Exhibit 10.1

EXECUTION VERSION

 

GOLDMAN SACHS BANK USA

200 West Street

New York, New York 10282-2198

GUGGENHEIM SECURITIES, LLC

330 Madison Avenue

New York, New York 10017

May 18, 2015

Ascena Retail Group, Inc.

933 MacArthur Boulevard

Mahwah, New Jersey 07430

Attention: Robb Giammatteo

Project Avian

Commitment Letter

Ladies and Gentlemen:

Ascena Retail Group, Inc. (“you” or the “Borrower”) has advised Goldman Sachs
Bank USA (“GS Bank” and, together with its affiliates, “Goldman Sachs”), each of
the entities listed on Schedule A hereto (collectively, the “Guggenheim
Commitment Entities” and each, individually, a “Guggenheim Commitment Entity”)
and Guggenheim Securities, LLC (“Guggenheim Securities” and, together with the
Guggenheim Commitment Entities and their respective affiliates, “Guggenheim”;
Guggenheim Securities, together with the Guggenheim Commitment Entities and GS
Bank, the “Commitment Parties”, “we” or “us”) that you intend to acquire (the
“Acquisition”) an entity identified to us as “Avian” (“Avian” or the “Target”;
the Target collectively with its subsidiaries, the “Acquired Business”). The
Acquisition will be effected through the merger (the “Merger”) of Avian
Acquisition Corp. (a newly formed wholly owned subsidiary of the Borrower)
(“Merger Sub”) with and into the Target pursuant to Section 251 of the Delaware
General Corporation Law, with the Target surviving the Merger as your direct or
indirect wholly-owned subsidiary. In connection with the Acquisition, the
Borrower’s and its subsidiaries’ existing revolving credit facilities (the
“Existing Credit Facilities”) and all existing indebtedness of the Acquired
Business (other than Retained Debt, as defined in Annex III hereto), will, in
each case, be repaid in full, all commitments thereunder will be terminated and
the security interests with respect thereto will be released (the
“Refinancing”); provided that the Borrower may elect, at its option and subject
to the conditions set forth in Annex III hereto, to permit the Existing Credit
Facilities and/or the existing asset based revolving credit facilities of the
Acquired Business (collectively, as may be amended, amended and restated,
supplemented or otherwise modified, so long as after giving effect to any such
amendment, amendment and restatement, supplement or other modification on or
after the date hereof, the maximum aggregate principal amount available to the
Borrower, the Target and their respective subsidiaries thereunder does not
exceed in the aggregate $700,000,000 plus up to $100,000,000 of incremental
facilities thereunder, the “Existing ABL Facilities”) to remain outstanding in
lieu of incurring the ABL Facility described below, and in connection therewith,
at its option, to elect to terminate the commitments of GS Bank hereunder with
respect to the ABL Facility. The Borrower, the Acquired Business and their
respective subsidiaries are sometimes collectively referred to herein as the
“Companies”.

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You have also advised us that you intend to finance the Acquisition, the
Refinancing, the costs and expenses related to the Transaction (as hereinafter
defined) and the ongoing working capital and other general corporate purposes of
the Companies after consummation of the Acquisition from the following sources
(and that no financing other than the financing described herein will be
required in connection with the Transaction): (a) $1,800,000,000 aggregate
principal amount of senior secured term B loans (the “Term Loan Facilities”),
(b) a $600,000,000 asset-based revolving facility of the Borrower and certain of
its subsidiaries (the “ABL Facility” and, collectively with the Term Loan
Facilities, the “Facilities”) and (c) common equity interests of the Borrower to
be issued as a portion of the consideration for the Acquisition in accordance
with the terms of the Acquisition Agreement (the “Equity Issuance”). Finally,
you have advised us that, in addition and at your election, you may elect to
issue senior unsecured notes with a tenor longer than that of the Term Loan
Facilities or senior secured notes (that are pari passu with the Term Loan
Facilities, subject to customary intercreditor terms reasonably acceptable to
the Term Administrative Agent and the Borrower) with a tenor equal to or longer
than that of the Term Loan Facilities (“Senior Notes”) in an underwritten
offering, Rule 144A offering or other private placement in lieu of a portion of
the Term Loan Facilities, in which case the principal amount of the Term Loan
Facilities shall be reduced on a dollar-for-dollar basis by the net proceeds
received from the issuance of such Senior Notes and the marketing of any such
Senior Notes shall be coordinated with the syndication of the Facilities in a
mutually agreed-upon manner. Notwithstanding the foregoing, regardless of
whether you elect to offer or issue, or engage in discussions with respect to
the offer or issuance of, Senior Notes or engage an investment bank in
connection with the offering or issuance of Senior Notes, our commitments
hereunder shall not be reduced or otherwise affected unless and until such
Senior Notes are issued by you in an underwritten offering, Rule 144A offering
or other private placement and you actually receive the proceeds thereof, in
which case the aggregate commitments with respect to the Term Loan Facilities
shall be reduced on a dollar-for-dollar basis by the net cash proceeds actually
received by you in connection with the issuance of Senior Notes. It shall not be
a condition to our commitments hereunder that you offer, issue or attempt to
offer or issue Senior Notes or engage an investment bank in connection with the
offering or issuance of Senior Notes or that, having elected to attempt to offer
or issue Senior Notes, you complete such offering or issuance. The Acquisition,
the Refinancing (or the continuation of the Existing ABL Facilities, if any),
the entering into and initial funding of the Term Loan Facilities and the ABL
Facility, the Equity Issuance and the issuance of the Senior Notes, if any, and
all related transactions are hereinafter collectively referred to as the
“Transaction”. The date of consummation of the Acquisition is referred to herein
as the “Closing Date”.

1. Commitments. In connection with the foregoing, (a) GS Bank is pleased to
advise you of its commitment to provide 100% of the principal amount of the ABL
Facility (in such capacity, the “Initial ABL Lender”) subject to the conditions
set forth in Annexes I and III hereto (the “ABL Facility Summary of Terms”);
(b) (i) GS Bank is pleased to advise you of its several and not joint commitment
to provide $1,300,000,000 of the principal amount of the Term Loan Facilities
and (ii) with respect to the remaining $500,000,0000 of the Term Loan
Facilities, each Guggenheim Commitment Entity is pleased to advise you of its
several and not joint commitment to provide the portion of such $500,000,000
principal amount of the Term Loan

 

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Facilities set forth next to such Guggenheim Commitment Entity’s name on
Schedule A hereto (in such capacities, the “Initial Term Loan Lenders” and,
together with the Initial ABL Lender, the “Initial Lenders”), in each case,
subject to the conditions set forth in Annexes II and III hereto (the “Term Loan
Facilities Summary of Terms” and, together with the ABL Facility Summary of
Terms, the “Summaries of Terms” and, together with this letter, the “Commitment
Letter”); (c)(i) GS Bank is pleased to advise you of its willingness, and you
hereby engage GS Bank to act as sole lead arranger and sole bookrunning manager
(in such capacity, the “ABL Lead Arranger”) for the ABL Facility, and in
connection therewith to form a syndicate of lenders for the ABL Facility
(collectively, the “ABL Lenders”), in consultation with you and reasonably
acceptable to you and (ii) each of GS Bank and Guggenheim Securities is pleased
to advise you of its willingness, and you hereby engage each of GS Bank and
Guggenheim Securities to act as joint lead arrangers and joint bookrunning
managers (in such capacities, the “Term Lead Arrangers” and, together with the
ABL Lead Arranger, collectively the “Lead Arrangers”) for the Term Loan
Facilities, and in connection therewith to form a syndicate of lenders for the
Term Loan Facilities (collectively, the “Term Lenders” and, collectively with
the ABL Lenders, the “Lenders”), in consultation with you and reasonably
acceptable to you. It is understood and agreed that (w) GS Bank shall have “top
left” placement in any and all marketing materials or documentation relating to
each of the Facilities and shall have the roles and responsibilities customarily
associated with such placement, (x) Guggenheim Securities shall have “top right”
placement in any and all marketing materials or documentation relating to the
Term Loan Facilities, (y) GS Bank shall act as administrative agent for the ABL
Facility (in such capacity, the “ABL Administrative Agent”) and (z) GS Bank
shall act as administrative agent for the Term Loan Facilities (in such
capacity, the “Term Administrative Agent” and, together with the ABL
Administrative Agent, the “Administrative Agents” and each, an “Administrative
Agent”). Notwithstanding anything to the contrary contained herein, the
commitments of the Initial Lenders with respect to the initial funding of the
Facilities will be subject only to the satisfaction (or waiver by the Initial
Lenders) of the conditions precedent set forth in Section 5 hereof. All
capitalized terms used and not otherwise defined herein shall have the same
meanings as specified therefor in the Summaries of Terms.

You agree that no other agents, co-agents, arrangers or bookrunners will be
appointed, no other titles will be awarded and no compensation (other than
compensation expressly contemplated by this Commitment Letter and the Fee Letter
referred to below) will be paid to any Lender (as defined below) in order to
obtain its commitment to participate in the Facilities unless you and we shall
so agree.

2. Syndication. The Lead Arrangers intend to commence syndication of the
Facilities promptly after your acceptance of the terms of this Commitment Letter
and the Fee Letter (as hereinafter defined); provided that we agree not to
syndicate our commitments to certain banks, financial institutions and other
institutional lenders and any competitors (or Known Affiliates (as defined
below) of competitors) of the Companies, in each case, that have been specified
to us by you in writing prior to the date hereof (collectively, “Disqualified
Lenders”); provided, further, that you, upon reasonable notice to us after the
date hereof, shall be permitted to supplement in writing the list of persons
that are Disqualified Lenders to the extent such supplemented person is or
becomes a competitor or a Known Affiliate of a competitor of the Companies,
which supplement shall be in the form of a list provided to us and become
effective upon delivery to us, but which supplement shall not apply
retroactively to disqualify

 

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any parties that have previously acquired an assignment in the loans under any
of the Facilities. As used herein, “Known Affiliates” of any person means, as to
such person, known affiliates readily identifiable by name, but excluding any
affiliate that is a bona fide debt fund or investment vehicle that is primarily
engaged in, or that advises funds or other investment vehicles that are engaged
in, making, purchasing, holding or otherwise investing in commercial loans,
bonds or similar extensions of credit or securities in the ordinary course and
with respect to which the Disqualified Lender does not, directly or indirectly,
possess the power to direct or cause the direction of the investment policies of
such entity. Without limiting your obligations to assist with syndication
efforts as set forth herein, it is understood that the Initial Lenders’
commitments hereunder are not conditioned upon the syndication of, or receipt of
commitments or participations in respect of, the Facilities and in no event
shall the commencement or successful completion of syndication of the Facilities
constitute a condition to the availability of the Facilities on the Closing
Date. You agree, prior to the Syndication Date (as hereinafter defined), to
actively assist, and to use commercially reasonable efforts to cause the
Acquired Business to actively assist, the Lead Arrangers in achieving a
syndication of each of the Facilities that is reasonably satisfactory to the
Lead Arrangers and you until the Syndication Date (as defined below); provided
that, notwithstanding the Lead Arrangers’ right to syndicate the Facilities and
receive commitments with respect thereto, it is agreed that (i) syndication of,
or receipt of commitments or participations in respect of, all or any portion of
an Initial Lender’s commitments hereunder prior to the date of the consummation
of the Acquisition and the date of the initial funding under the Facilities
shall not be a condition to such Initial Lender’s commitments and
(ii) (a) except as you in your sole discretion may otherwise agree in writing or
with respect to assignments made by GS Bank to Goldman Sachs Lending Partners
LLC (“GSLP”), no Initial Lender shall be relieved, released or novated from its
obligations hereunder (including its obligation to fund the Facilities on the
Closing Date) in connection with any syndication, assignment or participation of
the Facilities, including its commitments in respect thereof, until after the
initial funding of the Facilities has occurred; (b) other than with respect to
assignments made by GS Bank to GSLP, no assignment or novation shall become
effective with respect to all or any portion of any Initial Lender’s commitments
in respect of the Facilities until after the initial funding of the Facilities;
and (c) each Initial Lender shall retain exclusive control over all rights and
obligations with respect to its commitments in respect of the Facilities,
including all rights with respect to consents, modifications, supplements,
waivers and amendments, until the Closing Date has occurred and the initial
funding under the Facilities has been made. Such assistance shall include
(a) your providing and (subject to customary non-reliance agreements) causing
your advisors to provide, and using commercially reasonable efforts to cause the
Acquired Business, its subsidiaries and its advisors to provide, the Lead
Arrangers and the Lenders upon request with all information reasonably deemed
necessary by the Lead Arrangers to complete such syndication, including, but not
limited to (x) information and evaluations prepared by you, the Acquired
Business and your and its advisors, or on your or its behalf, relating to the
Transaction as may be reasonably requested by us (including the Projections (as
hereinafter defined), (y) customary forecasts prepared by management of the
Borrower of balance sheets, income statements and cash flow statements for each
fiscal quarter for the first twelve months following the Closing Date and for
each year commencing with the first fiscal year following the Closing Date and
for each of the succeeding six fiscal years thereafter, and (z) your using
commercially reasonable efforts to prepare customary availability forecasts of
the Companies for the ABL Facility as of the last day of each fiscal month for
the

 

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first twelve months following the Closing Date and to provide the ABL Lead
Arranger and its designees with sufficient access to the Companies to complete
customary field examinations and inventory appraisals as promptly as practicable
after the date hereof; (b) your preparation of a customary information
memorandum with respect to each of the Facilities (each, an “Information
Memorandum”) and other customary materials to be used in connection with the
syndication of each such Facility (collectively with the Summaries of Terms and
any additional summary of terms prepared for distribution to Lenders, the
“Information Materials”); (c) your using commercially reasonable efforts to make
your management available to participate in the marketing of the Facilities;
(d) your using commercially reasonable efforts to ensure that the syndication
efforts of the Lead Arrangers benefit materially from your existing lending
relationships; (e) your using commercially reasonable efforts to obtain, prior
to the launch of primary syndication of the Term Loan Facilities, monitored
public corporate credit or family ratings (but not any specific rating) for you
after giving effect to the Transaction and ratings of the Term Loan Facilities
from Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Financial
Services LLC (“S&P”) (collectively, the “Ratings”); (f) until the Syndication
Date, your ensuring, and with respect to the Acquired Business, using
commercially reasonable efforts to ensure, that none of the Companies shall
syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or engage in discussions
concerning the syndication or issuance of, any competing debt of the Companies
(other than the Facilities or the Senior Notes (so long as the marketing of such
Senior Notes is coordinated with the syndication for the Facilities in a
mutually acceptable manner)), including any renewals or refinancings of any
existing debt that, in the reasonable judgment of the Lead Arrangers, could
reasonably be expected to materially and adversely affect the primary
syndication of the Facilities without the prior written consent (not to be
unreasonably withheld) of the Lead Arrangers (it being understood that ordinary
course working capital facilities, ordinary course capital leases, letters of
credit, purchase money and equipment financings, and borrowings under the
existing revolving credit facilities of the Borrower or the Target, as
applicable, shall be permitted, and the Borrower or the Target shall be
permitted to proceed in furtherance of continuing the Existing ABL Facilities);
and (g) your otherwise assisting the Lead Arrangers in their syndication
efforts, including by making appropriate officers and advisors of you, and using
commercially reasonable efforts to make the officers and advisors of the
Acquired Business, available from time to time upon reasonable advance notice to
attend and make presentations regarding the business and prospects of the
Companies and the Transaction at one or more meetings of prospective Lenders.
Notwithstanding anything to the contrary contained in this Commitment Letter or
the Fee Letter or any other letter agreement or undertaking concerning the
financing of the Transactions to the contrary, neither the obtaining of the
Ratings referenced above nor the compliance with any of the other provisions set
forth in clauses (a) through (g) above or any other provision of this paragraph
shall constitute a condition to the commitments hereunder or the funding of the
Facilities on the Closing Date.

It is understood and agreed that GS Bank will manage and control all aspects of
the syndication of the Facilities in consultation with you and Guggenheim
Securities and, as to the selection of Lenders, with your approval (such
approval not to be unreasonably withheld or delayed), and any titles offered to
prospective Lenders, when commitments will be accepted and the final allocations
of the commitments among the Lenders. It is understood that no Lender
participating in the Facilities will receive compensation from you in order to
obtain its commitment, except on the terms contained herein and in the Summaries
of Terms, without the

 

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consent of the Lead Arrangers. It is also understood and agreed that the amount
and distribution of the fees among the Lenders will be at the sole and absolute
discretion of the Lead Arrangers. It is further understood that the Initial
Lenders’ commitments hereunder are not conditioned upon the syndication of, or
receipt of commitments in respect of, the Facilities and in no event shall the
commencement of successful completion of syndication of the Facilities
constitute a condition to availability of the Facilities on the Closing Date.

