Exhibit 10.1

EXECUTION COPY

 

 

 

SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION

CREDIT AGREEMENT

by and among

ORCHARD SUPPLY HARDWARE LLC,

as Borrower, as a Debtor and as Debtor-in-Possession,

ORCHARD SUPPLY HARDWARE STORES CORPORATION

OSH PROPERTIES LLC,

as Loan Guarantors and as Debtors-in-Possession

and

THE LENDERS AND ISSUING BANKS FROM TIME TO TIME PARTY HERETO

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as ABL Administrative Agent and Collateral Agent

BANK OF AMERICA, N.A.,

as Syndication Agent

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Supplemental Term Agent

and

WELLS FARGO CAPITAL FINANCE, LLC

MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED,

as Joint Lead Arrangers and Joint Bookrunners

Dated: June 19, 2013

 

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I Definitions

     1   

SECTION 1.01

  Defined Terms      1   

SECTION 1.02

  Classification of Loans and Borrowings      36   

SECTION 1.03

  Terms Generally      37   

SECTION 1.04

  Accounting Terms; GAAP      37   

SECTION 1.05

  Letter of Credit Amounts      37   

SECTION 1.06

  Times of Day      38    ARTICLE II The Credits      38   

SECTION 2.01

  Commitments      38   

SECTION 2.02

  Loans and Borrowings      39   

SECTION 2.03

  Requests for Revolving Borrowings      39   

SECTION 2.04

  Protective Advances      39   

SECTION 2.05

  Swingline Loans      40   

SECTION 2.06

  Letters of Credit      42   

SECTION 2.07

  Funding of Borrowings      51   

SECTION 2.08

  [Reserved.]      52   

SECTION 2.09

  Termination and Reduction of Revolving Commitments      52   

SECTION 2.10

  Repayment of Loans; Evidence of Debt      53   

SECTION 2.11

  Prepayment of Loans      54   

SECTION 2.12

  Fees      55   

SECTION 2.13

  Interest      56   

SECTION 2.14

  [Reserved.]      57   

SECTION 2.15

  Increased Costs      57   

SECTION 2.16

  [Reserved.]      58   

SECTION 2.17

  Taxes      58   

SECTION 2.18

  Payments Generally; Allocation of Proceeds; Sharing of Set-offs      60   

SECTION 2.19

  Mitigation Obligations; Replacement of Lenders      64   

SECTION 2.20

  Returned Payments      64   

SECTION 2.21

  Effective Date Adjustments with respect to Existing Letters of Credit      65
   ARTICLE III Representations and Warranties      66   

SECTION 3.01

  Organization; Powers      66   

SECTION 3.02

  Authorization; Enforceability      66   

SECTION 3.03

  Governmental Approvals; No Conflicts      66   

SECTION 3.04

  Budget; No Material Adverse Change      67   

SECTION 3.05

  Properties      67   

SECTION 3.06

  Litigation and Environmental Matters      67   

SECTION 3.07

  Compliance with Laws and Agreements      68   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 3.08

  Investment and Holding Company Status      68   

SECTION 3.09

  Taxes      68   

SECTION 3.10

  ERISA      68   

SECTION 3.11

  Disclosure      68   

SECTION 3.12

  Reserved      69   

SECTION 3.13

  Insurance      69   

SECTION 3.14

  Capitalization and Subsidiaries      69   

SECTION 3.15

  Security Interest in Collateral      70   

SECTION 3.16

  Labor Disputes      70   

SECTION 3.17

  Margin Regulations      70   

SECTION 3.18

  Use of Proceeds      71   

SECTION 3.19

  Collateral Locations      71   

SECTION 3.20

  Corporate Names; Prior Transactions      71   

SECTION 3.21

  Credit Card Agreements      71   

SECTION 3.22

  Master Operating Lease      71   

SECTION 3.23

  Survival of Warranties; Cumulative      71    ARTICLE IV Conditions      72   

SECTION 4.01

  Effective Date      72   

SECTION 4.02

  Each Credit Event      74    ARTICLE V Affirmative Covenants      75   

SECTION 5.01

  Financial Statements; Borrowing Base and Other Information      75   

SECTION 5.02

  Notices of Material Events      77   

SECTION 5.03

  Existence; Conduct of Business      79   

SECTION 5.04

  Payment of Obligations      79   

SECTION 5.05

  Maintenance of Properties      79   

SECTION 5.06

  Books and Records; Inspection Rights      80   

SECTION 5.07

  Compliance with Laws      80   

SECTION 5.08

  Compliance with Environmental Laws      80   

SECTION 5.09

  Compliance with Material Contracts      80   

SECTION 5.10

  Use of Proceeds      81   

SECTION 5.11

  Insurance      81   

SECTION 5.12

  Appraisals and Field Examinations      81   

SECTION 5.13

  Additional Collateral; Further Assurances      81   

SECTION 5.14

  Cash Management      82   

SECTION 5.15

  Real Property      82   

SECTION 5.16

  Post-Effective Date Covenant      83   

SECTION 5.17

  Retention of Consultants; Communication with Accountants and Other Financial
Advisors      83   

SECTION 5.18

  Performance within Budget      85   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 5.19

  Permitted Sales Process; Agency Agreement      85   

SECTION 5.20

  Additional Bankruptcy Related Affirmative Covenants      86   

SECTION 5.21

  Borrowings under DIP Term Loan Agreement      86    ARTICLE VI Negative
Covenants      86   

SECTION 6.01

  Indebtedness      87   

SECTION 6.02

  Liens      88   

SECTION 6.03

  Fundamental Changes      89   

SECTION 6.04

  Investments, Loans, Advances, Guarantees and Acquisitions      90   

SECTION 6.05

  Asset Sales      91   

SECTION 6.06

  Sale and Leaseback Transactions      92   

SECTION 6.07

  Swap Agreements      92   

SECTION 6.08

  Restricted Payments; Certain Payments of Indebtedness      93   

SECTION 6.09

  Change in Nature of Business; No Additional Subsidiaries      93   

SECTION 6.10

  Transactions with Affiliates      94   

SECTION 6.11

  Restrictive Agreements      94   

SECTION 6.12

  Use of Proceeds      94   

SECTION 6.13

  Amendment of Material Documents      95   

SECTION 6.14

  Accounting; Fiscal Year      95   

SECTION 6.15

  Margin Regulations      96   

SECTION 6.16

  Reserved      96   

SECTION 6.17

  Bankruptcy Related Negative Covenants      96    ARTICLE VII Events of Default
     97    ARTICLE VIII The ABL Administrative Agent; The Supplemental Term
Agent      104   

SECTION 8.01

  Appointment of ABL Administrative Agent, Collateral Agent and Supplemental
Term Agent      104   

SECTION 8.02

  Limited Duties      105   

SECTION 8.03

  Reliance      105   

SECTION 8.04

  Delegation of Rights and Duties      106   

SECTION 8.05

  Resignation of ABL Administrative Agent or Supplemental Term Agent      106   

SECTION 8.06

  Lender Credit Decision      107   

SECTION 8.07

  Reports      107   

SECTION 8.08

  Syndication Agent and Arrangers      108   

SECTION 8.09

  Defaulting Lenders      108   

SECTION 8.10

  Indemnification of Agents      109    ARTICLE IX Miscellaneous      109   

SECTION 9.01

  Notices      109   

SECTION 9.02

  Waivers; Amendments      111   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 9.03

  Expenses; Indemnity; Damage Waiver      115   

SECTION 9.04

  Successors and Assigns      118   

SECTION 9.05

  Survival      122   

SECTION 9.06

  Counterparts; Integration; Effectiveness      122   

SECTION 9.07

  Severability      123   

SECTION 9.08

  Right of Setoff      123   

SECTION 9.09

  Governing Law; Jurisdiction; Consent to Service of Process      123   

SECTION 9.10

  WAIVER OF JURY TRIAL      124   

SECTION 9.11

  Headings      124   

SECTION 9.12

  Confidentiality      124   

SECTION 9.13

  Several Obligations; Nonreliance; Violation of Law      126   

SECTION 9.14

  USA PATRIOT ACT      126   

SECTION 9.15

  Disclosure      126   

SECTION 9.16

  Appointment for Perfection      126   

SECTION 9.17

  Interest Rate Limitation      126   

SECTION 9.18

  DIP Orders      127   

SECTION 9.19

  Intercreditor Agreement      127   

SECTION 9.20

  Store Closing Sales      127    ARTICLE X Loan Guaranty      127   

SECTION 10.01

  Guaranty      127   

SECTION 10.02

  Guaranty of Payment      128   

SECTION 10.03

  No Discharge or Diminishment of Loan Guaranty      128   

SECTION 10.04

  Defenses Waived      129   

SECTION 10.05

  Rights of Subrogation      129   

SECTION 10.06

  Reinstatement; Stay of Acceleration      130   

SECTION 10.07

  Information      130   

SECTION 10.08

  Termination      130   

SECTION 10.09

  Taxes      130   

SECTION 10.10

  Maximum Liability      131   

SECTION 10.11

  Contribution      131   

SECTION 10.12

  Liability Cumulative      132   

SECTION 10.13

  Common Enterprise      132   

 

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TABLE OF CONTENTS

(continued)

Page

SCHEDULES:

Commitment Schedule

Schedule 1.01 – Budget

Schedule 2.06 – Existing Letters of Credit

Schedule 3.05 – Properties / Intellectual Property

Schedule 3.06 – Disclosed Matters

Schedule 3.13 – Insurance

Schedule 3.14 – Capitalization and Subsidiaries

Schedule 3.20 – Corporate Names

Schedule 3.21 – Existing Credit Card Agreements

Schedule 6.01 – Existing Indebtedness

Schedule 6.02 – Existing Liens

Schedule 6.11 – Existing Restrictions

EXHIBITS:

Exhibit A – Form of Assignment and Assumption

Exhibit B – Form of Borrowing Base Certificate

Exhibit C – Form of Compliance Certificate

Exhibit D – Form of Interim Borrowing Order

Exhibit E-1 – Form of Revolving Note

Exhibit E-2 – Form of FILO Note

Exhibit E-3 – Form of Swingline Note

Exhibit E-4 – Form of Supplemental Term Note

 

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This SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION CREDIT AGREEMENT (as it
may be amended, restated, supplemented or otherwise modified from time to time,
this “Agreement”), is entered into as of June 19, 2013 among ORCHARD SUPPLY
HARDWARE LLC, a Delaware limited liability company, as Debtor and
Debtor-in-Possession (“Borrower”), ORCHARD SUPPLY HARDWARE STORES CORPORATION, a
Delaware corporation, as Debtor and Debtor-in-Possession (“Holdings”), OSH
PROPERTIES LLC, a Delaware limited liability company, as Debtor and
Debtor-in-Possession (“OSH Properties”), those certain Subsidiaries of the
Borrower who subsequently become parties hereto, each as Debtor and
Debtor-in-Possession (together with Holdings and OSH Properties, collectively,
the “Loan Guarantors”), the Lenders party hereto, WELLS FARGO BANK, NATIONAL
ASSOCIATION, as ABL Administrative Agent, WELLS FARGO BANK, NATIONAL
ASSOCIATION, as collateral agent for the Lenders (in such capacity, the
“Collateral Agent”), BANK OF AMERICA, N.A., as Syndication Agent, WELLS FARGO
BANK, NATIONAL ASSOCIATION, as supplemental term agent for the Supplemental Term
Lenders (in such capacity, the “Supplemental Term Agent”).

W I T N E S S E T H:

WHEREAS, on June 17, 2013, the Borrower and the Loan Guarantors commenced
Chapter 11 Case No. 13-11565 (the “Chapter 11 Case”) by filing a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code, with the United
States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
The Borrower continues to operate its business and manage its properties as a
debtor and debtor-in-possession pursuant to Sections 1107(a) and 1108 of the
Bankruptcy Code;

WHEREAS, the Borrower has requested that the Agents, the Supplemental Term Agent
and the Lenders provide a senior secured, super-priority revolving credit and
term loan facility to the Borrower on the terms and conditions set forth herein;
and

WHEREAS, Holdings owns 100% of the issued and outstanding Equity Interests in
each of the Borrower and OSH Properties, and OSH Properties is a wholly-owned,
direct Subsidiary of the Borrower, and accordingly each of Holdings and OSH
Properties shall receive direct and indirect benefits from the providing of such
senior secured, super-priority revolving credit and term loan facility to the
Borrower.

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the Lenders, the Agents, the Supplemental Term
Agent, the Borrower and the Loan Guarantors hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

 

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“ABL Administrative Agent” means Wells Fargo Bank, National Association, in its
capacity as administrative agent for the Lenders hereunder, or any successor.

“ABL Facility” means the Loans and Letters of Credit under this Agreement.

“ABL Facility Primary Collateral” has the meaning assigned to such term in the
Intercreditor Agreement.

“ABL Loan Security Agreement” means the Second Amended and Restated Pledge and
Security Agreement dated as of January 29, 2010, among certain of the Loan
Parties and the Collateral Agent, and any other pledge or security agreement
entered into by any other Loan Party (as required by this Agreement or any other
Loan Document), or any other Person, granting a Lien on any property to secure
the obligations and liabilities of any Loan Party under any Loan Document, as
the same may be amended, restated or otherwise modified (including pursuant to
any Borrowing Order) from time to time.

“ABL Priority Collateral” means all now owned or hereafter acquired Collateral
other than Supplemental Term Priority Collateral.

“ABL Revolving Loan” means a Loan made pursuant to Section 2.02(a).

“Account” has the meaning assigned to such term in the ABL Loan Security
Agreement.

“Account Debtor” means any Person obligated on an Account.

“Adjusted LIBO Rate” means, for any interest rate calculation with respect to
the Supplemental Term Loan, an interest rate per annum (rounded upwards, if
necessary, to the next 1/100 of one percent) equal to (i) the greater of (x) the
LIBO Rate for a period commencing on the date of such calculation and ending on
the date that is thirty (30) days thereafter, or (y) the LIBO Rate for a period
commencing on the date of such calculation and ending on the date that is ninety
(90) days thereafter, multiplied by (ii) the Statutory Reserve Rate. The
Adjusted LIBO Rate will be adjusted automatically as of the effective date of
any change in the Statutory Reserve Rate.

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

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

“Agency Agreement” means an agreement entered into by the Borrower and the
Stalking Horse Bidder in connection with a Permitted Sale.

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

“Aggregate FILO Commitments” means the FILO Commitments of all the FILO Lenders.

 

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“Aggregate Revolving Commitments” means the Revolving Commitments of all the
Revolving Lenders.

“Aggregate Supplemental Term Commitments” means the Supplemental Term
Commitments of all the Supplemental Term Lenders.

“Appliances Agreement” means the Consignment Agreement, dated as of October 26,
2011, between the Borrower and Sears Authorized Hometown Stores, LLC.

“Applicable Percentage” means, in each case as the context requires, (i) with
respect to any Revolving Lender, with respect to ABL Revolving Loans, LC
Exposure, Swingline Loans or Protective Advances, a percentage equal to a
fraction the numerator of which is such Revolving Lender’s Revolving Commitment
and the denominator of which is the Aggregate Revolving Commitments; provided,
however, that if the Revolving Commitments have terminated or expired, the
Applicable Percentages shall be determined based upon such Lender’s share of the
aggregate Revolving Exposure at that time, (ii) with respect to any FILO Lender,
a percentage equal to a fraction the numerator of which is the portion of the
FILO Term Loan owing to such FILO Lender and the denominator of which is the
aggregate principal balance of the FILO Term Loan, and (iii) with respect to any
Supplemental Term Lender, a percentage equal to a fraction the numerator of
which is the portion of the Supplemental Term Loan owing to such Supplemental
Term Lender and the denominator of which is the aggregate principal balance of
the Supplemental Term Loan. The initial Applicable Percentage of each Lender is
set forth opposite the name of such Lender on the Commitment Schedule or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.

“Approved Fund” has the meaning assigned to such term in Section 9.04.

“Arranger” means, collectively, Wells Fargo Capital Finance, LLC and Merrill
Lynch, Pierce, Fenner & Smith Incorporated in their capacities as joint lead
arrangers.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the ABL Administrative Agent or, with respect
to Supplemental Term Loans, the Supplemental Term Agent, in the form of
Exhibit A or any other form approved by the ABL Administrative Agent and the
Supplemental Term Agent.

“Availability Block” means (i) until the entry by the Bankruptcy Court of the
Final Borrowing Order, $14,000,000, and (ii) thereafter, $8,000,000.

“Availability Period” means the period from and including the Effective Date to
but excluding the Revolving Credit Termination Date.

“Availability Reserve” means (a) the Supplemental Term Reserve and any Reserve
implemented pursuant to Section 2.01(b)(iii), (b) Bank Product Reserves, (c) the
Professional Fee Carve Out Reserve, and (d) such other reserves which the ABL
Administrative Agent deems necessary or advisable, in its Permitted Discretion,
to maintain (including, without limitation, reserves (i) to preserve the value
of the Collateral or the ABL Administrative Agent’s or Collateral Agent’s Lien
thereon, (ii) to provide for the payment of unanticipated liabilities of any

 

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Loan Party arising after the Effective Date, (iii) for accrued and unpaid
interest on the Secured Obligations, (iv) for consignee’s, warehousemen’s and
bailee’s charges, (v) for contingent liabilities of any Loan Party, (vi) for
uninsured losses of any Loan Party, (vii) for uninsured, underinsured,
un-indemnified or under-indemnified liabilities or potential liabilities with
respect to any litigation, (viii) for taxes, fees, assessments, and other
governmental charges, (ix) to reflect the amount of any priority or
administrative expense claims that, in the ABL Administrative Agent’s reasonable
determination, require payment during the Chapter 11 Case, and (x) reserves to
reflect the value of Inventory at leased locations with respect to which the
lease therefor has not been assumed commencing as of the date that is twelve
weeks prior to the deadline by which such lease must be assumed or rejected).

“Available Revolving Commitment” means, at any time, the Aggregate Revolving
Commitments then in effect minus the aggregate Revolving Exposure of all
Revolving Lenders at such time.

“Bank Products” shall mean one or more of the following types or services or
facilities provided to the Borrower by any Lender or any Affiliate of any
Lender: (a) credit cards, purchase cards or stored value cards; (b) cash
management or related services, including, without limitation, (i) automated
clearinghouse transfer of funds for the account of the Borrower pursuant to
agreement or overdraft for any accounts of the Borrower maintained with any
Lender that are subject to the control of such Lender, whether pursuant to any
deposit account control agreement to which such Lender is a party or by such
Lender or any of its Affiliates being the financial institution at which the
accounts are maintained, and (ii) controlled disbursement services; (c) foreign
exchange facilities; (d) if and to the extent permitted hereunder, Swap
Agreements; (e) Factored Receivables; (f) leasing; and (g) supply chain finance
services, including, without limitation, trade payable services and supplier
accounts receivable purchases.

“Bank Product Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Bank
Products.

“Bank Product Reserves” means such reserves as the ABL Administrative Agent from
time to time determines in its discretion as being appropriate to reflect any
Bank Product Obligations of the Loan Parties with respect to any Bank Products
(including, without limitation, Swap Agreements) then provided or outstanding;
provided that no such reserves shall be established with respect to any Bank
Products unless the ABL Administrative Agent shall have received written notice
duly executed by each of the Borrower and the Person providing such Bank
Products indicating that the Bank Product Obligations relating to such Bank
Products shall be the subject of a Bank Product Reserve; provided further that
once any such Bank Product Reserve has been established with respect to any Bank
Products, the ABL Administrative Agent shall not reduce or eliminate such Bank
Product Reserve without the prior written consent of the Person providing such
Bank Products.

“Bankruptcy Code” means Title 11, U.S.C., as now or hereafter in effect, or any
successor thereto.

 

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“Bankruptcy Court” has the meaning provided in the recitals to this Agreement.

“Base Rate” means, for any day, a rate per annum equal to the greater of (a) the
Prime Rate in effect for such day and (b) the Federal Funds Effective Rate in
effect on such day plus  1/2 of 1%. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective from
and including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

“Base Rate Borrowing” means a Borrowing comprised of Loans that bear interest at
a rate determined by reference to the Base Rate in accordance with the terms of
Section 2.13.

“Base Rate Loan” means a Loan that bears interest at a rate determined by
reference to the Base Rate in accordance with the terms of Section 2.13.

“Bidding Procedures Order” has the meaning assigned to such term in
Section 5.19(b).

“Bidding Procedures Motion” has the meaning assigned to such term in
Section 5.19(a).

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

“Borrower” has the meaning assigned to such term in the preamble.

“Borrowing” means (a) ABL Revolving Loans made on the same date, (b) a Swingline
Loan, (c) a Protective Advance, (d) the borrowing of the FILO Term Loan made by
each of the FILO Lenders on the Effective Date pursuant to Section 2.01(b),
and/or (e) the borrowing of the Supplemental Term Loan made by each of the
Supplemental Term Lenders on the Effective Date pursuant to Section 2.01(c), in
each case as the context may require.

“Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete by a Financial Officer of the Borrower, in substantially
the form of Exhibit B or another form which is reasonably acceptable to the ABL
Administrative Agent and the Supplemental Term Agent in their Permitted
Discretion.

“Borrowing Base Proceeds Deposit Account” has the meaning assigned to such term
in Section 5.14.

“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03.

“Budget” means the financial projections for the Loan Parties covering the
nine-week period commencing on the Petition Date on a weekly basis, which
projections shall include, at a minimum, an income statement, a balance sheet,
projected availability (including Combined Availability and Revolving
Availability), projected expenses, cash receipts, operating disbursements,
payroll disbursements, non-operating disbursements and inventory for the period
covered thereby, substantially in the forms of the initial Budget annexed hereto
as Schedule 1.01, and any subsequent projections furnished pursuant to Sections
5.01(h) and 5.01(j) hereof, in each case, in substance reasonably satisfactory
to the ABL Administrative Agent, the Supplemental

 

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Term Agent and the Lenders (it being understood and agreed that the items
described above shall be deemed in substance reasonably satisfactory to each
Lender unless the ABL Administrative Agent shall have received a reasonably
detailed objection thereto in writing within two (2) Business Days following the
ABL Administrative Agent’s delivery of such items to such Lender).

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in the state in which the ABL Administrative Agent’s
offices are located or in San Jose, California are authorized or required by law
to remain closed.

“Capital Expenditures” means, for any period, without duplication, any
expenditure or other acquisition of any asset, including capitalized leasehold
improvements, which would be classified as a fixed or capital asset on a
consolidated balance sheet of the Borrower and its Restricted Subsidiaries
prepared in accordance with GAAP; provided that the term “Capital Expenditures”
shall not include (i) expenditures made in connection with the replacement,
substitution, restoration or repair of assets to the extent financed or
reimbursed with (x) insurance proceeds paid on account of the loss of or damage
to the assets being replaced, restored or repaired, (y) awards of compensation
arising from the taking by eminent domain or condemnation of the assets being
replaced or (z) tenant improvement allowances or landlord contributions,
(ii) the purchase price of equipment that is purchased simultaneously with the
trade-in of existing equipment to the extent that the gross amount of such
purchase price is reduced by the credit granted by the seller for such equipment
being traded in at such time, or (iii) the purchase of plant, property or
equipment to the extent financed or reimbursed with the proceeds of tenant
improvement allowances or landlord contributions.

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

“Case Professionals” means Persons or firms retained by the Loan Parties or the
Creditors’ Committee or other statutory committee appointed in the Cases
pursuant to §§327 and 1103 of the Bankruptcy Code.

“Cash Collateralize” means (i) with respect to LC Exposure, to pledge and
deposit with or deliver to the ABL Administrative Agent, for the benefit of each
applicable Issuing Bank and the Revolving Lenders, as collateral for the LC
Exposure, cash or deposit account balances in an amount equal to 105% of the
outstanding amount of all LC Exposure, pursuant to documentation in form and
substance satisfactory to the ABL Administrative Agent and such Issuing Bank
(which documents are hereby consented to by the Revolving Lenders), and
(ii) with respect to other Unliquidated Obligations (including, without
limitation, indemnification obligations and expenses arising under
Section 9.03), to pledge and deposit with or deliver to the ABL Administrative
Agent, for the benefit of each other Lender Party, as collateral for such
Unliquidated Obligations, cash or deposit account balances in an amount
reasonably requested by the ABL Administrative Agent in its Permitted
Discretion, pursuant to documentation in form

 

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and substance satisfactory to the ABL Administrative Agent (which documents are
hereby consented to by the Lender Parties). “Cash Collateralization”, “Cash
Collateral” and other derivatives of “Cash Collateralize” shall have a meaning
correlative to the foregoing.

“Cash Management Order” means an order entered by the Bankruptcy Court, in form
and substance reasonably satisfactory to the ABL Administrative Agent and the
Supplemental Term Agent, authorizing the Loan Parties to, among other things,
continue their cash management systems, as such order may be amended, modified
or supplemented from time to time with the express written consent of the ABL
Administrative Agent and the Supplemental Term Agent and with the approval of
the Bankruptcy Court.

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or such Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement;
provided, however, that “Change in Law” shall include, regardless of the date
enacted, adopted or issued, all requests, guidelines, requirements or directives
(i) under or relating to the Dodd-Frank Wall Street Reform and Consumer
Protection Act, or (ii) promulgated pursuant to Basel III by the Bank of
International Securities, the Basel Committee on Banking Supervision (or any
similar authority) or any other Governmental Authority.

“Chapter 11 Case” has the meaning provided in the recitals to this Agreement.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are ABL Revolving Loans, Swingline
Loans, Protective Advances, the FILO Term Loan or the Supplemental Term Loan.

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

“Collateral” means any and all “Collateral” or “DIP Collateral” referred to in
the Collateral Documents (including, without limitation, a DIP Order).

“Collateral Access Agreement” has the meaning assigned to such term in the ABL
Loan Security Agreement.

“Collateral Agent” has the meaning assigned to such term in the preamble.

“Collateral Documents” means, collectively (a), the ABL Loan Security Agreement,
the Leasehold Mortgages and any other documents granting, perfecting or
evidencing a Lien upon the Collateral in favor of the Collateral Agent, on
behalf of itself, the ABL Administrative Agent, the Supplemental Term Agent and
the Lenders, as security for payment of the Secured Obligations, and (b) the DIP
Orders.

“Collection Account” has the meaning assigned to such term in Section 5.14.

 

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“Combined Availability” means, at any time, an amount equal to (a) the sum of
Maximum Revolving Availability plus the amount described in
Section 2.01(b)(iii)(A), in each case at such time, minus (b) the outstanding
Credit Extensions (other than the Supplemental Term Loan).

“Commitment” means, with respect to each Lender, its Revolving Commitment, its
FILO Commitment and its Supplemental Term Commitment, as applicable.

“Commitment Schedule” means the Schedule attached hereto identified as such.

“Consummation Date” means the date of substantial consummation (as defined in
Section 1101 of the Bankruptcy Code and which for purposes of this Agreement
shall be no later than the effective date) of a Plan of Reorganization confirmed
by a Final Order.

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

“Credit Card Account Receivable” means each “Account”, together with all income,
payments and proceeds thereof, owed by any Credit Card Issuer or Credit Card
Processor to a Loan Party resulting from charges by a customer of the Borrower
or any of its Restricted Subsidiaries on credit cards issued by such Credit Card
Issuer or processed by such Credit Card Processor in connection with the sale of
goods by the Borrower or any of its Restricted Subsidiaries, or services
performed by the Borrower or any of its Restricted Subsidiaries, in each case in
the ordinary course of its business.

“Credit Card Agreements” means all agreements now or hereafter entered into by
any Loan Party with any Credit Card Issuer or any Credit Card Processor, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, including, but not limited to, as to the
Borrower, the agreements set forth on Schedule 3.21 hereto.

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

“Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any sales transactions of any Loan Party involving credit card or
debit card purchases by customers using credit cards or debit cards issued by
any Credit Card Issuer.

“Credit Extensions” means as of any day, the sum of (a) the principal balance of
all Loans then outstanding, and (b) the then outstanding amount of LC Exposure.

 

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“Creditors’ Committee” means any official committee of creditors formed,
appointed or approved in the Chapter 11 Case pursuant to the Bankruptcy Code.

“Customs Broker Agreement” means an agreement in form and substance satisfactory
to the ABL Administrative Agent, the Supplemental Term Agent and the Collateral
Agent among a Loan Party, a customs broker, freight forwarder or other carrier,
and the Collateral Agent, pursuant to which the customs broker, freight
forwarder or other carrier acknowledges that it has control over and holds the
documents evidencing ownership of the Inventory of such Loan Party for the
benefit of the Collateral Agent and agrees, upon notice from the Collateral
Agent, to hold and dispose of the subject Inventory solely as directed by the
Collateral Agent.

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Loans, participations in LC Exposure or participations in Swingline Loans
required to be funded by it hereunder within one (1) Business Day of the date
required to be funded by it hereunder, (b) has otherwise failed to pay over to
the ABL Administrative Agent, the Supplemental Term Agent or any other Lender
any other amount required to be paid by it hereunder within one (1) Business Day
of the date when due, or (c) has been deemed insolvent or become the subject of
a bankruptcy or insolvency proceeding.

“Deteriorating Lender” means any Defaulting Lender or any Lender as to which
(a) any Issuing Bank or the Swingline Lender has a good faith belief that such
Lender has defaulted in fulfilling its obligations under one or more other
syndicated credit facilities, or (b) a Person that Controls such Lender has been
deemed insolvent or become the subject of a bankruptcy, insolvency or similar
proceeding.

“Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to the ABL Administrative Agent and the Supplemental
Term Agent, among any Loan Party, a banking institution holding such Loan
Party’s funds, and the Collateral Agent, with respect to collection and control
of all deposits and balances held in a deposit account maintained by any Loan
Party with such banking institution.

“DIP Orders” means and refers to the Interim Borrowing Order and the Final
Borrowing Order.

“DIP Term Administrative Agent” means Gleacher Products Corp., in its capacity
as administrative agent for the DIP Term Lenders under the DIP Term Loan
Agreement, or its successors.

“DIP Term Collateral Agent” means Gleacher Products Corp., in its capacity as
collateral agent for the DIP Term Lenders under the DIP Term Loan Agreement, or
its successors.

“DIP Term Facility” means the term loans under the DIP Term Loan Agreement.

“DIP Term Lenders” means the lenders under the DIP Term Loan Agreement.

 

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“DIP Term Loan Agreement” means the Second Lien Senior Secured Super-Priority
Debtor-In-Possession Credit Agreement dated as of the Petition Date among the
Borrower, the Loan Guarantors, the DIP Term Lenders and the DIP Term
Administrative Agent, as the same may hereafter be amended, restated or
otherwise modified from time to time in accordance with the terms of the DIP
Orders.

“DIP Term Loan Documents” means the “Loan Documents” (as such term is defined in
the DIP Term Loan Agreement).

“DIP Term Loans” has the meaning given such term in the DIP Term Loan Agreement.

“Disclosure Statement” means a disclosure statement filed in the Chapter 11 Case
in connection with a Plan of Reorganization.

“Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

“Document” has the meaning assigned to such term in the ABL Loan Security
Agreement.

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

“Effect of Bankruptcy” means, with respect to any contractual obligation,
contract or agreement to which a Loan Party is a party, any default or other
legal consequences arising on account of the commencement or the filing of the
Chapter 11 Case (including the implementation of any stay), or the rejection of
any such contractual obligation, contract or agreement with the approval of the
Bankruptcy Court if required under applicable law.

“Effective Date” means June 19, 2013.

“Eligible Credit Card Account Receivable” means, at the time of any
determination thereof, each Credit Card Account Receivable that satisfies the
following criteria at the time of creation and continues to meet the same at the
time of such determination: such Credit Card Account Receivable (i) has been
earned and represents the bona fide amounts due to a Loan Party from a Credit
Card Processor and/or Credit Card Issuer, and in each case originated in the
ordinary course of business of the applicable Loan Party and (ii) is not
ineligible for inclusion in the calculation of the Revolving Borrowing Base or
the Supplemental Term Borrowing Base pursuant to any of the clauses (a) through
(i) below. Without limiting the foregoing, to qualify as an Eligible Credit Card
Account Receivable, a Credit Card Account Receivable shall indicate no person
other than a Loan Party as payee or remittance party. Without limiting the ABL
Administrative Agent’s Permitted Discretion provided herein, Eligible Credit
Card Accounts Receivables shall not include any Credit Card Account Receivable
if:

(a) such Credit Card Account Receivable is not owned by a Loan Party and such
Loan Party does not have good or marketable title to such Credit Card Account
Receivable;

 

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(b) such Credit Card Account Receivable does not constitute an “Account” (as
defined in the UCC) or such Credit Card Account Receivable has been outstanding
more than seven (7) Business Days;

(c) the Credit Card Issuer or Credit Card Processor of the applicable credit
card with respect to such Credit Card Account Receivable is the subject of any
bankruptcy or insolvency proceedings;

(d) such Credit Card Account Receivable is not a valid, legally enforceable
obligation of the applicable Credit Card Issuer with respect thereto;

(e) such Credit Card Account Receivable is not subject to a properly perfected
security interest in favor of the ABL Administrative Agent, or is subject to any
Lien whatsoever other than Permitted Encumbrances contemplated by the processor
agreements and for which appropriate reserves (as reasonably determined by the
ABL Administrative Agent) have been established or maintained by the Loan
Parties;

(f) such Credit Card Account Receivable does not conform in all material
respects to all representations, warranties or other provisions in the Loan
Documents or in the Credit Card Agreements relating to Credit Card Account
Receivables;

(g) such Credit Card Account Receivable is subject to risk of set-off,
non-collection or not being processed due to unpaid and/or accrued credit card
processor fee balances, limited to the lesser of the balance of Credit Card
Account Receivables or unpaid credit card processor fees;

(h) such Credit Card Account Receivable is evidenced by “chattel paper” or an
“instrument” of any kind unless such “chattel paper” or “instrument” is in the
possession of the ABL Administrative Agent, and to the extent necessary or
appropriate, endorsed to the ABL Administrative Agent; or

(i) such Credit Card Account Receivable does not meet such other usual and
customary eligibility criteria for Credit Card Account Receivables as the ABL
Administrative Agent may determine from time to time in its Permitted
Discretion.

In determining the amount to be so included in the calculation of value of an
Eligible Credit Card Receivable, the face amount of a Credit Card Account
Receivable shall be reduced by, without duplication, to the extent not reflected
in such face amount, (i) the amount of all customary fees and expenses in
connection with any credit card arrangements and (ii) the aggregate amount of
all cash received in respect of such Credit Card Account Receivable but not yet
applied by the Borrower to reduce the amount of such Credit Card Account
Receivable. Standards of eligibility may be made more restrictive from time to
time solely by the ABL Administrative Agent in the exercise of its Permitted
Discretion, with any such changes to be effective upon notice thereof to the
Borrower and the Lenders.

