Exhibit 10.1 

 

EXECUTION

 

Third AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

This THIRD AMENDMENT TO SECOND Amended and restated CREDIT AGREEMENT dated as of
February 27, 2020 (this “Third Amendment”), is by and among (i) Christopher &
Banks Corporation, a Delaware corporation (the “Lead Borrower”), (ii) the
Persons named on Schedule 1.01 to the Credit Agreement referred to below
(collectively, the “Borrowers”) and (iii) Wells Fargo Bank, National
Association, as Lender and as L/C Issuer.

 

W I T N E S S E T H:

 

WHEREAS, the Borrowers, the Lender and the L/C Issuer are party to that certain
Second Amended and Restated Credit Agreement dated as of July 12, 2012 (as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, the “Credit Agreement”), pursuant to which the Lender agreed,
subject to the terms and conditions contained therein, to extend credit to the
Borrowers in the form of a revolving credit facility;

 

WHEREAS, the Borrowers and the Lender are party to that certain Security
Agreement dated as of July 12, 2012 (as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, the “Security
Agreement”), pursuant to which the Borrowers granted a security interest in
favor of the Lender for its own benefit and the benefit of the Credit Parties to
secure the payment and performance of all the Secured Obligations;

 

WHEREAS, on the date hereof, the Borrowers are entering into, and incurring
indebtedness under, a term loan facility for an original principal amount of up
to $10,000,000, the proceeds of which will be used in part to pay in full the
FILO Loan under the Credit Agreement; and

 

WHEREAS, the Loan Parties and the Lender have agreed to amend the Credit
Agreement and the Security Agreement as set forth herein, including without
limitation, to permit the Loan Parties’ incurrence of indebtedness under such
aforementioned term loan facility and terminate the FILO Commitment under the
Credit Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties signatory hereto agree
as follows:

 

1.Defined Terms. All capitalized terms used herein and not otherwise defined
shall have the same meaning herein as in the Credit Agreement, as amended
hereby, and with respect to “FILO Loan” and “FILO Commitment”, as in the Credit
Agreement prior to giving effect to this Third Amendment.

 

2.Representations and Warranties. Each Loan Party hereby represents and warrants
that (a) no Default or Event of Default has occurred and is continuing, and (b)
after giving effect to this Third Amendment, all representations and warranties
contained in the Credit Agreement and each other Loan Document are true and
correct in all material respects on and as of the date hereof except (i) to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct in all material respects as of
such earlier date, (ii) in the case of any representation or warranty qualified
by materiality, such representation or warranty is true and correct in all
respects (subject to such qualification) and (iii) in the case of any
representation or warranty qualified by knowledge, such representation or
warranty is true and correct in all respects subject to such qualification.

 

1

 

 

3.Amendments to Credit Agreement.

 

(a)The Credit Agreement is hereby amended to delete the stricken text (indicated
textually in the same manner as the following example: stricken text) and to add
the double-underlined text (indicated textually in the same manner as the
following example: double-underlined text) as set forth in the agreement
attached as Annex I hereto.

 

(b)The Schedules attached as Annex II hereto hereby amend and restate the
corresponding Schedules to the Credit Agreement in their entirety.

 

(c)The Exhibits attached as Annex III hereto hereby amend and restate the
corresponding Exhibits to the Credit Agreement in their entirety.

 

4.Amendment to the Security Agreement. The Security Agreement is hereby amended
to add the following Section 9.15:

 

“9.15. Intercreditor Agreement. With respect to provisions herein setting forth
requirements for, or containing representations regarding, the priority of the
Lender’s Lien in Term Loan Priority Collateral, it is understood and agreed that
such provisions shall be subject to and interpreted giving effect to the
priority arrangements agreed to in the Intercreditor Agreement.”

 

5.Conditions to Effectiveness. This Third Amendment shall not be effective until
each of the following conditions precedent have been fulfilled to the
satisfaction of the Lender:

 

(a)the Lender shall have received this Third Amendment and the Third Amendment
Fee Letter, each duly executed by each of the parties thereto;

 

(b)the Lender shall have received a Borrowing Base Certificate dated the Third
Amendment Effective Date, relating to the period ended on February 15, 2020 and
executed by a Responsible Officer of the Lead Borrower;

 

(c)the Lender shall have received certified copies of each of the Term Loan
Documents, each duly executed by each of the parties thereto, delivered in
escrow pending release simultaneous with the signature pages to this Third
Amendment;

 

(d)the Borrowers shall have paid (or will pay, substantially concurrently with
the execution of this Third Amendment and the Term Loan Documents) in full the
FILO Loan and all accrued and unpaid interest on the FILO Loan through the date
hereof (it being understood and agreed that upon such payment, the FILO
Commitment shall be terminated);

 

(e)the Lender shall have received the Intercreditor Agreement, dated as of the
date hereof, duly executed by the parties thereto;

 

(f)the Loan Parties shall have paid or made arrangements acceptable to the
Lender to pay all fees required to be paid to the Lender on or before the Third
Amendment Effective Date (with all such fees described in this paragraph being
fully earned as of the Third Amendment Effective Date, and no portion thereof
shall be refunded or returned to the Loan Parties under any circumstances);

 

(g)the Loan Parties shall have paid in full or made arrangements acceptable to
the Lender to pay all invoiced Credit Party Expenses in connection with the
preparation, execution, delivery and administration of this Third Amendment and
the other instruments and documents to be delivered hereunder (with such fees
and expenses described in this paragraph being fully earned as of the Third
Amendment Effective Date, and no portion thereof shall be refunded or returned
to the Loan Parties under any circumstances);

 

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(h)the Lender shall have received a secretary’s certificate from each of the
Loan Parties certifying the recent passage and continued effectiveness of
resolutions from the Loan Parties approving the transactions contemplated by
this Third Amendment and the incumbency of the officers executing this Third
Amendment and the documents delivered in connection therewith, in each case in
form and substance satisfactory to the Lender;

 

(i)the Lender shall have received and reviewed lien search results for the
jurisdiction of incorporation and organization of each of the Loan Parties and
judgment search results for the jurisdiction of the chief executive office of
each of the Loan Parties, which search results shall be in form and substance
reasonably satisfactory to the Lender;

 

(j)after giving effect to this Third Amendment, no Default or Event of Default
shall have occurred and be continuing; and

 

(k)all action on the part of the Loan Parties necessary for the valid execution,
delivery and performance by the Loan Parties of this Third Amendment shall have
been duly and effectively taken.

 

6.Effect on Loan Documents. The Credit Agreement and the other Loan Documents,
after giving effect to this Third Amendment, shall be and remain in full force
and effect in accordance with their terms and hereby are ratified and confirmed
in all respects. Except as expressly set forth herein, the execution, delivery,
and performance of this Third Amendment shall not operate as a waiver of any
right, power, or remedy of the Lender or any other Credit Party under the Credit
Agreement or any other Loan Document, as in effect prior to the date hereof.
Each Loan Party hereby ratifies and confirms in all respects all of its
obligations under the Loan Documents to which it is a party and each Loan Party
hereby ratifies and confirms in all respects any prior grant of a security
interest under the Loan Documents to which it is party.

 

7.Release. In consideration of the agreements of the Lender contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, each Loan Party, on behalf of itself and its successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably releases, remises and forever discharges the Lender and its
respective successors and assigns, and their respective present and former
shareholders, Affiliates, trustees, subsidiaries, divisions, predecessors,
directors, officers, attorneys, employees, agents and other representatives (the
Lender and all such other Persons being hereinafter referred to collectively as
the “Releasees” and individually as a “Releasee”), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”)
of every name and nature, known or unknown, suspected or unsuspected, both at
law and in equity, which such Loan Party or any of its successors, assigns or
other legal representatives may now or hereafter own, hold, have or claim to
have against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Third Amendment, including, without
limitation, for or on account of, or in relation to, or in any way in connection
with any of the Credit Agreement, or any of the other Loan Documents or
transactions thereunder or related thereto. Each Loan Party understands,
acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense and may be used as a basis for an injunction against
any action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release. Each Loan Party agrees
that no fact, event, circumstance, evidence or transaction which could now be
asserted or which may hereafter be discovered shall affect in any manner the
final, absolute and unconditional nature of the release set forth herein.

 

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8.No Novation; Entire Agreement. This Third Amendment evidences solely the
amendment of certain specified terms and obligations of the Loan Parties under
the Credit Agreement and is not a novation or discharge of any of the other
obligations of the Loan Parties under the Credit Agreement. There are no other
understandings, express or implied, among the Loan Parties or the Lender
regarding the subject matter hereof or thereof.

 

9.Choice of Law. This Third Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof, but including Section 5-1401 of the New
York General Obligations Law.

 

10.Counterparts; Facsimile Execution. This Third Amendment may be executed in
any number of counterparts and by different parties and separate counterparts,
each of which when so executed and delivered shall be deemed an original, and
all of which, when taken together, shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Third Amendment
by facsimile, .pdf, or other electronic transmission shall be as effective as
delivery of a manually executed counterpart of this Third Amendment. Any party
delivering an executed counterpart of this Third Amendment by facsimile also
shall deliver a manually executed counterpart of this Third Amendment but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Third Amendment.

 

11.Construction. This Third Amendment is a Loan Document. This Third Amendment
and the Credit Agreement shall be construed collectively and in the event that
any term, provision or condition of any of such documents is inconsistent with
or contradictory to any term, provision or condition of any other such document,
the terms, provisions and conditions of this Third Amendment shall supersede and
control the terms, provisions and conditions of the Credit Agreement.

 

12.Miscellaneous. The terms and provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, this Third Amendment has been duly executed and delivered by
each of the parties hereto as of the date first above written.

 

  BORROWERS:       CHRISTOPHER & BANKS CORPORATION               By: /s/ Luke R.
Komarek   Name: Luke R. Komarek   Title: Senior Vice President, General Counsel
and Secretary            CHRISTOPHER & BANKS, INC.               By: /s/ Luke R.
Komarek    Name: Luke R. Komarek    Title: Senior Vice President, General
Counsel and Secretary                              CHRISTOPHER & BANKS COMPANY  
            By: /s/ Luke R. Komarek     Name:    Luke R. Komarek     Title:
Senior Vice President, General Counsel and Secretary  

 

[Signature Page to Third Amendment]

 

5

 

 

  LENDER AND L/C ISSUER:       WELLS FARGO BANK, NATIONAL ASSOCIATION          
By: /s/ Michael S. Watson   Name:    Michael S. Watson   Title: Director

 

[Signature Page to Third Amendment]

 

6

 

 

ANNEX I

Credit Agreement

 

See attached.

 

7

 

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS EXHIBIT, MARKED BY [***], HAS
BEEN OMITTED PURSUANT TO REGULATION S-K, ITEM 601(b)(10) BECAUSE IT IS NOT
MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED.

 

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT1

 

Dated as of July 12, 2012,

 

among

 

CHRISTOPHER & BANKS CORPORATION,

 

as the Lead Borrower

 

For

 

The Borrowers Named Herein,

 

The Guarantors from time to time party hereto, and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Lender

 

 

 

 

1 As of the Third Amendment Effective Date.

 

8

 

 

Table of Contents

 

Page

Article I DEFINITIONS AND ACCOUNTING TERMS 1 1.01   Defined Terms 1 1.02   Other
Interpretive Provisions 40 1.03   Accounting Terms 41 1.04   Rounding 42
1.05   Times of Day 42 1.06   Letter of Credit Amounts 42 1.07   Currency
Equivalents Generally 42 1.08   Divisions 42 Article II THE COMMITMENT AND
CREDIT EXTENSIONS 42 2.01   Loans; Reserves 42 2.02   Borrowings, Conversions
and Continuations of Loans 43 2.03   Letters of Credit 44 2.04   Prepayments 50
2.05   Termination or Reduction of the Commitment 51 2.06   Repayment of Loans
52 2.07   Interest 52 2.08   Fees 52 2.09   Computation of Interest and Fees 52
2.10   Evidence of Debt 53 2.11   Payments Generally 53 Article III TAXES, YIELD
PROTECTION AND ILLEGALITY;  APPOINTMENT OF LEAD BORROWER 54 3.01   Taxes 54
3.02   Illegality 55

3.03   Inability to Determine Rates 55 3.04   Increased Costs; Reserves on LIBO
Rate Loans 55 3.05   Compensation for Losses 57 3.06   Mitigation Obligations;
Replacement of Lender 57 3.07   Survival 57 3.08   Designation of Lead Borrower
as Borrowers’ Agent 58

 

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Table of Contents

 

Page

Article IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 58 4.01   Conditions of
Initial Credit Extension 58 4.02   Conditions to all Credit Extensions 61
Article V REPRESENTATIONS AND WARRANTIES 62 5.01   Existence, Qualification and
Power 62 5.02   Authorization; No Contravention 62 5.03   Governmental
Authorization; Other Consents 62 5.04   Binding Effect 62 5.05   Financial
Statements; No Material Adverse Effect 63 5.06   Litigation 63 5.07   No Default
63 5.08   Ownership of Property; Liens 64 5.09   Environmental Compliance 64
5.10   Insurance 65 5.11   Taxes 65 5.12   ERISA Compliance 65
5.13   Subsidiaries; Equity Interests 66 5.14   Margin Regulations; Investment
Company Act 66 5.15   Disclosure 66

5.16   Compliance with Laws 66 5.17   Intellectual Property; Licenses, Etc. 66
5.18   Labor Matters 67 5.19   Security Documents 67 5.20   Solvency 68
5.21   Deposit Accounts; Credit Card Arrangements 68 5.22   Brokers 68
5.23   Customer and Trade Relations 68 5.24   Material Contracts 68
5.25   Casualty 68 5.26   OFAC; Sanctions 68 5.27   Beneficial Ownership
Certification 69

 

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Table of Contents

 

Page

Article VI AFFIRMATIVE COVENANTS 69 6.01   Financial Statements 69
6.02   Certificates; Other Information 70 6.03   Notices 72 6.04   Payment of
Obligations 73 6.05   Preservation of Existence, Etc. 73 6.06   Maintenance of
Properties 73 6.07   Maintenance of Insurance 73 6.08   Compliance with Laws 74
6.09   Books and Records; Accountants 75 6.10   Inspection Rights 75 6.11   Use
of Proceeds 76 6.12   Additional Loan Parties 76