3. Information Requirements. You hereby represent and warrant (with respect to
Information relating to the Acquired Business, to the best of your knowledge)
that (a) all written factual information, other than Projections (as defined
below) and other forward-looking information or information of a general
economic or industry nature, that has been or is hereafter made available to the
Lead Arrangers or any of the Lenders by or on behalf of you or any of your
representatives in connection with any aspect of the Transaction (including such
information, to the best of your knowledge, relating to the Acquired Business)
(the “Information”) is and will be complete and correct when furnished and taken
as a whole, in all material respects, and does not and will not, when furnished
and taken as a whole, contain any untrue statement of a fact or omit to state a
fact necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not materially misleading (after
giving effect to all supplements and updates with respect thereto) and (b) all
financial projections concerning the Companies that have been or are hereafter
made available to the Lead Arrangers or any of the Lenders by or on behalf of
you or any of your representatives (the “Projections”) (to the best of your
knowledge, in the case of Projections provided by the Acquired Business) have
been or will be prepared in good faith based upon assumptions believed by you to
be reasonable at the time provided (it being understood and agreed that the
Projections are as to future events and are not to be viewed as facts or a
guarantee of financial performance or achievement, that the Projections are
subject to significant uncertainties and contingencies, many of which are beyond
your control, and that actual results may differ from the Projections and such
differences may be material). You agree that if at any time prior to the later
of (a) the earlier of (i) the date on which a Successful Syndication (as defined
in the Fee Letter) is achieved and (ii) 60 days following the Closing Date (the
earlier of such dates, the “Syndication Date”) and (b) the Closing Date, any of
the representations in the preceding sentence would be incorrect in any material
respect if the Information and Projections were being furnished, and such
representations were being made, at such time, then you will promptly
supplement, or cause to be supplemented (or in the case of Information or
Projections relating to the Acquired Business, you will promptly notify the Lead
Arrangers upon becoming aware that any such Information or Projections are
incorrect in any material respect and will use commercially reasonable efforts
to supplement), the Information and Projections so that such representations (to
the best of your knowledge, in the case of the Acquired Business) will be
correct in all material respects at such time. In issuing this commitment and in
arranging and syndicating each of the Facilities, the Commitment Parties are and
will be using and relying on the Information and the Projections without
independent verification thereof. For the avoidance of doubt, nothing in this
paragraph will constitute a condition to the availability of the Facilities on
the Closing Date.

You acknowledge that (a) the Lead Arrangers on your behalf will make available
Information Materials to the proposed syndicates of Lenders by posting the
Information Materials on IntraLinks or another similar electronic system (the
“Platform”) and (b) certain prospective Lenders (such Lenders, “Public Lenders”;
all other Lenders, “Private Lenders”)

 

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may have personnel that do not wish to receive material non-public information
(within the meaning of the United States federal securities laws, “MNPI”) with
respect to the Companies, their respective affiliates or any other entity, 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 entities’
securities. If requested, you will assist the Lead Arrangers in preparing an
additional version of the Information Materials not containing MNPI (the “Public
Information Materials”) to be distributed to prospective Public Lenders.

Before distribution of any Information Materials (a) to prospective Private
Lenders, you shall provide the Lead Arrangers with a customary letter
authorizing the dissemination of the Information Materials; and (b) to
prospective Public Lenders, you shall provide the Lead Arrangers with a
customary letter authorizing the dissemination of the Public Information
Materials and confirming the absence of MNPI therefrom. In addition, you hereby
agree that (x) you will use commercially reasonable efforts at the request of
the Lead Arrangers or any Administrative Agent (or their respective affiliates)
to identify that portion of the Information Materials that may be distributed to
the Public Lenders by clearly and conspicuously marking the same as “PUBLIC”;
(y) all Information Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor”; and (z) the Lead
Arrangers and the Administrative Agents (and their respective affiliates) shall
be entitled to treat any Information Materials that are not marked “PUBLIC” as
being suitable only for posting on a portion of the Platform not designated
“Public Investor.”

You agree that the Lead Arrangers and the Administrative Agents (and their
respective affiliates) on your behalf may distribute the following documents to
all prospective Lenders, unless you advise the Lead Arrangers and Administrative
Agents in writing (including by email) within a reasonable time prior to their
intended distributions that such material should only be distributed to
prospective Private Lenders: (a) administrative materials for prospective
Lenders such as lender meeting invitations and funding and closing memoranda,
(b) notifications of changes to the terms of the Facilities and (c) drafts
approved in writing by you and the Administrative Agents (or their respective
affiliates) and final versions of definitive documents with respect to the
Facilities. If you advise the Lead Arrangers and the Administrative Agents that
any of the foregoing items should be distributed only to Private Lenders, then
the Lead Arrangers and the Administrative Agents will not distribute such
materials to Public Lenders without further discussions with you. You agree that
Information Materials made available to prospective Public Lenders in accordance
with this Commitment Letter with respect to which you have had a reasonable time
to review shall not contain MNPI.

4. Fees and Indemnities.

(a) You agree to reimburse the Commitment Parties from time to time upon receipt
of a reasonably detailed invoice therefor for all reasonable and documented
out-of-pocket fees and expenses (including, but not limited to, the reasonable
and documented out-of-pocket fees, disbursements and other out-of-pocket
expenses of (x) one firm of lead counsel to the Commitment Parties (it being
understood and agreed that Latham & Watkins LLP shall act as counsel to the
Commitment Parties), (y) one firm of local counsel in each relevant jurisdiction
reasonably retained by the Administrative Agents and (z) solely in the case of a
conflict of interest, one additional counsel in each relevant jurisdiction to
the affected Commitment Parties

 

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similarly situated and reasonable and documented out-of-pocket due diligence
expenses) incurred in connection with the Facilities, the syndication thereof,
the preparation of the Credit Documentation (as defined below) therefor and the
other transactions contemplated hereby, whether or not the Closing Date occurs
or any of the Credit Documentation is executed and delivered or any extensions
of credit are made under either of the Facilities. Such amounts shall be paid on
the earlier of (i) the Closing Date or (ii) three (3) business days following
the termination of this Commitment Letter as provided below. You acknowledge
that the Administrative Agents may receive a benefit, including without
limitation, a discount, credit or other accommodation, from any of such counsel
based on the fees such counsel may receive on account of their relationship with
us including, without limitation, fees paid pursuant hereto. You agree to pay
the fees set forth in the separate fee letter addressed to you dated the date
hereof from the Commitment Parties (the “Fee Letter”).

(b) You also agree to indemnify and hold harmless each of the Commitment
Parties, each other Lender and each of their affiliates, successors and assigns
and their respective partners, officers, directors, employees, trustees, agents,
advisors, controlling persons and other representatives (each, an “Indemnified
Party”) from and against (and will reimburse each Indemnified Party as the same
are incurred for) any and all claims, damages, losses, liabilities and
reasonable and documented out-of-pocket expenses (including, without limitation,
the reasonable and documented fees, disbursements and other charges of counsel
to any Indemnified Party) (without duplication) of amounts payable by you
pursuant to clause (a) above) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) (a) any aspect of the Transaction or any of the other
transactions contemplated thereby or (b) the Commitment Letter, the Fee Letter,
any of the Facilities, or any use made or proposed to be made with the proceeds
thereof, except to the extent such claim, damage, loss, liability or expense
(A) is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence,
bad faith or willful misconduct, (B) is found in a final non-appealable judgment
by a court of competent jurisdiction to have arisen from a material breach of
such Indemnified Party’s obligations hereunder or (C) arises from a proceeding
by an Indemnified Party against an Indemnified Party (other than an action
involving (i) alleged conduct by you or any of your affiliates or (ii) against
an arranger or administrative agent in its capacity as such). In the case of any
claim, litigation, investigation or proceeding (any of the foregoing, a
“Proceeding”) to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such Proceeding is brought by you, your equity
holders or creditors or an Indemnified Party, whether or not an Indemnified
Party is otherwise a party thereto and whether or not any aspect of the
Transaction is consummated. You also agree that (x) no Indemnified Party shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) to you, the Acquired Business, or your or their subsidiaries or
affiliates or to your or their respective equity holders or creditors or any
other person arising out of, related to or in connection with any aspect of the
Transaction, except to the extent of direct (as opposed to special, indirect,
consequential or punitive) damages determined in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party’s (i) gross negligence, bad faith or willful misconduct or (ii) a material
breach of such Indemnified Party’s obligations hereunder. It is further agreed
that the Commitment Parties shall only have liability to you (as opposed to any
other person), and that the

 

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Commitment Parties shall be severally liable solely in respect of their
respective commitments to the Facilities and agreements set forth herein, on a
several, and not joint, basis with any other Lender. Notwithstanding any other
provision of this Commitment Letter, no Indemnified Party shall be liable for
any damages arising from the use by others of information or other materials
obtained through electronic telecommunications or other information transmission
systems, other than for direct, actual damages resulting from the gross
negligence, bad faith or willful misconduct of such Indemnified Party as
determined by a final non-appealable judgment of a court of competent
jurisdiction. You shall not, without the prior written consent of an Indemnified
Party, such consent not to be unreasonably withheld, effect any settlement of
any pending or threatened Proceeding against an Indemnified Party in respect of
which indemnity could have been sought hereunder by such Indemnified Party
unless (i) such settlement includes an unconditional release of such Indemnified
Party from all liability or claims that are the subject matter of such
Proceeding and (ii) does not include any statement as to any admission of
liability. You shall not be liable for any settlement of any Proceeding affected
without your written consent (which consent shall not be unreasonably withheld);
provided, however, that the foregoing indemnity will apply to any settlement if
you were offered the ability to assume the defense of the action that was the
subject matter of such settlement and elected not to so assume.

As you know, each of Goldman, Sachs & Co. and Guggenheim Securities has been
retained by the Borrower (or one of its affiliates) as a financial advisor (in
such capacity, a “Financial Advisor”) in connection with the Acquisition. Each
of the parties hereto agrees to such retention, and further agrees not to assert
any claim it might allege based on any actual or potential conflicts of interest
that might be asserted to arise or result from, on the one hand, the engagement
of a Financial Advisor or a Lead Arranger’s and/or its affiliates’ arranging or
providing or contemplating arranging or providing financing for a competing
bidder and, on the other hand, our and our affiliates’ respective relationships
with you as described and referred to herein.

5. Conditions to Financing. The commitment of each Initial Lender with respect
to the initial funding of each Facility is subject solely to (a) the
satisfaction of each of the conditions set forth in Annex III hereto and (b) the
execution and delivery of definitive credit documentation by all parties thereto
with respect to each such Facility (except in the case of the ABL Facility, if
the Existing ABL Facilities are used in lieu of such Facility) consistent with
this Commitment Letter and the Fee Letter and subject to the Funds Certain
Provisions and giving effect to the ABL Documentation Standard (as defined in
Annex I) and the Term Loan Documentation Standard (as defined in Annex II,
collectively, the “Documentation Standards”) (the “Credit Documentation”) prior
to such initial funding.

Notwithstanding anything in this Commitment Letter, the Fee Letter, the Credit
Documentation or any other letter agreement or other undertaking concerning the
financing of the Transaction to the contrary, (a) the Credit Documentation shall
be in a form such that the terms thereof do not impair availability of the
Facilities on the Closing Date if the conditions in this Section 5 shall have
been satisfied, (b) the only representations and warranties the accuracy of
which shall be a condition to the availability of the Facilities on the Closing
Date shall be those set forth in paragraph (ii) of Annex III hereto and (c) the
only collateral the creation, validity or perfection of a security interest in
which will be a condition to the availability of the Facilities on the Closing
Date shall be the collateral described in paragraph (ii) of Annex III hereto.
The provisions of this paragraph are referred to herein as the “Funds Certain
Provisions”.

 

9

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Each of the parties hereto agrees that each of this Commitment Letter and the
Fee Letter is a binding and enforceable agreement (subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar
laws relating to or affecting creditors’ rights generally and general principles
of equity (whether considered in a proceeding in equity or law)) with respect to
the subject matter contained herein, including an agreement to negotiate in good
faith the Credit Documentation by the parties hereto in a manner consistent with
this Commitment Letter and, to the extent applicable, the Fee Letter, it being
acknowledged and agreed that the funding of the Facilities is subject only to
the conditions precedent as provided herein. For clarity, all terms referenced
herein to being defined in the Credit Documentation shall be defined in
accordance with the Documentation Standards.

6. Confidentiality and Other Obligations. This Commitment Letter and the Fee
Letter and the contents hereof and thereof are confidential and may not be
disclosed in whole or in part to any person or entity without the prior written
consent of the Commitment Parties except (i) this Commitment Letter and the Fee
Letter may be disclosed (A) on a confidential basis to your directors, officers,
employees, accountants, attorneys and other representatives and professional
advisors who need to know such information in connection with the Transaction
and are informed of the confidential nature of such information, (B) pursuant to
the order of any court or administrative agency in any pending legal or
administrative proceeding, or otherwise as required by applicable law or stock
exchange requirement or compulsory legal process (in which case you agree to
inform the Commitment Parties promptly thereof prior to such disclosure to the
extent permitted by applicable law), and (C) on a confidential basis to the
directors, officers, employees, accountants, attorneys and other representatives
and professional advisors of the Acquired Business; provided that the Fee Letter
is redacted in a customary manner satisfactory to the Commitment Parties,
(ii) Annex I and Annex II and the existence of this Commitment Letter and the
Fee Letter (but not the contents of the Commitment Letter and the Fee Letter)
may be disclosed to Moody’s, S&P and any other rating agency on a confidential
basis, (iii) the aggregate amount of the fees (including upfront fees and
original issue discount) payable under the Fee Letter may be disclosed as part
of generic disclosure regarding sources and uses for closing of the Acquisition
(but without disclosing any specific fees, market flex or other economic terms
set forth therein or to whom such fees or other amounts are owed), (iv) the
Commitment Letter and the Fee Letter may be disclosed on a confidential basis to
your auditors for customary accounting purposes, including accounting for
deferred financing costs, (v) Annex I and Annex II and the existence of this
Commitment Letter and the Fee Letter (but not the contents of the Commitment
Letter and the Fee Letter) may be disclosed in connection with the marketing and
negotiation of the Senior Notes and the continuation of the Existing ABL
Facilities, (vi) you may disclose the Commitment Letter (but not the Fee Letter)
and its contents in any information memorandum or syndication distribution, as
well as in any proxy statement or other public filing relating to the
Acquisition or the Facilities, and (vii) the Commitment Letter and Fee Letter
may be disclosed to a court, tribunal or any other applicable administrative
agency or judicial authority in connection with the enforcement of your rights
hereunder (in which case you agree to inform the Commitment Parties promptly
thereof prior to such disclosure to the extent permitted by applicable law).
This paragraph shall terminate on the second anniversary of the date of the
Commitment Letter.

 

10

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Each Commitment Party shall use all confidential information provided to it by
or on behalf of you hereunder solely for the purpose of providing the services
which are the subject of this Commitment Letter and otherwise in connection with
the Transaction and shall treat confidentially all such information; provided,
however, that nothing herein shall prevent any Commitment Party from disclosing
any such information (i) pursuant to the order of any court or administrative
agency or in any pending legal or administrative proceeding, or otherwise as
required by applicable law or compulsory legal process (in which case such
Commitment Party agrees to inform you promptly thereof to the extent not
prohibited by law, rule or regulation), (ii) upon the request or demand of any
regulatory authority having jurisdiction over such Commitment Party or any of
its affiliates, (iii) to the extent that such information becomes publicly
available other than by reason of disclosure in violation of this agreement by
such Commitment Party, (iv) to such Commitment Party’s affiliates, employees,
legal counsel, independent auditors and other experts, professionals or agents
who need to know such information in connection with the Transaction and are
informed of the confidential nature of such information, (v) for purposes of
establishing a “due diligence” defense, (vi) to the extent that such information
is received by such Commitment Party from a third party that is not to such
Commitment Party’s knowledge subject to confidentiality obligations to you,
(vii) to the extent that such information is independently developed by such
Commitment Party, (viii) to potential Lenders, participants, assignees or any
direct or indirect contractual counterparties to any swap or derivative
transaction relating to you or your obligations under the Facilities (other than
a Disqualified Lender), in each case, who agree to be bound by the terms of this
paragraph (or language not less restrictive than this paragraph or as otherwise
reasonably acceptable to you and such Commitment Party, including as may be
agreed in any confidential information memorandum or other marketing material),
(ix) to Moody’s and S&P; provided that such information is limited to Annex I
and Annex II and is supplied only on a confidential basis, or (x) with your
prior written consent. This paragraph shall terminate on the earlier of (a) the
initial funding under the Facilities and (b) the second anniversary of the date
of the Commitment Letter.