“Eligible Inventory” means all Inventory of a Loan Party that is not ineligible
for inclusion in the calculation of the Revolving Borrowing Base or the
Supplemental Term Borrowing Base pursuant to any of clauses (a) through
(l) below. Without limiting the ABL

 

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Administrative Agent’s Permitted Discretion provided herein, Eligible Inventory
shall not include any Inventory:

(a) which is not subject to a first priority perfected Lien in favor of the ABL
Administrative Agent;

(b) which is subject to any Lien other than (i) a Lien in favor of the ABL
Administrative Agent or the Collateral Agent and (ii) a Permitted Encumbrance;

(c) which is, in the ABL Administrative Agent’s reasonable opinion,
unmerchantable, defective, used, unfit for sale, not salable at prices
approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category and/or quantity;

(d) with respect to which any covenant, representation, or warranty contained in
this Agreement or the ABL Loan Security Agreement has been breached or is not
true in all material respects and which does not conform in all material
respects to all standards imposed by any Governmental Authority;

(e) in which any Person other than any Loan Party shall (i) have any direct or
indirect ownership, interest or title to such Inventory or (ii) be indicated on
any purchase order or invoice with respect to such Inventory as having or
purporting to have an interest therein;

(f) which is operating supplies, packaging or shipping materials, cartons,
labels or other such materials not considered used for sale in the ordinary
course of business by the ABL Administrative Agent in its Permitted Discretion;

(g) which is not located in the U.S. or is in transit with a common carrier from
vendors and suppliers and has not yet been received into a distribution center
or store; provided that in-transit inventory purchased under Letters of Credit
hereunder shall be deemed Eligible Inventory, subject to a twenty-five percent
(25%) reserve, if (i) a Loan Party has sole title, (ii) a Loan Party has
possession or control over title documents relating to such Inventory and a Loan
Party is named as the consignee of such title documents, (iii) the Collateral
Agent has received a Customs Broker Agreement from each customs broker and
freight forwarder acting on behalf of any Loan Party, (iv) the Inventory is
fully insured, (v) the Inventory is not commingled with Inventory of any other
third party (which, for the avoidance of doubt, shall include Sears), and
(vi) the Inventory would not be deemed ineligible pursuant to any other
provision of this definition;

(h) which is located in any third party warehouse or is in the possession of a
bailee (other than a third party processor) and is not evidenced by a Document,
unless (i) such warehouseman or bailee has delivered to the ABL Administrative
Agent a Collateral Access Agreement and such other documentation as the ABL
Administrative Agent may require or (ii) an appropriate Reserve has been
established by the ABL Administrative Agent in its Permitted Discretion;

(i) which is the subject of a consignment by a Loan Party as consignor;

 

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(j) which is perishable;

(k) which contains or bears any intellectual property rights licensed to a Loan
Party unless the ABL Administrative Agent is reasonably satisfied that it may
sell or otherwise dispose of such Inventory without (i) infringing the rights of
such licensor, (ii) violating any contract with such licensor, or
(iii) incurring any liability with respect to payment of royalties other than
royalties incurred pursuant to sale of such Inventory under the then current
licensing agreement;

(l) which is not reflected in a current perpetual inventory report of a Loan
Party; or

(m) which is located in a store that is the subject of an order entered by the
Bankruptcy Court authorizing such Store to be closed.

Standards of eligibility may be made more restrictive from time to time solely
by the ABL Administrative Agent in the exercise of its Permitted Discretion,
with any such changes to be effective upon notice thereof to the Borrower and
the Lenders.

“Enforcement Action” means the exercise by the Collateral Agent in good faith of
any of its material enforcement rights and remedies as a secured creditor
hereunder or under the other Loan Documents, any applicable Requirement of Law
or otherwise at any time upon the occurrence and during the continuance of an
Event of Default (including, without limitation, the solicitation of bids from
third parties to conduct the liquidation of any Collateral, the engagement or
retention of sales brokers, marketing agents, investment bankers, accountants,
appraisers, auctioneers or other third parties for the purposes of valuing,
marketing, promoting or selling any Collateral, the commencement of any action
to foreclose on the security interests or Liens of the ABL Administrative Agent
or the Collateral Agent in all or any material portion of the Collateral,
notification of Account Debtors to make payments to the Collateral Agent,
notification to depository banks with respect to taking of exclusive control
under Deposit Account Control Agreements, any action to take possession of all
or any material portion of the Collateral or commencement of any legal
proceedings or actions against or with respect to all or any portion of the
Collateral).

“Environmental Laws” means all applicable laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the protection of the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to the extent relating to the presence or exposure
to Hazardous Materials, to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract,

 

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agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.

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

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

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

“Event of Default” has the meaning assigned to such term in Article VII.

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

“Excluded Taxes” means, with respect to the ABL Administrative Agent, the
Supplemental Term Agent, any Lender, any Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.19(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such

 

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Foreign Lender becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Foreign Lender’s failure to comply with
Section 2.17(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.17(a).

“Existing Letters of Credit” means each of the Letters of Credit described on
Schedule 2.06 issued and outstanding under the Pre-Petition Credit Agreement
immediately prior to the Effective Date.

“Facilities” means, collectively, the Term Facility and the ABL Facility.

“Factored Receivables” means any Accounts originally owed or owing by the
Borrower or any Guarantor to another Person which have been purchased by or
factored with Wells Fargo Bank, National Association or any of its Affiliates
pursuant to a factoring arrangement or otherwise with the Person that sold the
goods or rendered the services to the Borrower or Guarantor which gave rise to
such Account.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the ABL Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

“FILO Commitment” means, with respect to each FILO Lender, the commitment of
such FILO Lender to make Loans to the Borrower in the amount set forth opposite
its name on the Commitment Schedule.

“FILO Lender” means each Lender having a FILO Commitment or having made a
portion of the FILO Term Loan, in each case as set forth on the Commitment
Schedule or in the Assignment and Assumption by which it becomes a FILO Lender.

“FILO Term Loan” means the Loan made by a FILO Lender pursuant to
Section 2.01(b).

“Final Borrowing Order” means an order of the Bankruptcy Court which order shall
be in form, scope and substance reasonably acceptable to the ABL Administrative
Agent and the Supplemental Term Agent, which, among other matters but not by way
of limitation, authorizes the Loan Parties to obtain credit, incur (or guaranty)
Obligations, grant Liens under this Agreement, the other Loan Documents, and the
DIP Orders, and provides for the super priority of the Agents’ and the Lenders’
claims, which order is a Final Order.

“Final Order” means an order or judgment of the Bankruptcy Court, as entered on
the docket of the Clerk of the Bankruptcy Court, that has not been reversed,
stayed, modified or amended and as to which the time to appeal or seek leave to
appeal, petition for certiorari, reargue or seek rehearing has expired and no
proceeding for certiorari, reargument or rehearing

 

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is pending or if an appeal, petition for certiorari, reargument, or rehearing
has been sought, the order or judgment of the Bankruptcy Court has been affirmed
by the highest court to which the order was appealed, from which the reargument
or rehearing was sought, or certiorari has been denied and the time to take any
further appeal or to seek certiorari or further reargument or rehearing has
expired.

“Financial Officer” means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Loan Party or any of
the other individuals designated in writing to the ABL Administrative Agent by
an existing Financial Officer of a Loan Party as an authorized signatory of any
certificate or other document to be delivered hereunder. Any document delivered
hereunder that is signed by a Financial Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Financial Officer shall be conclusively presumed to have acted on behalf of such
Loan Party.

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

“Fronting Fee” has the meaning assigned to such term in Section 2.06(j).

“Funding Account” means account number 1487602794 maintained by the Borrower
with Bank of America, N.A. and designated as the “Main Concentration Account”.

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time.

“Gift Card Liability Reserve” means, at any fiscal month end, as the case may
be, a reserve equal to the total value of all gift cards outstanding.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty

 

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issued to support such Indebtedness or obligation; provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee of any guarantor shall
be deemed to be the lower of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made and
(b) the maximum amount for which such guarantor may be liable pursuant to the
terms of the instrument embodying such Guarantee, unless such primary obligation
and the maximum amount for which such guarantor may be liable are not stated or
determinable, in which case the amount of such Guarantee shall be such
guarantor’s maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.

“Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.

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

“Holdings” has the meaning assigned to such term in the preamble.

“Honor Notice Date” has the meaning assigned to such term in Section 2.06(c)(i).

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (d) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business and any earn-out
obligation until such obligation becomes a liability on the balance sheet of
such Person in accordance with GAAP but including any liquidated earn-out),
(e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person,
(h) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty, (i) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Taxes” means Taxes (including Other Taxes) other than Excluded
Taxes.

“Independent Consultant” means FTI Consulting, Inc. (or another independent
third party consultant reasonably acceptable to the ABL Administrative Agent and
the Supplemental Term Agent).

 

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“Initial Loans” means the Loans which, subject to the Revolving Borrowing Base,
can be drawn on the Effective Date.

“Intercreditor Agreement” means the Amended and Restated Intercreditor
Agreement, dated as of January 29, 2010, among the Term Administrative Agent,
the Term Collateral Agent, the ABL Administrative Agent, the Collateral Agent,
the Borrower and the Loan Guarantors, as amended, restated, supplemented or
otherwise modified and in effect from time to time.

“Interest Payment Date” means: (a) except as provided in clause (b) below, the
first day of each month and the Revolving Credit Termination Date, and (b) with
respect to any portion of the Supplemental Term Loan, the first day of each
month.

“Interim Borrowing Order” means an order entered by the Bankruptcy Court,
substantially in the form of, and containing the provisions set forth in,
Exhibit D (or such other form and provisions as may be reasonably acceptable to
the Agents and the Supplemental Term Agent), approving, on an interim basis, the
Loan Parties’ entering into and performing their obligations under this
Agreement and the other Loan Documents.

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

“Inventory Reserves” shall mean reserves against Inventory equal to the sum of
the following:

(a) a reserve for shrink, or discrepancies between Inventory quantities on hand
pursuant to the Borrower’s perpetual and physical counts of the Inventory had a
full physical count been performed as of the date of the most recently delivered
Borrowing Base Certificate; and

(b) a reserve reasonably determined by the ABL Administrative Agent in its
Permitted Discretion for Inventory that is discontinued or slow-moving; and

(c) a reserve for Inventory which is designated to be returned to vendor or
which is recognized as damaged or off quality or not to customer specifications
by the Borrower; and

(d) any other reserve as deemed appropriate by the ABL Administrative Agent in
its Permitted Discretion, from time to time.

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

“Issuer Documents” means, with respect to any Letter of Credit, the Letter
Credit Application, and any other document, agreement and instrument entered
into by any Issuing Bank and the Borrower (or any Subsidiary) and relating to
any such Letter of Credit.

“Issuing Bank” means (a) Wells Fargo, in its capacity as the issuer of Letters
of Credit hereunder, (b) Bank of America, N.A. or an Affiliate thereof, and
(c) any other Revolving

 

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Lender designated as an Issuing Bank by the Borrower and the ABL Administrative
Agent (such approval not to be unreasonably withheld) and their successors in
such capacity as provided in Section 2.06(l). Any Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates
of such Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.

“LC Advance” means, with respect to each Revolving Lender, such Revolving
Lender’s funding of its participation in any LC Borrowing in accordance with its
Applicable Percentage.

“LC Borrowing” means an LC Disbursement which has not been reimbursed on the
date when reimbursement is required pursuant to the terms of Section 2.06(c)(i)
and which has not been refinanced as a Revolving Borrowing pursuant to the terms
of Section 2.06(c)(i).

“LC Collateral Account” has the meaning assigned to such term in Section
2.06(g).

“LC Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Borrowings. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 (or such other
comparable rule then in effect) of the International Standby Practices
(published by the Institute of International Banking Law & Practice), such
Letter of Credit shall be deemed to be “outstanding” in the amount so remaining
available to be drawn. The LC Exposure of any Revolving Lender at any time shall
be its Applicable Percentage of the total LC Exposure at such time.

“Leasehold Mortgages” means the leasehold mortgages in favor of the Collateral
Agent made by the Borrower or any other Loan Party, each in form and substance
reasonably satisfactory to the Collateral Agent.

“Leasehold Mortgage Supporting Documents” means, with respect to a Leasehold
Mortgage, each of the following:

(a) (i) evidence in form and substance reasonably satisfactory to the ABL
Collateral Agent that the recording of counterparts of such Leasehold Mortgage
in the recording offices specified in such Leasehold Mortgage will create a
valid and enforceable first priority Lien on the rights described therein in
favor of the Collateral Agent, for its own benefit and the benefit of the ABL
Administrative Agent, the Supplemental Term Agent and the Lenders (or in favor
of such other trustee as may be required or desired under local law), subject
only to (A) Liens permitted by Section 6.02 having priority by operation of
applicable law, and (B) such other Liens as the ABL Administrative Agent may
reasonably approve and (ii) an opinion of counsel in each state in which any
such Leasehold Mortgage is to be recorded in form and substance and from counsel
reasonably satisfactory to the ABL Administrative Agent; and

 

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(b) such other agreements, documents and instruments (including, without
limitation, (i) title searches (together with all documents referred to
therein), (ii) maps, plats, as-built surveys, and environmental reports (in each
case, to the extent existing) and (iii) evidence regarding recording and payment
of all recording fees and stamp, documentation, intangible or mortgage taxes, if
any), each in form and substance reasonably satisfactory to the Collateral
Agent, as the Collateral Agent deems necessary or appropriate to create,
register or otherwise perfect, maintain, evidence the existence, substance, form
or validity of, or enforce a valid and enforceable first priority Lien on such
rights in favor of the Collateral Agent, for its own benefit and the benefit of
the ABL Administrative Agent, the Supplemental Term Agent and the Lenders (or in
favor of such other trustee as may be required or desired under local law),
subject only to (A) Liens permitted by Section 6.02 having priority by operation
of applicable Law, and (B) such other Liens as the ABL Administrative Agent may
reasonably approve.

“Leases” means, with respect to any Person, all of those leasehold estates in
real property of such Person, as lessee, as such may be amended, supplemented or
otherwise modified from time to time.

“Lender Party” has the meaning assigned to such term in Article VII.

“Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption. Unless the context otherwise requires, the term
“Lenders” (i) includes the Swingline Lender, and (ii) when used in connection
with participations in Letters of Credit and Swingline Loans, shall not include
FILO Lenders or Supplemental Term Lenders.

“Letter of Credit” means any Trade Letter of Credit or any Standby Letter of
Credit issued pursuant to this Agreement. Without limiting the foregoing, all
Existing Letters of Credit shall be deemed to have been issued hereunder and
shall for all purposes be deemed to be “Letters of Credit” hereunder.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by any Issuing Bank.

“Letter of Credit Expiration Date” means the day that is five (5) days prior to
the Maturity Date (or, if such day is not a Business Day, the next preceding
Business Day).

“Letter of Credit Fee” has the meaning assigned to such term in Section 2.06(i).

“LIBO Rate” means, for any period, the rate appearing on Page 3750 of the Dow
Jones Market Service (or on any successor or substitute page of such Service, or
any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the ABL Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such period, as the rate for dollar deposits
with a maturity comparable to such period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” for such period
shall be the rate at which dollar deposits of $5,000,000 and for a maturity

 

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comparable to such period are offered by the principal London office of the ABL
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such period.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset and (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset.

“Loan Documents” means this Agreement, the Ratification Agreement, the Notes,
any Letter of Credit Applications, the Collateral Documents, the Loan Guaranty,
the Intercreditor Agreement, and all other agreements, instruments, documents
and certificates executed and delivered to, or in favor of, the ABL
Administrative Agent, the Supplemental Term Agent or any Lenders and including,
without limitation, all agreements, instruments, documents and certificates
identified in Section 4.01 and all other pledges, powers of attorney, consents,
assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Loan Party, or any employee of any Loan Party, and delivered to the ABL
Administrative Agent, the Supplemental Term Agent or any Lender in connection
with the Agreement or the transactions contemplated thereby. Any reference in
this Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to this Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.

“Loan Guarantor” means Holdings, the Real Property Holding Company, each
Restricted Subsidiary of the Borrower party to this Agreement and their
successors and assigns.

“Loan Guaranty” means Article X of this Agreement.

“Loan Parties” means Holdings, the Real Property Holding Company, the Borrower
and the Loan Guarantors and their successors and assigns.

“Loans” means the loans and advances made by the Lenders pursuant to this
Agreement, including ABL Revolving Loans, Swingline Loans, the FILO Term Loan,
the Supplemental Term Loan and Protective Advances.

“Master Operating Lease” means the lease agreement, dated as of November 23,
2005, between Real Property Holding Company, as landlord, and the Borrower, as
tenant, as amended by that certain First Amendment to Lease dated as of
February 13, 2006.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect on, the operations, business, assets, properties, or financial
condition of the Borrower and its subsidiaries, taken as a whole; (b) a material
impairment of the rights and remedies of the ABL Administrative Agent or the
Supplemental Term Agent under any loan documentation, or of the ability of the
Borrower and the Guarantors, taken as a whole, to perform their respective
material obligations under any loan documentation to which they are a party;
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower

 

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and the Guarantors, taken as a whole, of any loan documentation to which it is a
party; or (d) a “Material Adverse Effect” (or words of similar import) under the
DIP Term Loan Agreement. Notwithstanding anything to the contrary, a “Material
Adverse Effect shall not be deemed to exist as a result of the Effect of
Bankruptcy or the events leading up to and resulting therefrom.

“Material Contract” means, with respect to any Person, each contract to which
such Person is a party material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of such Person.

“Material Indebtedness” means (a) Indebtedness arising under the Term Loan
Documents, (b) Indebtedness arising under the DIP Term Loan Documents, and
(c) other Indebtedness (other than the Loans and Letters of Credit), and
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount exceeding
$15,000,000. For purposes of determining Material Indebtedness, the
“obligations” of the Borrower or any Subsidiary in respect of any Swap Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be required to pay if
such Swap Agreement were terminated at such time.

“Maturity Date” means the earliest of (i) one hundred eighty (180) days
following the Petition Date; (ii) ten (10) days after the entry of a Sale Order
by the Bankruptcy Court authorizing a Permitted Sale with respect to all or
substantially all of the Loan Parties’ assets under Section 363 of the
Bankruptcy Code; (iii) fourteen (14) days following the entry of an order by the
Bankruptcy Court confirming a Plan of Reorganization; (iv) the Consummation
Date; and (v) the date of termination of the Aggregate Revolving Commitments
and/or acceleration of any outstanding Obligations in accordance with Article
VII.

“Maximum Combined Availability” means, at any time, (a) the sum of (i) the
lesser of (x) the Aggregate Revolving Commitments in effect at such time and
(y) the Revolving Borrowing Base (calculated without inclusion of the then
outstanding balance of the FILO Term Loan), in each case at such time, plus
(ii) the outstanding principal balance of the FILO Term Loan at such time, minus
(b) the Availability Block, minus (c) the aggregate amount of any Availability
Reserves in effect at such time, minus (d) the aggregate Revolving Exposure of
all Revolving Lenders (as each such term in this clause (d) is defined in the
Pre-Petition Credit Agreement).

“Maximum Revolving Availability” means, at any time, (a) the lesser of (i) the
Aggregate Revolving Commitments in effect at such time and (ii) the Revolving
Borrowing Base (calculated without inclusion of the then outstanding balance of
the FILO Term Loan) at such time, minus (b) the Availability Block, minus
(c) the aggregate amount of any Availability Reserves in effect at such time,
minus (d) the aggregate Revolving Exposure of all Revolving Lenders (as each
such term in this clause (d) is defined in the Pre-Petition Credit Agreement).

“Maximum Liability” has the meaning assigned to such term in Section 10.10.

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

 

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“Mortgage” means each mortgage, deed of trust, deed to secure debt or other real
estate security document delivered by any Loan Party to any Agent to secure the
Secured Obligations, all in form and substance satisfactory to the ABL
Administrative Agent and the Supplemental Term Agent.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

“Net Orderly Liquidation Value” means, at any time, the estimated net income,
payments and proceeds (net of expenses) which could reasonably be realized in
connection with an orderly liquidation of each Loan Party’s Inventory given a
reasonable period of time for soliciting offers for the sale of such Inventory
on an “as is, where is” basis (expressed as a percentage) based on an updated
appraisal provided by an independent third party appraiser retained or approved
by the ABL Administrative Agent and the Supplemental Term Agent in consultation
with the Borrower.

“Net Proceeds” means, with respect to any Prepayment Event, (a) the cash
proceeds received in respect of such event including (i) any cash received in
respect of any non-cash proceeds (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but excluding any interest
payments), but only as and when received, (ii) in the case of a casualty,
insurance proceeds and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable attorneys’ fees, accountants’ fees, investment banking fees and other
reasonable fees and out-of-pocket expenses paid to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback
transaction or a casualty or a condemnation or similar proceeding), the amount
of all payments required to be made as a result of such event to repay
Indebtedness (other than the Loans and the Term Loans) secured by such asset or
otherwise subject to mandatory prepayment as a result of such event and to pay
any interest, premium or other amounts in connection therewith and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) as a result
thereof and the amount of any reserves established to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by a
Financial Officer).

“Non-Consenting Lender” has the meaning assigned to such term in Section
9.02(d).

“Non-Paying Guarantor” has the meaning assigned to such term in Section 10.11.

“Notes” means any notes evidencing the ABL Revolving Loans, FILO Term Loan,
Supplemental Term Loan or Swingline Loans issued pursuant to this Agreement, if
any, substantially in the form of Exhibit E-1, E-2, E-3 or E-4, as the case may
be.

“Obligated Party” has the meaning assigned to such term in Section 10.02.

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements,

 

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indemnities and other obligations of the Loan Parties to each Lender, the ABL
Administrative Agent, the Supplemental Term Agent, each Issuing Bank or any
indemnified party arising under the Loan Documents.

“OSH Properties” has the meaning assigned to such term in the preamble.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of this
Agreement.

“Participant” has the meaning assigned to such term in Section 9.04.

“Patriot Act” has the meaning assigned to such term in Section 9.14.

“Paying Guarantor” has the meaning assigned to such term in Section 10.11.

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

“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of secured asset-based lenders in
similar financings) commercial judgment in accordance with customary business
practices for comparable asset-based loans.

“Permitted Encumbrances” means:

(a) Liens imposed by law for taxes that are not yet due or are being contested
in compliance with Section 5.04;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;

(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations or to secure public or statutory obligations;

(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

(e) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (j) of Article VII;

(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any

 

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monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Restricted Subsidiary;

(g) pledges and deposits in the ordinary course of business securing liability
for reimbursement or indemnification obligations of (including obligations in
respect of letters of credit or bank guarantees for the benefit of) insurance
carriers providing property, casualty or liability insurance to the Borrower or
any of its Restricted Subsidiaries;

(h) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation of goods
in the ordinary course of business;

(i) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by the Borrower or any of
its Restricted Subsidiaries in the ordinary course of business permitted by this
Agreement;

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

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

(l) Liens in favor of Credit Card Issuers arising in the ordinary course of
business securing the obligation to pay customary fees and expenses in
connection with credit card arrangements;

(m) Liens arising under Uniform Commercial Code financing statements or similar
filings made in respect of operating leases entered into by the Borrower or any
of its Subsidiaries; and

(n) Liens securing the Pre-Petition Liabilities;

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness except with respect to the Pre-Petition Liabilities as set
forth in clause (n) above.

“Permitted Holders” means (a) ACOF I LLC and (b) ESL Investments, Inc. and their
respective Related Parties and Affiliates.

“Permitted Sales” means (i) the disposition of any furniture, fixture or
equipment that is no longer used or useful in the business of the Borrower and
its Subsidiaries, (ii) the disposition of Real Property which, as of the
Effective Date, is “ dark” or is no longer utilized by any Loan Party for
offices or as a store or distribution center, which disposition shall be on
terms

 

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reasonably satisfactory to the Agents and the Supplemental Term Agent and the
proceeds of which shall be paid upon the closing of such disposition to the ABL
Administrative Agent for application to the Obligations and the Pre-Petition
Liabilities, (iii) the sale of all or substantially all of the Loan Parties’
assets as a going concern in a single transaction or series of related
transactions as approved by the Bankruptcy Court pursuant to the applicable
provisions of the Bankruptcy Code, or other applicable law; provided that any
such going concern sale shall be for cash consideration in an amount in excess
of all outstanding Obligations and all Pre-Petition Liabilities, which amount
shall be paid to the ABL Administrative Agent upon the closing of such sale for
application to the Obligations and the Pre-Petition Liabilities, (iv) a
transaction or transactions combining the sale of certain of the Loan Parties’
business assets as a going concern and the permanent closing of all or a portion
of the Loan Parties’ stores and the sale of all Collateral located therein
through the retention by the Loan Parties of one or more independent, nationally
recognized, professional retail inventory liquidation firms, reasonably
acceptable to the Agents and the Supplemental Term Agent, as approved by the
Bankruptcy Court pursuant to the applicable provisions of the Bankruptcy Code or
other applicable law, which transaction or transactions shall be on terms
reasonably satisfactory to the Agents and the Supplemental Term Agent and shall
together, be for cash consideration in excess of all outstanding Obligations and
all Pre-Petition Liabilities, which amount shall be paid upon the closing of
such sale to the ABL Administrative Agent for application to the Obligations and
the Pre-Petition Liabilities, or (v) dispositions in connection with store
closures through the retention by the Loan Parties of one or more independent,
nationally recognized, professional retail inventory liquidation firms,
reasonably acceptable to the Agents and the Supplemental Term Agent, which
transaction shall be on terms reasonably satisfactory to the Agents and the
Supplemental Term Agent and approved by the Bankruptcy Court to the extent
required by applicable law, with all Net Proceeds thereof being paid to the ABL
Administrative Agent upon the closing of such sales for application to the
Obligations and the Pre-Petition Liabilities.

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

“Petition Date” means June 17, 2013.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledged Collateral” has the meaning assigned to such term in the ABL Loan
Security Agreement.

“Plan of Reorganization” means a plan filed in the Chapter 11 Case pursuant to
Chapter 11 of the Bankruptcy Code.

“Pre-Petition Credit Agreement” means that certain Third Amended and Restated
Senior Secured Credit Agreement dated as of October 17, 2012 entered into among
certain of the Loan Parties, the Agents, the Supplemental Term Agent and the
Lenders (as each of those terms is

 

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defined therein), together with all instruments, documents and agreements
executed or delivered in connection therewith, in each case, as amended,
modified or supplemented to the date hereof.

“Pre-Petition Liabilities” means (i) the “Obligations” and the “Guaranteed
Obligations”, each as defined in the Pre-Petition Credit Agreement, and (ii) the
“Secured Obligations”, as defined in the security documents executed and
delivered in connection with the Pre-Petition Credit Agreement.

“Pre-Petition Loan Documents” means the “Loan Documents” as defined in the
Pre-Petition Credit Agreement.

“Prepayment Event” means:

(a) any sale, transfer or other disposition (including pursuant to a sale and
leaseback transaction or a Permitted Sale) of any property or asset of any Loan
Party which constitutes Collateral, other than, with respect to Collateral not
constituting Supplemental Term Priority Collateral, dispositions described in
clauses (a)(i) and (a)(ii) of Section 6.05;

(b) any casualty or other insured damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, any property or
asset of any Loan Party which constitutes Collateral; or

(c) the receipt by any Loan Party of any proceeds of a Permitted Sale.

“Professional Fee Carve Out” means the “Carve Out” as defined in a DIP Order.

“Professional Fee Carve Out Reserve” means a Reserve equal to the maximum
possible amount of the Professional Fee Carve Out.

“Prime Rate” means the rate of interest as publicly announced from time to time
by Wells Fargo as its “prime rate.” The “prime rate” is a rate set by Wells
Fargo based upon various factors including Wells Fargo’s costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Wells Fargo shall take
effect at the opening of business on the day specified in the public
announcement of such change.

“Protective Advance” has the meaning assigned to such term in Section 2.04.

“Ratification Agreement” means the Ratification Agreement, dated as of the
Effective Date, among certain of the Loan Parties and the Agents.

“Real Estate Consultant” means A&G Realty Partners, LLC (or another independent
third party real estate advisor reasonably acceptable to the ABL Administrative
Agent and the Supplemental Term Agent).

“Real Property” means all now owned and hereafter acquired real property of the
Borrower and the Restricted Subsidiaries, including leasehold interests,
together with all

 

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buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.

“Real Property Documents” shall mean, collectively, with respect to any Real
Property, (i) a Mortgage duly executed by each applicable Loan Party, together
with (A) title insurance policies in amounts satisfactory to the ABL
Administrative Agent and the Supplemental Term Agent, current as-built ALTA/ACSM
Land Title surveys certified to the ABL Administrative Agent and the
Supplemental Term Agent, zoning letters, building permits and certificates of
occupancy, in each case relating to such Real Property and satisfactory in form
and substance to the ABL Administrative Agent and the Supplemental Term Agent,
(B) (x) “Life of Loan” Federal Emergency Management Agency Standard Flood Hazard
determinations, (y) notices, in the form required under the Flood Insurance
Laws, about special flood hazard area status and flood disaster assistance duly
executed by each Loan Party, and (z) if any improved real property encumbered by
any Mortgage is located in a special flood hazard area, a policy of flood
insurance that (1) covers such improved real property, (2) is written in an
amount not less than the outstanding principal amount of the Indebtedness
secured by such Mortgage reasonably allocable to such real property or the
maximum limit of coverage made available with respect to the particular type of
property under the Flood Insurance Laws, whichever is less, and (3) is otherwise
on terms satisfactory to the ABL Administrative Agent and the Supplemental Term
Agent and, (C) evidence that counterparts of such Mortgage have been recorded in
all places to the extent necessary or desirable, in the reasonable judgment of
the ABL Administrative Agent and the Supplemental Term Agent, to create a valid
and enforceable second priority Lien on such Real Property in favor of the ABL
Administrative Agent and the Supplemental Term Agent for the benefit of the
Agents and the Lenders (or in favor of such other trustee as may be required or
desired under local law), (D) an opinion of counsel in each state in which such
Real Property is located in form and substance and from counsel satisfactory to
the ABL Administrative Agent and the Supplemental Term Agent, and (E) such other
reports, documents, instruments and agreements as the ABL Administrative Agent
or the Supplemental Term Agent shall request, each in form and substance
satisfactory to the ABL Administrative Agent and the Supplemental Term Agent.

“Real Property Holding Company” means OSH Properties.

“Register” has the meaning set forth in Section 9.04.

“Reimbursement Date” has the meaning assigned to such term in Section
2.06(c)(i).

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

“Remaining Collateral” has the meaning assigned to such term in Section 9.20.

“Rent Expense” means, for any period, the aggregate amount of cash rental and
lease charges payable by Borrower and its Restricted Subsidiaries, including,
for the avoidance of doubt, rental payments to Real Property Holding Company,
for such period with respect to operating leases of Real Property, determined on
a consolidated basis in accordance with GAAP.

 

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“Rent Reserves” with respect to any store, warehouse distribution center,
regional distribution center, or depot where any Inventory subject to Liens
arising by operation of law is located or with respect to which a Collateral
Access Agreement has not been delivered, a reserve determined by the ABL
Administrative Agent in its Permitted Discretion, not to exceed two (2) months’
rent at such store, warehouse distribution center, regional distribution center,
or depot.

“Report” means reports prepared by the ABL Administrative Agent, the
Supplemental Term Agent or another Person showing the results of appraisals,
field examinations or audits pertaining to the Borrower’s assets from
information furnished by or on behalf of the Borrower, after the ABL
Administrative Agent or the Supplemental Term Agent has exercised its rights of
inspection pursuant to this Agreement, which Reports may be distributed to the
Lenders by the ABL Administrative Agent or the Supplemental Term Agent.

“Required FILO Lenders” means, at any time, at least two FILO Lenders (that are
not Affiliates) holding in the aggregate more than 50% of the FILO Term Loan at
such time.

“Required Lenders” means, at any time, at least two Lenders (that are not
Affiliates) holding in the aggregate more than 50% of the sum of (i) the total
Revolving Exposure, (ii) unused Revolving Commitments, (iii) outstanding
principal balance of the FILO Term Loan, and (iv) outstanding principal balance
of the Supplemental Term Loan, in each case at such time; provided that Required
Lenders shall at all times include the Required Revolving Lenders.

“Required Revolving Lenders” means, at any time, at least two Lenders (that are
not Affiliates) having Revolving Exposure and unused Revolving Commitments
representing more than 50% of the sum of (i) the total Revolving Exposure, and
(ii) unused Revolving Commitments, in each case at such time.

“Required Supplemental Term Lenders” means, at any time, at least two
Supplemental Term Lenders (that are not Affiliates) holding in the aggregate
more than 50% of the Supplemental Term Loan at such time.

“Requirement of Law” as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

“Reserves” means Inventory Reserves, Rent Reserves, Gift Card Liability
Reserves, and Availability Reserves.

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

 

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“Restricted Subsidiary” means any Subsidiary of Holdings and the Borrower,
including the Real Property Holding Company.

“Revolving Availability” means, at any time, an amount equal to (a) Maximum
Revolving Availability at such time minus (b) the outstanding Credit Extensions
(calculated without inclusion of the principal balance of the FILO Term Loan or
the principal balance of the Supplemental Term Loan).

“Revolving Borrowing Base” means, at any time, the sum of:

(a) the product of (i) 90% multiplied by (ii) the appraised Net Orderly
Liquidation Value of Eligible Inventory of the Borrower at such time, plus

(b) the product of (i) 90% multiplied by (ii) the Borrower’s Eligible Credit
Card Account Receivables at such time minus any Reserve related to Eligible
Credit Card Account Receivables, plus

(c) the then outstanding balance of the FILO Term Loan; minus

(d) all Reserves, other than Availability Reserves.

Any Reserve adjustment permitted to be made by the ABL Administrative Agent
under this Agreement shall be effective upon notice to the Borrower by the ABL
Administrative Agent. The Revolving Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the ABL Administrative Agent pursuant to Section 5.01(h) of this Agreement.

“Revolving Commitment” means, with respect to each Revolving Lender, the
commitment, if any, of such Revolving Lender to make ABL Revolving Loans and to
acquire participations in Letters of Credit and Swingline Loans hereunder,
expressed as an amount representing the maximum possible aggregate amount of
such Revolving Lender’s Revolving Exposure hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.09, and (b) reduced or
increased from time to time pursuant to assignments by or to such Revolving
Lender pursuant to Section 9.04 together with the commitment of such Revolving
Lender to acquire participations in Protective Advances hereunder. The amount of
each Revolving Lender’s Revolving Commitment as of the Effective Date is set
forth on the Commitment Schedule, or in the Assignment and Assumption pursuant
to which such Revolving Lender shall have assumed its Revolving Commitment, as
applicable. The aggregate amount of the Revolving Lenders’ Revolving Commitments
as of the Effective Date is $140,000,000.

