in compliance with the then FILO
Borrowing Base (or, if the FILO Commitments have been terminated, the then
Tranche A Borrowing Base). The conditions set forth in this SECTION 4.02 are for
the sole benefit of the Administrative Agent and each other Credit Party and may
be waived by the Administrative Agent, in whole or in part, without prejudice to
the rights of the Administrative Agent or any other Credit Party.

ARTICLE V

Affirmative Covenants

Until (i) the Commitments have expired or been terminated, (ii) the principal of
and interest on each Revolving Credit Loan (including Swingline Loans) and all
fees and other Obligations (other than contingent indemnity obligations with
respect to then unasserted claims and the Other Liabilities) shall have been
paid in full, (iii) all Letters of Credit shall have expired or terminated (or
been cash collateralized or backstopped in a manner reasonably satisfactory to
the applicable Issuing Bank) and (iv) all Letter of Credit Outstandings have
been reduced to zero (or cash collateralized or backstopped in a manner
reasonably satisfactory to the applicable Issuing Bank), the Lead Borrower shall
and shall (except in the case of the covenants set forth in SECTION 5.01,
SECTION 5.02, SECTION 5.03, SECTION 5.14 and SECTION 5.15) cause each of its
Restricted Subsidiaries to:

SECTION 5.01 Financial Statements.

Deliver to the Administrative Agent for prompt further distribution to each
Lender:

(a) as soon as available, but in any event within ninety (90) days after the end
of each Fiscal Year of the Lead Borrower, a Consolidated balance sheet of the
Lead Borrower and its Subsidiaries as at the end of such Fiscal Year, and the
related Consolidated statements of income or operations, stockholders’ equity
and cash flows for such Fiscal Year, setting forth in each case in

 

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comparative form the figures for the previous Fiscal Year, all in reasonable
detail and prepared in accordance with GAAP, audited and accompanied by a report
and opinion of Deloitte & Touche LLP or any other independent registered public
accounting firm of nationally recognized standing, which report and opinion
shall be prepared in accordance with generally accepted auditing standards and
shall not be subject to any “going concern” or like qualification or exception
or any qualification or exception as to the scope of such audit;

(b) as soon as available, but in any event within forty-five (45) days after the
end of each of the first three (3) Fiscal Quarters of each Fiscal Year of the
Lead Borrower, a Consolidated balance sheet of the Lead Borrower and its
Subsidiaries as at the end of such Fiscal Quarter, and the related
(A) Consolidated statements of income or operations for such Fiscal Quarter and
for the portion of the Fiscal Year then ended and (B) Consolidated statements of
cash flows for the portion of the Fiscal Year then ended, setting forth in each
case in comparative form the figures for the corresponding Fiscal Quarter of the
previous Fiscal Year and the corresponding portion of the previous Fiscal Year,
all in reasonable detail and certified by a Responsible Officer of the Lead
Borrower as fairly presenting in all material respects the financial condition,
results of operations and cash flows of the Lead Borrower and its Subsidiaries
in accordance with GAAP, subject only to normal year-end audit adjustments and
the absence of footnotes;

(c) as soon as available, but in any event within thirty-five (35) days after
the end of each of the first two (2) Fiscal Months of each Fiscal Quarter of the
Lead Borrower, a consolidated balance sheet of the Lead Borrower and its
Subsidiaries as at the end of such Fiscal Month, and the related
(i) consolidated statements of income or operations for such Fiscal Month and
for the portion of the Fiscal Year then ended and (ii) consolidated statements
of cash flows for the portion of the Fiscal Year then ended, setting forth in
each case in comparative form the figures for the corresponding Fiscal Month of
the previous Fiscal Year and the corresponding portion of the previous Fiscal
Year, all in reasonable detail and certified by a Responsible Officer of the
Lead Borrower as fairly presenting in all material respects the financial
condition, results of operations and cash flows of the Lead Borrower and its
Subsidiaries;

(d) as soon as available, and in any event no later than ninety (90) days after
the end of each Fiscal Year of the Lead Borrower, a reasonably detailed
consolidated budget by quarter for the following Fiscal Year (including a
projected consolidated balance sheet of the Lead Borrower and its Subsidiaries
as of the end of each quarter of the following Fiscal Year, the related
consolidated statements of projected cash flow and projected income and a
summary of the material underlying assumptions applicable thereto),
(collectively, the “Projections”), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on estimates, information and assumptions believed to be
reasonable and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect;

(e) On the 10th Business Day of each month (or on Wednesday of each week (or, if
Wednesday is not a Business Day, on the next succeeding Business Day) if the
Lead Borrower shall so elect, subject to the proviso below), a certificate in
the form of Exhibit I (a “Borrowing Base Certificate”) showing the Tranche A
Borrowing Base and the FILO Borrowing Base as of the close of business on the
immediately preceding Fiscal Month (or in the case of a voluntary delivery of a
Borrowing Base Certificate at the election of the Borrowers on a weekly basis,
as of the close of business on the immediately preceding Saturday), each
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complete and correct in all material respects on behalf of the Lead Borrower by
a Responsible Officer of the Lead Borrower, provided that if (x) any Specified
Default has occurred and is continuing or (y) Availability is less than the
greater of (A) twelve and one-half percent (12.5%) of the lesser of (X) the then
FILO Borrowing Base (or, if the FILO Commitments have been terminated, the then
Tranche A Borrowing Base) and (Y) the then Revolving Credit Ceiling, and
(B) $25,000,000, in each case for this clause (y), for five (5) consecutive
Business Days, then such Borrowing Base Certificate shall be furnished on
Wednesday of each week (or, if Wednesday is not a Business Day, on the next
succeeding Business Day), as of the close of business on the immediately
preceding Saturday until the date on which, in the case of clause (x) above,
such Specified Default is waived or cured or, in the case of clause (y) above,
Availability has been greater than the greater of (A) twelve and one-half
percent (12.5%) of the lesser of (X) the then FILO Borrowing Base (or, if the
FILO Commitments have been terminated, the then Tranche A Borrowing Base) and
(Y) the then Revolving Credit Ceiling, and (B) $25,000,000, in each case for
thirty (30) consecutive calendar days; provided further that if the Borrowers
elect to furnish the Administrative Agent with a Borrowing Base Certificate on a
weekly basis, then the Lead Borrower shall continue to furnish a Borrowing Base
Certificate on such weekly basis from the date of such election through the
remainder of the Fiscal Year in which such election was made;

(f) simultaneously with the delivery of each set of Consolidated financial
statements referred to in SECTION 5.01(a), SECTION 5.01(b) and SECTION 5.01(c)
above, the related consolidating financial statements (which may be in footnote
form) reflecting the adjustments necessary to eliminate the accounts of
Unrestricted Subsidiaries (if any) from such Consolidated financial statements;
and

(g) promptly upon receipt thereof, copies of all management letters from the
Lead Borrower’s independent certified public accountants submitted by such
accountants to management in connection with their annual audit (i) commenting
on any material weakness in the Lead Borrower’s internal controls, and
(ii) subject to the consent of such accountants (which consent the Lead Borrower
shall in good faith seek to obtain), commenting on any other matters relating to
the Lead Borrower’s internal controls.

Notwithstanding the foregoing, the obligations in paragraphs (a), (b) and (c) of
this SECTION 5.01 may be satisfied with respect to financial information of the
Lead Borrower and its Restricted Subsidiaries by furnishing (A) the Consolidated
financial statements of Holdings, the Lead Borrower (or any direct or indirect
parent thereof), or (B) the Lead Borrower’s or Holdings’ (or any direct or
indirect parent thereof), as applicable, Form 10-K or 10-Q, as applicable, filed
with the SEC, provided that to the extent that such information relates to
Holdings (or any direct or indirect parent thereof), such information is
accompanied by consolidating information that explains in reasonable detail the
differences between the information relating to Holdings (or any direct or
indirect parent thereof) and its Subsidiaries, on the one hand, and the Lead
Borrower and its Restricted Subsidiaries on the other hand, and (ii) to the
extent such information is in lieu of information required to be provided under
SECTION 5.01(a), such materials are accompanied by a report and opinion of
Deloitte & Touche LLP or any other independent registered public accounting firm
of nationally recognized standing, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be subject
to any “going concern” or like qualification or exception or any qualification
or exception as to the scope of such audit.

 

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SECTION 5.02 Certificates; Other Information.

Deliver to the Administrative Agent for prompt further distribution to each
Lender:

(a) [Reserved]

(b) contemporaneously with the delivery of the financial statements referred to
in SECTION 5.01(a) and SECTION 5.01(b), a duly completed Compliance Certificate
signed by a Responsible Officer of the Lead Borrower in the form of Exhibit H
hereto (a “Compliance Certificate”) (i) certifying as to whether a Default or
Event of Default has occurred and, if a Default or Event of Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
with respect to the Consolidated Fixed Charge Coverage Ratio for such period,
(iii) detailing all Store openings and Store closings during the immediately
preceding fiscal period, and stating the aggregate number of the Loan Parties’
Stores as of the first day of the current fiscal period, (iv) setting forth in
reasonable detail the status of rental payments for each of the Loan Parties’
(A) warehouses and distribution centers, and (B) other leased locations in the
Landlord Lien States designated by the Administrative Agent in its commercially
reasonable judgment (which, as of the Closing Date, are Washington, Pennsylvania
and Virginia), and (v) stating whether any change in GAAP or in the application
thereof has occurred since the date of the Lead Borrower’s most recent audited
financial statements and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such Compliance
Certificate;

(c) promptly after the same are publicly available, copies of all annual,
regular, periodic and special reports and registration statements which the Lead
Borrower or Holdings files with the SEC or with any Governmental Authority that
may be substituted therefor (other than amendments to any registration statement
(to the extent such registration statement, in the form it became effective, is
delivered), exhibits to any registration statement and, if applicable, any
registration statement on Form S-8) and in any case not otherwise required to be
delivered to the Administrative Agent pursuant hereto;

(d) promptly after the furnishing thereof, copies of any material requests or
material notices received by the Lead Borrower or any of its Restricted
Subsidiaries (other than in the ordinary course of business) or material
statements or material reports (other than in connection with any board observer
rights) furnished to any holder of Material Indebtedness of the Lead Borrower or
of any of its Restricted Subsidiaries, including pursuant to the terms of the
Senior Notes, the Term Loan Facility, any Junior Financing or any Permitted
Refinancing thereof, and not otherwise required to be furnished to the Lenders
pursuant to any other clause of this SECTION 5.02;

(e) together with the delivery of each Compliance Certificate pursuant to
SECTION 5.02(b), (i) a report setting forth the information required by
Section 4.02(e) of the Security Agreement or confirming that there has been no
change in such information since the Closing Date or the date of the last such
report, and (ii) a list of each Subsidiary that identifies each Subsidiary as a
Restricted Subsidiary or an Unrestricted Subsidiary as of the date of delivery
of such Compliance Certificate;

 

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(f) the financial and collateral reports described on Schedule 5.02(f) hereto,
at the times set forth in such Schedule 5.02(f); and

(g) after the occurrence and during the continuance of a Cash Dominion Event, a
detailed summary of all Net Proceeds received from any Prepayment Event, in each
case within five (5) Business Days after receipt of such Net Proceeds other than
from sales of Inventory in the ordinary course of business;

(h) promptly when available, (i) a copy of the acquisition agreement and other
acquisition documents relating to any Permitted Acquisition and (ii) updated
schedules to this Agreement and the Security Agreement after giving effect to
such Permitted Acquisition, appropriate financial statements of the Person which
is the subject of such Permitted Acquisition and financial statements prepared
on a Pro Forma Basis (to the extent available) after giving effect to such
Permitted Acquisition (including balance sheets, cash flows and income
statements);

(i) at least five (5) Business Days (or such shorter period as the
Administrative Agent shall agree in writing) prior to the making of any
Specified Payment or RP Payment, a detailed calculation of the Consolidated
Fixed Charge Coverage Ratio (to the extent that a minimum Consolidated Fixed
Charge Coverage Ratio is a condition to the making of such Specified Payment or
RP Payment) and the Pro Forma Availability Condition and all components thereof,
with such supporting documentation as the Administrative Agent may reasonably
request; and

(j) promptly, such additional information regarding the business, legal,
financial or corporate affairs of any Loan Party or any Subsidiary, or
compliance with the terms of the Loan Documents, as the Administrative Agent or
any Lender through the Administrative Agent may from time to time reasonably
request.

Documents required to be delivered pursuant to SECTION 5.01(a), SECTION 5.01(b),
SECTION 5.01(c) or SECTION 5.02(d) (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Lead Borrower posts such documents, or provides a link
thereto on the Lead Borrower’s website on the Internet at the website address
listed on Schedule 5.02; or (ii) on which such documents are posted on the Lead
Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any,
to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); provided that: (i) upon written request by the Administrative Agent, the
Lead Borrower shall deliver paper copies of such documents to the Administrative
Agent for further distribution to each Lender until a written request to cease
delivering paper copies is given by the Administrative Agent and (ii) the Lead
Borrower shall notify (which may be by facsimile or electronic mail) the
Administrative Agent of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents. Notwithstanding anything contained herein, in every instance
the Lead Borrower shall be required to provide paper copies of the Compliance
Certificates required by SECTION 5.02(b) to the Administrative Agent. Each
Lender shall be

 

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solely responsible for timely accessing posted documents or requesting delivery
of paper copies of such documents from the Administrative Agent and maintaining
its copies of such documents.

The Lead Borrower hereby acknowledges that (a) the Administrative Agent and/or
the Arranger will make available to the Lenders and the Issuing Banks materials
and/or information provided by or on behalf of the Loan Parties hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and (b) certain
of the Lenders (each, a “Public Lender”) may have personnel who do not wish to
receive material non-public information with respect to Holdings (or any parent
thereof), the Lead Borrower or any of their respective Subsidiaries, or the
respective securities of any of the foregoing, and who may be engaged in
investment and other market-related activities with respect to such Persons’
securities. The Lead Borrower hereby agrees that (w) all Borrower Materials that
are to be made available to Public Lenders shall be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower Materials
“PUBLIC,” the Lead Borrower shall be deemed to have authorized the
Administrative Agent, the Arranger, the Issuing Banks and the Lenders to treat
such Borrower Materials as not containing any material non-public information
with respect to the Lead Borrower or its securities for purposes of United
States Federal and state securities laws (provided, however, that to the extent
such Borrower Materials constitute Information, they shall be treated as set
forth in SECTION 9.08); (y) all Borrower Materials marked “PUBLIC” are permitted
to be made available through a portion of the Platform designated “Public Side
Information;” and (z) the Administrative Agent and the Arranger shall be
entitled to treat any Borrower Materials that are not marked “PUBLIC” as being
suitable only for posting on a portion of the Platform not designated “Public
Side Information.” Notwithstanding the foregoing, the Lead Borrower shall be
under no obligation to mark any Borrower Materials “PUBLIC.”

SECTION 5.03 Notices.

Promptly after obtaining knowledge thereof, notify the Administrative Agent in
writing (for prompt distribution to the Lenders):

(a) of the occurrence of any Default, specifying the nature and extent thereof
and the action (if any) which is proposed to be taken with respect thereto;

(b) (i) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including arising out of or resulting from
(A) breach or non-performance of, or any default or event of default under, a
contractual obligation of any Loan Party or any Subsidiary, (B) any dispute,
litigation, investigation, proceeding or suspension between any Loan Party or
any Subsidiary and any Governmental Authority, (C) the commencement of, or any
material development in, any litigation or proceeding affecting any Loan Party
or any Subsidiary, including pursuant to any applicable Environmental Laws or in
respect of IP Rights or the assertion or occurrence of any noncompliance by any
Loan Party or any of its Subsidiaries with, or liability under, any
Environmental Law or permit, (D) any strikes, lockouts or slowdowns against any
Loan Party, or (E) the occurrence of any ERISA Event or (ii) if any Loan Party
or any ERISA Affiliate enters into any agreement or takes any other corporate
action that will result in its becoming a sponsor of, beginning to maintain or
becoming obligated to contribute to, a Plan or a Multiemployer Plan;

 

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(c) any change in any Loan Party’s chief executive officer or chief financial
officer;

(d) any material change in any Loan Party’s financial reporting practices;

(e) the filing of any Lien for unpaid Taxes against any Loan Party in excess of
$10,000,000;

(f) the discharge by any Loan Party of its present independent accountants or
any withdrawal or resignation by such independent accountants;

(g) any casualty or other insured damage to any portion of the Collateral
included in the Tranche A Borrowing Base or the FILO Borrowing Base in excess of
$10,000,000, or the commencement of any action or proceeding for the taking of
any interest in a portion of the Collateral included in the Tranche A Borrowing
Base or the FILO Borrowing Base in excess of $10,000,000 or any part thereof or
interest therein under power of eminent domain or by condemnation or similar
proceeding, and

(h) the receipt of any notice of default by a Loan Party under, or notice of
termination of, any Lease for any of the Loan Parties’ distribution centers or
warehouses.

Each notice pursuant to this Section shall be accompanied by a written statement
of a Responsible Officer of the Lead Borrower (x) that such notice is being
delivered pursuant to this SECTION 5.03, and (y) setting forth details of the
occurrence referred to therein and stating what action the Lead Borrower has
taken and proposes to take with respect thereto.

SECTION 5.04 Payment of Taxes, Etc.

Pay, discharge or otherwise satisfy as the same shall become due and payable,
(a) all its Indebtedness and other obligations in accordance with their terms
and (b) all its obligations and liabilities in respect of Taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, except, in each case, (x) in the case of clause (b),
where the validity or amount thereof is being contested in good faith by
appropriate actions and the Lead Borrower or its Restricted Subsidiary, as
applicable, has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, and such contest effectively suspends collection of the
contested obligation and enforcement of any Lien securing such obligation, or
(b) in the case of either clause (a) or (b), to the extent the failure to pay,
discharge or otherwise satisfy the same could not reasonably be expected to have
a Material Adverse Effect.

SECTION 5.05 Preservation of Existence, Etc.

(a) Preserve, renew and maintain in full force and effect its legal existence
under the Applicable Laws of the jurisdiction of its organization except in a
transaction permitted by SECTION 6.04 or SECTION 6.05, and (b) take all
reasonable action to maintain all rights, privileges (including its good
standing), permits, licenses and franchises necessary or desirable in the normal
conduct of its business, except (i) to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect or (ii) pursuant to
a transaction permitted by SECTION 6.04 or SECTION 6.05.

 

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SECTION 5.06 Maintenance of Properties.

Unless the failure to do so could not reasonably be expected to have a Material
Adverse Effect, (a) maintain, preserve and protect all of its properties and
equipment necessary in the operation of its business in good working order,
repair and condition, ordinary wear and tear and obligations of landlords under
leases excepted and casualty or condemnation excepted, and (b) make all
necessary renewals, replacements, modifications, improvements, upgrades,
extensions and additions thereof or thereto in accordance with prudent industry
practice.

SECTION 5.07 Maintenance of Insurance.

(a) Maintain with financially sound and reputable insurance companies, insurance
with respect to their properties and business against loss or damage of the
kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts (after giving effect to any
self-insurance reasonable and customary for similarly situated Persons engaged
in the same or similar businesses as the Lead Borrower and its Restricted
Subsidiaries) as are customarily carried under similar circumstances by such
other Persons. The Lead Borrower shall furnish to the Administrative Agent, upon
written request, full information as to the insurance carried.

(b) Use commercially reasonable efforts to obtain (to the extent not already
obtained), and maintain endorsements or amendments to all casualty, loss, fire
and extended coverage policies maintained with respect to any Collateral to
include (i) a non-contributing mortgage clause (regarding improvements to real
property) and a lenders’ loss payable clause (regarding personal property), in
form and substance reasonably satisfactory to the Administrative Agent, which
endorsements or amendments shall provide that the insurer shall pay all proceeds
otherwise payable to the Loan Parties (other than Holdings) under the policies
directly to the Administrative Agent, (ii) a provision to the effect that none
of the Loan Parties, Credit Parties (in their capacity as such) or any other
Affiliate of a Loan Party shall be a co-insurer (the foregoing not being deemed
to limit the amount of self-insured retention or deductibles under such
policies, which self-insured retention or deductibles shall be consistent with
business practices in effect on the Closing Date or as otherwise determined by
the Responsible Officers of the Loan Parties acting reasonably in their business
judgment; it being understood that any applicable deductible under such policies
will apply to cover losses), and (iii) such other provisions as the
Administrative Agent may reasonably require from time to time to protect the
interests of the Credit Parties. Commercial general liability policies shall be
endorsed to name the Administrative Agent as an additional insured (or, in the
event that the Administrative Agent is already named as such, shall continue to
name the Administrative Agent as an additional insured). To the extent such
endorsement can be obtained through the commercially reasonable efforts of the
Lead Borrower and its Restricted Subsidiaries, each endorsement to such casualty
or liability policy referred to in this SECTION 5.07(b) shall also provide that
it shall not be canceled, modified in any manner that would cause this SECTION
5.07 to be violated, or not renewed (i) by reason of nonpayment of premium
except upon not less than ten (10) days’ prior written notice thereof by the
insurer to the Administrative Agent (giving the Administrative Agent the right
to cure defaults in the payment of premiums) or (ii) for any other reason except
upon not less than thirty (30) days’ prior written notice thereof by the insurer
to the Administrative Agent. The Lead Borrower shall deliver to the
Administrative Agent, prior to any cancellation, any material modification or
any non-renewal of any such policy of insurance, a copy of a renewal or
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policy previously delivered to the Administrative Agent, including an insurance
binder) together with evidence reasonably satisfactory to the Administrative
Agent of payment of the premium therefor.

(c) The Administrative Agent acknowledges that the insurance policies described
on Schedule 5.07 are satisfactory to it as of the Closing Date and are in
compliance with the provisions of this SECTION 5.07.

(d) With respect to each Mortgaged Property, if at any time the area in which
any building or other improvement is located is designated a “flood hazard area”
in any Flood Insurance Rate Map published by the Federal Emergency Management
Agency (or any successor agency), obtain flood insurance in such amount and with
such deductible as is required to ensure compliance with the Flood Laws.
Following the Closing Date, the Lead Borrower shall deliver to the Collateral
Agent annual renewals of the flood insurance policy or annual renewals of a
force-placed flood insurance policy. In connection with any amendment to this
Agreement pursuant to which any increase, extension, or renewal of Loans or
Commitments is contemplated, the Lead Borrower shall cause to be delivered to
the Collateral Agent for any Mortgaged Property, a Flood Determination Form,
Borrower Notice and Evidence of Flood Insurance, as applicable.

SECTION 5.08 Compliance with Laws.

Comply in all material respects with the requirements of all Applicable Laws
applicable to it or to its business or property, except where the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.

SECTION 5.09 Books and Records.

Maintain proper books of record and account, in which entries that are full,
true and correct in all material respects shall be made of all material
financial transactions and matters involving the assets and business of the Lead
Borrower or its Restricted Subsidiaries, as the case may be and shall cause
financial statements to be prepared in conformity with GAAP to the extent
required pursuant to Section 5.01.

SECTION 5.10 Inspection Rights.

(a) Permit any representatives designated by the Administrative Agent, upon
reasonable prior notice, to visit and inspect its properties, to discuss its
affairs, finances and condition with its officers and to examine and make
extracts from its books and records, all at such reasonable times during normal
business hours and as may be reasonably requested upon reasonable advance notice
to the Lead Borrower; provided that, excluding any such visits and inspections
during the continuation of an Event of Default, only the Administrative Agent on
behalf of the Lenders may exercise the rights of the Administrative Agent and
the Lenders under this SECTION 5.10(a) and the Administrative Agent shall not
exercise such rights more often than two (2) times during any calendar year,
absent the existence of an Event of Default and only one (1) such time shall be
at the Lead Borrower’s expense; provided further that when an Event of Default
exists, the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Lead Borrower at any time during normal business hours and upon
reasonable advance notice. The Administrative Agent and the Lenders shall give
the Lead Borrower the opportunity to participate in any discussions with the
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accountants. Nothing contained in this SECTION 5.10(a) shall be deemed to limit
or modify the rights of the Administrative Agent under SECTION 5.10(b) hereof.

(b) From time to time upon the request of the Administrative Agent, permit the
Administrative Agent or professionals (including consultants, accountants,
lawyers and appraisers) retained by the Administrative Agent, on reasonable
prior notice and during normal business hours, to conduct appraisals and
commercial finance examinations, including, without limitation, of (i) the
Borrowers’ practices in the computation of the then FILO Borrowing Base (or, if
the FILO Commitments have been terminated, the then Tranche A Borrowing Base),
and (ii) the assets included in the then FILO Borrowing Base (or, if the FILO
Commitments have been terminated, the then Tranche A Borrowing Base) and related
financial information such as, but not limited to, sales, gross margins,
payables, accruals and reserves. Subject to the following, the Loan Parties
shall pay the reasonable out-of-pocket fees and expenses of the Administrative
Agent or such professionals with respect to such evaluations and appraisals.