As you know, each of Goldman Sachs and Guggenheim is a full service financial
institution engaged, either directly or through its affiliates, in a broad array
of activities, including commercial and investment banking, financial advisory,
market making and trading, investment management (both public and private
investing), investment research, principal investment, financial planning,
benefits counseling, risk management, hedging, financing, brokerage and other
financial and non-financial activities and services globally. In the ordinary
course of their various business activities, each of Goldman Sachs and
Guggenheim and funds or other entities in which Goldman Sachs and Guggenheim
invests or with which they co-invest, may at any time purchase, sell, hold or
vote long or short positions and investments in securities, derivatives, loans,
commodities, currencies, credit default swaps and other financial instruments
for their own account and for the accounts of their customers. In addition, each
of Goldman Sachs and Guggenheim may at any time communicate independent
recommendations and/or publish or express independent research views in respect
of such assets, securities or instruments. Any of the aforementioned activities
may involve or relate to assets, securities and/or instruments of the Borrower,
the Acquired Business and/or other entities and persons which may (i) be
involved in transactions arising from or relating to the arrangement
contemplated by this Commitment Letter or (ii) have other relationships with the
Borrower or its affiliates. In addition, each of Goldman Sachs and Guggenheim
may provide investment banking, commercial banking, underwriting and financial
advisory services to such other entities and persons. The

 

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arrangement contemplated by this Commitment Letter may have a direct or indirect
impact on the investments, securities or instruments referred to in this
paragraph, and employees working on the financing contemplated hereby may have
been involved in originating certain of such investments and those employees may
receive credit internally therefor. Although either or both of Goldman Sachs and
Guggenheim in the course of such other activities and relationships may acquire
information about the transaction contemplated by this Commitment Letter or
other entities and persons which may be the subject of the financing
contemplated by this Commitment Letter, neither Goldman Sachs nor Guggenheim
shall have any obligation to disclose such information, or the fact that Goldman
Sachs or Guggenheim, as the case may be, is in possession of such information,
to the Borrower or to use such information on the Borrower’s behalf.

Consistent with their respective policies to hold in confidence the affairs of
their respective customers, neither Goldman Sachs nor Guggenheim will furnish
confidential information obtained from you by virtue of the transactions
contemplated by this Commitment Letter to any of their respective other
customers. Furthermore, you acknowledge that neither Goldman Sachs nor any of
its affiliates nor Guggenheim nor any of its affiliates has an obligation to use
in connection with the transactions contemplated by this Commitment Letter, or
to furnish to you, confidential information obtained or that may be obtained by
them from any other person.

In connection with all aspects of each transaction contemplated by this
Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’
understanding, that: (i) each of the Facilities and any related arranging or
other services described in this Commitment Letter is an arm’s-length commercial
transaction between you and your affiliates, on the one hand, and the Commitment
Parties, on the other hand, (ii) the Commitment Parties have not provided any
legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby and you have consulted your own legal,
accounting, regulatory and tax advisors to the extent you have deemed
appropriate, (iii) you are capable of evaluating, and understand and accept, the
terms, risks and conditions of the transactions contemplated hereby, (iv) in
connection with the financing transactions contemplated hereby and the process
leading to such transactions, each of the Commitment Parties has been, is, and
will be acting solely as a principal and has not been, is not, and will not be
acting as an advisor, agent or fiduciary for you or any of your affiliates,
stockholders, creditors or employees or any other party, (v) the Commitment
Parties have not assumed and will not assume an advisory, agency or fiduciary
responsibility in your or your affiliates’ favor with respect to any of the
financing transactions contemplated hereby or the process leading thereto, and
the Commitment Parties have no obligation to you or your affiliates with respect
to the financing transactions contemplated hereby except those obligations
expressly set forth in this Commitment Letter, and (vi) the Commitment Parties
and their respective affiliates may be engaged in a broad range of transactions
that involve interests that differ from yours and those of your affiliates, and
the Commitment Parties have no obligation to disclose any of such interests to
you or your affiliates. To the fullest extent permitted by law and without
limiting the provisions of Section 4(b), you hereby waive and release any claims
that you may have against the Commitment Parties with respect to any breach or
alleged breach of agency or fiduciary duty in connection with any aspect of any
financing transaction contemplated by this Commitment Letter.

 

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The Commitment Parties hereby notify you that pursuant to the requirements of
the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26,
2001) (the “U.S.A. Patriot Act”), each of them is required to obtain, verify and
record information that identifies you and the Guarantors, which information
includes the name and address of such person and other information that will
allow the Commitment Parties, as applicable, to identify each such person in
accordance with the U.S.A. Patriot Act.

7. Survival of Obligations. The provisions of Sections 2, 3, 4, 6 and 8 and the
Fee Letter shall remain in full force and effect regardless of whether any
Credit Documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or any commitment or undertaking of the
Commitment Parties hereunder, provided that (i) the provisions of Sections 2 and
3 shall not survive if the commitments and undertakings of the Commitment
Parties are terminated by any party hereto prior to the effectiveness of any of
the Facilities and (ii) if any of the Facilities close and the Credit
Documentation is executed and delivered the provisions of Section 2 and the
second sentence of the first paragraph of Section 3 shall survive only until the
Syndication Date.

8. Miscellaneous. This Commitment Letter and the Fee Letter may be executed in
multiple counterparts and by different parties hereto in separate counterparts,
all of which, taken together, shall constitute an original. Delivery of an
executed counterpart of a signature page to this Commitment Letter or the Fee
Letter by telecopier, facsimile or other electronic transmission (e.g., a “pdf”
or “tiff”) shall be effective as delivery of a manually executed counterpart
thereof. Headings are for convenience of reference only and shall not affect the
construction of, or be taken into consideration when interpreting, this
Commitment Letter or the Fee Letter.

This Commitment Letter and the Fee Letter shall be governed by, and construed in
accordance with, the laws of the State of New York; provided that,
notwithstanding the foregoing, it is understood and agreed that
(a) interpretation of the definition of “Company Material Adverse Effect” (as
defined in Annex III) or the equivalent term under the Acquisition Agreement and
whether a Company Material Adverse Effect (or the equivalent term) has occurred,
(b) the determination of the accuracy of any Acquisition Agreement
Representation (as defined in Annex III) and whether as a result of any
inaccuracy thereof you have the right (taking into account any applicable cure
provisions) to terminate your obligations under the Acquisition Agreement or
decline to consummate the Acquisition and (c) the determination of whether the
Acquisition has been consummated in accordance with the terms of the Acquisition
Agreement, and all claims and causes of action arising in connection therewith
in each case shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to laws that may be applicable under
conflicts of laws principles (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware. Each party hereto hereby irrevocably waives
any and all right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to
this Commitment Letter, the Fee Letter, the Transaction and the other
transactions contemplated hereby and thereby or the actions of the Commitment
Parties in the negotiation, performance or enforcement hereof. Each party hereto
hereby irrevocably and unconditionally submits to the exclusive jurisdiction of
any New York State court or Federal court of the United States of America
sitting in the Borough of Manhattan in New York City in

 

13

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respect of any suit, action or proceeding arising out of or relating to the
provisions of this Commitment Letter, the Fee Letter, the Transaction and the
other transactions contemplated hereby and thereby and irrevocably agrees that
all claims in respect of any such suit, action or proceeding may be heard and
determined in any such court. The parties hereto agree that service of any
process, summons, notice or document by registered mail addressed to you shall
be effective service of process against you for any suit, action or proceeding
relating to any such dispute. Each party hereto waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter have to
the laying of the venue of any such suit, action or proceedings brought in any
such court, and any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. A final judgment in
any such suit, action or proceeding brought in any such court may be enforced in
any other courts to whose jurisdiction the applicable party is or may be subject
by suit upon judgment.

This Commitment Letter, together with the Fee Letter, embodies the entire
agreement and understanding among the parties hereto and your affiliates with
respect to the Facilities and supersedes all prior agreements and understandings
relating to the subject matter hereof. No party has been authorized by the
Commitment Parties to make any oral or written statements that are inconsistent
with this Commitment Letter. Neither this Commitment Letter (including the
attachments hereto) nor the Fee Letter may be amended or any term or provision
hereof or thereof waived or modified except by an instrument in writing signed
by each of the parties hereto.

This Commitment Letter may not be assigned by you without our prior written
consent (and any purported assignment without such consent will be null and
void), is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto (and the Indemnified Parties). Each
Commitment Party may assign its commitment hereunder, in whole or in part, to
any of its affiliates (including, without limitation, in the case of GS Bank, to
GSLP) or, subject to the provisions of this Commitment Letter, to any Lender;
provided that, other than with respect to an assignment (i) by GS Bank to GSLP
or (ii) to which you otherwise consent in writing (which consent, in the case of
an assignment by a Commitment Party to its affiliates, shall not be unreasonably
withheld by you), such Commitment Party shall not be released from the portion
of its commitment hereunder so assigned to the extent such assignee fails to
fund the portion of the commitment assigned to it on the Closing Date
notwithstanding the satisfaction of the conditions to funding set forth herein.
Notwithstanding the foregoing, any and all obligations of, and services to be
provided by, a Commitment Party hereunder (including, without limitation, any
such Commitment Party’s commitment with respect to the Facilities) may be
performed and any and all rights of a Commitment Party hereunder may be
exercised by or through any of their respective affiliates or branches and, in
connection with such performance or exercise, such Commitment Party may exchange
with such affiliates or branches information concerning you and your affiliates
that may be the subject of the transactions contemplated hereby (subject to the
confidentiality provisions herein) and, to the extent so employed, such
affiliates and branches shall be entitled to the benefits afforded to the
Commitment Parties hereunder; provided that nothing in this sentence shall
release or excuse, or shall otherwise be deemed to release or excuse, any
Commitment Party from its obligations and commitments hereunder.

 

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Please indicate your acceptance of the terms of the Facilities set forth in this
Commitment Letter and the Fee Letter by returning to the Lead Arrangers executed
counterparts of this Commitment Letter and the Fee Letter not later than
9:00 a.m. (New York City time) on May 18, 2015, whereupon the undertakings of
the parties with respect to the Facilities shall become effective to the extent
and in the manner provided hereby. This offer shall terminate with respect to
the Facilities if not so accepted by you at or prior to that time. Thereafter,
all commitments and undertakings of the Commitment Parties hereunder will expire
automatically without any further action by any party hereto, unless extended by
us in our sole discretion, on the earliest of (a) 11:59 p.m., New York City
time, on February 17, 2016, unless the Closing Date occurs on or prior thereto,
(b) as to any Facility, the consummation of the Acquisition without the use of
such Facility and (c) the termination of the Acquisition Agreement.

This Commitment Letter amends and restates, and supersedes and replaces, in its
entirety that certain Commitment Letter by and between GS Bank and you dated
May 17, 2015 and shall be deemed to be an assignment to, and an assumption by,
the Guggenheim Commitment Entities of the portion of the commitments in respect
of the Term Loan Facilities committed to by the Guggenheim Commitment Entities
hereunder (and for which portion, for the avoidance of doubt, GS Bank shall have
no further liability or obligation).

[The remainder of this page intentionally left blank.]

 

15

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We are pleased to have the opportunity to work with you in connection with this
important financing.

 

Very truly yours, GOLDMAN SACHS BANK USA By:

/s/ Robert Ehudin

Name: Robert Ehudin Title: Authorized Signatory

Signature Page to Commitment Letter

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GUGGENHEIM SECURITIES, LLC By:

/s/ A.R. Booth

Name: A.R. Booth Title: Authorized Signatory SECURITY BENEFIT CORPORATION By:

/s/ Anthony D. Minella

Name: Anthony D. Minella Title: Authorized Signatory

 

Signature Page to Commitment Letter

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

MIDLAND NATIONAL LIFE INSURANCE COMPANY By: Guggenheim Partners Investment
Management, LLC, as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE By: Guggenheim Partners
Investment Management, LLC, as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

HORACE MANN LIFE INSURANCE COMPANY By: Guggenheim Partners Investment
Management, LLC, as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

DELAWARE LIFE INSURANCE COMPANY By: Guggenheim Partners Investment Management,
LLC, as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

WILTON REASSURANCE LIFE INSURANCE COMPANY OF NEW YORK By: Guggenheim Partners
Investment Management, LLC, as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

TEXAS LIFE INSURANCE COMPANY By: Guggenheim Partners Investment Management, LLC,
as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

WILTON REASSURANCE COMPANY By: Guggenheim Partners Investment Management, LLC,
as investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

NZC GUGGENHEIM FUND, LLC By: Guggenheim Partners Investment Management, LLC, as
investment manager By:

/s/ William R. Hagner

Name: William R. Hagner Title: Attorney-in-Fact

 

Signature Page to Commitment Letter

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

The provisions of this Commitment Letter are accepted and agreed to as of the
date first written above:

 

ASCENA RETAIL GROUP, INC. By:

/s/ David Jaffe

Name: David Jaffe Title: President and Chief Executive Officer

 

Signature Page to Commitment Letter

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Schedule A to Commitment Letter

 

Guggenheim Commitment Entity

   Term Loan Facilities
Commitment  

Security Benefit Corporation

   $ 345,000,000   

Midland National Life Insurance Company

   $ 56,100,000   

North American Company for Life and Health Insurance

   $ 31,670,000   

Horace Mann Life Insurance Company

   $ 1,050,000   

Delaware Life Insurance Company

   $ 8,380,000   

Wilton Reassurance Life Insurance Company of New York

   $ 1,500,000   

Texas Life Insurance Company

   $ 1,650,000   

Wilton Reassurance Company

   $ 1,950,000   

NZC Guggenheim Fund, LLC

   $ 52,700,000      

 

 

 

Total:

$ 500,000,000      

 

 

 

 

Schedule A

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ANNEX I

SUMMARY OF INDICATIVE TERMS AND CONDITIONS

$600,000,000 ABL FACILITY

Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the Commitment Letter to which this Annex I is attached.

 

Borrower: Ascena Retail Group, Inc., a Delaware corporation (the “Borrower”).
Guarantors: The obligations of the Borrower under the ABL Facility (including
cash management, interest rate protection, other hedging arrangements, and other
bank products entered into with a Lender (or any affiliate thereof) will be
jointly and severally guaranteed by each of the existing and future direct and
indirect wholly- owned U.S. subsidiaries of the Borrower (but excluding
(i) unrestricted subsidiaries, (ii) immaterial subsidiaries (to be defined in a
mutually acceptable manner as to individual and aggregate revenues or assets
excluded), (iii) any subsidiary that is prohibited, but only so long as such
subsidiary would be prohibited, by applicable law, rule or regulation or by any
contractual obligation existing on the Closing Date or existing at the time of
acquisition thereof after the Closing Date (so long as such prohibition did not
arise as part of such acquisition), in each case, from guaranteeing the ABL
Facility or which would require governmental (including regulatory) consent,
approval, license or authorization to provide a guarantee under the ABL Facility
unless such consent, approval, license or authorization has been received (but
without obligation to seek the same), (iv) any direct or indirect subsidiary of
a “controlled foreign corporation” within the meaning of Section 957 of the Code
(a “CFC”), (v) any domestic subsidiary with no material assets other than equity
interests of one or more foreign subsidiaries that are CFCs (a “Disregarded
Domestic Person”) and (vi) not-for-profit subsidiaries) (collectively, the
“Guarantors”). In addition, the Credit Documentation for the ABL Facility (the
“ABL Credit Documentation”) will contain carve outs for “non-ECP Guarantors”,
consistent with the standard LSTA provisions. All guarantees will be guarantees
of payment and not of collection. The Target and its subsidiaries included in
the Acquired Business that are not excluded from the foregoing requirements
pursuant to the terms described above shall be required to become Guarantors
(and grant liens in their assets constituting Collateral that can be

 

Annex I-1

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

perfected by filing UCC financing statements) on the Closing Date.
Notwithstanding the foregoing, it is understood and agreed that neither the
Target nor any of its subsidiaries shall be required to be Guarantors until the
Merger is consummated on the Closing Date. ABL Administrative Agent and
Collateral Agent: Goldman Sachs Bank USA (“GS Bank”) (including acting through
its branches and affiliates) will act as sole administrative agent and as
collateral agent for the ABL Facility (in such capacities, the “ABL
Administrative Agent”). Sole Lead Arranger and Sole Bookrunner: GS Bank will act
as sole lead arranger and sole bookrunner for the ABL Facility (the “ABL Lead
Arranger”). Lenders: GS Bank and a syndicate of other banks and financial
institutions selected by the ABL Lead Arranger and reasonably agreed to by the
Borrower, excluding any Disqualified Lenders (collectively, the “ABL Lenders”).
Letter of Credit Issuer: Each ABL Lender that consents to issuing Letters of
Credit that is designated by the Borrower with the consent of the ABL
Administrative Agent. ABL Facility: An aggregate principal amount of up to
$600,000,000 (as increased or reduced in accordance with the terms hereof, the
“Loan Cap”) will be available to the Borrower through a senior secured revolving
credit facility (the “ABL Facility”), which will include (i) a sublimit for the
issuance of letters of credit on customary terms in an aggregate amount to be
agreed upon (each a “Letter of Credit”), and (ii) a sublimit for swing line
loans on customary terms in an aggregate amount to be agreed upon (each a “Swing
Line Loan”). Availability: Up to $300,000,000 of commitments will, subject to
the Loan Limit, be available under the ABL Facility on the Closing Date to (a)
finance the Acquisition and the Refinancing, (b) fund additional amounts at the
Borrower’s election, sufficient to fund any original issue discount or upfront
fees required to be funded in connection with the exercise of the “Market Flex”
provisions set forth in the Fee Letter and (c) issue Letters of Credit under the
ABL Facility on the Closing Date solely to replace (including by grandfathering)
or backstop existing letters of credit under the applicable Existing Credit
Facility.