“Revolving Credit Termination Date” means with respect to the Revolving
Commitments of the Revolving Lenders, the Termination Date or any earlier date
on which the Revolving Commitments of the Revolving Lenders are permanently
reduced to zero or otherwise terminated pursuant to the terms hereof.

“Revolving Exposure” means, with respect to any Revolving Lender at any time,
the sum of the outstanding principal amount of such Revolving Lender’s ABL
Revolving Loans and its LC Exposure and an amount equal to its Applicable
Percentage of the aggregate principal

 

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amount of Swingline Loans at such time, plus an amount equal to its Applicable
Percentage of the aggregate principal amount of Protective Advances outstanding
at such time.

“Revolving Lender” means each Revolving Lender having a Revolving Commitment or
having made an ABL Revolving Loan, in each case as set forth on the Commitment
Schedule or in the Assignment and Assumption by which it becomes a Revolving
Lender.

“Revolving Loan” means a Loan.

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

“Sale Order” has the meaning provided in Section 5.19(f).

“Sale Order Motion” has the meaning provided for in Section 5.19(a)(ii).

“Sears” means Sears, Roebuck and Co.

“Secured Obligations” means all Obligations, together with all (i) Swap
Obligations owing to one or more Lenders or their respective Affiliates;
provided that, at or prior to the time that any transaction relating to such
Swap Obligation is executed, the Lender party thereto (other than Wells Fargo)
shall have delivered written notice to the ABL Administrative Agent that such a
transaction has been entered into and that it constitutes a Secured Obligation
entitled to the benefits of the Collateral Documents, and (ii) all other Bank
Product Obligations.

“Security Agreements” means, collectively, the ABL Loan Security Agreement and
the Term Loan Security Agreement, and any other pledge or security agreement
entered into by any Loan Party, or any other Person, granting a Lien on any
property to secure the obligations and liabilities of any Loan Party under the
DIP Term Facility, the Term Facility, the loan facility contemplated by the
Pre-Petition Loan Documents, or this ABL Facility, as the same may be amended,
restated or otherwise modified (including pursuant to any Borrowing Order) from
time to time

“Special Purpose Vehicle” means a trust, partnership or other special purpose
Person established by Holdings or the Borrower in a manner that is intended to
legally isolate the assets of such Person from Holdings and its other
Subsidiaries as a consolidated group.

“Stalking Horse Bid” means a bid or bids to purchase substantially all of the
assets of the Loan Parties pursuant to a Permitted Sale upon terms and
conditions acceptable to the ABL Administrative Agent and the Supplemental Term
Agent in their discretion, which bid(s) the Borrower accepts as the so-called
“stalking horse bid” pursuant to the Bidding Procedures Order.

“Stalking Horse Bidder” means one or more Persons reasonably acceptable to the
ABL Administrative Agent and the Supplemental Term Agent and whose bids have
been selected by the Borrower as the Stalking Horse Bid in connection with a
proposed Permitted Sale.

 

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“Standby Letter of Credit” means any letter of credit (other than a Trade Letter
of Credit) issued by an Issuing Bank for the account of a Loan Party pursuant to
this Agreement and all amendments, renewals, extensions and replacements
thereof.

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

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

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person
the payment of which is subordinated to payment of the Obligations and the Bank
Product Obligations (including the Swap Obligations) to the written satisfaction
of the ABL Administrative Agent and the Supplemental Term Agent.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower or any other Loan Party, as
applicable.

“Supermajority Revolving Lenders” means, at any time, at least two Revolving
Lenders (that are not Affiliates) having Revolving Exposure and unused Revolving
Commitments representing more than 662/3% of the sum of the total Revolving
Exposure and unused Revolving Commitments at such time.

“Supplemental Term Action Notice” shall have the meaning set forth in
Section 8.02(b) hereof.

 

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

(a) the product of (x) the Supplemental Term Inventory Advance Rate multiplied
by (y) the appraised Net Orderly Liquidation Value of Eligible Inventory of the
Borrower;

plus

(b) the product of (x) ten percent (10%) multiplied by (y) the Borrower’s
Eligible Credit Card Account Receivables at such time minus any Reserve related
to Eligible Credit Card Account Receivables.

“Supplemental Term Agent” means Wells Fargo Bank, National Association, in its
capacity as administrative agent for the Supplemental Term Lenders hereunder, or
any successor.

“Supplemental Term Commitment” means, with respect to each Supplemental Term
Lender, the commitment of such Supplemental Term Lender to make Loans to the
Borrower in the amount set forth opposite its name on the Commitment Schedule.

“Supplemental Term Inventory Advance Rate” means twelve and three tenths of one
percent (12.3%), as such amount shall be reduced by two tenths of one percent
(0.20%) on the first day of each calendar quarter commencing on July 1, 2013.

“Supplemental Term Lender” means each Lender having a Supplemental Term
Commitment or having made a portion of the Supplemental Term Loan, in each case
as set forth on the Commitment Schedule or in the Assignment and Assumption by
which it becomes a Supplemental Term Lender.

“Supplemental Term Loan” means the Loan made by the Supplemental Term Lenders on
the Effective Date pursuant to Section 2.01(c).

“Supplemental Term Priority Collateral” means all now owned or hereafter
acquired Collateral that constitutes:

(a) Fixtures and Equipment;

(b) all trademarks, tradenames, servicemarks, copyrights, patents, URLs, domain
names, customer lists and all license agreements related to the foregoing;

(c) permits and licenses related to any of the foregoing (including any permits
or licenses related to ownership or operation of Fixtures or Equipment of any
Loan Party);

(d) all proceeds of insurance that relate to the foregoing;

(e) all books and records related to the foregoing and not constituting ABL
Priority Collateral; and

 

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(f) all products and proceeds of the foregoing.

All capitalized terms used in this definition and not defined elsewhere in this
Agreement have the meanings assigned to them in the UCC.

“Supplemental Term Reserve” means, at any time of determination, the amount, if
any, by which the aggregate outstanding principal balance of the Supplemental
Term Loan exceeds the Supplemental Term Borrowing Base, which amount shall be
imposed by the ABL Administrative Agent as an Availability Reserve to the extent
a positive number.

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

“Swap Obligations” of a Person means any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all Swap Agreements, and
(b) any and all cancellations, buy backs, reversals, terminations or assignments
of any Swap Agreement transaction.

“Swingline Lender” means Wells Fargo Bank, National Association, in its capacity
as lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to Section 2.05.

“Syndication Agent” means Bank of America, N.A.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority.

“Tax Sharing Agreement” means the Tax Sharing Agreement, dated as of
November 23, 2005, among Holdings, Sears Holdings Corporation and all direct and
indirect subsidiaries of Holdings.

“Term Administrative Agent” means Gleacher Products Corp. (as successor in
interest to JPMorgan Chase Bank, N.A.), in its capacity as administrative agent
for the Term Lenders under the Term Loan Agreement, or its successors.

“Term Collateral Agent” means Gleacher Products Corp. (as successor in interest
to JPMorgan Chase Bank, N.A.), in its capacity as collateral agent for the Term
Lenders under the Term Loan Agreement, or its successors.

 

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“Term Facility” means the term loans under the Term Loan Agreement.

“Term Facility Primary Collateral” has the meaning assigned to such term in the
Intercreditor Agreement.

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

“Term Loan Agreement” means the Senior Secured Term Loan Agreement dated as of
December 21, 2006 among the Borrower, certain of the Loan Guarantors, the Term
Lenders and the Term Administrative Agent, as amended and restated pursuant to
that certain Amendment and Restatement Agreement dated as of December 22, 2011
by, among others, the Borrower, certain of the Loan Guarantors, the Term Lenders
and the Term Administrative Agent and as may hereafter be amended, restated or
otherwise modified from time to time in accordance with the terms of the
Intercreditor Agreement and the DIP Orders.

“Term Loan Documents” means the “Loan Documents” (as such term is defined in the
Term Loan Agreement).

“Term Loan Security Agreement” means that certain Pledge and Security Agreement,
dated as of December 21, 2006, between certain of the Loan Parties and the Term
Collateral Agent, for the benefit of the Term Administrative Agent and the Term
Lenders, and any other pledge or security agreement entered into after the date
of the Term Loan Agreement by any other Loan Party (as required by the Term Loan
Agreement or any other Term Loan Document), or any other Person, granting a Lien
on any property to secure the obligations and liabilities of any Loan Party
under any Term Loan Document, as the same may be amended, restated or otherwise
modified from time to time in accordance with the terms of the Intercreditor
Agreement and the DIP Orders.

“Term Loans” has the meaning given such term in the Term Loan Agreement.

“Termination Date” means the earliest to occur of (i) the Maturity Date,
(ii) the date on which the maturity of the Obligations is accelerated (or deemed
accelerated) and the Commitments are irrevocably terminated (or deemed
terminated) in accordance with Article VII, (iii) the termination of the
Commitments in accordance with the provisions of Section 2.09(b) hereof, or
(iv) the date which is thirty (30) days following the Effective Date, unless a
Final Borrowing Order has been entered on or prior to such date.

“Trade Letter of Credit” means any letter of credit that is drawable upon
presentation of documents evidencing the sale or shipment of goods purchased by
the Borrower or any of its Restricted Subsidiaries that are Loan Parties in the
ordinary course of business that is issued by an Issuing Bank under this
Agreement for the account of any Loan Party and all amendments, renewals,
extensions or replacements thereof.

“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement and the other Loan Documents, the borrowing of Loans and other
credit extensions, the use of the proceeds thereof, and the issuance of Letters
of Credit hereunder, in each case on the Effective Date.

 

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“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.

“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
(iii) an obligation to provide collateral to secure any of the foregoing types
of obligations; or (iv) any indemnification obligation or expense arising under
Section 9.03.

“Unreimbursed Amount” has the meaning assigned to such term in Section
2.06(c)(i).

“Use Period” means the period commencing on the date that the ABL Administrative
Agent or the Collateral Agent commences the liquidation and sale of the ABL
Priority Collateral and ending 150 days thereafter. If any stay or other order
that prohibits any of the ABL Administrative Agent or the Collateral Agent from
commencing and continuing any Enforcement Action or to sell or otherwise dispose
of the ABL Priority Collateral has been entered by a court of competent
jurisdiction, such 150-day period shall be tolled during the pendency of any
such stay or other order and the Use Period shall be so extended.

“Variance Report” means, collectively, (i) a report prepared by the Borrower’s
management reflecting on a line-item basis the Loan Parties’ actual performance
compared to the Budget (1) for the immediately preceding week, (2) on a rolling
four (4) week basis ending as of the end of such immediately preceding week, and
(3) on a cumulative basis from the Petition Date, in each case along with
management’s explanation of such variances, and (ii) a certificate duly executed
by a Financial Officer of the Borrower, in form and substance reasonably
satisfactory to the ABL Administrative Agent and the Supplemental Term Agent,
setting forth reasonably detailed calculations demonstrating compliance with the
financial covenants set forth in Section 5.19.

“Voting Stock” of any Person as of any date means the Equity Interests of such
Person that are at the time entitled to vote in the election of the Board of
Directors (or equivalent body) of such Person.

“Wells Fargo” means Wells Fargo Bank, National Association and its successors.

“WFCF” means Wells Fargo Capital Finance, LLC and its successors.

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

SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”). Borrowings also may be classified and referred to by Class (e.g., a
“Revolving Borrowing”).

 

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SECTION 1.03 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
amended and restated, replaced, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the ABL Administrative Agent and the Supplemental Term Agent
that the Borrower requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the ABL
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then the Borrower, the ABL Administrative Agent, the Supplemental Term
Agent and the Lenders shall negotiate in good faith to amend such provision to
preserve the original intent in light of such change in GAAP, and such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

SECTION 1.05 Letter of Credit Amounts. Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to be the Stated Amount of such Letter of Credit in effect at such time;
provided, however, that, except as otherwise provided in Sections 2.06(i) and
2.06(j), with respect to any Letter of Credit that, by its terms of any Issuer
Documents related thereto, provides for one or more automatic increases in the
Stated Amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum Stated Amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum Stated Amount is in effect at such
time.

 

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SECTION 1.06 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

ARTICLE II

The Credits

SECTION 2.01 Commitments of the Lenders.

(a) Subject to the terms and conditions set forth herein, each Revolving Lender
agrees to make ABL Revolving Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in
(i) such Revolving Lender’s Revolving Exposure exceeding such Revolving Lender’s
Revolving Commitment and (ii) the total Revolving Exposure of all Revolving
Lenders exceeding the Maximum Revolving Availability, subject to the ABL
Administrative Agent’s authority, in its Permitted Discretion, to make
Protective Advances pursuant to the terms of Section 2.04. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow ABL Revolving Loans. Notwithstanding anything to
the contrary, until the entry by the Bankruptcy Court of the Final Borrowing
Order, the total Revolving Exposure of all Revolving Lenders shall not exceed
$100,000,000.

(b) Each FILO Lender agrees, upon the terms and subject to the conditions herein
set forth, to extend credit to the Borrower, in the form of the FILO Term Loan
and in an amount not to exceed such FILO Lender’s FILO Commitment, in each case
subject to the following limitations:

(i) The FILO Term Loan shall be made in a single drawing in the aggregate amount
of $7,125,000 on the Effective Date. Upon funding of the FILO Term Loan on the
Effective Date, the FILO Commitments shall be reduced to $0.

(ii) Repayments and prepayments of the FILO Term Loan may not be reborrowed.

(iii) The FILO Term Loan advance rate shall be the lesser of (A) the product of
(x) five percent (5%) multiplied by (y) the appraised Net Orderly Liquidation
Value of Eligible Inventory of the Borrower, and (B) $7,125,000. To the extent
that the outstanding balance of the FILO Term Loan should ever exceed the amount
described in clause (A) above, an Availability Reserve will be implemented in
the amount of the shortfall.

(c) Each Supplemental Term Lender agrees, upon the terms and subject to the
conditions herein set forth, to extend credit to the Borrower, in the form of
the Supplemental Term Loan and in an amount not to exceed such Supplemental Term
Lender’s Supplemental Term Commitment, in each case subject to the following
limitations:

 

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(i) The Supplemental Term Loan shall be made in a single drawing in the
aggregate amount of $17,208,187.50 on the Effective Date. Upon funding of the
Supplemental Term Loan on the Effective Date, the Supplemental Term Commitments
shall be reduced to $0.

(ii) Repayments and prepayments of the Supplemental Term Loan may not be
reborrowed.

SECTION 2.02 Loans and Borrowings.

(a) Each ABL Revolving Loan (other than a Swingline Loan) shall be made as part
of a Borrowing consisting of ABL Revolving Loans of the same Class made by the
Revolving Lenders ratably in accordance with their respective Revolving
Commitments of the applicable Class. Any Protective Advance and any Swingline
Loan shall be made in accordance with the procedures set forth in Section 2.04
and Section 2.05, respectively.

(b) Each Revolving Borrowing shall be comprised entirely of Base Rate Loans.
Each Swingline Loan and each portion of the FILO Term Loan shall be a Base Rate
Loan. Each portion of the Supplemental Term Loan shall bear interest based on
the Adjusted LIBO Rate in accordance with Section 2.13.

(c) Borrowings of more than one Class may be outstanding at the same time.

SECTION 2.03 Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the ABL Administrative Agent of such
request in writing (delivered by hand or facsimile) in a form reasonably
approved by the ABL Administrative Agent and signed by the Borrower not later
than 12:00 noon, New York time, on the date of the proposed Borrowing. Each such
Borrowing Request shall specify the following information in compliance with
Section 2.02:

(a) the aggregate amount of the requested Borrowing and a breakdown of the
separate wires comprising such Borrowing; and

(b) the date of such Borrowing, which shall be a Business Day.

Promptly following receipt of a Borrowing Request in accordance with this
Section 2.03, the ABL Administrative Agent shall advise each Revolving Lender of
the details thereof and of the amount of such Revolving Lender’s Loan to be made
as part of the requested Borrowing.

SECTION 2.04 Protective Advances.

(a) Subject to the limitations set forth below, the ABL Administrative Agent is
authorized by the Borrower and the Lenders, from time to time in the ABL
Administrative Agent’s sole discretion (but shall have absolutely no
obligation), to make ABL Revolving Loans to the Borrower, on behalf of all
Revolving Lenders, which the ABL Administrative Agent, in its Permitted
Discretion, deems necessary or desirable (i) to preserve or protect the
Collateral, or any portion thereof, (ii) to enhance the likelihood of, or
maximize the amount of, repayment of

 

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the Loans and other Obligations, or (iii) to pay any other amount chargeable to
or required to be paid by the Borrower pursuant to the terms of this Agreement,
including payments of reimbursable expenses (including costs, fees, and expenses
as described in Section 9.03) and other sums payable under the Loan Documents
(any of such ABL Revolving Loans are herein referred to as “Protective
Advances”); provided that, the aggregate amount of Protective Advances
outstanding at any time shall not at any time exceed 5% of Maximum Revolving
Availability at such time; provided further that, the aggregate amount of
outstanding Protective Advances plus the aggregate Revolving Exposure shall not
exceed the aggregate unused Revolving Commitments and provided further that no
Protective Advance may remain outstanding for more than ninety (90) days.
Protective Advances may be made even if the conditions precedent set forth in
Section 4.02 have not been satisfied. The Protective Advances shall be secured
by the Liens in favor of the ABL Administrative Agent in and to the Collateral
and shall constitute Obligations hereunder. All Protective Advances shall be
Base Rate Borrowings. The ABL Administrative Agent’s authorization to make
Protective Advances may be revoked at any time by the Required Revolving
Lenders. Any such revocation must be in writing and shall become effective
prospectively upon the ABL Administrative Agent’s receipt thereof. At any time
that there is sufficient Revolving Availability and the conditions precedent set
forth in Section 4.02 have been satisfied, the ABL Administrative Agent may
request the Revolving Lenders to make an ABL Revolving Loan to repay a
Protective Advance. At any other time the ABL Administrative Agent may require
the Revolving Lenders to fund their risk participations described in Section
2.04(b).

(b) Upon the making of a Protective Advance by the ABL Administrative Agent
(whether before or after the occurrence of a Default), each Revolving Lender
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the ABL Administrative Agent
without recourse or warranty, an undivided interest and participation in such
Protective Advance in proportion to its Applicable Percentage. From and after
the date, if any, on which any Revolving Lender is required to fund its
participation in any Protective Advance purchased hereunder, the ABL
Administrative Agent shall promptly distribute to such Revolving Lender, such
Revolving Lender’s Applicable Percentage of all payments of principal and
interest and all proceeds of Collateral received by the ABL Administrative Agent
in respect of such Protective Advance.

SECTION 2.05 Swingline Loans.

(a) Subject to the terms and conditions set forth herein, the Swingline Lender
agrees to make Swingline Loans to the Borrower from time to time during the
Availability Period, in an aggregate principal amount at any time outstanding
that will not result in (i) the aggregate principal amount of outstanding
Swingline Loans exceeding $20,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the Maximum Revolving Availability; provided that the
Swingline Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan; provided further that the Swingline Lender shall not
be obligated to make any Swingline Loan at any time when any Revolving Lender is
at such time a Defaulting Lender or Deteriorating Lender hereunder, unless the
Swingline Lender has entered into satisfactory arrangements with the Borrower or
such Revolving Lender to eliminate the Swingline Lender’s risk with respect to
such Revolving Lender. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and

 

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reborrow Swingline Loans. To request a Swingline Loan, the Borrower shall notify
the ABL Administrative Agent of such request in writing (delivered by hand or
facsimile), not later than 1:00 p.m., New York time, on the day of a proposed
Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. All Swingline Loans shall be Base Rate Borrowings. The ABL
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the Funding
Account (or, in the case of repayment of another Loan or fees or expenses as
provided by Section 2.10(b), by remittance to the ABL Administrative Agent to be
distributed to the Revolving Lenders) by 2:00 p.m., New York time, on the
requested date of such Swingline Loan.

(b) Upon the making of a Swingline Loan (whether before or after the occurrence
of a Default and regardless of whether a Settlement (as defined below) has been
requested with respect to such Swingline Loan, each Revolving Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Swingline Lender, without recourse or warranty,
an undivided interest and participation in such Swingline Loan in proportion to
its Applicable Percentage of the Revolving Commitment. The Swingline Lender may,
at any time, require the Revolving Lenders to fund their participations. Each
Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this clause is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or the
subsequent termination of the Revolving Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Revolving Lender shall comply with its obligation under this
clause by wire transfer of immediately available funds, in the same manner as
provided in Section 2.07 with respect to ABL Revolving Loans made by such
Revolving Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the ABL Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Revolving Lenders. The ABL Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this clause, and
thereafter payments in respect of such Swingline Loan shall be made to the ABL
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the ABL Administrative Agent; any such amounts received by the ABL
Administrative Agent shall be promptly remitted by the ABL Administrative Agent
to the Revolving Lenders that shall have made their payments pursuant to this
clause and to the Swingline Lender, as their interests may appear; provided that
any such payment so remitted shall be repaid to the Swingline Lender or to the
ABL Administrative Agent, as applicable, if and to the extent such payment is
required to be refunded to the Borrower for any reason. The purchase of
participations in a Swingline Loan pursuant to this clause shall not relieve the
Borrower of any default in the payment thereof.

(c) The ABL Administrative Agent, on behalf of the Swingline Lender, shall
request settlement (a “Settlement”) with the Revolving Lenders on at least a
weekly basis or on any date that the ABL Administrative Agent elects, by
notifying the Revolving Lenders of such requested Settlement by facsimile or
e-mail no later than 12:00 noon New York time on the date

 

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of such requested Settlement (the “Settlement Date”). Each Revolving Lender
(other than the Swingline Lender, in the case of the Swingline Loans) shall
transfer the amount of such Revolving Lender’s Applicable Percentage of the
outstanding principal amount of the applicable ABL Revolving Loan with respect
to which Settlement is requested to the ABL Administrative Agent, to such
account of the ABL Administrative Agent as the ABL Administrative Agent may
designate not later than 2:00 p.m., New York time, on such Settlement Date.
Settlements may occur during the existence of a Default and whether or not the
applicable conditions precedent set forth in Section 4.02 have then been
satisfied. Such amounts transferred to the ABL Administrative Agent shall be
applied against the amounts of the Swingline Lender’s Swingline Loans and
together with the Swingline Lender’s Applicable Percentage of such Swingline
Loan, shall constitute ABL Revolving Loans of such Revolving Lenders,
respectively. If any such amount is not transferred to the ABL Administrative
Agent by any Revolving Lender on such Settlement Date, the Swingline Lender
shall be entitled to recover such amount on demand from such Revolving Lender
together with interest thereon as specified in Section 2.07.

SECTION 2.06 Letters of Credit.

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, (A) each Issuing Bank
agrees, in reliance upon the agreements of the Revolving Lenders set forth in
this Section 2.06, from time to time on any Business Day during the period from
the Effective Date until the Letter of Credit Expiration Date, to issue Letters
of Credit for the account of the Borrower, and to amend Letters of Credit
previously issued by it, in accordance with Section 2.06(b) below; and (B) the
Revolving Lenders severally agree to participate in Letters of Credit issued for
the account of the Borrower and any drawings thereunder; provided that, after
giving effect to any LC Credit Extension with respect to any Letter of Credit,
(x) the total Revolving Exposure of all Revolving Lenders shall not exceed the
Maximum Revolving Availability, (y) the Revolving Exposure of any Revolving
Lender shall not exceed such Revolving Lender’s Revolving Commitment, and
(z) the total LC Exposure shall not exceed $20,000,000. Each request by the
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by the Borrower that the LC Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed. Each Issuing Bank (other than Wells Fargo or any of its
Affiliates) shall notify the ABL Administrative Agent in writing on each
Business Day of all Letters of Credit issued on the prior Business Day by such
Issuing Bank; provided that (A) until the ABL Administrative Agent advises any
such Issuing Bank that the provisions of Section 4.02 are not satisfied, or
(B) the aggregate amount of the Letters of Credit issued in any such week
exceeds such amount as shall be agreed by the ABL Administrative Agent and such
Issuing Bank, such Issuing Bank shall be required to so notify the ABL
Administrative Agent in writing only once each week of the Letters of Credit
issued by such Issuing Bank during the immediately preceding week as well as the
daily amounts outstanding for the prior week, such notice to be furnished

 

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on such day of the week as the ABL Administrative Agent and such Issuing Bank
may agree. On the Effective Date, the parties hereto agree that the Existing
Letters of Credit shall be deemed to be Letters of Credit pursuant to the terms
and conditions, and entitled to the benefits, of this Agreement and the other
Loan Documents, without any further action by the Borrower or any other Person.

(ii) No Letter of Credit shall be issued if:

(A) subject to Section 2.06(b)(ii), the expiry date of any such requested
Standby Letter of Credit would occur more than twelve months after the date of
issuance, unless the Required Revolving Lenders have approved such expiry date;
or

(B) subject to Section 2.06(b)(ii), the expiry date of any such requested Trade
Letter of Credit would occur more than 120 days after the date of issuance,
unless the Required Revolving Lenders have approved such expiry date; or

(C) the expiry date of any such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless either such Letter of Credit is Cash
Collateralized on or prior to the Letter of Credit Expiration Date or all the
Revolving Lenders have approved such expiry date.

(iii) No Letter of Credit shall be issued without the prior consent of the
applicable Issuing Bank if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain such Issuing Bank from issuing
such Letter of Credit, or any law applicable to such Issuing Bank or any request
or directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over such Issuing Bank shall prohibit, or request
that such Issuing Bank refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon such Issuing Bank
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which such Issuing Bank is not otherwise compensated hereunder)
not in effect on the Effective Date, or shall impose upon such Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Effective
Date and which such Issuing Bank in good faith deems material to it; or

(B) the issuance of such Letter of Credit would violate one or more policies of
such Issuing Bank applicable to letters of credit generally; or

(C) except as otherwise agreed by such Issuing Bank, such Letter of Credit is in
an initial Stated Amount less than $25,000, in the case of a Trade Letter of
Credit, or $100,000, in the case of a Standby Letter of Credit; or

(D) such Letter of Credit is to be denominated in a currency other than dollars;
provided that, if such Issuing Bank, in its discretion, approves

 

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the issuance of a Letter of Credit denominated in a currency other than dollars,
all reimbursements by the Borrower of the honoring of any drawing under such
Letter of Credit shall be paid in the currency in which such Letter of Credit
was denominated, unless payment in dollars is approved by the ABL Administrative
Agent and such Issuing Bank in their reasonable discretion.

(iv) The Borrower shall not permit any Letter of Credit to be amended if (A) the
applicable Issuing Bank would not be permitted at such time to issue such Letter
of Credit in its amended form under the terms hereof or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

(v) Each Issuing Bank shall act on behalf of the Revolving Lenders with respect
to any Letters of Credit issued by it and the documents associated therewith,
and each Issuing Bank shall have all of the benefits and immunities (A) provided
to the ABL Administrative Agent in Article VIII with respect to any acts taken
or omissions suffered by such Issuing Bank in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “ABL Administrative Agent” as
used in Article VIII included such Issuing Bank with respect to such acts or
omissions, and (B) as additionally provided herein with respect to each Issuing
Bank.

(b) Procedures for Issuance and Amendment of Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to an Issuing Bank in the form of a Letter
of Credit Application, appropriately completed and signed by a Financial Officer
of the Borrower. Such Letter of Credit Application must be received by such
Issuing Bank not later than 11:00 a.m. at least two (2) Business Days (or such
other date and time as such Issuing Bank may agree in a particular instance in
its sole discretion) prior to the proposed issuance date or date of amendment,
as the case may be. In the case of a request for an initial issuance of a Letter
of Credit, such Letter of Credit Application shall specify in form and detail
reasonably satisfactory to such Issuing Bank: (A) the proposed issuance date of
the requested Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; (G) the
currency thereof, which shall be dollars unless otherwise approved by such
Issuing Bank pursuant to Section 2.06(a)(iii); and (H) such other matters as
such Issuing Bank may reasonably require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail reasonably satisfactory to such Issuing Bank:
(A) the Letter of Credit to be amended; (B) the proposed date of amendment
thereof (which shall be a Business Day); (C) the nature of the proposed
amendment; and (D) such other matters as such Issuing Bank may reasonably
require. Additionally, the Borrower shall furnish to the applicable Issuing Bank
and the ABL Administrative Agent such other documents and information pertaining
to such requested Letter of Credit issuance or amendment,

 

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including any Issuer Documents, as such Issuing Bank or the ABL Administrative
Agent may reasonably require.

(ii) Promptly after receipt of any Letter of Credit Application, the applicable
Issuing Bank will provide the ABL Administrative Agent with a copy thereof.
Unless an Issuing Bank has received written notice from any Revolving Lender,
the ABL Administrative Agent or any Loan Party, at least one (1) Business Day
prior to the requested date of issuance or amendment of the applicable Letter of
Credit, that one or more applicable conditions contained in Article IV shall not
then be satisfied, then, subject to the terms and conditions hereof, such
Issuing Bank shall, on the requested date, issue a Letter of Credit for the
account of the Borrower or enter into the applicable amendment, as the case may
be, in each case in accordance with such Issuing Bank’s usual and customary
business practices. Immediately upon the issuance or amendment of each Letter of
Credit, each Revolving Lender shall be deemed to (without any further action),
and hereby irrevocably and unconditionally agrees to, purchase from such Issuing
Bank, without recourse or warranty, a risk participation in such Letter of
Credit in an amount equal to the product of such Revolving Lender’s Applicable
Percentage times the amount of such Letter of Credit. Upon any change in the
Commitments under this Agreement, it is hereby agreed that with respect to the
total LC Exposure, there shall be an automatic adjustment to the participations
hereby created to reflect the new Applicable Percentages of the assigning and
assignee Revolving Lenders.

(iii) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, each Issuing Bank will also deliver to the Borrower and the ABL
Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the applicable Issuing Bank shall notify
the Borrower and the ABL Administrative Agent thereof; provided, however, that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Revolving
Lenders with respect to any such payment. Not later than (A) 4:00 p.m. on the
date the applicable Issuing Bank notifies the Borrower of any payment by any
Issuing Bank under a Letter of Credit (each such date, an “Honor Notice Date”),
if such Issuing Bank notifies the Borrower of such payment not later than 1:30
p.m. on the Honor Notice Date, or (B) 11:00 a.m. on the first Business Day
immediately following the Honor Notice Date, if such Issuing Bank notifies the
Borrower of such payment after 1:30 p.m. on the Honor Notice Date, the Borrower
shall reimburse such Issuing Bank through the ABL Administrative Agent in an
amount equal to the amount of such drawing. If the Borrower fails to so
reimburse such Issuing Bank by the time required pursuant to the immediately
preceding sentence (each such date, a “Reimbursement Date”), the Borrower shall
be deemed to have requested a Revolving Borrowing of Base Rate Loans to be
disbursed on the Reimbursement Date in an amount equal to the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), without regard to the minimum
and multiples specified in

 

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Section 2.02 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Aggregate Revolving Commitments and the
conditions set forth in Section 4.02 (other than the delivery of a Borrowing
Request), and the ABL Administrative Agent shall promptly notify each Revolving
Lender of the Reimbursement Date, the Unreimbursed Amount, and the amount of
such Revolving Lender’s Applicable Percentage thereof.

(ii) Each Revolving Lender shall, upon any notice pursuant to Section
2.06(c)(i), make funds available to the ABL Administrative Agent for the account
of the applicable Issuing Bank by wire transfer of immediately available funds
to the account of the ABL Administrative Agent most recently designated by it
for such purpose in an amount equal to its Applicable Percentage of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in
such notice by the ABL Administrative Agent, whereupon, subject to the
provisions of Section 2.06(c)(iii), each Revolving Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount. The ABL Administrative Agent shall remit the funds so received to the
applicable Issuing Bank.

(iii) In the event that an Issuing Bank honors any drawing under a Letter of
Credit, the amount of such drawing shall bear interest at the rate set forth in
Section 2.13(a) from the date such drawing was honored through and including the
Reimbursement Date pursuant to Section 2.06(c)(i). In the event that any drawing
under a Letter of Credit is not reimbursed by the Reimbursement Date and the
Unreimbursed Amount is not fully refinanced by a Revolving Borrowing of Base
Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied
or for any other reason, the Borrower shall be deemed to have incurred from the
applicable Issuing Bank an LC Borrowing in the amount of the Unreimbursed Amount
that is not so refinanced, which LC Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate set forth in
Section 2.13(d). In such event, each Revolving Lender’s payment to the ABL
Administrative Agent for the account of such Issuing Bank pursuant to Section
2.06(c)(ii) shall be deemed payment in respect of its participation in such LC
Borrowing and shall constitute an LC Advance from such Revolving Lender in
satisfaction of its participation obligation under this Section 2.06.

(iv) Until each Revolving Lender funds its ABL Revolving Loan or LC Advance
pursuant to this Section 2.06(c) to reimburse any Issuing Bank for any amount
drawn under any Letter of Credit, interest in respect of such Revolving Lender’s
Applicable Percentage of such amount shall be solely for the account of such
Issuing Bank.

(v) Each Revolving Lender’s obligation to make ABL Revolving Loans or LC
Advances to reimburse an Issuing Bank for amounts drawn under Letters of Credit,
as contemplated by this Section 2.06(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Lender may
have against such Issuing Bank, the Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition,

 

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whether or not similar to any of the foregoing; provided, however, that each
Revolving Lender’s obligation to make ABL Revolving Loans pursuant to this
Section 2.06(c) is subject to the conditions set forth in Section 4.02 (other
than delivery by the Borrower of a Borrowing Request). No such making of an LC
Advance shall relieve or otherwise impair the obligation of the Borrower to
reimburse an Issuing Bank for the amount of any payment made by such Issuing
Bank under any Letter of Credit, together with interest as provided herein.

(vi) If any Revolving Lender fails to make available to the ABL Administrative
Agent for the account of the applicable Issuing Bank any amount required to be
paid by such Revolving Lender pursuant to the foregoing provisions of this
Section 2.06(c) by the time specified in Section 2.06(c)(ii), such Issuing Bank
(acting through the ABL Administrative Agent) shall be entitled to recover from
such Revolving Lender, on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to such Issuing Bank at a rate per annum equal to the
greater of the Federal Funds Effective Rate and a rate determined by such
Issuing Bank in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by such Issuing Bank in connection with the foregoing. If such Revolving
Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Revolving Lender’s ABL Revolving Loan included in the
relevant Revolving Borrowing or LC Advance in respect of the relevant LC
Borrowing, as the case may be. A certificate of such Issuing Bank submitted to
any Revolving Lender (through the ABL Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d) Repayment of Participations.

(i) At any time after an Issuing Bank has made a payment under any Letter of
Credit and has received from any Revolving Lender such Revolving Lender’s LC
Advance in respect of such payment in accordance with Section 2.06(c), if the
ABL Administrative Agent receives for the account of such Issuing Bank any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrower or otherwise, including proceeds of Cash
Collateral applied thereto by the ABL Administrative Agent), the ABL
Administrative Agent will distribute to such Revolving Lender its Applicable
Percentage thereof (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Lender’s LC Advance was
outstanding) in the same funds as those received by the ABL Administrative
Agent.