(i) The Administrative Agent may conduct up to one (1) commercial finance
examination in each calendar year, each at the Loan Parties’ expense; provided
that, if Availability is less than thirty-five percent (35%) of the lesser of
(A) the then FILO Borrowing Base (or, if the FILO Commitments have been
terminated, the then Tranche A Borrowing Base) and (B) the then Revolving Credit
Ceiling, in each case for five (5) consecutive Business Days, the Administrative
Agent may conduct up to two (2) commercial finance examinations in each calendar
year, each at the Loan Parties’ expense. Notwithstanding anything to the
contrary contained herein, the Administrative Agent (A) may undertake one
(1) additional commercial finance examination in each calendar year at the sole
expense of the Administrative Agent, and (B) after the occurrence and during the
continuance of any Specified Default, may cause such additional commercial
finance examinations to be taken as the Administrative Agent, in its reasonable
discretion, determine are necessary or appropriate (each, at the expense of the
Loan Parties).

(ii) The Administrative Agent may conduct up to one (1) appraisal of the Loan
Parties’ Inventory in each calendar year, each at the Loan Parties’ expense;
provided that, if Availability is less than thirty-five percent (35%) of the
lesser of (A) the then FILO Borrowing Base (or, if the FILO Commitments have
been terminated, the then Tranche A Borrowing Base) and (B) the then Revolving
Credit Ceiling, in each case for five (5) consecutive Business Days, the
Administrative Agent may conduct up to two (2) appraisals of the Loan Parties’
Inventory in each calendar year, each at the Loan Parties’ expense.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent (A) may undertake one (1) additional Inventory appraisal in each calendar
year at the sole expense of the Administrative Agent, and (B) after the
occurrence and during the continuance of any Specified Default, may cause such
additional Inventory appraisals to be taken as the Administrative Agent, in its
reasonable discretion, determine are necessary or appropriate (each, at the
expense of the Loan Parties).

(iii) The commercial finance examination and appraisal delivered to the
Administrative Agent in January 2012 pursuant to the Existing Credit Agreement
shall be deemed to have been conducted in the calendar year 2012 for the
purposes of clauses (i)

 

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and (ii) above (provided that, for the avoidance of doubt, to the extent that
the Administrative Agent orders a commercial finance examination or appraisal in
any calendar year for delivery in the immediately following calendar year, such
commercial finance examination or appraisal shall be deemed to have been
conducted in the calendar year in which it was delivered and not the calendar
year it was ordered).

(c) At all times retain independent certified public accountants of national
standing and shall instruct such accountants to cooperate with, and be available
to, the Administrative Agent or its representatives to discuss the annual
audited statements, the financial performance, financial condition, operating
results, controls of the Lead Borrower and its Restricted Subsidiaries, and such
other matters, within the scope of the retention of such accountants for such
audited statements, as may be raised by the Administrative Agent; subject,
however, if requested by such accountants, to the execution of an access
agreement by the Administrative Agent and such accountants in form reasonably
satisfactory to each of them; provided that a representative of the Lead
Borrower shall be given the opportunity to be present all such discussions.

SECTION 5.11 Covenant to Become a Loan Party and Give Security.

At the Lead Borrower’s expense, take all action necessary or reasonably
requested by the Administrative Agent or the Collateral Agent to ensure that the
Collateral and Guarantee Requirement continues to be satisfied (subject to the
limitations set forth in the definition of “Collateral and Guarantee
Requirement”), including:

(a) Upon the formation or acquisition of any new direct or indirect wholly owned
Domestic Subsidiary (in each case, other than an Excluded Subsidiary) by the
Lead Borrower, the designation in accordance with SECTION 5.14 of any existing
direct or indirect wholly owned Domestic Subsidiary as a Restricted Subsidiary
(other than an Excluded Subsidiary) or any wholly owned Domestic Subsidiary
ceasing to be an Excluded Subsidiary:

(i) as soon as practicable, but in any event within 60 days after such
formation, acquisition, designation or other event, or such longer period as the
Administrative Agent may agree in writing in its sole discretion:

(a) cause each such Domestic Subsidiary to duly execute and deliver to the
Administrative Agent or the Collateral Agent (as appropriate) a joinder to this
Agreement as a Borrower (provided, however, that if the Lead Borrower shall
reasonably determine that causing such Restricted Subsidiary to become a
Borrower hereunder is not practicable (including, without limitation, because
materially adverse tax consequences would result therefrom), the Lead Borrower
shall cause such Restricted Subsidiary to duly execute and deliver to the
Administrative Agent a joinder to the Facility Guaranty) security agreement
supplements, intellectual property security agreements and other security
agreements and documents, as reasonably requested by and in form and substance
reasonably satisfactory to the Administrative Agent (consistent with the
Mortgage, Security Agreement, intellectual property security agreements and
other security agreements in effect on the Closing Date), in each case granting
Liens required by the Collateral and Guarantee Requirement;

 

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(b) cause each such Domestic Subsidiary (and the parent of each such Domestic
Subsidiary that is a Loan Party) to deliver to the Collateral Agent (subject to
the Intercreditor Agreement) any and all certificates representing Capital Stock
(to the extent certificated) and intercompany notes (to the extent certificated)
that are required to be pledged pursuant to the Collateral and Guarantee
Requirement, accompanied by undated stock powers or other appropriate
instruments of transfer executed in blank;

(c) take and cause such Restricted Subsidiary and each direct or indirect parent
of such Restricted Subsidiary to take whatever action (including the recording
of Mortgages, the filing of UCC financing statements and delivery of stock and
membership interest certificates) as may be necessary in the reasonable opinion
of the Collateral Agent to vest in the Collateral Agent (or in any
representative of the Collateral Agent designated by it) valid and perfected
Liens to the extent required by the Collateral and Guarantee Requirement, and to
otherwise comply with the requirements of the Collateral and Guarantee
Requirement;

(ii) if reasonably requested by the Administrative Agent or the Collateral
Agent, as soon as available but in any event within forty-five (45) days after
such request (or such longer period as the Administrative Agent may agree in
writing in its sole discretion), deliver to the Administrative Agent a signed
copy of an opinion, addressed to the Administrative Agent and the Lenders, of
counsel for the Loan Parties reasonably acceptable to the Administrative Agent
as to such matters set forth in this SECTION 5.11(a) as the Administrative Agent
may reasonably request;

(iii) as promptly as practicable after the request therefor by the
Administrative Agent or Collateral Agent, deliver to the Collateral Agent with
respect to each Material Real Property, any existing surveys, title reports,
abstracts or environmental assessment reports, to the extent available and in
the possession or control of the Borrower; provided, however, that there shall
be no obligation to deliver to the Collateral Agent any existing environmental
assessment report whose disclosure to the Collateral Agent would require the
consent of a Person other than the Lead Borrower or one of its Subsidiaries,
where, despite the commercially reasonable efforts of the Lead Borrower to
obtain such consent, such consent cannot be obtained; and

(iv) if reasonably requested by the Administrative Agent or the Collateral
Agent, as soon as available but in any event within sixty (60) days after such
request (or such longer period as the Administrative Agent may agree in writing
in its sole discretion), deliver to the Collateral Agent any other items
necessary from time to time to satisfy the Collateral and Guarantee Requirement
with respect to the validity, perfection, existence and priority of security
interests with respect to property of any Borrower or Facility Guarantor
acquired after the Closing Date and subject to the Collateral and Guarantee
Requirement, but not specifically covered by the preceding clauses (i), (ii) or
(iii) or clause (b) below.

(b) As soon as is practicable, but in any event not later than one hundred
twenty (120) days after the acquisition by any Loan Party of Material Real
Property that is required to be provided as Collateral pursuant to the
Collateral and Guarantee Requirement (or such longer period as the

 

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Administrative Agent may agree in writing in its sole discretion), which
property would not be automatically subject to another Lien pursuant to
pre-existing Security Documents, cause such property to be subject to a Lien in
favor of the Collateral Agent for the benefit of the Secured Parties and take,
or cause the relevant Loan Party to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent or the Collateral Agent to
grant and perfect or record such Lien, in each case to the extent required by,
and subject to the limitations and exceptions of, the Collateral and Guarantee
Requirement and to otherwise comply with the requirements of the Collateral and
Guarantee Requirement.

(c) Always ensuring that the Obligations are secured by a perfected security
interest in all the Capital Stock of each of the Borrowers and the Subsidiary
Facility Guarantors.

Notwithstanding anything in this Agreement or the Security Documents to the
contrary, in no event shall any of the Borrowers or the Subsidiary Facility
Guarantors be required to deliver certificate(s) representing the Capital Stock
of Gymboree Hong Kong Services Limited that constitute Pledged Equity, or any
related stock powers, to the Collateral Agent or the collateral agent under the
Term Loan Facility (pursuant to the Intercreditor Agreement) until the date that
is thirty (30) days after the Closing Date or such longer period as the
Collateral Agent may agree in its Permitted Discretion.

SECTION 5.12 Compliance with Environmental Laws.

Except, in each case, to the extent that the failure to do so could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, the Loan Parties shall comply, and take all reasonable actions
to cause all lessees and other Persons operating or occupying its properties to
comply with all applicable Environmental Laws and permits; obtain and renew all
permits necessary for its operations and properties; and, in each case to the
extent required by Environmental Laws, conduct any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws.

SECTION 5.13 Further Assurances and Post-Closing Conditions.

(a) [Reserved].

(b) Promptly upon reasonable request by the Administrative Agent or the
Collateral Agent (i) correct any material defect or error that may be discovered
in the execution, acknowledgment, filing or recordation of any Security Document
or other document or instrument relating to any Collateral, and (ii) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register any and all such further acts, deeds, certificates, assurances and
other instruments as the Administrative Agent or the Collateral Agent may
reasonably request from time to time in order to carry out more effectively the
purposes of the Loan Documents and to cause the Collateral and Guarantee
Requirement to be and remain satisfied. Without limiting the foregoing, the Loan
Parties shall use commercially reasonable efforts to obtain a Collateral Access
Agreement from any Person from whom a Loan Party enters into a Lease after the
Closing Date for a warehouse or distribution center prior to entering into such
Lease.

 

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(c) Use commercially reasonable efforts to cause each of its customs brokers or
freight forwarder or carrier to deliver an agreement (including, without
limitation, a Customs Broker Agreement) to the Collateral Agent covering such
matters and in such form as the Collateral Agent may reasonably require.
Notwithstanding anything to the contrary contained in any Loan Document, unless
the Administrative Agent shall otherwise agree in its Permitted Discretion, in
the event Inventory is in the possession or control of a customs broker or
freight forwarder or carrier that has not delivered an agreement as required by
the preceding sentence, such Inventory shall not be considered Eligible
In-Transit Inventory hereunder.

SECTION 5.14 Designation of Subsidiaries.

The board of directors of the Lead Borrower may at any time designate any
Restricted Subsidiary as an Unrestricted Subsidiary or any Unrestricted
Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and
after such designation, no Default shall have occurred and be continuing,
(ii) after giving effect to such designation, the Payment Conditions shall have
been satisfied, (iii) no Subsidiary may be designated as an Unrestricted
Subsidiary if such Subsidiary is a Borrower or if such Subsidiary owns any
property of the type (e.g., Inventory and Accounts) included in the Tranche A
Borrowing Base or the FILO Borrowing Base, (iv) no Subsidiary may be designated
as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose
of the Senior Notes, the Term Loan Facility or any Junior Financing, as
applicable, and (v) no Restricted Subsidiary may be designated as an
Unrestricted Subsidiary if it was previously designated an Unrestricted
Subsidiary. The designation of any Subsidiary as an Unrestricted Subsidiary
shall constitute an Investment by the Lead Borrower therein at the date of
designation in an amount equal to the net book value of the Lead Borrower’s or
Restricted Subsidiary’s (as applicable) investment therein. The designation of
any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the
incurrence at the time of designation of any Indebtedness or Liens of such
Subsidiary existing at such time.

SECTION 5.15 Information Regarding Collateral.

The Lead Borrower will furnish to the Administrative Agent prompt written notice
of any change in: (a) any Loan Party’s name; (b) the location of any Loan
Party’s chief executive office or its principal place of business; (c) any Loan
Party’s organizational structure or jurisdiction of incorporation or formation;
or (d) any Loan Party’s Federal Taxpayer Identification Number or organizational
identification number assigned to it by its state or province of organization.
The Loan Parties agree not to effect or permit any change referred to in the
preceding sentence unless all filings, publications and registrations, have been
made (or will be made in a timely fashion) under the UCC or other Applicable Law
that are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected first priority
security interest to the extent required under the Security Documents (subject
only to Permitted Encumbrances having priority under Applicable Law) in all the
Collateral for its own benefit and the benefit of the other Secured Parties.

SECTION 5.16 Physical Inventories.

The Loan Parties, at their own expense, shall cause not less than one
(1) physical count of Inventory to be undertaken in each twelve (12) month
period (or alternatively, periodic cycle

 

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counts) in conjunction with the preparation of its annual audited financial
statements, conducted following such methodology as is consistent with the
methodology used in the immediately preceding Inventory (or cycle count) or as
otherwise may be reasonably satisfactory to the Administrative Agent. Following
the completion of such Inventory count, and in any event by the next date
required for the delivery of a Borrowing Base Certificate hereunder, the
Borrowers shall deliver the results of such physical inventory to the
Administrative Agent and shall post such results to the Loan Parties’ stock
ledgers and general ledgers, as applicable.

SECTION 5.17 Use of Proceeds of Credit Extensions.

The proceeds of Revolving Credit Loans made hereunder and of Letters of Credit
issued hereunder will be used only (a) to finance the acquisition of working
capital assets of the Lead Borrower and its Subsidiaries, including the purchase
of inventory and equipment, in each case in the ordinary course of business,
(b) to finance Capital Expenditures of the Lead Borrower and its Subsidiaries,
(c) to finance Permitted Acquisitions, and (d) for general corporate purposes,
all to the extent permitted in this Agreement. No part of the proceeds of any
Revolving Credit Loan or other Credit Extension will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
regulations of the FRB, including Regulations U and X.

SECTION 5.18 [Reserved].

SECTION 5.19 [Reserved].

SECTION 5.20 Pension Plans.

Cause each of its Plans to be duly qualified and administered in all respects in
compliance with all Applicable Laws, and the terms of the Plans and any
agreements relating thereto, except for such non-compliance as would not
reasonably be expected to have a Material Adverse Effect. The Lead Borrower and
each of its Restricted Subsidiaries shall use reasonable commercial efforts to
ensure that it, except where failure to do so would not reasonably be expected
to have a Material Adverse Effect: (a) has no Unfunded Pension Liability in
respect of any Plan, including any Plan to be established and administered by it
or them; and (b) does not engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that could reasonably be
expected to result in liability.

ARTICLE VI

Negative Covenants

Until (i) the Commitments have expired or been terminated, (ii) the principal of
and interest on each Revolving Credit Loan (including Swingline Loans) and all
fees and other Obligations (other than contingent indemnity obligations with
respect to then unasserted claims and the Other Liabilities) shall have been
paid in full, (iii) all Letters of Credit shall have expired or terminated (or
been cash collateralized or backstopped in a manner reasonably satisfactory to
the applicable Issuing Bank) and (iv) all Letter of Credit Outstandings have
been reduced to zero (or cash collateralized or backstopped in a manner
reasonably satisfactory to the applicable Issuing Bank):

 

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SECTION 6.01 Liens.

The Lead Borrower will not, nor will it permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the
following (each a “Permitted Encumbrance”):

(a) Liens securing any Obligations;

(b) Liens existing on the Closing Date and listed on Schedule 6.01 and any
modifications, replacements, renewals or extensions thereof; provided that
(i) the Lien does not extend to any additional property other than
(A) after-acquired property that is affixed or incorporated into the property
covered by such Lien or financed by Indebtedness permitted under SECTION 6.03,
and (B) proceeds and products thereof, and (ii) the renewal, extension or
refinancing of the obligations secured or benefited by such Liens is permitted
by SECTION 6.03;

(c) Liens for taxes, assessments or governmental charges which are not required
to be paid pursuant to SECTION 5.04 or which are not yet due and payable;

(d) statutory or common law Liens of landlords, sublandlords, carriers,
warehousemen, mechanics, materialmen, repairmen, construction contractors or
other like Liens imposed by Applicable Law or other customary Liens (other than
Liens in respect of Indebtedness) in favor of landlords, in each case, arising
in the ordinary course of business which secure amounts not overdue for a period
of more than thirty (30) days and no other action has been taken to enforce such
Lien or which are being contested in good faith and by appropriate actions
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of the applicable Person in accordance with GAAP and such contest
effectively suspends collection of the contested obligation and enforcement of
any Lien securing such obligation;

(e) (i) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation and (ii) pledges and deposits in the ordinary course of business
securing liability for reimbursement or indemnification obligations of
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance to the Lead Borrower or any Restricted Subsidiary;

(f) deposits to secure the performance of bids, trade contracts, governmental
contracts and leases (other than Indebtedness for borrowed money), statutory
obligations, surety, stay, customs and appeal bonds, performance bonds and other
obligations of a like nature (including those to secure health, safety and
environmental obligations) incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions, encroachments, servitudes, rights of
way, licenses, protrusions, site plan agreements, development agreements,
contract zoning agreements and other similar encumbrances, rights, agreements
and minor title defects affecting real property which, in the aggregate, do not
in any case materially interfere with the ordinary conduct of the business of
the Lead Borrower or any Restricted Subsidiary (other than an Immaterial
Subsidiary) taken as a whole, and exceptions on Mortgage Policies issued in
connection with such Mortgage Policies;

 

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(h) Liens securing judgments for the payment of money not constituting an Event
of Default under SECTION 7.01(h);

(i) Liens securing Indebtedness permitted under SECTION 6.03(e); provided that
(i) such Liens attach concurrently with or within two hundred and seventy
(270) days after the acquisition, lease, repair, replacement, construction or
improvement (as applicable) of the property subject to such Liens, (ii) such
Liens do not at any time encumber any property (except for accessions,
replacements or additions to such property) other than the property financed by
such Indebtedness and the proceeds and the products thereof and customary
security deposits and (iii) with respect to Capitalized Leases, such Liens do
not at any time extend to or cover any assets (except for accessions,
replacements or additions to such assets) other than the assets subject to such
Capitalized Leases and the proceeds and products thereof and customary security
deposits; provided that individual financings of equipment provided by one
lender may be cross collateralized to other financings of equipment provided by
such lender; and Liens securing any Permitted Refinancing of Indebtedness under
SECTION 6.03(e) that do not extend to any property that was not subject to the
Lien securing the Indebtedness being refinanced 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) the renewal, extension or
refinancing of the obligations secured or benefited by such Liens is permitted
by SECTION 6.03 (to the extent constituting Indebtedness);

(j) leases, licenses, subleases or sublicenses granted to others in the ordinary
course of business which do not (i) interfere in any material respect with the
business of Holdings, the Lead Borrower or any Restricted Subsidiary (other than
an Immaterial Subsidiary), taken as a whole, or (ii) secure any Indebtedness;

(k) Liens (i) in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods in the ordinary course of business which payments are not overdue for a
period of more than thirty (30) days and no other action has been taken to
enforce such Lien or which are being contested in good faith and by appropriate
actions diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP and
such contest effectively suspends collection of the contested obligation and
enforcement of any Lien securing such obligation and (ii) on specific items of
inventory or other goods and proceeds thereof of any Person securing such
Person’s obligations in respect of bankers’ acceptances or letters of credit
issued or created for the account of such person to facilitate the purchase,
shipment or storage of such inventory or such other goods in the ordinary course
of business; provided that no item of inventory subject to a Lien under this
clause (k)(ii) (other than a Lien in favor of the Collateral Agent securing the
Obligations and Liens in favor of Term Loan Agent and/or any agent or trustee
with respect to the Term Loan Facility or any Permitted Refinancing thereof)
shall be included in the FILO Borrowing Base or the Tranche A Borrowing Base;

(l) Liens (i) arising by operation of law under Article 4 of the UCC in
connection with collection of items provided for therein, and (ii) in favor of a
banking or other financial institution arising as a matter of law or under
customary general terms and conditions encumbering deposits or other funds
maintained with a financial institution (including the right of

 

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set-off) and which are within the general parameters customary in the banking
industry or arising pursuant to such banking institution’s general terms and
conditions;

(m) Liens (i) on cash advances in favor of the seller of any property to be
acquired in a Permitted Acquisition, an Investment permitted pursuant to SECTION
6.02(l) or, to the extent related to any of the foregoing, SECTION 6.02(v), in
each case, to be applied against the purchase price for such Permitted
Acquisition or Investment, and (ii) consisting of an agreement to dispose of any
property in a Permitted Disposition, in each case, solely to the extent such
Permitted Acquisition or Permitted Disposition, as the case may be, would have
been permitted on the date of the creation of such Lien;

(n) Liens on property (i) of any Foreign Subsidiary that is not a Loan Party and
(ii) that does not constitute Collateral, which Liens secure Indebtedness of the
applicable Foreign Subsidiary permitted under SECTION 6.03;

(o) Liens in favor of the Lead Borrower or a Restricted Subsidiary securing
Indebtedness permitted under SECTION 6.03(d);

(p) Liens (x) existing on property (other than ABL Priority Collateral unless
the Liens thereon are subordinated to the Lien of the Collateral Agent in a
manner consistent with the terms of the Intercreditor Agreement) at the time of
its acquisition or existing on the property of any Person at the time such
Person becomes a Restricted Subsidiary (other than by designation as a
Restricted Subsidiary pursuant to SECTION 5.14), in each case after the Closing
Date (other than Liens on the Capital Stock of any Person that becomes a
Restricted Subsidiary) and (y) placed upon property or assets (other than ABL
Priority Collateral unless the Liens thereon are subordinated to the Lien of the
Collateral Agent in a manner consistent with the terms of the Intercreditor
Agreement) of any Restricted Subsidiary or its Restricted Subsidiaries acquired
pursuant to a Permitted Acquisition to secure Indebtedness incurred pursuant to
SECTION 6.03(g) in connection with such Permitted Acquisition; provided that
(i) in the case of clause (x), such Lien was not created in contemplation of
such acquisition or such Person becoming a Restricted Subsidiary, (ii) in the
case of clause (x), such Lien does not extend to or cover any other assets or
property (other than the proceeds or products thereof and accessions or
additions thereto and other than after-acquired property subjected to a Lien
securing Indebtedness and other obligations incurred prior to such time and
which Indebtedness and other obligations are permitted hereunder that require,
pursuant to their terms at such time, 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) and (iii) in the case of clauses (x) and (y), (1) the obligations
secured thereby do not exceed $50,000,000 at any time outstanding and (2) the
Indebtedness secured thereby is permitted under SECTION 6.03(g);

(q) any interest or title (and all encumbrances and other matters affecting such
interest or title) of a licensor, sublicensor, lessor or sublessor under
licenses and leases entered into by the Lead Borrower or any of its Restricted
Subsidiaries in the ordinary course of business provided that no such lease or
sublease shall constitute a Capitalized Lease;

 

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(r) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by the Lead Borrower or any
of its Restricted Subsidiaries in the ordinary course of business permitted by
this Agreement;

(s) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes;

(t) 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 Lead Borrower or any Restricted Subsidiary to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Lead Borrower and its Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the Lead Borrower or
any Restricted Subsidiary in the ordinary course of business;

(u) Liens solely on any cash earnest money deposits made by the Lead Borrower or
any of its Restricted Subsidiaries in connection with any letter of intent or
purchase agreement permitted hereunder;

(v) Liens in respect of the Indebtedness incurred pursuant to SECTION 6.03(s) or
any Permitted Refinancing thereof; provided that such Liens are at all times
subject to the Intercreditor Agreement;

(w) Liens arising from precautionary UCC filings regarding “true” operating
leases or the consignment of goods to a Loan Party;

(x) Liens placed on the Capital Stock of any joint venture entity in the form of
a transfer restriction, purchase option, call or similar right of a third party
joint venture partner;

(y) ground leases in respect of real property on which facilities owned or
leased by the Lead Borrower or any of its Subsidiaries are located;

(z) Liens existing on title insurance policies relating to any Mortgages;

(aa) Liens on insurance proceeds incurred in the ordinary course of business in
connection with the financing of insurance premiums;

(bb) Liens on securities which are the subject of repurchase agreements incurred
in the ordinary course of business, provided that such Liens do not extend to
any assets other than those that are the subject of such repurchase agreement;

(cc) Liens arising by operation of law in the United States under Article 2 of
the UCC in favor of a reclaiming seller of goods or buyer of goods;

(dd) Security given to a public or private utility or any Governmental Authority
as required in the ordinary course of business;

 

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(ee) (i) zoning, building, entitlement and other land use regulations by
Governmental Authorities with which the normal operation of the business
complies, and (ii) any zoning or similar law or right reserved to or vested in
any Governmental Authority to control or regulate the use of any real property
that does not materially interfere with the ordinary conduct of the business of
the Lead Borrower and its Restricted Subsidiaries, taken as a whole;

(ff) [Reserved];

(gg) Undetermined or inchoate Liens which have not at such time been filed and
of which none of the Loan Parties have been given notice and which relate to
obligations not then due and payable; and

(hh) Without duplication of, or aggregation with, any other Lien permitted under
any other clause of this SECTION 6.01, other Liens (not covering ABL Priority
Collateral unless the Liens thereon are subordinated to the Lien of the
Collateral Agent in a manner consistent with the terms of the Intercreditor
Agreement) securing Indebtedness outstanding in an aggregate principal amount
not to exceed $60,000,000 at any time outstanding.