 

Annex I-2

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ABL Documentation Standard: The ABL Credit Documentation (i) shall be based upon
senior secured asset-based revolving credit facilities for similar borrowers
with appropriate modifications to baskets and materiality thresholds to reflect
the size, leverage and ratings of the Borrower after giving effect to the
Acquisition, (ii) shall contain the terms and conditions set forth in this ABL
Summary of Terms, (iii) shall give due regard to the Existing Credit Facilities,
(iv) shall reflect the operational and strategic requirements of the Borrower
and its subsidiaries in light of their size, industries and practices and
(v) shall reflect the customary agency and operational requirements of the ABL
Administrative Agent (collectively, the “ABL Documentation Standard”), in each
case, subject to the Funds Certain Provisions. The ABL Credit Documentation
shall contain only those conditions to borrowing, mandatory prepayments,
representations and warranties, covenants and events of default expressly set
forth in this ABL Summary of Terms, in each case, applicable to the Borrower and
its subsidiaries and, subject to the ABL Documentation Standard and certain
other limitations as set forth herein, with standards, qualifications,
exceptions and grace and cure periods consistent with the ABL Documentation
Standard. Swingline Option:

Swing Line Loans will be made available by the swingline lender on a same day
basis for the Borrower and in minimum amounts to be agreed. Each ABL Lender
shall be irrevocably and unconditionally obligated to purchase, under certain
circumstances, a participation in each Swing Line Loan on a pro rata basis based
on its commitment under the ABL Facility.

 

If any ABL Lender becomes a Defaulting Lender, then the letter of credit and
swing line exposure of such Defaulting Lender will automatically be reallocated
among the non-Defaulting Lenders pro rata in accordance with their commitments
under the ABL Facility up to an amount but only to the extent that, after such
reallocation, the revolving credit exposure of each non-Defaulting Lender does
not exceed its respective commitment. The Letter of Credit Issuer and Swing Line
Lender may require the Borrower to repay such “uncovered” exposure in respect of
the letters of credit and Swing Line Loans and will have no obligation to issue
new letters of credit or Swing Line Loans to the extent such letters of credit
or Swing Line Loans would exceed the commitments of the non-Defaulting Lenders.

 

Annex I-3

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Increase Option: Provided that no event of default then exists or would arise
therefrom, upon notice to the ABL Administrative Agent, the Borrower may request
from the existing ABL Lenders and/or prospective lenders that are eligible
assignees under the ABL Facility increases from time to time in the ABL Facility
by an aggregate amount for all such increases not exceeding $100,000,000 (any
such increase, a “Commitment Increase”); provided that any such request for a
Commitment Increase shall be in a minimum amount to be agreed. Any Commitment
Increase shall be on the same terms and conditions as the ABL Facility (other
than the payment of any upfront or other fees paid to the ABL Lenders
participating in the Commitment Increase in amounts agreed to between the
Borrower and such ABL Lenders). None of the existing ABL Lenders shall have an
obligation to increase their respective commitments to satisfy the Borrower’s
requested increase in the ABL Facility. Any Commitment Increase shall be subject
to, among other conditions: (i) the execution and delivery of joinder
documentation by any new ABL Lender in form and substance reasonably acceptable
to the ABL Administrative Agent, (ii) delivery by legal counsel to the Borrower
of any legal opinions to the extent reasonably requested by ABL Administrative
Agent, and (iii) payment by the Borrower of all reasonable and documented
out-of-pocket fees and expenses incurred in connection with such Commitment
Increase (including any customary breakage costs, as applicable). Outstandings
under the ABL Facility shall be reallocated among the ABL Lenders in accordance
with their new percentage shares following any exercise of the Increase Option.
Purpose: The proceeds of the ABL Facility shall be used (i) for working capital,
capital expenditures, and other lawful corporate purposes (including but not
limited to acquisitions, investments and restricted payments to the extent
permitted under the ABL Credit Documentation); (ii) to consummate the
Refinancing; and (iii) for transaction costs in connection with the Acquisition.
Interest Rates: As set forth in Addendum I. Maturity: The ABL Facility shall
terminate and all amounts outstanding thereunder shall be due and payable in
full five (5) years after the Closing Date.

 

Annex I-4

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Availability:

The aggregate principal amount of loans, including Swing Line Loans and Letters
of Credit outstanding under the ABL Facility, shall not exceed the lesser of the
Loan Cap and the Borrowing Base (as defined below) (the lesser of the Loan Cap
and the Borrowing Base, the “Loan Limit”).

 

“Availability” shall mean, at any given time, an amount equal to the Loan Limit,
less the principal amount of the loans, including Swing Line Loans and Letters
of Credit, outstanding under the ABL Facility.

 

“Borrowing Base” shall mean the sum of (i) 90% of the appraised net orderly
liquidation value of eligible inventory owned by the Borrower and the
Guarantors, plus (ii) 90% of the eligible credit card receivables owned by the
Borrower and the Guarantors, less (iii) such Reserves (to be defined in the ABL
Credit Documentation) as the ABL Administrative Agent may establish in its
Reasonable Credit Judgment from time to time. “Reasonable Credit Judgment” means
a determination made in good faith and in the exercise of reasonable business
judgment from the perspective of an asset-based lender.

 

The initial reserves on the Closing Date and the definitions of “eligible credit
card receivables” and “eligible inventory” shall be mutually and reasonably
agreed by the ABL Administrative Agent and the Borrower based upon the results
of the ABL Administrative Agent’s due diligence, including, without limitation,
a field examination and an inventory appraisal.

 

Notwithstanding the foregoing, to the extent the ABL Administrative Agent has
not completed a field examination of, and has not received an inventory
appraisal for, the Borrower or any Guarantor prior to the Closing Date (any such
entity an “Affected Entity”), assets of such Affected Entity that would
otherwise be eligible for inclusion of the Borrowing Base shall not be subject
to the advance rates set forth above until such field examination and appraisal
are completed but instead the Borrowing Base for Affected Entities shall be
calculated as follows: (a) in the case of the Borrower, an amount determined by
using the most recent borrowing base certificate delivered under the Borrower’s
existing asset-based credit facility as in effect immediately prior to the
Closing Date subject to the advance rates set forth above, and (b) in the case
of the Acquired Business, an amount determined by using the most recent
borrowing base

 

Annex I-5

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certificate delivered under the Acquired Business’ existing asset-based credit
facility as in effect immediately prior to the Closing Date subject to the
advance rates set forth above, in each case under clauses (a) and (b) for up to
60 days so long as the ABL Facility has a first priority security interest in
all such assets and the ABL Administrative Agent has been provided with copies
of such borrowing base certificates less (c) such Reserves (to be defined in the
ABL Credit Documentation) as the ABL Administrative Agent may establish in its
Reasonable Credit Judgment; provided that if the field examination and inventory
appraisal with respect to each Affected Entity have not been completed by the
60th day after the Closing Date, the Borrowing Base shall thereafter not include
any amount in respect of the assets of such Affected Entity until such field
examination and inventory appraisal are completed. Optional Prepayments and
Commitment Reductions:

The Borrower may repay the loans under the ABL Facility at any time and from
time to time without premium or penalty (other than breakage costs (but not loss
of margin) with respect to LIBOR loans, if applicable), in minimum principal
amounts and with customary notice requirements to be mutually agreed upon.

 

The Borrower may reduce the unutilized portion of the commitments in respect of
the ABL Facility at any time and from time to time, or terminate the ABL
Facility, in each case, without premium or penalty, in customary minimum
principal amounts to be mutually agreed upon by the Borrower and the ABL
Administrative Agent and subject to customary notice requirements to be mutually
agreed upon.

Mandatory Prepayments:

If at any time the sum of the principal amount of outstanding borrowings and
outstanding Letters of Credit under the ABL Facility exceeds the lesser of
(i) the Borrowing Base as in effect at such time and (ii) the Loan Cap, the
Borrower shall prepay the loans (and cash collateralize Letters of Credit) in an
amount necessary to eliminate such excess.

 

Upon any sale or other disposition of any assets of the Borrower or any
Guarantor, in each case to the extent constituting ABL Priority Collateral,
outside of the ordinary course of business or the receipt by the Borrower of any
proceeds from casualty insurance or a condemnation of ABL Priority Collateral
(in each case, with exceptions and materiality levels to be agreed in the ABL
Credit Documentation), above a threshold to be agreed, the Borrower shall
provide an updated calculation of the Borrowing Base.

 

Annex I-6

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If a Cash Dominion Event (as defined below) has occurred and is continuing, all
amounts deposited in each Collection Account (as defined below) will be promptly
applied by the ABL Administrative Agent to repay outstanding loans under the ABL
Facility and, if an event of default exists, to cash collateralize outstanding
Letters of Credit.

 

Mandatory prepayments shall not reduce the commitments of the ABL Lenders under
the ABL Facility.

Security: Subject to the Funds Certain Provisions, the ABL Facility (including
cash management services, interest rate protection, other hedging arrangements,
and other bank products provided to the Borrower or its Subsidiaries by any of
the ABL Lenders or their respective affiliates) will be secured by:
(a) perfected first priority (subject to permitted liens, including in respect
of the Term Loan Facilities, and other customary exceptions) security interests
in substantially all tangible and intangible assets of the Borrower and the
Guarantors consisting of accounts receivable, payment intangibles, inventory,
tax refunds, cash, deposit accounts, securities accounts, investment property
(other than (x) capital stock and (y) any deposit account or securities account
(or amount on deposit therein) established solely to hold identified proceeds of
Term Loan Priority Collateral (as defined below)), general intangibles (other
than equity interests and intellectual property), chattel paper, documents,
supporting obligations, certain other assets and books and records related to
the foregoing and, in each case, proceeds thereof, subject to customary
exceptions (the “ABL Priority Collateral”); and (b) a second priority (subject
to permitted liens, including in respect of the Term Loan Facilities, and other
customary exceptions) security interest in (i) 100% of the capital stock held by
the Borrower and the Guarantors (but limited in the case of the voting capital
stock of any first-tier CFC or Disregarded Domestic Person, to 65% of such
capital stock), (ii) substantially all material owned real property and
equipment of the Borrower and the Guarantors and (iii) all other personal
property of the Borrower and the Guarantors to the extent not constituting ABL
Priority Collateral, including, without limitation, contracts, patents,
copyrights, trademarks, other general intangibles and all proceeds of the
foregoing (in each case, other than those relating to ABL Priority Collateral)
(the property in

 

Annex I-7

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clauses (b)(i) through (b)(iii) above, the “Term Loan Priority Collateral”, and
together with the ABL Priority Collateral, the “Collateral”), in each case,
excluding the Excluded Assets (as defined below). Notwithstanding anything to
the contrary, the Collateral shall exclude the following: (i) any fee-owned real
property with a fair market value of less than an amount to be agreed (with all
required mortgages being permitted to be delivered post-closing) and all
leasehold interests in real property; (ii) motor vehicles, aircrafts and other
assets subject to certificates of title (except to the extent perfection can be
accomplished through the filing of UCC-1 financing statements); (iii) letter of
credit rights with a value of less than an amount to be agreed (except to the
extent perfection can be accomplished through the filing of UCC-1 financing
statements) and commercial tort claims with a value of less than an amount to be
agreed; (iv) pledges and security interests prohibited by applicable law, rule
or regulation (including the requirement to obtain consent of any governmental
authority); (v) equity interests in any person other than wholly-owned
subsidiaries to the extent not permitted by the terms of such person’s
organizational or joint venture documents; (vi) any lease, permit, license or
other agreement or any property subject to a purchase money security interest or
similar arrangement to the extent that a grant of a security interest therein
would violate or invalidate such lease, permit, license or agreement or purchase
money arrangement or create a right of termination in favor of, or require the
consent of, any other party thereto (other than the Borrower or any of its
subsidiaries) after giving effect to the applicable anti-assignment provisions
of the Uniform Commercial Code, other than proceeds and receivables thereof, the
assignment of which is expressly deemed effective under the Uniform Commercial
Code notwithstanding such prohibition; (vii) those assets as to which the ABL
Administrative Agent and the Borrower reasonably agree that the cost of
obtaining such a security interest or perfection thereof are excessive in
relation to the benefit to the Lenders of the security to be afforded thereby;
(viii) margin stock; (ix) voting capital stock in excess of 65% of any
first-tier CFC or Disregarded Domestic Person; (x) any of the capital stock of a
subsidiary of a CFC or Disregarded Domestic Person; (xi) any governmental
licenses or state or local franchises, charters and authorizations, to the
extent security interests in such licenses, franchises, charters or
authorizations are prohibited

 

Annex I-8

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or restricted thereby after giving effect to the applicable anti-assignment
provisions of the Uniform Commercial Code; (xii) “intent-to-use” trademark or
service mark applications; (xiii) (a) payroll and other employee wage and
benefit accounts, (b) sales tax accounts, (c) escrow accounts, (d) fiduciary or
trust accounts, and (e) store accounts, and, in the case of clauses (a) through
(e), the funds or other property held in or maintained in any such account
(collectively, the “Excluded Accounts”); (xiv) any acquired property (including
property acquired through acquisition or merger of another entity, but excluding
any Collateral included in the Borrowing Base and other assets to be mutually
agreed) if at the time of such acquisition the granting of a security interest
therein or the pledge thereof is prohibited by any contract or other agreement
(in each case, not created in contemplation thereof) to the extent and for so
long as such contract or other agreement prohibits such security interest or
pledge; and (xv) other exceptions to be mutually agreed upon (the foregoing
described in clauses (i) through (xv) are, collectively, the “Excluded Assets”).
In addition, in no event shall (a) notices be required to be sent to account
debtors or other contractual third parties (other than credit card
notifications) prior to the occurrence and during the continuance of an event of
default, (b) perfection (except to the extent perfected through the filing of
Uniform Commercial Code financing statements) be required with respect to letter
of credit rights and commercial tort claims, in each case with a value of less
than an amount to be agreed, or (c) security documents governed by the laws of a
jurisdiction other than the United States or any state thereof be required.
Notwithstanding anything to the contrary, no foreign local law pledges, landlord
lien waivers, estoppels or collateral access letters will be required.

 

All the above-described pledges, security interests and mortgages shall be
created on terms to be set forth in the ABL Credit Documentation; and none of
the Collateral shall be subject to other pledges, security interests or
mortgages (except in favor of the Term Loan Facilities and other permitted liens
and exceptions and baskets to be set forth in the ABL Credit Documentation).

 

The relative rights and priorities in the ABL Priority Collateral among the ABL
Administrative Agent and the Term Administrative Agent will be set forth in
customary intercreditor agreements in form and substance satisfactory to the ABL
Administrative Agent and the Term

 

Annex I-9

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Administrative Agent (the “Intercreditor Agreement”). Without limiting the
foregoing, the Intercreditor Agreement with the Term Administrative Agent and
the security documents with the Borrower and Guarantors shall provide that the
ABL Administrative Agent shall have a license allowing the use of such of the
Term Priority Collateral as may be necessary or desirable for the liquidation of
the ABL Priority Collateral. Representations and Warranties: Subject to the ABL
Documentation Standard, with customary exceptions, thresholds and baskets to be
reasonably and mutually agreed, representations and warranties applicable to the
Borrower and its restricted subsidiaries (with materiality qualifiers to be
mutually agreed), limited to the following: (i) legal existence, qualification
and power; (ii) due authorization and no contravention of law, contracts or
organizational documents; (iii) governmental and third party approvals and
consents; (iv) enforceability; (v) accuracy and completeness of specified
financial statements, the borrowing base and other information and no event or
circumstance, either individually or in the aggregate, that has had or would
reasonably be expected to have a Material Adverse Effect (to be defined in the
ABL Credit Documentation); (vi) no material litigation; (vii) no default;
(viii) ownership of property; (ix) insurance matters; (x) environmental matters;
(xi) tax matters; (xii) ERISA; (xiii) identification of loan parties and
subsidiaries of loan parties, and equity interests owned by loan parties;
(xiv) use of proceeds and not engaging in business of purchasing/carrying margin
stock in violation of margin regulations; (xv) status under Investment Company
Act; (xvi) material compliance with laws; (xvii) intellectual property;
(xviii) consolidated solvency as of the Closing Date; (xix) collateral
documents; (xx) labor matters; (xxi) disclosure of material depositary and
securities accounts and credit card issuers and processors of the Borrower and
Guarantors; and (xxii) foreign assets control regulations, FCPA, OFAC, Patriot
Act, anti-money laundering laws and related matters. Cash Management: The
Borrower and the Guarantors will establish lockbox and blocked account
arrangements reasonably acceptable to the ABL Administrative Agent and shall
cause all cash receipts above a nominal amount to be agreed upon to be forwarded
to one or more deposit accounts which is subject to a control agreement in favor
of the ABL Administrative Agent (excluding (i) the Excluded Accounts (so long as
receipts

 

Annex I-10

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held in store accounts are directed to concentration accounts that are subject
to control agreements) and (ii) certain other accounts with deposits up to an
aggregate amount to be agreed) with respect to accounts owned by the Borrower
and the Guarantors, within 90 days after the Closing Date (or such longer period
as the ABL Administrative Agent may reasonably agree) (each a “Controlled
Account”). Without limiting the foregoing, the Borrower and the Guarantors will
instruct their account debtors to make payments directly to a Controlled
Account.

 

During the continuance of a Cash Dominion Event (as defined below), all cash
proceeds of ABL Priority Collateral (subject to exceptions to be mutually
agreed) received by the Borrower and/or its Subsidiaries in a Controlled Account
or otherwise shall be swept daily to a collection account maintained at the
Administrative Agent (each such account, a “Collection Account”) and shall be
applied daily in reduction of the obligations under the ABL Facility.