(ii) If any payment received by the ABL Administrative Agent for the account of
an Issuing Bank pursuant to Section 2.06(c)(i) is required to be returned under
any of the circumstances described in Section 2.20 (including pursuant to any
settlement entered into by such Issuing Bank in its discretion), each Revolving
Lender shall pay to the ABL Administrative Agent for the account of such Issuing
Bank its Applicable Percentage thereof on demand of the ABL Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Revolving

 

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Lender, at a rate per annum equal to the Federal Funds Effective Rate from time
to time in effect. The obligations of the Revolving Lenders under this clause
shall survive the payment in full of the Obligations and the termination of this
Agreement.

(e) Obligations Absolute. The obligation of the Borrower to reimburse each
applicable Issuing Bank for each drawing under each Letter of Credit and to
repay each LC Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), such Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv) any payment by such Issuing Bank under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by such Issuing Bank under
such Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect;

(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower or any of its
Subsidiaries; or

(vi) the fact that any Event of Default shall have occurred and be continuing.

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will promptly notify the ABL Administrative Agent and the applicable
Issuing Bank. The Borrower shall be conclusively deemed to have waived any such
claim against such Issuing Bank and its correspondents unless

 

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such notice is given within ten (10) days after the issuance or amendment, as
applicable, of any Letter of Credit.

(f) Role of Issuing Bank. Each Revolving Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, no Issuing Bank shall have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the Issuing Banks,
the ABL Administrative Agent or any of their respective Related Parties nor any
correspondent, participant or assignee of any Issuing Bank shall be liable to
any Revolving Lender for: (i) any action taken or omitted in connection herewith
at the request or with the approval of the Revolving Lenders or the Required
Revolving Lenders, as applicable; (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; (iii) any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit or any error in
interpretation of technical terms; or (iv) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Borrower’s pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. None of the Issuing Banks, the ABL Administrative Agent or any of
their respective Related Parties nor any correspondent, participant or assignee
of any Issuing Bank shall be liable or responsible for any of the matters
described in clauses (i) through (vi) of Section 2.06(e); provided, however,
that anything in such clauses to the contrary notwithstanding, the Borrower may
have a claim against any such Issuing Bank, and any such Issuing Bank may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
were caused by such Issuing Bank’s willful misconduct or gross negligence or
such Issuing Bank’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit, as
determined in each case by a final and non-appealable judgment of a court of
competent jurisdiction. In furtherance and not in limitation of the foregoing,
any Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary (or such Issuing Bank may refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit), and such Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

(g) Cash Collateral. Upon the request of the ABL Administrative Agent, (i) if
any Issuing Bank has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an LC Borrowing that remains
outstanding, or (ii) if, as of the Letter of Credit Expiration Date, any LC
Obligation for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then outstanding amount of all LC Exposure.
Sections 2.11, 2.18(b) and 9.05 set forth certain additional requirements to
deliver Cash Collateral hereunder. The Borrower hereby grants to the Collateral
Agent a security

 

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interest in all such cash, deposit accounts and all balances therein and all
proceeds of the foregoing. Cash Collateral shall be maintained in a blocked
deposit account at Wells Fargo (the “LC Collateral Account”). If, at any time,
the ABL Administrative Agent determines that any funds held as Cash Collateral
are subject to any right or claim of any Person other than the ABL
Administrative Agent or that the total amount of such funds is less than the
aggregate outstanding amount of all LC Exposure, the Borrower will, forthwith
upon demand by the ABL Administrative Agent, pay to the ABL Administrative
Agent, as additional funds to be deposited as Cash Collateral, an amount equal
to the excess of (x) such aggregate outstanding amount over (y) the total amount
of funds, if any, then held as Cash Collateral that the ABL Administrative Agent
determines to be free and clear of any such right and claim. Upon the drawing of
any Letter of Credit for which funds are on deposit as Cash Collateral, such
funds shall be applied, to the extent permitted under applicable law, to
reimburse the applicable Issuing Bank; to the extent not so applied, such funds
shall thereafter be applied to satisfy other Obligations.

(h) Applicability of ISP and UCP. Unless otherwise expressly agreed by an
Issuing Bank and the Borrower when a Letter of Credit is issued, (i) the rules
of the ISP shall apply to each Standby Letter of Credit, and (ii) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce at the time of issuance shall
apply to each Trade Letter of Credit.

(i) Letter of Credit Fees. The Borrower shall pay to the ABL Administrative
Agent for the account of each Revolving Lender in accordance with its Applicable
Percentage, a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter
of Credit equal to the product of (i) the daily Stated Amount under each such
Letter of Credit, multiplied by (ii) (x) in the case of each Letter of Credit
that is a Standby Letter of Credit, 2.0%, or (y) in the case of each Letter of
Credit that is a Trade Letter of Credit, 1.5%. For purposes of computing the
daily Stated Amount available to be drawn under any Letter of Credit, the Stated
Amount of such Letter of Credit shall be determined in accordance with Section
1.05; provided that, for purposes only of calculating the Letter of Credit Fee
owing hereunder, the daily Stated Amount available to be drawn under any Letter
of Credit that provides for one or more automatic increases in the Stated Amount
thereof shall be deemed to be the maximum Stated Amount then in effect under
such Letter of Credit (at the time of each such calculation of the Letter of
Credit Fee), rather than the maximum Stated Amount for which such Letter of
Credit may be honored. Letter of Credit Fees shall be (i) due and payable in
arrears on the first day of each of April, July, October and January commencing
with the first such date to occur after the issuance of such Letter of Credit)
and on the Letter of Credit Expiration Date, and (ii) computed on a quarterly
basis in arrears; provided that, upon the occurrence and during the continuance
of an Event of Default, Letter of Credit Fees shall be (i) due and payable in
arrears on the last day of each month (commencing with the first such date to
occur after the issuance of such Letter of Credit) and on the Letter of Credit
Expiration Date, and (ii) computed on a monthly basis in arrears.
Notwithstanding anything to the contrary contained herein, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the rate provided in
Section 2.13(d) hereof.

(j) Fronting Fee and Documentary and Processing Charges Payable to Issuing
Banks. The Borrower shall pay to each Issuing Bank, a fronting fee (the
“Fronting Fee”) with respect to each Letter of Credit at a rate equal to
0.125% per annum, computed on the daily Stated Amount available to be drawn
under such Letter of Credit. For purposes of computing the

 

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daily Stated Amount available to be drawn under any Letter of Credit, the Stated
Amount of such Letter of Credit shall be determined in accordance with Section
1.05; provided that, for purposes only of calculating the Fronting Fee owing
hereunder, the daily Stated Amount available to be drawn under any Letter of
Credit that provides for one or more automatic increases in the Stated Amount
thereof shall be deemed to be the maximum Stated Amount then in effect under
such Letter of Credit (at the time of each such calculation of the Fronting
Fee), rather than the maximum Stated Amount for which such Letter of Credit may
be honored. Fronting Fees shall be due and payable on a quarterly basis in
arrears on the first day of each of April, July, October and January (commencing
with the first such date to occur after the issuance of such Standby Letter of
Credit) and on the Letter of Credit Expiration Date; provided that, upon the
occurrence and during the continuance of an Event of Default, Fronting Fees
shall be due and payable on a monthly basis in arrears on the last day of each
month (commencing with the first such date to occur after the issuance of such
Standby Letter of Credit) and on the Letter of Credit Expiration Date. In
addition, the Borrower shall pay to each Issuing Bank the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of such Issuing Bank relating to letters of credit as from time to time
in effect. Such customary fees and standard costs and charges are due and
payable on demand and are nonrefundable.

(k) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

(l) Replacement of Issuing Banks. Any Issuing Bank may be replaced at any time
by written agreement among the ABL Administrative Agent, the replaced Issuing
Bank and the successor Issuing Bank, with notice thereof to the Borrower. The
ABL Administrative Agent shall notify the Revolving Lenders of any such
replacement of any Issuing Bank. At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of the
replaced Issuing Bank pursuant to Section 2.06(j). From and after the effective
date of any such replacement, (i) the successor Issuing Bank shall have all the
rights and obligations of the replaced Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein
to the term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit.

SECTION 2.07 Funding of Borrowings.

(a) Each Revolving Lender shall make each ABL Revolving Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 3:00 p.m., New York time, to the account of the ABL Administrative
Agent most recently designated by it for such purpose by notice to the Revolving
Lenders in an amount equal to such Revolving Lender’s Applicable Percentage;
provided that Swingline Loans shall be made as provided in Section 2.05. The ABL
Administrative Agent will make such ABL Revolving Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to the
Funding Account; provided that Base Rate ABL Revolving Loans made to finance the

 

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reimbursement of (i) an LC Borrowing as provided in Section 2.06(c) shall be
remitted by the ABL Administrative Agent to the applicable Issuing Bank and
(ii) a Protective Advance shall be retained by the ABL Administrative Agent.

(b) Unless the ABL Administrative Agent shall have received notice from a
Revolving Lender prior to the proposed date of any Borrowing that such Revolving
Lender will not make available to the ABL Administrative Agent such Revolving
Lender’s share of such Borrowing, the ABL Administrative Agent may assume that
such Revolving Lender has made such share available on such date in accordance
with clause (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Revolving
Lender has not in fact made its share of the applicable Borrowing available to
the ABL Administrative Agent, then the applicable Revolving Lender agrees to pay
to the ABL Administrative Agent forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the ABL
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the ABL Administrative Agent in accordance with banking
industry rules on interbank compensation. In the event such Revolving Lender
does not pay such amount to the ABL Administrative Agent promptly, the Borrower
shall pay such amount to the ABL Administrative Agent with interest thereon for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of such repayment to the ABL Administrative
Agent at the interest rate applicable to Base Rate Loans. If such Revolving
Lender pays such amount to the ABL Administrative Agent, then such amount shall
constitute such Revolving Lender’s ABL Revolving Loan included in such
Borrowing.

SECTION 2.08 [Reserved.]

SECTION 2.09 Termination and Reduction of Revolving Commitments.

(a) Unless previously terminated, all Revolving Commitments of the Revolving
Lenders shall terminate on the Revolving Credit Termination Date, and the
Borrower shall pay, in full and in cash, all outstanding Loans and all other
outstanding Obligations then owing to the Lenders.

(b) The Borrower may, at any time, terminate in whole the Revolving Commitments
upon (i) the payment in full of all outstanding Loans, together with accrued and
unpaid interest thereon, (ii) the cancellation and return of all outstanding
Letters of Credit (or, alternatively, the Cash Collateralization (or, at the
discretion of the ABL Administrative Agent, the furnishing to the ABL
Administrative Agent of a back up standby letter of credit satisfactory to the
ABL Administrative Agent) of each such Letter of Credit as of such date),
(iii) the payment in full of the accrued and unpaid fees and (iv) the payment in
full of all reimbursable expenses and other Obligations together with accrued
and unpaid interest thereon.

(c) The Borrower may from time to time reduce the Revolving Commitments;
provided that (i) each such reduction of the Revolving Commitments shall be in
an aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof and (ii) the Borrower shall not reduce the Revolving Commitments if,
after giving effect to any

 

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concurrent prepayment of the ABL Revolving Loans in accordance with Section
2.11, the total Revolving Exposure would exceed the Maximum Revolving
Availability.

(d) The Borrower shall notify the ABL Administrative Agent of any election to
terminate or reduce the Revolving Commitments under clauses (c) or (d) of this
Section 2.09 at least three (3) Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the ABL Administrative Agent
shall advise the Revolving Lenders of the contents thereof. Each notice
delivered by the Borrower pursuant to this Section 2.09 shall be irrevocable;
provided that a notice of termination of the Revolving Commitments delivered by
the Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the ABL Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Revolving Commitments shall be permanent. Each reduction of the Revolving
Commitments shall be applied ratably to the Revolving Commitments of each
Revolving Lender.

SECTION 2.10 Repayment of Loans; Evidence of Debt.

(a) The Borrower hereby unconditionally promises to pay in cash (i) to the ABL
Administrative Agent, for the account of each Revolving Lender, the then unpaid
principal amount of each ABL Revolving Loan and all other outstanding
Obligations then owing to the Revolving Lenders on the Revolving Credit
Termination Date, (ii) to the ABL Administrative Agent the then unpaid amount of
each Protective Advance on the earlier of (A) the applicable Revolving Credit
Termination Date or (B) demand by the ABL Administrative Agent, (iii) to the ABL
Administrative Agent, for the account of each FILO Lender, the then unpaid
principal amount of the FILO Term Loan and all other outstanding Obligations
then owing to the FILO Lenders on the Termination Date, (iv) to the ABL
Administrative Agent, for the account of each Supplemental Term Lender, the then
unpaid principal amount of the Supplemental Term Loan and all other outstanding
Obligations then owing to the Supplemental Term Lenders on the Termination Date,
and (v) to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the earlier of the Revolving Credit Termination Date and the
first date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least two Business Days after such Swingline Loan is
made; provided that on each date that an ABL Revolving Loan is made, the
Borrower shall repay all Swingline Loans then outstanding.

(b) On each Business Day, at or before 4:00 p.m., New York time, the ABL
Administrative Agent shall apply all immediately available funds credited to the
Collection Account in accordance with Section 2.18(b).

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

(d) The ABL Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder and the Class thereof,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each

 

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Lender hereunder and (iii) the amount of any sum received by the ABL
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof.

(e) The entries made in the accounts maintained pursuant to clause (c) or (d) of
this Section 2.10 shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Lender or the
ABL Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.

(f) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in substantially
the form attached hereto as Exhibit E-1, E-2, E-3 or E-4, as applicable in an
aggregate principal amount equal to such Lender’s Revolving Commitment, FILO
Commitment, Supplemental Term Commitment or, in the case of the Note evidencing
the Swingline Loans, $20,000,000. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

(g) The Borrower hereby unconditionally promises to pay to the ABL
Administrative Agent, for the account of each FILO Lender on a pro rata basis,
$187,500 on the first day of each calendar quarter commencing on July 1, 2013
which shall be applied as reduction of the outstanding principal balance of the
FILO Term Loan.

(h) The Borrower hereby unconditionally promises to pay to the ABL
Administrative Agent, for the account of each Supplemental Term Lender on a pro
rata basis, $291,812.50 on the first day of each calendar quarter commencing on
July 1, 2013 which shall be applied as reduction of the outstanding principal
balance of the Supplemental Term Loan.

SECTION 2.11 Prepayment of Loans.

(a) The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to prior notice in accordance
with clause (d) of this Section 2.11, subject to the Borrower’s reimbursement of
breakage and redeployment costs in the case of prepayment of LIBOR borrowings;
provided that (i) the Borrower shall not voluntarily prepay any portion of the
Supplemental Term Loan, and (ii) no portion of the FILO Term Loan may be
voluntarily prepaid unless all other Obligations (other than in respect of the
Supplemental Term Loan) are paid contemporaneously therewith. The Commitments
may be irrevocably reduced or terminated by the Borrower at any time and from
time to time without penalty or premium.

(b) In the event and on such occasion that the aggregate Revolving Exposure
exceeds the Maximum Revolving Availability, the Borrower shall immediately repay
(i) first, the Revolving Exposure (as defined in the Pre-Petition Credit
Agreement) in accordance with Section 2.11(b) of the Pre-Petition Credit
Agreement until such Revolving Exposure has been

 

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reduced to zero, and (ii) second, the ABL Revolving Loans, LC Exposure and/or
Swingline Loans in an aggregate amount equal to any remaining excess (or provide
Cash Collateral in accordance with Section 2.06(g)).

(c) In the event and on each occasion that any Net Proceeds are received by or
on behalf of Holdings or any Loan Party with respect to any Prepayment Event,
the Borrower shall, promptly after such Net Proceeds are received by Holdings or
any Loan Party, prepay the Obligations in accordance with the terms of
Section 2.18(b) in an aggregate amount equal to 100% of such Net Proceeds.

(d) The Borrower shall notify the ABL Administrative Agent (and (i) in the case
of prepayment of a Swingline Loan, the Swingline Lender, and (ii) in the case of
prepayment of the Supplemental Term Loan, the Supplemental Term Agent) by hand
delivery or facsimile of any prepayment hereunder, not later than 1:00 p.m., New
York time, one Business Day before the date of prepayment or (ii) in the case of
prepayment of a Swingline Loan, not later than 1:00 p.m., New York time, on the
date of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.09, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.09. Promptly following
receipt of any such notice relating to a Revolving Borrowing, the ABL
Administrative Agent shall advise the Revolving Lenders of the contents thereof.
Each partial prepayment of any Revolving Borrowing shall be in an amount that
would be permitted in the case of an advance of a Revolving Borrowing as
provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be
applied ratably to the ABL Revolving Loans included in the prepaid Borrowing.
Promptly following receipt of any such notice relating to the Supplemental Term
Loan, the Supplemental Term Agent shall advise the Supplemental Term Lenders of
the contents thereof. Each prepayment of a portion of the Supplemental Term Loan
shall be applied ratably to the Supplemental Term Lenders in accordance with
their Applicable Percentages. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

SECTION 2.12 Fees.

(a) The Borrower agrees to pay to the ABL Administrative Agent for the account
of each Revolving Lender a commitment fee, which shall accrue at a rate of 0.50%
multiplied by the average daily amount of the Available Revolving Commitment of
such Revolving Lender during the period from and including the Effective Date to
but excluding the date on which the Revolving Lenders’ Revolving Commitments
terminate. Accrued commitment fees shall be payable in arrears on the first day
of April, July, October and January and on the Revolving Credit Termination Date
with respect to Revolving Lenders, commencing on the first such date to occur
after the Effective Date. All commitment fees shall be computed on the basis of
a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

(b) The Borrower agrees to pay to the ABL Administrative Agent, on the Effective
Date, (i) for the account of the Revolving Lenders, a closing fee in the amount
of

 

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$1,100,000, (ii) for the account of the FILO Lenders, a closing fee in the
amount of $53,438, and (iii) for the account of the Supplemental Term Lenders, a
closing fee in the amount of $301,143.

(c) The Borrower agrees to pay to the ABL Administrative Agent, for its own
account, an administrative agent’s fee in an amount equal to $75,000 per annum,
which fee shall be fully earned on the Effective Date and on each anniversary
thereof and shall be payable in monthly installments in the amount of $6,250 per
month, commencing on the Effective Date and continuing on each monthly
anniversary thereof, until indefeasible payment in full of the Obligations, the
termination of the Revolving Commitments, and the cancellation and return of all
outstanding Letters of Credit (or, alternatively, the Cash Collateralization
(or, at the discretion of the ABL Administrative Agent, the furnishing to the
ABL Administrative Agent of a back up standby letter of credit satisfactory to
the ABL Administrative Agent) of each such Letter of Credit as of such date).
Any portion of an annual administrative agent’s fee earned and not yet paid as
of the Maturity Date shall be paid in full on the Maturity Date.

(d) The Borrower agrees to pay to the ABL Administrative Agent, for the account
of the Supplemental Term Agent, a supplemental term agent’s fee in an amount
equal to $20,000 per annum, which fee shall be fully earned on the Effective
Date and on each anniversary thereof and shall be payable in monthly
installments in the amount of $1,666.67 per month, commencing on the Effective
Date and continuing on each monthly anniversary thereof, until indefeasible
payment in full of the Obligations in respect of the Supplemental Term Loan. Any
portion of an annual supplemental term agent’s fee earned and not yet paid as of
the Maturity Date shall be paid in full on the Maturity Date.

(e) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the ABL Administrative Agent for distribution to the
applicable Lenders and each Issuing Bank, as appropriate. Fees paid shall not be
refundable under any circumstances except where paid in error.

SECTION 2.13 Interest.

(a) The ABL Revolving Loans (including each Swingline Loan) made by, and owing
to, each Revolving Lender shall bear interest at the Base Rate plus 0.75%.

(b) Each Protective Advance made by, and owing to, a Revolving Lender shall bear
interest at the Base Rate plus 3.00%.

(c) (i) The FILO Term Loan, or portions thereof, shall bear interest at the Base
Rate plus 1.75%. (ii) The Supplemental Term Loan, or portions thereof, shall
bear interest at 9.25% plus the greater of (1) the Adjusted LIBO Rate, or
(2) 0.75%.

(d) Notwithstanding the foregoing, during the occurrence and continuance of any
Event of Default, (i) the ABL Administrative Agent (or, solely with respect to
interest and fees owing to the Supplemental Term Lenders, the Supplemental Term
Agent) may, at its option, declare that (x) all Loans shall bear interest at 2%
plus the rate otherwise applicable to such Loans as provided in the preceding
clauses of this Section 2.13, and/or (y) any fee payable pursuant to Section
2.06(i) shall accrue at 2% plus the rate applicable to such fee or other
obligation as provided hereunder, and (ii) the Required Revolving Lenders, the
Required FILO

 

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Lenders or the Required Supplemental Term Lenders, as applicable, may direct the
ABL Administrative Agent to declare that such interest and/or fees described in
clause (i) above owing to the Revolving Lenders, the FILO Lenders or the
Supplemental Term Lenders, as applicable, shall be so increased by 2%.

(e) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan, upon termination of the Revolving Commitments and
upon the Termination Date; provided that (i) interest accrued pursuant to clause
(d) of this Section 2.13 shall be payable on the first day of each calendar
month (ii) interest accrued pursuant to clause (e) of this Section 2.13 shall be
payable on demand, and (iii) in the event of any repayment or prepayment of any
Loan (other than a prepayment of a Base Rate ABL Revolving Loan prior to the end
of the Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment.

(f) All interest hereunder shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Base Rate, Adjusted LIBO Rate or
LIBO Rate shall be determined by the ABL Administrative Agent, and such
determination shall be conclusive absent manifest error. All Letter of Credit
Fees and Fronting Fees payable pursuant to Sections 2.06(i) and 2.06(j) shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

SECTION 2.14 [Reserved.]

SECTION 2.15 Increased Costs.

(a) If any Change in Law made after the Effective Date shall impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate)
or any Issuing Bank, and the result of any of the foregoing shall be, by an
amount that such Lender deems to be material, to increase the cost to such
Lender or such Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender or such Issuing Bank hereunder (whether of principal, interest or
otherwise) (in each case, other than with respect to any Taxes), then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

(b) If any Lender or any Issuing Bank determines that any Change in Law made
after the Effective Date regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or such Issuing Bank’s
capital or on the capital of such Lender’s or such Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or
such Issuing Bank’s holding company with

 

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respect to capital adequacy), by an amount that such Lender deems to be
material, then from time to time the Borrower will pay to such Lender or such
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or such Issuing Bank or such Lender’s or such Issuing
Bank’s holding company for any such reduction suffered.

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or such Issuing Bank or its holding
company, as the case may be, as specified in clause (a) or (b) of this Section
2.15 shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender or such Issuing Bank, as the case may
be, the amount shown as due on any such certificate within 10 days after receipt
thereof.

(d) Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section 2.15 shall not constitute a waiver of such
Lender’s or such Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section 2.15 for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or such Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or such Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

SECTION 2.16 [Reserved.]

SECTION 2.17 Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required under applicable Law to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the ABL Administrative Agent, the
Supplemental Term Agent, a Lender or an Issuing Bank (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

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

(c) The Borrower shall indemnify the ABL Administrative Agent, the Supplemental
Term Agent, each Lender and each Issuing Bank, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the ABL Administrative Agent, the Supplemental Term Agent, such Lender
or such Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or

 

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attributable to amounts payable under this Section) and, to the extent that the
payment of the Indemnified Taxes or Other Taxes was the responsibility of the
Borrower and within the Borrower’s control, any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by the Supplemental Term
Agent, a Lender or an Issuing Bank, or by the ABL Administrative Agent on its
own behalf or on behalf of the Supplemental Term Agent, such Lender or such
Issuing Bank, shall be conclusive absent manifest error.

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

(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
ABL Administrative Agent), at the time or times prescribed by applicable law,
such properly completed and executed documentation prescribed by applicable law
or reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

(f) If any Lender, the ABL Administrative Agent or the Supplemental Term Agent
shall become aware that it is entitled to receive a refund in respect of amounts
paid by the Borrower pursuant to this Section 2.17, which refund in the sole
good faith judgment of such Lender, the ABL Administrative Agent or the
Supplemental Term Agent is allocable to such payment, it shall promptly notify
the Borrower of the availability of such refund and shall, within thirty
(30) days after the receipt of a request by the Borrower, apply for such refund.
If the ABL Administrative Agent, the Supplemental Term Agent or a Lender
determines, in its sole good faith discretion, that it has received a refund of
any Taxes or Other Taxes as to which it has been indemnified by the Borrower or
with respect to which the Borrower has paid additional amounts pursuant to this
Section 2.17, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the ABL Administrative Agent,
the Supplemental Term Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of the ABL Administrative
Agent, the Supplemental Term Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the ABL Administrative Agent, the
Supplemental Term Agent or such Lender in the event the ABL Administrative
Agent, the Supplemental Term Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section shall not be construed to
require the ABL Administrative Agent, the Supplemental Term Agent or any Lender
to make available its tax returns (or any other information relating to its
taxes which it deems confidential) to the Borrower or any other Person.

 

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SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 1:00
p.m., New York time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the ABL Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the ABL Administrative
Agent at its offices at 270 Park Avenue, New York, New York, except payments to
be made directly to either an Issuing Bank or the Swingline Lender as expressly
provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17
and 9.03 shall be made directly to the Persons entitled thereto. The ABL
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

(b) Any amounts received on account of the Obligations by the ABL Administrative
Agent (x) not constituting a specific payment of principal, interest, fees or
other sum payable under the Loan Documents (which shall be applied as specified
by the Borrower so long as no Event of Default has occurred and is continuing
(in which event the following clause (y) below shall apply)), or (y) after an
Event of Default has occurred and is continuing, shall be applied by the ABL
Administrative Agent in the following order, in each case whether or not such
Obligations are allowed or allowable in any bankruptcy or insolvency proceeding
or under any applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally:

(i) With respect to any and all amounts, other than the proceeds from
Supplemental Term Priority Collateral, ratably as follows:

first, to pay any fees, indemnities, or expense reimbursements including amounts
then due to the ABL Administrative Agent and any Issuing Bank from the Borrower
(other than in connection with Bank Products),

second, to pay any expense reimbursements due to the Revolving Lenders, the FILO
Lenders and the Swingline Lender from the Borrower (other than in connection
with Bank Products),

third, to pay any fees then due to the Lenders (other than the Supplemental Term
Lenders), ratably,

fourth, to pay any expense reimbursements due to the Supplemental Term Agent
from the Borrower (other than in connection with Bank Products), with respect to
the realization on the ABL Priority Collateral, in an aggregate amount

 

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not to exceed, when combined with all amounts paid under clause fifth below,
$150,000;

fifth, to pay any expense reimbursements due to the Supplemental Term Lenders
from the Borrower (other than in connection with Bank Products), with respect to
the realization on the ABL Priority Collateral, in an aggregate amount not to
exceed, when combined with all amounts paid under clause fourth above, $150,000;

sixth, to pay interest due in respect of the Protective Advances,

seventh, to pay the principal of the Protective Advances,

eighth, to pay the Pre-Petition Liabilities (other than in respect of the
Supplemental Term Loan (as defined in the Pre-Petition Credit Agreement)) in
accordance with Section 2.18 of the Pre-Petition Credit Agreement,

ninth, to pay interest then due and payable on the Loans (other than the
Protective Advances, the FILO Term Loan and the Supplemental Term Loan) ratably,

tenth, to prepay principal on the Loans (other than the Protective Advances, the
FILO Term Loan and the Supplemental Term Loan) and LC Borrowings ratably,

eleventh, to pay an amount to the ABL Administrative Agent to Cash Collateralize
the aggregate undrawn face amount of all outstanding Letters of Credit and the
aggregate amount of any unpaid LC Borrowings,

twelfth, to payment of any amounts owing with respect to (i) Bank Products of
the type described in clause (b) of the definition of such term, and (ii) other
Bank Products (including Swap Agreements) to the extent of any Bank Product
Reserve imposed therefor,

thirteenth, to the payment of interest then due on the FILO Term Loan,

fourteenth, to the payment of the principal balance of the FILO Term Loan,

fifteenth, to pay any fees or expense reimbursements then due to the
Supplemental Term Lenders from the Borrower,

sixteenth, to the payment of interest then due on the Supplemental Term Loan,

 

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seventeenth, to the payment of the principal balance of the Supplemental Term
Loan, and

eighteenth, to payment of any remaining Bank Product Obligations, and

nineteenth, to the payment of any other Secured Obligation due to the ABL
Administrative Agent, the Supplemental Term Agent, any Issuing Bank or any
Lender and the Cash Collateralization of any Unliquidated Obligations.

Subject to Section 2.06, amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Seventh above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

(ii) With respect to any and all proceeds from Supplemental Term Priority
Collateral:

first, to pay any indemnities or expense reimbursements due to the ABL
Administrative Agent from the Borrower (other than in connection with Bank
Products), with respect to the realization on the Supplemental Term Priority
Collateral,

second, to pay any indemnities or expense reimbursements due to the Supplemental
Term Agent from the Borrower;

third, to pay any expense reimbursements due to the Supplemental Term Lenders
from the Borrower,

fourth, to pay any expense reimbursements due to the Lenders (other than the
Supplemental Term Lenders) from the Borrower (other than in connection with Bank
Products), with respect to the realization on the Supplemental Term Priority
Collateral,

fifth, to pay any fees then due to the Supplemental Term Agent and the
Supplemental Term Lenders, ratably,

sixth, to pay interest due in respect of the Supplemental Term Loan,

seventh, to pay the principal of the Supplemental Term Loan,

eighth, to the payment of any other Secured Obligation due to the Supplemental
Term Agent or any Supplemental Term Lender in respect of the Supplemental Term
Loan,

 

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ninth, to payment of the remaining Obligations, in accordance with the
priorities established pursuant to Section 2.18(b)(i) above; and

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Requirements of
Law.

The ABL Administrative Agent, the Supplemental Term Agent and the Lenders shall
have the continuing and exclusive right to apply and reverse and reapply any and
all such proceeds and payments to any portion of the Secured Obligations.
Notwithstanding the foregoing, the proceeds of Term Facility Primary Collateral
and ABL Facility Primary Collateral shall be applied as between the Lenders and
the Term Lenders, in the manner set forth in the Intercreditor Agreement.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this clause shall not be construed to apply
to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Restricted Subsidiary or, except as
specifically permitted by this Agreement, an Affiliate thereof (in each case as
to which the provisions of this clause shall apply).

(d) Unless the ABL Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the ABL Administrative
Agent or the Supplemental Term Agent (in each case for the account of the
applicable Lenders) or an Issuing Bank hereunder that the Borrower will not make
such payment, the ABL Administrative Agent and the Supplemental Term Agent may
assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
such Issuing Bank, as the case may be, on such due date the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or each Issuing Bank, as the case may be, severally agrees to repay to
the ABL Administrative Agent and the Supplemental Term Agent forthwith on demand
the amount so distributed to such Lender or such Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the ABL Administrative Agent or the
Supplemental Term Agent, as the case may be, at the greater of the Federal Funds
Effective Rate

 

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and a rate determined by the ABL Administrative Agent in accordance with banking
industry rules on interbank compensation.

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

SECTION 2.19 Mitigation Obligations; Replacement of Lenders. If any Lender
requests compensation under Section 2.15, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then:

(a) such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Sections 2.15 or 2.17, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender (and the
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment);

(b) if any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, or if any
Lender is a Defaulting Lender or a Deteriorating Lender, the Borrower may, at
its sole expense and effort, upon notice to such Lender, the ABL Administrative
Agent and the Supplemental Term Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the ABL Administrative
Agent, each Issuing Bank and, in the case of Supplemental Term Lenders, the
Supplemental Term Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.

SECTION 2.20 Returned Payments; Separate Claims and Classifications.

 

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(a) Returned Payments. If after receipt of any payment which is applied to the
payment of all or any part of the Obligations, the ABL Administrative Agent, the
Supplemental Term Agent, any Issuing Bank or any Lender is for any reason
compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds, or for any other reason, then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the ABL Administrative Agent, the Supplemental Term Agent or
such Lender. The provisions of this Section 2.20 shall be and remain effective
notwithstanding any contrary action which may have been taken by the ABL
Administrative Agent, the Supplemental Term Agent, any Issuing Bank or any
Lender in reliance upon such payment or application of proceeds. The provisions
of this Section 2.20 shall survive the termination of this Agreement and the
payment in full of the Obligations.

(b) Separate Claims and Classifications. Each of the parties hereto acknowledges
and agrees that because of, among other things, their differing rights and
priorities in the Collateral, the claims of the Revolving Lenders and the FILO
Lenders, on one hand, and the Supplemental Term Lenders, on the other hand, in
respect of the Collateral are fundamentally different from each other, and the
claims of the Loans (other than the Supplemental Term Loan), on one hand, and
the Supplemental Term Loan, on the other hand, in respect of any Collateral must
be separately classified in any bankruptcy or other proceeding under any
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally. To further effectuate the intent of the
parties as provided in the immediately preceding sentence, if it is held that,
in respect of any Collateral, the Loans (other than the Supplemental Term Loan),
and/or the Supplemental Term Loan, on the other hand, in respect of such
Collateral constitute only one secured claim (rather than separate classes of
secured claims), then all distributions shall be made as if there were separate
classes of secured claims in respect of any Collateral and, to the extent that
any holder of the Loans (other than the Supplemental Term Loan), and/or the
Supplemental Term Loan, on the other hand, receives distributions in respect of
the Collateral, such distributions shall be held in trust by the receiving party
and distributed giving effect to the foregoing.

SECTION 2.21 Effective Date Adjustments with respect to Existing Letters of
Credit. On the Effective Date, (i) each Revolving Lender hereunder irrevocably
agrees to accept and purchase and hereby accepts and purchases from each Issuing
Bank and from each Revolving Lender (as each such term is defined in the
Pre-Petition Credit Agreement) with an interest in an Existing Letter of Credit
immediately prior to the Effective Date pursuant to Section 2.06(d) of the
Pre-Petition Credit Agreement, on the terms and conditions set forth in Section
2.06 of this Agreement, for such Revolving Lender’s own account and risk, an
undivided interest equal to such Revolving Lender’s Applicable Percentage in
such Issuing Bank’s obligations and rights under and in respect of each Existing
Letter of Credit and the amount of each draft paid by such Issuing Bank
thereunder and (ii) each Issuing Bank and each Revolving

 

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Lender with an interest in an Existing Letter of Credit immediately prior to the
Effective Date pursuant to Section 2.06(d) of the Pre-Petition Credit Agreement
hereby irrevocably agrees to sell and assign and hereby sells and assigns an
undivided interest in such Issuing Bank’s obligations and rights under and in
respect of each Existing Letter of Credit, as necessary to achieve ratable
interests in the Existing Letters of Credit for each Revolving Lender in
accordance with its Applicable Percentage hereunder.