6.13   Cash Management 76 6.14   Information Regarding the Collateral 78
6.15   Physical Inventories 79 6.16   Environmental Laws 79 6.17   Further
Assurances 79 6.18   Compliance with Terms of Leaseholds 80 6.19   Material
Contracts 80 6.20   OFAC; Sanctions 81 6.21   Credit Card Processors 81

 

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Table of Contents

 

Page

Article VII NEGATIVE COVENANTS 81 7.01   Liens 81 7.02   Investments 81
7.03   Indebtedness; Disqualified Stock 81 7.04   Fundamental Changes 82
7.05   Dispositions 82 7.06   Restricted Payments 82 7.07   Prepayments of
Indebtedness 83 7.08   Change in Nature of Business 83 7.09   Transactions with
Affiliates 83 7.10   Burdensome Agreements 83 7.11   Use of Proceeds 84
7.12   Amendment of Material Documents 84 7.13   Fiscal Year 84 7.14   Deposit
Accounts; Credit Card Processors 84 7.15   Financial Covenant 84

 

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Table of Contents

 

Page

Article VIII EVENTS OF DEFAULT AND REMEDIES 84 8.01   Events of Default 84
8.02   Remedies Upon Event of Default 87 8.03   Application of Funds 87 Article
IX MISCELLANEOUS 88 9.01   Amendments, Etc. 88 9.02   Notices; Effectiveness;
Electronic Communications 89 9.03   No Waiver; Cumulative Remedies 90
9.04   Expenses; Indemnity; Damage Waiver 90 9.05   Payments Set Aside 91
9.06   Successors and Assigns 91 9.07   Treatment of Certain Information;
Confidentiality 93 9.08   Right of Setoff 94 9.09   Interest Rate Limitation 94
9.10   Counterparts; Integration; Effectiveness 94 9.11   Survival 94
9.12   Severability 95 9.13   Governing Law; Jurisdiction; Etc. 95 9.14   Waiver
of Jury Trial 96 9.15   No Advisory or Fiduciary Responsibility 96 9.16   USA
PATRIOT Act Notice 97 9.17   Foreign Asset Control Regulations 97 9.18   Time of
the Essence 97 9.19   Publicity 97 9.20   Additional Waivers 97

 

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Table of Contents

 

Page

9.21   No Strict Construction 99 9.22   Attachments 99 9.23   Amendment and
Restatement 99 9.24   Keepwell 99 9.25   Acknowledgement Regarding Any Supported
QFCs 100

 

vi

 

 

SCHEDULES

 

1.01   Borrowers 1.03   Existing Letters of Credit 5.01   Loan Parties
Organizational Information 5.05   Supplement to Interim Financial Statements
5.06   Litigation 5.08(b)(1)   Owned Real Estate 5.08(b)(2)   Leased Real Estate
5.09   Environmental Matters 5.10   Insurance 5.13   Subsidiaries; Other Equity
Investments 5.17   Intellectual Property Matters 5.18   Collective Bargaining
Agreements 5.21(a)   DDAs 5.21(b)   Credit Card Arrangements 5.24   Material
Contracts 6.02   Financial and Collateral Reporting 7.01   Existing Liens 7.02  
Existing Investments 7.03   Existing Indebtedness 7.09   Affiliate Transactions
9.02   Lender’s Office; Certain Addresses for Notices

 

EXHIBITS

 

    Form of   A   Committed Loan Notice B   Note C   Compliance Certificate D  
Assignment and Assumption E   Borrowing Base Certificate F   Credit Card
Notification G   DDA Notification

 

7

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into
as of July 12, 2012, among CHRISTOPHER & BANKS CORPORATION, a Delaware
corporation (the “Lead Borrower”), the Persons named on Schedule 1.01 hereto
(collectively, the “Borrowers”), the Persons from time to time party hereto as
Guarantors (collectively, the “Guarantors”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Lender and as L/C Issuer.

 

The Borrowers and the Lender are party to that certain Amended and Restated
Credit and Security Agreement dated as of November 4, 2005 (as amended, modified
and supplemented from time to time prior to the date hereof, the “Existing
Credit Agreement”).

 

The Borrowers have requested that the Lender agree to amend and restate the
Existing Credit Agreement as set forth herein, and the Lender is willing to do
so on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

Article I

DEFINITIONS AND ACCOUNTING TERMS

 

1.01           Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:

 

“Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and
continuance of any Default or Event of Default, or (ii) the failure of the
Borrowers to maintain Availability at least equal to the greater of (a) thirty
percent (30%) of the Loan Cap, or (b) $10,000,000. For purposes of this
Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event shall
be deemed continuing at the Lender’s option (i) so long as such Default or Event
of Default has not been waived, and/or (ii) if the Accelerated Borrowing Base
Delivery Event arises as a result of the Borrowers’ failure to achieve
Availability as required hereunder, until Availability has exceeded the greater
of (x) thirty percent (30%) of the Loan Cap , or (y) $10,000,000, in each case,
for sixty (60) consecutive calendar days, in which case an Accelerated Borrowing
Base Delivery Event shall no longer be deemed to be continuing for purposes of
this Agreement; provided, that in the discretion of the Lender an Accelerated
Borrowing Base Delivery Event shall be deemed continuing (even if a Default or
an Event of Default is no longer continuing and/or Availability exceeds the
required amount for such sixty (60) consecutive calendar days) at all times
after an Accelerated Borrowing Base Delivery Event has occurred and has been
discontinued on two (2) occasions in any one 12-month period after the Closing
Date. The termination of an Accelerated Borrowing Base Delivery Event as
provided herein shall in no way limit, waive or delay the occurrence of a
subsequent Accelerated Borrowing Base Delivery Event in the event that the
conditions set forth in this definition again arise.

 

“Acceptable Document of Title” means, with respect to any Inventory, a tangible
or electronic negotiable bill of lading or other Document (as defined in the
UCC) that (a) is issued by a common carrier which is not an Affiliate of the
Approved Foreign Vendor or any Loan Party and which is in actual possession of
such Inventory, (b) is issued to the order of a Loan Party or, if so requested
by the Lender after the occurrence and during the continuance of a Default or
Event of Default, to the order of the Lender, (c) is not subject to any Lien
(other than in favor of the Lender), and (d) is on terms otherwise reasonably
acceptable to the Lender.

 

8

 

 

“ACH” means automated clearing house transfers.

 

“Accommodation Payment” as defined in Section 9.20(d).

 

“Account” means “accounts” as defined in the UCC.

 

“Acquisition” means, with respect to any Person (a) an investment in, or a
purchase of, a Controlling interest in the Equity Interests of any other Person,
(b) a purchase or other acquisition of all or substantially all of the assets or
properties of another Person or of any business unit of another Person, (c) any
merger or consolidation of such Person with any other Person or other
transaction or series of transactions resulting in the acquisition of all or
substantially all of the assets, or a Controlling interest in the Equity
Interests, of any Person, or (d) any acquisition of any Store locations from any
Person (but not the opening of new individual Stores), in each case in any
transaction or group of transactions which are part of a common plan.

 

“Act” shall have the meaning provided in Section 9.16.

 

“Adjusted LIBO Rate” means:

 

(a)                for any Interest Period with respect to any LIBO Borrowing,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of
one percent) equal to (i) the LIBO Rate for such Interest Period multiplied by
(ii) the Statutory Reserve Rate; and

 

(b)                for any interest rate calculation with respect to any Base
Rate Loan, an interest rate per annum (rounded upwards, if necessary, to the
next 1/100 of one percent) equal to (i) the LIBO Rate for an Interest Period
commencing on the date of such calculation and ending on the date that is thirty
(30) 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.

 

“Adjusted Payment Conditions” means, at the time of determination with respect
to any specified transaction or payment, that (a) no Default or Event of Default
then exists or would arise as a result of entering into such transaction or the
making of such payment, (b) the specified transaction or payment shall be funded
solely with cash on hand (and not, for the avoidance of doubt, with the proceeds
of any Loans), (c) immediately after giving effect to such transaction or
payment, Pro Forma Excess Availability will be greater than $10,000,000, (d) no
Loans shall have been outstanding during the twelve (12) months immediately
preceding the date of such transaction or the making of such payment, and (e) no
Loans are projected to be outstanding during the twelve (12) months immediately
following the date of such transaction or the making of such payment.

 

“Affiliate” means, with respect to any Person, (i) 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, (ii) any director,
officer, managing member, partner, trustee, or beneficiary of that Person, (iii)
any other Person directly or indirectly holding twenty percent (20%) or more of
any class of the Equity Interests of that Person, and (iv) any other Person
twenty percent (20%) or more of any class of whose Equity Interests is held
directly or indirectly by that Person.

 

“Agreement” means this Credit Agreement.

 

“Allocable Amount” has the meaning specified in Section 9.20(d).

 

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“Anti-Corruption Laws” means the FCPA and all other applicable laws and
regulations or ordinances concerning or relating to bribery, money laundering or
corruption in any jurisdiction in which any Loan Party or any of its
Subsidiaries or Affiliates is located or is doing business.

 

“Anti-Money Laundering Laws” means the applicable laws or regulations in any
jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is
located or is doing business that relates to money laundering, any predicate
crime to money laundering, or any financial record keeping and reporting
requirements related thereto.

 

“Applicable Margin” means, as applicable, the percentages set forth in the
following table:

 

Applicable Margin for
Loans that are LIBO Rate
Loans   Applicable Margin for Loans
that are Base Rate Loans   Commercial Letter of
Credit Fee   Standby Letter of Credit
Fee   1.75%   0.75%   1.25%   1.75%

 

“Appraisal Percentage” means ninety percent (90%).

 

“Appraised Value” means with respect to Eligible Inventory, the appraised
orderly liquidation value, net of costs and expenses to be incurred in
connection with any such liquidation, which value is expressed as a percentage
of Cost of Eligible Inventory as set forth in the inventory stock ledger of the
Borrowers, which value shall be determined from time to time by the most recent
appraisal undertaken by an independent appraiser engaged by the Lender.

 

“Approved Fund” means any Fund that is administered or managed by (a) the
Lender, (b) an Affiliate of the Lender, (c) an entity or an Affiliate of an
entity that administers or manages the Lender or (d) the same investment advisor
or an advisor under common control with the Lender, Affiliate or advisor, as
applicable.

 

“Approved Foreign Vendor” means a Foreign Vendor which (a) is located in any
country acceptable to the Lender in its discretion, (b) has not asserted and has
no right to assert any reclamation, repossession, diversion, stoppage in
transit, Lien or title retention rights in respect of such Inventory, and (c) if
so requested by the Lender (which request may be made by the Lender only with
respect to a Foreign Vendor from which the Loan Parties received more than ten
percent (10%) of their Inventory in the prior Fiscal Year or with respect to
which the Loan Parties have more than ten percent (10%) of their Inventory in
transit at any time), has entered into and is in full compliance with the terms
of a Foreign Vendor Agreement.

 

“Assignment and Assumption” means an assignment and assumption entered into by
the Lender and an Eligible Assignee, in substantially the form of Exhibit D or
any other form approved by the Lender.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease Obligation of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease,
agreement or instrument were accounted for as a capital lease. Each lease that
was classified and accounted for as an operating lease under GAAP as in effect
on July 12, 2012 shall be excluded for purposes of the definition of
Attributable Indebtedness, notwithstanding that such lease may be classified and
accounted for as a capital lease after such date under GAAP due to the effect of
FAS 13/ASC 840.

 

-3-

 

 

“Audited Financial Statements” means the audited consolidated balance sheet of
the Lead Borrower and its Subsidiaries for the Fiscal Year ended February 2,
2019, and the related consolidated statements of income or operations,
Shareholders’ Equity and cash flows for such Fiscal Year of the Lead Borrower
and its Subsidiaries, including the notes thereto.

 

“Auto-Extension Letter of Credit” shall have the meaning specified in
Section 2.03(b)(iii).

 

“Availability” means, as of any date of determination thereof by the Lender, the
result, if a positive number, of:

 

(a)                The Loan Cap

 

     minus

 

(b)                Total Outstandings.

 

In calculating Availability at any time and for any purpose under this
Agreement, the Lead Borrower shall certify to the Lender that all accounts
payable more than thirty (30) days past due and all Taxes (other than such
accounts payable and Taxes being contested in good faith not to exceed
$1,000,000 in the aggregate at any time) are being paid in the ordinary course
of the Borrowers’ business consistent with practices in effect on the Third
Amendment Effective Date.

 

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Commitments pursuant to Section 2.05, and (c) the date of termination of the
Commitments and of the obligation of the L/C Issuer to make L/C Credit
Extensions pursuant to Section 8.02.

 

“Availability Reserves” means, without duplication of any other Reserves or
items to the extent such items are otherwise addressed in calculating Appraised
Value or otherwise or are excluded through eligibility criteria, such reserves
as the Lender from time to time determines in its Permitted Discretion as being
appropriate (a) to reflect the impediments to the Lender’s ability to realize
upon the Collateral, (b) to reflect claims and liabilities that the Lender
determines will need to be satisfied in connection with the realization upon the
Collateral, (c) to reflect criteria, events, conditions, contingencies or risks
which adversely affect any component of the Borrowing Base, or the financial
performance or financial condition of any Loan Party, or (d) to reflect that a
Default or an Event of Default then exists. Without limiting the generality of
the foregoing, Availability Reserves may include, in the Lender’s Permitted
Discretion, reserves based on: (i) rent at leased locations subject to landlords
liens, past due rent, and up to three months future rent that would be payable
to a landlord that has not executed and delivered a Collateral Access Agreement;
(ii) customs duties, and other costs to release Inventory which is being
imported into the United States; (iii) outstanding Taxes and other governmental
charges, including, without limitation, ad valorem, real estate, personal
property, sales, claims of the PBGC and other Taxes which may have priority over
the interests of the Lender in the Collateral; (iv) salaries, wages and benefits
due to employees of any Borrower; (v) fifty percent (50%) of all Customer Credit
Liabilities; (vi) Customer Deposits; (vii) reserves for reasonably anticipated
changes in the Appraised Value of Eligible Inventory between appraisals; (viii)
warehousemen’s or bailee’s charges and other Permitted Encumbrances which may
have priority over the interests of the Lender in the Collateral; (ix) amounts
due to vendors on account of consigned goods or on account of purchase money or
“floor plan financing” payables (provided, that the Lender shall only implement
Reserves pursuant to this clause (ix) after the occurrence of a Cash Dominion
Event); (x) Cash Management Reserves; (xi) Bank Products Reserves to the extent
that the applicable underlying Bank Products are not supported by Letters of
Credit issued for the benefit of, as applicable, the Lender or its Affiliate(s)
providing such Bank Products; and (xii) royalties payable in respect of licensed
merchandise.