The designation of a Lien as a Permitted Encumbrance shall not limit or restrict
the ability of the Administrative Agent to establish any Reserve relating
thereto.

SECTION 6.02 Investments.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
make or hold any Investments, except the following (each a “Permitted
Investment”):

(a) Investments by the Lead Borrower or a Restricted Subsidiary in assets that
were Cash Equivalents when such Investment was made;

(b) loans or advances to officers, directors and employees of Holdings, the Lead
Borrower and its Restricted Subsidiaries (i) for reasonable and customary
business-related travel, entertainment, relocation and analogous ordinary
business purposes, (ii) to the extent permitted by Applicable Law, in connection
with such Person’s purchase of Capital Stock of the Lead Borrower (or any direct
or indirect parent of the Lead Borrower), provided that the amount of such loans
and advances shall be contributed to the Lead Borrower in cash as common equity,
or paid to the Lead Borrower in connection with such purchase of Capital Stock,
and (iii) to the extent permitted by Applicable Law, for purposes not described
in the foregoing clauses (i) and (ii), provided that the aggregate principal
amount outstanding at any time pursuant to this SECTION 6.02(b) shall not exceed
$18,000,000;

(c) Investments (i) by the Lead Borrower or any Restricted Subsidiary in any
Loan Party (other than Holdings), (ii) by any Restricted Subsidiary that is not
a Loan Party in any other such Restricted Subsidiary that is also not a Loan
Party, and (iii) by the Lead Borrower or any Restricted Subsidiary (A) in any
Foreign Subsidiary; provided that the outstanding aggregate amount of such
Investments in Foreign Subsidiaries that are not Loan Parties shall not exceed
$25,000,000 at any time (net of any return representing a return of capital in
respect of any such Investment), (B) in any Foreign Subsidiary, constituting an
exchange of Capital Stock of such

 

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Foreign Subsidiary for Indebtedness of such Foreign Subsidiary or
(C) constituting Guarantees of Indebtedness or other monetary obligations of
Foreign Subsidiaries owing to any Loan Party;

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and other credits
to suppliers in the ordinary course of business;

(e) Investments consisting of Permitted Encumbrances, Permitted Indebtedness,
fundamental changes, Permitted Dispositions, and Restricted Payments permitted
under SECTION 6.01, SECTION 6.03 (other than SECTION 6.03(c) and (d)), SECTION
6.04 (other than SECTION 6.04(c), (d) and (g)), SECTION 6.05 (other than SECTION
6.05(d) and (e)), and SECTION 6.06 (other than SECTION 6.06(c)), respectively;

(f) Investments by the Lead Borrower and its Restricted Subsidiaries consisting
of Permitted Acquisitions;

(g) Investments (i) existing or contemplated on the Closing Date and set forth
on Schedule 6.02 and any modification, replacement, renewal, reinvestment or
extension thereof and (ii) Investments existing on the Closing Date by the Lead
Borrower or any Restricted Subsidiary in the Lead Borrower or any other
Restricted Subsidiary and any modification, renewal or extension thereof;
provided that the amount of the original Investment is not increased except by
the terms of such Investment or as otherwise permitted by this SECTION 6.02;

(h) Investments in Swap Contracts permitted under SECTION 6.03;

(i) promissory notes and other noncash consideration received in connection with
Permitted Dispositions;

(j) Investments in the ordinary course of business consisting of endorsements
for collection or deposit and customary trade arrangements with customers
consistent with past practices;

(k) Investments (including debt obligations and Capital Stock) received in
connection with the bankruptcy or reorganization of suppliers and customers or
in settlement of delinquent obligations of, or other disputes with, customers
and suppliers arising in the ordinary course of business or upon the foreclosure
with respect to any secured Investment or other transfer of title with respect
to any secured Investment;

(l) so long as immediately after giving effect to any such Investment, no Event
of Default has occurred and is continuing and without duplication of any other
clauses of this SECTION 6.02, other Investments that do not exceed $60,000,000
in the aggregate at any time outstanding (net of any return of capital,
interest, distributions, income and similar amounts actually received in cash in
respect of any such Investment) and valued at the time of the making thereof
(provided that, such amount shall be increased by the Net Proceeds of Permitted
Equity Issuances), and determined without regard to any write-downs or
write-offs thereof;

 

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(m) advances of payroll payments to employees in the ordinary course
of business;

(n) Investments to the extent that payment for such Investments is made solely
with Capital Stock of the Lead Borrower or any direct or indirect parent of the
Lead Borrower not resulting in a Change in Control;

(o) Investments of a Restricted Subsidiary acquired after the Closing Date or of
a Person merged into or amalgamated with the Lead Borrower or merged,
amalgamated or consolidated with a Restricted Subsidiary in accordance with
SECTION 6.04 after the Closing Date to the extent that such Investments were not
made in contemplation of or in connection with such acquisition, merger,
amalgamation, or consolidation and were in existence on the date of such
acquisition, merger, amalgamation, or consolidation;

(p) Guarantees by the Lead Borrower or any Restricted Subsidiary of leases
(other than Capitalized Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business;

(q) Guarantees constituting Permitted Indebtedness;

(r) Subject to SECTION 2.18, Investments in deposit accounts opened in the
ordinary course of business;

(s) [Reserved];

(t) Capital Expenditures;

(u) Loans and advances to Holdings in lieu of, and not in excess of the amount
of (after giving effect to any other loans, advances or Restricted Payments in
respect thereof), Restricted Payments to the extent permitted to be made to
Holdings in accordance with SECTION 6.06;

(v) Without duplication of, or aggregation with, any Investment made under any
other clause of this SECTION 6.02, the Lead Borrower and its Restricted
Subsidiaries may make other Investments as long as the Payment Conditions are
satisfied; and

(w) Investments made by any Restricted Subsidiary that is not a Loan Party to
the extent such Investments are financed with the proceeds received by such
Restricted Subsidiary from an Investment in such Restricted Subsidiary permitted
pursuant to SECTION 6.02(c)(iii), SECTION 6.02(f) or SECTION 6.02(v);

provided that no Investment in an Unrestricted Subsidiary that would otherwise
be permitted under this SECTION 6.02 shall be permitted hereunder (w) to the
extent that any portion of such Investment is used to make any prepayments,
redemptions, purchases, defeasances and other payments in respect of any
Indebtedness of Holdings, the Lead Borrower or any of their Restricted
Subsidiaries, (x) if immediately before or after such Investment, an Event of
Default shall have occurred and be continuing, (y) if after giving effect to
such Investment, the Payment Conditions shall not have been satisfied, or (z) if
such Investment

 

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consists of a transfer of any property of the type (e.g., Inventory and
Accounts) included in the Tranche A Borrowing Base or the FILO Borrowing Base.

SECTION 6.03 Indebtedness.

The Lead Borrower will not, nor will it permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Indebtedness, except the following
(each “Permitted Indebtedness”):

(a) Indebtedness of the Lead Borrower and any of its Subsidiaries under the Loan
Documents;

(b) Indebtedness (i) outstanding on the Closing Date and listed on Schedule
6.03, and (ii) intercompany Indebtedness outstanding on the Closing Date;

(c) Guarantees by the Lead Borrower and its Restricted Subsidiaries in respect
of Indebtedness of the Lead Borrower or any Restricted Subsidiary otherwise
permitted hereunder; provided that (A) no Guarantee by any Restricted Subsidiary
of the Senior Notes or the Term Loan Facility or any Junior Financing shall be
permitted unless such Restricted Subsidiary shall have also provided a Guarantee
of the Obligations substantially on the terms set forth in the Facility
Guarantee executed on the Initial Closing Date and (B) if the Indebtedness being
Guaranteed is subordinated to the Obligations, such Guarantee shall be
subordinated to the Facility Guarantee of the Obligations on terms at least as
favorable to the Lenders as those contained in the subordination of such
Indebtedness;

(d) Indebtedness of the Lead Borrower or any Restricted Subsidiary owing to the
Lead Borrower or any other Restricted Subsidiary to the extent constituting an
Investment permitted by SECTION 6.02; provided that, (i) all such Indebtedness
of any Loan Party owed to any Person that is not, or ceases to be, a Loan Party
shall be subject to the subordination terms set forth in Article VII of the
Security Agreement pursuant to an express written agreement by such Person for
the benefit of the Administrative Agent and Collateral Agent and (ii) in the
event of any such Indebtedness in respect of the sale, transfer or assignment of
ABL Priority Collateral, such Indebtedness shall be duly noted on the books and
records of the Loan Parties as being owing in respect of ABL Priority
Collateral;

(e) So long as the Payment Conditions are satisfied after giving effect thereto,
Attributable Indebtedness and other Indebtedness (including Capitalized Leases)
of the Lead Borrower and its Restricted Subsidiaries financing the acquisition,
lease, construction, repair, replacement or improvement of fixed or capital
assets, other than software; provided that (i) such Indebtedness is incurred
concurrently with or within two hundred and seventy (270) days after the
applicable acquisition, construction, repair, lease, replacement or improvement,
and (ii) if reasonably requested by the Administrative Agent, the Loan Parties
will use commercially reasonable efforts to cause the holder of such
Indebtedness to enter into a Collateral Access Agreement with the Collateral
Agent on terms reasonably satisfactory to the Collateral Agent; provided further
that notwithstanding the foregoing, the Lead Borrower and its Restricted
Subsidiaries may incur Attributable Indebtedness and other Indebtedness of the
type described in this clause (e), in an aggregate amount not to exceed
$25,000,000 at any time outstanding, without satisfaction of the Payment
Conditions.

 

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(f) Indebtedness in respect of Swap Contracts designed to hedge against interest
rates, foreign exchange rates or commodities pricing risks incurred in the
ordinary course of business and not for speculative purposes;

(g) (i) Indebtedness of the Lead Borrower or any of its Restricted Subsidiaries
(A) assumed in connection with any Permitted Acquisition; provided that such
Indebtedness is not incurred in contemplation of such Permitted Acquisition, or
(B) incurred to finance a Permitted Acquisition and (ii) any Permitted
Refinancing of the foregoing; provided, in each case that such Indebtedness and
all Indebtedness resulting from any Permitted Refinancing thereof (v) is
unsecured (except for (A) Liens permitted under SECTION 6.01(p) securing
Indebtedness (together with Permitted Refinancings thereof) in an aggregate
principal outstanding not to exceed $50,000,000 and (B) Liens permitted under
SECTION 6.01(hh)) or is subordinated to the Obligations on terms reasonably
acceptable to the Administrative Agent, (w) both immediately prior and after
giving effect thereto, no Event of Default shall exist or result therefrom
(other than with respect to a Permitted Acquisition made pursuant to a legally
binding commitment entered into at a time when no Event of Default existed or
would result therefrom), (x) matures after, and does not require any scheduled
amortization or other scheduled payments of principal prior to, the then Latest
Maturity Date (it being understood that such Indebtedness may have mandatory
prepayment, repurchase or redemptions provisions satisfying the requirement of
clause (y) hereof) and (y) has terms and conditions (other than interest rate,
redemption premiums, and optional prepayment and optional redemption terms),
taken as a whole, that are reasonably acceptable to the Administrative Agent
provided that a certificate of a Responsible Officer shall be delivered to the
Administrative Agent at least five Business Days prior to the incurrence of such
Indebtedness (or within such shorter period as the Administrative Agent shall
agree in writing, in its sole discretion), together with a reasonably detailed
description of the material terms and conditions of such Indebtedness or drafts
of the documentation relating thereto, stating that the Lead Borrower has
determined in good faith that such terms and conditions satisfy the foregoing
requirement and such certificate shall be conclusive evidence that such terms
and conditions satisfy the foregoing requirement unless the Administrative Agent
notifies the Lead Borrower within such five Business Day period that it
disagrees with such determination (including a reasonable description of the
basis upon which it disagrees);

(h) Indebtedness representing deferred compensation, severance, and health and
welfare retirement benefits to current and former employees of Holdings, the
Lead Borrower and its Restricted Subsidiaries incurred in the ordinary course of
business or existing on the Closing Date;

(i) Indebtedness consisting of promissory notes issued by any Loan Party to
current or former officers, directors, employees and consultants, their
respective estates, spouses or former spouses to finance the purchase or
redemption of Capital Stock of Holdings or the Lead Borrower or any direct or
indirect parent of Holdings or the Lead Borrower permitted by SECTION 6.06;

(j) Indebtedness incurred by the Lead Borrower or its Restricted Subsidiaries in
connection with any Permitted Acquisition, Investment or disposition expressly
permitted hereunder constituting indemnification obligations or obligations in
respect of purchase price (including earnouts) or other similar adjustments,
provided that in the case of a disposition, the maximum assumable liability in
respect of all such Indebtedness shall at no time exceed the gross proceeds
including non-cash proceeds (the fair market value of such non-cash proceeds
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time received and without giving effect to any subsequent changes in value)
actually received by the Lead Borrower and its Restricted Subsidiaries in
connection with such Acquisition or Investment;

(k) Indebtedness consisting of obligations of the Lead Borrower or its
Restricted Subsidiaries under deferred compensation or other similar
arrangements incurred by such Person in connection with the Transaction and
Permitted Acquisitions or any other Investment expressly permitted hereunder;

(l) Obligations with respect to Cash Management Services and other Indebtedness
in respect of netting services, overdraft protections and similar arrangements
in each case in connection with deposit accounts;

(m) Without duplication of, or accumulation with, any other clauses of this
SECTION 6.03, Indebtedness in an aggregate principal amount not to exceed
$90,000,000 at any time outstanding;

(n) As long as the Payment Conditions are satisfied after giving effect thereto,
Subordinated Indebtedness and other unsecured non-amortizing long term
Indebtedness;

(o) Indebtedness consisting of (a) the financing of insurance premiums or
(b) take-or-pay obligations contained in supply arrangements, in each case, in
the ordinary course of business;

(p) [Reserved];

(q) obligations in respect of performance, bid, appeal and surety bonds and
performance and completion guarantees and similar obligations provided by the
Lead Borrower or any of its Restricted Subsidiaries or obligations in respect of
letters of credit, bank guarantees or similar instruments related thereto, in
each case in the ordinary course of business or consistent with past practice;

(r) Indebtedness supported by a Letter of Credit, in a principal amount not to
exceed the face amount of such Letter of Credit;

(s) Indebtedness in respect of the Term Loan Facility in an aggregate principal
amount at any time outstanding not to exceed the sum of (x) $820,000,000 plus
(y) $200,000,000 minus (z) the aggregate principal amount of Commitment
Increases made hereunder in accordance with SECTION 2.02 (whether or not
outstanding);

(t) Indebtedness in respect of the Senior Notes in an aggregate principal amount
not to exceed $400,000,000 at any time outstanding;

(u) Indebtedness incurred in connection with sale-leaseback transactions
permitted hereunder;

(v) Unsecured Indebtedness owed to the Sponsor and/or other stockholders of
Holdings, the Lead Borrower and their respective Affiliates, provided that such
Indebtedness does not require the payment in cash of interest at a rate in
excess of ten percent (10%) per annum or principal prior to the then Latest
Maturity Date, has a maturity which extends beyond the then Latest Maturity

 

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Date, and is subordinated to the Obligations on terms reasonably acceptable to
the Administrative Agent;

(w) Guarantees and letters of credit and surety bonds (other than Guarantees of,
or letters of credit and surety bonds related to, Indebtedness) issued by the
Lead Borrower and its Restricted Subsidiaries in connection with Permitted
Acquisitions and Permitted Dispositions;

(x) Without duplication of any other Indebtedness, non-cash accruals of
interest, accretion or amortization of original issue discount and
payment-in-kind interest with respect to Indebtedness permitted hereunder;

(y) Indebtedness due to any landlord in connection with the financing by such
landlord of leasehold improvements;

(z) All premiums (if any), interest (including post-petition interest), fees,
expenses, charges and additional or contingent interest on obligations described
in clauses (a) through (y) above;

(aa) Indebtedness of Restricted Subsidiaries that are not Loan Parties, in an
aggregate principal amount at any time outstanding not to exceed $40,000,000;
and

(bb) Extensions, renewals and replacements of any such Indebtedness described in
clauses (b), (c), (d), (e), (f), (g), (m), (n), (s), (t), (u), (v), (w), (x) and
(aa) above provided that such Indebtedness constitutes a Permitted Refinancing.

For purposes of calculating compliance with this SECTION 6.03 only, the amount
of Indebtedness of a Person which is non-recourse to such Person shall be deemed
to be equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness, or (ii) the fair market value of the property upon which a Lien
has been granted to secure such Indebtedness.

SECTION 6.04 Fundamental Changes.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
merge, amalgamate, dissolve, liquidate, wind up, consolidate with or into
another Person, or dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that:

(a) any Restricted Subsidiary may merge or amalgamate with (i) any Borrower
(including a merger or amalgamation, the purpose of which is to reorganize such
Borrower into a new jurisdiction); provided that such Borrower shall be the
continuing or surviving Person and no Event of Default shall have occurred or
resulted therefrom, or (ii) any one or more other Restricted Subsidiaries;
provided that when any Restricted Subsidiary that is a Loan Party is merging or
amalgamating with another Restricted Subsidiary, a Loan Party shall be the
continuing or surviving Person except to the extent otherwise constituting an
Investment permitted by SECTION 6.02 (other than SECTION 6.02 (e));

(b) (i) any Subsidiary that is not a Loan Party may merge, amalgamate or
consolidate with or into any other Subsidiary that is not a Loan Party, (ii) any
Loan Party may merge, amalgamate or consolidate with any other Loan Party,
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party thereto, a Borrower shall be the continuing or surviving Person, and
(iii) any Subsidiary may liquidate or dissolve or change its legal form if the
Lead Borrower determines in good faith that such action is in the best interests
of the Lead Borrower and its Subsidiaries and if not materially disadvantageous
to the Lenders; provided that with respect to this clause (b)(iii), a
certificate of a Responsible Officer shall be delivered to the Administrative
Agent at least five (5) Business Days (or within such shorter period as the
Administrative Agent shall agree in writing, in its sole discretion) prior to
the liquidation, dissolution or change of legal form, together with a reasonably
detailed description of the material terms and conditions thereof, stating that
the Lead Borrower has determined in good faith that such terms and conditions
satisfy the foregoing requirement;

(c) any Restricted Subsidiary may dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Lead Borrower or to
another Restricted Subsidiary; provided that if the transferor in such a
transaction is a Loan Party, then (i) the transferee must be another Loan Party,
or (ii) to the extent constituting an Investment, such Investment must be a
Permitted Investment in or Indebtedness of a Restricted Subsidiary which is not
a Loan Party in accordance with SECTION 6.02 and SECTION 6.03, respectively;

(d) so long as no Event of Default exists or would result therefrom, any
Restricted Subsidiary may merge or amalgamate with any other Person in order to
effect a Permitted Investment; provided that the continuing or surviving Person
shall be a Restricted Subsidiary, which together with each of its Restricted
Subsidiaries, shall have complied with the requirements of SECTION 5.11;

(e) so long as no Event of Default exists or would result therefrom, the Lead
Borrower and its Restricted Subsidiaries may consummate a merger, amalgamation,
dissolution, winding up, liquidation, consolidation or Disposition, the purpose
of which is to effect a Permitted Disposition;

(f) [Reserved]; and

(g) so long as no Event of Default exists or would result therefrom, the Lead
Borrower may merge with any other Person; provided that (i) the Lead Borrower
shall be the continuing or surviving corporation or (ii) if the Person formed by
or surviving any such merger or consolidation is not the Lead Borrower (any such
Person, the “Successor Lead Borrower”), (A) the Successor Lead Borrower shall be
an entity organized or existing under the Laws of the United States, any state
thereof or the District of Columbia and such transaction shall not have an
adverse effect on the attachment, perfection or priority of the Liens granted
under the Security Documents, (B) the Successor Lead Borrower shall expressly
assume all the obligations of the Lead Borrower under this Agreement and the
other Loan Documents to which the Lead Borrower is a party pursuant to a
supplement hereto or thereto in form and substance reasonably satisfactory to
the Administrative Agent, (C) each other Borrower and Facility Guarantor, unless
it is the other party to such merger or consolidation, shall have confirmed that
its Guarantee shall apply to the Successor Lead Borrower’s obligations under the
Loan Documents, (D) each other Borrower and Facility Guarantor, unless it is the
other party to such merger or consolidation, shall have by a supplement to the
Security Agreement and other applicable Security Documents confirmed that its
obligations thereunder shall apply to the Successor Lead Borrower’s obligations
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Loan Documents, (E) if requested by the Collateral Agent, each mortgagor of a
mortgaged property, unless it is the other party to such merger or
consolidation, shall have by an amendment to or restatement of the applicable
mortgage (or other instrument reasonably satisfactory to the Collateral Agent)
confirmed that its obligations thereunder shall apply to the Successor Lead
Borrower’s obligations under the Loan Documents, (F) the Administrative Agent
shall have received such financial information, collateral appraisals and
examinations, projections (including Availability projections) and other
information (all at the cost and expense of the Lead Borrower) as the
Administrative may reasonably request in connection with such transaction,
(G) the Administrative Agent, in good faith in the exercise of its Permitted
Discretion, shall have approved such transaction and (H) the Lead Borrower shall
have delivered to the Administrative Agent (x) an officer’s certificate and an
opinion of counsel, each stating that such merger or consolidation and such
supplement to this Agreement or any Security Document comply with this Agreement
and (y) an updated Borrowing Base Certificate dated as of the date of such
merger (after giving effect thereto); provided, further, that if the foregoing
are satisfied, the Successor Lead Borrower will succeed to, and be substituted
for, the Lead Borrower under this Agreement; and provided further that the Lead
Borrower agrees to use commercially reasonable efforts to provide any
documentation and other information about the Successor Lead Borrower as shall
have been reasonably requested in writing by any Lender through the
Administrative Agent that such Lender shall have reasonably determined is
required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation the
USA Patriot Act.