ARTICLE III

Representations and Warranties

Each Loan Party jointly and severally represents and warrants to the ABL
Administrative Agent, the Supplemental Term Agent, the Issuing Banks and the
Lenders that:

SECTION 3.01 Organization; Powers. Each of the Loan Parties and each of its
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (ii) subject to the entry of
the DIP Orders, has all requisite power and authority to carry on its business
as now conducted, and (iii) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required (except
where the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect).

SECTION 3.02 Authorization; Enforceability. Execution, delivery and performance
of this Agreement and the other Loan Documents are within each Loan Party’s
corporate or limited liability company powers and, upon the entry of the DIP
Orders, have been duly authorized by all necessary corporate or limited
liability company and, if required, stockholder action. The Loan Documents to
which each Loan Party is a party have been duly executed and delivered by such
Loan Party and, upon the entry of the DIP Orders, constitute a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its terms.

SECTION 3.03 Governmental Approvals; No Conflicts. Upon entry of the DIP Orders,
execution, delivery and performance of this Agreement, the other Loan Documents
and the consummation of the Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority or any other Person, except such as have been obtained or
made and are in full force and effect and except for filings necessary to
perfect Liens created pursuant to the Loan Documents, (b) will not violate any
Requirement of Law applicable to any Loan Party or any of its Subsidiaries,
(c) do not conflict with or will not violate or result in a default under any
material indenture, material agreement or other material instrument binding upon
any Loan Party or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by any Loan Party or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of any Loan Party or any of its Subsidiaries, except Liens created
pursuant to the Loan Documents.

 

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SECTION 3.04 Budget; No Material Adverse Change.

(a) The initial Budget delivered to the Agents and the Supplemental Term Agent
was prepared in good faith on the basis of the assumptions stated therein, which
assumptions were fair in light of the conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, the Loan
Parties’ best estimate of its future financial performance.

(b) No event, change or condition has occurred that has had, or could reasonably
be expected to have, a Material Adverse Effect, since the Petition Date.

SECTION 3.05 Properties.

(a) As of the Effective Date, Schedule 3.05 sets forth the address of each
parcel of real property that is owned or leased by each Loan Party. Except as an
Effect of Bankruptcy, each of the Loan Parties and its Subsidiaries has good and
indefeasible title to, or valid and enforceable leasehold interests in, all real
and personal property necessary for the conduct of its business, free of all
Liens other than those permitted by Section 6.02 of this Agreement.

(b) Each Loan Party and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
necessary to its business as currently conducted, a correct and complete list of
which, as of the Effective Date, is set forth on Schedule 3.05, and the use
thereof by the Loan Parties and its Subsidiaries does not infringe in any
material respect upon the rights of any other Person, and the Loan Parties’
rights thereto are not subject to any licensing agreement or similar arrangement
affecting any material portion of the Collateral.

SECTION 3.06 Litigation and Environmental Matters.

(a) Other than the Chapter 11 Case, there are no actions, investigations, suits
or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Loan Party, threatened against or affecting
the Loan Parties or any of their Subsidiaries (i) that, if adversely determined,
would reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or (ii) that could
reasonably be expected to have a material adverse effect on the ability of the
parties to consummate the Transactions or the funding of the Loans.

(b) Except for the Disclosed Matters and, except for matters that both could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect and could not reasonably be expected to have a material
adverse effect on the ability of the parties to consummate the Transactions or
the funding of the Loans, (i) no Loan Party nor any of its Subsidiaries has
received notice of any claim with respect to any Environmental Liability or
knows of any basis for any Environmental Liability and (ii) no Loan Party nor
any of its Subsidiaries (1) has failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law or (2) has become subject to any
Environmental Liability.

 

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(c) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in a
Material Adverse Effect.

SECTION 3.07 Compliance with Laws and Agreements. Except as an Effect of
Bankruptcy, each Loan Party and its Subsidiaries is in compliance with all
Requirements of Law applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing under this Agreement. No default has occurred and is continuing under
any indenture, agreement or other instrument binding upon any Loan Party or any
of its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect.

SECTION 3.08 Investment and Holding Company Status. No Loan Party nor any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

SECTION 3.09 Taxes. Each Loan Party and its Subsidiaries has timely filed or
caused to be filed all material Tax returns and reports required to have been
filed and has paid or caused to be paid all material Taxes required to have been
paid by it, except Taxes that are being contested in good faith by appropriate
proceedings and for which such Loan Party or such Subsidiary, as applicable, has
set aside on its books adequate reserves. No tax liens have been filed and no
claims are being asserted with respect to any such taxes.

SECTION 3.10 ERISA.

(a) No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect.

(b) Each employee benefit plan of Holdings, the Borrower or any of the
Borrower’s Subsidiaries intended to qualify under Section 401 of the Code does
so qualify, and any trust created thereunder is exempt from tax under the
provisions of Section 501 of the Code, except where such failures, in the
aggregate, would not have a Material Adverse Effect.

(c) Each Plan is in compliance in all material respects with applicable
provisions of ERISA, the Code and other Requirements of Law except for
non-compliances that, in the aggregate, would not have a Material Adverse
Effect.

SECTION 3.11 Disclosure. The Borrower and Holdings have disclosed to the Agents,
the Supplemental Term Agent and the Lenders all agreements, instruments and
corporate or other restrictions to

 

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which it or any Subsidiary is subject, and all other matters known to it, in
relation to the Transactions that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the
written reports, financial statements (including, without limitation, the
Budget), certificates or other written information furnished by or on behalf of
the any Loan Party to the ABL Administrative Agent, the Supplemental Term Agent
or any Lender in connection with the negotiation of this Agreement or any other
Loan Document (as modified or supplemented by other written information so
furnished) contains or contained as of the date such report, statement,
certificate or information was so furnished any material misstatement of fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not materially
misleading; provided that, with respect to projected financial information and
the Budget, the Borrower and Holdings represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time delivered and, if such projected financial information was delivered prior
to the Effective Date, as of the Effective Date, it being recognized by the
Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered
by such financial information may differ from the projected results set forth
therein by a material amount.

SECTION 3.12 Reserved.

SECTION 3.13 Insurance. Schedule 3.13 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties and the Subsidiaries as of the
Effective Date. As of the Effective Date, all premiums in respect of such
material insurance have been paid. The Borrower and Holdings believe that the
insurance maintained by or on behalf of the Borrower and the Subsidiaries is
adequate.

SECTION 3.14 Capitalization and Subsidiaries.

(a) All of the outstanding Equity Interests of the Borrower are owned
beneficially and of record by Holdings, free and clear of all Liens other than
(i) the Liens in favor of the Agents (for the benefit of the ABL Administrative
Agent, the Supplemental Term Agent, the Issuing Banks and the Lenders), the
Agents (as defined in the Pre-Petition Credit Agreement) (for the benefit of the
ABL Administrative Agent, the Supplemental Term Agent, the Issuing Banks and the
Lenders (as each such term is defined in the Pre-Petition Credit Agreement), the
Term Collateral Agent (for the benefit of the Term Lenders) and the DIP Term
Collateral Agent (for the benefit of the DIP Term Lenders), in each case created
by the Security Agreements, and (ii) non-consensual Liens created by operation
of law. No Equity Interest of the Borrower is subject to any option, warrant,
right of conversion or purchase or any similar right. Other than the Borrower’s
LLC agreement, there are no agreements or understandings to which the Borrower
is a party with respect to the voting, sale or transfer of any Equity Interest
of the Borrower or any agreement restricting the transfer or hypothecation of
any such shares.

 

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(b) Schedule 3.14 sets forth as of the Effective Date, (i) a correct and
complete list showing, the name and relationship to the Borrower of each and all
of the Borrower’s Subsidiaries, (ii) a true and complete listing of each class
of each of such Subsidiaries’ authorized Equity Interests, of which all of such
issued shares are validly issued, outstanding, fully paid and non-assessable,
and owned beneficially and of record by the Persons identified on Schedule 3.14,
and (iii) the type of entity of the Borrower and each of its Subsidiaries.

SECTION 3.15 Security Interest in Collateral. Upon the entry of the DIP Orders,
the Collateral Documents (including the DIP Orders) will create in favor of the
Collateral Agent a legal, valid, unavoidable and enforceable security interest
in the Collateral, subject to the DIP Orders, and the Collateral Agent shall, or
shall upon entry of the DIP Orders, have a fully perfected first priority Lien
on, and security interest in, all right, title and interest of the Loan Parties
thereunder in the Collateral, in each case prior and superior in right to any
other Person, except for Permitted Encumbrances having priority by operation of
applicable law. No further recording, filing or other action of any kind will be
required in connection with the creation, perfection or enforcement of such
security interests and Liens in favor of the Collateral Agent. No other claims
having a priority superior or pari passu to that granted to or on behalf of the
Agents, the Supplemental Term Agent or the Lenders shall be granted or approved
while any of the Obligations or the Commitments remain outstanding.

SECTION 3.16 Labor Disputes. As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to
the knowledge of the Borrower, threatened. All payments due from any Loan Party
or any Subsidiary or for which any claim may be made against any Loan Party or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
such Loan Party or such Subsidiary, except as in the aggregate would not
reasonably be expected to have a Material Adverse Effect.

SECTION 3.17 Margin Regulations. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Federal Reserve Board), and no proceeds of
any Loan will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock
in contravention of Regulation T, U or X of the Federal Reserve Board.

SECTION 3.18 Use of Proceeds. The proceeds of the Loans and the Letters of
Credit are being used by the Borrower solely (i) upon the entry of the Final
Order, to repay the Pre-Petition Liabilities in full (to the extent not
previously paid in full), and (ii) to the extent expressly permitted under the
DIP Orders, and solely in strict compliance with the Budget and this Agreement,
for general corporate purposes of the Borrower. Upon repayment of the
Pre-Petition Liabilities in full, the

 

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Pre-Petition Credit Agreement and any other Pre-Petition Loan Documents will be
deemed satisfied and terminated (it being acknowledged and agreed that all
obligations of the Loan Parties thereunder that survive such termination by
their terms (including, without limitation, indemnification obligations) shall
remain in full force and effect and shall not be deemed satisfied and
terminated).

SECTION 3.19 Collateral Locations. As of the Effective Date, each Loan Party and
each Loan Party’s records concerning Accounts and Credit Card Account
Receivables are located only at the addresses set forth for such Loan Party on
Schedule 3.05 hereto. Schedule 3.05 hereto correctly identifies as of the
Effective Date any of such locations which are not owned by Loan Party and sets
forth the owners and/or operators thereof.

SECTION 3.20 Corporate Names; Prior Transactions. As of the Effective Date, no
Loan Party has, during the past five years, been known by or used any other
corporate or fictitious name (other than as set forth in Schedule 3.20 hereto)
or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property or assets out
of the ordinary course of business.

SECTION 3.21 Credit Card Agreements. Except as could not reasonably be expected
to have a Material Adverse Effect, (a) each of the Credit Card Agreements
constitutes the legal, valid and binding obligations of the Loan Party that is
party thereto and to the best of Borrower’s knowledge, the other parties
thereto, enforceable in accordance with their respective terms and is in full
force and effect, and (b) each Loan Party has complied with all of the material
terms and conditions of the Credit Card Agreements to the extent necessary for
such Loan Party to be entitled to receive payments thereunder.

SECTION 3.22 Master Operating Lease. The Master Operating Lease has not been
amended or modified in any respect and no provision therein has been waived,
except where a copy of such amendment or waiver has been provided by the
Borrower to the ABL Administrative Agent.

SECTION 3.23 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Loan Documents shall
survive the execution and delivery of this Agreement and shall be conclusively
presumed to have been relied on by the ABL Administrative Agent and the
Supplemental Term Agent regardless of any investigation made or information
possessed by the ABL Administrative Agent, the Supplemental Term Agent or any
Lender.

 

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ARTICLE IV

Conditions

SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans and of
the Issuing Banks to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

(a) Credit Agreement and Other Loan Documents. The ABL Administrative Agent and
the Supplemental Term Agent (or their respective counsel) shall have received
(i) from each party hereto either (A) a counterpart of this Agreement signed on
behalf of such party or (B) written evidence satisfactory to the ABL
Administrative Agent and the Supplemental Term Agent (which may include
facsimile transmission (or other electronic image scan) of a signed signature
page of this Agreement) that such party has signed a counterpart of this
Agreement, (ii) duly executed copies of the other Loan Documents and such other
certificates, documents, instruments and agreements as the ABL Administrative
Agent or the Supplemental Term Agent shall reasonably request in connection with
the transactions contemplated by this Agreement and the other Loan Documents,
including any Notes requested by a Lender pursuant to Section 2.10 payable to
the order of each such requesting Lender, and (iii) without limiting the
generality of the foregoing, a duly executed copy of an amendment to the
Intercreditor Agreement, in form and substance satisfactory to the ABL
Administrative Agent and the Supplemental Term Agent, from each party thereto.

(b) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The ABL Administrative Agent and the Supplemental Term Agent shall
have received (i) a certificate of each Loan Party, dated the Effective Date and
executed by its Secretary or Assistant Secretary, which shall (A) certify the
resolutions of its Board of Directors, members or other body authorizing the
execution, delivery and performance of the Loan Documents to which it is a
party, (B) identify by name and title and bear the signatures of the Financial
Officers and any other officers of such Loan Party authorized to sign the Loan
Documents to which it is a party, and (C) contain appropriate attachments,
including the certificate or articles of incorporation or organization of each
Loan Party certified by the relevant authority of the jurisdiction of
organization of such Loan Party and a true and correct copy of its by-laws or
operating, management or partnership agreement, and (ii) a long form good
standing certificate for each Loan Party from its jurisdiction of organization.

(c) No Default Certificate. The ABL Administrative Agent and the Supplemental
Term Agent shall have received a certificate, signed by a Secretary or Assistant
Secretary of the Borrower, on behalf of itself and the other Loan Parties,
(i) stating that no Default or Event of Default has occurred and is continuing,
(ii) stating that the representations and warranties contained in Article III
are true and correct as of such date, and (iii) certifying any other factual
matters as may be reasonably requested by the ABL Administrative Agent or the
Supplemental Term Agent.

 

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(d) Fees. The Lenders, the ABL Administrative Agent and the Supplemental Term
Agent shall have received all fees required to be paid, and all expenses for
which invoices have been presented (including the reasonable fees and expenses
of legal counsel (including any local counsel)), on or before the Effective
Date, including, without limitation, any and all expenses incurred by the ABL
Administrative Agent, the Collateral Agent, the Supplemental Term Agent, any
Issuing Bank or any Lender (as each such term is defined in the Pre-Petition
Credit Agreement) or any of their respective Affiliates, including the
reasonable fees, charges and disbursements of counsel, in connection with the
Pre-Petition Loan Documents or the Pre-Petition Liabilities, including any
expenses incurred in connection with the administration of the loan facilities
contemplated by the Pre-Petition Loan Documents or any amendments, modifications
or waiver to any Pre-Petition Loan Document, in each case, to the extent
incurred prior to the Petition Date and outstanding as of the Effective Date.
All such amounts may be paid with proceeds of Loans made on the Effective Date
and, if such amounts are paid with proceeds of Loans, such amounts will be
reflected in the funding instructions given by the Borrower to the ABL
Administrative Agent or the Supplemental Term Agent, as applicable, on or before
the Effective Date.

(e) Lien Searches. The ABL Administrative Agent and the Supplemental Term Agent
shall have received the results of a recent lien search in the jurisdictions
where each of the Loan Parties are incorporated or organized, and such search
shall reveal no liens on any of the assets of the Loan Parties except for liens
permitted by Section 6.02 or discharged on or prior to the Effective Date
pursuant to a pay-off letter or other documentation satisfactory to the ABL
Administrative Agent and the Supplemental Term Agent.

(f) Borrowing Base Certificate. The ABL Administrative Agent and the
Supplemental Term Agent shall have received a Borrowing Base Certificate which
calculates the Revolving Borrowing Base, the Supplemental Term Borrowing Base
and the amounts described in Section 2.01(b)(iii)(A) as of the end of the week
immediately preceding the Effective Date, dated as of the Effective Date and
executed by a Financial Officer of the Borrower.

(g) Budget. The ABL Administrative Agent, the Supplemental Term Agent shall have
received and be satisfied with (a) an initial Budget of Loan Parties and a
reasonably detailed professional fee budget, and (b) such other information
(financial or otherwise) reasonably requested by the ABL Administrative Agent or
the Supplemental Term Agent.

(h) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the Collateral Documents or
under law or reasonably requested by the ABL Administrative Agent or the
Supplemental Term Agent to be filed, registered or recorded in order to create
in favor of the ABL Administrative Agent, for the benefit of the Lenders, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 6.02 having priority by operation of applicable law) and a
super-priority administrative claim with the priority set forth in the Interim
Borrowing Order, shall be in proper form for filing, registration or
recordation, and the Interim Borrowing Order shall have been entered.

(i) Reserved.

 

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(j) Motions. All motions and other documents to be filed with and submitted to
the Bankruptcy Court in connection with the DIP Orders and this Agreement
(including, without limitation, the Bidding Procedures Motion and the Sale Order
Motion) shall be in form and substance reasonably satisfactory to the ABL
Administrative Agent and the Supplemental Term Agent. The Interim Borrowing
Order and the Cash Management Order shall have been entered, shall be in full
force and effect, and shall not have been reversed, vacated or stayed, or
modified without the prior written consent of the ABL Administrative Agent and
the Supplemental Term Agent, and all other necessary consents and approvals to
the transactions contemplated hereby shall have been obtained and shall be
reasonably satisfactory to the ABL Administrative Agent and the Supplemental
Term Agent.

(k) Adequate Protection. The Bankruptcy Court shall have entered an order
granting the lenders under the Pre-Petition Credit Agreement adequate protection
of their interests, which order shall be in form and substance reasonably
acceptable to the ABL Administrative Agent and the Supplemental Term Agent under
the Pre-Petition Credit Agreement and to the ABL Administrative Agent and the
Supplemental Term Agent hereunder.

(l) No Challenge. (a) There shall not have been filed any pleading by any Person
challenging the validity, priority, perfection, or enforceability of the Loan
Documents (as defined in the Pre-Petition Credit Agreement), the Pre-Petition
Liabilities, or any Lien granted pursuant to the Pre-Petition Loan Documents,
and (b) no Lien granted pursuant to the Pre-Petition Loan Documents shall have
been determined to be null and void, invalid or unenforceable by the Bankruptcy
Court or another court of competent jurisdiction in any action commenced or
asserted by any other party in interest in the Chapter 11 Case, including,
without limitation, the Creditors’ Committee.

(m) Insurance. The ABL Administrative Agent and the Supplemental Term Agent
shall have received evidence that all insurance required to be maintained
pursuant to the Loan Documents and all endorsements in favor of the ABL
Administrative Agent required under the Loan Documents have been obtained and
are in effect.

(n) Consents and Approvals. The Borrower and Guarantors shall have obtained all
governmental consents and approvals, and all third party consents required for
the Borrower and Guarantors to consummate the financing contemplated by the Loan
Documents.

(o) Other Documents. The ABL Administrative Agent and the Supplemental Term
Agent shall have received such other documents as the ABL Administrative Agent,
the Supplemental Term Agent, any Issuing Bank, any Lender or their respective
counsel may have reasonably requested.

The ABL Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Banks to issue, amend, renew
or extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

 

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(a) The representations and warranties of the Loan Parties set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such Borrowing as if made on and as of such date, except to the extent
that any such representation or warranty is expressly qualified by
“materiality”, “Material Adverse Effect” or words of similar import, in which
case, such representation and warranty shall be true and correct in all respects
on and as of the date of such Borrowing (except that representations and
warranties which relate to a specific earlier date shall be true and correct in
all material respects, or true and correct in all respects, as applicable, as of
such earlier date).

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default or Event of Default shall have occurred and be
continuing.

(c) The aggregate Revolving Exposure outstanding on the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, after giving effect to the applicable Borrowing, issuance, amendment,
renewal or extension of a Letter of Credit, shall not exceed the Maximum
Revolver Availability.

(d) There shall not be proceeding pending or threatened seeking to invalidate or
avoid, or any order invalidating or avoiding, the pre-petition claims, security
interests and liens securing the Pre-Petition Liabilities or sustaining any
other similar challenge under Chapter 5 of the Bankruptcy Code.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in clauses (a), (b),
(c) and (d) of this Section 4.02.

ARTICLE V

Affirmative Covenants

Until the Revolving Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated or
been Cash Collateralized and all LC Disbursements shall have been reimbursed,
each Loan Party covenants and agrees, jointly and severally with all of the Loan
Parties, in favor of the ABL Administrative Agent, the Supplemental Term Agent,
the Issuing Banks and the Lenders that:

SECTION 5.01 Financial Statements; Borrowing Base and Other Information. The
Borrower or Holdings will furnish to the ABL Administrative Agent, the
Supplemental Term Agent and each Lender:

(a) as soon as available and in any event within 95 days after the end of each
fiscal year of Holdings, its audited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by

 

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independent public accountants of recognized national standing (without any
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of Holdings and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;

(b) as soon as available and in any event within 50 days after the end of each
of the fiscal quarters of Holdings, its consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied subject to normal year-end
audit adjustments and the absence of footnotes;

(c) as soon as available and in any event within 20 days after the end of each
fiscal month of Holdings, its consolidated balance sheet and related statements
of operations, stockholders’ equity and cash flows as of the end of and for such
fiscal month and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of operations of
Holdings and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied subject to normal year-end audit adjustments and
the absence of footnotes;

(d) concurrently with the delivery of each set of financial statements referred
to in Section 5.01(a), (b) and (c) above, a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management’s Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of Holdings and
its Subsidiaries separate from the financial condition and results of operations
of the Real Property Holding Company;

(e) concurrently with any delivery of financial statements under financial
statements referred to in Section 5.01(a), (b) and (c) above, a certificate of a
Financial Officer of the Borrower in substantially the form of Exhibit C
certifying as to whether a Default or Event of Default has occurred and, if a
Default or Event of Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto;

(f) concurrently with any delivery of financial statements referred to in
Section 5.01(a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default or Event
of Default (which certificate may be limited to the extent required by
accounting rules or guidelines);

(g) [reserved];

 

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(h) on Tuesday of each week, (i) a weekly Borrowing Base Certificate, which
shall reflect (A) the updated Eligible Credit Card Account Receivables as of the
end of the immediately preceding week and (B) Eligible Inventory as stated in
the immediately preceding monthly Borrowing Base Certificate, which Borrowing
Base Certificate shall be accompanied by supporting documentation and additional
reports with respect to the Revolving Borrowing Base, the Supplemental Term
Borrowing Base and the calculations described in Section 2.01(b)(iii) as the ABL
Administrative Agent or the Supplemental Term Agent may reasonably request,
(ii) a rent report reflecting the date and amount of each payment on account of
base rent, additional rent and common area maintenance expenses made on account
of the Loan Parties’ Leases, together with such supporting documentation or
other information as the ABL Administrative Agent or the Supplemental Term Agent
may reasonably request, (iii) a statement of all Reported Fee Accruals (as
defined in a DIP Order), (iv) a nine (9) week cash flow projections for the Loan
Parties, reflecting on a line-item basis, among other things, anticipated sales,
cash receipts, inventory levels and expenditures, and (v) a Variance Report and
an updated Budget (which shall update the then current Budget solely to reflect
the removal of the then-first week and the addition of a new ninth week), each
of which items described in this clause (v) shall be acceptable to the ABL
Administrative Agent, the Supplemental Term Agent and the Lenders in their sole
discretion (it being understood and agreed that each Lender shall be deemed to
have accepted such items unless the ABL Administrative Agent shall have received
a reasonably detailed objection thereto in writing within two (2) Business Days
following the ABL Administrative Agent’s delivery of such items to such Lender);

(i) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by Holdings or any
Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or, after a public equity offering,
distributed by the Borrower to its shareholders generally, as the case may be;

(j) at least seven days prior to the hearing for the entry of a Final Borrowing
Order, a final Budget and business plan updating the initial Budget and business
plan delivered prior to the Effective Date;

(k) at least two Business Days prior to the furnishing or filing thereof, copies
of any statement, report or pleading proposed to be furnished to or filed with
the Bankruptcy Court or the Creditors’ Committee in connection with the Chapter
11 Case; and

(l) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, as the ABL Administrative Agent, the Supplemental Term Agent or any
Lender may reasonably request.

SECTION 5.02 Notices of Material Events. The Borrower and Holdings will furnish
to the ABL Administrative Agent, the Supplemental Term Agent and each Lender
prompt written notice of the following:

 

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(a) the occurrence of any Default or Event of Default promptly upon becoming
aware of it;

(b) the occurrence of any condition which would reasonably be expected to have a
Material Adverse Effect;

(c) the occurrence of any ERISA Event;

(d) any material change in accounting or financial reporting practices (other
than as reported by GAAP or applicable law) by any Loan Party or any Subsidiary
thereof;

(e) any sale, lease, transfer, assignment or other disposition of property, sale
of equity, or incurrence of Indebtedness in excess of $500,000, in each case
after knowledge thereof by a responsible officer of the Borrower or any
Guarantor;

(f) receipt of any notice of any governmental investigation or any litigation or
proceeding commenced or threatened against any Loan Party that (i) seeks damages
in excess of $500,000 and is not covered by insurance, (ii) seeks injunctive
relief which, if granted, would reasonably be expected to have a Material
Adverse Effect;

(g) (i) any Lien (other than Liens permitted by Section 6.02) or claim made or
asserted against any of the Collateral, (ii) any loss, damage, or destruction to
the Collateral whether or not covered by insurance or the commencement of any
action or proceeding for the taking of any material portion of the Collateral or
interest therein under power of eminent domain or by condemnation or similar
proceeding and (iii) any and all default notices received under or with respect
to any leased location or public warehouse where Collateral is located (which
shall be delivered within two Business Days after receipt thereof), in each case
in relation to (x) Supplemental Term Priority Collateral in the aggregate amount
of $50,000 or more, and/or (y) other Collateral in the aggregate amount of
$500,000 or more;

(h) any Credit Card Agreement entered into by such Loan Party after the
Effective Date, together with a true, correct and complete copy thereof and such
other information with respect thereto as the ABL Administrative Agent or the
Supplemental Term Agent may reasonably request;

(i) the receipt by any Loan Party of any written notice of violation of or
potential liability under, or knowledge by such Loan Party that there exists a
condition that could reasonably be expected to result in a violation of or
liability under, any Environmental Law, except for violations and liabilities
the consequence of which would not be reasonably likely to subject the Loan
Parties to liabilities exceeding $500,000 individually or in the aggregate;

(j) obtaining knowledge of the commencement of any judicial or administrative
proceeding or investigation alleging a violation of or liability under any
Environmental Law, that has a reasonable likelihood of being adversely
determined and that, in the aggregate, if adversely determined, would have a
reasonable likelihood of subjecting the Loan Party to liabilities exceeding
$500,000 individually or in the aggregate;

 

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

(l) any failure by any Loan Party to pay rent at any of such Loan Party’s
locations when such rent first came due following the Petition Date, unless such
non-payment was permitted under the Bankruptcy Code or pursuant to an order of
the Bankruptcy Court;

(m) any breach (or alleged breach) under the Agency Agreement, by any party
thereto;

(n) the discharge or resignation of the Independent Consultant or the Real
Estate Consultant; and

(o) any amendment, supplement, waiver or other modification to the Term Loan
Agreement, any other Term Loan Document, the DIP Term Loan Agreement or any
other DIP Term Loan Document (in each case whether or not consent of the ABL
Administrative Agent is required under the Intercreditor Agreement with respect
thereto).

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto. In addition, each notice delivered
under clause (o) above shall be accompanied by a true and complete copy of any
such amendment, supplement, waiver or other modification described in such
clause.

SECTION 5.03 Existence; Conduct of Business. Each Loan Party will, and will
cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect (i) its legal existence and
(ii) the rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits material to
the conduct of its business, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 and, in the case of clause (ii) above,
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.

SECTION 5.04 Payment of Obligations. To the extent required by the Bankruptcy
Code, each Loan Party will, and will cause each Subsidiary to, pay or discharge
all Material Indebtedness and all other material liabilities and obligations
incurred after the Petition Date, including Taxes, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, and (b) such Loan
Party or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP.

SECTION 5.05 Maintenance of Properties. Each Loan Party will, and will cause
each Subsidiary to, keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.

 

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SECTION 5.06 Books and Records; Inspection Rights. Each Loan Party will, and
will cause each Restricted Subsidiary to, (i) keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities and (ii) permit any
representatives designated by the ABL Administrative Agent, the Supplemental
Term Agent or any Lender (including employees of the ABL Administrative Agent,
the Supplemental Term Agent, any Lender or any consultants, accountants, lawyers
and appraisers retained by the ABL Administrative Agent or the Supplemental Term
Agent), to visit and inspect its properties, to examine and make extracts from
its books and records, including environmental assessment reports and Phase I or
Phase II studies, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested. The Loan Parties acknowledge that the ABL
Administrative Agent and/or the Supplemental Term Agent, after exercising its
rights of inspection, may prepare and distribute to the Lenders certain Reports
pertaining to the Loan Parties’ assets for internal use by the ABL
Administrative Agent, the Supplemental Term Agent and the Lenders. The ABL
Administrative Agent and the Supplemental Term Agent may conduct inspections of
the Collateral from time to time during each calendar year, and the Borrower
shall pay for all such inspections.

SECTION 5.07 Compliance with Laws. Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its
property except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

SECTION 5.08 Compliance with Environmental Laws

Each Loan Party will (a) conduct its operations and keep and maintain its Real
Property in material compliance with all Environmental Laws; (b) obtain and
renew all environmental permits necessary for its operations and properties; and
(c) implement any and all investigation, remediation, removal and response
actions that are appropriate or necessary to maintain the value and
marketability of the Real Property or to otherwise comply with Environmental
Laws pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or release of any Hazardous Materials on, at, in, under, above,
to, from or about any of its Real Property, provided, however, that neither a
Loan Party nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and adequate
reserves have been set aside and are being maintained by the Loan Parties with
respect to such circumstances in accordance with GAAP.

SECTION 5.09 Compliance with Material Contracts. Each Loan Party will
(a) perform and observe all the terms and provisions of each Material Contract
to be performed or observed by it (except as may be occasioned as an

 

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Effect of Bankruptcy), (b) maintain each such Material Contract in full force
and effect, (c) enforce each such Material Contract in accordance with its
terms, (d) take all such action to such end as may be from time to time
requested by any Agent, (e) upon request of any Agent, make to each other party
to each such Material Contract such demands and requests for information and
reports or for action as any Loan Party or any of its Subsidiaries is entitled
to make under such Material Contract, and (f) cause each of its Subsidiaries to
do the foregoing.

SECTION 5.10 Use of Proceeds. The proceeds of the Loans will be used only as
described in Section 3.18. No part of the proceeds of any Loan and no Letter of
Credit will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations T, U and X.

SECTION 5.11 Insurance. Each Loan Party will, and will cause each Subsidiary to,
maintain insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is consistent with
prudent business practice; provided that each Loan Party and its Subsidiaries
may self insure to the extent consistent with prudent business practice. The
Borrower will furnish to the Lenders, upon request of the ABL Administrative
Agent or the Supplemental Term Agent, information in reasonable detail as to the
insurance so maintained.

SECTION 5.12 Appraisals and Field Examinations. At any time reasonably deemed
necessary by the ABL Administrative Agent, and upon reasonable notice from the
ABL Administrative Agent, the Borrower and the Restricted Subsidiaries will
permit the ABL Administrative Agent or professionals (including consultants,
accounts and/or appraisers) retained by the ABL Administrative Agent to conduct
field examinations and/or appraisals of (a) the Loan Parties’ practices in the
computation of the Revolving Borrowing Base and the Supplemental Term Borrowing
Base, (b) the assets included in the Revolving Borrowing Base, the Supplemental
Term Borrowing Base or the calculations described in Section 2.01(b)(iii), and
(c) the Loan Parties’ Real Property, furniture, fixtures and equipment. The Loan
Parties shall pay the reasonable and documented fees and expenses of the ABL
Administrative Agent and such professionals with respect to such evaluations and
appraisals. The Loan Parties acknowledge that the ABL Administrative Agent may,
in its discretion, cause appraisals (including with respect to assets of the
type included in the Revolving Borrowing Base and the Supplemental Term
Borrowing Base, or furniture, fixtures and equipment) and field examinations to
be undertaken at the expense of the Loan Parties. At any time, the Supplemental
Term Agent may, in its discretion, direct the ABL Administrative Agent to
undertaken an appraisal or a field examination upon written notice to the ABL
Administrative Agent.

SECTION 5.13 Additional Collateral; Further Assurances.

(a) Each Loan Party will, and will cause each Restricted Subsidiary to, execute
and deliver, or cause to be executed and delivered, to the ABL Administrative
Agent and the Supplemental Term Agent such documents, agreements and
instruments, and will take or

 

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cause to be taken such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and other
documents and such other actions or deliveries of the type required by Section
4.01 or Section 5.15, as applicable), which may be required by law or which the
ABL Administrative Agent or the Supplemental Term Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents, all at the
expense of the Loan Parties.

(b) If any material assets (including any real property or improvements thereto
or any interest therein with a fair market value in excess of $250,000) are
acquired by the Borrower or any Restricted Subsidiary that is a Loan Party after
the Effective Date (other than assets constituting Collateral under the ABL Loan
Security Agreement that become subject to the Lien in favor of the Collateral
Agent upon acquisition thereof), the Borrower will notify the ABL Administrative
Agent, the Supplemental Term Agent and the Lenders thereof, and, if requested by
the ABL Administrative Agent, the Supplemental Term Agent or the Required
Lenders, the Borrower will cause such assets to be subjected to a Lien securing
the Secured Obligations and will take, and cause the Restricted Subsidiary Loan
Parties to take, such actions as shall be necessary or reasonably requested by
the ABL Administrative Agent or the Supplemental Term Agent to grant and perfect
such Liens, including actions described in clause (a) of this Section 5.13, all
at the expense of the Loan Parties.

SECTION 5.14 Cash Management. The Borrower shall cause 100% of the sum of
(i) aggregate daily cash collections in respect of all Eligible Credit Card
Account Receivables and (ii) aggregate daily cash payments constituting proceeds
of all Eligible Inventory to be paid into one or more deposit accounts with
respect to which the Borrower has provided to the ABL Administrative Agent a
Deposit Account Control Agreement (any such deposit account, a “Borrowing Base
Proceeds Deposit Account”). The ABL Administrative Agent shall have the right,
with respect to all amounts that pursuant to this Section 5.14 are on deposit in
any Borrowing Base Proceeds Deposit Account, (1) to cause all such amounts to be
swept at the end of each Business Day into an account (the “Collection Account”)
maintained by the ABL Administrative Agent with Wells Fargo and (2) to apply all
such amounts on deposit in the Collection Account to the prepayment of the
Obligations and the Cash Collateralization of LC Exposure as set forth in
Section 2.10(b).