 

-4-

 

 

“Average Daily Availability” means, for any period of determination, an amount
equal to the sum of Availability for each day of such period divided by the
actual number of days in such period, as determined by the Lender, which
determination shall be conclusive absent manifest error.

 

“Bank Products” means any services of facilities provided to any Loan Party by
the Lender or any of its Affiliates (but excluding Cash Management Services)
including, without limitation, on account of (a) Swap Contracts, (b) merchant
services constituting a line of credit, (c) leasing, (d) Factored Receivables,
and (e) supply chain finance services including, without limitation, trade
payable services and supplier accounts receivable purchases.

 

“Bank Product Reserves” means such reserves as the Lender from time to time
determines in its discretion as being appropriate to reflect the liabilities and
obligations of the Loan Parties with respect to Bank Products then provided or
outstanding.

 

“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the Federal Funds Rate, as in effect from time to time, plus
one-half of one percent (0.50%), (b) the Adjusted LIBO Rate plus one percent
(1.00%), or (c) the rate of interest in effect for such day as publicly
announced from time to time by Wells Fargo as its “prime rate” (and if such
announced rate is below zero, the rate pursuant to this clause (c) shall be
deemed to be zero). 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.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Beneficial Ownership Certificate” means a certification regarding beneficial
ownership required by the Beneficial Ownership Regulation, which certification
shall be substantially similar in form and substance to the form of
Certification Regarding Beneficial Owners of Legal Entity Customers published
jointly, in May 2018, by the Loan Syndications and Trading Association and
Securities Industry and Financial Markets Association.

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

“Blocked Account” has the meaning provided in Section 6.13(a)(ii).

 

“Blocked Account Agreement” means with respect to an account established by a
Loan Party, an agreement, in form and substance satisfactory to the Lender,
establishing control (as defined in the UCC) of such account by the Lender and
whereby the bank maintaining such account agrees, upon receipt of notice from
the Lender following the occurrence and during the continuance of a Cash
Dominion Event, to comply only with the instructions originated by the Lender
without the further consent of any Loan Party.

 

“Blocked Account Bank” means each bank with whom deposit accounts are maintained
in which any funds of any of the Loan Parties from one or more DDAs are
concentrated and with whom a Blocked Account Agreement has been, or is required
to be, executed in accordance with the terms hereof.

 

“Borrowers” has the meaning specified in the introductory paragraph hereto.

 

-5-

 

 

“Borrowing” means a borrowing consisting of a Loan of the same Type and, in the
case of LIBO Rate Loans, having the same Interest Period made by the Lender
pursuant to Section 2.01.

 

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

 

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

 

plus

 

(b)                the Cost of Eligible Inventory, net of Inventory Reserves,
multiplied by the product of the Appraisal Percentage multiplied by the
Appraised Value of Eligible Inventory (expressed as a percentage of Cost of
Eligible Inventory) (provided that in no event shall Eligible In-Transit
Inventory included in Eligible Inventory included in the Borrowing Base exceed
$7,500,000);

 

minus

 

(c)                the then amount of all Availability Reserves.

 

“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit E hereto (with such changes therein as may be required by the Lender to
reflect the components of and reserves against the Borrowing Base as provided
for hereunder from time to time), executed and certified as accurate and
complete by a Responsible Officer of the Lead Borrower which shall include
appropriate exhibits, schedules, supporting documentation, and additional
reports as reasonably requested by the Lender.

 

“Business” means designing, sourcing, marketing and selling women’s apparel,
accessories, personal care products and fragrances.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Lender’s Office is located and, if such day
relates to any LIBO Rate Loan, means any such day on which dealings in Dollar
deposits are conducted by and between banks in the London interbank market.

 

“Capital Expenditures” means, with respect to any Person for any period, (a) all
expenditures made (whether made in the form of cash or other property) or costs
incurred for the acquisition or improvement of fixed or capital assets of such
Person (excluding normal replacements and maintenance which are properly charged
to current operations), in each case that are (or should be) set forth as
capital expenditures in a Consolidated statement of cash flows of such Person
for such period, in each case prepared in accordance with GAAP, and (b) Capital
Lease Obligations incurred by a Person during such period.

 

“Capital Lease Obligations” means, with respect to any Person for any period,
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 liabilities on a balance sheet of such Person under GAAP and
the amount of which obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Cash Collateral Account” means a non-interest bearing account established by
one or more of the Loan Parties with Wells Fargo, and in the name of the Lender
(or as the Lender shall otherwise direct), and under the sole and exclusive
dominion and control of the Lender, in which deposits are required to be made in
accordance with Section 2.03(f) or 8.02(c).

 

-6-

 

 

 

“Cash Collateralize” has the meaning specified in Section 2.03(f). Derivatives
of such term have corresponding meanings.

 

“Cash Dominion Event” means either (i) the occurrence and continuance of any
Default or Event of Default, or (ii) the failure of the Borrowers to maintain
Availability at least equal to the greater of (a) $10,000,000, or (b) thirty
percent (30%) of the Loan Cap. For purposes of this Agreement, the occurrence of
a Cash Dominion Event shall be deemed continuing at the Lender’s option (i) so
long as such Default or Event of Default has not been waived, and/or (ii) if the
Cash Dominion Event arises as a result of the Borrowers’ failure to achieve
Availability as required hereunder, until Availability has exceeded the greater
of (x) $10,000,000, or (y) thirty percent (30%) of the Loan Cap, in each case,
for sixty (60) consecutive calendar days, in which case a Cash Dominion Event
shall no longer be deemed to be continuing for purposes of this Agreement;
provided, that a Cash Dominion Event shall be deemed continuing (even if a
Default or an Event of Default is no longer continuing and/or Availability
exceeds the required amount for sixty (60) consecutive calendar days) at all
times after a Cash Dominion Event has occurred and been discontinued on three
(3) occasion(s) after the Third Amendment Effective Date. The termination of a
Cash Dominion Event as provided herein shall in no way limit, waive or delay the
occurrence of a subsequent Cash Dominion Event in the event that the conditions
set forth in this definition again arise.

 

“Cash Management Reserves” means such reserves as the Lender, from time to time,
determines in its Permitted Discretion as being appropriate to reflect the
reasonably anticipated liabilities and obligations of the Loan Parties with
respect to Cash Management Services then provided or outstanding.

 

“Cash Management Services” means any cash management services or facilities
provided to any Loan Party by the Lender or any of its Affiliates, including,
without limitation: (a) ACH transactions, (b) controlled disbursement services,
treasury, depository, overdraft, and electronic funds transfer services, (c)
credit or debit cards, (d) credit card processing services, and (e) purchase
cards.

 

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

 

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

 

“CFC” means a Person that is a controlled foreign corporation under Section 957
of the Code.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority;
provided, however, for the purposes of this Agreement: (x) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted or issued.

 

“Change of Control” means an event or series of events by which:

 

(a)                any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent, or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an
“option right”)), directly or indirectly, of forty percent (40%) or more of the
Equity Interests of the Lead Borrower entitled to vote for members of the board
of directors or equivalent governing body of the Lead Borrower on a
fully-diluted basis (and taking into account all such Equity Interests that such
“person” or “group” has the right to acquire pursuant to any option right); or

 

-7-

 

 

(b)                during any period of twelve (12) consecutive months, a
majority of the members of the board of directors or other equivalent governing
body of the Lead Borrower cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that board or
other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body
(excluding, in the case of both clause (ii) and clause (iii), any individual
whose initial nomination for, or assumption of office as, a member of that board
or equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors); or

 

(c)                any Person or two or more Persons acting in concert shall
have acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in its or their
acquisition of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Lead Borrower, or control over
the Equity Interests of the Lead Borrower entitled to vote for members of the
board of directors or equivalent governing body of the Lead Borrower on a
fully-diluted basis (and taking into account all such securities that such
Person or Persons have the right to acquire pursuant to any option right)
representing forty percent (40%) or more of the combined voting power of such
securities; or

 

(d)                any “change in control” or “sale” or “disposition” or similar
event as defined in any Organization Document of any Loan Party; or

 

(e)                the Lead Borrower fails at any time to own, directly or
indirectly, one hundred percent (100%) of the Equity Interests of each other
Loan Party free and clear of all Liens (other than the Liens in favor of the
Lender pursuant to the Security Documents and the Term Loan Lender pursuant to
the Term Loan Documents), except where such failure is as a result of a
transaction permitted by the Loan Documents.

 

“Closing Date” means July 12, 2012.

 

“Code” means the Internal Revenue Code of 1986, and the regulations promulgated
thereunder, as amended and in effect.

 

“Collateral” means any and all “Collateral” as defined in any applicable
Security Document and all other property that is or is intended under the terms
of the Security Documents to be subject to Liens in favor of the Lender.

 

-8-

 

 

“Collateral Access Agreement” means an agreement reasonably satisfactory in form
and substance to the Lender executed by (a) a bailee or other Person in
possession of Collateral, and (b) any landlord of Real Estate leased by any Loan
Party, other than Stores, pursuant to which such Person (i) acknowledges the
Lender’s Lien on the Collateral, (ii) releases or subordinates such Person’s
Liens in the Collateral held by such Person or located on such Real Estate,
(iii) provides the Lender with access to the Collateral held by such bailee or
other Person or located in or on such Real Estate, (iv) as to any landlord,
provides the Lender with a reasonable time to sell and dispose of the Collateral
from such Real Estate, and (v) makes such other agreements with the Lender as
the Lender may reasonably require.

 

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

 

“Commercial Letter of Credit Agreement” means the Commercial Letter of Credit
Agreement relating to the issuance of a Commercial Letter of Credit in the form
from time to time in use by the L/C Issuer.

 

“Commitments” means the obligation of the Lender to (a) make Loans to the
Borrowers pursuant to Section 2.01(a) and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed $50,000,000, as such amount may be adjusted from time to time in
accordance with this Agreement.

 

“Committed Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of
Loans from one Type to the other, or (c) a continuation of LIBO Rate Loans,
pursuant to Section 2.02, which, if in writing, shall be substantially in the
form of Exhibit A.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

 

“Competitor” means a Person, other than a Loan Party, who directly provides
products or services that are the same or substantially similar to the products
or services provided by, and that constitute a material part of the business of,
the Loan Parties taken as a whole.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

 

“Concentration Account” has the meaning provided in Section 6.13(c).

 

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

 

“Consolidated EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of the Lead Borrower and its Subsidiaries on a
Consolidated basis for the most recently completed Measurement Period, plus (a)
the following to the extent deducted in calculating such Consolidated Net
Income: (i) Consolidated Interest Charges, (ii) the provision for Federal,
state, local and foreign income Taxes, (iii) depreciation and amortization
expense, (iv) non-cash stock compensation, and (v) other non-recurring expenses
reducing such Consolidated Net Income which do not represent a cash item (in
each case of or by Lead Borrower and its Subsidiaries for such Measurement
Period), minus (b) the following to the extent included in calculating such
Consolidated Net Income: (i) Federal, state, local and foreign income tax
credits and (ii) all non-recurring, non-cash items increasing Consolidated Net
Income (in each case of or by Lead Borrower and its Subsidiaries for such
Measurement Period), all as determined on a Consolidated basis in accordance
with GAAP.

 

-9-

 

 

“Consolidated Fixed Charge Coverage Ratio” means, at any date of determination,
the ratio of (a) (i) Consolidated EBITDA minus (ii) unfinanced Capital
Expenditures made during such period minus (iii) the aggregate amount of
Federal, state, local and foreign income taxes paid in cash during such period,
to (b) the sum of (i) Debt Service Charges plus (ii) the aggregate amount of all
Restricted Payments, in each case, of or by Lead Borrower and its Subsidiaries
for the most recently completed Measurement Period, all as determined on a
Consolidated basis in accordance with GAAP.

 

“Consolidated Interest Charges” means, for any Measurement Period, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including capitalized interest) or
in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs
under Swap Contracts, but excluding any non-cash or deferred interest financing
costs, (b) all interest paid or payable with respect to discontinued operations
and (c) the portion of rent expense with respect to such period under Capital
Lease Obligations that is treated as interest in accordance with GAAP, in each
case of or by Lead Borrower and its Subsidiaries for such Measurement Period,
all as determined on a Consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, as of any date of determination, the net income
of Lead Borrower and its Subsidiaries for the most recently completed
Measurement Period, all as determined on a Consolidated basis in accordance with
GAAP; provided, however, that there shall be excluded therefrom (a)
extraordinary gains and extraordinary losses for such Measurement Period, (b)
the income (or loss) of such Person during such Measurement Period in which any
other Person has a joint interest, except to the extent of the amount of cash
dividends or other distributions actually paid in cash to such Person during
such period, (c) the income (or loss) of any Person during such Measurement
Period accrued prior to the date it becomes a Subsidiary of the Lead Borrower or
any of its Subsidiaries or is merged into or consolidated with the Lead Borrower
or any of its Subsidiaries or that Person’s assets are acquired by the Lead
Borrower or any of its Subsidiaries, and (d) the income of any direct or
indirect Subsidiary of a Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its Organization Documents or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, except that Lead
Borrower’s equity in any net loss of any such Subsidiary for such Measurement
Period shall be included in determining Consolidated Net Income.

 

“Contractual Obligation” means, as to any Person, any provision of any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.

 

“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.

 

“Cost” means the lower of cost or market value of Inventory, based upon the
Borrowers’ accounting practices in effect on the Third Amendment Effective Date.