 

As used herein, “Cash Dominion Event” shall mean either (i) the occurrence and
continuance of any event of default, or (ii) the failure of the Borrower to
maintain for five (5) consecutive business days Availability at least equal to
the greater of (x) $60.0 million and (y) 10.0% of the Loan Limit. A Cash
Dominion Event shall continue unless and until, as applicable, such event of
default is waived or Availability is equal to or greater than the amounts
required above for thirty (30) consecutive days; provided that, for purposes of
this cash management requirement, a Cash Dominion Event may be discontinued only
twice in any 12 consecutive month period notwithstanding that the event of
default has been waived or that Availability shall have been equal to or greater
than the amounts required above for thirty (30) consecutive days.

Financial Covenants: If, at any time, Availability is less than the greater of
(x) $45.0 million and (y) 10.0% of the Loan Limit, then the Borrower will be
required to maintain a minimum Consolidated Fixed Charge Coverage Ratio (to be
defined in the ABL Credit Documentation), calculated on a trailing four-quarter
basis as of the end of the most recent fiscal quarter prior to such event and as
of the last day of each subsequent fiscal quarter ending during a test period,
of 1.0:1.0 until Availability shall have been equal to or greater than such
threshold for thirty (30) consecutive calendar days.

 

Annex I-11

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Financial Reporting: The Borrower shall provide financial reporting usual and
customary for transactions of this type, each comprising: (a) if Availability is
less than the greater of 15.0% of the Loan Limit and $65.0 million, monthly
financial statements of the Borrower and its Subsidiaries (for each of the first
two months of each quarter), within 30 days after the end of each fiscal month
end (until such time as Availability is equal to or greater than the greater of
17.5% of the Loan Limit and $75.0 million for 30 consecutive days); (b)
quarterly financial statements of the Borrower and its Subsidiaries (for each of
the first three quarters of each year), within 45 days after the end of each
fiscal quarter; (c) consolidated annual audited financial statements of the
Borrower and its Subsidiaries (within 90 days after each fiscal year end); (d)
annual consolidated forecasts and projections, including monthly balance sheets,
income statements and statements of cash flow (in each case, within 90 days
after each fiscal year end); (e) borrowing base certificates which shall be
delivered no less frequently than quarterly; provided, that, if on the last day
of any month, loans are outstanding or Letter of Credit exposure exceeds $60.0
million, such borrowing base certificates shall be delivered monthly, in each
case with supporting documentation no later than the fifteenth (15th) business
day after the end of each fiscal quarter or month, as applicable, unless
Availability at any time is less than the greater of (x) $60.0 million and
(y) 12.5% of the Loan Limit, in which case borrowing base certificates and
supporting documentation shall be delivered weekly (until such time as
Availability is equal to or greater than such threshold for 30 consecutive
days); and (f) Other customary requirements including quarterly compliance
certificates, inventory and credit card receivables reports, notices of
defaults, litigation and other material events, and other information
customarily supplied in a transaction of this type to be mutually agreed.

 

Annex I-12

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Collateral Monitoring: Field examinations and inventory appraisals will be
conducted on an ongoing basis at the discretion of the ABL Administrative Agent.
The Borrower shall be required to pay the fees and expenses for one (1) field
examination and one (1) inventory appraisal in any twelve (12) month period;
provided that, if Availability at any time is less than the greater of
(x) $85.0 million and (y) 17.5% of the Loan Limit for three (3) consecutive
business days, the Borrower shall be required to pay for two (2) field
examinations and two appraisals in each twelve (12) month period (but shall no
longer be required to do so after Availability is equal to or greater than such
threshold for 30 consecutive days), provided further, that while an event of
default exists, the Borrower shall be required to pay all fees and expenses for
all field examinations and inventory appraisals reasonably undertaken by the ABL
Administrative Agent. Nothing herein shall limit the ABL Administrative Agent’s
right to conduct one additional field examination and one additional inventory
appraisal in any fiscal year (as determined in the discretion of the ABL
Administrative Agent) at the ABL Lenders’ expense. Other Covenants: Subject to
the ABL Documentation Standard, affirmative and negative covenants applicable to
the Borrower and its restricted subsidiaries with such exceptions, thresholds,
baskets, and materiality qualifications as may be reasonably and mutually agreed
upon in the ABL Credit Documentation, limited to the following: (a) Affirmative
Covenants. (i) delivery of certificates and other information; (ii) delivery of
customary notices (including, without limitation, of any default, material
adverse condition, ERISA, or material change in accounting or financial
reporting practices); (iii) payment and performance of obligations;
(iv) preservation of existence; (v) maintenance of properties; (vi) maintenance
of insurance; (vii) material compliance with laws; (viii) maintenance of books
and records; (ix) inspection rights; (x) covenant to guarantee obligations and
give security; (xi) compliance with environmental laws; (xii) further
assurances; (xiii) maintenance of governmental approvals and authorizations;
(xiv) maintenance of customary cash management systems; (xv) compliance with
pension plan requirements; and (xvi) labor matters.

 

Annex I-13

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(b) Negative Covenants. Restrictions on (i) liens; (ii) indebtedness (including
guarantees and other contingent obligations); (iii) investments (including loans
and advances); (iv) mergers and other fundamental changes; (v) sales and other
dispositions of property or assets; (vi) payments of dividends and other
distributions; (vii) changes in the nature of business; (viii) transactions with
affiliates; (ix) burdensome agreements; (x) use of proceeds; (xi) OFAC, FCPA and
anti-money laundering laws; (xii) amendments of organizational documents in a
manner materially adverse to the ABL Lenders; (xiii) changes in fiscal year and
changes in accounting policies unless required by GAAP or to align the Borrower
and the Acquired Business; (xiv) prepayments of other indebtedness; and
(xv) modification or termination of documents related to certain material
indebtedness, in each case with such customary exceptions as may be reasonably
and mutually agreed upon in the ABL Credit Documentation. Notwithstanding the
foregoing, (1) The Borrower may make cash dividends, distributions, repurchases
or other payments in respect of its capital stock (a “Restricted Payment”) if
(a) no event of default exists or would arise as a result of the subject
Restricted Payment, (b) immediately after giving pro forma effect to such
Restricted Payment and on a pro forma basis for each of the 30 days preceding
such Restricted Payment, the average Availability shall be greater than or equal
to the greater of (x) $75.0 million and (y) 17.5% of the Loan Limit, (c) the
Consolidated Fixed Charge Coverage Ratio for the trailing twelve (12) month
period immediately preceding such Restricted Payment shall be greater than or
equal to 1.0 to 1.0; provided that the provisions of this clause (c) shall not
be applicable if the average Availability, calculated in accordance with
clause (b) hereof, immediately after giving pro forma effect to such Restricted
Payment on a pro forma basis for each of the 30 days preceding such Restricted
Payment is greater than or equal to the greater of (x) $85.0

 

Annex I-14

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million and (y) 20.0% of the Loan Limit; and (d) the Borrower shall have
delivered a certificate to the ABL Administrative Agent including a reasonably
detailed calculation of such Availability and, if applicable, Consolidated Fixed
Charge Coverage Ratio. (2) The Borrower may make Permitted Acquisitions and
other investments and prepay Indebtedness if the Payment Conditions are
satisfied. As used herein, “Payment Conditions” shall mean that (a) no event of
default exists or would arise as a result of the subject transaction or payment,
(b) immediately after giving pro forma effect to such transaction or payment and
on a pro forma basis for each of the 30 days preceding such investment or
prepayment, the average Availability shall be greater than or equal to the
greater of (x) $75.0 million and (y) 15% of the Loan Limit, (c) the Consolidated
Fixed Charge Coverage Ratio for the trailing twelve (12) month period
immediately preceding such transaction or payment shall be greater than or equal
to 1.0 to 1.0, provided that the provisions of this clause (c) shall not be
applicable if the average Availability, calculated in accordance with clause (b)
hereof, immediately after giving pro forma effect to such acquisition,
investment or prepayment and on a pro forma basis for each of the 30 days
preceding such acquisition, investment or prepayment is greater than or equal to
the greater of (x) $85.0 million and (y) 17.5% of the Loan Limit; and (d) the
Borrower shall have delivered a Compliance Certificate to the ABL Administrative
Agent including a reasonably detailed calculation of such Availability and, if
applicable, Consolidated Fixed Charge Coverage Ratio. Unrestricted Subsidiaries:
The ABL Credit Documentation will contain provisions pursuant to which, subject
to customary limitations on investments, loans, advances to, and other
investments in, unrestricted subsidiaries, the Borrower will be permitted,
subject to compliance with the Payment Conditions, to designate any existing or
subsequently acquired or organized subsidiary (other than Target) as an
“unrestricted subsidiary” and subsequently re-designate any such unrestricted
subsidiary as a restricted subsidiary, it being understood that (x) the
designation of any unrestricted subsidiary as a restricted subsidiary shall
constitute the incurrence at the time of designation of any indebtedness or
liens of such subsidiary existing at such time and (y) the fair market value

 

Annex I-15

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of such subsidiary at the time it is designated as an “unrestricted subsidiary”
shall be treated as an investment by the Borrower at such time. Unrestricted
subsidiaries will not be subject to the representations and warranties,
affirmative or negative covenants or event of default provisions of the ABL
Credit Documentation and the Commitment Letter and results of operations and
indebtedness of unrestricted subsidiaries will not be taken into account for
purposes of determining any financial ratio or covenant contained in the ABL
Credit Documentation. No restricted subsidiary may be designated as an
unrestricted subsidiary under the ABL Facility if it is a “restricted
subsidiary” under the Term Loan Facilities. Events of Default: Subject to the
ABL Documentation Standard, limited to the following (with customary grace
periods, thresholds and exceptions as mutually and reasonably agreed):
(i) nonpayment of principal, and nonpayment of interest, fees or other amounts
which continues for five (5) business days after the date when due; (ii) failure
to perform or observe covenants set forth in the ABL Credit Documentation within
a specified period of time, where customary and appropriate, after notice of
such failure from the ABL Administrative Agent; (iii) any representation or
warranty proving to have been incorrect in any material respect (or, in the case
of any representation and warranty qualified by materiality, in all respects)
when made or confirmed; (iv) cross-default to other indebtedness in an amount to
be agreed; (v) bankruptcy and insolvency defaults (with grace period for
involuntary proceedings); (vi) monetary judgment defaults in an amount to be
agreed; (vii) ERISA; (viii) actual or asserted invalidity or impairment of any
material ABL Credit Documentation or security; (ix) change of control (to be
defined in a customary and mutually agreeable reasonable manner, and without any
dead-hand board component); (x) cessation of business; (xi) breach of
intercreditor or subordination agreements, if any; and (xii) failure to maintain
financial covenant, if applicable. Conditions Precedent to Closing: Limited to
those conditions specified in Section 5 of the Commitment Letter. Conditions
Precedent to Extensions of Credit after the Closing Date: Limited to the
following: (i) all of the representations and warranties in the ABL Credit
Documentation shall be true and correct as of the date of such extension of
credit in all material respects (except to the extent such representation and
warranty expressly relates to an earlier date or if such

 

Annex I-16

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representations and warranties are qualified by materiality, in which case they
shall be true and correct in all respects); (ii) no default or event of default
shall have occurred and be continuing, or would result from such extension of
credit; and (iii) in the case of any extension of credit under the ABL Facility,
the aggregate principal amount of all loans outstanding under the ABL Facility
and the aggregate undrawn amount of all Letters of Credit outstanding on such
date, after giving effect to the applicable borrowing or issuance or renewal of
a Letter of Credit, shall not exceed the Loan Limit on such date. Assignments
and Participations:

Subject to the consents described below (which consents will not be unreasonably
withheld or delayed), each ABL Lender will be permitted to make assignments to
other eligible financial institutions (but not any Disqualified Lender) in
respect of the ABL Facility in a minimum amount equal to $5 million; provided
that the Borrower’s consent shall be deemed to have been given if the Borrower
shall not have responded to a request for consent within 10 business days. The
consent of the ABL Administrative Agent, the Letter of Credit issuer and the
swing line lender will be required for any assignment under the ABL Facility.

 

The consent of the Borrower will be required unless (i) a payment or bankruptcy
Event of Default has occurred and is continuing, or (ii) the assignment is to an
ABL Lender, an affiliate of an ABL Lender or an Approved Fund (as such term
shall be defined in the ABL Credit Documentation).

 

An assignment fee payable by the assigning ABL Lender in the amount of $3,500
will be charged with respect to each assignment unless waived by the ABL
Administrative Agent in its sole discretion. Each ABL Lender will also have the
right, without consent of the Borrower or the ABL Administrative Agent, to
assign as security all or part of its rights under the ABL Credit Documentation
to any Federal Reserve Bank.

 

ABL Lenders will be permitted to sell participations with voting rights limited
to significant matters such as changes in amount, rate, maturity date and
releases of all or substantially all of the collateral securing the ABL
Facility.

Waivers and Amendments: Amendments and waivers of the provisions of the ABL
Credit Documentation will require the approval of ABL Lenders holding loans and
commitments representing more

 

Annex I-17

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than 50% of the aggregate amount of the loans and commitments under the ABL
Facility (the “Required Lenders”), except that (a) the consent of each ABL
Lender shall be required with respect to certain matters, including, without
limitation, the amendment of certain of the pro rata sharing provisions; and
(b) the consent of each ABL Lender affected thereby shall be required with
respect to certain matters, including, without limitation, (i) increases or
extensions in the commitment of such ABL Lender, (ii) reductions of principal,
interest or fees, (iii) extensions of scheduled maturities or times for payment,
(iv) the release of all or substantially all of the collateral securing the ABL
Facility, (v) the release of the guaranties of the Borrower’s obligations made
by the Guarantors representing all or substantially all of the value thereof,
and (vi) the amendment of the voting percentages of the Lenders. Certain
modifications such as increasing the advance rates in the Borrowing Base or the
inclusion of additional classes of assets in the Borrowing Base will require the
approval of ABL Lenders holding loans and commitments representing more than 66
2/3% of the aggregate amount of the loans and commitments under the ABL
Facility.

 

The ABL Credit Documentation shall contain a customary “yank-a-bank” provision.

Governing Law: State of New York. Indemnification: Consistent with the ABL
Documentation Standard. ABL Administrative Agent’s Counsel: Latham & Watkins
LLP. Other: Each of the parties shall (i) waive its right to a trial by jury and
(ii) submit to New York jurisdiction.

 

Annex I-18

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ADDENDUM I

PRICING, FEES AND EXPENSES

 

Interest Rates:   The interest rates per annum applicable to the ABL Facility
(other than in respect of Swing Line Loans) will be LIBOR plus the Applicable
Margin (as hereinafter defined) or, at the option of the Borrower, the Base Rate
(to be defined for Loans to the Borrower as the highest of (x) the ABL
Administrative Agent’s prime rate, (y) the Federal Funds rate plus 0.50%, and
(z) the sum of 1.00% per annum plus LIBOR for a 30 day interest period) plus the
Applicable Margin. “Applicable Margin” means a percentage per annum to be
determined based upon the Availability for the three - month period ended
immediately preceding each Adjustment Date in accordance with the pricing grid
set forth below; provided that Level II pricing shall apply until the end of the
first full fiscal quarter ending after the Closing Date. Each Swing Line Loan
shall bear interest at the Base Rate plus the Applicable Margin for Base Rate
loans. “Adjustment Date” means the first day of each fiscal quarter. Pricing
Grid:   The Applicable Margin shall be based on the average daily Availability
(expressed as a percentage of the aggregate commitments under the ABL Facility)
as set forth below:

 

Level

   Average Daily
Excess Availability      LIBOR
Rate Loans     Base Rate
Loans  

I

     > 66 2/3         1.25 %      0.25 % 

II

     > 33 1/3 but < 66 2/3         1.50 %      0.50 % 

III

     <33 1/3         1.75 %      0.75 % 

 

 

The Borrower may select interest periods, subject to availability, of one, two,
three or six months, and, if agreed to by all ABL Lenders, 12 months, for LIBOR
loans, provided that that the total number of outstanding LIBOR loans will not
exceed a number to be mutually agreed upon. Interest shall be payable at the end
of the selected interest period, but no less frequently than quarterly. Interest
on Base Rate Loans and Swing Line Loans shall be paid monthly.

 

During the continuance of any payment or bankruptcy event of default under the
ABL Credit Documentation, the Applicable Margin on overdue obligations under the
loan documentation shall increase by 2% per annum.