SECTION 5.15 Real Property.

(a) The Borrower shall, and shall cause each of its Subsidiaries to, to the
extent required under the Bankruptcy Code, (i) comply in all material respects
with all of their respective obligations becoming due following the Petition
Date under all of their material Leases having annual rentals in excess of
$400,000 now or hereafter held respectively by them, (ii) not modify, amend,
cancel, extend or otherwise change in any materially adverse manner any term,
covenant or condition of any such material Lease, (iii) not assign or sublet any
other Lease if such assignment or sublet would have a Material Adverse Effect,
(iv) provide the ABL Administrative Agent and the Supplemental Term Agent with a
copy of each notice of default under any material Lease received by the Borrower
or any Subsidiary of the Borrower promptly upon receipt thereof and (v) promptly
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Supplemental Term Agent (and in no event later than thirty (30) days) following
the date the Borrower or any Subsidiary takes possession of, or becomes liable
under, any new leased premises or Lease, whichever is earlier.

(b) At least 15 Business Days prior to (i) entering into any Lease (other than a
renewal of an existing Lease) for the principal place of business or chief
executive office of the Borrower or any other Loan Guarantor or (ii) acquiring
any material owned Real Property, the Borrower shall, and shall cause such Loan
Guarantor to, provide the ABL Administrative Agent and the Supplemental Term
Agent written notice thereof.

(c) With respect to (i) any Real Property of the Borrower or any Loan Guarantor
existing on the Effective Date, (ii) any material Real Property having a
purchase price in excess of $400,000 acquired by the Borrower or any Loan
Guarantor after the Effective Date and (iii) any Real Property that is subject
to a Lease having annual rental payments in excess of $400,000 acquired or
entered into by the Borrower or any Loan Guarantor after the Effective Date,
upon the written request of the ABL Administrative Agent or the Supplemental
Term Agent, the Borrower shall, and shall cause each Loan Guarantor to, execute
and deliver to the ABL Administrative Agent, for the benefit of each of the ABL
Administrative Agent, the Supplemental Term Agent, the Issuing Banks and the
Lenders, promptly and in any event not later than 45 days after receipt of such
notice (or, if such request is given by the ABL Administrative Agent or the
Supplemental Term Agent prior to the acquisition of such Real Property or Lease,
immediately upon such acquisition), a first-priority Mortgage on any Real
Property or a Leasehold Mortgage on any or Lease of the Borrower or such Loan
Guarantor, together with such Real Property Documents or Leasehold Mortgage
Supporting Documents as may be reasonably requested by the ABL Administrative
Agent or the Supplemental Term Agent (or, in the case of any Real Property or
Lease with respect to Real Property located outside of the United States, such
other documents, agreements and instruments deemed by the Administrative Agent
or the Collateral Agent to be appropriate in the applicable jurisdiction to
obtain the equivalent first-priority Lien in such jurisdiction).

SECTION 5.16 Post-Effective Date Covenant. Within fourteen (14) days following
the Effective Date (or such later date as to which the ABL Administrative Agent
and the Supplemental Term Agent may agree in their sole discretion), in respect
of all insurance policies maintained by any Loan Party, the Loan Parties shall
deliver to the ABL Administrative Agent, in form and substance reasonably
satisfactory to the ABL Administrative Agent and the Supplemental Term Agent,
(i) certificates of insurance naming the Collateral Agent (for the benefit of
the Collateral Agent, the ABL Administrative Agent, the Supplemental Term Agent
and the Lenders) as an additional insured or as lender’s loss payee, as
applicable, and (ii) endorsements containing (A) lender’s loss payable clauses,
additional insured or mortgagee clauses, as applicable, and (B) notice of
cancellation clauses.

SECTION 5.17 Retention of Consultants; Communication with Accountants and Other
Financial Advisors.

(a) The Loan Parties shall continue to retain the Independent Consultant and the
Real Estate Consultant, the scope and terms of such engagement to be reasonably
satisfactory to the ABL Administrative Agent and the Supplemental Term Agent
(subject to Bankruptcy

 

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Court approval, to be obtained within thirty (30) days after the Petition Date).
Until such time as all Pre-Petition Liabilities and all Obligations have been
repaid in full (or cash collateralized in accordance with the terms hereof) and
all Commitments have been terminated, the Borrower shall continue to retain
(i) the Independent Consultant to assist the Loan Parties with a Permitted Sale
and with the preparation of the Budget and the other financial and Collateral
reporting required to be delivered to the ABL Administrative Agent pursuant to
this Agreement, and (ii) the Real Estate Consultant to assist the Loan Parties
in connection with real estate matters (including, without limitation,
negotiations in respect of Leases).

(b) The Borrower authorizes each of the ABL Administrative Agent and the
Supplemental Term Agent to communicate directly with its independent certified
public accountants, appraisers, financial advisors, investment bankers and
consultants (including the Independent Consultant and the Real Estate
Consultant), which have been engaged from time to time by the Borrower, and
authorizes and shall instruct those accountants, appraisers, financial advisors,
investment bankers and consultants to communicate to the ABL Administrative
Agent and the Supplemental Term Agent information relating to each Loan Party
with respect to the business, results of operations, prospects and financial
condition of such Loan Party. The Borrower acknowledges and agrees that (i) the
Borrower and its representatives will cooperate fully with the Independent
Consultant, the Real Estate Consultant and any Lender Group Consultant, (ii) the
Independent Consultant, the Real Estate Consultant and any Lender Group
Consultant shall be granted full and complete access to the Borrower’s books and
records, (iii) the ABL Administrative Agent, the Supplemental Term Agent and the
Lenders are authorized to communicate directly with the Independent Consultant
and the Real Estate Consultant, and the Independent Consultant and the Real
Estate Consultant are authorized to communicate directly with the ABL
Administrative Agent, the Supplemental Term Agent and the Lenders, regarding all
matters relating to the services to be rendered by the Independent Consultant or
the Real Estate Consultant to the Borrower, including, without limitation, to
discuss all financial reports, business information, findings and
recommendations of the Independent Consultant or Real Estate Consultant, as
applicable, and (iv) the Independent Consultant and the Real Estate Consultant
are authorized to provide the ABL Administrative Agent, the Supplemental Term
Agent and the Lenders with all reports and other information prepared or
reviewed by the Independent Consultant or the Real Estate Consultant, as
applicable.

(c) Each Loan Party acknowledges that each of the ABL Administrative Agent and
the Supplemental Term Agent shall be permitted to engage such outside
consultants and advisors (each, a “Lender Group Consultant”), for the sole
benefit of the ABL Administrative Agent, the Supplemental Term Agent, the
Issuing Banks and the Lenders, as the ABL Administrative Agent or the
Supplemental Term Agent may determine to be necessary or appropriate in its sole
discretion. Each Loan Party covenants and agrees that (i) such Loan Party shall
provide its complete cooperation with any Lender Group Consultant (including,
without limitation, providing unfettered access to such Loan Party’s business,
books and records and senior management); (ii) all costs and expenses of any
such Lender Group Consultant shall be expenses required to be paid by the Loan
Parties under Section 9.03 hereof; and (iii) all reports, determinations and
other written and verbal information provided by any Lender Group Consultant
shall be confidential and no Loan Party shall be entitled to have access to
same.

 

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SECTION 5.18 Performance within Budget.

The Loan Parties shall strictly perform in accordance with the Budget subject to
the following at all times following the Effective Date: (a) the Borrower’s
actual sales and cash receipts shall not be less than 90% of the projected
amounts set forth in the Budget, and (b) the Borrower’s actual expenses and cash
expenditures shall not be greater than 110% of the projected amounts set forth
in the Budget on a line item basis or in the aggregate; provided that the
Borrower shall not use funds allocated to a particular line item in the Budget
(including line items denominated “Miscellaneous” or “Other”, or words of
similar import) to pay any expenses under any other line item(s) in the Budget
without the prior express written consent of the ABL Administrative Agent and
the Supplemental Term Agent, which consent may be conditioned, withheld, or
delayed in the ABL Administrative Agent’s and the Supplemental Term Agent’s sole
and exclusive discretion. Each of the foregoing covenants shall be tested on
Tuesday of each week (commencing with the first (1st) week after the Petition
Date) on a cumulative basis from the Petition Date until the fourth week after
the Petition Date and then on a rolling four (4) week basis, pursuant to the
Variance Report delivered by the Borrower to the ABL Administrative Agent and
the Supplemental Term Agent in accordance with Section 5.01(h).

SECTION 5.19 Permitted Sales Process; Agency Agreement.

(a) On the Petition Date, the Loan Parties shall have filed the following
motions in the Chapter 11 Case with the Bankruptcy Court, each in form and
substance acceptable to the ABL Administrative Agent and the Supplemental Term
Agent:

(i) A motion (the “Bidding Procedures Motion”), requesting an order from the
Bankruptcy Court approving bidding procedures relating to a Permitted Sale of
substantially all of the assets of the Loan Parties; and

(ii) A motion (the “Sale Order Motion”) requesting an order from the Bankruptcy
Court pursuant to Section 363 of the Bankruptcy Code authorizing the Loan
Parties to consummate a Permitted Sale of substantially all of the assets of the
Loan Parties.

(b) On or before July 12, 2013, the Bankruptcy Court shall have entered an order
(the “Bidding Procedures Order”) approving the bidding procedures set forth in
the Bidding Procedures Motion, which Bidding Procedures Order shall be in form
and substance acceptable to the ABL Administrative Agent and the Supplemental
Term Agent.

(c) On or before August 29, 2013, the Loan Parties shall have received bids in
accordance with the Bidding Procedures Order.

(d) On or before June 17, 2013, the Loan Parties shall have selected a Stalking
Horse Bid with respect to a Permitted Sale of substantially all of the assets of
the Loan Parties, which Stalking Horse Bid shall be in form and substance
acceptable to the ABL Administrative Agent and the Supplemental Term Agent.

(e) On or before August 30, 2013, the Loan Parties shall have completed an
auction for a Permitted Sale of substantially all of the assets of the Loan
Parties.

 

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(f) On or before September 3, 2013, the Bankruptcy Court shall have entered an
order (the “Sale Order”) approving a Permitted Sale as requested in the Sale
Order Motion, which Sale Order shall be in form and substance acceptable to the
ABL Administrative Agent and the Supplemental Term Agent.

(g) On or before September 16, 2013, the Loan Parties shall have closed on a
Permitted Sale of substantially all of the assets of the Loan Parties.

(h) On or before October 15, 2013, the Bankruptcy Court shall have entered an
order extending the time period of the Borrower to assume or reject Leases to
not less than 210 days from the Petition Date.

SECTION 5.20 Additional Bankruptcy Related Affirmative Covenants.

(a) The Loan Parties shall provide the ABL Administrative Agent and the
Supplemental Term Agent with a status report and such other updated information
relating to a Permitted Sale as may be requested by the ABL Administrative Agent
or the Supplemental Term Agent, in form and substance acceptable to the ABL
Administrative Agent and the Supplemental Term Agent.

(b) Upon the Effective Date, and on behalf of themselves and their estates, and
for so long as any Obligations shall be outstanding, the Loan Parties hereby
irrevocably waive any right, pursuant to Sections 364(c) or 364(d) of the
Bankruptcy Code or otherwise, to grant any Lien of equal or greater priority
than the Liens securing the Obligations, or to approve a claim of equal or
greater priority than the Obligations other than as expressly set forth in a DIP
Order.

(c) The Loan Parties shall promptly, punctually, and faithfully perform all
terms and conditions of the DIP Orders.

SECTION 5.21 Borrowings under DIP Term Loan Agreement. If Maximum Revolver
Availability is at any time less than $30,000,000, the Borrower shall draw the
full amount available to be drawn under Article II of the DIP Term Loan
Agreement, which amount shall be remitted by the Borrower to the ABL
Administrative Agent in accordance with the DIP Orders and Section 3.18 of the
DIP Term Loan Agreement (as in effect as of the date hereof).

ARTICLE VI

Negative Covenants

Until the Revolving Commitments have expired or terminated and the principal of
and interest on each Loan and all fees, expenses and other amounts payable under
any Loan Document have been paid in full and all Letters of Credit have expired
or terminated or been Cash Collateralized and all LC Disbursements shall have
been reimbursed, each Loan Party covenants and agrees, jointly and severally
with all of the Loan Parties, in favor of the ABL Administrative Agent, the
Supplemental Term Agent, the Issuing Banks and the Lenders that:

 

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SECTION 6.01 Indebtedness. No Loan Party will, nor will it permit any Restricted
Subsidiary to, create, incur or suffer to exist any Indebtedness, except as set
forth below, in each case, which shall be consistent with the Budget:

(a) Indebtedness incurred pursuant to any Loan Document;

(b) Indebtedness existing on the Effective Date and set forth in Schedule 6.01;

(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or any other Subsidiary, provided that (i) Indebtedness of any
Subsidiary that is not a Loan Party to the Borrower or any Subsidiary that is a
Loan Party shall be subject to Section 6.04 and (ii) Indebtedness of the
Borrower to any Subsidiary and Indebtedness of any Subsidiary that is a Loan
Party to any Subsidiary that is not a Loan Party shall be subordinated to the
Secured Obligations on terms reasonably satisfactory to the ABL Administrative
Agent and the Supplemental Term Agent;

(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Restricted Subsidiary of Indebtedness of the Borrower or any other Subsidiary,
provided that (i) the Indebtedness so Guaranteed is permitted by this Section
6.01, (ii) Guarantees by the Borrower or any Subsidiary that is a Loan Party of
Indebtedness of any Restricted Subsidiary that is not a Loan Party shall be
subject to Section 6.04 and (iii) Guarantees permitted under this clause (d)
shall be subordinated to the Secured Obligations of the applicable Restricted
Subsidiary on the same terms as the Indebtedness so Guaranteed is subordinated
to the Secured Obligations;

(e) Indebtedness of the Borrower or any Restricted Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or capital
assets (whether or not constituting purchase money Indebtedness), including
Capital Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof; provided that such Indebtedness is incurred prior to,
concurrently with or within 180 days after such acquisition or the completion of
such construction or improvement;

(f) [Reserved;]

(g) Indebtedness owed to any person providing workers’ compensation, health,
disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
person, in each case incurred in the ordinary course of business;

(h) Indebtedness of the Borrower or any Restricted Subsidiary in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations, in each case provided in the ordinary course of business;

(i) [Reserved];

 

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(j)  (i) Indebtedness pursuant to the Term Loan Agreement, and (ii) to the
extent permitted pursuant to an order of the Bankruptcy Court, Indebtedness
pursuant to the DIP Term Loan Agreement, in each case of clauses (i) and
(ii) subject at all times to the Intercreditor Agreement, the DIP Orders and
each other order of the Bankruptcy Court (including, without limitation, any
intercreditor provisions set forth in any such DIP Orders or other orders);

(k) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business; provided that such Indebtedness is
extinguished within two Business Days of its incurrence;

(l) Indebtedness representing deferred compensation to employees of the Borrower
and the Restricted Subsidiaries incurred in the ordinary course of business;

(m) Indebtedness supported by a letter of credit (for so long as supported by
such letter of credit) in a principal amount not to exceed the face amount of
such letter of credit;

(n) any customary “bad acts” guarantee issued by any Loan Party in connection
with Indebtedness in respect of any Real Property owned by the Real Property
Holding Company; and

(o) the Pre-Petition Liabilities.

SECTION 6.02 Liens. No Loan Party will, nor will it permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:

(a) Liens created pursuant to any Loan Document;

(b) Permitted Encumbrances;

(c) any Lien on any property or asset of the Borrower or any Restricted
Subsidiary existing on the Effective Date and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset of
the Borrower or Restricted Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the Effective Date and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;

(d) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Restricted Subsidiary; provided that (i) such security interests
secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or
concurrently with or within 180 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring, constructing or improving such

 

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fixed or capital assets and (iv) such security interests shall not apply to any
other property or assets of the Borrower or Restricted Subsidiary;

(e) any Lien existing on any property or asset (other than Accounts, Credit Card
Account Receivables and Inventory) prior to the acquisition thereof by the
Borrower or any Restricted Subsidiary or existing on any property or asset
(other than Accounts, Credit Card Account Receivables and Inventory) of any
Person that becomes a Loan Party after the Effective Date prior to the time such
Person becomes a Loan Party; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Loan Party, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Loan Party (other than proceeds), (iii) such Lien
shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Loan Party, as the case may be,
and (iv) such Lien shall not secure Indebtedness for borrowed money or any other
Indebtedness that is not permitted by Section 6.01;

(f) Liens of a collecting bank arising in the ordinary course of business under
Section 4-208 of the Uniform Commercial Code in effect in the relevant
jurisdiction covering only the items being collected upon;

(g) Liens on securities held by the Borrower or any of its Restricted
Subsidiaries representing an interest in a joint venture to which the Borrower
or such Restricted Subsidiary is a party (provided that such joint venture is
not a Subsidiary of the Borrower) to the extent that (i) such Liens constitute
purchase options, calls or similar rights of a counterparty to such joint
venture and (ii) such Liens are granted pursuant to the terms of the partnership
agreement, joint venture agreement or other similar document or documents
pursuant to which such joint venture was created or otherwise governing the
rights and obligations of the parties to such joint venture;

(h) Liens securing the Term Facility and the DIP Term Facility, which Liens
shall be subordinate to the Liens securing the Obligations and the Pre-Petition
Liabilities in accordance with, and otherwise subject at all times to, the
Intercreditor Agreement and the DIP Orders (including, without limitation, any
intercreditor provisions set forth therein); and

(i) Liens securing the Pre-Petition Liabilities, subject at all times to the DIP
Orders.

Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.02 may at any time attach to any Loan Party’s (1) Eligible Credit Card
Account Receivables, other than those permitted under clauses (a), (l) and
(n) of the definition of Permitted Encumbrance and clauses (a), (e) and (h)
above and (2) Eligible Inventory, other than those permitted under clauses (a),
(b), (e), (h) and (n) of the definition of Permitted Encumbrance and clauses
(a), (e) and (h) above.

SECTION 6.03 Fundamental Changes.

(a) No Loan Party will, nor will it permit any Restricted Subsidiary to, merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except in connection with
a Permitted Sale.

 

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(b) No Loan Party will, nor will it permit any of its Restricted Subsidiaries
to, engage in any business other than businesses of the type conducted by the
Borrower and its Restricted Subsidiaries on the Effective Date.

(c) Holdings will not engage in any business or activity other than those
activities related to its Equity Interests being publicly traded, purchasing
Loans in accordance with the terms of this Agreement and Term Loans in
accordance with the terms of the Term Loan Agreement, the ownership of all the
outstanding Equity Interests of the Borrower and activities incidental thereto,
including (i) paying taxes, (ii) preparing reports to Governmental Authorities
and to its shareholders, (iii) holding directors and shareholders meetings,
preparing corporate records and other activities permitted by this Agreement,
and (iv) guarantees required in the ordinary course of the Borrower’s activities
that may be required by counterparties. Holdings will not own or acquire any
assets (other than Equity Interests of the Borrower, the cash proceeds of any
Restricted Payments permitted by Section 6.08 and cash contributions received
from the holders of Equity Interest of Holdings provided that such contributions
shall be immediately contributed to the Borrower) or incur any liabilities
(other than liabilities under the Loan Documents, the Pre-Petition Liabilities,
liabilities under the Term Facility and liabilities under the DIP Term Facility,
liabilities pursuant to the Indemnification Agreements, liabilities reasonably
incurred in connection with the maintenance of its existence, nonconsensual
obligations imposed by law and obligations with respect to its Equity Interests
(including related to its Equity Interests being publicly traded and pursuant to
its stockholders’ agreement)).

SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. No Loan
Party will, nor will it permit any Restricted Subsidiary to, purchase, hold or
acquire any Equity Interests, evidence of Indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit
(whether through purchase of assets, merger or otherwise), except as set forth
below, in each case, which shall be consistent with the Budget:

(a)  (i) investments by Holdings in the Borrower and (ii) investments by the
Borrower and the other Loan Parties in Equity Interests in their respective
Subsidiaries that are Loan Parties; provided that any such Equity Interests held
by a Loan Party shall be pledged pursuant to the ABL Loan Security Agreement
(subject to the limitations applicable to common stock of a foreign Restricted
Subsidiary referred to in Section 5.13);

(b) loans or advances made by the Borrower to any other Loan Party; provided
that any such loans and advances made by a Loan Party shall be evidenced by a
promissory note pledged pursuant to the ABL Loan Security Agreement;

(c) Guarantees incurred prior to the Petition Date constituting Indebtedness
permitted by Section 6.01 other than any Guarantees of Indebtedness of
Subsidiaries that are not Loan Parties;

 

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(d)  (i) extensions of trade credit in the ordinary course of business and
(ii) subject to the ABL Loan Security Agreement, notes payable, or stock or
other securities issued by Account Debtors to a Loan Party pursuant to
negotiated agreements with respect to settlement of such Account Debtor’s
Accounts and Credit Card Account Receivables in the ordinary course of business,
consistent with past practices;

(e) investments in the form of Swap Agreements permitted by Section 6.07;

(f) [reserved];

(g) investments constituting deposits described in clauses (c) and (d) of the
definition of the term “Permitted Encumbrances”; and

(h) any customary “bad acts” guarantee issued by any Loan Party in connection
with Indebtedness in respect of any Real Property owned by the Real Property
Holding Company;

SECTION 6.05 Asset Sales. No Loan Party will, nor will it permit any Restricted
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any
Restricted Subsidiary to issue any additional Equity Interest in such Restricted
Subsidiary (other than to the Borrower or another Restricted Subsidiary in
compliance with Section 6.04), except in each case (other than the dispositions
described in clauses (a)(i) and (a)(ii) below) to the extent the Bankruptcy
Court has issued a Final Order authorizing such sale, transfer, lease or other
disposition and to the extent consistent with the Budget, the following:

(a) sales, transfers and dispositions of (i) Inventory in the ordinary course of
business, (ii) used, obsolete, worn out or surplus equipment or property in the
ordinary course of business, and (iii) Inventory and equipment not in the
ordinary course of business in connection with store closings; provided that all
sales of Inventory and equipment in connection with store closings shall be in
accordance with liquidation agreements and with professional liquidators
reasonably acceptable to the ABL Administrative Agent and the Supplemental Term
Agent; provided, further, that all Net Proceeds received in connection therewith
are applied to the Obligations in accordance with Section 2.11(c);

(b) sales, transfers and dispositions to the Borrower or any Restricted
Subsidiary, provided that any such sales, transfers or dispositions involving a
Restricted Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.10;

(c) sales, transfers and dispositions of accounts receivable in connection with
the compromise, settlement or collection thereof;

(d) sales, transfers and dispositions of investments permitted by clause (g) of
Section 6.04;

(e) [reserved];

 

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(f) dispositions resulting from any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of the Borrower or any Restricted Subsidiary;

(g) licensing and cross-licensing arrangements entered into in the ordinary
course of business involving any technology or other intellectual property of
the Borrower or any Restricted Subsidiary;

(h) leases and subleases not materially interfering with the ordinary course of
business;

(i) [reserved]; and

(j) Permitted Sales;

provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clauses (b), (f) and (g) above) shall be
made for fair value and for at least 75% cash consideration.

SECTION 6.06 Sale and Leaseback Transactions. No Loan Party will, nor will it
permit any Restricted Subsidiary to, enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred.

SECTION 6.07 Swap Agreements; Deposit Accounts and Credit Card Processors.

(a) No Loan Party will, nor will it permit any Restricted Subsidiary to, enter
into any Swap Agreement or any speculative transaction except (a) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Restricted Subsidiary has actual exposure (other than those in respect of Equity
Interests of the Borrower or any of its Restricted Subsidiaries), and (b) Swap
Agreements entered into in order to effectively cap, collar or exchange interest
rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment
of the Borrower or any Restricted Subsidiary, in each case for the sole purpose
of hedging in the ordinary course of business.

(b) No Loan Party will, nor will it permit any Restricted Subsidiary to,
(i) open new deposit accounts or securities accounts or maintain any existing
deposit accounts or securities accounts unless the same is permitted by the Cash
Management Order and such deposit accounts or securities accounts are subject to
a lien in favor of the Collateral Agent, or (ii) enter into any Credit Card
Agreements with Credit Card Processors or Credit Card Issuers except with the
prior written consent of the ABL Administrative Agent and the Supplemental Term
Agent.

 

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SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness.

(a) No Loan Party will, nor will it permit any Restricted Subsidiary to, declare
or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or to make, or agree to make any redemptions or repurchases with
respect to its Equity Interests, or incur any obligation (contingent or
otherwise) to do so, except that each of Holdings and the Borrower may, to the
extent the same is consistent with the Budget, pay dividends or make
distributions to the Persons holding its Equity Interests in an aggregate amount
such that such Persons may pay (x) franchise taxes and other fees, taxes and
expenses to maintain their legal existence and (y) federal, state and local
income taxes to the extent attributable to Holdings and its Subsidiaries or to
the Borrower and its Subsidiaries as the case may be (without duplication),
provided that in all events the amounts paid pursuant to clause (y) shall be
amounts sufficient to pay the direct obligations of such Persons for such taxes
and obligations of the Borrower and Holdings under the Tax Sharing Agreement,
provided, however, that, notwithstanding the foregoing, (aa) the amounts paid
under clause (y) shall not exceed the amount that would be payable, on a
consolidated or combined basis, were Holdings the common parent of a separate
federal consolidated group or state combined group including the Borrower and
its Subsidiaries, (bb) in the case of taxes attributable to the Real Property
Holding Company, an amount equal to the amount of such tax payment has been
received by the Borrower from the Real Property Holding Company Subsidiary prior
to such payment being made, and (cc) an amount shall not be paid under clause
(y) unless the Borrower has provided, or caused to be provided, to the ABL
Administrative Agent a copy of the Tax Return to be filed with the applicable
Governmental Authority properly reflecting a Tax liability equal to such payment
amount for the ABL Administrative Agent’s review no later than thirty (30) days
prior to the payment of such amount and the ABL Administrative Agent consents to
the filing of such Tax Return.

(b) No Loan Party will, nor will it permit any Restricted Subsidiary to, make or
agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of
or interest on any Indebtedness, or any payment or other distribution (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Indebtedness (it being understood and agreed
that borrowings by the Borrower under the DIP Term Loan Agreement shall not
constitute a payment or other distribution in respect of any Indebtedness for
purposes of this Section 6.08), except as permitted under the DIP Orders and
consistent with the Budget.

SECTION 6.09 Change in Nature of Business; No Additional Subsidiaries.

(a) In the case of Holdings, engage in any business or activity other than as
permitted by Section 6.03(c).

(b) In the case of each of the other Loan Parties, engage in any line of
business substantially different from the business conducted by the Loan Parties
and their Subsidiaries on the Effective Date or any business substantially
related or incidental thereto.

(c) Create, form or organize any Subsidiary from and after the Effective Date.

 

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SECTION 6.10 Transactions with Affiliates. No Loan Party will, nor will it
permit any Restricted Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except the following, in each case, which shall be consistent with
the Budget: (a) transactions that (i) are in the ordinary course of business and
(ii) are at prices and on terms and conditions not less favorable to the
Borrower or such Restricted Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties; (b) transactions between or among the
Borrower and any Restricted Subsidiary that is a Loan Party not involving any
other Affiliate; (c) transactions otherwise permitted by this Agreement; (d) the
payment of reasonable fees to directors of the Borrower or any Restricted
Subsidiary who are not employees of the Borrower or any Restricted Subsidiary,
and compensation and employee benefit arrangements paid to, and indemnities
provided for the benefit of, directors, officers or employees of the Borrower or
its Restricted Subsidiaries in the ordinary course of business; (e) any
issuances of securities or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements, stock
options and stock ownership plans approved by the Borrower’s board of directors;
and (f) transactions pursuant to the Master Operating Lease.

SECTION 6.11 Restrictive Agreements. Except as expressly permitted pursuant to a
DIP Order, no Loan Party will, nor will it permit any Restricted Subsidiary to,
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon:
(a) the ability of such Loan Party or any of its Restricted Subsidiaries to
create, incur or permit to exist any Lien upon any of its property or assets; or
(b) the ability of any Restricted Subsidiary to pay dividends or other
distributions with respect to any shares of its Equity Interests or to make or
repay loans or advances or to transfer any assets to the Borrower or any other
Restricted Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Restricted Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by any Loan Document, any
Pre-Petition Loan Document, any Term Loan Document or any DIP Term Loan
Document, (ii) the foregoing shall not apply to restrictions and conditions
existing on the Effective Date identified on Schedule 6.11 (but shall apply to
any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Restricted Subsidiary or substantially all its assets pending
such sale, provided such restrictions and conditions apply only to the
Restricted Subsidiary or such assets that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases or
licenses restricting the assignment thereof.

SECTION 6.12 Use of Proceeds. Except as expressly provided in the DIP Orders, no
Loan Party shall use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately,

 

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incidentally or ultimately: (a) (i) to finance in any way any action, suit,
arbitration, proceeding, application, motion or other litigation of any type
adverse to the interests of the Agents, the Supplemental Term Agent, the Lenders
or the Issuing Banks or their rights and remedies under this Agreement and the
other Loan Documents, including, without limitation, for the payment of any
services rendered by the professionals retained by the Borrower or the
Creditors’ Committee in connection with the assertion of or joinder in any
claim, counterclaim, action, proceeding, application, motion, objection, defense
or other contested matter, the purpose of which is to seek, or the result of
which would be to obtain, any order, judgment determination, declaration or
similar relief (x) invalidating, setting aside, avoiding or subordinating, in
whole or in part, the Obligations or the Liens securing same, (y) for monetary,
injunctive or other affirmative relief against any Lender Party or the
Collateral, or (z) preventing, hindering or otherwise delaying the exercise by
any Lender Party of any rights and remedies under the Loan Documents or
applicable Law, or the enforcement or realization (whether by foreclosure,
credit bid, further order of the court or otherwise) by any or all of the Lender
Parties upon any of the Collateral; (ii) to make any distribution under a Plan
of Reorganization in the Chapter 11 Case; (iii) to make any payment in
settlement of any claim, action or proceeding, before any court, arbitrator or
other governmental body without the prior written consent of the ABL
Administrative Agent and the Supplemental Term Agent; (iv) to pay any fees or
similar amounts to any Person who has proposed or may propose to purchase
interests in any Borrower without the prior written consent of the ABL
Administrative Agent and the Supplemental Term Agent; and (v) to purchase or
carry margin stock (within the meaning of Regulation U of the Board) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund Indebtedness originally incurred for such purpose, or for any other
purpose that entails a violation of any of the regulations of the Board,
including Regulations U and X; or (b) for purposes other than those permitted
under this Agreement.

SECTION 6.13 Amendment of Material Documents. No Loan Party will, nor will it
permit any Restricted Subsidiary to, amend, modify or waive any of its rights
under (i) any agreement relating to any Subordinated Indebtedness, (ii) any
agreement relating to the DIP Term Facility, (iii) its certificate of
incorporation, by-laws, operating, management or partnership agreement or other
organizational documents, or (iv) the Master Operating Lease, in each case to
the extent any such amendment, modification or waiver would reasonably be
expected to be materially adverse to the Lenders (it being acknowledged and
agreed that any amendment, modification or waiver of any agreement relating to
the DIP Term Facility that shortens the maturity thereof, increases the
outstanding principal balance or interest rate thereof, requires or provides for
additional collateral therefor, is materially adverse to the Lenders).

SECTION 6.14 Accounting; Fiscal Year. Neither Holdings nor the Borrower shall,
nor shall they permit any Restricted Subsidiary of the Borrower to, change its
(a) accounting treatment and reporting practices or tax reporting treatment,
except as required by GAAP or any Requirement of Law and disclosed to the ABL
Administrative Agent and the Supplemental Term Agent and provided that any such
changes are reconciled against the accounting treatment and reporting practices
or tax reporting treatment used by such entity as of the Effective Date or
(b) fiscal year.

 

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SECTION 6.15 Margin Regulations. Neither Holdings nor the Borrower shall, nor
shall they permit any Restricted Subsidiary of the Borrower to, use all or any
portion of the proceeds of any credit extended hereunder to purchase or carry
margin stock (within the meaning of Regulation U of the Federal Reserve Board)
in contravention of Regulation U of the Federal Reserve Board.

SECTION 6.16 Reserved.

SECTION 6.17 Bankruptcy Related Negative Covenants. No Loan Party shall seek,
consent to, or permit to exist any of the following:

(a) Any order which authorizes the rejection or assumption of any Leases (other
than the “dark stores”) of any Loan Party without the Administrative Agent’s
prior consent, whose consent shall not be unreasonably withheld;

(b) Any modification, stay, vacation or amendment to the DIP Orders to which the
Agents and the Supplemental Term Agent have not consented in writing;

(c) A priority claim or administrative expense or unsecured claim against any
Loan Party (now existing or hereafter arising or any kind or nature whatsoever,
including, without limitation, any administrative expense of the kind specified
in Sections 105, 326, 328, 330, 331, 364(c), 503(a), 503(b), 506(c), 507(a),
507(b), 546(c), 546(d), 726 or 1114 of the Bankruptcy Code) equal or superior to
the priority claim of the Agents and the Lenders in respect of the Obligations
and the Pre-Petition Liabilities, except with respect to the Professional Fee
Carve Out;

(d) Any Lien on any Collateral having a priority equal or superior to the Lien
securing the Obligations;

(e) Any order which authorizes the return of any of the Loan Parties’ property
pursuant to Section 546(h) of the Bankruptcy Code;

(f) Any order which authorizes the payment of any Indebtedness (other than the
Pre-Petition Liabilities, Indebtedness reflected in the approved Budget, and
other Indebtedness approved by the ABL Administrative Agent and the Supplemental
Term Agent) incurred prior to the Petition Date or the grant of “adequate
protection” (whether payment in cash or transfer of property) with respect to
any such Indebtedness which is secured by a Lien; or

(g) Any order seeking authority to take any action that is prohibited by the
terms of this Agreement or the other Loan Documents or refrain from taking any
action that is required to be taken by the terms of this Agreement or any of the
other Loan Documents.