 

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

 

“Credit Card Issuer” means any person (other than a Borrower or other Loan
Party) 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, Carte
Blanche, World Financial Bank, 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., and Novus Services, Inc.
and other issuers approved by the Lender.

 

-10-

 

 

“Credit Card Processor” means 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 Borrower’s sales transactions involving credit card or debit card purchases
by customers using credit cards or debit cards issued by any Credit Card Issuer.

 

“Credit Card Notifications” has the meaning provided in Section 6.13(a)(i).

 

“Credit Card Receivables” means each “Account” (as defined in the UCC) together
with all income, payments and proceeds thereof, owed by a Credit Card Issuer or
Credit Card Processor to a Loan Party resulting from charges by a customer of a
Loan Party on credit or debit cards issued by such issuer in connection with the
sale of goods by a Loan Party, or services performed by a Loan Party, in each
case in the ordinary course of its business.

 

“Credit Extensions” mean each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.

 

“Credit Party” or “Credit Parties” means (a) individually, (i) the Lender and
its Affiliates, (ii) the L/C Issuer, (iii) any beneficiary of each
indemnification obligation undertaken by any Loan Party under any Loan Document,
(iv) any other Person to whom Obligations under this Agreement and other Loan
Documents are owing, and (v) the successors and assigns of each of the
foregoing, and (b) collectively, all of the foregoing.

 

“Credit Party Expenses” means, without limitation, (a) all reasonable
out-of-pocket expenses incurred by the Lender and its Affiliates, in connection
with this Agreement and the other Loan Documents, including without limitation
(i) the reasonable fees, charges and disbursements of (A) counsel for the
Lender, (B) outside consultants for the Lender, (C) appraisers, (D) commercial
finance examinations, and (E) all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of the Obligations, (ii)
in connection with (A) the preparation, negotiation, administration, management,
execution and delivery of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (B) the
enforcement or protection of their rights in connection with this Agreement or
the Loan Documents or efforts to preserve, protect, collect, or enforce the
Collateral, or (C) any workout, restructuring or negotiations in respect of any
Obligations; (b) with respect to the L/C Issuer and its Affiliates, all
reasonable out-of-pocket expenses incurred in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder; and (c) all customary fees and charges (as adjusted from
time to time) of Lender with respect to the disbursement of funds (or the
receipt of funds) to or for the account of Loan Parties (whether by wire
transfer or otherwise), together with any out-of-pocket costs and expenses
incurred in connection therewith.

 

“Customer Credit Liabilities” means at any time, the aggregate remaining value
at such time of (a) outstanding gift certificates and gift cards of the
Borrowers entitling the holder thereof to use all or a portion of the
certificate or gift card to pay all or a portion of the purchase price for any
Inventory, and (b) outstanding merchandise credits of the Borrowers.

 

-11-

 

 

“Customer Deposits” means at any time, the aggregate amount at such time of (a)
deposits made by customers with respect to the purchase of goods or the
performance of services and (b) layaway obligations of the Borrowers.

 

“Customs Broker/Carrier Agreement” means an agreement in form and substance
satisfactory to the Lender among a Borrower, a customs broker, freight
forwarder, consolidator or carrier, and the Lender, in which the customs broker,
freight forwarder, consolidator or carrier acknowledges that it has control over
and holds the documents evidencing ownership of the subject Inventory for the
benefit of the Lender and agrees, upon notice from the Lender, to hold and
dispose of the subject Inventory solely as directed by the Lender.

 

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

 

“DDA Notification” has the meaning provided therefor in Section 6.13(a)(iii).

 

“Debt Service Charges” means, for any Measurement Period, the sum of (a)
Consolidated Interest Charges paid or required to be paid for such Measurement
Period, plus (b) principal payments made or required to be made on account of
Indebtedness (excluding the Obligations and any Synthetic Lease Obligations but
including, without limitation, Capital Lease Obligations) for such Measurement
Period, in each case determined on a Consolidated basis in accordance with GAAP.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Margin, if any, applicable to Base Rate Loans, plus (iii) two percent
(2%) per annum; provided, however, that with respect to a LIBO Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Margin) otherwise applicable to such Loan plus two percent (2%) per
annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Margin for Standby Letters of Credit or Commercial Letters of
Credit, as applicable, plus two percent (2%) per annum.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (whether in one transaction or in a series of transactions, and
including any sale and leaseback transaction and any sale, transfer, license or
other disposition) of any property (including, without limitation, any Equity
Interests) by any Person (or the granting of any option or other right to do any
of the foregoing), including any sale, assignment, transfer or other disposal,
with or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.

 

-12-

 

 

“Disqualified Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is ninety-one (91)
days after the date on which the Loans mature; provided, however, that (i) only
the portion of such Equity Interests which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date shall be deemed to be Disqualified
Stock and (ii) with respect to any Equity Interests issued to any employee or to
any plan for the benefit of employees of the Lead Borrower or its Subsidiaries
or by any such plan to such employees, such Equity Interest shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Lead Borrower or one of its Subsidiaries in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee’s
termination, resignation, death or disability and if any class of Equity
Interest of such Person that by its terms authorizes such Person to satisfy its
obligations thereunder by delivery of an Equity Interest that is not
Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified
Stock. Notwithstanding the preceding sentence, any Equity Interest that would
constitute Disqualified Stock solely because the holders thereof have the right
to require a Loan Party to repurchase such Equity Interest upon the occurrence
of a change of control or an asset sale shall not constitute Disqualified Stock.
The amount of Disqualified Stock deemed to be outstanding at any time for
purposes of this Agreement will be the maximum amount that the Lead Borrower and
its Subsidiaries may become obligated to pay upon maturity of, or pursuant to
any mandatory redemption provisions of, such Disqualified Stock or portion
thereof, plus accrued dividends.

 

“Dollars” and “$” mean lawful money of the United States.

 

“Eligible Assignee” means (a) a Credit Party or any of its Affiliates; (b) a
bank, insurance company, or company engaged in the business of making commercial
loans, which Person, together with its Affiliates, has a combined capital and
surplus in excess of $1,000,000,000; (c) an Approved Fund; (d) any Person to
whom a Credit Party assigns its rights and obligations under this Agreement as
part of an assignment and transfer of such Credit Party’s rights in and to a
material portion of such Credit Party’s portfolio of asset based credit
facilities, and (e) any other Person (other than a natural person) approved by
(i) the Lender, and (ii) unless a Default or Event of Default has occurred and
is continuing, the Lead Borrower (each such approval not to be unreasonably
withheld or delayed); provided, that notwithstanding the foregoing, “Eligible
Assignee” shall not include a Loan Party or any of the Loan Parties’ Affiliates,
Subsidiaries or (other than after the occurrence and during the continuance of a
Specified Event of Default) Competitors.

 

“Eligible Credit Card Receivables” means at the time of any determination
thereof, each Credit Card 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 Receivable (i) has been earned by performance
and represents the bona fide amounts due to a Borrower from a Credit Card Issuer
or Credit Card Processor, and in each case originated in the ordinary course of
business of such Borrower, and (ii) in each case is acceptable to the Lender in
its Permitted Discretion, and is not ineligible for inclusion in the calculation
of the Borrowing Base pursuant to any of clauses (a) through (j) below. Without
limiting the foregoing, to qualify as an Eligible Credit Card Receivable, an
Account shall indicate no Person other than a Borrower as payee or remittance
party. In determining the amount to be so included, the face amount of an
Account shall be reduced by, without duplication, to the extent not reflected in
such face amount, (i) the amount of all accrued and actual discounts, claims,
credits or credits pending, promotional program allowances, price adjustments,
finance charges or other allowances (including any amount that a Borrower may be
obligated to rebate to a customer, a Credit Card Issuer or Credit Card Processor
pursuant to the terms of any agreement or understanding (written or oral)) and
(ii) the aggregate amount of all cash received in respect of such Account but
not yet applied by the Loan Parties to reduce the amount of such Credit Card
Receivable. Except as otherwise agreed by the Lender, any Credit Card Receivable
included within any of the following categories shall not constitute an Eligible
Credit Card Receivable:

 

-13-

 

 

(a)                Credit Card Receivable which do not constitute an “Account”
(as defined in the UCC);

 

(b)                Credit Card Receivables that have been outstanding for more
than five (5) Business Days from the date of sale;

 

(c)                Credit Card Receivables (i) that are not subject to a
perfected first priority security interest in favor of the Lender, or (ii) with
respect to which a Borrower does not have good, valid and marketable title
thereto, free and clear of any Lien (other than Liens granted to the Lender
pursuant to the Security Documents and Liens granted to the Term Loan Lender
pursuant to the Term Loan Documents and subject in all respects to the
Intercreditor Agreement);

 

(d)                Credit Card Receivables which are disputed, as to which the
Credit Card Issuer or Credit Card Processor has recourse to a Loan Party due to
the creditworthiness of the cardholder, or with respect to which a claim,
counterclaim, offset or chargeback has been asserted (to the extent of such
claim, counterclaim, offset or chargeback);

 

(e)                Credit Card Receivables as to which the Credit Card Issuer or
Credit Card Processor has the right due to the creditworthiness of the
cardholder to require a Loan Party to repurchase the Accounts from such Credit
Card Issuer or Credit Card Processor;

 

(f)                 Credit Card Receivables due from a Credit Card Issuer or
Credit Card Processor of the applicable credit card which is the subject of any
bankruptcy or insolvency proceedings;

 

(g)                Credit Card Receivables which are not a valid, legally
enforceable obligation of the applicable Credit Card Issuer or Credit Card
Processor with respect thereto;

 

(h)                Credit Card Receivables which do not conform to all
representations, warranties or other provisions in the Loan Documents relating
to Credit Card Receivables;

 

(i)                 Credit Card Receivables which are evidenced by “chattel
paper” or an “instrument” of any kind unless such “chattel paper” or
“instrument” is in the possession of the Lender, and to the extent necessary or
appropriate, endorsed to the Lender; or

 

(j)                 Credit Card Receivables which the Lender determines in its
discretion to be uncertain of collection or which do not meet such other
reasonable eligibility criteria for Credit Card Receivables as the Lender may
determine.

 

“Eligible In-Transit Inventory” means, as of any date of determination thereof,
without duplication of other Eligible Inventory, In-Transit Inventory:

 

(a)                Which has been shipped from a foreign location for receipt by
a Borrower, but which has not yet been delivered to such Borrower, which
In-Transit Inventory has been in transit for sixty (60) days or less from the
date of shipment of such Inventory;

 

(b)                For which the purchase order is in the name of a Borrower and
title and risk of loss has passed to such Borrower;

 

(c)                For which an Acceptable Document of Title has been issued,
and in each case as to which at all times on and after September 15, 2012, the
Lender has control (as defined in the UCC) over the documents of title which
evidence ownership of the subject Inventory pursuant to a Customs Broker/Carrier
Agreement;

 

-14-

 

 

(d)                Which is insured to the reasonable satisfaction of the Lender
(including, without limitation, marine cargo insurance);

 

(e)                The Foreign Vendor with respect to such In-Transit Inventory
is an Approved Foreign Vendor; and

 

(f)                 Which otherwise would constitute Eligible Inventory;

 

provided, that the Lender may, in its discretion, exclude any particular
Inventory from the definition of “Eligible In-Transit Inventory” in the event
the Lender determines that such Inventory is subject to any Person’s right of
reclamation, repudiation, stoppage in transit or any event has occurred or is
reasonably anticipated by the Lender to arise which may otherwise adversely
impact the ability of the Lender to realize upon such Inventory.

 

“Eligible Inventory” means, as of the date of determination thereof, without
duplication, (i) Eligible In-Transit Inventory, and (ii) items of Inventory of a
Borrower that are finished goods, merchantable and readily saleable to the
public in the ordinary course of the Borrowers’ business and deemed by the
Lender in its Permitted Discretion to be eligible for inclusion in the
calculation of the Borrowing Base, in each case that, except as otherwise agreed
by the Lender, (A) complies with each of the representations and warranties
respecting Inventory made by the Borrowers in the Loan Documents, and (B) is not
excluded as ineligible by virtue of one or more of the criteria set forth below.
Except as otherwise agreed by the Lender, in its discretion, the following items
of Inventory shall not be included in Eligible Inventory:

 

(a)                Inventory that is not solely owned by a Borrower or a
Borrower does not have good and valid title thereto;

 

(b)                (i) Inventory that is leased by or is on consignment to a
Borrower or which is consigned by a Borrower to a Person which is not a Loan
Party, or (ii) PMSI Inventory;

 

(c)                Inventory (other than Eligible In-Transit Inventory) that is
not located in the United States of America (excluding territories or
possessions of the United States);

 

(d)                Inventory that is not located at a location that is owned or
leased by a Borrower or at a warehouse with respect to which there exists an
executed Collateral Access Agreement, except (i) Inventory in transit between
such locations or locations which meet the criteria set forth in clause (ii)
below, or (ii) to the extent that the Borrowers have furnished the Lender with
(A) any UCC financing statements or other documents that the Lender may
determine to be necessary to perfect its security interest in such Inventory at
such location, and (B) a Collateral Access Agreement executed by the Person
owning any such location on terms reasonably acceptable to the Lender;

 

(e)                Inventory that is located: (i) in a warehouse or distribution
center leased by a Borrower unless the applicable lessor has delivered to the
Lender a Collateral Access Agreement, or (ii) at any leased location in a
Landlord Lien State unless the applicable lessor has delivered to the Lender a
Collateral Access Agreement or the Lender has implemented Reserves for such
location;

 

(f)                 Inventory that is comprised of goods which (i) are damaged,
defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to
the vendor, (iii) are obsolete or slow moving, or custom items, work in process,
raw materials, or that constitute samples, spare parts, promotional, marketing,
labels, bags and other packaging and shipping materials or supplies used or
consumed in a Borrower’s business, (iv) are seasonal in nature and which have
been packed away for sale in the subsequent season, (v) not in compliance with
all standards imposed by any Governmental Authority having regulatory authority
over such Inventory, its use or sale, or (vi) are bill and hold goods;

 

-15-

 

 

(g)                Inventory that is not subject to a perfected first priority
security interest in favor of the Lender;

 

(h)                Inventory that is not insured in compliance with the
provisions of Section 5.10 hereof;

 

(i)                 Inventory that has been sold but not yet delivered or as to
which a Borrower has accepted a deposit;

 

(j)                 Inventory that is subject to any material licensing, patent,
royalty, trademark, trade name or copyright agreement with any third party from
which any Borrower or any of its Subsidiaries has received notice of a material
dispute in respect of any such agreement; or

 

(k)                Inventory acquired in a Permitted Acquisition or which is not
of the type usually sold in the ordinary course of the Borrowers’ business,
unless and until the Lender has completed or received (A) an appraisal of such
Inventory from appraisers satisfactory to the Lender and establishes Inventory
Reserves (if applicable) therefor, and otherwise agrees that such Inventory
shall be deemed Eligible Inventory, and (B) such other due diligence as the
Lender may require, all of the results of the foregoing to be reasonably
satisfactory to the Lender.