SECTION 6.05 Dispositions.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
make any Disposition, except the following (each, a “Permitted Disposition”):

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business and dispositions of
property no longer used or useful in the conduct of the business of the Lead
Borrower and its Restricted Subsidiaries including, without limitation, the
abandonment of or failure to maintain Intellectual Property and with respect to
closed Stores;

(b) Dispositions of Inventory in the ordinary course of business;

(c) Dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or
(ii) the proceeds of such disposition are promptly applied to the purchase price
of such replacement property;

(d) Dispositions of property to the Lead Borrower or to a Restricted Subsidiary;
provided that if the transferor of such property is a Loan Party (i) the
transferee thereof must either be a Borrower or a Subsidiary Facility Guarantor,
in which event the Collateral Agent shall retain its perfected Lien on the
property so disposed of, subject to the same priority as existed prior to such
disposition, or (ii) to the extent such transaction constitutes an Investment,
such transaction is a Permitted Investment, provided further that (A) if the
property being disposed of is transferred to a Subsidiary that is not a Loan
Party, the Administrative Agent may require, in the exercise of its reasonable
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agreement granting the Agents access to such property for purposes of conducting
a Liquidation, and (B) if the property being disposed of constitutes Eligible
Credit Card Receivables, Eligible Trade Receivables, Eligible Inventory,
Eligible In-Transit Inventory, or Eligible Letters of Credit and is being
transferred to a Subsidiary which is not a Borrower or a Subsidiary Facility
Guarantor, such disposition shall be made only if the Payment Conditions are
satisfied after giving effect thereto;

(e) Dispositions permitted by SECTION 6.02 (other than SECTION 6.02(e)), SECTION
6.04 (other than SECTION 6.04(e)) and SECTION 6.06 (other than SECTION 6.06(c))
and Permitted Encumbrances;

(f) Dispositions of Cash Equivalents;

(g) sales, discounting or forgiveness of Accounts in the ordinary course of
business or in connection with the collection or compromise thereof;

(h) leases, subleases, licenses or sublicenses (including the provision of
Software under an open source license), in each case in the ordinary course of
business and which (i) do not materially interfere with the business of the Lead
Borrower and its Restricted Subsidiaries, or (ii) relate to closed Stores;

(i) termination of Leases in the ordinary course of business;

(j) transfers of property subject to Casualty Events upon receipt (where
practical) of the Net Proceeds of such Casualty Event;

(k) licenses for the conduct of licensed departments within the Loan Parties’
Stores in the ordinary course of business;

(l) as long as no Specified Default hereof then exists or would arise therefrom,
and no Overadvance would result therefrom, bulk sales or other dispositions of
the Loan Parties’ Inventory not in the ordinary course of business in connection
with Store closings, at arm’s length, provided that (i) such Store closures and
related Inventory dispositions shall not exceed, in any Fiscal Year of the Lead
Borrower and its Subsidiaries, ten percent (10%) of the number of the Loan
Parties’ Stores as of the beginning of such Fiscal Year (net of Store
relocations (i) occurring substantially contemporaneously, but in no event later
than ten (10) Business Days after the related Store closure date, or
(ii) wherein a binding lease has been entered into prior to the related Store
closure date) as set forth in the Compliance Certificate delivered pursuant to
SECTION 5.02(b), and (ii) as of any date after the Closing Date, the aggregate
number of such Store closures since the Closing Date shall not exceed
twenty-five percent (25%) of the greater of (x) the number of the Loan Parties’
Stores in existence as of the Closing Date or (y) the number of the Loan
Parties’ Stores as of the first day of any Fiscal Year beginning after the
Closing Date (net of Store relocations (i) occurring substantially
contemporaneously, but in no event later than ten (10) Business Days after the
related Store closure date or (ii) wherein a binding lease has been entered into
prior to the related Store closure date) as set forth in the Compliance
Certificate delivered pursuant to SECTION 5.02(b), provided that all sales of
Inventory in connection with Store closings in a transaction or series of
related transactions shall be in accordance with liquidation agreements and with
professional liquidators reasonably acceptable to the Administrative Agent;
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received in connection therewith are applied to the Obligations, if then
required in accordance with SECTION 2.17, SECTION 2.18 or SECTION 7.04 hereof;

(m) sales of non-core assets acquired in connection with a Permitted Acquisition
and sales of Real Estate acquired in a Permitted Acquisition which, within
thirty days of the date of the Acquisition (or such longer period as the
Administrative Agent shall agree in writing, in its sole discretion), are
designated in writing to the Administrative Agent as being held for sale and not
for the continued operation of a Store;

(n) exchanges or swaps, including, without limitation, transactions covered by
Section 1031 of the Code, of Leases and other Real Estate of the Loan Parties so
long as the exchange or swap is made for fair value and on an arm’s length
basis, provided that upon the consummation of such exchange or swap, (x) the
Collateral Agent has a perfected Lien having the same priority as any Lien held
on the Leases or Real Estate so exchanged or swapped and (y) the Net Proceeds,
if any, received in connection with any such exchange or swap are applied to the
Obligations if then required in accordance with SECTION 2.17, SECTION 2.18 or
SECTION 7.04 hereof;

(o) sale-leaseback transactions of Real Estate of any Loan Party as long as
(A) no Specified Default then exists or would arise therefrom, and (B) with
respect to any distribution center, warehouse, manufacturing facility or
corporate offices, (1) such sale-leaseback is made pursuant to leases on market
terms, and (2) the Loan Parties cause each purchaser of such Real Estate to
enter into a Collateral Access Agreement with the Collateral Agent on terms
reasonably satisfactory to the Collateral Agent; provided that the Loan Parties
need not enter into such Collateral Access Agreements to the extent that the
aggregate fair market value of the Real Estate disposed of pursuant to this
SECTION 6.05(o) since the Closing Date and with respect to which no Collateral
Access Agreements have been executed does not exceed $40,000,000 (but the
foregoing shall not impair the right of the Administrative Agent to impose an
Availability Reserve);

(p) Dispositions listed on Schedule 6.05;

(q) Dispositions of Investments in joint ventures to the extent required by, or
made pursuant to customary buy/sell arrangements between, the joint venture
parties set forth in joint venture arrangements and similar binding
arrangements; and

(r) Dispositions of property (other than ABL Priority Collateral) not otherwise
permitted under this SECTION 6.05, provided that (i) at the time of such
Disposition (other than any such Disposition made pursuant to a legally binding
commitment entered into at any time when no Event of Default exists), no Event
of Default shall exist or would result from such Disposition, (ii) the aggregate
book value of all property disposed of pursuant to this clause (r) and clause
(s) below shall not exceed $250,000,000 in the aggregate after the Closing Date
and (iii) in the event of a Disposition of Intellectual Property used or useful
in connection with the ABL Priority Collateral, the purchaser, assignee or other
transferee thereof agrees in writing to be bound by a non-exclusive royalty-free
worldwide license of such Intellectual Property in favor of the Collateral Agent
for use in connection with the exercise of the rights and remedies of the
Secured Parties, which license shall be in form and substance reasonably
satisfactory to the Collateral Agent, and provided further, that in the case of
a Disposition of Intellectual Property licensed by the Lead Borrower or one of
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transferee thereof shall be required to provide such a license only to the
extent to which the applicable license gives it a right to do so;

(s) so long as no Event of Default exists or would arise as a result of the
transaction, sales of a Subsidiary or any business segment which is a Non-Core
Business Segment, or any portion thereof, (i) to any Person other than a Loan
Party or a Subsidiary or a Sponsor, for fair market value and so long as the
consideration received for such sale or transfer is at least 85% cash, or
(ii) to a Subsidiary or Sponsor, if the Pro Forma Availability Condition is
satisfied, such sale or transfer is for fair market value and the entire
consideration received for such sale or transfer is paid in cash, provided that,
in each case, such sale shall be in an amount at least equal to the greater of
the amounts advanced or available to be advanced against the assets included in
the sale under the Borrowing Base, and further provided that (A) all Net
Proceeds, if any, received in connection with any such sales are applied to the
Obligations if then required in accordance with SECTION 2.17 or SECTION 2.18
hereof and (B) the aggregate book value of all property disposed of pursuant to
this clause (s) and clause (r) above shall not exceed $250,000,000 in the
aggregate after the Closing Date;

provided that any disposition of any property pursuant to this SECTION 6.05
(except for Dispositions pursuant to SECTION 6.05(e), SECTION 6.05(j) and
SECTION 6.05(q) and Dispositions from a Loan Party to another Loan Party), shall
be for no less than the fair market value of such property at the time of such
disposition and, (1) in the case of Accounts and Inventory owned by a Loan Party
solely for cash consideration, and (2) in the case of a Disposition of any other
assets pursuant to SECTION 6.05(r) for a purchase price in excess of $5,000,000,
at least seventy-five percent (75%) of the consideration is payable in cash or
Cash Equivalents at the time of consummation of the transaction; provided,
however, that for the purposes of this clause (2), the following shall be deemed
to be cash: (A) any liabilities (as shown on the Lead Borrower’s most recent
balance sheet provided hereunder or in the footnotes thereto) of the Lead
Borrower or such Restricted Subsidiary, other than liabilities that are by their
terms subordinated to the payment in cash of the Obligations, that are assumed
by the transferee with respect to the applicable Disposition and for which the
Lead Borrower and all of its Restricted Subsidiaries shall have been validly
released by all applicable creditors in writing, (B) any securities received by
the Lead Borrower or the applicable Restricted Subsidiary from such transferee
that are converted by the Lead Borrower or such Restricted Subsidiary into cash
or Cash Equivalents (to the extent of the cash or Cash Equivalents received)
within 180 days following the closing of the applicable Disposition, and
(C) aggregate non-cash consideration received by the Led Borrower or the
applicable Restricted Subsidiary having an aggregate fair market value
(determined as of the closing of the applicable Disposition for which such
non-cash consideration is received) not to exceed $10,000,000 at any time (net
of any non-cash consideration converted into cash and Cash Equivalents). To the
extent any Collateral is disposed of as expressly permitted by this SECTION 6.05
to any Person other than the Lead Borrower or any Restricted Subsidiary, such
Collateral shall be sold free and clear of the Liens created by the Loan
Documents, and, if requested by the Lead Borrower, upon the certification
delivered to the Administrative Agent or the Collateral by the Lead Borrower
that such Disposition is permitted by this Agreement, the Agents shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.

SECTION 6.06 Restricted Payments.

 

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The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to
declare or make, directly or indirectly, any Restricted Payment, except:

(a) each Restricted Subsidiary may make Restricted Payments to the Lead Borrower
and to other Restricted Subsidiaries (and, in the case of a Restricted Payment
by a non-wholly owned Restricted Subsidiary, to the Lead Borrower and any other
Restricted Subsidiary and to each other owner of Capital Stock of such
Restricted Subsidiary based on their relative ownership interests of the
relevant class of Capital Stock);

(b) the Lead Borrower and each Restricted Subsidiary may declare and make
dividend payments or other distributions payable solely in the Capital Stock
(other than Disqualified Capital Stock not otherwise permitted by SECTION 6.03)
of such Person;

(c) to the extent constituting Restricted Payments, the Lead Borrower and its
Restricted Subsidiaries may enter into and consummate transactions expressly
permitted by any provision of SECTION 6.02 (other than SECTION 6.02(e)), SECTION
6.04 or SECTION 6.08 (other than SECTION 6.08(h) and (k));

(d) the Lead Borrower or any Restricted Subsidiary may repurchase (or may make
Restricted Payments to allow Holdings or any direct or indirect parent thereof
to repurchase) Capital Stock in Holdings or any direct or indirect parent
thereof, the Lead Borrower or any Restricted Subsidiary deemed to occur upon the
exercise of stock options or warrants if such Capital Stock represents a portion
of the exercise price of such options or warrants;

(e) the Lead Borrower or any Restricted Subsidiary may pay (or make Restricted
Payments to allow Holdings or any direct or indirect parent thereof to pay) for
the repurchase, retirement, or other acquisition of Capital Stock of Holdings or
any of its direct or indirect parent companies held by any former or present
officer, director, employee or consultant of Holdings, the Lead Borrower or any
of its Restricted Subsidiaries or any of its direct or indirect parent
companies, or any of their respective estates, spouses or former spouses
pursuant to any management, director or employee equity plan or stock option
plan or any other management, director or employee benefit plan or agreement
(including, for the avoidance of doubt, any principal and interest payable on
any notes issued by Holdings or the Lead Borrower or any direct or indirect
parent company in connection with such repurchase, retirement or other
acquisition); provided that amounts payable under this clause (e) do not exceed
$10,000,000 in any fiscal year (which shall increase to $20,000,000 subsequent
to the consummation of an underwritten Qualifying IPO by Holdings, the Lead
Borrower or any direct or indirect parent company of Holdings), with unused
amounts in any calendar year being carried over to succeeding fiscal years,
subject to a maximum (without giving effect to the following proviso) of
$20,000,000 in any fiscal year unless the Pro Forma Availability Condition shall
have been satisfied after giving effect to such Restricted Payment, in which
case the maximum amount shall be $40,000,000 in any fiscal year after the
consummation of an underwritten Qualifying IPO by Holdings, the Lead Borrower or
any direct or indirect parent company of Holdings; provided further that such
amount in any fiscal year may be increased by an amount not to exceed the Net
Proceeds of Permitted Equity Issuances (other than Disqualified Capital Stock)
after the Closing Date to the extent that such Net Proceeds shall have been
actually received by the Lead Borrower, in each case to members of management,
directors or consultants of Holdings or of its Restricted

 

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Subsidiaries or any direct or indirect parent company of Holdings that occurs
after the Closing Date, plus, in respect of any sale of Capital Stock in
connection with an exercise of stock options, an amount equal to the amount
required to be withheld by Holdings, the Lead Borrower or any of its direct or
indirect parent companies in connection with such exercise under applicable law
to the extent such amount is repaid to Holdings or any of its direct or indirect
parent companies, less (B) the amount of any Restricted Payments previously made
with the cash proceeds described in clauses (A) of this clause (e);

(f) the Lead Borrower may make cash payments (or may make Restricted Payments to
permit Holdings or any direct or indirect parent thereof to make cash payments)
in lieu of the issuance of fractional shares in connection with the exercise of
warrants, options or other securities convertible into or exchangeable for
Capital Stock of Holdings (or any direct or indirect parent thereof), the Lead
Borrower or any Restricted Subsidiary; provided, however, that any such cash
payment shall not be for the purpose of evading the limitations of this
Agreement;

(g) the Lead Borrower and its Restricted Subsidiaries may make Restricted
Payments with the Net Proceeds of Permitted Equity Issuances;

(h) the Lead Borrower and its Restricted Subsidiaries may distribute, by
dividend or otherwise, shares of Capital Stock of, or Indebtedness owed to
Holdings, the Lead Borrower or a Restricted Subsidiary by, Unrestricted
Subsidiaries (other than any Unrestricted Subsidiary whose primary assets are
Cash Equivalents);

(i) The Lead Borrower may declare and pay dividends or distributions to, or make
loans to, Holdings in amounts required for Holdings or any direct or indirect
parent of Holdings to pay, in each case without duplication,

(i) franchise taxes and other fees, Taxes and expenses required to maintain
Holdings’ (or such parent’s) corporate existence;

(ii) for any taxable period in which the Lead Borrower and/or any of its
Subsidiaries is a member of a consolidated, combined or similar income tax group
of which a direct or indirect parent of the Lead Borrower is the common parent
(a “Tax Group”), to pay federal, foreign, state and local income taxes of such
Tax Group that are attributable to the taxable income of the Lead Borrower
and/or its Subsidiaries; provided that, for each taxable period, the amount of
such payments made in respect of such taxable period in the aggregate shall not
exceed the amount that the Lead Borrower and its Subsidiaries would have been
required to pay in respect of federal, foreign, state and local income taxes in
the aggregate if such entities were corporations paying taxes separately from
any Tax Group at the highest combined applicable federal, foreign, state and
local tax rate for such fiscal year (it being understood and agreed that if the
Lead Borrower or any Subsidiary pays any such federal, foreign, state or local
income taxes directly to such taxing authority, that a Restricted Payment in
duplication of such amount shall not be permitted to be made pursuant to this
clause (ii)); provided further that the permitted payment pursuant to this
clause (ii) with respect to any taxes of any Unrestricted Subsidiary for any
taxable period shall be limited to the amount

 

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actually paid with respect to such period by such Unrestricted Subsidiary to the
Lead Borrower or its Restricted Subsidiaries for the purposes of paying such
consolidated, combined or similar taxes;

(iii) as long as no Event of Default then exists or would arise therefrom (or if
such Event of Default exists or would so arise, with the written consent of the
Administrative Agent or without such consent, by using the amounts in the
Designated Account), for any Permitted Acquisition that would be permitted to be
made pursuant to SECTION 6.02, assuming such recipient were subject to such
section;

(iv) (A) its operating expenses incurred in the ordinary course of business and
other corporate overhead costs and expenses (including administrative, legal,
accounting and similar expenses provided by third parties), which are reasonable
and customary and incurred in the ordinary course of business and attributable
to the ownership or operations of the Lead Borrower and its Restricted
Subsidiaries and (B) Transaction Expenses and any reasonable and customary
indemnification claims made by directors or officers of such parent attributable
to the ownership or operations of the Lead Borrower and its Restricted
Subsidiaries;

(v) customary salary, bonus and other benefits payable to officers and employees
of Holdings or any direct or indirect parent company of Holdings to the extent
such salaries, bonuses and other benefits are attributable to the ownership or
operation of the Lead Borrower and its Restricted Subsidiaries; and

(vi) as long as no Event of Default then exists or would arise therefrom (or if
such Event of Default exists or would so arise, with the written consent of the
Administrative Agent or without such consent, by using the amounts in the
Designated Account), reasonable and customary fees and expenses (other than to
Affiliates) related to any unsuccessful equity or debt offering by Holdings (or
any direct or indirect parent thereof) not prohibited by this Agreement that is
directly attributable to the operations of the Lead Borrower and its Restricted
Subsidiaries.

(j) the Lead Borrower or any of its Restricted Subsidiaries may make payments in
respect of withholding or similar Taxes payable by any future, present or former
employee, director, manager or consultant;

(k) without duplication of, or aggregation with, any Restricted Payments
permitted under any other clause of this SECTION 6.06, (i) the Lead Borrower and
its Restricted Subsidiaries may make other Restricted Payments to the holders of
their respective Capital Stock as long as the RP Payment Conditions are
satisfied and (ii) as long as the Pro Forma Availability Condition is satisfied
and no Event of Default then exists or would arise therefrom, the Lead Borrower
and its Restricted Subsidiaries may make other Restricted Payments to the
holders of their respective Capital Stock, in the case of this clause (ii), in
an aggregate amount, when added to the aggregate amount of voluntary
prepayments, purchases, exchanges or redemptions of

 

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Indebtedness made pursuant to SECTION 6.11(g), not to exceed $40,000,000 over
the term of this Agreement;

(l) [reserved]; and

(m) after a Qualifying IPO, so long as no Event of Default shall have occurred
and be continuing or would result therefrom the Lead Borrower or any of its
Restricted Subsidiaries may make any Restricted Payment to pay listing fees and
other costs and expenses directly attributable to being a publicly traded
company which are reasonable and customary.

SECTION 6.07 Change in Nature of Business.

(a) The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary
to, engage in any material line of business substantially different from those
lines of business conducted by the Lead Borrower and its Restricted Subsidiaries
on the date hereof or any business reasonably related or ancillary thereto or a
reasonable extension thereof.

(b) Holdings shall not conduct, transact or otherwise engage in any business or
operations other than those incidental to (i) its ownership of the Capital Stock
of the Lead Borrower, (ii) the maintenance of its legal existence, (iii) the
performance of the Loan Documents and the Term Loan Facility and other
Indebtedness incurred by it, (iv) any public offering of its common stock or any
other issuance of its Capital Stock not prohibited by this Article VI, (v) any
transaction that Holdings is permitted to enter into or consummate under this
Article VI, (vi) financing activities, including the issuance of securities,
incurrence of debt, payment of dividends, making contributions to the capital of
the Lead Borrower and guaranteeing the obligations of the Lead Borrower,
(vii) participating in tax, accounting and other administrative matters as a
member of the consolidated group of Holdings and the Lead Borrower,
(viii) holding any cash or property (but not operate any property) and
(ix) providing indemnification to officers and directors. Furthermore,
notwithstanding anything to the contrary herein contained, Holdings shall not
(i) own any material assets other than the Capital Stock of the Lead Borrower or
(ii) grant any Liens in any of its assets (other than Liens granted to
Collateral Agent, for the benefit of the Secured Parties, under the Loan
Documents or to secure obligations under the Term Loan Facility or any Permitted
Refinancing thereof).

SECTION 6.08 Transactions with Affiliates.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
enter into any transaction of any kind with any Affiliate of the Lead Borrower,
whether or not in the ordinary course of business, other than (a) transactions
among the Loan Parties or any Restricted Subsidiary or a Person that becomes a
Restricted Subsidiary as a result of such transaction, (b) on terms
substantially as favorable to the Lead Borrower or such Restricted Subsidiary as
would be obtainable by the Lead Borrower or such Restricted Subsidiary at the
time in a comparable arm’s-length transaction with a Person other than an
Affiliate, (c) payments due pursuant to the Sponsor Management Agreement on
account of management, monitoring, consulting, and transaction and advisory fees
(including termination fees), provided that such payments may not be made if a
Specified Default has occurred and is continuing or would arise therefrom,
provided further that such fees not paid may accrue and be payable on or after
the date when the applicable Specified Default has been cured or waived and no
additional Specified Default has

 

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occurred and is continuing or would arise as a result of such payment,
(d) payments of indemnities and expense reimbursements under the Sponsor
Management Agreements as in effect on the Initial Closing Date, (e) equity
issuances, repurchases, retirements or other acquisitions or retirements of
Capital Stock of the Lead Borrower permitted under SECTION 6.06, (f) loans and
other transactions by the Lead Borrower and its Restricted Subsidiaries to the
extent permitted under this Article VI, (g) employment and severance
arrangements between the Lead Borrower and its Restricted Subsidiaries and their
respective officers and employees and transactions pursuant to stock option
plans and employee benefit plans and similar arrangements in the ordinary course
of business, (h) payments by the Restricted Subsidiaries pursuant to the tax
sharing agreements among the Lead Borrower and its Restricted Subsidiaries on
customary terms to the extent attributable to the ownership or operation of
Holdings, the Lead Borrower and its Restricted Subsidiaries, (i) the payment of
customary fees, compensation, and reasonable out of pocket costs to, and
indemnities provided on behalf of, directors, officers and employees of
Holdings, the Lead Borrower and its Restricted Subsidiaries in the ordinary
course of business to the extent attributable to the ownership or operation of
the Lead Borrower and its Restricted Subsidiaries, (j) transactions pursuant to
permitted agreements in existence on the Closing Date and set forth on Schedule
6.08 or any amendment thereto to the extent such an amendment is not adverse to
the Lenders in any material respect, (k) dividends, redemptions and repurchases
permitted under SECTION 6.06, (l) the Transactions and the payment of fees and
expenses (including Transaction Expenses) as part of or in connection with the
Transactions, (m) any payments required to be made pursuant to the Merger
Agreement, (n) so long as no Specified Default has occurred and is continuing or
would result therefrom, customary payments by the Lead Borrower and any of its
Restricted Subsidiaries to the Sponsor made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities (including in connection with acquisitions or divestitures),
which payments are approved by the majority of the members of the board of
directors or a majority of the disinterested members of the board of directors
of the Lead Borrower, in good faith and (o) the payment of reasonable
out-of-pocket costs and expenses relating to registration rights and indemnities
provided to shareholders of Holdings or any direct or indirect parent thereof
pursuant to the Stockholders Agreement (including any registration rights
agreement or purchase agreement related thereto).

SECTION 6.09 Burdensome Agreements.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
enter into or permit to exist any contractual obligation (including Material
Indebtedness) (other than this Agreement or any other Loan Document) that limits
the ability of (a) any Restricted Subsidiary of the Lead Borrower that is not a
Borrower or a Facility Guarantor to make Restricted Payments to any Loan Party
or to make or repay loans or advances to or otherwise transfer assets to or make
Investments in the Borrowers or any Subsidiary Facility Guarantor or (b) the
Lead Borrower or any other Loan Party to create, incur, assume or suffer to
exist Liens on property of such Person for the benefit of the Secured Parties
with respect to the Obligations or under the Loan Documents; provided that the
foregoing clauses (a) and (b) shall not apply to contractual obligations
(including Material Indebtedness) which (i) (x) exist on the Closing Date and
(to the extent not otherwise permitted by this SECTION 6.09) are listed on
Schedule 6.09 hereto and (y) to the extent contractual obligations permitted by
clause (x) are set forth in an agreement evidencing Indebtedness, are set forth
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extension or refinancing of such Indebtedness so long as such renewal, extension
or refinancing does not expand the scope of such contractual obligation in any
material respect, (ii) are binding on a Restricted Subsidiary at the time such
Restricted Subsidiary first becomes a Restricted Subsidiary of Holdings, so long
as such contractual obligations were not entered into solely in contemplation of
such Person becoming a Restricted Subsidiary of Holdings; provided further that
this clause (ii) shall not apply to contractual obligations that are binding on
a Person that becomes a Restricted Subsidiary pursuant to SECTION 5.14,
(iii) represent Indebtedness of a Restricted Subsidiary of the Lead Borrower
which is not a Loan Party which is permitted pursuant to SECTION 6.03,
(iv) arise in connection with any Permitted Disposition, (v) are customary
provisions in joint venture agreements and other similar agreements applicable
to joint ventures permitted under SECTION 6.02 and applicable solely to such
joint venture entered into in the ordinary course of business, (vi) are negative
pledges and restrictions on Liens in favor of any holder of Indebtedness
permitted under SECTION 6.03 (other than Junior Financings) but solely to the
extent any negative pledge relates to the property financed by or the subject of
such Indebtedness, (vii) are customary restrictions on leases, subleases,
licenses or asset sale agreements otherwise permitted hereby so long as such
restrictions relate to the assets subject thereto, (viii) comprise restrictions
imposed by any agreement relating to secured Indebtedness permitted pursuant to
SECTION 6.03(e), SECTION 6.03(g) or SECTION 6.03(m) to the extent that such
restrictions apply only to the property or assets securing such Indebtedness or,
in the case of Indebtedness incurred pursuant to SECTION 6.03(g) only, to the
Restricted Subsidiaries incurring or guaranteeing such Indebtedness, (ix) are
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Lead Borrower or any Restricted Subsidiary, (x) are
customary provisions restricting assignment of any agreement entered into in the
ordinary course of business, (xi) are restrictions on cash or other deposits
imposed by customers under contracts entered into in the ordinary course of
business, (xii) are customary restrictions contained in the documentation
relating to the Senior Notes or the Term Loan Facility, (xiii) arise in
connection with cash or other deposits permitted under SECTION 6.01 and SECTION
6.02 and limited to such cash or deposit, (xiv) arise under applicable law or
any applicable rule, regulation or order and (xv) comprise restrictions imposed
by any agreement governing Indebtedness entered into after the Closing Date and
permitted under SECTION 6.03 that are, taken as a whole, in the good faith
judgment of the Lead Borrower, no more restrictive with respect to the Lead
Borrower or any Restricted Subsidiary than customary market terms for
Indebtedness of such type (and, in any event, are no more restrictive than the
restrictions contained in this Agreement), so long as the Lead Borrower shall
have determined in good faith that such restrictions will not affect its
obligation or ability to make any payments required hereunder.