 

Annex I-19

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“LIBOR” is the rate for eurodollar deposits for the respective interest period
appearing on Reuters Screen LIBOR01 Page (or otherwise on the Reuters Screen)
(as adjusted for statutory reserve requirements for eurocurrency liabilities).
Commitment Fee: Commencing on (and subject to the occurrence of) the Closing
Date, a commitment fee of 0.375% per annum on the daily unutilized commitments
during the immediately preceding quarter; provided that such fee shall be
subject to reduction to 0.25% per annum commencing after the first full fiscal
quarter ending after the Closing Date if the average daily utilization of the
ABL Facility during the preceding quarter was at least 35% of the aggregate
commitments under the ABL Facility. Such fee shall be payable to the ABL Lenders
quarterly in arrears, commencing on the first quarterly payment date to occur
after the Closing Date. Letter of Credit Fees: Letter of Credit fees shall be
payable on the maximum amount available to be drawn under each Letter of Credit
at a rate per annum equal to the Applicable Margin from time to time applicable
to LIBOR Rate loans under the ABL Facility. Such fees will be (a) payable
quarterly in arrears, commencing on the first quarterly payment date to occur
after the Closing Date, and (b) shared proportionately by the ABL Lenders. In
addition, a fronting fee shall be payable to the Letter of Credit Issuer in an
amount equal to 0.125% per annum for all Letters of Credit quarterly in arrears
and the Borrower shall also pay each Letter of Credit Issuer’s customary fees
and charges in connection with the negotiation, amendment, and extension of
Letters of Credit. Calculation of Interest and Fees: All interest on all
advances (to the extent interest is determined with respect to the LIBOR Rate)
and per annum fees will be calculated on the basis of actual number of days
elapsed in a year of 360 days. All other interest will be calculated on the
basis of actual number of days elapsed in a year of 365/366 days. Cost and Yield
Protection: Customary for transactions and facilities of this type, including,
without limitation, in respect of breakage or redeployment costs incurred in
connection with prepayments (other than loss of margin), changes in capital
adequacy and capital requirements or their interpretation, illegality,
unavailability, reserves without proration or offset and payments free and clear
of withholding or other taxes. Expenses: The Borrower will pay all reasonable
and documented out-of-pocket costs and expenses associated with the

 

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preparation, due diligence, administration, syndication and closing of all ABL
Credit Documentation, including, without limitation, the reasonable and
documented out-of-pocket legal fees of counsel to the ABL Administrative Agent
and the ABL Lead Arranger (including, without limitation, the reasonable and
documented fees and out-of-pocket expenses of Latham & Watkins LLP and of any
local counsel to the ABL Lenders retained by the ABL Lead Arranger or the ABL
Administrative Agent, limited to one counsel in each relevant jurisdiction),
regardless of whether or not the ABL Facility is closed. The Borrower will also
pay the reasonable and documented out-of-pocket expenses of the ABL
Administrative Agent and one other counsel (in total) to all of the ABL Lenders
(in the absence of conflict) in connection with the enforcement of any of the
ABL Credit Documentation.

 

Annex I-21

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ANNEX II

SUMMARY OF TERMS AND CONDITIONS

$1,800,000,000 TERM LOAN FACILITIES

Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the Commitment Letter to which this Annex II is attached.

 

Borrower: Ascena Retail Group, Inc. a Delaware corporation (the “Borrower”).
Guarantors: The obligations of the Borrower under the Term Loan Facilities (as
hereinafter defined) will be unconditionally guaranteed jointly and severally on
a senior basis (the “Term Guarantees”) by each of the Borrower’s wholly-owned
material restricted U.S. subsidiaries (and consistent with the principles set
forth herein) (collectively, the “Guarantors” and together with the Borrower,
the “Loan Parties”), provided that Guarantors shall not include,
(i) unrestricted subsidiaries, (ii) immaterial subsidiaries (to be defined in a
mutually acceptable manner as to individual and aggregate revenues or assets
excluded), (iii) any subsidiary that is prohibited, but only so long as such
subsidiary would be prohibited, by applicable law, rule or regulation or by any
contractual obligation existing on the Closing Date or existing at the time of
acquisition thereof after the Closing Date (so long as such prohibition did not
arise as part of such acquisition), in each case, from guaranteeing the Term
Loan Facilities or which would require governmental (including regulatory)
consent, approval, license or authorization to provide a Term Guarantee unless
such consent, approval, license or authorization has been received (but without
obligation to seek the same), (iv) any direct or indirect subsidiary of a
“controlled foreign corporation” within the meaning of Section 957 of the Code
(a “CFC”), (v) any domestic subsidiary with no material assets other than equity
interests of one or more foreign subsidiaries that are CFCs (a “Disregarded
Domestic Person”) and (vi) not-for-profit subsidiaries. In addition, the Credit
Documentation for the Term Loan Facilities (the “Term Facilities Credit
Documentation”) will contain carve outs for “non-ECP Guarantors”, consistent
with the LSTA provisions. All guarantees will be guarantees of payment and not
of collection. The Target and its subsidiaries included in the Acquired Business
that are not excluded from the foregoing requirements pursuant to the terms
described above shall be required to become Guarantors (and grant liens in their
assets constituting Collateral that can be perfected by filing UCC

 

Annex II-1

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financing statements) on the Closing Date. Notwithstanding the forgoing, it is
understood and agreed that neither the Target nor any of its subsidiaries shall
be required to be Guarantors until the Merger is consummated on the Closing
Date.

 

Notwithstanding the foregoing, additional subsidiaries may be excluded from the
guarantee requirements in circumstances where the Borrower and the Term
Administrative Agent reasonably agree that the cost of providing such a
guarantee is excessive in relation to the value afforded thereby.

Term Administrative and Collateral Agent: Goldman Sachs Bank USA (“GS Bank”)
will act as sole and exclusive administrative and collateral agent for the Term
Loan Lenders (the “Term Administrative Agent”). Joint Lead Arrangers and Joint
Bookrunners: GS Bank and Guggenheim Securities, LLC will act as joint lead
arrangers and joint bookrunners for the Term Loan Facilities (in such
capacities, the “Term Lead Arrangers”). Term Loan Lenders: Banks, financial
institutions and institutional lenders selected by GS Bank and reasonably agreed
to by the Borrower and excluding any Disqualified Lenders and, after the initial
funding of the Term Loan Facilities, subject to the restrictions set forth in
the Assignments and Participations section below (the “Term Loan Lenders”). Term
Loan Facilities: A senior secured first lien term loan B facility (the “Term
Loan Facilities”) in an aggregate principal amount of $1,800 million. At the
election of the Borrower, a portion of the Term Loan Facility may be replaced by
the issuance of Senior Notes. Purpose: The proceeds of the borrowings under the
Term Loan Facilities, together with cash on the balance sheet of the Companies,
borrowings under the ABL Facility, the Equity Issuance and, if applicable, the
Senior Notes, shall be used (i) to finance the Acquisition and the Refinancing
and (ii) to pay fees and expenses incurred in connection therewith.
Availability: The Term Loan Facilities will be available in a single drawing on
the Closing Date. Amounts borrowed under the Term Loan Facilities that are
repaid or prepaid may not be reborrowed. Interest Rates: The interest rates per
annum applicable to the Term Loan Facilities will be, at the option of the
Borrower (i) LIBOR plus the Applicable Margin (as hereinafter defined) or
(ii) the Base Rate plus the Applicable Margin. The Applicable Margin means (a)
if the Borrower has received (I) a public corporate credit rating of BB-
(stable) or better from S&P and (II) a

 

Annex II-2

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public corporate family rating of Ba3 (stable) or better from Moody’s, 3.50% per
annum, in the case of LIBOR advances, and 2.50% per annum, in the case of Base
Rate advances and (b) otherwise, 3.75% per annum, in the case of LIBOR advances,
and 2.75% per annum, in the case of Base Rate advances.

 

The Borrower may select interest periods of one, two, three or six months (and,
if agreed to by all Term Loan Lenders, twelve months) for LIBOR advances.
Interest shall be payable at the end of the selected interest period, but no
less frequently than quarterly.

 

“LIBOR” and “Base Rate” will have meanings customary and appropriate for
financings of this type; provided that (x) LIBOR will be deemed to be not less
than 1.00% per annum (the “LIBOR Floor”) and (y) the Base Rate will be deemed to
be not less than 100 basis points higher than one-month LIBOR (after giving
effect to the LIBOR Floor).

 

During the continuance of an event of default for nonpayment of principal,
interest or fees, interest will accrue on such overdue principal, interest or
fees at the Default Rate (as defined below). During the continuance of a
bankruptcy event of default, the principal amount of all outstanding obligations
will bear interest at the Default Rate. As used herein, “Default Rate” means
(i) on the principal of any loan at a rate of 200 basis points in excess of the
rate otherwise applicable to such loan and (ii) on any other overdue amount at a
rate of 200 basis points in excess of the non-default rate of interest then
applicable to Base Rate loans.

Calculation of Interest and Fees: Other than calculations in respect of interest
at the Base Rate (which shall be made on the basis of actual number of days
elapsed in a 365/366 day year), all calculations of interest and fees shall be
made on the basis of actual number of days elapsed in a 360-day year. Cost and
Yield Protection: Subject to the Term Loan Documentation Standard (as defined
below) and customary for transactions and facilities of this type, including,
without limitation, in respect of breakage or redeployment costs incurred in
connection with prepayments (other than loss of margin), changes in capital
adequacy and capital requirements or their interpretation, illegality,
unavailability, reserves without proration or offset and payments free and clear
of withholding or other taxes; provided that for all purposes of the Term
Facilities Credit

 

Annex II-3

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Documentation, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines and directives promulgated thereunder and
(ii) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States regulatory authorities, in
each case, pursuant to Basel III, shall be deemed introduced or adopted after
the Closing Date, so long as, in each case, any amounts with respect thereto
assessed by any Lender shall also be so assessed by such Lender against its
similarly situated customers generally under agreements containing comparable
gross-up provisions. Maturity: The Term Loan Facilities will mature on the date
that is 7 years after the Closing Date. Incremental Term Facilities: The Term
Facilities Credit Documentation will permit the Borrower to add one or more
incremental term loan facilities to the Term Loan Facilities (each, an
“Incremental Term Facility”) after the Closing Date in an aggregate principal
amount of up to (a) $700.0 million (such amount, the “Incremental Base Amount”)
plus (b) an amount such that, after giving effect to the incurrence of such
amount and other pro forma adjustment events consistent with the Term Loan
Documentation Standard, the Senior Secured Net Leverage Ratio (to be defined in
the Term Facilities Credit Documentation) for the most recently ended
four-quarter period for which financial statements have been (or are required to
have been) delivered is equal to or less than the Senior Secured Net Leverage
Ratio in effect on the Closing Date (the “Ratio Amount”); provided that (i) no
Term Loan Lender will be required to participate in any such Incremental Term
Facility, (ii) no event of default or default exists or would exist after giving
effect thereto, (iii) the representations and warranties in the Term Facilities
Credit Documentation (in the case of an Incremental Term Facility to finance a
Permitted Acquisition (as defined below), limited to the Specified
Representations (as defined in Annex IV) and the Acquisition Agreement
Representations (as applied to the applicable acquisition agreement)) shall be
true and correct in all material respects, (iv) the maturity date of any such
Incremental Term Facility shall be no earlier than the maturity date for the
Term Loan Facilities, (v) the weighted average life to maturity of any
Incremental Term Facility shall be no shorter than the weighted average life to
maturity of the Term Loan Facilities, (vi) the interest margins for the
Incremental Term Facility shall

 

Annex II-4

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be determined by the Borrower and the lenders of the Incremental Term Facility;
provided that in the event that the interest margins for any Incremental Term
Facility incurred within 12 months following the Closing Date are greater than
the Applicable Margin for the Term Loan Facilities by more than 50 basis points,
then the Applicable Margin for the Term Loan Facilities shall be increased to
the extent necessary so that the interest margins for the Incremental Term
Facility are not more than 50 basis points higher than the Applicable Margin for
the Term Loan Facilities; provided, further, that in determining the interest
margins applicable to the Term Loan Facilities and the Applicable Margins for
any Incremental Term Facility, (x) original issue discount (“OID”) or upfront
fees (which shall be deemed to constitute like amounts of OID) payable by the
Borrower for the account of the Term Loan Lenders of the Term Loan Facilities or
the Incremental Term Facility in the primary syndication thereof shall be
included (with OID being equated to interest based on an assumed four-year life
to maturity), (y) customary arrangement, structuring, underwriting, amendment or
commitment fees payable to one or more arrangers of any Incremental Term
Facility shall be excluded, and (z) if the LIBOR or Base Rate floor for any
Incremental Term Facility is greater than the LIBOR or Base Rate floor,
respectively, for the existing Term Loan Facilities, the difference between such
floor for the Incremental Term Facility and the Term Loan Facilities shall be
equated to an increase in the Applicable Margin for purposes of this
clause (vi), (vii) each Incremental Term Facility shall be secured by pari passu
liens on the Collateral (as hereinafter defined) securing the Term Loan
Facilities, or secured by liens subordinated to the liens securing the Term Loan
Facilities (subject to customary intercreditor terms reasonably acceptable to
the Term Administrative Agent and the Borrower) and (viii) any Incremental Term
Facility shall be on terms and pursuant to documentation to be determined,
provided that, to the extent such terms and documentation are not consistent
with the Term Loan Facilities (except to the extent permitted by clause (iv),
(v) or (vi) above), they shall be reasonably satisfactory to the Term
Administrative Agent. The Borrower shall seek commitments in respect of any
Incremental Term Facility from existing Term Loan Lenders or from additional
banks, financial institutions and other institutional lenders reasonably
acceptable to the Term Administrative Agent who will become Term Loan Lenders in
connection therewith.

 

Annex II-5

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Refinancing Facilities: The Term Facilities Credit Documentation will permit the
Borrower to refinance loans under the Term Loan Facilities or loans under any
Incremental Term Facility (each, “Refinanced Debt”) from time to time, in whole
or part, with (x) one or more new term facilities (each, a “Refinancing Term
Facility”) under the Term Facilities Credit Documentation with the consent of
the Borrower, the Term Administrative Agent and the institutions providing such
Refinancing Term Facility or (y) one or more series of unsecured notes or loans,
notes secured by the Collateral on a pari passu basis with the Term Loan
Facilities or notes or loans secured by the Collateral on a subordinated basis
to the Term Loan Facilities, which will be subject to customary intercreditor
terms reasonably acceptable to the Term Administrative Agent and the Borrower
(any such notes or loans, “Refinancing Notes” and together with the Refinancing
Term Facilities, the “Refinancing Indebtedness”); provided that (i) any
Refinancing Term Facility or Refinancing Notes do not mature prior to the
maturity date of, or have a shorter weighted average life than, the applicable
Refinanced Debt, (ii) any Refinancing Notes consisting of notes do not mature
prior to the maturity date of the applicable Refinanced Debt or have any
scheduled amortization, (iii) there shall be no issuers, borrowers or guarantors
in respect of any Refinancing Indebtedness that are not the Borrower or a
Guarantor, (iv) any Refinancing Notes shall not contain any mandatory prepayment
provisions (other than related to customary asset sale and change of control
offers or events of default) that could result in prepayments of such
Refinancing Notes prior to the maturity date of the applicable Refinanced Debt,
(v) the other terms and conditions of such Refinancing Indebtedness (excluding
pricing, interest rate margins, rate floors, discounts, fees and optional
prepayment or optional redemption provisions) are not materially more favorable
(when taken as a whole) to the lenders or investors providing such Refinancing
Indebtedness than the terms of the applicable Refinanced Debt and (vi) the
proceeds of such Refinancing Indebtedness (a) shall not be in an aggregate
principal amount greater than the aggregate principal amount of the applicable
Refinanced Debt plus any fees and premiums associated therewith, and costs and
expenses related thereto and (b) shall be immediately applied to permanently
prepay in whole or in part the applicable Refinanced Debt. Term Loan
Documentation Standard: The Term Facilities Credit Documentation (i) shall be
based upon senior secured term loan facilities for similar borrowers with
appropriate modifications to baskets and materiality

 

Annex II-6

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thresholds to reflect the size, leverage and ratings of the Borrower after
giving effect to the Acquisition, (ii) shall contain the terms and conditions
set forth in this Term Loan Facilities Summary of Terms, (iii) shall give due
regard to that certain Term Credit Agreement dated as of June 18, 2014 among The
Men’s Wearhouse, Inc., as borrower, the lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent, (iv) shall reflect the operational and
strategic requirements of the Borrower and its subsidiaries in light of their
size, industries and practices and (v) shall reflect the customary agency and
operational requirements of the Term Administrative Agent (collectively, the
“Term Loan Documentation Standard”), in each case, subject to the Funds Certain
Provisions. The Term Facilities Credit Documentation shall, subject to the
“market flex” provisions contained in the Fee Letter, contain only those
conditions to borrowing, mandatory prepayments, representations and warranties,
covenants and events of default expressly set forth in this Term Loan Facilities
Summary of Terms, in each case, applicable to the Borrower and its subsidiaries
and, subject to the Term Loan Documentation Standard and certain other
limitations as set forth herein, with standards, qualifications, exceptions and
grace and cure periods consistent with the Term Loan Documentation Standard.
Scheduled Amortization: The Term Loan Facilities shall be subject to quarterly
amortization of principal equal to 0.25% of the original aggregate principal
amount of the Term Loan Facilities, with the balance payable on the final
maturity date. Mandatory Prepayments: In addition to the amortization set forth
above and subject to the Term Loan Documentation Standard and the next
paragraph, mandatory prepayments shall be required (i) subject to customary
exceptions and thresholds, from the receipt of net cash proceeds by the Borrower
or any of its restricted subsidiaries from any disposition of assets outside the
ordinary course of business or casualty event by the Borrower or any of its
restricted subsidiaries, in each case, to the extent such proceeds are not
reinvested (or committed to be reinvested) in assets useful in the business of
the Borrower or any of its restricted subsidiaries within twelve months of the
date of such disposition or casualty event (and, in the case of ABL Priority
Collateral, to the extent such amounts are not required to repay the ABL
Facility) and, if so committed to be reinvested, reinvested no later than
180 days after the end of such twelve month period; (ii) following the receipt
of net cash proceeds from the issuance or incurrence after the Closing Date of

 

Annex II-7

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additional debt of the Borrower or any of its subsidiaries (other than debt
permitted under the Term Facilities Credit Documentation other than Refinancing
Indebtedness); and (iii) in an amount equal to 50% of Excess Cash Flow (to be
defined in the Term Facilities Credit Documentation) of the Borrower and its
subsidiaries, beginning with the first full fiscal year of the Borrower
commencing after the Closing Date, with step downs to 25% and 0% based on the
Senior Secured Net Leverage Ratios at levels to be agreed, of the Borrower (with
a dollar-for-dollar credit for optional prepayments of the Term Loan Facilities
subsequent to the first day of the relevant year), in each case of clauses (i) -
(iii), subject to the limitations set forth in the paragraph immediately
following, such amounts shall be applied against amortization payments as
directed by the Borrower and absent any such direction, in forward order to the
prepayment of the next eight (8) installments of the Term Loan Facilities, and
then on a pro rata basis and to scheduled amortization of the Term Loan
Facilities on a pro rata basis.