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental Liability” means any liability, obligation, damage, loss, claim,
action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent
or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal or presence of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

 

“Equipment” has the meaning set forth in the UCC.

 

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

 

-16-

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Lead Borrower within the meaning of Section 414(b)
or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Lead Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Lead Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Lead
Borrower or any ERISA Affiliate.

 

“Event of Default” has the meaning specified in Section 8.01. An Event of
Default shall be deemed to be continuing unless and until that Event of Default
has been duly waived as provided in Section 9.01 hereof.

 

“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap
Obligation if, and to the extent that, all or a portion of the Guarantee of such
Loan Party of, or the grant by such Loan Party of a security interest to secure,
such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Loan Party’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the Guarantee of such Loan Party or the grant
of such security interest becomes effective with respect to such Swap
Obligation. If a Swap Obligation arises under a master agreement governing more
than one swap, such exclusion shall apply only to the portion of such Swap
Obligation that is attributable to swaps for which such Guarantee or security
interest is or becomes illegal.

 

“Excluded Taxes” means, with respect to the Lender, the L/C Issuer or any other
recipient of any payment to be made by or on account of any obligation of the
Loan Parties hereunder, (a) taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the laws of which such recipient is organized or in which its principal office
is located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which any Loan Party is
located, (c) any U.S. federal, state or local backup withholding tax, and (d)
any U.S. federal withholding tax imposed under FATCA.

 

“Executive Order” has the meaning set forth in Section 9.17.

 

“Existing Credit Agreement” has the meaning specified in the introductory
paragraph hereto.

 

“Existing Letters of Credit” means those letters of credit identified on
Schedule 1.03.

 

“Extraordinary Receipt” means any cash received by or paid to or for the account
of any Person not in the ordinary course of business, including tax refunds,
pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings), condemnation awards (and payments in lieu thereof), indemnity
payments and any purchase price adjustments.

 

-17-

 

 

“Facility Guaranty” means any Guarantee made by a Guarantor in favor of the
Lender and the other Credit Parties, in form reasonably satisfactory to the
Lender, as amended, modified, supplemented, renewed, restated or replaced.

 

“Factored Receivables” means any Accounts owed by a Loan Party which have been
factored or sold by an account debtor of a Loan Party to Wells Fargo or any of
its Affiliates pursuant to a factoring arrangement or otherwise.

 

“FATCA” means current Section 1471 through 1474 of the Code or any amended
version or successor provision that is substantively similar to and, in each
case, any regulations promulgated thereunder and any interpretation and other
guidance issued in connection therewith.

 

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

 

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

 

“Fee Letter” means the letter agreement, dated as of July 12, 2012, among the
Borrowers and Lender.

 

“First Amendment Effective Date” means September 8, 2014.

 

“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall
generally end on the Saturday nearest to the last day of each calendar month in
accordance with the fiscal accounting calendar of the Loan Parties.

 

“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally end on the Saturday nearest to the last day of each April, July,
October and January of such Fiscal Year in accordance with the fiscal accounting
calendar of the Loan Parties.

 

“Fiscal Year” means the fiscal year ended February 1, 2020, and any prior or
subsequent (as applicable) period of fifty-two (52) or fifty-three (53)
consecutive weeks ending on the Saturday nearest to January 31 of each calendar
year.

 

“Foreign Assets Control Regulations” has the meaning set forth in Section 9.17.

 

“Foreign Vendor” means a Person that sells In-Transit Inventory to a Borrower.

 

-18-

 

 

“Foreign Vendor Agreement” means an agreement between a Foreign Vendor and the
Lender in form and substance satisfactory to the Lender and pursuant to which,
among other things, the parties shall agree upon their relative rights with
respect to In-Transit Inventory of a Borrower purchased from such Foreign
Vendor.

 

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

 

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

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental Authority” means the government of the United States or any other
nation, or of 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 (including any
supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person (or any right, contingent or otherwise, of any
holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantor” has the meaning specified in the introductory paragraph hereto and
includes each Subsidiary of the Lead Borrower that shall be required to execute
and deliver a Facility Guaranty pursuant to Section 6.12.

 

“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.

 

-19-

 

 

“Honor Date” has the meaning specified in Section 2.03(c)(i).

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

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

 

(b)                the maximum amount of all direct or contingent obligations of
such Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

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

 

(d)                all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable in the ordinary
course of business and, in each case, not past due for more than sixty (60) days
after the date on which such trade account payable was created);

 

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

 

(f)                 all Attributable Indebtedness of such Person;

 

(g)                all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity Interest in such
Person or any other Person (including, without limitation, Disqualified Stock),
or any warrant, right or option to acquire such Equity Interest, valued, in the
case of a redeemable preferred interest, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; and

 

(h)                all Guarantees of such Person in respect of any of the
foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitee” has the meaning specified in Section 9.04(b).

 

“Information” has the meaning specified in Section 9.07.

 

“Intellectual Property” means all present and future: trade secrets, know-how
and other proprietary information; trademarks, trademark applications, internet
domain names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and combinations
of the foregoing) indicia and other source and/or business identifiers, and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights and copyright
applications; (including copyrights for computer programs) and all tangible and
intangible property embodying the copyrights, unpatented inventions (whether or
not patentable); patents and patent applications; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.

 

-20-

 

 

“Intercreditor Agreement” means the Intercreditor Agreement dated as of the
Third Amendment Effective Date between the Lender and the Term Lender, and
acknowledged by the Loan Parties, as amended, restated, or otherwise modified
from time to time.

 

“Interest Payment Date” means: (a) as to any LIBO Rate Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a LIBO Rate Loan exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base
Rate Loan, the first day after the end of each month and the Maturity Date.

 

“Interest Period” means, as to each LIBO Rate Loan, the period commencing on the
date such LIBO Rate Loan is disbursed or converted to or continued as a LIBO
Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by the Lead Borrower in its Committed Loan Notice; provided, that:

 

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

 

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

 

(c)                no Interest Period shall extend beyond the Maturity Date; and

 

(d)                notwithstanding the provisions of clause (c) no Interest
Period shall have a duration of less than one (1) month, and if any Interest
Period applicable to a LIBO Borrowing would be for a shorter period, such
Interest Period shall not be available hereunder.

 

For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.

 

“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Lead
Borrower’s and/or its Subsidiaries’ internal controls over financial reporting,
in each case as described in the Securities Laws.

 

“In-Transit Inventory” means Inventory of a Borrower which is in the possession
of a common carrier and is in transit from a Foreign Vendor of a Borrower from a
location outside of the continental United States to a location of a Borrower
that is within the continental United States.

 

“Inventory” has the meaning given that term in the UCC.

 

-21-

 

 

“Inventory Reserves” means such reserves as may be established from time to time
by the Lender in its Permitted Discretion with respect to the determination of
the saleability, at retail, of the Eligible Inventory, which reflect factors
that affect the market value of the Eligible Inventory to the extent not
reflected in Appraised Value or which reflect claims and liabilities that the
Lender determines will need to be satisfied in connection with the realization
upon the Inventory.

 

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, (c) any
Acquisition, or (d) any other investment of money or capital in order to obtain
a profitable return. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

 

“IRS” means the United States Internal Revenue Service.

 

“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, the Standby Letter of Credit Agreement or Commercial Letter of
Credit Agreement, as applicable, and any other document, agreement and
instrument entered into by the L/C Issuer and a Borrower (or any Subsidiary) or
in favor of the L/C Issuer and relating to any such Letter of Credit.

 

“Joinder” means an agreement, in form satisfactory to the Lender, pursuant to
which, among other things, a Person becomes a party to, and bound by the terms
of, this Agreement and/or the other Loan Documents in the same capacity and to
the same extent as either a Borrower or a Guarantor, as the Lender may
determine.

 

“Landlord Lien State” means such state(s) in which a landlord’s claim for rent
may have priority over the Lien of the Lender in any of the Collateral.

 

“Laws” means each international, foreign, Federal, state and local statute,
treaty, rule, guideline, regulation, ordinance, code and administrative or
judicial precedent or authority, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and each applicable administrative
order, directed duty, license, authorization and permit of, and agreement with,
any Governmental Authority, in each case whether or not having the force of law.

 

“L/C 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.

 

“L/C Issuer” means (a) solely with respect to the Existing Letters of Credit and
until such Existing Letters of Credit expire or are returned undrawn, Wells
Fargo, and (b) in all other instances, Wells Fargo in its capacity as issuer of
Letters of Credit hereunder, or any successor issuer of Letters of Credit
hereunder. The L/C Issuer may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the L/C Issuer and/or for such
Affiliate to act as an advising, transferring, confirming and/or nominated bank
in connection with the issuance or administration of any such Letter of Credit,
in which case the term “L/C Issuer” shall include any such Affiliate with
respect to Letters of Credit issued by such Affiliate.

 

-22-

 

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount available to be drawn under all outstanding Letters of Credit. For
purposes of computing the amounts available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06. 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 any “rule” under the ISP
or any article of UCP 600, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn.

 

“Lead Borrower” has the meaning specified in the introductory paragraph hereto.

 

“Lease” means any agreement, whether written or oral, no matter how styled or
structured, pursuant to which a Loan Party is entitled to the use or occupancy
of any space in a structure, land, improvements or premises for any period of
time.

 

“Lender” has the meaning specified in the introductory paragraph hereto.

 

“Lender’s Office” means, the office or offices of the Lender’s address and as
appropriate, account as set forth on Schedule 9.02 or such other address or
account as the Lender may from time to time notify the Lead Borrower.

 

“Letter of Credit” means each Standby Letter of Credit and each Commercial
Letter of Credit issued hereunder and shall include the Existing Letters of
Credit.

 

“Letter of Credit Application” means an application for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

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

 

“Letter of Credit Fee” has the meaning specified in Section 2.03(h).

 

“Letter of Credit Sublimit” means an amount equal to $17,500,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Commitment. A permanent
reduction of the Commitment shall not require a corresponding pro rata reduction
in the Letter of Credit Sublimit; provided, however, that if the Commitment is
reduced to an amount less than the Letter of Credit Sublimit, then the Letter of
Credit Sublimit shall be reduced to an amount equal to (or, at Lead Borrower’s
option, less than) the Commitment.

 

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

 

“LIBO Rate” means, the rate per annum as published by ICE Benchmark
Administration Limited (or any successor page or other commercially available
source as the Lender may designate from time to time) as of 11:00 a.m., London
time, two Business Days prior to the commencement of the requested Interest
Period, for a term, and in an amount, comparable to the Interest Period and the
amount of the LIBO Rate Loan requested (whether as an initial LIBO Rate Loan or
as a continuation of a LIBO Rate Loan or as a conversion of a Base Rate Loan to
a LIBO Rate Loan) by Borrowers in accordance with this Agreement (and, if any
such published rate is below zero, then the rate shall be deemed to be zero).
Each determination of the LIBO Rate shall be made by the Lender and shall be
conclusive in the absence of manifest error.

 

“LIBO Rate Loan” means a Loan that bears interest at a rate based on the
Adjusted LIBO Rate.

 

-23-

 

 

“Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever (including
any conditional sale, Capital Lease Obligation, Synthetic Lease Obligation, or
other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing) and (b) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

 

“Loan” has the meaning specified in Section 2.01.

 

“Loan Account” has the meaning assigned to such term in Section 2.10(a).

 

“Loan Cap” means, at any time of determination, the lesser of (a) the Commitment
and (b) the Borrowing Base.

 

“Loan Documents” means this Agreement (as amended, restated, modified or
supplemented from time to time through the Third Amendment), the Note, each
Issuer Document, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, the Intercreditor Agreement, any Facility Guaranty, the Fee Letter,
the Second Amendment Fee Letter, the Third Amendment Fee Letter and any other
instrument or agreement now or hereafter executed and delivered in connection
herewith, or in connection with any transaction arising out of any Cash
Management Services and Bank Products provided by the Lender or any of its
Affiliates, each as amended and in effect from time to time,

 

“Loan Parties” means, collectively, the Borrowers and the Guarantors.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, assets, properties, liabilities
(actual or contingent), or condition (financial or otherwise) of the Lead
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party; or (c) a material impairment of the rights and remedies of
the Lender under any Loan Document or a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party. In determining whether any individual
event would result in a Material Adverse Effect, notwithstanding that such event
in and of itself does not have such effect, a Material Adverse Effect shall be
deemed to have occurred if the cumulative effect of such event and all other
then existing events would result in a Material Adverse Effect.

 

“Material Contract” means, with respect to any Loan Party, each contract or
agreement to which such Loan Party is a party (a) that is deemed to be a
material contract or material definitive agreement under any Securities Laws
applicable to such Loan Party, or (b) under which the Loan Parties receive a
material portion of their revenue in the ordinary course of business.

 

“Material Indebtedness” means (a) the Term Loan Obligations (it being understood
that the Term Loan Obligations shall be deemed to be “Material Indebtedness” for
so long as any Term Loan Obligations remain outstanding), and (b) any other
Indebtedness (other than the Obligations) of the Loan Parties in an aggregate
principal amount exceeding $5,000,000. For purposes of determining the amount of
Material Indebtedness at any time, (a) the amount of the obligations in respect
of any Swap Contract at such time shall be calculated at the Swap Termination
Value thereof, (b) undrawn committed or available amounts shall be included, and
(c) all amounts owing to all creditors under any combined or syndicated credit
arrangement shall be included.