SECTION 6.10 Accounting Changes.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
make any change in their Fiscal Year (it being understood that the Lead
Borrower’s fiscal year ends on the Saturday closest to January 31 of each year);
provided, however, that the Lead Borrower may, upon written notice to the
Administrative Agent, change its Fiscal Year to any other Fiscal Year reasonably
acceptable to the Administrative Agent, in which case, the Lead Borrower and the
Administrative Agent will, and are hereby authorized by the Lenders to, make any
adjustments to this Agreement that are necessary to reflect such change in
Fiscal Year.

 

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SECTION 6.11 Prepayments, Etc., of Indebtedness.

The Lead Borrower will not, nor will it permit any Restricted Subsidiary to,
make or agree to pay or make any payment or other distribution (whether in cash,
securities or other property) of or in respect of principal of or interest on
any Indebtedness, 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 of any Indebtedness, except:

(a) payments in Capital Stock (as long as no Change in Control would result
therefrom), the conversion of Indebtedness to Capital Stock (other than
Disqualified Capital Stock) or Indebtedness of Holdings (as long as no Change in
Control would result therefrom) and payments of interest in-kind of the Loan
Parties or the accretion of interest on Permitted Indebtedness;

(b) payments of principal and interest as and when due in respect of any
Subordinated Indebtedness (subject to applicable subordination provisions
relating thereto);

(c) scheduled or mandatory payments of principal (including mandatory
prepayments) and interest as and when due in respect of any Permitted
Indebtedness (other than Subordinated Indebtedness);

(d) voluntary prepayments, redemptions, purchases, and defeasances in whole or
in part of the Senior Notes, the Term Loan Facility and other Indebtedness with
the Net Proceeds of any Permitted Equity Issuances for the purpose of making
such payment or prepayment;

(e) voluntary prepayments of, and exchanges for, in whole or in part, the Senior
Notes or the Term Loan Facility from any Permitted Refinancing thereof;

(f) if the Payment Conditions are satisfied, voluntary prepayments, purchases,
redemptions, and defeasances, in whole or in part of the Senior Notes, the Term
Loan Facility or any other Permitted Indebtedness;

(g) as long as the Pro Forma Availability Condition is satisfied and no Event of
Default then exists or would arise therefrom, in an aggregate amount, when added
to the aggregate amount of any Restricted Payments made pursuant to SECTION
6.06(k), not to exceed $40,000,000 over the term of this Agreement, voluntary
prepayments, purchases, exchanges or redemptions, in whole or in part, of
Indebtedness;

(h) the prepayment of Indebtedness of the Lead Borrower or any Restricted
Subsidiary to the Lead Borrower or any Restricted Subsidiary to the extent
permitted by the Security Documents;

(i) other Permitted Refinancings of Indebtedness;

(j) mandatory redemptions of the Senior Notes (and exchange notes issued in
respect thereof) due to the existence of an AHYDO Amount (as defined in the
indenture for the Senior Notes); and

 

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(k) the conversion (or exchange) of any Indebtedness to (or with) Capital Stock
or Indebtedness of Holdings or any direct or indirect parent thereof.

SECTION 6.12 Equity Interests of the Lead Borrower and Restricted Subsidiaries.

The Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
permit any Subsidiary that is a Restricted Subsidiary to be a non-wholly owned
Subsidiary, except (i) as a result of or in connection with a dissolution,
merger, amalgamation, consolidation or disposition of a Restricted Subsidiary
permitted by SECTION 6.04 or SECTION 6.05 or a Permitted Investment in any
Person or (ii) so long as such Restricted Subsidiary continues to be a Facility
Guarantor or a Borrower.

SECTION 6.13 Amendment of Material Documents.

(a) The Lead Borrower will not, nor shall it permit any Restricted Subsidiary
to, amend, modify or waive any of its rights under (i) its Organization
Documents, (ii) the Sponsor Management Agreement, or (iii) any Material
Indebtedness (other than as a result of a Permitted Refinancing thereof), in
each case to the extent that such amendment, modification or waiver would either
(A) reasonably likely have a Material Adverse Effect, (B) except with respect to
the Term Loan Facility and any Permitted Refinancing thereof, be materially
adverse to the interests of the Credit Parties (it being understood that, with
respect to clause (ii), any amendment, modification or waiver which directly or
indirectly increase the obligation of Holdings, the Lead Borrower or any of its
Affiliates to make any payments thereunder shall be deemed materially adverse to
the interests of the Credit Parties) or (C) with respect to clause (iii) only,
(1) shorten the maturity date of any Material Indebtedness to a date which is
prior to ninety-one (91) days after the then Latest Maturity Date, (2) except as
provided in clause (1), shorten the date scheduled for any principal payment or
increase the amount of any required principal payment, the result of which would
be to require principal payments on account thereof in excess of the amounts
previously required over the twenty-four (24) months following such amendment,
modification or waiver, (3) grant any collateral security therefor on the ABL
Priority Collateral, except to the extent that such collateral security
constitutes a Permitted Encumbrance and is granted subject to an intercreditor
agreement on terms substantially similar to those contained in the Intercreditor
Agreement, (4) without duplication of any collateral security granted under
clause (3) above, grant any other collateral therefor except to the extent such
grant of security constitutes a Permitted Encumbrance, the Collateral Agent also
has or obtains a Lien on such assets, and provided that to the extent that such
collateral security consists of assets that would constitute Term Priority
Collateral, such collateral security is granted subject to an intercreditor
agreement on terms substantially similar to those contained in the Intercreditor
Agreement, or (5) modify the subordination provisions thereof.

(b) The Lead Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, designate any Indebtedness (or related interest obligations) as
“Designated Senior Debt” or any similar term (as defined in any documents or
agreements evidencing the Junior Financing), in each case, except for the
Obligations, the Term Loan Facility (and related obligations), the Senior Notes
and any Permitted Refinancings thereof.

SECTION 6.14 Designated Account.

 

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After the occurrence and during the continuance of a Cash Dominion Event, the
Lead Borrower shall not, nor shall it permit any Restricted Subsidiary to,
utilize the funds on deposit in the Designated Account for any purposes other
than the payment of operating expenses incurred by the Loan Parties in the
ordinary course of business (including payments of interest when due on account
of the Senior Notes and the Term Loan Facility and any Permitted Refinancing
thereof).

SECTION 6.15 Minimum Consolidated Fixed Charge Coverage Ratio.

Upon the occurrence and during the continuation of a FCCR Trigger Event
(including, for the avoidance of doubt, on any FCCR Initial Test Date), the Lead
Borrower shall not permit the Consolidated Fixed Charge Coverage Ratio to be
less than 1.00 to 1.00 as of the last day of the applicable FCCR Test Period.

ARTICLE VII

Events of Default

SECTION 7.01 Events of Default.

The occurrence of any of the following events shall constitute an “Event of
Default” hereunder:

(a) Non-Payment. Any Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Revolving Credit
Loan (including Swingline Loans), or any reimbursement obligation in respect of
any Letter of Credit Disbursement, or (ii) within five (5) Business Days after
the same becomes due, any interest on any Revolving Credit Loan (including
Swingline Loans) or any other amount payable hereunder or with respect to any
other Loan Document; or

(b) Specific Covenants. Any Loan Party shall fail to observe or perform when due
any covenant, condition or agreement contained in (i) any Section of Article VI,
or (ii) SECTION 5.01(e) (after a two (2) Business Day grace period),
(iii) [reserved], (iv) SECTION 2.18 (provided that for SECTION 2.18(f), after a
five (5) Business Day grace period), or (v) any of SECTION 5.02(b), SECTION
5.03(a), SECTION 5.07 (but only with respect to casualty, loss and extended
coverage policies maintained with respect to any Collateral), SECTION 5.10(b),
SECTION 5.17 (provided that if (A) any such Default described in this clause
(v) is of a type that can be cured within five (5) Business Days and (B) such
Default could not materially adversely impact the Lenders’ Liens on the
Collateral, such default shall not constitute an Event of Default for five
(5) Business Days after the occurrence of such Default so long as the Loan
Parties are diligently pursuing the cure of such Default); or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in SECTION 7.01(a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for thirty (30) days after notice thereof by the Administrative Agent
to the Lead Borrower; or

 

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(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Lead Borrower or
any other Loan Party herein, in any other Loan Document, or in any document
required to be delivered in connection herewith or therewith shall be incorrect
or misleading in any material respect when made or deemed made; or

(e) Cross-Default. Any Loan Party or any Restricted Subsidiary (A) fails to make
any payment beyond the applicable grace period with respect thereto, if any
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Material Indebtedness (other than the Obligations),
or (B) fails to observe or perform any other agreement or condition relating to
any such Material Indebtedness beyond the applicable grace period with respect
thereto, or any other event occurs (other than, with respect to Indebtedness
consisting of Swap Contracts, termination events or equivalent events pursuant
to the terms of such Swap Contracts), the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) after the expiration of the applicable grace period with respect
thereto, to cause, with the giving of notice if required, such Indebtedness to
become due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such Material
Indebtedness to be made, prior to its stated maturity; provided that this clause
(e)(B) shall not apply to secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness, if such sale or transfer is permitted hereunder and under the
documents providing for such Indebtedness, and further provided that the
occurrence of any event of default under the Term Loan Agreement by virtue of
the breach of any financial maintenance covenant contained in Section 7.11 of
the Term Loan Agreement (or any other financial maintenance covenant from time
to time in effect under the Term Loan Agreement and not contained in this
Agreement) shall not constitute an Event of Default until the earliest of
(x) sixty (60) days after the date of such breach (during which period such
breach is not waived by the lenders under the Term Loan Agreement or such breach
is not cured pursuant to Section 8.05 of the Term Loan Agreement), or (y) the
acceleration of the obligations under the Term Loan Agreement, or (z) the
commencement of the Exercise of Any Secured Creditor Remedies (as defined in the
Intercreditor Agreement as in effect on the Closing Date) by the Term Loan Agent
and/or the Term Loan Lenders under the Term Loan Agreement as a result of such
breach; or

(f) Insolvency Proceedings, Etc. Any Loan Party or any of the Lead Borrower’s
Restricted Subsidiaries institutes or consents to the institution of any
proceeding under the Bankruptcy Code or any other federal, state, provincial, or
foreign bankruptcy, insolvency, receivership or similar law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, monitor,
liquidator, rehabilitator, administrator, administrative receiver or similar
officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, monitor, liquidator, rehabilitator,
administrator, administrative receiver or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for sixty (60) calendar days; or any proceeding under
the Bankruptcy Code or any other federal, state, provincial, or foreign
bankruptcy, insolvency, receivership or similar law relating to any such Person
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without the consent of such Person and continues undismissed or unstayed for
sixty (60) calendar days, or an order for relief is entered in any such
proceeding; or

(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Restricted
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of the Loan Parties, taken as a whole, and is not released,
vacated or fully bonded within forty-five (45) days after its issue or levy; or

(h) Judgments. There is entered against any Loan Party or any Restricted
Subsidiary a final judgment or order for the payment of money in an aggregate
amount in excess of $25,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer has been notified of such judgment
or order and has not denied coverage) and such judgment or order shall not have
been satisfied, vacated, discharged or stayed or bonded pending an appeal for a
period of forty-five (45) consecutive days; or

(i) ERISA. (a)(i) An ERISA Event occurs with respect to a Plan subject to ERISA
or Multiemployer Plan subject to ERISA which, together with any other ERISA
Events that have occurred, has resulted or could reasonably be expected to
result in liability of any Loan Party under Title IV of ERISA in an aggregate
amount in excess of $25,000,000, or (ii) any Loan Party or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$25,000,000; or (b) except as could not reasonably be expected to result in a
Material Adverse Effect, (i) the appointment by the appropriate Governmental
Authority of a trustee for any Plan or (ii) if any Plan shall be terminated or
any such trustee shall be requested or appointed; or

(j) Invalidity of Loan Documents. (i) Any material provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder (including as a result of a
transaction permitted under SECTION 6.04 or SECTION 6.05) or as a result of acts
or omissions by any Agent or any Lender or the satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party contests
in writing (or supports any other Person in contesting) the validity or
enforceability of any provision of any Loan Document; or any Loan Party denies
in writing that it has any or further liability or obligation under any Loan
Document (other than as a result of repayment in full of the Obligations and
termination of the Commitments), or purports in writing to revoke or rescind any
Loan Document; or (ii) any challenge by or on behalf of any Loan Party,
receiver, trustee, custodian, conservator, monitor, liquidator, rehabilitator,
administrator, administrative receiver or similar officer for any Loan Party or
for all or any material part of its property to the validity of any Loan
Document or the applicability or enforceability of any Loan Document strictly in
accordance with the subject Loan Document’s terms or which seeks to void, avoid,
limit, or otherwise adversely affect any security interest created by or in any
Loan Document or any payment made pursuant thereto; or

(k) Change in Control. There occurs any Change in Control; or

 

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(l) Security Documents. (i) Any Security Document shall for any reason (other
than pursuant to the terms thereof including as a result of a transaction
permitted under SECTION 6.04 or SECTION 6.05) cease to create a valid and
perfected or recorded Lien, with the priority required by the Security
Documents, (or other security purported to be created on the applicable
Collateral) on, security interest in, and hypothecs of any material portion of
the Collateral purported to be covered thereby, subject to Permitted
Encumbrances, except to the extent that any such loss of perfection or priority
results from the failure of the Administrative Agent or the Collateral Agent to
maintain possession of certificates actually delivered to it representing
securities pledged under the Security Documents or to file Uniform Commercial
Code continuation statements and except as to Collateral consisting of real
property to the extent that such losses are covered by a lender’s title
insurance policy and such insurer has not denied coverage, or (ii) any of the
Capital Stock of the Lead Borrower ceasing to be pledged pursuant to the
Security Agreement free of Liens other than Liens created by the Security
Agreement (other than Liens to secure the Term Loan Facility or Liens securing
any Permitted Refinancing thereof) or any nonconsensual Liens arising solely by
operation of Law;

(m) Junior Financing. (i) Any of the Obligations of the Loan Parties under the
Loan Documents for any reason shall cease to be “Senior Indebtedness” (or any
comparable term) or “Senior Secured Financing” (or any comparable term) under
any Junior Financing, or (ii) the subordination provisions set forth in any
Junior Financing shall, in whole or in part, cease to be effective or cease to
be legally valid, binding and enforceable against the holders of any Junior
Financing;

(n) Termination of Business. Except as permitted under SECTION 6.05, the
determination of the Loan Parties, whether by vote of the Loan Parties’ board of
directors or otherwise to: suspend the operation of the Loan Parties’ business
in the ordinary course, liquidate all or substantially all of the Loan Parties’
assets or Store locations, or employ an agent or other third party to conduct
any so-called store closing, store liquidation or “Going-Out-Of-Business” sales
for all or substantially all of the Loan Parties’ Stores;

(o) Termination of Guaranty. The termination of the Facility Guaranty or any
other guaranty of the Obligations (except for any release or termination
permitted hereunder); or

(p) Indictment. The indictment of any Loan Party under any Applicable Law where
the crime alleged would constitute a felony under Applicable Law and such
indictment remains unquashed or such legal process remains undismissed for a
period of ninety (90) days or more, unless either (i) the Administrative Agent,
in its reasonable discretion, determines that the indictment is not material or
(ii) such indictment relates to the Lead Borrower’s stock option practices.

SECTION 7.02 Remedies Upon Event of Default.

If any Event of Default occurs and is continuing, the Administrative Agent may
and, at the request of the Required Lenders, shall take any or all of the
following actions:

 

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(a) declare the Commitment of each Lender to make Revolving Credit Loans
(including Swingline Loans) and any obligation of the Issuing Banks to issue
Letters of Credit to be terminated, whereupon such Commitments and obligation
shall be terminated;

(b) declare the unpaid principal amount of all outstanding Revolving Credit
Loans (including Swingline Loans), all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other Loan Document to
be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrowers;

(c) require that the Borrowers cash collateralize the amount of the Letter of
Credit Outstandings (in an amount equal to 103% of the then Stated Amount of
outstanding Letters of Credit plus 103% of the then unreimbursed amounts due to
the Issuing Banks); and

(d) exercise on behalf of itself and the Secured Parties all rights and remedies
available to it and the Secured Parties under the Loan Documents or Applicable
Law;

provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the any Loan Party under the Bankruptcy Code, the
obligation of each Lender to make Revolving Credit Loans (including Swingline
Loans) and any obligation of the Issuing Banks to issue Letters of Credit shall
automatically terminate, the unpaid principal amount of all outstanding
Revolving Credit Loans (including Swingline Loans) and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrowers to cash collateralize the amount of Letter of Credit
Outstandings as aforesaid shall automatically become effective, in each case
without further act of the Administrative Agent or any Lender.

SECTION 7.03 Exclusion of Immaterial Subsidiaries.

Solely for the purpose of determining whether a Default or Event of Default has
occurred under clause (f) or (g) of SECTION 7.01, any reference in any such
clause to any Restricted Subsidiary or Loan Party shall be deemed not to include
any Immaterial Subsidiary affected by any event or circumstances referred to in
any such clause (it being agreed that all Immaterial Subsidiaries affected by
any event or circumstance referred to in any such clause shall be considered
together, as a single consolidated Restricted Subsidiary, for purposes of
determining whether they constitute Immaterial Subsidiaries).

SECTION 7.04 Application of Proceeds.

After the occurrence and during the continuance of (i) any Cash Dominion Event,
or (ii) any Event of Default and acceleration of the Obligations, all proceeds
realized from any Loan Party or on account of any Collateral owned by a Loan
Party or any payments in respect of any Obligations and all proceeds of the
Collateral, shall be applied in the following order:

(a) FIRST, ratably to pay the Obligations in respect of any Credit Party
Expenses, indemnities and other amounts then due to the Administrative Agent and
the Collateral Agent until paid in full;

 

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(b) SECOND, ratably to pay any Credit Party Expenses and indemnities, and to pay
any fees then due to the Lenders (other than any fees owed to FILO Lenders),
until paid in full;

(c) THIRD, ratably to pay interest accrued in respect of the Obligations (other
than the FILO Loans) until paid in full;

(d) FOURTH, to pay principal due in respect of the Swingline Loans until paid in
full;

(e) FIFTH, ratably to pay principal due in respect of the Revolving Credit Loans
(other than FILO Loans) until paid in full;

(f) SIXTH, to the Administrative Agent, to be held by the Administrative Agent,
for the ratable benefit of the Issuing Banks and the Tranche A Lenders as cash
collateral in an amount up to 103% of the then Stated Amount of Letters of
Credit (other than those in which the FILO Lenders participate) until paid in
full;

(g) SEVENTH, ratably to pay any fees then due to the FILO Lenders until paid in
full;

(h) EIGHTH, ratably to pay interest accrued in respect of the FILO Loans until
paid in full;

(i) NINTH, ratably to pay principal due in respect of FILO Loans until paid in
full;

(j) TENTH, to the Administrative Agent, to be held by the Administrative Agent,
for the ratable benefit of the Issuing Banks and the FILO Lenders, as cash
collateral in an amount up to 103% of the then Stated Amount of Letters of
Credit in which the FILO Lenders participate until paid in full;

(k) ELEVENTH, ratably to pay any other outstanding Obligations (including any
Cash Management Services, Bank Products and other outstanding Other
Liabilities); and

(l) TWELFTH, to the Lead Borrower or such other Person entitled thereto under
Applicable Law.

SECTION 7.05 Lead Borrower’s Right to Cure.

(a) Notwithstanding anything to the contrary contained in SECTION 7.01 or
SECTION 7.02, in the event of any Event of Default under the covenant set forth
in SECTION 6.15 and until the expiration of the tenth (10th) day after the date
on which financial statements are required to be delivered with respect to the
applicable Fiscal Quarter hereunder, any Permitted Holder may directly or
indirectly make a Specified Equity Contribution to the Lead Borrower, and the
Lead Borrower shall apply the amount of the net cash proceeds thereof to
increase Consolidated EBITDA with respect to such applicable Fiscal Quarter;
provided that such net cash proceeds (i) are actually received by the Lead
Borrower as cash common equity (including through capital contribution of such
net cash proceeds to the Lead Borrower) no later than ten (10) days after the
date on which financial statements are required to be delivered with respect to
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Otherwise Applied and (iii) are identified in a certificate of a Responsible
Officer of the Lead Borrower delivered to the Administrative Agent as a
Specified Equity Contribution. The parties hereby acknowledge that this SECTION
7.05(a) may not be relied on for purposes of calculating any financial ratios
other than as applicable to SECTION 6.15 and shall not result in any adjustment
to any amounts other than the amount of the Consolidated EBITDA referred to in
the immediately preceding sentence.

(b) (i) In each period of four consecutive fiscal quarters, there shall be at
least two fiscal quarters in which no Specified Equity Contribution is made,
(ii) no more than five Specified Equity Contributions will be made in the
aggregate during the term of this Agreement, (iii) the amount of any Specified
Equity Contribution shall be no more than the amount required to cause the Lead
Borrower to be in Pro Forma Compliance with SECTION 6.15 for any applicable
period, (iv) all Specified Equity Contributions shall be disregarded for the
purposes of determining pricing, financial ratio-based conditioning or any
baskets with respect to the covenants contained in this Agreement, (v) there
shall not have been a breach of any covenant under this Agreement by reason of
having no longer included such Specified Equity Contribution in any basket
during the relevant period and (vi) there shall be no pro forma reduction in
Indebtedness with the proceeds of any Specified Equity Contribution for
determining compliance with SECTION 6.15.

ARTICLE VIII

The Administrative Agent

SECTION 8.01 Appointment of Administrative Agent.

Each Credit Party hereby irrevocably designates Bank of America as
Administrative Agent under this Agreement and the other Loan Documents. The
general administration of the Loan Documents shall be by the Administrative
Agent. The Credit Parties each hereby (a) irrevocably authorizes the
Administrative Agent (i) to enter into the Loan Documents to which it is a
party, and (ii) at its discretion, to take or refrain from taking such actions
as agent on its behalf and to exercise or refrain from exercising such powers
under the Loan Documents as are delegated by the terms hereof or thereof, as
appropriate, together with all powers reasonably incidental thereto, and
(b) agrees and consents to all of the provisions of the Security Documents. The
Administrative Agent shall have no duties or responsibilities except as set
forth in this Agreement and the other Loan Documents, nor shall it have any
fiduciary relationship with any other Credit Party, and no implied covenants,
responsibilities, duties, obligations, or liabilities shall be read into the
Loan Documents or otherwise exist against the Administrative Agent.

SECTION 8.02 Appointment of Collateral Agent.