 

Any Term Loan Lender may elect not to accept its pro rata portion of any
mandatory prepayment other than a prepayment made with the proceeds of a
Refinancing Debt (each a “Declining Lender”). Any prepayment amount declined by
a Declining Lender shall first be offered to prepay Term Loans of Term Loan
Lenders who were not Declining Lenders and, if declined by such Term Loan
Lenders, may be retained by the Borrower (such amount, a “Declined Amount”).

Optional Prepayments: The Term Loan Facilities may be prepaid at any time in
whole or in part without premium or penalty, upon written notice, at the option
of the Borrower, except (x) that any prepayment of LIBOR advances other than at
the end of the applicable interest periods therefor shall be made with
reimbursement for any funding losses and redeployment costs (but not loss of
margin) of the Term Loan Lenders resulting therefrom and (y) as set forth in
“Soft-Call Premium” below. Each optional prepayment of the Term Loan Facilities
shall be applied as directed by the Borrower. Soft-Call Premium: In the event
that all or any portion of the Term Loan Facilities is (i) repaid, prepaid,
refinanced or replaced with term loan indebtedness with a lower effective yield
(to be defined) than the effective yield of such Term Loan Facility or
(ii) repriced through any waiver, consent or amendment that has the effect of
reducing the effective yield of the Term Loan Facilities (a “Repricing
Transaction”), in each case, on or prior to the

 

Annex II-8

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six-month anniversary of the Closing Date and other than in connection with a
change of control or other transformative transaction, such repayment,
prepayment, refinancing, replacement or repricing will be accompanied by a
premium of 1% of the principal amount so repaid, prepaid, refinanced, replaced
or repriced. If all or any portion of the Term Loan Facilities held by any Term
Loan Lender is required to be assigned pursuant to a “yank-a-bank” provision in
the Term Facilities Credit Documentation as a result of, or in connection with a
Repricing Transaction, such Term Loan Lender not agreeing or otherwise
consenting to any waiver, consent or amendment referred to in clause (ii) above
(or otherwise in connection with a Repricing Transaction), such replacement will
be accompanied by a premium equal to 1% of the principal amount so required to
be assigned. Security:

Subject to the Funds Certain Provisions, the Borrower and each of the Guarantors
shall grant the Term Administrative Agent (for its benefit and for the benefit
of the Term Loan Lenders) (a) a first-priority (subject to permitted liens and
other customary exceptions) security interest in the Term Loan Priority
Collateral (as defined in Annex I hereto) and (b) a second-priority (subject to
permitted liens, including in respect of the ABL Facility, and other customary
exceptions) security interest in the ABL Priority Collateral (as defined in
Annex I hereto), in each case, excluding the Excluded Assets (as defined in
Annex I hereto) (collectively, the “Collateral”). Notwithstanding anything to
the contrary, except to the extent delivered pursuant to the ABL Facility, no
control agreements, landlord lien waivers, estoppels or collateral access
letters will be required.

 

All the above-described pledges, security interests and mortgages shall be
created on terms to be set forth in the Term Facilities Credit Documentation and
otherwise consistent with the Term Loan Documentation Standard; and none of the
Collateral shall be subject to other pledges, security interests or mortgages
(except in favor of the ABL Facility and other permitted liens and exceptions
and baskets to be set forth in the Term Facilities Credit Documentation).

 

Assets will be excluded from the Collateral in circumstances to be agreed and in
circumstances where the Term Administrative Agent reasonably determines in
consultation with the Borrower that the cost of obtaining a security interest in
such assets is excessive in relation to the value afforded thereby, and in any
event such exclusions shall include vehicles, trust, payroll and

 

Annex II-9

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escrow accounts, certain leasehold interests (except as noted above), assets
subject to capital leases and purchase money arrangements, cash which secures
permitted letters of credit, assets held in jurisdictions outside the U.S.
(solely to the extent action would be required in such other jurisdictions to
obtain such security interests) and assets sold in accordance with the Term
Facilities Credit Documentation. Conditions Precedent to Initial Borrowing:
Limited to those conditions specified in Section 5 of the Commitment Letter.
Representations and Warranties: Subject to the Term Loan Documentation Standard,
with customary exceptions, thresholds and baskets to be reasonably and mutually
agreed, representations and warranties applicable to the Borrower and its
restricted subsidiaries (with materiality qualifiers to be mutually agreed),
limited to the following: (i) legal existence, qualification and power; (ii) due
authorization and no contravention of law, contracts or organizational
documents; (iii) governmental and third party approvals and consents;
(iv) enforceability; (v) accuracy and completeness of specified financial
statements and other information and no event or circumstance, either
individually or in the aggregate, that has had or would reasonably be expected
to have a Material Adverse Effect (to be defined in the Term Facilities Credit
Documentation); (vi) no material litigation; (vii) no default; (viii) ownership
of property; (ix) insurance matters; (x) environmental matters; (xi) tax
matters; (xii) ERISA; (xiii) identification of loan parties and subsidiaries of
loan parties, and equity interests owned by loan parties; (xiv) use of proceeds
and not engaging in business of purchasing/carrying margin stock in violation of
margin regulations; (xv) status under Investment Company Act; (xvi) material
compliance with laws; (xvii) intellectual property; (xviii) consolidated
solvency as of the Closing Date; (xix) collateral documents; (xx) labor matters;
and (xxi) foreign assets control regulations, FCPA, OFAC, Patriot Act,
anti-money laundering laws and related matters. Covenants: Subject to the Term
Loan Documentation Standard, with customary exceptions, thresholds and baskets
to be reasonably and mutually agreed, covenants shall be limited to the
following: (a) Affirmative Covenants: (i) delivery of financial statements;
(ii) delivery of certificates, annual budgets and other information;
(iii) delivery of customary notices; (iv) payment of obligations;
(v) preservation of

 

Annex II-10

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existence; (vi) maintenance of properties; (vii) maintenance of insurance;
(viii) material compliance with laws; (ix) compliance with pension plan
requirements; (x) maintenance of books and records; (xi) inspection rights;
(xii) covenant to guarantee obligations and give security; (xiii) further
assurances; (xiv) commercially reasonable efforts to maintain facility and
corporate ratings from Moody’s and S&P (but not any specific ratings); and
(xv) annual Lender conference calls. (b) Financial Covenants: None. (c) Negative
Covenants: Restrictions on (i) liens; (ii) investments (including loans and
advances); (iii) indebtedness (including guarantees and other contingent
obligations); (iv) mergers and other fundamental changes; (v) sales and other
dispositions of property or assets; (vi) restricted payments; (vii) changes in
the nature of business; (viii) changes in fiscal year and changes in accounting
policies unless required by GAAP or to align the Borrower and the Acquired
Business; (ix) transactions with affiliates; (x) use of proceeds;
(xi) prepayments of other indebtedness; (xii) granting negative pledges that
limit or restrict the Term Administrative Agent from taking or perfecting its
lien in the intended Collateral, subject to exceptions to be agreed;
(xiii) amendments of organizational documents in a manner materially adverse to
the Term Loan Lenders; (xiv) modification or termination of documents related to
certain material indebtedness; (xv) limitation on restrictions on subsidiary
distributions; and (xvi) OFAC, FCPA and anti-money laundering laws. The
foregoing limitations shall be subject to customary thresholds, exceptions and
baskets to be mutually and reasonably agreed as are consistent with the Term
Loan Documentation Standard, including: (1) a customary basket for unsecured
indebtedness subject to pro forma compliance with an interest coverage ratio of
at least 2.00:1.00 (with a cap to be agreed for incurrence by non-Loan Parties);
(2) an available basket amount (the “Available Amount Basket”) that will be in
the amount of (a) $50.0 million, plus (b) 100% of retained Excess Cash Flow,
plus

 

Annex II-11

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(c) net cash proceeds of new equity raised by the Borrower (which in each case
shall be common equity interests or other qualified equity interests), plus
(d) net cash proceeds of debt and disqualified equity of the Borrower, in each
case issued after the Closing Date that have been converted to “qualified
equity” of the Borrower, plus (e) the net cash proceeds of sales of investments
made under the Available Amount Basket not otherwise included but only up to the
original amount invested and only to the extent such proceeds are not required
to be applied as a mandatory prepayment pursuant to the Term Facilities Credit
Documentation, plus (f) returns, profits, distributions and similar amounts
received in cash or cash equivalents on investments made under the Available
Amount Basket, plus (g) the investments of the Borrower and its restricted
subsidiaries in any unrestricted subsidiary that has been re-designated as a
restricted subsidiary or that has been merged or consolidated into the Borrower
or any of its restricted subsidiaries or the fair market value of the assets of
any unrestricted subsidiary that have been transferred to the Borrower or any of
its restricted subsidiaries (in each case, not to exceed the amount of
investment made in such unrestricted subsidiary utilizing the Available Amount
Basket), plus (h) any Declined Amounts, which may be used, if there is no
continuing event of default and, in the case of usage for restricted payments
and prepayment of certain subordinated, junior lien or unsecured debt, subject
to compliance with a net leverage-based restriction to be agreed, for among
other things, acquisitions and certain other investments, restricted payments
and the prepayment or redemption of debt; (3) the ability to consummate
acquisitions of entities that become restricted subsidiaries subject to (w) no
event of default, (x) pro forma compliance with a Total Net Leverage Ratio (to
be defined in the Term Facilities Credit Documentation) that is either (i) less
than or equal to Total Net Leverage Ratio on the Closing Date or (ii) less than
or equal to Total Net Leverage Ratio immediately prior to giving effect to such
acquisition, (y) the acquired entity engaging in a permitted business and (z) a
sublimit to be agreed for acquisitions of entities that do not become Guarantors
(“Permitted Acquisitions”);

 

Annex II-12

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(4) the ability to designate or re-designate subsidiaries (other than Target) as
“unrestricted subsidiaries” (which subsidiaries shall not be subject to the
negative covenants and events of default in the Term Facilities Credit
Documentation) subject to customary restrictions including no event of default,
pro forma compliance with a leverage-based test to be agreed and usage of
investment capacity and to subsequently redesignate unrestricted subsidiaries as
restricted subsidiaries subject to customary conditions; and (5) certain baskets
will include “grower” components based upon a percentage of the consolidated net
tangible assets of the Borrower and its restricted subsidiaries. Events of
Default:

Subject to the Term Loan Documentation Standard, with customary thresholds,
exceptions and grace periods to be reasonably and mutually agreed, events of
default shall be limited to the following: (i) nonpayment of principal, and
nonpayment of interest, fees or other amounts which continues for five
(5) business days after the date when due; (ii) any representation or warranty
proving to have been inaccurate in any material respect (or, in the case of any
representation or warranty qualified by materiality, in all respects) when made
or confirmed; (iii) failure to perform or observe covenants set forth in the
Term Facilities Credit Documentation within a specified period of time, where
customary and appropriate, after notice of such failure from the Term
Administrative Agent; (iv) cross-defaults to other indebtedness in an amount to
be agreed; (v) bankruptcy and insolvency defaults (with grace period for
involuntary proceedings); (vi) monetary judgment defaults in an amount to be
agreed; (vii) actual or asserted impairment of material Term Facilities Credit
Documentation or security; (viii) change of control (to be defined in a
customary and mutually agreeable reasonable manner, and without any dead-hand
board component); and (ix) ERISA.

 

The occurrence of a default or event of default under the ABL Facility (other
than a payment event of default) shall not constitute a default or event of
default under the cross-default provisions of the Term Facility until the
earliest of (x) 30 days after the date of such event of default (during which
period such event of default is not waived or cured), (y) the

 

Annex II-13

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acceleration of the obligations under the ABL Facility or (z) the exercise of
secured creditor remedies by the ABL Administrative Agent as a result of such
event of default. Assignments and Participations:

Each Term Loan Lender will be permitted to make assignments in minimum amounts
to be agreed to other entities approved by (x) the Term Administrative Agent and
(y) so long as no payment or bankruptcy default has occurred and is continuing,
the Borrower, each such approval not to be unreasonably withheld or delayed;
provided, however, that (i) no approval of the Borrower shall be required in
connection with assignments in connection with assignments to other Term Loan
Lenders or any of their affiliates or approved funds, (ii) the Borrower shall be
deemed to have given consent to an assignment if they shall have failed to
respond to a written notice thereof within 10 business days and (iii) no
approval of the Term Administrative Agent shall be required in connection with
assignments to other Term Loan Lenders or any of their affiliates or approved
funds. Each Term Loan Lender will also have the right, without consent of the
Borrower or the Term Administrative Agent, to assign as security all or part of
its rights under the Term Facilities Credit Documentation to any Federal Reserve
Bank. Term Loan Lenders will be permitted to sell participations with voting
rights limited to customary significant matters. An assignment fee in the amount
of $3,500 will be charged with respect to each assignment unless waived by the
Term Administrative Agent in its sole discretion.

 

In addition, Term Loans may be purchased by and assigned to the Borrower or any
of its subsidiaries on a non-pro rata basis through (a) open market purchases
subject to a cap of 25% of the original principal amount of the Term Loans or
(b) Dutch auctions open to all applicable Lenders on a pro rata basis in
accordance with customary procedures, so long as (1) no default or event of
default is has occurred and is continuing, (2) any such loans are permanently
cancelled immediately upon acquisition thereof, (3) no proceeds of loans under
the ABL Facility are used to fund such purchases and (4) neither the Borrower
nor any of its subsidiaries shall be required to make any representations with
respect to material non-public information in connection therewith.

Waivers and Amendments: Amendments and waivers of the provisions of the Term
Facilities Credit Documentation will require the approval of Term Loan Lenders
holding more than 50% of the aggregate Term Loan Facilities (the “Required
Lenders”), except that

 

Annex II-14

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(a) the consent of each Term Loan Lender directly and adversely affected thereby
will also be required with respect to (i) increases in commitment amount of such
Term Loan Lender, (ii) reductions of principal, interest, or fees payable to
such Term Loan Lender, (iii) extensions of scheduled maturities or times for
payment of amounts payable to such Term Loan Lender and (iv) changes in certain
pro rata provisions and (b) the consent of each Term Loan Lender shall be
required with respect to (i) releases of all or substantially all of the
Collateral or the release of all or substantially all of the value of any
guaranties and (ii) the definition of Required Lenders or other voting
provisions.

 

The Term Facilities Credit Documentation shall contain a customary “yank-a-bank”
provision.

 

Notwithstanding anything to the contrary set forth herein, the Term Facilities
Credit Documentation shall provide that the Borrower may at any time and from
time to time request that all or a portion of any loans under the Term Loan
Facilities be converted to extend the scheduled maturity date of any payment of
principal with respect to all or a portion of any principal amount of such loans
(any such loans which have been so converted, “Extended Loans”) and upon such
request of the Borrower any individual Term Loan Lender shall have the right to
agree to extend the maturity date of its outstanding loans without the consent
of any other Term Loan Lender; provided that all such requests shall be made pro
rata to all Term Loan Lenders within the applicable Term Loan Facilities. The
terms of Extended Loans shall be identical to the loans of the existing class
from such Extended Loans are converted except for interest rates, fees,
amortization (so long as the weighted average life to maturity of the Extended
Loans exceeds the then remaining weighted average life to maturity of the Term
Loan Facilities), final maturity date or final termination date, provisions
permitting optional and mandatory prepayments to be directed first to the
non-extended loans prior to being applied to Extended Loans and certain other
customary provisions to be agreed.