 

-24-

 

 

“Maturity Date” means August 3, 2023.

 

“Maximum Rate” has the meaning provided therefor in Section 9.09.

 

“Measurement Period” means, at any date of determination, the most recently
completed twelve (12) Fiscal Months of the Lead Borrower.

 

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

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Lead Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

 

“Net Proceeds” means (a) with respect to any Disposition by any Loan Party or
any of its Subsidiaries, or any Extraordinary Receipt received or paid to the
account of any Loan Party or any of its Subsidiaries, the excess, if any, of (i)
the sum of cash and cash equivalents received in connection with such
transaction (including any cash or cash equivalents received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) over (ii) the sum of (A) the principal amount of
any Indebtedness that is secured by a Lien permitted hereunder on the applicable
asset which is senior to the Lender’s Lien on such asset and that is required to
be repaid (or to establish an escrow for the future repayment thereof) in
connection with such transaction (other than Indebtedness under the Loan
Documents), and (B) the reasonable and customary out-of-pocket expenses incurred
by such Loan Party or such Subsidiary in connection with such transaction
(including, without limitation, appraisals, and brokerage, legal, title and
recording or transfer tax expenses, other taxes paid in cash in connection with
the consummation of such transaction, and commissions) paid by any Loan Party to
third parties (other than Affiliates); and (b) with respect to the sale or
issuance of any Equity Interest by any Loan Party or any of its Subsidiaries, or
the incurrence or issuance of any Indebtedness by any Loan Party or any of its
Subsidiaries, the excess of (i) the sum of the cash and cash equivalents
received in connection with such transaction over (ii) the underwriting
discounts and commissions, and other reasonable and customary out-of-pocket
expenses, incurred by such Loan Party or such Subsidiary in connection
therewith.

 

“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).

 

“Note” means a promissory note made by the Borrowers in favor of the Lender
evidencing the Loans made by the Lender, substantially in the form of Exhibit B,
as may be amended, restated, supplemented or modified from time to time.

 

“NPL” means the National Priorities List under CERCLA.

 

“Obligations” means (a) all advances to, and debts (including principal,
interest, fees, costs, and expenses), liabilities, obligations, covenants,
indemnities, and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan or Letter of Credit (including payments in
respect of reimbursement of disbursements, interest thereon and obligations to
provide cash collateral therefor), whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees, costs, expenses and
indemnities that accrue after the commencement by or against any Loan Party or
any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest,
fees, costs, expenses and indemnities are allowed claims in such proceeding, and
(b) any Other Liabilities; provided that the Obligations shall not include any
Excluded Swap Obligations.

 

-25-

 

 

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

 

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

 

“Other Liabilities” means any obligation on account of (i) any Cash Management
Services furnished to any of the Loan Parties or any of their Subsidiaries
and/or (ii) any transaction with the Lender or any of its Affiliates that arises
out of any Bank Product entered into with any Loan Party and any such Person, as
each may be amended from time to time.

 

“Other Taxes” means 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 under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

 

“Outstanding Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans occurring on such date; and (ii) with respect
to any L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date.

 

“Overadvance” means a Credit Extension to the extent that, immediately after its
having been made, Availability is less than zero.

 

“Participant” has the meaning specified in Section 9.06(b).

 

“Payment Conditions” means, at the time of determination with respect to any
specified transaction or payment, that (a) no Default or Event of Default then
exists or would arise as a result of entering into such transaction or the
making of such payment, and (b) immediately after giving effect to such
transaction or payment, either (x) (i) the Pro Forma Availability Condition has
been satisfied, (ii) the Trailing Twelve Month Availability Condition has been
satisfied, (iii) Availability as of the date of such transaction or payment will
be greater than thirty percent (30%) of the Loan Cap, and (iv) the Consolidated
Fixed Charge Coverage Ratio for the twelve (12) months immediately preceding the
date of such transaction or payment for which the Lender has received financial
statements shall be equal to or greater than 1.10:1.00 after giving pro forma
effect to such transaction or payment as if such transaction had been entered
into or such payment had been made as of the first day of such twelve-month
period, or (y) (i) Pro Forma Excess Availability following, and after giving
effect to, such transaction or payment, will be greater than fifty percent (50%)
of the Loan Cap, (ii) Trailing Twelve Month Excess Availability following, and
after giving effect to, such transaction or payment, will be greater than fifty
percent (50%) of the Loan Cap, and (iii) Availability as of the date of such
transaction or payment will be greater than fifty percent (50%) of the Loan Cap.
Prior to undertaking any transaction or payment which is subject to the Payment
Conditions, the Loan Parties shall deliver to the Lender evidence of
satisfaction of the conditions contained in clause (b) above on a basis
(including, without limitation, giving due consideration to results for prior
periods) reasonably satisfactory to the Lender.

 

-26-

 

 

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“PCAOB” means the Public Company Accounting Oversight Board.

 

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

 

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

 

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

 

(b)                Such Acquisition shall have been approved by the board of
directors of the Person (or similar governing body if such Person is not a
corporation) which is the subject of such Acquisition and such Person shall not
have announced that it will oppose such Acquisition or shall not have commenced
any action which alleges that such Acquisition shall violate applicable Law;

 

(c)                The Lead Borrower shall have furnished the Lender with ten
(10) days’ prior written notice of such intended Acquisition and shall have
furnished the Lender with a current draft of the acquisition documents (and
final copies thereof as and when executed), a summary of any due diligence
undertaken by the Loan Parties in connection with such Acquisition, appropriate
financial statements of the Person which is the subject of such Acquisition, pro
forma projected financial statements for the twelve (12) month period following
such Acquisition after giving effect to such Acquisition (including balance
sheets, cash flows and income statements by month for the acquired Person,
individually, and on a Consolidated basis with all Loan Parties), and such other
information as the Lender may reasonably require, all of which shall be
reasonably satisfactory to the Lender;

 

(d)                Either (i) the legal structure of the Acquisition shall be
acceptable to the Lender in its discretion, or (ii) the Loan Parties shall have
provided the Lender with a favorable solvency opinion from an unaffiliated third
party valuation firm reasonably satisfactory to the Lender;

 

(e)                After giving effect to the Acquisition, if the Acquisition is
an Acquisition of the Equity Interests, a Loan Party shall acquire and own,
directly or indirectly, a majority of the Equity Interests in the Person being
acquired and shall Control a majority of any voting interests or shall otherwise
Control the governance of the Person being acquired;

 

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

 

(g)                If the Person which is the subject of such Acquisition will
be maintained as a Subsidiary of a Loan Party, or if the assets acquired in an
acquisition will be transferred to a Subsidiary which is not then a Loan Party,
such Subsidiary shall have been joined as a “Borrower” hereunder or as a
Guarantor, as the Lender shall determine, and the Lender shall have received a
first priority security interest (or, while the Term Loan Obligations or any
commitment to extend credit under the Term Loan Agreement remains outstanding,
second priority security interest with respect to Term Loan Priority Collateral,
subject to the Intercreditor Agreement) in such Subsidiary’s Equity Interests,
Inventory, Accounts, and other personal property of the same nature as
constitutes collateral under the Security Documents;

 

-27-

 

 

(h)                [Reserved]; and

 

(i)                 The Loan Parties shall have satisfied the Payment
Conditions.

 

“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured, asset-based lender in
the retail industry) business or credit judgment.

 

“Permitted Disposition” means any of the following:

 

(a)                Dispositions of inventory in the ordinary course of business;

 

(b)                bulk sales or other Dispositions of the Inventory of a Loan
Party not in the ordinary course of business in connection with Store closings,
at arm’s length; provided, that such Store closings and related Inventory
Dispositions shall not exceed (i) in any Fiscal Year of the Lead Borrower and
its Subsidiaries, ten percent (10%) of the number of the Loan Parties’ Stores as
of the beginning of such Fiscal Year (net of new Store openings in such Fiscal
Year) and (ii) in the aggregate from and after the Second Amendment Effective
Date, twenty-five percent (25%) of the number of the Loan Parties’ Stores in
existence as of the Second Amendment Effective Date (net of cumulative new Store
openings since the Second Amendment Effective Date); provided, further, that all
sales of Inventory in connection with Store closings which exceed, in any Fiscal
Year of the Lead Borrower and its Subsidiaries, five percent (5%) of the number
of the Loan Parties’ Stores as of the beginning of such Fiscal Year shall be in
accordance with liquidation agreements in form and substance reasonably
satisfactory to the Lender; provided, however, that the consolidation of
Christopher & Banks Stores and CJ Banks Stores into MPW Stores shall be excluded
from such limits set forth in the foregoing provisos; provided, further that all
Net Proceeds received in connection with Store closings and related sales of
Inventory are applied to the Obligations if then required in accordance with
Section 2.04 hereof;

 

(c)                non-exclusive licenses of Intellectual Property of a Loan
Party or any of its Subsidiaries in the ordinary course of business;

 

(d)                licenses for the conduct of licensed departments within the
Loan Parties’ Stores in the ordinary course of business; provided, that, if
requested by the Lender, the Lender shall have entered into an intercreditor
agreement with the Person operating such licensed department on terms and
conditions reasonably satisfactory to the Lender;

 

(e)                Dispositions of Equipment in the ordinary course of business
that is substantially worn, damaged, obsolete or, in the judgment of a Loan
Party, no longer useful or necessary in its business or that of any Subsidiary
and is replaced with similar property having at least equivalent value;

 

(f)                 sales, transfers and Dispositions among the Loan Parties or
by any Subsidiary to a Loan Party;

 

(g)                sales, transfers and Dispositions by any Subsidiary which is
not a Loan Party to another Subsidiary that is not a Loan Party; and

 

-28-

 

 

(h)                as long as no Default or Event of Default then exists or
would arise therefrom, sales of Real Estate of any Loan Party (or sales of any
Person or Persons created to hold such Real Estate or the Equity Interests in
such Person or Persons), including sale-leaseback transactions involving any
such Real Estate pursuant to leases on market terms, as long as, (A) such sale
is made for fair market value, (B) the proceeds of such sale are utilized to
repay the Obligations, and (C) in the case of any sale-leaseback transaction
permitted hereunder, the Lender shall have received from each such purchaser or
transferee a Collateral Access Agreement on terms and conditions reasonably
satisfactory to the Lender.

 

“Permitted Encumbrances” means:

 

(a)                Liens imposed by law for Taxes that are not yet due or are
being contested in compliance with Section 6.04;

 

(b)                Carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s and other like Liens imposed by applicable Law, arising in the
ordinary course of business and securing obligations that are not overdue or are
being contested in compliance with Section 6.04;

 

(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, other than any Lien imposed by ERISA;

 

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

 

(e)                Liens in respect of judgments that would not constitute an
Event of Default hereunder;

 

(f)                 Easements, covenants, conditions, restrictions, building
code laws, 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 monetary obligations and do not materially detract from the value
of the affected property or materially interfere with the ordinary conduct of
business of a Loan Party and such other minor title defects or survey matters
that are disclosed by current surveys that, in each case, do not materially
interfere with the current use of the real property;

 

(g)                Liens existing on the Third Amendment Effective Date and
listed on Schedule 7.01 and any Permitted Refinancings thereof;

 

(h)                Liens on fixed or capital assets acquired by any Loan Party
which are permitted under clause (c) of the definition of Permitted Indebtedness
so long as (i) such Liens and the Indebtedness secured thereby are incurred
prior to or within ninety (90) days after such acquisition, (ii) the
Indebtedness secured thereby does not exceed the cost of acquisition of such
fixed or capital assets and (iii) such Liens shall not extend to any other
property or assets of the Loan Parties;

 

(i)                 Liens in favor of the Lender;

 

(j)                 Statutory Liens of landlords and lessors in respect of rent
not in default;

 

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(k)                Possessory Liens in favor of brokers and dealers arising in
connection with the acquisition or disposition of Investments owned as of the
Third Amendment Effective Date and Permitted Investments, provided that such
liens (a) attach only to such Investments and (b) secure only obligations
incurred in the ordinary course and arising in connection with the acquisition
or disposition of such Investments and not any obligation in connection with
margin financing;

 

(l)                 Liens arising solely by virtue of any statutory or common
law provisions relating to banker’s liens, liens in favor of securities
intermediaries, rights of setoff or similar rights and remedies as to deposit
accounts or securities accounts or other funds maintained with depository
institutions or securities intermediaries;

 

(m)               Liens arising from precautionary UCC filings regarding “true”
operating leases, the consignment of goods to a Loan Party, or PMSI Inventory;
provided, however, (x) with respect to the consignment of goods to a Loan Party
and PMSI Inventory, (A) the aggregate cost of goods which may be consigned to a
Loan Party at any time plus the aggregate amount of PMSI Inventory Indebtedness
outstanding at any time shall not exceed $10,000,000 in the aggregate and (B) if
so requested by the Lender, the Loan Party shall cause the consignor or
creditor, as applicable, to enter into an agreement, in form and substance
satisfactory to the Lender, with the Lender and the applicable Loan Party
related to such consigned goods or PMSI Inventory, as applicable, and proceeds
thereof and (y) with respect to PMSI Inventory, such (i) Liens and the PMSI
Inventory Indebtedness secured thereby are incurred prior to or substantially
concurrently with the acquisition of such PMSI Inventory and (ii) such Liens
shall not extend to any other property or assets of the Loan Parties other than
the PMSI Inventory financed with such PMSI Inventory Indebtedness;

 

(n)               voluntary Liens on property (other than property of the type
included in the Borrowing Base) in existence at the time such property is
acquired pursuant to a Permitted Acquisition or on such property of a Subsidiary
of a Loan Party in existence at the time such Subsidiary is acquired pursuant to
a Permitted Acquisition; provided, that such Liens are not incurred in
connection with or in anticipation of such Permitted Acquisition and do not
attach to any other assets of any Loan Party or any Subsidiary;

 

(o)               Liens in favor of customs and revenues authorities imposed by
applicable Law arising in the ordinary course of business in connection with the
importation of goods and securing obligations that are being contested in good
faith by appropriate proceedings, (B) the applicable Loan Party or Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (C) such contest effectively suspends collection of the contested
obligation and enforcement of any Lien securing such obligation; and

 

(p)               subject to the Intercreditor Agreement, Liens granted by the
Loan Parties under the Term Loan Facility (and any Permitted Refinancings
thereof) in favor of the Term Lender.