Each Secured Party hereby irrevocably designates Bank of America as Collateral
Agent under this Agreement and the other Loan Documents. The Secured Parties
each hereby (i) irrevocably authorizes the Collateral Agent (x) to enter into
the Loan Documents to which it is a party, and (y) at its discretion, to take or
refrain from taking such actions as agent on its behalf and to exercise or
refrain from exercising such powers under the Loan Documents as are delegated by
the terms hereof or thereof, as appropriate, together with all powers reasonably
incidental thereto, and (ii) agrees and consents to all of the provisions of the
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Documents. All Collateral shall be held or administered by the Collateral Agent
(or its duly-appointed agent) for its own benefit and for the ratable benefit of
the other Credit Parties. Any proceeds received by the Collateral Agent from the
foreclosure, sale, lease or other disposition of any of the Collateral and any
other proceeds received pursuant to the terms of the Security Documents or the
other Loan Documents shall be paid over to the Administrative Agent for
application as provided in SECTION 7.04 (if applicable) and, otherwise, in
accordance with this Agreement and the other Loan Documents. The Collateral
Agent shall have no duties or responsibilities except as set forth in this
Agreement and the other Loan Documents, nor shall it have any fiduciary
relationship with any other Secured Party, and no implied covenants,
responsibilities, duties, obligations, or liabilities shall be read into the
Loan Documents or otherwise exist against the Collateral Agent.

SECTION 8.03 Reserved.

SECTION 8.04 Sharing of Excess Payments.

If at any time or times any Secured Party shall receive (i) by payment,
foreclosure, setoff, banker’s lien, counterclaim, or otherwise, or any payments
with respect to the Obligations owing to such Secured Party arising under, or
relating to, this Agreement or the other Loan Documents, or (ii) payments from
the Administrative Agent in excess of such Secured Party’s ratable portion of
all such distributions by the Administrative Agent, such Secured Party shall
promptly (1) turn the same over to the Administrative Agent, in kind, and with
such endorsements as may be required to negotiate the same to the Administrative
Agent, or in same day funds, as applicable, for the account of all of the
Secured Parties and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations owed to the
other Secured Parties so that such excess payment received shall be applied
ratably as among the Secured Parties in accordance with the provisions of
SECTION 2.17 or SECTION 7.04, as applicable; provided, however, that if all or
part of such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment. In no event shall the
provisions of this paragraph be construed to apply to any payment made by the
Borrowers 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 Revolving Credit Loans or participations
in Swingline Loans or in drawings under Letters of Credit to any Eligible
Assignee or participant, other than to the Borrowers (as to which the provisions
of this paragraph shall apply).

SECTION 8.05 Agreement of Applicable Lenders.

Upon any occasion requiring or permitting an approval, consent, waiver, election
or other action on the part of the Applicable Lenders, action shall be taken by
each Agent for and on behalf or for the benefit of all Credit Parties upon the
direction of the Applicable Lenders, and any such action shall be binding on all
Credit Parties. No amendment, modification, consent, or waiver shall be
effective except in accordance with the provisions of SECTION 9.01.

 

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SECTION 8.06 Liability of Agents.

(a) The Agents, when acting on behalf of the Credit Parties, may execute any of
their respective duties under this Agreement or any of the other Loan Documents
by or through any of their respective officers, agents and employees, and none
of the Agents nor any of their respective directors, officers, agents or
employees shall be liable to any other Secured Party for any action taken or
omitted to be taken in good faith, or be responsible to any other Secured Party
for the consequences of any oversight or error of judgment, or for any loss,
except to the extent of any liability imposed by law by reason of such Agent’s
own gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision). None of the
Agents nor any of their respective directors, officers, agents and employees
shall in any event be liable to any other Secured Party for any action taken or
omitted to be taken by it pursuant to instructions received by it from the
Applicable Lenders, or in reliance upon the advice of counsel selected by it.
Without limiting the foregoing none of the Agents, nor any of their respective
directors, officers, employees, or agents shall be: (i) responsible to any other
Secured Party for the due execution, validity, genuineness, effectiveness,
sufficiency, or enforceability of, or for any recital, statement, warranty or
representation in, this Agreement, any other Loan Document or any related
agreement, document or order; (ii) required to ascertain or to make any inquiry
concerning the performance or observance by any Loan Party of any of the terms,
conditions, covenants, or agreements of this Agreement or any of the Loan
Documents; (iii) responsible to any other Secured Party for the state or
condition of any properties of the Loan Parties or any other obligor hereunder
constituting Collateral for the Obligations or any information contained in the
books or records of the Loan Parties; (iv) responsible to any other Secured
Party for the validity, enforceability, collectibility, effectiveness or
genuineness of this Agreement or any other Loan Document or any other
certificate, document or instrument furnished in connection therewith; or
(v) responsible to any other Secured Party for the validity, priority or
perfection of any Lien securing or purporting to secure the Obligations or for
the value or sufficiency of any of the Collateral.

(b) The Agents may execute any of their duties under this Agreement or any other
Loan Document by or through their agents or attorneys-in-fact, and shall be
entitled to the advice of counsel concerning all matters pertaining to its
rights and duties hereunder or under the other Loan Documents. The Agents shall
not be responsible for the negligence or misconduct of any agent or
attorneys-in-fact selected by them with reasonable care.

(c) None of the Agents nor any of their respective directors, officers,
employees, or agents shall have any responsibility to any Loan Party on account
of the failure or delay in performance or breach by any other Secured Party
(other than by each such Agent in its capacity as a Lender) of any of its
respective obligations under this Agreement or any of the other Loan Documents
or in connection herewith or therewith.

(d) The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any notice, consent, certificate, affidavit, or other document or
writing believed by them to be genuine and correct and to have been signed, sent
or made by the proper person or persons, and upon the advice and statements of
legal counsel (including, without, limitation, counsel to the Loan Parties),
independent accountants and other experts selected by any Loan Party or any
Secured Party. The Agents shall be fully justified in failing or refusing to
take any action under this Agreement or any other Loan Document unless they
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Lenders as they deem appropriate or they shall first be indemnified to their
satisfaction by the other Secured Parties against any and all liability and
expense which may be incurred by them by reason of the taking or failing to take
any such action.

SECTION 8.07 Notice of Default.

No Agent shall be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default unless such Agent has actual knowledge of the same
or has received notice from a Secured Party or Loan Party 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 an Agent obtains such actual
knowledge or receives such a notice, such Agent shall give prompt notice thereof
to each of the other Secured Parties. Upon the occurrence of an Event of
Default, the Agents shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders. Unless and
until the Agents shall have received such direction, the Agents may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to any such Default or Event of Default as they shall deem advisable in
the best interest of the Secured Parties. In no event shall the Agents be
required to comply with any such directions to the extent that the Agents
believe that their compliance with such directions would be unlawful.

SECTION 8.08 Credit Decisions.

Each Secured Party (other than the Agents) acknowledges that it has,
independently and without reliance upon the Agents or any other Secured Party,
and based on the financial statements prepared by the Loan Parties and such
other documents and information as it has deemed appropriate, made its own
credit analysis and investigation into the business, assets, operations,
property, and financial and other condition of the Loan Parties and has made its
own decision to enter into this Agreement and the other Loan Documents. Each
Credit Party (other than the Agents) also acknowledges that it will,
independently and without reliance upon the Agents or any other Secured Party,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in determining whether or not
conditions precedent to closing any Revolving Credit Loan hereunder have been
satisfied and in taking or not taking any action under this Agreement and the
other Loan Documents.

SECTION 8.09 Reimbursement and Indemnification.

Each Secured Party (other than the Administrative Agent and the Collateral
Agent) agrees to (i) reimburse the Administrative Agent and the Collateral Agent
for such Secured Party’s pro rata share of outstanding Credit Extensions held by
such Secured Party (or, in the case of any Lender that has assigned its
Commitments pursuant to SECTION 9.07 hereof, where the applicable assignee has
not ratably assumed such Lender’s obligations under this SECTION 8.09 with
respect to acts or omissions that occurred prior to such assignment, such
assigning Lender’s Commitment Percentage prior to such assignment) of (x) any
expenses and fees incurred by such Agent for the benefit of Secured Parties
under this Agreement and any of the other Loan Documents, including, without
limitation, counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Secured Parties, and any other expense
incurred in connection with the operation or enforcement thereof not reimbursed
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Parties, and (y) any expenses of such Agent incurred for the benefit of the
Secured Parties that the Loan Parties have agreed to reimburse pursuant to this
Agreement or any other Loan Document and have failed to so reimburse, and
(ii) indemnify and hold harmless such Agent and any of its directors, officers,
employees, or agents, on demand, in the amount of such Secured Party’s
Commitment Percentage (or, in the case of any Lender that has assigned its
Commitments pursuant to SECTION 9.07 hereof, where the applicable assignee has
not ratably assumed such Lender’s obligations under this SECTION 8.09 with
respect to acts or omissions that occurred prior to such assignment, such
assigning Lender’s Commitment Percentage prior to such assignment), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against such
Agent or any Secured Party in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by
it or any of them under this Agreement or any of the other Loan Documents, to
the extent not reimbursed by the Loan Parties, including, without limitation,
costs of any suit initiated either by such Agent against any Secured Party or
against such Agent or Secured Party (except such as shall have been determined
by a court of competent jurisdiction or another independent tribunal having
jurisdiction by final and non-appealable judgment to have resulted from the
gross negligence or willful misconduct of such Agent); provided, however, that
the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against such
Secured Party in its capacity as such. The provisions of this SECTION 8.09 shall
survive the repayment or assignment of the Obligations and the termination of
the Commitments and, in the case of any Lender that has assigned its Commitments
pursuant to SECTION 9.07 hereof where the applicable assignee has not ratably
assumed such Lender’s obligations under this SECTION 8.09 with respect to acts
or omissions that occurred prior to such assignment, with respect to events
which have occurred prior to any such assignment.

SECTION 8.10 Rights of Agents.

It is understood and agreed that the Agents shall have the same rights and
powers hereunder (including the right to give such instructions) as the other
Lenders and may exercise such rights and powers, as well as their rights and
powers under other agreements and instruments to which they are or may be party,
and engage in other transactions with the Loan Parties, as though they were not
the Agents. Each Agent and their respective Affiliates may accept deposits from,
lend money to, and generally engage in any kind of commercial or investment
banking, trust, advisory or other business with the Loan Parties and their
Affiliates as if it were not an Agent thereunder.

SECTION 8.11 Notice of Transfer.

The Administrative Agent may deem and treat a Lender party to this Agreement as
the owner of such Lender’s portion of the Obligations for all purposes, unless
and until, and except to the extent, an Assignment and Acceptance shall have
become effective as set forth in SECTION 9.07.

SECTION 8.12 Successor Agents.

 

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Any Agent may resign at any time by giving thirty (30) Business Days’ written
notice thereof to the other Secured Parties and the Lead Borrower. Upon any such
resignation of an Agent, the Required Lenders shall have the right to appoint a
successor Agent, which, so long as there is no Specified Default, shall be
reasonably satisfactory to the Lead Borrower (whose consent in any event shall
not be unreasonably withheld or delayed). If no successor Agent shall have been
so appointed by the Required Lenders and/or none shall have accepted such
appointment within thirty (30) days after the retiring Agent’s giving of notice
of resignation, the retiring Agent may, on behalf of the other Secured Parties,
appoint a successor Agent which shall be a commercial bank (or affiliate
thereof) organized under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of a least
$1,000,000,000, or capable of complying with all of the duties of such Agent
hereunder (in the opinion of the retiring Agent and as certified to the other
Secured Parties in writing by such successor Agent) which, so long as there is
no Specified Default, shall be reasonably satisfactory to the Lead Borrower
(whose consent shall not in any event be unreasonably withheld or delayed). Upon
the acceptance of any appointment as Agent by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent’s resignation hereunder as such Agent, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was such Agent under this Agreement.

SECTION 8.13 Relation Among the Lenders.

The Lenders are not partners or co-venturers, and no Lender shall be liable for
the acts or omissions of, or (except as otherwise set forth herein in case of
any Agent) authorized to act for, any other Lender.

SECTION 8.14 Reports and Financial Statements.

By signing this Agreement, each Lender (and with respect to clause (a), each
Secured Party):

(a) agrees to furnish the Administrative Agent at its written request, after the
occurrence and during the continuance of a Cash Dominion Event (and thereafter
at such frequency as the Administrative Agent may reasonably request in
writing), with a summary of all Other Liabilities due or to become due to such
Lender or its Affiliates;

(b) is deemed to have requested that the Agents furnish such Lender, promptly
after they become available, copies of all financial statements required to be
delivered by the Lead Borrower under SECTION 5.01(a) through and including
SECTION 5.01(g), all commercial finance examinations and appraisals of the
Collateral received by the Agents (collectively, the “Reports”), the
certificates and other information delivered by the Lead Borrower under SECTION
5.02, and the notices delivered by the Lead Borrower under SECTION 5.03, and the
Agents agree to furnish the same promptly to the Lenders (which Reports may be
furnished in accordance with the final paragraph of SECTION 5.01);

 

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(c) expressly agrees and acknowledges that no Agent makes any representation or
warranty as to the accuracy of the Reports, and shall not be liable for any
information contained in any Report;

(d) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that the Agents or any other party performing any audit
or examination will inspect only specific information regarding the Loan Parties
and will rely significantly upon the Loan Parties’ books and records, as well as
on representations of the Loan Parties’ personnel;

(e) agrees to keep all Reports confidential and strictly for its internal use,
and not to distribute except to its participants, or use any Report in any other
manner; and

(f) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold each Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any Credit Extensions that the indemnifying Lender has made or
may make to the Borrowers, or the indemnifying Lender’s participation in
Swingline Loans and Letters of Credit, or the indemnifying Lender’s purchase of,
Revolving Credit Loans of the Borrowers; and (ii) to pay and protect, and
indemnify, defend, and hold each Agent and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including attorney costs) incurred by the
Agents and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender in violation of the terms hereof.

SECTION 8.15 Agency for Perfection.

Each Lender hereby appoints each other Lender as agent for the purpose of
perfecting Liens for the benefit of the Agents and the Secured Parties, in
assets which, in accordance with Article 9 of the UCC or any other Applicable
Law of the United States of America can be perfected only by possession. Should
any Secured Party (other than an Agent) obtain possession of any such
Collateral, such Secured Party shall notify the Collateral Agent thereof, and,
promptly upon the Collateral Agent’s request therefor shall deliver such
Collateral to the Collateral Agent, or otherwise deal with such Collateral in
accordance with the Collateral Agent’s instructions.

SECTION 8.16 Delinquent Lender.

(a) If for any reason any Lender (in each case, as determined by the
Administrative Agent) (i) shall fail or refuse to abide by its obligations under
this Agreement, including without limitation its obligation to make available to
Administrative Agent its Commitment Percentage of any Revolving Credit Loans,
expenses or setoff or purchase its Commitment Percentage of a participation
interest in the Swingline Loans or Letter of Credit Outstandings and such
failure is not cured within one (1) Business Day of receipt from the
Administrative Agent of written notice thereof, (ii) shall fail, within three
(3) Business Days after request by the Administrative Agent, to confirm that it
will comply with the terms of this Agreement relating to its Commitments,
(iii) has notified the Lead Borrower or the Administrative Agent or any other
Lender that it does not intend to comply with its funding obligations or has
made a public statement to that effect with respect to its funding obligations

 

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hereunder or under other agreements in which it commits to extend credit or
(iv) has, or has a direct or indirect parent that has, been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding or had a receiver,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or a
custodian appointed for it (or taken any action in furtherance of any such
proceeding or appointment) (each, a “Delinquent Lender”); provided that a Lender
shall not be deemed a Delinquent Lender solely by virtue of the ownership or
acquisition of any equity interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority, then, in addition to the
rights and remedies that may be available to the other Secured Parties, the Loan
Parties or any other party at law or in equity, and not at limitation thereof,
(i) such Delinquent Lender’s right to participate in the administration of, or
decision-making rights related to, the Revolving Credit Loans, this Agreement or
the other Loan Documents shall be suspended during the pendency of such failure
or refusal, (ii) a Delinquent Lender shall be deemed to have assigned any and
all payments due to it from the Loan Parties, whether on account of outstanding
Revolving Credit Loans, interest, fees or otherwise, to the remaining
non-Delinquent Lenders for application to, and reduction of, their proportionate
shares of all outstanding Obligations until, as a result of application of such
assigned payments the Lenders’ respective Commitment Percentages of all
outstanding Obligations (other than Other Liabilities) shall have returned to
those in effect immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency, and (iii) at the option of the
Administrative Agent, any amounts payable to such Delinquent Lender hereunder
(whether on account of principal, interest, fees or otherwise) shall, in lieu of
being distributed to such Delinquent Lender, be retained by the Administrative
Agent as cash collateral and may be utilized for future funding obligations of
the Delinquent Lender in respect of any Revolving Credit Loan or existing or
future participating interest in any Swingline Loan or Letter of Credit. The
Delinquent Lender’s decision-making and participation rights and rights to
payments as set forth in clauses (i) and (ii) hereinabove shall be restored only
upon the payment by the Delinquent Lender of its Commitment Percentage of any
Obligations (other than Other Liabilities), any participation obligation, or
expenses as to which it is delinquent, together with interest thereon at the
Default Rate from the date when originally due until the date upon which any
such amounts are actually paid. Any payments, prepayments or other amounts paid
or payable to a Delinquent Lender that are applied (or held) to pay amounts owed
by a Delinquent Lender or to post cash collateral pursuant to this SECTION
8.16(a) shall be deemed paid to and redirected by that Delinquent Lender, and
each Lender irrevocably consents hereto.

(b) The non-Delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to cause the
termination and assignment without any further action by the Delinquent Lender
for no cash consideration (pro rata, based on the respective Commitments of
those Lenders electing to exercise such right), the Delinquent Lender’s
Commitment to fund future Credit Extensions. Upon any such purchase of the
Commitment Percentage of any Delinquent Lender, the Delinquent Lender’s share in
future Credit Extensions and its rights under the Loan Documents with respect
thereto shall terminate on the date of purchase, and the Delinquent Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Acceptance. The
Borrowers may, on ten (10) days’ prior written notice to the Administrative
Agent and such Delinquent Lender, replace such Delinquent Lender (in its
capacity as a Lender) by causing such Delinquent Lender to (and such Delinquent
Lender shall be obligated to) assign (with the assignment fee to be paid by the
Borrowers in such instance) all of its rights and obligations under this
Agreement to one or more Eligible Assignees.

 

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(c) During any period in which there is a Delinquent Lender, for purposes of
computing the amount of the obligation of each non-Delinquent Lender to acquire,
refinance or fund participations in Letters of Credit or Swingline Loans under
this Agreement, the Commitment Percentage of each applicable non-Delinquent
Lender holding a Tranche A Commitment or a FILO Commitment (as applicable) shall
be computed without giving effect to the Tranche A Commitment or a FILO
Commitment (as applicable) of that Delinquent Lender; provided that (i) each
such reallocation shall be given effect only if, at the date the applicable
Lender becomes a Delinquent Lender, no Default or Event of Default exists; and
(ii) the aggregate obligation of each non-Delinquent Lender to acquire,
refinance or fund participations in Letters of Credit and Swingline Loans shall
not exceed the positive difference, if any, of (1) the Tranche A Commitment or a
FILO Commitment (as applicable) of that non-Delinquent Lender minus (2) the
aggregate outstanding amount of the Credit Extensions of that Lender in respect
of its Tranche A Commitment or FILO Commitment (as applicable).

(d) At any time that there shall exist a Delinquent Lender, immediately upon the
request of the Administrative Agent, an Issuing Bank or the Swingline Lender,
the Borrowers shall deliver to the Administrative Agent cash collateral in an
amount sufficient to cover all fronting exposure of such Person in respect of
such Delinquent Lender (after giving effect to SECTION 8.16(c) and any cash
collateral provided by the Delinquent Lender).

(e) Each Delinquent Lender shall indemnify the Administrative Agent and each
non-delinquent Lender from and against any and all loss, damage or expenses,
including but not limited to reasonable attorneys’ fees and funds advanced by
the Administrative Agent or by any non-delinquent Lender, on account of a
Delinquent Lender’s failure to timely fund its Commitment Percentage of a
Revolving Credit Loan, or its participation in Swingline Loans and Letters of
Credit or to otherwise perform its obligations under the Loan Documents.

SECTION 8.17 Collateral Matters.

(a) The Lenders hereby irrevocably authorize the Collateral Agent to release any
Lien upon any Collateral (i) upon the termination of the Commitments and payment
and satisfaction in full of all Obligations (other than (A) contingent
indemnification obligations and (B) Obligations in respect of obligations that
may thereafter arise with respect to Other Liabilities not yet due and payable;
unless the Administrative Agent has received written notice, at least two
(2) Business Days prior to the proposed date of any such release of Liens,
stating that arrangements reasonably satisfactory to the applicable provider
thereof in respect of obligations and liabilities under Cash Management Services
and Bank Products constituting Obligations have not been made), all Letters of
Credit shall have expired or terminated (or been collateralized or backstopped
in a manner reasonably satisfactory to the applicable Issuing Bank) and all
Letter of Credit Outstandings have been reduced to zero (or collateralized or
backstopped in a manner reasonably satisfactory to the applicable Issuing Bank),
or (ii) of a Borrower or a Facility Guarantor upon the consummation of any
transaction permitted by this Agreement as a result of which such Borrower or
Facility Guarantor (as applicable) ceases to be a Borrower or a Facility
Guarantor (provided that the Required Lenders shall have consented to such
transaction (to the extent required by the Credit Agreement) and the terms of
such consent did not provide otherwise) or (iii) constituting property being
sold, transferred or disposed of in a Permitted Disposition (other than a
Permitted Disposition to a Person required to grant a Lien to the Administrative
Agent or the Collateral Agent under the Loan Documents), subject to the

 

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conditions thereof, or upon the effectiveness of any written consent to the
release of the security interest granted hereby in any Collateral pursuant to
Section 9.01 of this Agreement. Except as provided above, the Collateral Agent
will not release any of the Collateral Agent’s Liens without the prior written
authorization of the Applicable Lenders. Upon request by any Agent or any Loan
Party at any time, the Lenders will confirm in writing the Collateral Agent’s
authority to release any Liens upon particular types or items of Collateral
pursuant to this SECTION 8.17.

(b) Upon at least two (2) Business Days’ prior written request by the Lead
Borrower (or within such shorter period as the Collateral Agent may agree in
writing), the Collateral Agent shall (and is hereby irrevocably authorized by
the Lenders to) execute such documents as may be necessary to evidence the
release of the Liens upon any Collateral described in SECTION 8.17(a); provided,
however, that (i) the Collateral Agent shall not be required to execute any such
document on terms which, in its reasonable opinion, would, under Applicable Law,
expose the Collateral Agent to liability or create any obligation or entail any
adverse consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of any Loan Party in respect of) all interests retained by
any Loan Party, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

SECTION 8.18 Additional Secured Parties. The benefit of the provisions of the
Loan Documents directly relating to the Collateral or any Lien granted
thereunder shall extend to and be available to any Secured Party that is not an
Agent, a Lender or an Issuing Bank party hereto as long as, by accepting such
benefits, such Secured Party agrees, as among Agent and all other Secured
Parties, that such Secured Party is bound by (and, if requested by Agent, shall
confirm such agreement in a writing in form and substance reasonably acceptable
to Agent) this ARTICLE VIII and SECTION 2.23, SECTION 9.08, SECTION 9.09,
SECTION 9.18, and SECTION 9.20 and the Intercreditor Agreement, and the
decisions and actions of any Agent and the Required Lenders (or, where expressly
required by the terms of this Agreement, a greater proportion of the Lenders or
other parties hereto as required herein) to the same extent a Lender is bound;
provided, however, that, notwithstanding the foregoing, (a) such Secured Party
shall be bound by SECTION 8.09 only to the extent of liabilities, reimbursement
obligations, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements with respect to or otherwise relating to the
Liens and Collateral held for the benefit of such Secured Party, in which case
the obligations of such Secured Party thereunder shall not be limited by any
concept of pro rata share or similar concept, (b) each of Agents, the Lenders
and the Issuing Banks party hereto shall be entitled to act at its sole
discretion, without regard to the interest of such Secured Party, regardless of
whether any Obligation to such Secured Party thereafter remains outstanding, is
deprived of the benefit of the Collateral, becomes unsecured or is otherwise
affected or put in jeopardy thereby, and without any duty or liability to such
Secured Party or any such Obligation and (c) except as otherwise set forth
herein and in the other Loan Documents, such Secured Party shall not have any
right to be notified of, consent to, direct, require or be heard with respect
to, any action taken or omitted in respect of the Collateral or under any Loan
Document.

SECTION 8.19 Syndication Agent, Documentation Agent, Arranger and Joint
Bookrunners.

 

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Notwithstanding the provisions of this Agreement or any of the other Loan
Documents, the Syndication Agent, the Documentation Agent, the Arranger and
Joint Bookrunners shall have no powers, rights, duties, responsibilities or
liabilities with respect to this Agreement and the other Loan Documents.

SECTION 8.20 Intercreditor Agreements.