Indemnification: Consistent with the Term Loan Documentation Standard. Governing
Law: New York. Expenses: The Borrower will pay all reasonable and documented
out-of-pocket costs and expenses associated with the preparation, due diligence,
administration, syndication and

 

Annex II-15

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closing of all Term Facilities Credit Documentation, including, without
limitation, the reasonable and documented out-of-pocket legal fees of counsel to
the Term Administrative Agent and the Term Lead Arrangers (including, without
limitation, the reasonable and documented fees and out-of-pocket expenses of
Latham & Watkins LLP and of any local counsel to the Term Loan Lenders retained
by the Term Lead Arrangers or the Term Administrative Agent, limited to one
counsel in each relevant jurisdiction), regardless of whether or not the Closing
Date occurs. The Borrower will also pay the reasonable and documented
out-of-pocket expenses of the Term Administrative Agent and one other Counsel to
the counsel (in total) to all of the Term Loan Lenders (in the absence of
conflict) in connection with the enforcement of any of the Term Facilities
Credit Documentation. Counsel to the Commitment Parties: Latham & Watkins LLP.
Miscellaneous: Each of the parties shall (i) waive its right to a trial by jury
and (ii) submit to New York jurisdiction. The Term Facilities Credit
Documentation shall contain customary “defaulting lender” provisions.

 

Annex II-16

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ANNEX III

CONDITIONS PRECEDENT TO CLOSING

Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the Commitment Letter to which this Annex III is attached.

The initial extensions of credit under the Facilities will, subject to the Funds
Certain Provisions, be subject to satisfaction of the following conditions
precedent:

(i) The Merger shall have been, or shall substantially concurrently be,
consummated in accordance with the terms of that certain Agreement and Plan of
Merger, dated as of May 17, 2015, by and among Merger Sub, the Borrower and the
Target (together with all schedules, exhibits, annexes and other attachments
thereto, the “Acquisition Agreement”), without giving effect to any amendment,
change or supplement or waiver of any provision thereof (including any change in
the purchase price) in any manner that is materially adverse to the interests of
the Lenders or the Lead Arrangers without the prior written consent (not to be
unreasonably withheld) of the Lead Arrangers (it being understood that any
reduction of the purchase price in respect of the Merger will be materially
adverse to the Lenders and the Lead Arrangers, unless (x) such reduction is in
the aggregate less than 10% of the purchase price payable on the date of the
Commitment Letter pursuant to the Acquisition Agreement and (y) there is a
concurrent reduction in the aggregate principal amount of the commitments in
respect of the Term Loan Facilities in an amount equal to such reduction).

(ii) All representations and warranties under the Credit Documentation shall be
made on the Closing Date; provided, however, the only representations and
warranties the accuracy of which in all material respects shall be a condition
to the initial availability of the Facilities shall be (A) the Acquisition
Agreement Representations (as defined below) and (B) the Specified
Representations (as defined below). “Acquisition Agreement Representations”
shall mean such of the representations made by the Target in the Acquisition
Agreement as are material to the interests of the Lenders, but only to the
extent that the breach of any such representations results in you or any of your
affiliates having the right to terminate your or its obligations under the
Acquisition Agreement (after giving effect to any applicable notice and cure
period) or results in the failure of a condition precedent to your or your
affiliates’ obligation to consummate the Acquisition pursuant to the Acquisition
Agreement. “Specified Representations” shall mean the representations and
warranties in the Credit Documentation relating to: (i) (A) corporate status of
the Borrower and the Guarantors and (B) corporate power and authority to enter
into the Credit Documentation by the Borrower and the material Guarantors,
(ii) due authorization, execution, delivery and enforceability of the Credit
Documentation by the Borrower and the material Guarantors, (iii) no conflicts of
the Credit Documentation with charter documents of the Borrower and the material
Guarantors, (iv) compliance with Federal Reserve margin regulations, OFAC, FCPA,
anti-money laundering laws, the U.S.A. Patriot Act and Investment Company Act,
(v) solvency of the Borrower and the Guarantors on a consolidated basis and on a
pro forma basis for the Transaction (such representations to be substantially
identical to those

 

Annex III-1

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set forth in the Solvency Certificate attached as Annex V to the Commitment
Letter (the “Solvency Certificate”)), and (vi) the creation, validity and
perfection of the security interests granted in the Collateral by the Borrower
and the Guarantors on the Closing Date substantially concurrently with the
initial funding of the Facilities (it being understood that to the extent any
security interest in the Collateral (other than any Collateral of the Borrower
and the Guarantors the security interest in which may be perfected by the filing
of a UCC financing statement or the delivery of certificates evidencing equity
interests of any material wholly-owned domestic subsidiary of the Borrower) is
not perfected on the Closing Date after your use of commercially reasonable
efforts to do so without undue burden or expense, the perfection of such
security interest shall not constitute a condition precedent to the availability
of the Facilities on the Closing Date but shall be required to be perfected not
later than 90 days (subject to extensions as may be agreed to by the applicable
Administrative Agent in its sole discretion) after the Closing Date pursuant to
arrangements to be mutually agreed).

(iii) Since January 31, 2015, there has not occurred any Company Material
Adverse Effect. For purposes hereof, “Company Material Adverse Effect” means any
change, condition, event, effect, occurrence, circumstance or development (each,
an “Effect”), individually or in the aggregate, that (a) has, or would
reasonably be expected to have, a material adverse effect on the business,
assets, liabilities, financial condition or results of operations of the Company
and the Company Subsidiaries, taken as a whole or (b) prevents the performance
in any material respect by the Company of its obligations to consummate the
Merger; provided, that for purposes of clause (a), none of the following shall
constitute or be deemed to contribute to a Company Material Adverse Effect, or
shall otherwise be taken into account in determining whether a Company Material
Adverse Effect has occurred or would reasonably be expected to occur: any
adverse Effect arising out of, resulting from or attributable to: (i) changes or
proposed changes in applicable Laws, GAAP or the interpretation or enforcement
thereof; (ii) changes in general economic, business, labor or regulatory
conditions, or general changes in securities, credit or other financial markets,
including interest rates or exchange rates, in the United States regionally,
locally or globally, or changes generally affecting the industries (including
seasonal fluctuations to the extent consistent with the Company’s historical
results of operations) in which the Company or the Company Subsidiaries operate
in the United States or globally; (iii) changes in general global, national,
regional or local political conditions (including the outbreak or escalation of
war (whether or not declared), military action, sabotage or acts of terrorism),
changes due to natural disasters or changes in the weather, hurricanes or
changes due to the outbreak or worsening of an epidemic, pandemic or other
health crisis; (iv) actions or omissions required of the Company (a) under the
express terms of the Acquisition Agreement or (b) taken or not taken at the
request of, or with the consent of, an officer of Parent or any of its
affiliates to the extent, in the case of this clause (b), consented to by the
Lead Arrangers; (v) any breach, violation or non-performance of any provision of
the Acquisition Agreement by Parent or any of its affiliates; (vi) the
negotiation, announcement, pendency or consummation of the Acquisition Agreement
and the transactions contemplated thereby, including the identity of Parent or
any of its affiliates or any communication by Parent or any of its affiliates
regarding plans, proposals or projections with respect to the Company, the
Company Subsidiaries or their employees (including any impact on the

 

Annex III-2

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relationship of the Company or any of the Company Subsidiaries, contractual or
otherwise, with its customers, suppliers, distributors, vendors, lenders,
employees or partners); (vii) any item or matter disclosed in the Company SEC
Documents filed prior to the date hereof; (viii) any Proceeding arising from
allegations of breach of fiduciary duty or violation of Law relating to the
Acquisition Agreement or the transactions contemplated thereby; (ix) the outcome
of any Proceeding or investigation involving the Company or any Company
Subsidiary that has been disclosed in the Company Disclosure Letter; (x) changes
in the trading price or trading volume of Company Shares, in and of itself, or
any suspension of trading; (xi) any item set forth in Section 8.4 of the Company
Disclosure Letter; (xii) the expiration or termination by its terms of any
Contract to which the Company or any of the Company Subsidiaries is a party; or
(xiii) any failure by the Company or any of the Company Subsidiaries to meet any
revenue, earnings or other financial projections or forecasts, in and of itself;
provided, that, (A) in the case of clauses (x) and (xiii), the underlying cause
of such failure may be taken into account in determining whether a Company
Material Adverse Effect has occurred (except to the extent subject to any other
foregoing exception), and (B) in the case of clauses (i), (ii) and (iii), the
impact of such Effect is not or is not reasonably expected to be
disproportionately adverse to the Company and the Company Subsidiaries, taken as
a whole, relative to other participants in their industry (in which case only
the incrementally disproportionate effect may be taken into account in
determining whether a Company Material Adverse Effect has occurred). All
capitalized terms used in this paragraph and not otherwise defined in the
Commitment Letter shall have the meanings assigned thereto in the Acquisition
Agreement as in effect on the date hereof.

(iv) The Administrative Agent under each Facility shall have received the
Solvency Certificate from the Borrower’s chief financial officer in
substantially the form attached hereto on Annex IV.

(v) The Administrative Agent under each Facility shall have received
(A) customary opinions of counsel to the Borrower and the Guarantors,
(B) customary corporate resolutions, customary closing date officer’s
certificates certifying as to the satisfaction of the conditions precedent to
the Facilities, customary secretary’s certificates appending such resolutions,
charter documents and an incumbency certificate and information necessary for
the Administrative Agents to perform customary UCC lien searches and (C) a
customary borrowing notice under each applicable Facility.

(vi) The Administrative Agent under each Facility shall have received: (A) the
audited consolidated balance sheets and related consolidated statements of
operations, cash flows and shareholders’ equity of each of the Borrower and the
Target for the three most recently completed fiscal years of the Borrower and
the Target, respectively, ended at least 90 days before the Closing Date,
accompanied by an unqualified report thereon by their respective independent
registered public accountants; (B) the unaudited consolidated balance sheets and
related statements of operations and cash flows of each of the Borrower and the
Target for each subsequent fiscal quarter of the Borrower and the Target,
respectively, ended at least 45 days before the Closing Date (the “Quarterly
Financial Statements”); and (C) a pro forma balance sheet and related statement
of operations of the Borrower and its subsidiaries (including the Acquired
Business) as of

 

Annex III-3

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and for the twelve-month period ending with the latest quarterly period of the
Borrower covered by the Quarterly Financial Statements, in each case after
giving effect to the Transaction, all of which financial statements shall be
prepared in accordance with generally accepted accounting principles in the
United States. The Lead Arrangers confirm receipt of the financial statements
referred to in clause (A) above with respect to the fiscal years of the Borrower
and the Target ended prior to the date of the Commitment Letter.

(vii) The Lead Arrangers under each Facility shall have received from the
Borrower all information customarily provided by a borrower for inclusion in an
Information Memorandum (the “Required Information”) not later than
15 consecutive calendar days prior to the Closing Date (the “Marketing Period”);
provided that (w) such consecutive calendar day period shall exclude the days
from July 3, 2015 through and including July 5, 2015, (x) if the Marketing
Period has not been completed on or prior to August 21, 2015, then the Marketing
Period shall not commence prior to September 8, 2015, (y) such consecutive
calendar day period shall exclude the days from November 26, 2015 through and
including November 29, 2015 and (z) if the Marketing Period has not been
completed on or prior to December 18, 2015, then the Marketing Period shall not
commence prior to January 4, 2016; provided that if Borrower in good faith
reasonably believes that it has delivered the Required Information, Borrower may
(but shall not be obligated to) deliver to the Administrative Agent written
notice to that effect (stating when it believes it completed such delivery), in
which case the required information shall be deemed to have been delivered on
the date of such notice, unless Administrative Agent in good faith reasonably
believes that Borrower has not completed such delivery and, within three
(3) business days after its receipt of such notice from Borrower, Administrative
Agent delivers a written notice to Borrower to that effect (stating with
specificity the portion or portions of the required information that
Administrative Agent believes have not yet been delivered or are not complete or
sufficient), in which case the required information shall be deemed to be
delivered immediately upon the delivery by Borrower of provisions reasonably
addressing the points contained in the notice.

(viii) All fees due to the Administrative Agents, the Lead Arrangers and the
Lenders under the Fee Letter and the Commitment Letter to be paid on or prior to
the Closing Date, and all expenses to be paid or reimbursed under the Commitment
Letter to the Administrative Agents and the Lead Arrangers on or prior to the
Closing Date that have been invoiced at least three business days prior to the
Closing Date, shall have been paid, in each case, from the proceeds of the
initial funding under the applicable Facilities.

(ix) The Refinancing shall have been, or shall concurrently with the initial
funding of the Facilities be, consummated or arrangements for such Refinancing
(reasonably satisfactory to the Administrative Agents) shall have been
established substantially concurrently with the initial funding of the
Facilities; provided that (a) capital leases, intercompany indebtedness, letters
of credit, indebtedness of the Acquired Business permitted by the Acquisition
Agreement, (b) other ordinary course debt of the Borrower and its subsidiaries
not to exceed $10.0 million, (c) if the Existing ABL Facilities are to remain
outstanding pursuant to the proviso below, outstandings under the

 

Annex III-4

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Existing ABL Facilities and (d) other indebtedness reasonably agreed to by the
Lead Arrangers (collectively, the “Retained Debt”), will be allowed to remain
outstanding after the Closing Date; provided, further, that the Existing ABL
Facilities may, if the Borrower so elects, remain outstanding and constitute
Retained Debt so long as (i) the commitments of GS Bank hereunder with respect
to the ABL Facility shall have been terminated in full, (ii) the Borrower and
the Target shall have obtained an amendment and/or waiver, in form and substance
reasonably satisfactory to the Lead Arrangers, permitting (A) the incurrence of
the Term Loan Facilities and, if applicable, the issuance of the Senior Notes
and (B) the lien priorities on the “Collateral” described in this Commitment
Letter (including a first-priority lien on the Term Loan Priority Collateral
securing the Term Loan Facilities) and (iii) the Borrower, the Target, each of
their respective subsidiaries (to the extent applicable), the Term
Administrative Agent and the agents under each of the Existing ABL Facilities
shall have entered into intercreditor arrangements substantially equivalent to
the intercreditor arrangements described in this Commitment Letter and otherwise
reasonably acceptable to the Term Administrative Agent.

(x) The Borrower and each of the Guarantors shall have provided the
documentation and other information to the Administrative Agents that are
required by regulatory authorities under applicable “know-your-customer” rules
and regulations, including the Patriot Act, at least 3 business days prior to
the Closing Date to the extent such information has been requested at least
10 business days prior to the Closing Date.

(xi) With respect to the ABL Facility (unless replaced by the Existing ABL
Facility), the ABL Administrative Agent shall have received a completed
Borrowing Base certificate as of the last day of the most recent month ending at
least 15 days prior to the Closing Date (it being understood that this condition
may be satisfied by providing a Borrowing Base certificate that includes one or
more, or is entirely comprised of, Affected Entities).

 

Annex III-5

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ANNEX IV

SOLVENCY CERTIFICATE1

[            ], 201[  ]

This SOLVENCY CERTIFICATE (this “Certificate”) is delivered in connection with
that certain Credit Agreement dated as of [            ], 201[  ] (as amended,
supplemented, amended and restated, replaced, or otherwise modified from time to
time, the “Credit Agreement”) among Ascena Retail Group, Inc., a Delaware
corporation (the “Borrower”), [                    ], as administrative agent
and collateral agent, the financial institutions from time to time party thereto
as lenders and the other parties thereto. Capitalized terms used herein without
definition have the same meanings as in the Credit Agreement.

In my capacity as a Responsible Officer of Company (as defined below), and not
in my individual or personal capacity, I certify that:

1. the fair value of the assets of the Borrower and its subsidiaries, taken as a
whole, is now, and will be following the incurrence of the obligations under the
Credit Agreement and the consummation of the Acquisition on the Closing Date, on
a pro forma basis, greater than the amount that will be required to pay the
total liability on existing debts, as such debts become absolute and matured;

2. the present fair salable value of the property of the Borrower and its
subsidiaries, taken as a whole, is now, and will be following the incurrence of
the obligations under the Credit Agreement and the consummation of the
Acquisition on the Closing Date, on a pro forma basis, greater than the amount
that will be required to pay the probable liability on existing debts as they
become absolute and matured;

3. as of the date hereof, after giving effect to the incurrence of the
obligations under the Credit Agreement and the consummation of the other
Transactions on the Closing Date, the Borrower and its subsidiaries, taken as a
whole, are able to pay its debts, as such debts become absolute and matured; and

4. the incurrence of the obligations under the Credit Agreement and the
consummation of the other Transactions on the Closing Date, on a pro forma
basis, will not leave the Borrower and its subsidiaries, taken as a whole, with
property remaining in its hands constituting “unreasonably small capital,” (it
being understand and agreed that “unreasonably small capital” depends upon the
nature of the particular business or businesses conducted or to be conducted,
and that this conclusion is based on current assumptions regarding the needs and
anticipated needs for capital of the businesses conducted or anticipated to be
conducted by Company in light of projected financial statements and available
credit capacity, which current assumption is not unreasonable in light of the
circumstances applicable thereto).

 

1  Defined terms to be aligned with those in the applicable definitive Credit
Agreement, but consistent with this form of solvency certificate.

 

Annex IV-1

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The undersigned has caused this Certificate to be duly executed as of the date
first written above.

 

ASCENA RETAIL GROUP, INC. By:

 

Name: Title:

 

Annex IV-2

[Signature Page to Solvency Certificate]