 

“Permitted Indebtedness” means each of the following as long as no Default or
Event of Default exists or would arise from the incurrence thereof:

 

(a)                Indebtedness outstanding on the Third Amendment Effective
Date and listed on Schedule 7.03 and any Permitted Refinancing thereof;

 

(b)                Indebtedness of any Loan Party to any other Loan Party;

 

(c)                Purchase money Indebtedness of any Loan Party to finance the
acquisition of any personal property consisting solely of fixed or capital
assets, 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, and Permitted Refinancings
thereof; provided, however, that the aggregate principal amount of Indebtedness
permitted by this clause (c) shall not exceed $5,000,000 at any time
outstanding; provided, further, that, if requested by the Lender, the Loan
Parties shall cause the holders of such Indebtedness secured by Real Estate or
other personal property material to the operation of the Business to enter into
a Collateral Access Agreement on terms reasonably satisfactory to the Lender;

 

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(d)                obligations (contingent or otherwise) of any Loan Party or
any Subsidiary thereof existing or arising under any Swap Contract, provided
that such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated with
fluctuations in interest rates or foreign exchange rates, and not for purposes
of speculation or taking a “market view;” provided, that the aggregate Swap
Termination Value thereof shall not exceed $2,000,000 at any time outstanding;

 

(e)                 Contingent liabilities under surety bonds or similar
instruments incurred in the ordinary course of business in connection with the
construction or improvement of Stores or other Real Estate;

 

(f)                 Indebtedness incurred for the construction or acquisition or
improvement of, or to finance or to refinance, any Real Estate owned by any Loan
Party (including therein any Indebtedness incurred in connection with
sale-leaseback transactions permitted hereunder and any Synthetic Lease
Obligations), provided that, the Loan Parties shall cause the holders of such
Indebtedness and the lessors under any sale-leaseback transaction to enter into
a Collateral Access Agreement on terms reasonably satisfactory to the Lender;

 

(g)                Indebtedness with respect to the deferred purchase price for
any Permitted Acquisition, provided that such Indebtedness does not require the
payment in cash of principal (other than in respect of working capital
adjustments) prior to the Maturity Date, has a maturity which extends beyond the
Maturity Date, and is subordinated to the Obligations on terms reasonably
acceptable to the Lender;

 

(h)                Indebtedness of any Person that becomes a Subsidiary of a
Loan Party in a Permitted Acquisition, which Indebtedness is existing at the
time such Person becomes a Subsidiary of a Loan Party (other than Indebtedness
incurred solely in contemplation of such Person’s becoming a Subsidiary of a
Loan Party);

 

(i)                 The Obligations;

 

(j)                 Unsecured Indebtedness not otherwise specifically described
herein in an aggregate principal amount not to exceed $10,000,000 at any time
outstanding;

 

(k)                Indebtedness under the Term Loan Facility and any Permitted
Refinancing thereof; and

 

(l)                 PMSI Inventory Indebtedness (subject to the limitations
(including the amount thereof) set forth in clause (m) of the definition of
“Permitted Encumbrances”).

 

“Permitted Investments” means each of the following as long as no Default or
Event of Default exists or would arise from the making of such Investment:

 

-31-

 

 

(a)                Readily marketable obligations issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than 360 days from the
date of acquisition thereof; provided, that the full faith and credit of the
United States of America is pledged in support thereof;

 

(b)                Commercial paper issued by any Person organized under the
laws of any state of the United States of America and rated at least “Prime-1”
(or the then equivalent grade) by Moody’s or at least “A-1” (or the then
equivalent grade) by S&P, in each case with maturities of not more than 180 days
from the date of acquisition thereof;

 

(c)                Time deposits with, or insured certificates of deposit or
bankers’ acceptances of, any commercial bank that (i) (A) is the Lender or (B)
is organized under the laws of the United States of America, any state thereof
or the District of Columbia or is the principal banking subsidiary of a bank
holding company organized under the laws of the United States of America, any
state thereof or the District of Columbia, and is a member of the Federal
Reserve System, (ii) issues (or the parent of which issues) commercial paper
rated as described in clause (c) of this definition and (iii) has combined
capital and surplus of at least $1,000,000,000, in each case with maturities of
not more than 180 days from the date of acquisition thereof;

 

(d)                Fully collateralized repurchase agreements with a term of not
more than thirty (30) days for securities described in clause (a) above (without
regard to the limitation on maturity contained in such clause) and entered into
with a financial institution satisfying the criteria described in clause (c)
above or with any primary dealer and having a market value at the time that such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such counterparty entity with whom such repurchase agreement has
been entered into;

 

(e)                 Investments, classified in accordance with GAAP as current
assets of the Loan Parties, in any money market fund, mutual fund, or other
investment companies that are registered under the Investment Company Act of
1940, as amended, which are administered by financial institutions that have the
highest rating obtainable from either Moody’s or S&P, and which invest solely in
one or more of the types of securities described in clauses (a) through (d)
above;

 

(f)                 Investments existing on the Third Amendment Effective Date,
and set forth on Schedule 7.02, but not any increase in the amount thereof or
any other modification of the terms thereof;

 

(g)                (i) Investments by any Loan Party and its Subsidiaries in
their respective Subsidiaries outstanding on the Third Amendment Effective Date,
(ii) additional Investments by any Loan Party and its Subsidiaries in Loan
Parties (other than the Lead Borrower), (iii) additional Investments by
Subsidiaries of the Loan Parties that are not Loan Parties in other Subsidiaries
that are not Loan Parties and (iv) so long as no Default or Event of Default has
occurred and is continuing or would result from such Investment and the Payment
Conditions are satisfied, additional Investments by the Loan Parties in
wholly-owned Subsidiaries that are not Loan Parties in an aggregate amount
invested after the Second Amendment Effective Date not to exceed $2,000,000;

 

(h)                Investments consisting of extensions of credit in the nature
of accounts receivable or notes receivable arising from the grant of trade
credit in the ordinary course of business, and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;

 

-32-

 

 

(i)                 Guarantees constituting Permitted Indebtedness;

 

(j)                 Investments by any Loan Party in Swap Contracts entered into
in the ordinary course of business and for bona fide business (and not
speculative) purposes to protect against fluctuations in interest rates in
respect of the Obligations;

 

(k)                Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

 

(l)                 advances to officers, directors and employees of the Loan
Parties and Subsidiaries in the ordinary course of business in an amount not to
exceed $250,000 to any individual at any time or in an aggregate amount not to
exceed $500,000 at any time outstanding;

 

(m)               Investments constituting Permitted Acquisitions;

 

(n)                Capital contributions made by any Loan Party to another Loan
Party;

 

(o)                Investments in accordance with that certain Christopher &
Banks Corporation and Subsidiaries Investment Policy dated December 3, 2014,
approved by the Audit Committee and attached hereto as part of Schedule 7.02;
and

 

(p)                Other Investments not otherwise specifically described herein
and not exceeding $1,000,000 in the aggregate at any time outstanding;

 

provided, however, that notwithstanding the foregoing, no such Investments
specified in clauses (a) through (e) and clauses (o) and (p) shall be permitted
unless (i) either (A) no Loans are then outstanding and, if required hereunder,
all Letters of Credit required to be Cash Collateralized are Cash
Collateralized, or (B) the Investment is a temporary Investment pending
expiration of an Interest Period for a LIBO Rate Loan, the proceeds of which
Investment will be applied to the Obligations after the expiration of such
Interest Period, and (ii) such Investments shall be pledged to the Lender as
additional collateral for the Obligations pursuant to such agreements as may be
reasonably required by the Lender.

 

“Permitted Refinancing” means, with respect to any Person, any Indebtedness
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund (collectively, to “Refinance”), the
Indebtedness being Refinanced (or previous refinancings thereof constituting a
Permitted Refinancing); provided, that (a) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced (plus unpaid accrued interest and premiums thereon and underwriting
discounts, defeasance costs, fees, commissions and expenses), (b) the weighted
average life to maturity of such Permitted Refinancing is greater than or equal
to the weighted average life to maturity of the Indebtedness being Refinanced,
(c) such Permitted Refinancing shall not require any scheduled principal
payments due prior to the Maturity Date if the amount of such payments in any
Fiscal Year would be greater than the scheduled principal payments due with
respect to the Indebtedness so Refinanced during such Fiscal Year, (d) if the
Indebtedness being Refinanced is subordinated in right of payment to the
Obligations under this Agreement, such Permitted Refinancing shall be
subordinated in right of payment to such Obligations on terms at least as
favorable to the Credit Parties as those contained in the documentation
governing the Indebtedness being Refinanced, (e) no Permitted Refinancing shall
have direct or indirect obligors who were not also obligors of the Indebtedness
being Refinanced, or greater guarantees or security, than the Indebtedness being
Refinanced, (f) such Permitted Refinancing shall be otherwise on terms not
materially less favorable to the Credit Parties than those contained in the
documentation governing the Indebtedness being Refinanced, including, without
limitation, with respect to financial and other covenants and events of default,
(g) the interest rate applicable to any such Permitted Refinancing shall not
exceed the then applicable market interest rate, (h) at the time thereof, no
Default or Event of Default shall have occurred and be continuing, and (i) in
the case of a refinancing of the Term Loan Obligations and the Term Loan
Documents, all such Persons refinancing such Indebtedness shall be reasonably
acceptable to the Lender and agree to be bound by the terms of the Intercreditor
Agreement.

 

-33-

 

 

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

 

“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by the Lead Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“PMSI Inventory” means Inventory of any Loan Parties which is acquired by such
Loan Party with PMSI Inventory Indebtedness.

 

“PMSI Inventory Indebtedness” means Indebtedness of any Loan Party to finance
the acquisition of PMSI Inventory; provided, however, that (x) the documents
governing such PMSI Inventory Indebtedness shall provide that, absent an event
of default thereunder pursuant to which the creditor is exercising its rights
and remedies with respect to the applicable PMSI Inventory (subject to the terms
of any applicable agreements with the Lender), such Loan Party shall only be
required to repay such Indebtedness upon the sale of such PMSI Inventory to a
customer or another third party and using the proceeds received by such Loan
Party upon such sale, (y) the documents governing such PMSI Inventory
Indebtedness shall otherwise be in form and substance reasonably satisfactory to
the Lender, and (z) the aggregate amount of PMSI Inventory Indebtedness does not
exceed the limitation set forth in clause (m) of the definition of “Permitted
Encumbrances”.

 

“Prepayment Event” means:

 

(a)                Any Disposition (including pursuant to a sale and leaseback
transaction but excluding Permitted Dispositions of the type described in clause
(a) of the definition of “Permitted Dispositions”) of any property or asset of a
Loan Party other than to another Loan Party (provided that any Disposition in an
amount less than $2,000,000 prior to the occurrence of a Cash Dominion Event
shall not be deemed a Prepayment Event);

 

(b)                Any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of (and
payments in lieu thereof), any property or asset of a Loan Party in an amount in
excess of $2,000,000, unless (i) the proceeds therefrom are required to be paid
to the holder of a Lien on such property or asset having priority over the Lien
of the Lender or (ii) prior to the occurrence of a Cash Dominion Event, the
proceeds therefrom are deposited into a segregated account and utilized for
purposes of replacing or repairing the assets in respect of which such proceeds,
awards or payments were received within two hundred and seventy (270) days of
the occurrence of the damage to or loss of the assets being repaired or
replaced;

 

(c)                The issuance by a Loan Party of any Equity Interests, other
than any such issuance of Equity Interests (i) to a Loan Party, (ii) as
consideration for a Permitted Acquisition or (iii) to any employee, director, or
consultant (including under any option plan) (provided that the issuance by the
Loan Parties of any Equity Interests in an amount less than $2,000,000 prior to
the occurrence of a Cash Dominion Event shall not be deemed a Prepayment Event);

 

-34-

 

 

(d)                The incurrence by a Loan Party of any Indebtedness for
borrowed money other than Permitted Indebtedness (provided that the incurrence
by the Loan Parties of any Indebtedness in an amount less than $2,000,000 prior
to the occurrence of a Cash Dominion Event shall not be deemed a Prepayment
Event); or

 

(e)                The receipt by any Loan Party of any Extraordinary Receipts
(provided that any receipt by the Loan Parties of any Extraordinary Receipts in
an amount less than $1,000,000 prior to the occurrence of a Cash Dominion Event
shall not be deemed a Prepayment Event).

 

“Prepayment Premium” has the meaning given to such term in the Third Amendment
Fee Letter.

 

“Pro Forma Availability Condition” means, for any date of calculation with
respect to any transaction or payment, the Pro Forma Excess Availability
following, and after giving effect to, such transaction or payment, will be
greater than thirty percent (30%) of the Loan Cap.

 

“Pro Forma Excess Availability” means, for any date of calculation, after giving
pro forma effect to the transaction then to be consummated, the projected
Availability at all times during any subsequent projected twelve (12) Fiscal
Months.

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, any
Borrower, any Guarantor or any other guarantor of the Obligations that has total
assets exceeding $10,000,000 at the time such Swap Obligation is incurred or
such other person as constitutes an “Eligible Contract Participant” (an “ECP”)
as that term is defined under the Commodity Exchange Act or any regulations
promulgated thereunder and can cause another person to qualify as an “eligible
contract participant” at such time by entering into a keepwell under Section
1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Real Estate” means all land, together with the buildings, structures, parking
areas, and other improvements thereon, now or hereafter owned by any Loan Party
or subject to any Lease, including all easements, rights-of-way, and similar
rights relating thereto and all leases, tenancies, and occupancies thereof.

 

“Receipts and Collections” has the meaning specified in Section 6.13(c).

 

“Registered Public Accounting Firm” has the meaning specified by the Securities
Laws and shall be independent of the Lead Borrower and its Subsidiaries as
prescribed by the Securities Laws.

 

“Related Intellectual Property” means such rights with respect to the
Intellectual Property of the Loan Parties as are reasonably necessary to permit
the Lender to enforce its rights and remedies under the Loan Documents with
respect to the Collateral, or the disposition of which would otherwise
materially adversely affect the value of the Collateral of the Loan Parties.