 

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ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise; or

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article
VII) payable under this Agreement, when and as the same shall become due and
payable; or

(c) any representation or warranty made or deemed made by or on behalf of any
Loan Party or any Restricted Subsidiary in or in connection with this Agreement
or any Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any Loan Document
or any amendment or modification thereof or waiver thereunder, shall prove to
have been materially incorrect when made or deemed made; or

(d) any Loan Party shall fail to observe or perform (i) any covenant, condition
or agreement contained in Sections 5.01(h), 5.02(a), 5.03 (with respect to a
Loan Party’s existence), 5.10, 5.14 (except to the extent that such failure to
observe or perform the obligations set out in Section 5.14 relates solely to an
error in the transmission of funds or to other ordinary course of business cash
management issues and where such default or breach is rectified within two
(2) Business Days of any Loan Party becoming aware of such failure to observe or
perform), 5.16, 5.17, 5.18, 5.19, 5.20, 5.21 or Article VI, (ii) any covenant,
condition or agreement contained in Section 5.01 (other than clause
(h) thereof), or Section 5.02(h) and such failure shall continue unremedied for
a period of three (3) days after the earlier of such breach or notice thereof
from the ABL Administrative Agent or the Supplemental Term Agent (which notice
will be given at the request of any Lender), or (ii) any covenant, condition or
agreement contained in this Agreement not described in clauses (i) or (ii) above
and such failure shall continue unremedied for a period of five (5) days after
the earlier of such breach or notice thereof from the ABL Administrative Agent
or the Supplemental Term Agent (which notice will be given at the request of any
Lender); or

(e) except as a result of the commencement of the Chapter 11 Case or unless
payment is stayed by the Bankruptcy Court, any Loan Party or any Subsidiary of
the Borrower shall fail to make any payment (whether of principal or interest
and regardless of amount) in respect of any Material Indebtedness, when and as
the same shall become due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or

(f) (i) except as a result of the commencement of the Chapter 11 Case, any event
or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the giving
of notice, the lapse of

 

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time or both) the holder or holders of any Material Indebtedness or any trustee
or agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; or (ii) any event or condition shall occur that
constitutes an “event of default” or similar event under and as defined in any
DIP Term Loan Document; or

(g) following the Petition Date, one or more judgments for the payment of money
in each case an aggregate amount in excess of $500,000 (not covered by insurance
as to which the insurer has been notified and has not denied coverage) shall be
rendered against any Loan Party, any Restricted Subsidiary of any Loan Party or
any combination thereof and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed or bonded pending appeal, or any Loan Party or any Restricted Subsidiary
of any Loan Party shall fail within thirty (30) days to discharge one or more
non-monetary judgments or orders arising following the Petition Date which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, which judgments or orders, in any such case, are not
stayed on appeal or otherwise being appropriately contested in good faith by
proper proceedings diligently pursued; or

(h) an ERISA Event shall have occurred that individually or when taken together
with any other ERISA Events that have occurred, is in excess of $500,000 and
could reasonably be expected to have a Material Adverse Effect; or

(i) the occurrence of (i) any material “default”, as defined in any Loan
Document (other than this Agreement) or the breach of any of the material terms
or provisions of any Loan Document (other than this Agreement), which default or
breach continues beyond any period of grace therein provided and (ii) any other
“default”, as defined in any Loan Document (other than this Agreement) or the
breach of any other terms or provisions of any Loan Document (other than this
Agreement), which default or default or breach continues unremedied for a period
of thirty (30) days; or

(j) the Loan Guaranty shall fail to remain in full force or effect or any action
shall be taken to discontinue or to assert the invalidity or unenforceability of
the Loan Guaranty, or any Loan Guarantor shall fail to comply with any of the
terms or provisions of the Loan Guaranty to which it is a party, or any Loan
Guarantor shall deny that it has any further liability under the Loan Guaranty
to which it is a party, or shall give notice to such effect; or

(k) any Collateral Document (including, without limitation, any DIP Order) shall
for any reason fail to create a valid and perfected first priority security
interest in any Collateral purported to be covered thereby, except as permitted
by the terms of any Loan Document, or any Collateral Document (including,
without limitation, any DIP Order) shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document (including, without limitation, any
DIP Order), or any Loan Party shall fail to comply with any of the terms or
provisions of any Collateral Document (including, without limitation, any DIP
Order); or

(l) any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Loan Party
shall challenge

 

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the enforceability of any Loan Document or shall assert in writing, or engage in
any action or inaction based on any such assertion, that any provision of any of
the Loan Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms); or

(m) except in connection with a store closing sale that was commenced prior to
the Petition Date with respect to the Borrower’s store #790, located at 17200
Brookhurst Street, Fountain Valley, California 92708, and store #110, located at
177 Lewelling Boulevard, San Lorenzo, California 94580, or as otherwise
expressly permitted hereunder in connection with a Permitted Sale, (i) the
Borrower shall suspend the operation of any of its store locations for a period
of time exceeding five (5) Business Days, or (ii) any Loan Party shall take any
action, or shall make a determination, whether or not formally approved by such
Loan Party’s management or board of directors, to suspend the operation of its
business in the ordinary course, liquidate any of its assets or store locations,
or employ an agent or other third party to conduct a program of closings,
liquidations or “Going-Out-Of-Business” sales of any portion of its business; or

(n) the subordination provisions of the documents evidencing or governing any
Subordinated Indebtedness, or the Intercreditor Agreement, or any other
intercreditor provisions with respect to any other Indebtedness (including,
without limitation, any intercreditor provisions set forth in any DIP Order)
(the foregoing, collectively, the “Intercreditor Provisions”) shall, in whole or
in part, terminate, cease to be effective or cease to be legally valid, binding
and enforceable against any holder of the applicable Subordinated Indebtedness,
the Term Lenders, the Term Collateral Agent, the Term Administrative Agent, the
DIP Term Lenders, the DIP Term Collateral Agent, the DIP Term Administrative
Agent or any other holder of Indebtedness or agent or representative thereof; or
(ii) the Borrower or any other Loan Party shall, directly or indirectly, disavow
or contest in any manner (A) the effectiveness, validity or enforceability of
any of the Intercreditor Provisions, (B) that the Intercreditor Provisions exist
for the benefit of the Lender Parties, or (C) that all payments of principal of
or premium and interest on the applicable Indebtedness or realized from the
liquidation of any property of any Loan Party, shall be subject to any of the
Intercreditor Provisions; or

(o) the entry of an order in the Chapter 11 Case which stays, modifies or
reverses any DIP Order or which otherwise materially adversely affects, as
determined by the ABL Administrative Agent and the Supplemental Term Agent in
their reasonable discretion, the effectiveness of any DIP Order without the
express written consent of the ABL Administrative Agent and the Supplemental
Term Agent; or

(p) the occurrence of any default by a Loan Party under the Agency Agreement; or

(q) either (i) the appointment in the Chapter 11 Case of a trustee or of any
examiner having expanded powers to operate all or any part of any Loan Party’s
business, or (ii) the conversion of the Chapter 11 Case to a case under Chapter
7 of the Bankruptcy Code; or

(r) the failure of the Bankruptcy Court to enter a Final Borrowing Order, in
form and substance satisfactory to the ABL Administrative Agent and the
Supplemental Term Agent, within thirty (30) days after the Petition Date; or

 

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(s) the entry of any order which provides relief from the automatic stay
otherwise imposed pursuant to Section 362 of the Bankruptcy Code which permits
any creditor to (i) realize upon, or to exercise any right or remedy with
respect to (x) any portion of the Collateral included in (or eligible for
inclusion in) the Revolving Borrowing Base, the Supplemental Term Borrowing Base
or the calculations described in Section 2.01(b)(iii) or (y) any other
Collateral, to the extent such realization or exercise of rights or remedies
would be reasonably likely to have a Material Adverse Effect, or (ii) to
terminate any license, franchise, or similar agreement, where such termination
would reasonably be likely to have a Material Adverse Effect; or

(t) the filing of any application by any Loan Party without the express prior
written consent of the ABL Administrative Agent and the Supplemental Term Agent
for the approval of any super-priority claim in the Chapter 11 Case which is
pari passu with or senior to the priority of the claims of the ABL
Administrative Agent, the Supplemental Term Agent, the Issuing Banks and the
Lenders for the Obligations, or there shall arise any such super-priority claim
under the Bankruptcy Code (other than the Professional Fee Carve Out); or

(u) the payment or other discharge by any Loan Party of any pre-petition
Indebtedness, except as expressly permitted hereunder, under any DIP Order, or
in the Budget or by order in the Chapter 11 Case to which order the ABL
Administrative Agent and the Supplemental Term Agent have provided their written
consent; or

(v) the entry of any order in the Chapter 11 Case which provides adequate
protection, or the granting by any Loan Party of similar relief in favor of any
one or more of a Loan Party’s creditors existing prior to the Petition Date,
that is contrary to the terms and conditions of any DIP Order or the terms
hereof; or

(w) the failure of any Loan Party to (i) comply with each and all of the terms
and conditions of any DIP Order or the Sale Order or (ii) comply in all material
respects with the Cash Management Order, the Sale Motion Order or any other
order entered in the Chapter 11 Case; or

(x) the filing of any motion by any Loan Party seeking, or the entry of any
order in the Chapter 11 Case: (i) (A) permitting working capital or other
financing (other than ordinary course trade credit, unsecured debt and the DIP
Term Facility) for any Loan Party from any Person other than the Administrative
Agent (unless the proceeds of such financing are used to pay all Pre-Petition
Liabilities in full, to fully fund the Pre-Petition ABL Indemnity Account (as
defined in a DIP Order), to pay all Obligations in full, to cash collateralize
all LC Exposure, and all Unliquidated Obligations (including any such
Obligations due in connection with any Swap Agreement, cash management,
depository or similar products), and to establish a reserve account for all
indemnification and expense reimbursement obligations hereunder), (B) granting a
Lien on, or security interest in (other than a Lien permitted by Section 6.02)
any of the Collateral, other than with respect to this Agreement (unless such
Liens are granted in connection with a financing, the proceeds of which are
applied to the payment in full of all Obligations and the cash collateralization
of all LC Exposure, other Unliquidated Obligations and indemnification
obligations hereunder), (C) except as permitted by this Agreement and the DIP
Orders, permitting the use of any of the Collateral pursuant to Section 363(c)
of the

 

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Bankruptcy Code without the prior written consent of the ABL Administrative
Agent and the Supplemental Term Agent, (D) permitting recovery from any portion
of the Collateral any costs or expenses of preserving or disposing of such
Collateral under Section 506(c) of the Bankruptcy Code, or (E) dismissing the
Chapter 11 Case or (ii) the filing of any motion by any party in interest or any
Creditors’ Committee appointed in the Chapter 11 Case) (x) seeking any of the
matters specified in the foregoing clause (i) that is not dismissed or denied
within thirty (30) days of the date of the filing of such motion (or such later
date agreed to in writing by the ABL Administrative Agent and the Supplemental
Term Agent) or (y) seeking the reconsideration of any DIP Order; or

(y)  (i) the filing of a motion seeking approval of a Disclosure Statement and a
Plan of Reorganization, or the entry of an order confirming a Plan of
Reorganization, that does not require repayment in full in cash of all
Obligations and Pre-Petition Liabilities on the Consummation Date of such Plan
of Reorganization, or (ii) the failure of the Consummation Date to occur within
fourteen (14) days following the entry of an order confirming a Plan of
Reorganization; or

(z)  (i) the filing of any pleading by any Loan Party or any other party in
interest (including but not limited to, any Creditors’ Committee) challenging
the validity, priority, perfection, or enforceability of the Pre-Petition Loan
Documents, the Pre-Petition Liabilities, or any Lien granted pursuant to the
Pre-Petition Loan Documents, or (ii) the validity, priority, perfection, or
enforceability of the Pre-Petition Loan Documents, the Pre-Petition Liabilities,
or any Lien granted pursuant to the Pre-Petition Loan Documents is determined to
be null and void, invalid or unenforceable by the Bankruptcy Court or another
court of competent jurisdiction in any action commenced or asserted by any other
party in interest in the Chapter 11 Case, including, without limitation, the
Creditors’ Committee; or

(aa) The expiration of the Loan Parties’ exclusivity period with respect to
filing of a Plan of Reorganization under Section 1121(b) of the Bankruptcy Code;

then, and in every such event, subject to the terms of the DIP Orders and at any
time thereafter during the continuance of such event, with the consent of the
Required Lenders, the ABL Administrative Agent may, and at the request of the
Required Lenders shall, by notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate the Revolving
Commitments, and thereupon the Revolving Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower. Upon the occurrence and the continuance of an Event of Default,
the ABL Administrative Agent may, and at the request of the Required Lenders
shall, exercise any rights and remedies provided to the ABL Administrative Agent
under the Loan Documents (including, without limitation, the DIP Orders) or at
law or equity, including all remedies provided under the UCC.

 

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In addition to the exercise by the ABL Administrative Agent and the Collateral
Agent of any or all of their rights and remedies after the occurrence and during
the continuance of an Event of Default, the ABL Administrative Agent or the
Collateral Agent may require, and upon request by the ABL Administrative Agent
or the Collateral Agent the Borrower shall, undertake to liquidate the
Collateral on behalf of the ABL Administrative Agent and the Collateral Agent in
such manner as the Collateral Agent may require. Such liquidation may be
effected through a partial or chain-wide store closing sale in a manner
consistent with the foregoing enumeration of the Agents’ rights and remedies,
and as otherwise permitted by the Bankruptcy Court. The Agents and the Borrower
shall endeavor to implement such a liquidation on mutually acceptable terms and
conditions. However, any Agent may by written notice to the Borrower require the
Borrower to:

(a) File a motion seeking to retain one or more nationally recognized
professional retail inventory liquidation agents reasonably acceptable to the
Agents and the Supplemental Term Agent to sell, lease, or otherwise dispose of
the Collateral on terms acceptable to the Agents and the Supplemental Term
Agent;

(b) File a motion or motions seeking to sell or otherwise dispose of any or all
of the Real Property pursuant to Section 363 of the Bankruptcy Code, on terms
acceptable to the Agents and the Supplemental Term Agent;

(c) File a motion or motions seeking to sell, assume, assign, or otherwise
dispose of any or all of the Leases pursuant to Sections 363 and 365 of the
Bankruptcy Code, on terms acceptable to the Agents and the Supplemental Term
Agent.

The Borrower shall file such motion(s) within three (3) Business Days of the ABL
Administrative Agent’s request and shall diligently prosecute such motion(s). If
the Borrower fails to so file or diligently prosecute the motion(s), the ABL
Administrative Agent may file and prosecute such motion(s) in the name of the
Borrower.

Notwithstanding anything to the contrary contained herein, except as the
Required Supplemental Term Lenders shall otherwise agree with respect to any
action to be taken by the ABL Administrative Agent pursuant to this paragraph,
the ABL Administrative Agent shall demand payment of the Obligations and ABL
Administrative Agent and Collateral Agent shall exercise all rights and remedies
of the ABL Administrative Agent, the Supplemental Term Agent, the Lenders and
the Issuing Banks (collectively, the “Lender Parties”) under the Loan Documents
or Requirements of Law, including, but not limited to, by suit in equity, action
at law or other appropriate proceeding, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of the Lender Parties, and commence and pursue
such other Enforcement Actions as the ABL Administrative Agent in good faith
deems appropriate (x) with respect to Events of Default described in clauses
(a) or (b) of this Article VII (in each case to the extent relating to payments
in respect of the Supplemental Term Loan only) or clauses (g) or (h) of this
Article VII, promptly upon receipt of notice, or, with respect to the
Supplemental Term Priority Collateral in connection with any such Event of
Default, as directed by the Required Supplemental Term Lenders, and
(y) otherwise, within sixty (60) days after the date of the receipt by the ABL
Administrative Agent of written notice executed and delivered by the Required
Supplemental

 

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Term Lenders or by the Supplemental Term Agent on behalf of Required
Supplemental Term Lenders requesting that the ABL Administrative Agent commence
Enforcement Actions (the “Term Loan Action Notice”), provided, that:

(1) such Event of Default has not been waived by the applicable Lenders in
accordance with Section 9.02,

(2) in the good faith determination of the ABL Administrative Agent, taking an
Enforcement Action is permitted under the terms of the Loan Documents and
applicable Requirements of Law,

(3) taking an Enforcement Action shall not result in any liability of the ABL
Administrative Agent, the Supplemental Term Agent or the Lenders to any Loan
Party or any other person,

(4) the ABL Administrative Agent shall be entitled to all of the benefits of
Sections 8.02, 8.03 and 8.10 hereof, and

(5) the ABL Administrative Agent shall not be required to take an Enforcement
Action so long as, within the period provided above, the ABL Administrative
Agent shall, at its option, either

(a) appoint the Supplemental Term Agent, as an agent of the ABL Administrative
Agent for purposes of exercising the rights of the ABL Administrative Agent to
take an Enforcement Action, subject to the terms hereof, or

(b) resign as ABL Administrative Agent, and the Supplemental Term Agent shall
automatically be deemed to be the successor ABL Administrative Agent hereunder
and under the other Loan Documents for purposes hereof or thereof, except with
respect to the provisions of Article II hereof and in connection with all
matters relating to the determination of the Revolving Borrowing Base, the
Supplemental Term Borrowing Base and each of their respective components
(including Eligible Credit Card Account Receivables, Eligible Inventory,
Reserves and receiving reports in respect of Collateral and conducting field
examinations and appraisals with respect to the Collateral and similar matters).

Without limiting any rights the Agents, any Revolving Lender or any FILO Lender
may otherwise have under applicable Requirements of Law or by agreement, in the
event of any sale or other disposition (including, without limitation, by means
of a sale pursuant to Section 363 of the Bankruptcy Code) of the ABL Priority
Collateral, the Agents or any other Person (including any Revolving Lender and
any FILO Lender) acting with the consent, or on behalf, of the ABL
Administrative Agent, shall have the right during the Use Period, to use the
Supplemental Term Priority Collateral, in order to assemble, inspect, copy or
download information stored on, take actions to perfect its Lien on, complete a
production run of Inventory involving, take possession of, move, prepare and
advertise for sale, sell (by public auction, private sale or a
“going-out-of-business”, “store closing” or other similar sale, whether in bulk,
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ordinary course of business or otherwise, and which sale may include augmented
inventory of the same type sold in any Loan Party’s business), store or
otherwise deal with the ABL Priority Collateral, in each case without the
involvement of or interference by the Supplemental Term Agent or any
Supplemental Term Lender or liability to the Supplemental Term Agent or any
Supplemental Term Lender (other than as provided in clause (iii) below). The
Supplemental Term Agent may not sell, assign or otherwise transfer (or direct
the Agents to take any such action) the related Supplemental Term Priority
Collateral prior to the expiration of the Use Period, unless the purchaser,
assignee or transferee thereof agrees to be bound by the provisions of this
paragraph. None of the Agents, the Revolving Lenders or the FILO Lenders shall
be obligated to pay any rent, fee or other amounts to the Supplemental Term
Agent or the Supplemental Term Lenders (or any Person claiming by, through or
under any of them, including any purchaser of the Supplemental Term Priority
Collateral) or to the Loan Parties, for or in respect of the use by the Agents,
the Revolving Lenders and the FILO Lenders of the Supplemental Term Priority
Collateral. The Agents, the Revolving Lenders and the FILO Lenders shall (i) use
the Supplemental Term Priority Collateral in accordance with applicable
Requirements of Law; (ii) insure the Supplemental Term Priority Collateral for
damage to property and liability to persons, including property and liability
insurance for the benefit of the Supplemental Term Agent (for itself and as
agent for the Supplemental Term Lenders) and the Supplemental Term Agent shall
be named as an additional insured and loss payee thereon; and (iii) indemnify
the Supplemental Term Agent and the Supplemental Term Lenders from any claim,
loss, damage, cost or liability (including reasonable attorneys’ fees and
expenses) arising from the Agents’, the Revolving Lenders’ and the FILO Lenders’
use of the Supplemental Term Priority Collateral (except for those arising from
the gross negligence or willful misconduct of the Supplemental Term Agent or any
Supplemental Term Lender).

ARTICLE VIII

The ABL Administrative Agent; The Supplemental Term Agent

SECTION 8.01 Appointment of ABL Administrative Agent, Collateral Agent and
Supplemental Term Agent. Each of the Lenders and each of the Issuing Banks
hereby irrevocably appoints Wells Fargo as ABL Administrative Agent and
authorizes the ABL Administrative Agent to take such actions on its behalf,
including execution of the other Loan Documents, and to exercise such powers as
are delegated to the ABL Administrative Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto. Each of the Lenders hereby irrevocably appoints Wells Fargo as
Collateral Agent for purposes of the perfection of all Liens created by the Loan
Documents and all other purposes stated therein and authorizes the Collateral
Agent to enter into and exercise such powers as set forth in the Intercreditor
Agreement. Each of the Supplemental Term Lenders hereby irrevocably appoints
Wells Fargo as Supplemental Term Agent and authorizes the Supplemental Term
Agent to take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Supplemental Term
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

The bank serving as the ABL Administrative Agent and/or the Supplemental Term
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
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the Supplemental Term Agent, as applicable, and such bank and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Loan Parties or any Subsidiary of a Loan Party or other Affiliate
thereof as if it were not the ABL Administrative Agent or the Supplemental Term
Agent, as applicable, hereunder.

SECTION 8.02 Limited Duties. Neither the ABL Administrative Agent nor the
Supplemental Term Agent shall have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) neither the ABL Administrative Agent nor the Supplemental
Term Agent shall be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing, (b) neither the ABL
Administrative Agent nor the Supplemental Term Agent shall have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the ABL Administrative Agent or the Supplemental Term Agent, as applicable,
is required to exercise in writing as directed by the Required Lenders, the
Required Revolving Lenders, the Required FILO Lenders, or the Required
Supplemental Term Lenders, as applicable (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, neither the
ABL Administrative Agent nor the Supplemental Term Agent shall have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any of its Subsidiaries that is communicated to or
obtained by the bank serving as ABL Administrative Agent or Supplemental Term
Agent, as applicable, or any of their respective Affiliates in any capacity.
Neither the ABL Administrative Agent nor the Supplemental Term Agent shall be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders, the Required Revolving Lenders, the Required
FILO Lenders, or the Required Supplemental Term Lenders, as applicable (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), or in the absence of its own gross
negligence or willful misconduct. Neither the ABL Administrative Agent nor the
Supplemental Term Agent shall be deemed to have knowledge of any Default unless
and until written notice thereof is given to the ABL Administrative Agent or the
Supplemental Term Agent, as applicable, by the Borrower or a Lender. Neither the
ABL Administrative Agent nor the Supplemental Term Agent shall be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection with any Loan Document, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, (v) the creation,
perfection or priority of Liens on the Collateral or the existence of the
Collateral, or (vi) the satisfaction of any condition set forth in Article IV or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the ABL Administrative Agent or the Supplemental
Term Agent, as applicable.

SECTION 8.03 Reliance.

 

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Each of the ABL Administrative Agent and the Supplemental Term Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. Each of the ABL Administrative Agent and the Supplemental Term
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. Each of the ABL Administrative Agent and the
Supplemental Term Agent may consult with legal counsel (who may be counsel for
the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.

SECTION 8.04 Delegation of Rights and Duties. Each of the ABL Administrative
Agent and the Supplemental Term Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the ABL Administrative Agent or the Supplemental Term Agent, as
applicable. Each of the ABL Administrative Agent, the Supplemental Term Agent
and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding clauses shall apply to any such sub-agent and to the
Related Parties of the ABL Administrative Agent, the Supplemental Term Agent and
any such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as ABL Administrative Agent or Supplemental Term Agent, as
applicable.

SECTION 8.05 Resignation of ABL Administrative Agent or Supplemental Term Agent.

(a) Subject to the appointment and acceptance of a successor ABL Administrative
Agent as provided in this clause, the ABL Administrative Agent may resign at any
time by notifying the Lenders, the Supplemental Term Agent and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, upon
notice to the Borrower, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring ABL Administrative Agent gives notice of its
resignation, then the retiring ABL Administrative Agent may, on behalf of the
Lenders, appoint a successor ABL Administrative Agent which shall be a
commercial bank or an Affiliate of any such commercial bank. Upon the acceptance
of its appointment as ABL Administrative Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring ABL Administrative Agent and the retiring
ABL Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor ABL Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. After the ABL Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 9.03
shall continue in effect for the benefit of such retiring ABL Administrative
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Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as ABL Administrative Agent.

(b) Subject to the appointment and acceptance of a successor Supplemental Term
Agent as provided in this clause, the Supplemental Term Agent may resign at any
time by notifying the Supplemental Term Lenders, the ABL Administrative Agent
and the Borrower. Upon any such resignation, the Required Supplemental Term
Lenders shall have the right, upon notice to the Borrower and after consultation
with the ABL Administrative Agent, to appoint a successor. If no successor shall
have been so appointed by the Required Supplemental Term Lenders and shall have
accepted such appointment within 30 days after the retiring Supplemental Term
Agent gives notice of its resignation, then the retiring Supplemental Term Agent
may, on behalf of the Supplemental Term Lenders, appoint a successor
Supplemental Term Agent which shall be a commercial bank or an Affiliate of any
such commercial bank. Upon the acceptance of its appointment as Supplemental
Term Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Supplemental Term Agent and the retiring Supplemental Term Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Supplemental Term Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Supplemental Term Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Supplemental Term Agent its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Supplemental Term Agent.

SECTION 8.06 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the ABL Administrative Agent, the
Supplemental Term Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the ABL Administrative Agent, the
Supplemental Term Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.

SECTION 8.07 Reports. Each Lender hereby agrees that: (a) it has requested a
copy of each Report prepared by or on behalf of the ABL Administrative Agent or
the Supplemental Term Agent; (b) it has requested a copy of all financial
statements and projections required to be delivered by the Borrower hereunder;
(b) neither the ABL Administrative Agent nor the Supplemental Term Agent
(i) makes no representation or warranty, express or implied, as to the
completeness or accuracy of any Report or any of the information contained
therein or any inaccuracy or omission contained in or relating to a Report and
(ii) shall not be liable for any information contained in any Report; (c) the
Reports are not comprehensive audits or examinations, and that any Person
performing any field examination will inspect only specific information
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Loan Parties and will rely significantly upon the Loan Parties’ books and
records, as well as on representations of the Loan Parties’ personnel and that
neither the ABL Administrative Agent nor the Supplemental Term Agent undertakes
any obligation to update, correct or supplement the Reports; (d) it will keep
all Reports confidential and strictly for its internal use, not share the Report
with any Loan Party or any other Person except as otherwise permitted pursuant
to this Agreement; and (e) without limiting the generality of any other
indemnification provision contained in this Agreement, it will pay and protect,
and indemnify, defend, and hold the ABL Administrative Agent, the Supplemental
Term Agent and any such other Person preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses, and other
amounts (including reasonable attorney fees) incurred by any such Person as the
direct or indirect result of any third parties who might obtain all or part of
any Report through the indemnifying Lender.

SECTION 8.08 Syndication Agent and Arrangers. The Syndication Agent and the
Arrangers shall not have any right, power, obligation, liability, responsibility
or duty under this Agreement other than those applicable to all Lenders as such,
except for the rights of the Syndication Agent to the fees in accordance with
Section 2.12(b) hereof.

SECTION 8.09 Defaulting Lenders.

(a) [RESERVED]

(b) The non-Defaulting Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to cause the
termination and assignment, without any further action by the Defaulting Lender
for no cash consideration (pro rata, based on the respective Revolving
Commitments of those Lenders electing to exercise such right), of the Defaulting
Lender’s Revolving Commitment to fund future Loans. Upon any such purchase of
the Applicable Percentage of any Defaulting Lender, the Defaulting Lender’s
share in future Loans and Letters of Credit and its rights under the Loan
Documents with respect thereto shall terminate on the date of purchase, and the
Defaulting Lender shall promptly execute all documents reasonably requested to
surrender and transfer such interest, including, if so requested, an Assignment
and Assumption.

(c) In addition to the rights of the non-Defaulting Lenders set forth in Section
8.09(b) above, the Borrower shall have the right, at any time, upon notice to a
Defaulting Lender or a Deteriorating Lender and the ABL Administrative Agent, to
replace such Defaulting Lender or Deteriorating Lender in accordance with the
provisions of Section 2.19(b) hereof.

(d) Each Defaulting Lender shall indemnify the ABL Administrative Agent and each
non-Defaulting Lender from and against any and all loss, damage or expenses,
including, but not limited to, reasonable attorneys’ fees and funds advanced by
the ABL Administrative Agent or by any non-Defaulting Lender, on account of a
Defaulting Lender’s failure to timely fund its Applicable Percentage of a Loan
or to otherwise perform its obligations under the Loan Documents.

 

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SECTION 8.10 Indemnification of Agents and Supplemental Term Agent. The Lenders
agree to indemnify each of the ABL Administrative Agent, the Supplemental Term
Agent and the Collateral Agent in its capacity as such, and each Related Party
of any of the foregoing Persons (to the extent not reimbursed by the Loan
Parties and without limiting the obligation of the Loan Parties to do so),
ratably according to their respective Applicable Percentages in effect on the
date on which indemnification is sought under this Section 8.10 (or, if
indemnification is sought after the date upon which the Revolving Commitment of
any Lender shall have terminated and the Loans shall have been paid in full,
ratably in accordance with such Applicable Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against the ABL Administrative
Agent, the Supplemental Term Agent or the Collateral Agent in any way relating
to or arising out of, the Revolving Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Agent or the Supplemental Term Agent under or in connection
with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that are
found by a final and nonappealable decision of a court of competent jurisdiction
to have resulted from the ABL Administrative Agent’s, the Supplemental Term
Agent’s or the Collateral Agent’s gross negligence or willful misconduct. The
agreements in this Section 8.10 shall survive the payment of the Loans and all
other amounts payable hereunder.

ARTICLE IX

Miscellaneous

SECTION 9.01 Notices.

(a) All notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by facsimile, as follows:

 

  (i) if to any Loan Party, to the Borrower at:

Orchard Supply Hardware LLC

6450 Via Del Oro

San Jose, CA 95119

Attention: Chief Executive Officer and Chief Financial Officer

Facsimile No: (408) 629-7174

E-mail: chris.newman@osh.com

 

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  (ii) if to the ABL Administrative Agent, the Collateral Agent, Wells Fargo or
the Swingline Lender, to Wells Fargo at:

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, MA 02108

Attention: Jason Searle

Facsimile No.: (855) 766-9554

E-mail: jason.searle@wellsfargo.com

with copy (which shall not constitute notice) to:

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attention: Donald E. Rothman, Esquire

Facsimile No.: (617) 692-3556

E-mail: drothman@riemerlaw.com

 

  (iii) if to the Supplemental Term Agent, to Wells Fargo at:

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, MA 02108

Attention: Christian West

Facsimile No.: (887) 474-3331

E-mail: christian.c.west@wellsfargo.com

with copy to:

Greenberg Traurig, LLP

One International Place

Boston, Massachusetts 02110

Attention: Jeffrey M. Wolf, Esquire

Facsimile No.: (617) 279-8447

E-mail: wolfje@gtlaw.com

 

  (iv) if to any other Lender or Issuing Bank, to it at its address or facsimile
number set forth in its Administrative Questionnaire.

All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (ii) sent by facsimile shall be deemed to have been given
when sent, provided that if not given during normal business hours for the
recipient, such notice shall be deemed to have been given at the opening of
business on the next Business Day for the recipient.

 

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(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications (including e-mail and internet or
intranet websites) pursuant to procedures approved by the ABL Administrative
Agent or, with respect to notices or communications to the Supplemental Term
Lenders, the Supplemental Term Agent; provided that the foregoing shall not
apply to notices pursuant to Article II or to compliance and no Event of Default
certificates delivered pursuant to Section 5.01(e) unless otherwise agreed by
the applicable Lender and the ABL Administrative Agent or the Supplemental Term
Agent, as applicable. The ABL Administrative Agent, the Supplemental Term Agent
or the Borrower (on behalf of the Loan Parties) may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications. All such
notices and other communications (i) sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if not given
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient, and (ii) posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (b)(i) of
notification that such notice or communication is available and identifying the
website address therefor.

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

SECTION 9.02 Waivers; Amendments.

(a) No failure or delay by the ABL Administrative Agent, the Supplemental Term
Agent, any Issuing Bank or any Lender in exercising any right or power hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the ABL Administrative Agent, the Supplemental Term Agent, the
Issuing Banks and the Lenders hereunder and under any other Loan Document are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by clause (b) of this Section 9.02 , and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the ABL Administrative Agent, the
Supplemental Term Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.