Each Lender that has signed this Agreement shall be deemed to have consented to
and hereby irrevocably authorizes the Agents (or any of them) to enter into any
Intercreditor Agreement (including any and all amendments, amendments and
restatements, modification, supplements and acknowledgements thereto) from time
to time, and agree to be bound by the provisions thereof.

ARTICLE IX

Miscellaneous

SECTION 9.01 Amendments, Etc.

Except as otherwise set forth in this Agreement, no amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent to any
departure by the Lead Borrower or any other Loan Party therefrom, shall be
effective unless in writing signed by the Required Lenders and the Lead Borrower
or the applicable Loan Party, as the case may be, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that, no such amendment, waiver or consent
shall:

(a) extend or increase the Commitment of any Lender without the written consent
of such Lender (it being understood that a waiver of any condition precedent set
forth in SECTION 4.02 or the waiver of any Default, mandatory prepayment or
mandatory reduction of the Commitments shall not constitute an extension or
increase of any Commitment of any Lender);

(b) postpone any date scheduled for, or reduce the amount of, any payment of
principal, interest, fees or other amounts payable under the Loan Documents or
reduce the amount of, waive or excuse any such payment or postpone the
expiration of the Commitments or the Maturity Date, without the prior written
consent of all Lenders directly affected thereby provided that, only the consent
of the Required Lenders shall be necessary to amend the definition of “Default
Rate” or to waive any obligation of the Borrowers to pay interest at the Default
Rate;

(c) reduce the principal of, or the rate of interest specified herein on, any
Loan, or any fees or other amounts payable hereunder or under any other Loan
Document without the prior written consent of all Lenders directly affected
thereby; provided that, only the consent of the Required Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrowers to pay interest at the Default Rate;

(d) change any provision of this SECTION 9.01, the definition of “Required
Lenders”, “Supermajority Consent of the Lenders”, “Supermajority Consent of the
FILO

 

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Lenders” or any other provision of any Loan Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights thereunder
or make any determination or grant any consent thereunder, without the prior
written consent of all Lenders directly affected thereby;

(e) other than in a transaction permitted under SECTION 6.05, release all or
substantially all of the Collateral in any transaction or series of related
transactions, without the prior written consent of all Lenders directly affected
thereby; or

(f) other than in connection with a transaction permitted under SECTION 6.04 or
SECTION 6.05, release any Loan Party from its obligations under any Loan
Document or limit its liability in respect of such Loan Document, without the
prior written consent of all Lenders directly affected thereby; or

(g) increase any advance rate under the “Tranche A Borrowing Base” or “FILO
Borrowing Base” above the advance rates as in effect on the Closing Date,
without the prior written consent of all Lenders directly affected thereby

(h) without the prior written Supermajority Consent of the Lenders, change the
definition of the terms “Availability” or “Tranche A Borrowing Base” or “FILO
Borrowing Base” or any component definition of any such terms if as a result
thereof the amounts available to be borrowed by the Borrowers would be
increased, provided that in the event that the FILO Lenders are affected by any
such change described under this clause (h), the prior written Supermajority
Consent of the FILO Lenders shall also be required; and provided, however, that
the foregoing shall not limit the discretion of the Administrative Agent to
change, establish or eliminate any Reserves or to add Inventory and Accounts
acquired in a Permitted Acquisition to the Borrowing Base as provided herein; or

(i) without the prior written Supermajority Consent of the Lenders, modify the
definition of Permitted Overadvance so as to increase the amount thereof, or,
except as provided in such definition, the time period for a Permitted
Overadvance;

(j) without the prior written consent of all Lenders directly affected thereby,
change SECTION 2.16(a)(i), SECTION 2.17, SECTION 2.18, SECTION 7.04, or SECTION
8.04 or amend or modify the ratable requirement of SECTION 2.21(b);

(k) without the prior written consent of all Lenders directly affected thereby,
(i) subordinate the Obligations hereunder to any other Indebtedness, or
(ii) except as provided by operation of Applicable Law or in the Intercreditor
Agreement, subordinate the Liens granted hereunder or under the other Loan
Documents to any other Lien; or

(l) [reserved];

and provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by each Issuing Bank in addition to the Lenders required
above, affect the rights or duties of an Issuing Bank under this Agreement or
any Letter of Credit application relating to any Letter of Credit issued or to
be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swingline Lender in addition to the Lenders required above,
affect the

 

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rights or duties of the Swingline Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent and the Collateral Agent in addition to the Lenders
required above, affect the rights or duties of, or any fees or other amounts
payable to, the Administrative Agent or the Collateral Agent under this
Agreement or any other Loan Document, (iv) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the
parties thereto, (v) no Lender consent is required to effect an Extension
(except as expressly provided in SECTION 2.27), (vi) modifications to SECTION
2.21 or any other provision requiring pro rata payments or sharing of payments
in connection with any Extension, shall only require approval (to the extent any
such approval is otherwise required) of the Required Lenders, (vii) no Lender
consent is required to effect the Canadian Credit Facility (except as expressly
provided in SECTION 2.26) and (viii) no Lender consent is required to effect any
amendment or supplement to the Intercreditor Agreement (I) that is for the
purposes of adding the holders of any Indebtedness constituting a Permitted
Refinancing of the Term Loan Facility (or any agent or trustee of such holders)
as parties thereto, as expressly contemplated by the terms of the Intercreditor
Agreement (it being understood that any such amendment or supplement may make
such other changes to the Intercreditor Agreement as, in the good faith
determination of the Administrative Agent, are required to effectuate the
foregoing and provided, that such other changes are not adverse, in any material
respect, to the interests of the Lenders) and (II) that is expressly
contemplated by Section 5.2(c) or the second paragraph of Section 7.4 of the
Intercreditor Agreement (or the comparable provisions, if any, of any successor
intercreditor agreement with respect to a Permitted Refinancing of the Term Loan
Facility). Notwithstanding anything to the contrary herein, no Delinquent Lender
shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender (it being understood that any
Commitments or Loans held or deemed held by any Delinquent Lender shall be
excluded for a vote of the Lenders hereunder requiring any consent of the
Lenders).

Notwithstanding anything to the contrary contained in this SECTION 9.01, (a) in
the event that the Lead Borrower shall request that this Agreement or any other
Loan Document be modified, amended or waived in a manner which would require the
consent of all Lenders directly affected thereby and such amendment is approved
by the Required Lenders, but not by all the Lenders, the Lead Borrower and the
Administrative Agent shall be permitted to amend this Agreement without the
consent of the Lender or Lenders which did not agree to the modification or
amendment requested by the Lead Borrower (such Lender or Lenders, collectively
the “Minority Lenders”) subject to their providing for (i) the termination of
the Commitment of each of the Minority Lenders, (ii) the addition to this
Agreement of one or more other financial institutions which would qualify as an
Eligible Assignee, subject to the reasonable approval of the Administrative
Agent, or an increase in the Commitment of one or more of the Required Lenders,
so that the Total Commitments after giving effect to such amendment shall be in
the same amount as the aggregate Commitments immediately before giving effect to
such amendment, (iii) if any Revolving Credit Loans are outstanding at the time
of such amendment, the making of such additional Revolving Credit Loans by such
new or increasing Lender or Lenders, as the case may be, as may be necessary to
repay in full the outstanding Revolving Credit Loans (including principal,
interest, fees and other amounts due and owing under the Loan Documents) of the
Minority Lenders immediately before giving effect to such amendment and
(iv) such other modifications to this Agreement or the Loan Documents as may be
appropriate

 

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and incidental to the foregoing and (b) the Administrative Agent and the Lead
Borrower may amend any Loan Document to correct administrative errors or
omissions, or to effect administrative changes that are not adverse to any
Lender and, notwithstanding anything to the contrary contained herein, such
amendment shall become effective without any further consent of any other party
to such Loan Document.

SECTION 9.02 Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder or under any other Loan Document shall be
in writing (including by facsimile transmission). All such written notices shall
be mailed, faxed or delivered to the applicable address, facsimile number or
electronic mail address, 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 any Loan Party, to it at The Gymboree Corporation, Attention: Kimberly
Holtz MacMillan, Vice President and General Counsel, 500 Howard Street, San
Francisco, CA 94105 (Telecopy No. 415-278-7562) (E-Mail:
kimberly_macmillan@gymboree.com), with a copy to the attention of Lynda
Gustafson, Interim Principal Financial Officer, 500 Howard Street, San
Francisco, CA 94105 (Telecopy No. 415-278-7519) (E-mail:
lynda_gustafson@gymboree.com), and, with a copy to Ropes & Gray LLP, Prudential
Tower, 800 Boylston Street, Boston, Massachusetts 02199-3600, Attention: Byung
W. Choi, Esquire (Telecopy No. (617) 235-0452), (E-Mail:
byung.choi@ropesgray.com); and

(ii) if to the Administrative Agent, the Collateral Agent or the Swingline
Lender to Bank of America, N.A., 100 Federal Street, Boston, Massachusetts
02110, Attention: Rick Hill (Telecopy No. (617) 310-2156), (E-Mail:
rick.hill@baml.com), with a copy to Morgan, Lewis & Bockius LLP, 225 Franklin
Street, Boston, Massachusetts 02109, Attention: Matthew F. Furlong, Esquire
(Telecopy No. (617) 341-7701), (E-Mail: mfurlong@morganlewis.com);

(iii) if to any other Credit Party, to it at its address (or telecopy number or
electronic mail address) set forth on the signature pages hereto or on any
Assignment and Acceptance.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four (4) Business Days
after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when
sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of SECTION
5.02), when delivered; provided that notices and other communications to the
Administrative Agent, the Issuing Banks and the Swingline Lender pursuant to
Article II shall not be effective until actually received by such Person. In no
event shall a voice mail message be effective as a notice, communication or
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Notwithstanding the foregoing, any notice hereunder sent by e-mail shall be
solely for the distribution of (i) routine communications such as financial
statements and (ii) documents and signature pages for execution by the parties
hereto, and for no other purpose. Unless the Administrative Agent otherwise
prescribes, notices and other communications sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next Business Day for the recipient. Any party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile or by electronic pdf copy. The
effectiveness of any such documents and signatures shall, subject to Applicable
Law, have the same force and effect as manually signed originals and shall be
binding on all Loan Parties, the Administrative Agent, the Collateral Agent, the
Issuing Banks, and the Lenders.

(c) Reliance by Agents and Lenders. The Administrative Agent, the Collateral
Agent, the Issuing Banks and the Lenders shall be entitled to rely and act upon
any notices (including telephonic Borrowing Requests) purportedly given by or on
behalf of any Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrowers shall indemnify
the Credit Parties and each Related Person from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrowers in the absence of gross
negligence or willful misconduct. All telephonic notices to the Administrative
Agent may be recorded by the Administrative Agent, and each of the parties
hereto hereby consents to such recording.

SECTION 9.03 No Waiver; Cumulative Remedies.

No failure or delay by any Credit Party in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Credit Parties hereunder and
under the other Loan Documents are cumulative and are not exclusive of any other
rights or remedies that they would otherwise have. No waiver of any provision of
any Loan Document or consent to any departure by any Loan Party therefrom shall
in any event be effective unless the same shall be permitted by SECTION 9.01,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Revolving Credit Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default or Event of Default,
regardless of whether any Credit Party may have had notice or knowledge of such
Default or Event of Default at the time.

SECTION 9.04 Attorney Costs and Expenses.

 

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The Lead Borrower agrees (a) to pay or reimburse the Administrative Agent, the
Collateral Agent and the Arrangers for all Credit Party Expenses incurred in
connection with (i) the preparation, negotiation, syndication and execution of
this Agreement and the other Loan Documents, and (ii) any amendment, waiver,
consent or other modification of the provisions hereof and thereof (whether or
not the transactions contemplated thereby are consummated), and (iii) the
consummation and administration of the transactions contemplated hereby and
thereby, including, in each case, all reasonable fees and expenses of Morgan,
Lewis & Bockius, LLP, and (b) to pay or reimburse the Administrative Agent, the
Collateral Agent and each Lender for all Credit Party Expenses incurred in
connection with the enforcement of any rights or remedies under this Agreement
or the other Loan Documents (including, without limitation, all such costs and
expenses incurred during any legal proceeding, including any proceeding under
the Bankruptcy Code, and including all fees and expenses of counsel to the
Administrative Agent, the Collateral Agent and, to the extent constituting
Credit Party Expenses, the other Credit Parties). The agreements in this SECTION
9.04 shall survive the termination of the Commitments, repayment of all other
Obligations and assignment of any portion of the Obligations. All amounts due
under this SECTION 9.04 for Credit Party Expenses incurred after the Closing
Date shall be paid within ten (10) Business Days of receipt by the Lead Borrower
of an invoice relating thereto setting forth such Credit Party Expenses in
reasonable detail. If any Loan Party fails to pay when due any Credit Party
Expenses payable by it hereunder or under any Loan Document, such amount may be
paid on behalf of such Loan Party by the Administrative Agent in its sole
discretion, without notice to or consent from the Loan Parties, and any amounts
so paid shall constitute Revolving Credit Loans hereunder.

SECTION 9.05 Indemnification by the Lead Borrower.

Whether or not the transactions contemplated hereby are consummated, the Lead
Borrower shall indemnify and hold harmless each Credit Party, their respective
Related Parties and their respective Affiliates (collectively the “Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and
disbursements (including fees and expenses of one counsel to the Administrative
Agent, the Collateral Agent, the Arranger and the Lenders (and, if reasonably
necessary, one local counsel in each applicable jurisdiction for all
Indemnities, taken as a whole, and, in the event of any actual conflict of
interest, one additional counsel of each type for all similarly situated
affected parties, taken as a whole) of any kind or nature whatsoever which may
at any time be imposed on, incurred by or asserted against any such Indemnitee
in any way relating to or arising out of or in connection with (a) the
execution, delivery, enforcement, performance or administration of any Loan
Document, the Existing Credit Agreement or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby or
the consummation of the transactions contemplated thereby, (b) any Commitment,
Revolving Credit Loan (including Swingline Loans) or Letter of Credit or the use
or proposed use of the proceeds therefrom (including any refusal by an Issuing
Bank to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), or (c) any actual or alleged presence or release of
Hazardous Materials on or from any property currently or formerly owned or
operated by the Lead Borrower, any Subsidiary or any other Loan Party, or any
Environmental Liability related in any way to the Lead Borrower, any Subsidiary
or any other Loan Party, or (d) any actual or prospective claim, litigation,
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foregoing, whether based on contract, tort or any other theory (including any
investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto and, in each case, whether or not caused by or
arising, in whole or in part, out of the negligence of the Indemnitee; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses or disbursements (i) resulted from
the gross negligence, bad faith, or willful misconduct of such Indemnitee or of
any Affiliate or Related Party of such Indemnitee, as determined by the final
non-appealable judgment of a court of competent jurisdiction, (ii) are relating
to disputes amongst Indemnitees other than (1) any claim against an Indemnitee
or its Related Parties in its capacity or in fulfilling its role as
Administrative Agent, Collateral Agent, Arranger or similar role and (2) any
claim arising out of the any act or omission of the Lead Borrower or any of its
Affiliates or (iii) relate to Taxes (other than Taxes relating to liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements indemnified under this SECTION 9.05). No
Indemnitee shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee or any Loan Party have any liability and each party hereby
waives, any claim against any other party to this Agreement or any Indemnitee,
for any special, punitive, indirect or consequential damages relating to this
Agreement or any other Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the Closing Date). In
the case of an investigation, litigation or other proceeding to which the
indemnity in this SECTION 9.05 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any
Loan Party, its directors, stockholders or creditors or an Indemnitee or any
other Person, whether or not any Indemnitee is otherwise a party thereto and
whether or not any of the transactions contemplated hereunder or under any of
the other Loan Documents is consummated. All amounts due under this SECTION 9.05
shall be paid within ten (10) Business Days after demand therefor; provided,
however, that such Indemnitee shall promptly refund such amount to the extent
that there is a final judicial or arbitral determination that such Indemnitee
was not entitled to indemnification or contribution rights with respect to such
payment pursuant to the express terms of this SECTION 9.05. The agreements in
this SECTION 9.05 shall survive the resignation of the Administrative Agent or
the Collateral Agent, the replacement of any Lender, the termination of the
Commitments, the repayment, satisfaction or discharge of all the other
Obligations and the assignment of any of the Obligations to a third party.

SECTION 9.06 Payments Set Aside.

To the extent that any payment by or on behalf of the Lead Borrower is made to
any Credit Party, or any Credit Party exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by such Credit Party in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under the Bankruptcy Code or any other debtor
relief law or otherwise, then (a) to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender severally agrees to pay to the
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Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent or the Collateral Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Effective Rate from time to time in effect.

SECTION 9.07 Successors and Assigns.

The provisions of this Agreement shall be binding upon and inure to the benefit
of the Secured Parties, the Loan Parties and their respective successors and
assigns permitted hereby, except that no Loan Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee, (ii) by way
of participation in accordance with the provisions of SECTION 9.07(d) or SECTION
9.07(e), or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of SECTION 9.07(g) or SECTION 9.07(h) (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the Secured Parties, the Loan Parties and their
respective successors and assigns permitted hereby, Participants to the extent
provided in SECTION 9.07(e) and, to the extent expressly contemplated hereby,
the Indemnitees) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

(a) (i) Subject to the conditions set forth in paragraph (a)(ii) below, any
Lender may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Revolving Credit Loans (including for purposes of this
SECTION 9.07(a), participations in Letters of Credit and in Swingline Loans) at
the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

(A) the Lead Borrower, provided that no consent of the Lead Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund or, if a Specified Default has occurred and is continuing, any Eligible
Assignee;

(B) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment to a Lender, an Affiliate of a Lender,
or an Approved Fund; and

(C) the Issuing Banks and the Swingline Lender for any assignment of the Tranche
A Commitments that increases the obligation of the assignee to participate in
exposure under one or more Letters of Credit or Swingline Loans (in each case,
whether or not then outstanding);

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

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitment, the amount of the Commitment of the assigning
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(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
(x) with respect to Tranche A Commitments, $5,000,000 or (y) in the case of FILO
Commitments, $1,000,000 unless each of the Lead Borrower and the Administrative
Agent otherwise consents, provided that (1) no such consent of the Lead Borrower
shall be required if a Specified Default has occurred and is continuing and
(2) such amounts shall be aggregated in respect of each Lender and its
Affiliates or Approved Funds, if any;

(B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500 (unless such fee is waived by the Administrative
Agent);

(C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire satisfactory in form and
content to the Administrative Agent; and

(D) the assignment shall be recorded in the Register.

(b) Subject to acceptance and recording thereof by the Administrative Agent
pursuant to SECTION 9.07(c), from and after the effective date specified in each
Assignment and Acceptance, the Eligible Assignee thereunder shall be a party to
this Agreement 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 (except to the extent provided in SECTION 8.09,
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 SECTION
9.05 with respect to facts and circumstances occurring prior to the effective
date of such assignment). Upon request, and the surrender by the assigning
Lender of its Note, the Borrowers (at their expense) shall execute and deliver a
Note to the assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this clause (b) 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 SECTION 9.07(d).

(c) The Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at the Administrative Agent’s Office 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 the Commitments of, and principal
amounts (and related interest amounts) of the Revolving Credit Loans (including
Swingline Loans) and Obligations with respect to Letters of Credit owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, absent manifest error, and the
Administrative Agent, the Borrowers and the Credit Parties shall treat each
Person whose name is recorded in the Register pursuant to the terms hereof as
the owner of the related Commitments and Obligations as set forth next to the
name of such Person in the Register, notwithstanding notice to the contrary.

 

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The Register shall be available for inspection by any Borrower and any Credit
Party, at any reasonable time and from time to time upon reasonable prior
notice.

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrowers or the Administrative Agent, sell participations to any Person (other
than (x) any Loan Party, (y) any natural person, or (z) the Sponsors or any of
their respective Affiliates (other than a Sponsor Related Investment Funds))
(each, a “Participant”) in all or a portion of such Lender’s rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or the Revolving Credit Loans (including such Lender’s participations in
Letters of Credit and/or Swingline Loans) owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrowers and the other Credit
Parties shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and the other Loan Documents and to approve any amendment,
modification or waiver of any provision of this Agreement or the other Loan
Documents; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
waiver or other modification described in SECTION 9.01(b), (c), (e) or (f) that
directly affects such Participant. Subject to SECTION 9.07(f), the Borrowers
agree that each Participant shall be entitled to the benefits of SECTION 2.14
and SECTION 2.23 (subject to the terms thereof as if it were a Lender) to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to SECTION 9.07(b). To the extent permitted by Applicable Law, each
Participant also shall be entitled to the benefits of SECTION 9.09 as though it
were a Lender; provided that such Participant agrees to be subject to SECTION
8.04 as though it were a Lender.

(e) Each Lender that sells a participation shall, acting solely for this
purposes as an agent of the Borrowers, maintain a register on which it enters
the name and address of each participant and the principal amounts (and interest
thereon) of each participant’s interest in the Loans or other Obligations under
this Agreement (the “Participant Register”). Notwithstanding any other provision
of this Agreement, no sale, grant or other transfer of a participation shall be
effective until recorded in the Participant Register. The entries in Participant
Register shall be conclusive and the Borrower, Lenders and each Agent shall
treat each Person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement, notwithstanding
notice to the contrary. The Participant Register shall be available for
inspection by any Borrower and any Credit Party at any reasonable time and from
time to time upon reasonable prior notice.

(f) A Participant shall not be entitled to receive any greater payment under
SECTION 2.14 or SECTION 2.23 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 Lead
Borrower’s prior written consent.

(g) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
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Reserve Bank; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

(h) Notwithstanding anything to the contrary contained herein, (1) any Lender
may in accordance with Applicable Law create a security interest in all or any
portion of the Revolving Credit Loans owing to it and the Note, if any, held by
it and (2) any Lender that is a fund that invests in loans may create a security
interest in all or any portion of the Revolving Credit Loans owing to it and the
Note, if any, held by it to the trustee for holders of obligations owed, or
securities issued, by such fund as security for such obligations or securities;
provided that unless and until such trustee actually becomes a Lender in
compliance with the other provisions of this SECTION 9.07, (i) no such pledge
shall release the pledging Lender from any of its obligations under the Loan
Documents and (ii) such trustee shall not be entitled to exercise any of the
rights of a Lender under the Loan Documents even though such trustee may have
acquired ownership rights with respect to the pledged interest through
foreclosure or otherwise.

(i) Notwithstanding anything to the contrary contained herein, any Issuing Bank
or the Swingline Lender may, upon thirty (30) days’ notice to the Lead Borrower
and the Lenders, resign as an Issuing Bank or the Swingline Lender,
respectively; provided that on or prior to the expiration of such 30-day period
with respect to such resignation, the relevant Issuing Bank or the Swingline
Lender shall have identified a successor Issuing Bank or Swingline Lender
reasonably acceptable to the Lead Borrower willing to accept its appointment as
successor Issuing Bank or Swingline Lender, as applicable. In the event of any
such resignation of an Issuing Bank or the Swingline Lender, the Lead Borrower
shall be entitled to appoint from among the Lenders willing to accept such
appointment a successor Issuing Bank or Swingline Lender hereunder; provided
that no failure by the Lead Borrower to appoint any such successor shall affect
the resignation of the relevant Issuing Bank or the Swingline Lender, as the
case may be, except as expressly provided above. If an Issuing Bank resigns as
an Issuing Bank, it shall retain all the rights and obligations of an Issuing
Bank hereunder with respect to all Letters of Credit outstanding as of the
effective date of its resignation as an Issuing Bank and all Obligations with
respect thereto (including the right to require the Lenders to make Prime Rate
Loans or fund risk participations in Letters of Credit). If the Swingline Lender
resigns as Swingline Lender, it shall retain all the rights of the Swingline
Lender provided for hereunder with respect to Swingline Loans made by it and
outstanding as of the effective date of such resignation, including the right to
require the Lenders to make Prime Rate Loans or fund risk participations in
outstanding Swingline Loans.

SECTION 9.08 Confidentiality.