(b) Neither this Agreement nor any other Loan Document nor any provision hereof
or thereof may be waived, amended or modified except (1) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrower and the Required Lenders or, (2) in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
ABL Administrative Agent and the Loan Party or Loan

 

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Parties that are parties thereto, with the consent of the Required Lenders;
provided that no such agreement described in clauses (1) or (2) above shall:

(i) increase the Revolving Commitment of any Lender without the written consent
of such Lender (provided that the ABL Administrative Agent may make Protective
Advances as set forth in Section 2.04),

(ii) increase the principal amount of the Supplemental Term Loan without the
written consent of the Required Revolving Lenders,

(iii) reduce or forgive the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce or forgive any interest or fees
payable hereunder, without the written consent of each Lender directly affected
thereby,

(iv) postpone the Revolving Credit Termination Date or the scheduled date of
expiration of any Revolving Commitment, without the written consent of each
Lender directly affected thereby and the Required Supplemental Term Lenders,

(v) postpone any scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any date for the payment of any interest, fees or other
Obligations payable hereunder, or reduce the amount of, waive or excuse any such
payment, without the written consent of each Lender directly affected thereby,

(vi) as to any Lender, change Section 2.18(b) or 2.18(d) in a manner that would
alter the manner in which payments are shared, without the written consent of
such Lender,

(vii) change any of the provisions of this Section or the definition of
“Required Lenders”, “Required Revolving Lenders”, “Required FILO Lenders”,
“Required Supplemental Term Lenders”, or “Supermajority Revolving Lenders” or
any other provision of any Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender included in any such definition,

(viii) increase the advance rates set forth in the definition of “Supplemental
Term Borrowing Base” or add new categories of eligible assets to the
Supplemental Term Borrowing Base, without the written consent of the Required
Supplemental Term Lenders,

(ix) release all or substantially all of the Loan Guarantors from their
obligations under the Loan Guaranty (except as otherwise permitted herein or in
the other Loan Documents), or amend the definitions of “ABL Priority Collateral”
or “Supplemental Term Priority Collateral”, in each case without the written
consent of each Lender,

 

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(x) except as provided in clause (c) of this Section or in any Collateral
Document, release all or substantially all of the Collateral, without the
written consent of each Lender; provided that, (x) in connection with an
Enforcement Action with respect to any ABL Priority Collateral, or a sale or
other disposition of any ABL Priority Collateral with the written consent of the
Required Revolving Lenders other than pursuant to an Enforcement Action but
after the occurrence and during the continuance of an Event of Default, then
such ABL Priority Collateral may be released solely with the written consent of
the Required Revolving Lenders, and (y) in connection with an Enforcement Action
with respect to any Supplemental Term Priority Collateral, or a sale or other
disposition of any Supplemental Term Priority Collateral with the written
consent of the Required Supplemental Term Lenders other than pursuant to an
Enforcement Action but after the occurrence and during the continuance of an
Event of Default, then such Supplemental Term Priority Collateral may be
released solely with the written consent of the Required Supplemental Term
Lenders,

(xi) increase the rate of interest applicable to:

(A) the ABL Revolving Loans and the Swingline Loans (other than as a result of
an increase in accordance with Section 2.13(e)) by more than two percent
(2.0%) without the written consent of the Required FILO Lenders and the Required
Supplemental Term Lenders;

(B) the FILO Term Loan (other than as a result of an increase in accordance with
Section 2.13(e)) by more than two percent (2.0%) without the written consent of
the Required Revolving Lenders and the Required Supplemental Term Lenders; or

(C) the Supplemental Term Loan (other than as a result of an increase in
accordance with Section 2.13(e)) by more than two percent (2.0%) without the
written consent of the Required Revolving Lenders and the Required FILO Lenders;

(xii) without the consent of the Required Revolving Lenders, the Required FILO
Lenders and the Required Supplemental Term Lenders:

(A) amend Section 2.04, 5.01, 5.02, 5.05, 5.06, 5.09, 5.10, 5.11, 5.12, 5.14,
5.15, 5.17, 5.18, 5.19, 5.20 any provisions of Article VI, or Article VII, or
Section 9.03;

(B) amend the definitions of “Accelerated Reporting Event”, “Adjusted LIBO
Rate”, “Applicable Percentage”, “Availability Block”, “Availability Reserves”,
“Approved Fund”, “Bank Product Reserves”, “Bank Products” (or any defined term
included therein), “Bidding Procedures Order”, “Bidding Procedures Motion”,
“Budget”, “Cash Management Order”, “Combined Availability”, “DIP Orders”,
“Enforcement Action”, “Event of Default”, “Excess Availability”, “Effective
Date”, “Final Borrowing Order”, “Final Order”, “Independent Consultant”,
“Interest Payment Date”, “Interim Order”, “LIBO

 

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Rate”, “Material Adverse Effect”, “Material Contract”, “Material Indebtedness”,
“Maximum Combined Availability”, “Maximum Revolving Availability”, “Net Orderly
Liquidation Value”, “Net Proceeds”, “Permitted Encumbrances”, “Permitted
Holders”, “Permitted Sales”, “Pre-Petition Credit Agreement”, “Pre-Petition
Liabilities”, “Pre-Petition Loan Documents”, “Real Estate Consultant”,
“Restricted Payments”, “Reserves” (or any defined term included therein),
“Revolving Availability”, “Sale Order”, “Sale Order Motion”, “Stalking Horse
Bid”, “Stalking Horse Bidder”, “Supplemental Term Action Notice”, “Prepayment
Event”, “Supplemental Term Reserve”, “Use Period” or “Variance Report”; provided
that the foregoing requirements with respect to amendments to the definitions of
“Availability Reserves”, “Bank Product Reserves”, “Reserves” (or any defined
term included therein), or “Supplemental Term Reserve” shall not limit the
discretion of the ABL Administrative Agent to change, establish or eliminate any
Reserves, so long as the methodology used in determining or changing any such
Reserves is consistent with the methodology used by the ABL Administrative Agent
on the First Amendment Effective Date; or

(xiii) without the consent of the Supermajority Revolving Lenders, the Required
FILO Lenders and the Required Supplemental Term Lenders:

(A) increase the advance rates set forth in the definition of “Revolving
Borrowing Base” or add new categories of eligible assets to the Revolving
Borrowing Base; provided that the foregoing shall not limit the discretion of
the ABL Administrative Agent to change, establish or eliminate any Reserves, so
long as the methodology used in determining or changing any such Reserves is
consistent with the methodology used by the ABL Administrative Agent on the
First Amendment Effective Date; or

(B) amend the definitions of “Eligible Inventory” or “Eligible Credit Card
Account Receivables”; provided that the foregoing shall not limit the ability of
the ABL Administrative Agent to change or establish any eligibility criteria in
the exercise of its Permitted Discretion as provided in the definitions of
“Eligible Inventory” and “Eligible Credit Card Account Receivables”, so long as
the methodology used in determining or changing any such criteria is consistent
with the methodology used by the ABL Administrative Agent on the First Amendment
Effective Date; or

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the ABL Administrative Agent, the Supplemental Term
Agent, the Issuing Bank or the Swingline Lender hereunder without the prior
written consent of the ABL Administrative Agent, the Supplemental Term Agent,
the Issuing Bank or the Swingline Lender, as the case may be. The ABL
Administrative Agent and the Supplemental Term Agent may also amend the
Commitment Schedule to reflect assignments entered into pursuant to Section
9.04.

(c) The Lenders hereby irrevocably authorize the ABL Administrative Agent, at
its option and in its sole discretion, to release any Loan Guarantor or any
Liens granted to the ABL Administrative Agent by the Loan Parties on any
Collateral (i) upon the termination of all

 

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Revolving Commitments, payment and satisfaction in full in cash of all Secured
Obligations (other than Unliquidated Obligations), and the Cash
Collateralization of all Unliquidated Obligations in a manner satisfactory to
the ABL Administrative Agent and the Issuing Banks, (ii) constituting property
being sold or disposed of if such sale or disposition is made in compliance with
the terms of this Agreement, (iii) constituting property leased to a Loan Party
under a lease which has expired or been terminated in a transaction permitted
under this Agreement, or (iv) as required to effect any sale or other
disposition of such Collateral in connection with any exercise of remedies of
the ABL Administrative Agent, the Supplemental Term Agent and the Lenders
pursuant to Article VII. Except as provided in the preceding sentence or in
Section 9.02, the ABL Administrative Agent will not release any Liens on
Collateral without the prior written authorization of the Required Lenders;
provided that the ABL Administrative Agent may in its discretion, release its
Liens on Collateral valued in the aggregate not in excess of $500,000 during any
calendar year without the prior written authorization of the Required Lenders.
Any such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Loan Parties in respect of) all interests retained by the
Loan Parties, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.

(d) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender,” or “each Lender affected thereby,” or “each
Supplemental Term Lender,” or “each Revolving Lender”, the consent of the
Required Lenders (or the Required Revolving Lenders, the Required FILO Lenders,
or the Required Supplemental Term Lenders, as applicable) is obtained, but the
consent of other necessary Lenders is not obtained (any such Lender whose
consent is necessary but not obtained being referred to herein as a
“Non-Consenting Lender”), then the Borrower may elect to replace a
Non-Consenting Lender as a Lender party to this Agreement; provided that,
concurrently with such replacement, (i) another bank or other entity which is
reasonably satisfactory to the Borrower, the ABL Administrative Agent and, with
respect to any Non-Consenting Lender that is a Supplemental Term Lender, the
Supplemental Term Agent, shall agree, as of such date, to purchase for cash the
Loans and other Obligations due to the Non-Consenting Lender pursuant to an
Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be
terminated as of such date and to comply with the requirements of clause (b) of
Section 9.04, and (ii) the Borrower shall pay to such Non-Consenting Lender in
same day funds on the day of such replacement (1) all interest, fees and other
amounts then accrued but unpaid to such Non-Consenting Lender by the Borrower
hereunder to and including the date of termination, including without limitation
payments due to such Non-Consenting Lender under Sections 2.15 and 2.17, and
(2) an amount, if any, equal to the payment which would have been due to such
Lender on the day of such replacement under Section 2.16 had the Loans of such
Non-Consenting Lender been prepaid on such date rather than sold to the
replacement Lender.

SECTION 9.03 Expenses; Indemnity; Damage Waiver.

(a) The Borrower and each other Loan Party shall jointly and severally pay
(i) all reasonable out-of-pocket expenses incurred by the ABL Administrative
Agent, the Supplemental Term Agent and their respective Affiliates, including
the reasonable fees, charges and disbursements of one primary counsel and one
local counsel in each relevant jurisdiction for

 

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each of the ABL Administrative Agent and the Supplemental Term Agent, in
connection with the syndication and distribution (including, without limitation,
via the internet or through a service such as Intralinks) of the credit
facilities provided for herein, the preparation and administration of the Loan
Documents or any amendments, modifications or waivers of the provisions of the
Loan Documents (whether or not the transactions contemplated hereby or thereby
shall be consummated), and the creation, perfection or protection of the Liens
under the Loan Documents, (ii) all reasonable out-of-pocket expenses incurred by
any Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder,
(iii) all reasonable out-of-pocket expenses incurred by the ABL Administrative
Agent, the Collateral Agent, the Supplemental Term Agent, any Issuing Bank or
any Lender (as each such term is defined in the Pre-Petition Credit Agreement)
or any of their respective Affiliates, including the reasonable fees, charges
and disbursements of counsel, in connection with the Pre-Petition Loan Documents
or the Pre-Petition Liabilities, including any expenses incurred in connection
with the administration of the loan facilities contemplated by the Pre-Petition
Loan Documents or any amendments, modifications or waivers to any Pre-Petition
Loan Document, in each case, to the extent incurred prior to the Petition Date
and outstanding as of the Effective Date, (iv) all reasonable out-of-pocket
expenses incurred by any Issuing Bank (as defined in the Pre-Petition Credit
Agreement) in connection with the issuance, amendment, renewal or extension of
any Letter of Credit (as defined in the Pre-Petition Credit Agreement) or any
demand for payment thereunder, in each case, to the extent incurred prior to the
Petition Date and outstanding as of the Effective Date, and (iv) all reasonable
out-of-pocket expenses incurred by the ABL Administrative Agent, the
Supplemental Term Agent, any Issuing Bank or any Lender, including the
reasonable fees, charges and disbursements of any counsel for the ABL
Administrative Agent, the Supplemental Term Agent, any Issuing Bank or any
Lender, in connection with the enforcement, collection or protection of its
rights in connection with the Loan Documents, including its rights under this
Section 9.03, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit; provided that the aggregate expenses of the Revolving Lenders (other
than Wells Fargo), including the reasonable fees, charges and disbursements of
any counsel to such Revolving Lenders, in connection with the preparation of the
Loan Documents on or prior to the Effective Date shall not exceed $50,000.
Expenses being reimbursed by the Borrower under this Section include, without
limiting the generality of the foregoing, costs and expenses incurred in
connection with:

(i) appraisals;

(ii) field examinations and the preparation of Reports based on the fees charged
by a third party retained by the ABL Administrative Agent or the Supplemental
Term Agent and reasonably acceptable to the Borrower or the internally allocated
per diem fees for each Person employed by the ABL Administrative Agent or the
Supplemental Term Agent with respect to each field examination, together with
the reasonable fees and expenses associated with collateral monitoring services
performed by the ABL Administrative Agent or the Supplemental Term Agent (and
the Borrower agrees to modify or adjust the computation of the Revolving
Borrowing Base or the Supplemental Term Borrowing Base which may include
maintaining additional Reserves, modifying the advance rates or modifying the
eligibility criteria for the components of

 

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the Revolving Borrowing Base or the Supplemental Term Borrowing Base to the
extent required by the ABL Administrative Agent or the Supplemental Term Agent
as a result of any such evaluation, appraisal or monitoring);

(iii) lien and title searches and title insurance;

(iv) taxes, fees and other charges for filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Collateral Agent’s Liens;

(v) sums paid or incurred to take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; and

(vi) forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the accounts and lock boxes, and costs and expenses
of preserving and protecting the Collateral.

All of the foregoing costs and expenses may be charged to the Borrower as ABL
Revolving Loans or to another deposit account, all as described in
Section 2.10(b).

(b) The Borrower shall indemnify the ABL Administrative Agent, each other Agent,
the Supplemental Term Agent, each Issuing Bank and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, penalties, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of the Loan Documents or any agreement
or instrument contemplated thereby, the performance by the parties hereto of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by any Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower or
any of its Subsidiaries, or any Environmental Liability to the extent related in
any way to the Borrower or any of its Subsidiaries, (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, penalties, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by the Borrower or any
Guarantor against any Indemnitee for breach in bad faith of such Indemnitee’s
obligations hereunder, if the Borrower or such Guarantor has obtained a final
and nonappealable judgment in its favor on such claim as determined by a court
of competent jurisdiction.

 

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(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the ABL Administrative Agent, any other Agent, the Supplemental Term
Agent, any Issuing Bank or the Swingline Lender under clause (a) or (b) of this
Section 9.03, each Lender severally agrees to pay to the ABL Administrative
Agent, such other Agent, the Supplemental Term Agent, such Issuing Bank or the
Swingline Lender, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, penalty, liability or related expense, as
the case may be, was incurred by or asserted against the ABL Administrative
Agent, such other Agent, the Supplemental Term Agent, such Issuing Bank or the
Swingline Lender in its capacity as such.

(d) To the extent permitted by applicable law, no Loan Party shall assert, and
each hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section 9.03 shall be payable promptly after
written demand therefor.

SECTION 9.04 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in clause (c) of this Section 9.04) and, to the extent expressly
contemplated hereby, the Related Parties of each of the ABL Administrative
Agent, the Supplemental Term Agent, the Issuing Banks and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in clause (b)(ii) below, any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Revolving
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of:

(A) [reserved];

 

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(B) the ABL Administrative Agent; provided that no consent of the ABL
Administrative Agent shall be required for an assignment (i) to a Lender, an
Affiliate of a Lender or an Approved Fund, or (ii) by a Supplemental Term
Lender;

(C) solely with respect to assignments by Supplemental Term Lenders, the
Supplemental Term Agent; provided that no consent of the Supplemental Term Agent
shall be required for an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund; and

(D) each Issuing Bank; provided that no consent of any Issuing Bank shall be
required for an assignment (i) to a Lender, an Affiliate of a Lender or an
Approved Fund, or (ii) by a FILO Lender or a Supplemental Term Lender.

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

(A) no assignment may be made to any of (i) Holdings, (ii) any Permitted Holder
or (iii) any Affiliate of Holdings or any Permitted Holder;

(B) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Revolving Commitment or Loans of any Class, the amount of the
Revolving Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the ABL Administrative Agent or the
Supplemental Term Agent, as applicable) shall not be less than $5,000,000 (or,
solely with respect to assignments by Supplemental Term Lenders, $2,500,000)
unless the ABL Administrative Agent or the Supplemental Term Agent, as
applicable, otherwise consents;

(C) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;
provided that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

(D) the parties to each assignment shall execute and deliver to the ABL
Administrative Agent (or, in the case of an assignment by a Supplemental Term
Lender, the Supplemental Term Agent) an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and

(E) the assignee, if it shall not be a Lender, shall deliver to the ABL
Administrative Agent (or, in the case of an assignment by a Supplemental Term
Lender, the Supplemental Term Agent) an Administrative Questionnaire in which
the assignee designates one or more Credit Contacts to whom all syndicate-level
information (which may contain material non-public information about the
Borrower, the Loan Parties and their related parties or their respective
securities)

 

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will be made available and who may receive such information in accordance with
the assignee’s compliance procedures and applicable laws, including Federal and
state securities laws.

For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

(iii) Subject to acceptance and recording thereof pursuant to clause (b)(iv) of
this Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.15,
2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with clause (c) of
this Section 9.04.

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

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in clause (b) of this Section 9.04
and any written consent to such assignment required by clause (b) of this
Section 9.04, the ABL

 

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Administrative Agent or the Supplemental Term Agent, as applicable, shall accept
such Assignment and Assumption and record the information contained therein in
the Register; provided that if either the assigning Lender or the assignee shall
have failed to make any payment required to be made by it pursuant to Section
2.05, 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), neither the ABL
Administrative Agent nor the Supplemental Term Agent shall have any obligation
to accept such Assignment and Assumption and record the information therein in
the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this clause.

(c)   (i) Any Lender may, without the consent of the Borrower, the ABL
Administrative Agent, the Supplemental Term Agent, any Issuing Bank or the
Swingline Lender, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Revolving Commitment and the
Loans owing to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the ABL Administrative Agent, the Supplemental Term Agent,
the Issuing Banks and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to clause (c)(ii) of this Section 9.04, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to clause (b) of this Section 9.04. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 9.08
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender. Each Lender that sells a
participation shall, acting solely for this purpose as an agent of the Borrower,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest
in the Commitments, Loans and other Obligations (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any Commitments, Loans or
other Obligations) to any Person except to the extent that such disclosure is
necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, none of the ABL Administrative Agent, the Collateral
Agent or the Supplemental Term Agent (in its capacity as such) shall have no
responsibility for maintaining a Participant Register.

 

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(d) (ii) A Participant shall not be entitled to receive any greater payment
under Sections 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent.

(e) Any Lender may at any time without consent of the Borrower, the ABL
Administrative Agent or the Supplemental Term Agent pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section
9.04 shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

SECTION 9.05 Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the ABL Administrative Agent, the Supplemental Term
Agent, any Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Revolving Commitments have not expired or
terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the Revolving
Commitments or the termination of this Agreement or any provision hereof. In
connection with the termination of this Agreement and the release and
termination of the security interests in the Collateral, the ABL Administrative
Agent may require such indemnities and collateral security (including, without
limitation, Cash Collateral) as it shall reasonably deem necessary or
appropriate to protect the Lender Parties against (x) loss on account of credits
previously applied to the Obligations that may subsequently be reversed or
revoked, (y) any obligations that may thereafter arise with respect to Bank
Product Obligations (including, without limitation, Swap Obligations), and
(z) any Unliquidated Obligations and any Obligations that may thereafter arise
under Section 9.03.

SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
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Administrative Agent or the Supplemental Term Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the ABL
Administrative Agent and when the ABL Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile or other electronic transmission (such as pdf) shall be effective as
delivery of a manually executed counterpart of this Agreement.

SECTION 9.07 Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower or such
Loan Guarantor against any of and all the Secured Obligations held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under the Loan Documents and although such obligations may be unmatured. The
applicable Lender shall notify the Borrower and the ABL Administrative Agent of
such set-off or application, provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such set-off or
application under this Section. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.

(a) The Loan Documents (other than those containing a contrary express choice of
law provision) shall be governed by and construed in accordance with the
Bankruptcy Code and laws of the State of New York, without giving effect to the
conflicts of laws principles thereof, but including Section 5-1401 of the New
York General Obligations Law.

(b) Each Loan Party hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Bankruptcy Court and
any U.S. Federal or New York State court sitting in New York, New York in any
action or proceeding arising out of or relating to any Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all

 

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claims in respect of any such action or proceeding may be heard and determined
in such courts. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the ABL Administrative Agent, the Supplemental Term Agent, any Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Loan Party or its properties in
the courts of any jurisdiction.

(c) Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in clause (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.

SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

SECTION 9.11 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12 Confidentiality.

(a) Each of the ABL Administrative Agent, the Supplemental Term Agent, the
Issuing Banks and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed: (i) to
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officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential); (ii) to the extent requested by any
regulatory authority; (iii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process; (iv) to any other party
to this Agreement; (v) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder; (vi) subject to an agreement containing provisions
substantially the same as those of this Section, to (A) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (B) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations; (vii) with the consent of the Borrower; or
(viii) to the extent such Information (A) is or becomes publicly available other
than as a result of a breach of this Section 9.12 or (B) is or becomes available
to the ABL Administrative Agent, the Supplemental Term Agent, any Issuing Bank
or any Lender on a non-confidential basis from a source other than the Borrower.
For the purposes of this Section 9.12, “Information” means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the ABL Administrative Agent, the
Supplemental Term Agent, any Issuing Bank or any Lender on a non-confidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the Effective Date, the Borrower
will notify the ABL Administrative Agent if the information includes material
non-public information (within the meaning of United States federal securities
laws) with respect to Sears Holdings Corporation and its Affiliates (taken as a
whole) and any of their respective securities. Any Person required to maintain
the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to confidential information of a similar
nature.

(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12(a)
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL
NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW,
INCLUDING FEDERAL AND STATE SECURITIES LAWS.

(c) ALL INFORMATION, INCLUDING WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWER, THE ABL ADMINISTRATIVE AGENT OR THE SUPPLEMENTAL TERM AGENT PURSUANT
TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL
INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE
BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES) AND ITS SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE
BORROWER, THE ABL ADMINISTRATIVE AGENT AND THE SUPPLEMENTAL TERM AGENT THAT IT
HAS IDENTIFIED IN ITS

 

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ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT
MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE
PROCEDURES AND APPLICABLE LAW.

SECTION 9.13 Several Obligations; Nonreliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Each Lender
hereby represents that it is not relying on or looking to any margin stock for
the repayment of the Borrowings provided for herein. Anything contained in this
Agreement to the contrary notwithstanding, neither any Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrower in violation of any
Requirement of Law.

SECTION 9.14 USA PATRIOT ACT. Each Lender that is subject to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”) hereby notifies the Borrower and each Guarantor that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies the Borrower and each Guarantor, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower and each Guarantor in
accordance with the Act.

SECTION 9.15 Disclosure. Each Loan Party and each Lender hereby acknowledges and
agrees that the ABL Administrative Agent, the Supplemental Term Agent and/or
their respective Affiliates from time to time may hold investments in, make
other loans to or have other relationships with any of the Loan Parties and
their respective Affiliates.

SECTION 9.16 Appointment for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the
ABL Administrative Agent, the Supplemental Term Agent and the Lenders, in assets
which, in accordance with Article 9 of the UCC or any other applicable law can
be perfected by possession or control. Should any Lender (other than the ABL
Administrative Agent) obtain possession or control of any such Collateral, such
Lender shall notify the ABL Administrative Agent thereof, and, promptly upon the
ABL Administrative Agent’s request therefor shall deliver such Collateral to the
ABL Administrative Agent or otherwise deal with such Collateral in accordance
with the ABL Administrative Agent’s instructions.

SECTION 9.17 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,

 

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received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.18 DIP Orders. In the event of any inconsistency between the terms of
the DIP Orders and the Loan Documents, the terms of the DIP Orders shall
control. Notwithstanding the foregoing, the ABL Administrative Agent and the
Supplemental Term Agent agree with the Lenders that they shall not assent to any
DIP Order or any amendment thereto that is materially inconsistent with the
terms of this Agreement without consent of the Required Lenders.

SECTION 9.19 Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the Liens and security interests granted to the Collateral Agent
pursuant to the Collateral Documents, and the exercise of any right or remedy by
the Collateral Agent hereunder or thereunder, are subject to the provisions of
the Intercreditor Agreement. In the event of any conflict between the terms of
the Intercreditor Agreement and the terms of this Agreement, the terms of the
Intercreditor Agreement shall govern and control.

SECTION 9.20 Store Closing Sales. Notwithstanding anything to the contrary
stated in this Agreement, the Loan Parties may conduct Permitted Sales through
the retention of one or more independent, nationally recognized, professional
retail inventory liquidation firms reasonably acceptable to the Agents and the
Supplemental Term Agent, whether or not such Permitted Sales terms are contrary
to any provisions of this Agreement, so long as the Agents and the Supplemental
Term Agent approved in writing the forms of any applicable agency agreement,
order to be issued by the Bankruptcy Court approving such sales, and any related
documents, instruments and agreements (including, without limitation, any
pleadings or motions to be filed by any Loan Party with the Bankruptcy Court).

ARTICLE X

Loan Guaranty

SECTION 10.01 Guaranty. Each Loan Guarantor hereby agrees that it is jointly and
severally liable for, and, as primary obligor and not merely as surety,
absolutely and unconditionally guarantees to the Lenders the prompt payment when
due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Secured Obligations and all costs and expenses
including, without limitation, all court costs and attorneys’ and paralegals’
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allocated costs of in-house counsel and paralegals) and reasonable out-of-pocket
expenses paid or incurred by the ABL Administrative Agent, the Supplemental Term
Agent, the Issuing Banks and the Lenders in endeavoring to collect all or any
part of the Secured Obligations from, or in prosecuting any action against, the
Borrower, any Loan Guarantor or any other guarantor of all or any part of the
Secured Obligations (such costs and expenses, together with the Secured
Obligations, collectively the “Guaranteed Obligations”). Each Loan Guarantor
further agrees that the Guaranteed Obligations may be extended or renewed in
whole or in part without notice to or further assent from it, and that it
remains bound upon its guarantee notwithstanding any such extension or renewal.
All terms of this Loan Guaranty apply to and may be enforced by or on behalf of
any domestic or foreign branch or Affiliate of any Lender that extended any
portion of the Guaranteed Obligations.

SECTION 10.02 Guaranty of Payment. This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the ABL
Administrative Agent, the Supplemental Term Agent, any Issuing Bank or any
Lender to sue the Borrower, any Loan Guarantor, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations (each,
an “Obligated Party”), or otherwise to enforce its payment against any
collateral securing all or any part of the Guaranteed Obligations.

SECTION 10.03 No Discharge or Diminishment of Loan Guaranty.

(a) Except as otherwise provided for herein, the obligations of each Loan
Guarantor hereunder are unconditional and absolute and not subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Guaranteed Obligations), including:
(i) any claim of waiver, release, extension, renewal, settlement, surrender,
alteration, or compromise of any of the Guaranteed Obligations, by operation of
law or otherwise; (ii) any change in the corporate existence, structure or
ownership of the Borrower or any other guarantor of or other person liable for
any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Obligated Party, or
their assets or any resulting release or discharge of any obligation of any
Obligated Party; or (iv) the existence of any claim, setoff or other rights
which any Loan Guarantor may have at any time against any Obligated Party, the
ABL Administrative Agent, the Supplemental Term Agent, any Issuing Bank, any
Lender, or any other person, whether in connection herewith or in any unrelated
transactions.

(b) The obligations of each Loan Guarantor hereunder are not subject to any
defense or setoff, counterclaim, recoupment, or termination whatsoever by reason
of the invalidity, illegality, or unenforceability of any of the Guaranteed
Obligations or otherwise (other than a defense of payment or performance), or
any provision of applicable law or regulation purporting to prohibit payment by
any Obligated Party, of the Guaranteed Obligations or any part thereof.

(c) Further, the obligations of any Loan Guarantor hereunder are not discharged
or impaired or otherwise affected by: (i) the failure of the ABL Administrative
Agent, the Supplemental Term Agent, any Issuing Bank or any Lender to assert any
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demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement to any
provision of any agreement relating to the Guaranteed Obligations; (iii) any
release, non-perfection, or invalidity of any indirect or direct security for
the obligations of the Borrower for all or any part of the Guaranteed
Obligations or any obligations of any other guarantor of or other person liable
for any of the Guaranteed Obligations; (iv) any action or failure to act by the
ABL Administrative Agent, the Supplemental Term Agent, any Issuing Bank or any
Lender with respect to any collateral securing any part of the Guaranteed
Obligations; or (v) any default, failure or delay, willful or otherwise, in the
payment or performance of any of the Guaranteed Obligations, or any other
circumstance, act, omission or delay that might in any manner or to any extent
vary the risk of such Loan Guarantor or that would otherwise operate as a
discharge of any Loan Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).

SECTION 10.04 Defenses Waived. To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of the Borrower or any Loan Guarantor or the unenforceability of all
or any part of the Guaranteed Obligations from any cause, or the cessation from
any cause of the liability of the Borrower or any Loan Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without
limiting the generality of the foregoing, each Loan Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any person against any Obligated Party,
or any other person. The ABL Administrative Agent may, at its election,
foreclose on any Collateral held by it by one or more judicial or nonjudicial
sales, accept an assignment of any such Collateral in lieu of foreclosure or
otherwise act or fail to act with respect to any collateral securing all or a
part of the Guaranteed Obligations, compromise or adjust any part of the
Guaranteed Obligations, make any other accommodation with any Obligated Party or
exercise any other right or remedy available to it against any Obligated Party,
without affecting or impairing in any way the liability of such Loan Guarantor
under this Loan Guaranty except to the extent the Guaranteed Obligations have
been fully and indefeasibly paid in cash. To the fullest extent permitted by
applicable law, each Loan Guarantor waives any defense arising out of any such
election even though that election may operate, pursuant to applicable law, to
impair or extinguish any right of reimbursement or subrogation or other right or
remedy of any Loan Guarantor against any Obligated Party or any security.

SECTION 10.05 Rights of Subrogation. No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification that it has against any Obligated Party, or any
collateral, until the Loan Parties and the Loan Guarantors have fully performed
all their obligations to the ABL Administrative Agent, the Supplemental Term
Agent, the Issuing Banks and the Lenders.

 

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SECTION 10.06 Reinstatement; Stay of Acceleration. If at any time any payment of
any portion of the Guaranteed Obligations is rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy, or reorganization of the
Borrower or otherwise, each Loan Guarantor’s obligations under this Loan
Guaranty with respect to that payment shall be reinstated at such time as though
the payment had not been made and whether or not the ABL Administrative Agent,
the Supplemental Term Agent, the Issuing Banks and the Lenders are in possession
of this Loan Guaranty. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Lender.

SECTION 10.07 Information. Each Loan Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower’s financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
none of the ABL Administrative Agent, the Supplemental Term Agent, any Issuing
Bank or any Lender shall have any duty to advise any Loan Guarantor of
information known to it regarding those circumstances or risks.

SECTION 10.08 Termination. The Lenders may continue to make loans or extend
credit to the Borrower based on this Loan Guaranty until three days after it
receives written notice of termination from any Loan Guarantor. Notwithstanding
receipt of any such notice, each Loan Guarantor will continue to be liable to
the Lenders for any Guaranteed Obligations created, assumed or committed to
prior to the third day after receipt of the notice, and all subsequent renewals,
extensions, modifications and amendments with respect to, or substitutions for,
all or any part of that Guaranteed Obligations.

SECTION 10.09 Taxes. Subject to the same exceptions and limitations applicable
to the Borrower under Section 2.17 of the Agreement, mutatis mutandis, all
payments of the Guaranteed Obligations will be made by each Loan Guarantor free
and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if any Loan Guarantor shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the ABL
Administrative Agent, the Supplemental Term Agent, any Lender or any Issuing
Bank (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Loan Guarantor shall make
such deductions and (iii) such Loan Guarantor shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

 

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SECTION 10.10 Maximum Liability. The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any Loan
Guarantor under this Loan Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other
provision of this Loan Guaranty to the contrary, the amount of such liability
shall, without any further action by the Loan Guarantors or the Lenders, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor’s “Maximum Liability”).
This Section with respect to the Maximum Liability of each Loan Guarantor is
intended solely to preserve the rights of the Lenders to the maximum extent not
subject to avoidance under applicable law, and no Loan Guarantor nor any other
person or entity shall have any right or claim under this Section with respect
to such Maximum Liability, except to the extent necessary so that the
obligations of any Loan Guarantor hereunder shall not be rendered voidable under
applicable law. Each Loan Guarantor agrees that the Guaranteed Obligations may
at any time and from time to time exceed the Maximum Liability of each Loan
Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lenders hereunder; provided that nothing in this sentence shall
be construed to increase any Loan Guarantor’s obligations hereunder beyond its
Maximum Liability.

SECTION 10.11 Contribution. In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Loan Guaranty, each other Loan Guarantor
(each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor an
amount equal to such Non-Paying Guarantor’s “Applicable Percentage” of such
payment or payments made, or losses suffered, by such Paying Guarantor. For
purposes of this Article X, each Non-Paying Guarantor’s “Applicable Percentage”
with respect to any such payment or loss by a Paying Guarantor shall be
determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrower after the Effective Date (whether by
loan, capital infusion or by other means) to (ii) the aggregate Maximum
Liability of all Loan Guarantors hereunder (including such Paying Guarantor) as
of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder), or to the extent that a Maximum Liability has
not been determined for any Loan Guarantor, the aggregate amount of all monies
received by such Loan Guarantors from the Borrower after the Effective Date
(whether by loan, capital infusion or by other means). Nothing in this provision
shall affect any Loan Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor’s Maximum Liability). Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations. This provision is for the benefit of the ABL
Administrative Agent, the Supplemental Term Agent, the Issuing Banks, the
Lenders and

 

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the Loan Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.

SECTION 10.12 Liability Cumulative. The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative with
all liabilities of each Loan Party to the ABL Administrative Agent, the
Supplemental Term Agent, the Issuing Banks and the Lenders under this Agreement
and the other Loan Documents to which such Loan Party is a party or in respect
of any obligations or liabilities of the other Loan Parties, without any
limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.

SECTION 10.13 Common Enterprise. The successful operation and condition of each
of the Loan Parties is dependent on the continued successful performance of the
functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties is dependent on the successful performance
and operation of each other Loan Party. Each Loan Party expects to derive
benefit, directly and indirectly, from (i) successful operations of each of the
other Loan Parties and (ii) the credit extended by the Lenders to the Borrower
hereunder, both in their separate capacities and as members of the group of
companies.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

ORCHARD SUPPLY HARDWARE LLC, as Borrower, as Debtor and as Debtor-In-Possession
By:   Orchard Supply Hardware Stores Corporation, its Managing Member By:   /s/
Michael Fox Name:   Michael Fox Title:   Senior Vice President & General Counsel

 

ORCHARD SUPPLY HARDWARE STORES CORPORATION, as Loan Guarantor, as Debtor and as
Debtor-In-Possession By:   /s/ Michael Fox Name:   Michael Fox Title:   Senior
Vice President & General Counsel

 

OSH PROPERTIES LLC, as Loan Guarantor, as Debtor and as Debtor-In-Possession By:
  /s/ Michael Fox Name:   Michael Fox Title:   Senior Vice President & General
Counsel

[Signature Page to Senior Secured, Super-Priority

Debtor-In-Possession Credit Agreement]

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

WELLS FARGO BANK, NATIONAL ASSOCIATION, as ABL Administrative Agent, as
Collateral Agent, as Swingline Lender, as an Issuing Bank, as a Revolving Lender
and as a FILO Lender By:   /s/ Jason Searle Name:   Jason Searle Title:  
Director

[Signature Page to Senior Secured, Super-Priority

Debtor-In-Possession Credit Agreement]

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

BANK OF AMERICA, N.A., as Syndication Agent, as an Issuing Bank, as a Revolving
Lender and as a FILO Lender By:   /s/ Christine M. Scott Name:   Christine M.
Scott Title:   SVP-Director

[Signature Page to Senior Secured, Super-Priority

Debtor-In-Possession Credit Agreement]

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

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Supplemental Term Agent and as a
Supplemental Term Lender By:   /s/ Adam D. Salter Name:   Adam D. Salter Title:
  Managing Director

[Signature Page to Senior Secured, Super-Priority

Debtor-In-Possession Credit Agreement]

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

1903 ONSHORE FUNDING, LLC, as a Supplemental Term Lender By:   GB Credit
Partners, LLC, its Investment Manager By:   /s/ Lawrence Klaff Name:   Lawrence
Klaff Title:   Managing Director

 

1903 OFFSHORE FUNDING SPV LIMITED, as a Supplemental Term Lender By:   GB Credit
Partners, LLC, its Investment Manager By:   /s/ Lawrence Klaff Name:   Lawrence
Klaff Title:   Managing Director

[Signature Page to Senior Secured, Super-Priority

Debtor-In-Possession Credit Agreement]