Each of the Agents and the Lenders agrees to maintain the confidentiality of the
Information, except that Information may be disclosed (a) to its Affiliates and
its Affiliates’ directors, officers, employees, trustees, investment advisors
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and shall agree to keep such
Information confidential); (b) to the extent requested by any Governmental
Authority; (c) to the extent required by Applicable Law or regulations or by any
subpoena or similar legal process; (d) to any other party to this Agreement;
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provisions substantially the same as those of this SECTION 9.08 (or as may
otherwise be reasonably acceptable to the Lead Borrower), to any pledgee
referred to in SECTION 9.07(g), counterparty to a Swap Contract, Eligible
Assignee of or Participant in, or any prospective Eligible Assignee of or
Participant in, any of its rights or obligations under this Agreement; (f) with
the written consent of the Lead Borrower; (g) to the extent such Information
becomes publicly available other than as a result of a breach of this SECTION
9.08; (h) to any Governmental Authority or examiner (including the National
Association of Insurance Commissioners or any other similar organization)
regulating any Lender; (i) to any rating agency when required by it (it being
understood that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Information relating to the
Loan Parties received by it from such Lender); (j) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights hereunder
or thereunder; (k) to the extent such Information becomes available to any
Credit Party on a nonconfidential basis from a source other than the Loan
Parties; and (l) to the extent that such Information is independently developed
by such Credit Party. In addition, the Credit Parties may disclose the existence
of this Agreement and information about this Agreement to market data
collectors, similar service providers to the lending industry, and service
providers to the Credit Parties in connection with the administration and
management of this Agreement, the other Loan Documents, the Commitments, and the
Credit Extensions. For the purposes of this SECTION 9.08, “Information” means
all information received from any Loan Party relating to any Loan Party or its
business, other than any such information that is publicly available to any
Credit Party prior to disclosure by any Loan Party other than as a result of a
breach of this SECTION 9.08; provided that, in the case of information received
from a Loan Party after the Closing Date, such information is (i) clearly
identified at the time of delivery as confidential or (ii) is delivered pursuant
to SECTION 5.01, SECTION 5.02 or SECTION 5.03 hereof.

SECTION 9.09 Setoff.

In addition to any rights and remedies of the Lenders provided by Applicable
Law, upon the occurrence and during the continuance of any Event of Default,
each Lender and its Affiliates is authorized at any time and from time to time,
without prior notice to the Lead Borrower or any other Loan Party, any such
notice being waived by the Lead Borrower (on its own behalf and on behalf of
each Loan Party and its Subsidiaries) to the fullest extent permitted by
Applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
Indebtedness at any time owing by, such Lender and its Affiliates to or for the
credit or the account of the respective Loan Parties against any and all
Obligations owing to such Lender and its Affiliates hereunder or under any other
Loan Document or document governing any Other Liabilities, now or hereafter
existing, irrespective of whether or not such Lender or Affiliate shall have
made demand under this Agreement or any other Loan Document or document
governing any Other Liabilities and although such Obligations may be contingent
or unmatured or denominated in a currency different from that of the applicable
deposit or Indebtedness. Each Lender agrees promptly to notify the Lead Borrower
and the Administrative Agent after any such set off and application made by such
Lender; provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of the Administrative Agent
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other rights and remedies (including other rights of setoff) that the Agents and
such Lender may have.

SECTION 9.10 Interest Rate Limitation.

Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by Applicable Law (the “Maximum
Rate”). If any Credit Party shall receive interest in an amount that exceeds the
Maximum Rate, the excess interest shall be applied to the principal of the
Revolving Credit Loans (including Swingline Loans) or, if it exceeds such unpaid
principal, refunded to the Borrowers. In determining whether the interest
contracted for, charged, or received by a Credit Party exceeds the Maximum Rate,
such Person may, to the extent permitted by Applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the
Obligations hereunder.

SECTION 9.11 Counterparts.

This Agreement and each other Loan Document may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery by telecopier or
by electronic .pdf copy of an executed counterpart of a signature page to this
Agreement and each other Loan Document shall be effective as delivery of an
original executed counterpart of this Agreement and such other Loan Document.
The Administrative Agent and the Collateral Agent may also require that any such
documents and signatures delivered by telecopier be confirmed by a manually
signed original thereof; provided that the failure to request or deliver the
same shall not limit the effectiveness of any document or signature delivered by
telecopier.

SECTION 9.12 Integration.

This Agreement, together with the Fee Letter and the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Credit Parties in any other Loan Document shall not be
deemed a conflict with this Agreement. Each Loan Document was drafted with the
joint participation of the respective parties thereto and shall be construed
neither against nor in favor of any party, but rather in accordance with the
fair meaning thereof.

SECTION 9.13 Severability.

If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

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SECTION 9.14 Governing Law.

(a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL GOVERN
IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN
REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL,
SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.

(b) ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN
NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY AND EACH CREDIT
PARTY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH BORROWER, EACH FACILITY GUARANTOR AND EACH
CREDIT PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION OR OTHER JURISDICTION CHOSEN BY THE ADMINISTRATIVE AGENT IN RESPECT
OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

SECTION 9.15 Waiver of Right to Trial by Jury.

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.15
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

SECTION 9.16 Binding Effect.

 

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This Agreement shall become effective when it shall have been executed by the
Borrowers and the Administrative Agent shall have been notified by each Lender,
Swingline Lender and Issuing Bank that each such Lender, Swingline Lender and
Issuing Bank has executed it and thereafter shall be binding upon and inure to
the benefit of each Borrower and each Credit Party and their respective
successors and assigns, except that no Borrower shall have the right to assign
its rights hereunder or any interest herein without the prior written consent of
the Lenders except as otherwise permitted hereby.

SECTION 9.17 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 each Borrower in respect of any such
sum due from it to the Administrative Agent or the Lenders hereunder or under
the other Loan Documents shall, notwithstanding any judgment in a currency (the
“Judgment Currency”) other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the “Agreement
Currency”), be discharged only to the extent that on the Business Day following
receipt by the Administrative Agent of any sum adjudged to be so due in the
Judgment Currency, the Administrative Agent may in accordance with normal
banking procedures purchase the Agreement Currency with the Judgment Currency.
If the amount of the Agreement Currency so purchased is less than the sum
originally due to the Administrative Agent from any Borrower in the Agreement
Currency, such Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Administrative Agent or the Person to whom such
obligation was owing against such loss. If the amount of the Agreement Currency
so purchased is greater than the sum originally due to the Administrative Agent
in such currency, the Administrative Agent agrees to return the amount of any
excess to such Borrower (or to any other Person who may be entitled thereto
under Applicable Law).

SECTION 9.18 Lender Action.

Each Lender agrees that it shall not take or institute any actions or
proceedings, judicial or otherwise, for any right or remedy against any Loan
Party or any other obligor under any of the Loan Documents (including the
exercise of any right of setoff, rights on account of any banker’s lien or
similar claim or other rights of self-help), or institute any actions or
proceedings, or otherwise commence any remedial procedures, with respect to any
Collateral or any other property of any such Loan Party, without the prior
written consent of the Administrative Agent. The provision of this SECTION 9.18
are for the sole benefit of the Lenders and shall not afford any right to, or
constitute a defense available to, any Loan Party.

SECTION 9.19 USA PATRIOT ACT, ETC.; PROCEEDS OF CRIME ACT.

Each Lender hereby notifies the Loan Parties that pursuant to the requirements
of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) and other “know your customer” rules, regulations, laws and
policies (together with the Act, collectively, the “KYC Provisions”), it is
required to obtain, verify and record information that

 

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identifies the Loan Parties, which information includes the name and address of
each Loan Party and other information that will allow such Lender to identify
such Loan Party in accordance with KYC Provisions. Each Loan Party is in
compliance, in all material respects, with the KYC Provisions and the Proceeds
of Crime Act. No part of the proceeds of the Revolving Credit Loans will be used
by the Loan Parties, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

SECTION 9.20 No Advisory or Fiduciary Responsibility.

In connection with all aspects of each transaction contemplated hereby, the Loan
Parties each acknowledge and agree that: (i) the credit facility provided for
hereunder and any related arranging or other services in connection therewith
(including in connection with any amendment, waiver or other modification hereof
or of any other Loan Document) are an arm’s-length commercial transaction
between the Loan Parties, on the one hand, and the Credit Parties, on the other
hand, and each of the Loan Parties is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (ii) in connection with the
process leading to such transaction, each Credit Party is and has been acting
solely as a principal and is not the financial advisor, agent or fiduciary, for
the Loan Parties or any of their respective Affiliates, stockholders, creditors
or employees or any other Person; (iii) none of the Credit Parties has assumed
or will assume an advisory, agency or fiduciary responsibility in favor of the
Loan Parties with respect to any of the transactions contemplated hereby or the
process leading thereto, including with respect to any amendment, waiver or
other modification hereof or of any other Loan Document (irrespective of whether
any of the Credit Parties has advised or is currently advising any Loan Party or
any of its Affiliates on other matters) and none of the Credit Parties has any
obligation to any Loan Party 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; (iv) the Credit Parties and their
respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Loan Parties and their
respective Affiliates, and none of the Credit Parties has any obligation to
disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Credit Parties have not provided and will not provide
any legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each of the Loan Parties
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate. Each of the Loan Parties hereby waives and
releases, to the fullest extent permitted by law, any claims that it may have
against each of the Credit Parties with respect to any breach or alleged breach
of agency or fiduciary duty.

SECTION 9.21 Foreign Asset Control Regulations.

Neither of the advance of the Revolving Credit Loans nor the use of the proceeds
of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et
seq., as amended) (the

 

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“Trading With the Enemy Act”) or any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) (the “Foreign Assets Control Regulations”) or any enabling legislation
or executive order relating thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
“Executive Order”) and (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56)). Furthermore, none of the Borrowers or their Subsidiaries
(a) is or will become a “blocked person” as described in the Executive Order,
the Trading With the Enemy Act or the Foreign Assets Control Regulations or
(b) knowingly engages or will engage in any dealings or transactions, or be
otherwise associated, with any such “blocked person” or in any manner violative
of any such order.

SECTION 9.22 Survival.

All covenants, agreements, indemnities, representations and warranties made by
the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Revolving Credit Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and, notwithstanding that any Credit Party may have had notice
or knowledge of any Default or Event of Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect until (i) the Commitments have expired or been terminated,
(ii) the principal of and interest on each Revolving Credit Loan (including
Swingline Loans) and all fees and other Obligations (other than contingent
indemnity obligations with respect to then unasserted claims) shall have been
paid in full, (iii) all Letters of Credit shall have expired or terminated (or
been cash collateralized or backstopped in a manner reasonably satisfactory to
the applicable Issuing Bank) and (iv) all Letter of Credit Outstandings have
been reduced to zero (or cash collateralized in a manner reasonably satisfactory
to the applicable Issuing Bank). In connection with the termination of this
Agreement and the release and termination of the security interests in the
Collateral, the Administrative Agent, on behalf of itself and the other Credit
Parties, may require such indemnities as they shall reasonably deem necessary or
appropriate to protect the Credit Parties against (x) loss on account of credits
previously applied to the Obligations that may subsequently be reversed or
revoked, (y) any obligations that may thereafter arise with respect to the Other
Liabilities, and (z) any Obligations that may thereafter arise under SECTION
9.04 or SECTION 9.05 hereof.

SECTION 9.23 Press Releases and Related Matters.

Each Loan Party consents to the publication by the Administrative Agent of
customary trade advertising material in tombstone format relating to the
financing transactions contemplated by this Agreement using any Loan Party’s
name, and with the consent of the Lead Borrower, logo or trademark. The
Administrative Agent shall provide a draft reasonably in advance of any
advertising material to the Lead Borrower for review and comment prior to the
publication thereof. The Administrative Agent and the Lenders reserve the right
to provide to

 

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industry trade organizations information necessary and customary for inclusion
in league table measurements.

SECTION 9.24 Additional Waivers.

(a) The Obligations are the joint and several obligation of each Loan Party. To
the fullest extent permitted by Applicable Law, the obligations of each Loan
Party hereunder shall not be affected by (i) the failure of any Credit Party to
assert any claim or demand or to enforce or exercise any right or remedy against
any other Loan Party under the provisions of this Agreement, any other Loan
Document or under Applicable Law, (ii) any rescission, waiver, amendment or
modification of, or any release of any Loan Party from, any of the terms or
provisions of, this Agreement, any other Loan Document, or (iii) the failure to
perfect any security interest in, or the release of, any of the Collateral or
other security held by or on behalf of the Collateral Agent, any Secured Party
or any other Credit Party.

(b) To the fullest extent permitted by Applicable Law, the obligations of each
Loan Party to pay the Obligations in full hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than the
payment in full in cash of the Obligations after the termination of all
Commitments to any Loan Party under any Loan Document), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations or otherwise. Without limiting the
generality of the foregoing, to the fullest extent permitted by Applicable Law,
the obligations of each Loan Party hereunder shall not be discharged or impaired
or otherwise affected by the failure of the Administrative Agent, any Secured
Party or any other Credit Party to assert any claim or demand or to enforce any
remedy under this Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, any default, failure
or delay, willful or otherwise, in the performance of any of the Obligations, or
by any other act or omission that may or might in any manner or to any extent
vary the risk of any Loan Party or that would otherwise operate as a discharge
of any Loan Party as a matter of law or equity (other than the payment in full
in cash of all the Obligations after termination of all Commitments to any Loan
Party under any Loan Document).

(c) To the fullest extent permitted by Applicable Law, each Loan Party waives
any defense based on or arising out of any defense of any other Loan Party or
the unenforceability of the Obligations or any part thereof from any cause, or
the cessation from any cause of the liability of any other Loan Party, other
than the payment in full in cash of all the Obligations after the termination of
all Commitments to any Loan Party under any Loan Document. To the fullest extent
permitted by Applicable Law, the Collateral Agent, each Secured Party and the
other Credit Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with any other Loan Party,
or exercise any other right or remedy available to them against any other Loan
Party, without affecting or impairing in any way the liability of any Loan Party
hereunder except to the extent that all the Obligations have been indefeasibly
paid in full in cash and performed in full after the termination of Commitments
to any Loan Party under any Loan Document. Pursuant to, and to the fullest
extent permitted by, Applicable Law, each Loan Party waives any defense arising
out of any such election even though such election

 

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operates, pursuant to Applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Loan Party against
any other Loan Party, as the case may be, or any security. To the fullest extent
permitted by Applicable Law, each Loan Party waives any and all suretyship
defenses.

(d) Except as otherwise specifically provided herein, each Loan Party is
obligated to repay the Obligations as joint and several obligors under this
Agreement. Upon payment by any Loan Party of any Obligations, all rights of such
Loan Party against any other Loan Party arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
payment in full in cash of all the Obligations (other than contingent indemnity
obligations for then unasserted claims) and the termination of all Commitments
to any Loan Party under any Loan Document. If any amount shall erroneously be
paid to any Loan Party on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of any
Loan Party, such amount shall be held in trust for the benefit of the Credit
Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of this Agreement and the other Loan Documents.
Subject to the foregoing, to the extent that any Loan Party shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Revolving Credit Loans made to another Loan Party hereunder (an
“Accommodation Payment”), then the Loan Party making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Loan Parties in an amount equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Loan
Party’s Allocable Amount and the denominator of which is the sum of the
Allocable Amounts of all of the Loan Parties; provided that such rights of
contribution and indemnification shall be subordinated to the prior payment in
full, in cash, of all of the Obligations. As of any date of determination, the
“Allocable Amount” of each Loan Party shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such Loan
Party hereunder without (a) rendering such Loan Party “insolvent” within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent
Conveyance Act (“UFCA”), (b) leaving such Loan Party with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Loan Party
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.

(e) Each Loan Party understands and acknowledges that if the Collateral Agent or
any other Secured Party forecloses judicially or nonjudicially against any real
property security for the Obligations, that foreclosure could impair or destroy
any ability that such Loan Party may have to seek reimbursement, contribution,
or indemnification from the other Loan Parties or others based on any right such
Loan Party may have of subrogation, reimbursement, contribution, or
indemnification for any amounts paid by such Loan Party hereunder or under the
Guaranty. Each Loan Party further understands and acknowledges that in the
absence of this paragraph, such potential impairment or destruction of such Loan
Party’s rights, if any, may entitle such Loan Party to assert a defense to its
obligations based on Section 580d of the California Code of Civil Procedure as
interpreted in Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968). By executing
the Loan Documents, each Loan Party freely, irrevocably, and unconditionally:
(i) waives and relinquishes that defense and agrees that such Loan Party will be
fully liable under the Loan Documents even though the Collateral Agent or any

 

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other Secured Party may foreclose, either by judicial foreclosure or by exercise
of power of sale, any deed of trust securing the Obligations; (ii) agrees that
such Loan Party will not assert that defense in any action or proceeding which
the Administrative Agent, the Collateral Agent or any other Secured Party may
commence to enforce the Loan Documents; (iii) acknowledges and agrees that the
rights and defenses waived by such Loan Party herein include any right or
defense that such Loan Party may have or be entitled to assert based upon or
arising out of any one or more of §§ 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure or § 2848 of the California Civil Code; and
(iv) acknowledges and agrees that the Secured Parties are relying on this waiver
in creating the Obligations, and that this waiver is a material part of the
consideration which the Secured Parties are receiving for creating the
Obligations.

(f) Each Loan Party hereby agrees to keep each other Loan Party fully apprised
at all times as to the status of its business, affairs, finances, and financial
condition, and its ability to perform its Obligations under the Loan Documents,
and in particular as to any adverse developments with respect thereto. Each Loan
Party hereby agrees to undertake to keep itself apprised at all times as to the
status of the business, affairs, finances, and financial condition of each other
Loan Party, and of the ability of each other Loan Party to perform its
Obligations under the Loan Documents, and in particular as to any adverse
developments with respect to any thereof. Each Loan Party hereby agrees, in
light of the foregoing mutual covenants to inform each other, and to keep
themselves and each other informed as to such matters, that the Credit Parties
shall have no duty to inform any Loan Party of any information pertaining to the
business, affairs, finances, or financial condition of any other Loan Party, or
pertaining to the ability of any other Loan Party to perform its Obligations
under the Loan Documents, even if such information is adverse, and even if such
information might influence the decision of one or more of the Loan Parties to
continue to be jointly and severally liable for, or to provide Collateral for,
the Obligations of one or more of the other Loan Parties. To the fullest extent
permitted by applicable law, each Loan Party hereby expressly waives any duty of
the Credit Parties to inform any Loan Party of any such information.

(g) Each Loan Party waives any right or defense it may have at law or equity,
including California Code of Civil Procedure §580a, to a fair market value
hearing or action to determine a deficiency judgment after a foreclosure.

SECTION 9.25 Intercreditor Agreement.

Each of the Loan Parties, the Agents, the Lenders and the other Credit Parties
(i) consents to and ratifies the execution by the Administrative Agent of the
Intercreditor Agreement and any amendments or supplements expressly contemplated
thereby, (ii) hereby agrees that it will be bound by and will take no actions
contrary to the provisions of the Intercreditor Agreement and (iii) acknowledges
that it has received a copy of the Intercreditor Agreement and that the exercise
of certain of the Agents’ rights and remedies hereunder may be subject to, and
restricted by, the provisions of the Intercreditor Agreement. Except as
specified herein, nothing contained in the Intercreditor Agreement shall be
deemed to modify any of the provisions of this Agreement and the other Loan
Documents, which, as among the Loan Parties, the Agents, the Lenders and the
other Credit Parties shall remain in full force and effect.

SECTION 9.26 Assumption by Company.

 

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The Company, by its signature below, hereby confirms that, as a result of its
merger with Giraffe Acquisition Corporation, it assumed all of the rights and
obligations of Giraffe Acquisition Corporation under the Existing Credit
Agreement and the other Loan Documents (in furtherance of, and not in lieu of,
any assumption or deemed assumption as a matter of law) and joined the Existing
Credit Agreement as the Lead Borrower thereunder and joined the other Loan
Documents.

SECTION 9.27 Transitional Arrangements.

On the Closing Date, this Agreement shall amend and restate and supersede the
Existing Credit Agreement in its entirety. On the Closing Date, the rights and
obligations of the parties evidenced by the Existing Credit Agreement shall be
evidenced by this Agreement and the other Loan Documents. In the event that any
payment made by any Loan Party under the Existing Credit Agreement must be
disgorged or otherwise returned by any Credit Party, such Credit Party shall be
entitled to the benefits of the Existing Credit Agreement and the Loan Parties
shall unconditionally be obligated to repay the same along with any applicable
interest and fees. This Agreement represents a modification, and not a novation,
of the credit facility under the Existing Credit Agreement. All interest, fees
and expenses, if any, owing or accruing under or in respect of the Existing
Credit Agreement for periods prior to the Closing Date shall be calculated and
paid on the Closing Date. The Loan Parties acknowledge, represent and warrant
that they have no claims, defenses or offsets with respect to the Existing
Credit Agreement or any of the Loan Documents (as defined therein) related
thereto and that immediately prior to the effectiveness of this Agreement, the
Existing Credit Agreement and such other loan and collateral documents are
valid, binding and enforceable in accordance with the terms thereof. Except as
provided herein, this Agreement shall not be deemed to (i) be a consent to any
amendment, waiver or modification of any other term or condition of the Existing
Credit Agreement or any other Loan Document, or (ii) operate as a waiver or
otherwise prejudice any right, power or remedy that any Credit Party may now
have or may have in the future under or in connection with the Existing Credit
Agreement or any other Loan Document, except as specifically set forth herein.
Upon the effectiveness of this Agreement, each reference in the Loan Documents
to “the Credit Agreement” shall mean this Agreement.

SECTION 9.28 Ratification and Reaffirmation.

Each Loan Party (a) acknowledges and agrees that each Loan Document shall remain
in full force and effect, (b) ratifies, reaffirms and confirms all of its
Obligations under the Loan Documents and (c) ratifies, reaffirms and confirms
that the Obligations are and remain secured pursuant to the Loan Documents and
pursuant to all other instruments and documents executed and delivered by such
Loan Party as security for the Obligations.

[SIGNATURE PAGES FOLLOW]

 

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

 

THE GYMBOREE CORPORATION, as Lead Borrower and as Borrower

By:

 

/s/ Lynda Gustafson

Name:

  Lynda Gustafson

Title:

  Interim Principal Financial Officer and
Vice President Corporate Controller

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

GYMBOREE MANUFACTURING, INC., as Borrower By:  

/s/ Lynda Gustafson

Name:   Lynda Gustafson Title:   Interim Principal Financial Officer and
Vice President Corporate Controller GYMBOREE OPERATIONS, INC., as Borrower By:  

/s/ Lynda Gustafson

Name:   Lynda Gustafson Title:   Interim Principal Financial Officer and
Vice President Corporate Controller GYMBOREE PLAY PROGRAMS, INC., as Borrower
By:  

/s/ Lynda Gustafson

Name:   Lynda Gustafson Title:   Interim Principal Financial Officer and
Vice President Corporate Controller GYMBOREE RETAIL STORES, INC., as Borrower
By:  

/s/ Lynda Gustafson

Name:   Lynda Gustafson Title:   Interim Principal Financial Officer and
Vice President Corporate Controller GYM-CARD, LLC, as Borrower By:  

/s/ Lynda Gustafson

Name:   Lynda Gustafson Title:   Interim Principal Financial Officer and
Vice President Corporate Controller

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

GYM-MARK, INC., as Borrower

By:

 

/s/ Lynda Gustafson

Name:

 

Lynda Gustafson

Title:

  Interim Principal Financial Officer and
Vice President Corporate Controller

S.C.C. WHOLESALE, INC., as Borrower

By:

 

/s/ Lynda Gustafson

Name:

 

Lynda Gustafson

Title:

  Interim Principal Financial Officer and
Vice President Corporate Controller

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

GIRAFFE INTERMEDIATE B, INC., as a Facility Guarantor By:  

/s/ Jordan Hitch

Name:   Jordan Hitch Title:   Vice President & Secretary

 

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BANK OF AMERICA, N.A., as Administrative Agent, as Collateral Agent, and as
Issuing Bank By:  

/s/ Roger Malouf

Name:   Roger Malouf Title:   Vice President

Address:

100 Federal Street, 9th Floor

Boston, Massachusetts 02110

Attn: Rick Hill

Telephone: 617-434-4080

Telecopy: 617-434-4131

BANK OF AMERICA, N.A., as Swingline Lender, and as a Lender By:  

/s/ Roger Malouf

Name:   Roger Malouf Title:   Vice President

Address:

100 Federal Street, 9th Floor

Boston, Massachusetts 02110

Attn: Rick Hill

Telephone: 617-434-4080

Telecopy: 617-434-4131

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

LENDERS (cont.): SUNTRUST BANK, as a Lender By:  

/s/ Virginia D. Sullivan

Name:   Virginia D. Sullivan Title:   Vice President

 

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LENDERS (cont.): TD BANK, N.A., as a Lender By:  

/s/ Albert J. Forzano

Name:   Albert J. Forzano Title:   Vice President

 

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LENDERS (cont.): U.S. BANK NATIONAL ASSOCIATION, as a Lender By:  

/s/ Carol Anderson

Name:   Carol Anderson Title:   Vice President