 

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

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the thirty (30) day notice period has been
waived.

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Loans, a Committed Loan Notice, and (b) with respect to an
L/C Credit Extension, a Letter of Credit Application and, if required by the L/C
Issuer, a Standby Letter of Credit Agreement or Commercial Letter of Credit
Agreement, as applicable.

 

-35-

 

 

“Reserves” means all Inventory Reserves and Availability Reserves.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, chief accounting officer, or assistant treasurer
of a Loan Party or any of the other individuals designated in writing to the
Lender by an existing Responsible 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 Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Person or any of its Subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to such Person’s
stockholders, partners or members (or the equivalent of any thereof), or any
option, warrant or other right to acquire any such dividend or other
distribution or payment. Without limiting the foregoing, “Restricted Payments”
with respect to any Person shall also include all payments made by such Person
with any proceeds of a dissolution or liquidation of such Person.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, or (d) a Person resident
in or determined to be resident in a country, in each case of clauses (a)
through (d) that is a target of Sanctions, including a target of any country
sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means, at any time (a) any Person named on the list of
Specially Designated Nationals and Blocked Persons maintained by OFAC (“SDN”),
OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained
by any Governmental Authority, (b) a Person or legal entity that is a target of
Sanctions, (c) any Person operating, organized or resident in a Sanctioned
Entity, or (d) any Person directly or indirectly owned or controlled
(individually or in the aggregate) by or acting on behalf of any such Person or
Persons described in clauses (a) through (c) above.

 

“Sanctions” means individually and collectively, respectively, any and all
economic sanctions, trade sanctions, financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes anti-terrorism laws and other sanctions
laws, regulations or embargoes, including those imposed, administered or
enforced from time to time by: (a) the United States of America, including those
administered by OFAC, the U.S. Department of State, the U.S. Department of
Commerce, or through any existing or future executive order, (b) the United
Nations Security Council, or (c) any other Governmental Authority with
jurisdiction over any Credit Party or any Loan Party or any of their respective
Subsidiaries or Affiliates.

 

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

 

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

 

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

 

“Second Amendment Effective Date” means August 3, 2018.

 

-36-

 

 

“Second Amendment Fee Letter” means the letter agreement, dated as of August
3, 2018, among the Borrowers and Lender.

 

“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.

 

“Security Agreement” means the Security Agreement dated as of the Closing Date
among the Loan Parties and the Lender, as the same now exists or may hereafter
be amended, modified, supplemented, renewed, restated or replaced.

 

“Security Documents” means the Security Agreement, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, and each other
security agreement or other instrument or document executed and delivered to the
Lender pursuant to this Agreement or any other Loan Document granting a Lien to
secure any of the Obligations.

 

“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of the Lead Borrower and its Subsidiaries as of that date
determined in accordance with GAAP.

 

“Solvent” and “Solvency” means, with respect to any Person on a particular date,
that on such date (a) at fair valuation, excluding the impact of intercompany
assets and liabilities which are eliminated in consolidation, all of the
properties and assets of such Person are greater than the sum of the debts,
including contingent liabilities, of such Person, (b) the present fair saleable
value of the properties and assets of such Person is not less than the amount
that would be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts beyond such Person’s ability to pay as such debts mature, and (e)
such Person is not engaged in a business or a transaction, and is not about to
engage in a business or transaction, for which such Person’s properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. The amount of all guarantees at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time,
can reasonably be expected to become an actual or matured liability.

 

“Specified Event of Default” means the occurrence of (a) any Event of Default
described in Sections 8.01(f) or (b) the Lender’s exercise of any of its
remedies pursuant to Section 8.02 following any other Event of Default.

 

“Spot Rate” has the meaning given to such term in Section 1.07 hereof.

 

“Standby Letter of Credit” means any Letter of Credit that is not a Commercial
Letter of Credit and that (a) is used in lieu or in support of performance
guaranties or performance, surety or similar bonds (excluding appeal bonds)
arising in the ordinary course of business, (b) is used in lieu or in support of
stay or appeal bonds, (c) supports the payment of insurance premiums for
reasonably necessary casualty insurance carried by any of the Loan Parties, or
(d) supports payment or performance for identified purchases or exchanges of
products or services in the ordinary course of business.

 

“Standby Letter of Credit Agreement” means the Standby Letter of Credit
Agreement relating to the issuance of a Standby Letter of Credit in the form
from time to time in use by the L/C Issuer.

 

-37-

 

 

“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 FRB to which the Lender 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. LIBO Rate
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to the 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.

 

“Store” means any retail store (which may include any owned or leased real
property, fixtures, equipment, inventory and other property related thereto)
operated, or to be operated, by any Loan Party.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
Equity Interests having ordinary voting power for the election of directors or
other governing body are at the time beneficially owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of a Loan Party.

 

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

 

“Swap Obligation” means any obligation to pay or perform under any agreement,
contract or transaction that constitutes a “swap” within the meaning of section
1a(47) of the Commodity Exchange Act.

 

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

 

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“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (including sale and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Term Loan Agreement” means the Term Loan Agreement, dated as of the Third
Amendment Effective Date, as the same may be amended, restated or otherwise
modified as permitted by the Intercreditor Agreement.

 

“Term Loan Documents” means the “Loan Documents”, as defined in the Term Loan
Agreement.

 

“Term Loan Facility” means the term loan facility in the original principal
amount of up to $10,000,000 under the Term Loan Documents and any Permitted
Refinancing thereof.

 

“Term Loan Lender” means ALCC, LLC, as lender, and any successor lender under
the Term Loan Facility.

 

“Term Loan Obligations” means the “Term Obligations” as defined in the
Intercreditor Agreement.

 

“Term Loan Priority Account” means the “Term Loan Priority Account” as defined
in the Intercreditor Agreement.

 

“Term Loan Priority Collateral” means any “Term Priority Collateral” as defined
in the Intercreditor 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 VIII, or (iii) the termination of the
Commitments in accordance with the provisions of Section 2.05(a) hereof.

 

“Third Amendment” means that certain Third Amendment to Second Amended and
Restated Credit Agreement entered into by and among the Borrowers, the Lender
and the L/C Issuer dated as of the Third Amendment Effective Date.

 

“Third Amendment Effective Date” means February 27, 2020.

 

“Third Amendment Fee Letter” means the letter agreement, dated as of the Third
Amendment Effective Date, among the Borrowers and Lender.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Trading with the Enemy Act” has the meaning set forth in Section 9.17.

 

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“Trailing Twelve Month Availability Condition” means, for any date of
calculation with respect to any transaction or payment, the Trailing Twelve
Month Excess Availability following, and after giving effect to, such
transaction or payment, will be greater than thirty percent (30%) of the Loan
Cap.

 

“Trailing Twelve Month Excess Availability” means, for any date of calculation,
after giving pro forma effect to the transaction then to be consummated, the
Average Daily Availability for each of the twelve (12) Fiscal Months immediately
preceding the date of such transaction or payment for which the Lender has
received financial statements.

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
LIBO Rate Loan.

 

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

 

“UCP 600” means the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce and
in effect as of July 1, 2007 (or such later version thereof as may be in effect
at the time of issuance).

 

“UFCA” has the meaning specified in Section 9.20(d).

 

“UFTA” has the meaning specified in Section 9.20(d).

 

“UVTA” has the meaning specified in Section 9.20(d).

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

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

 

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

 

1.02           Other Interpretive Provisions. With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

 

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(a)                The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include,” “includes” and “including” shall be deemed to
be followed by the phrase “without limitation.” The word “will” shall be
construed to have the same meaning and effect as the word “shall.” Unless the
context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, restated, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth
herein or in any other Loan Document), (ii) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (iii) the
words “herein,” “hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references in a
Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

 

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

 

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

 

(d)                Any reference herein or in any other Loan Document to the
satisfaction, repayment, or payment in full of the Obligations shall mean the
repayment in Dollars in full in cash or immediately available funds (or, in the
case of contingent reimbursement obligations with respect to Letters of Credit
and Bank Products (other than Swap Contracts) and any other contingent
Obligations, providing Cash Collateralization or other collateral as may be
requested by the Lender) of all of the Obligations (including the payment of any
termination amount then applicable (or which would or could become applicable as
a result of the repayment of the other Obligations) under Swap Contracts) other
than (i) unasserted contingent indemnification Obligations, (ii) any Obligations
relating to Bank Products (other than Swap Contracts) that, at such time, are
allowed by the applicable Bank Product provider to remain outstanding without
being required to be repaid or Cash Collateralized or otherwise collateralized
as may be requested by the Lender, and (iii) any Obligations relating to Swap
Contracts that, at such time, are allowed by the applicable provider of such
Swap Contracts to remain outstanding without being required to be repaid.

 

1.03           Accounting Terms.

 

(a)                Generally. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.

 

(b)                Changes in GAAP. If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and the Lead Borrower shall so request, the Lender and the Lead
Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP; provided,
that until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the Lead
Borrower shall provide to the Lender financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.

 

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1.04           Rounding. Any financial ratios required to be maintained by the
Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

 

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

 

1.06           Letter of Credit Amounts. Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to be the Stated Amount of such Letter of Credit in effect at such time;
provided, however, that 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.

 

1.07           Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Article II and Article IX,) or any of the other Loan
Documents to be in Dollars shall also include the equivalent of such amount in
any currency other than Dollars, such equivalent amount thereof in the
applicable currency to be determined by the Lender at such time on the basis of
the Spot Rate (as defined below) for the purchase of such currency with Dollars.
For purposes of this Section 1.07, the “Spot Rate” for a currency means the rate
determined by the Lender to be the rate quoted by the Person acting in such
capacity as the spot rate for the purchase by such Person of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date of such
determination; provided, that the Lender may obtain such spot rate from another
financial institution designated by the Lender if the Person acting in such
capacity does not have as of the date of determination a spot buying rate for
any such currency.

 

1.08           Divisions. For all purposes under the Loan Documents, in
connection with any division or plan of division under Delaware law (or any
comparable event under a different jurisdiction’s laws): (a) if any asset,
right, obligation or liability of any Person becomes the asset, right,
obligation or liability of a different Person, then it shall be deemed to have
been transferred from the original Person to the subsequent Person, and (b) if
any new Person comes into existence, such new Person shall be deemed to have
been organized on the first date of its existence by the holders of its Equity
Interests at such time.

 

Article II

THE COMMITMENT AND CREDIT EXTENSIONS

 

2.01           Loans; Reserves.

 

(a)                Subject to the terms and conditions set forth herein, (i) the
Lender agrees to make loans (each such loan, a “Loan”) to the Borrowers from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the Loan Cap; subject in
each case to the following limitations:

 

(i)                 after giving effect to any Borrowing, the Total Outstandings
shall not exceed the Loan Cap,

 

(ii)               [reserved],

 

and

 

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(iii)             the Outstanding Amount of all L/C Obligations shall not at any
time exceed the Letter of Credit Sublimit.

 

Within the limits of the Commitments, and subject to the other terms and
conditions hereof, the Borrowers may borrow under this Section 2.01, prepay
under Section 2.04, and reborrow under this Section 2.01. Loans may be Base Rate
Loans or LIBO Rate Loans, as further provided herein.

 

(b)                The Inventory Reserves and Availability Reserves as of
February 15, 2020 are set forth in the Borrowing Base Certificate delivered
pursuant to Section 4(b) of the Third Amendment.

 

(c)                The Lender shall have the right, at any time and from time to
time after the Closing Date in its Permitted Discretion to establish, modify or
eliminate Reserves.

 

2.02           Borrowings, Conversions and Continuations of Loans.

 

(a)                Loans shall be either Base Rate Loans or LIBO Rate Loans as
the Lead Borrower may request subject to and in accordance with this
Section 2.02. Subject to the other provisions of this Section 2.02, Borrowings
of more than one Type may be incurred at the same time.

 

(b)                Each Borrowing, each conversion of Loans from one Type to the
other, and each continuation of LIBO Rate Loans shall be made upon the Lead
Borrower’s irrevocable notice to the Lender, which may be given by telephone.
Each such notice must be received by the Lender not later than 11:00 a.m. (i)
two (2) Business Days prior to the requested date of any Borrowing of,
conversion to or continuation of LIBO Rate Loans or of any conversion of LIBO
Rate Loans to Base Rate Loans, and (ii) one (1) Business Day prior to the
requested date of any Borrowing of Base Rate Loans. Each telephonic notice by
the Lead Borrower pursuant to this Section 2.02(b) must be confirmed promptly by
delivery to the Lender of a written Committed Loan Notice, appropriately
completed and signed by a Responsible Officer of the Lead Borrower. Each
Borrowing of, conversion to or continuation of LIBO Rate Loans shall be in a
principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof. Except as provided in Section 2.03(c), each Borrowing of or conversion
to Base Rate Loans shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether
telephonic or written) shall specify (i) whether the Lead Borrower is requesting
a Borrowing, a conversion of Loans from one Type to the other, or a continuation
of LIBO Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Loans to be borrowed, converted or continued, (iv) the Type
of Loans to be borrowed or to which existing Loans are to be converted, and (v)
if applicable, the duration of the Interest Period with respect thereto. If the
Lead Borrower fails to specify a Type of Loan in a Committed Loan Notice or if
the Lead Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Loans shall be made as, or converted to, Base
Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective
as of the last day of the Interest Period then in effect with respect to the
applicable LIBO Rate Loans. If the Lead Borrower requests a Borrowing of,
conversion to, or continuation of LIBO Rate Loans in any such Committed Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one (1) month.

 

(c)                [Reserved.]

 

(d)                Upon satisfaction of the applicable conditions set forth in
Section 4.02 (and, if such Borrowing is the initial Credit Extension,
Section 4.01), the Lender shall use reasonable efforts to make funds available
to the Borrowers by no later than 4:00 p.m. on the day of such requested
Borrowing either by (i) crediting the account of the Lead Borrower on the books
of Wells Fargo with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to (and reasonably
acceptable to) the Lender by the Lead Borrower.

 

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(e)                The Lender, without the request of the Lead Borrower, may
advance any interest, fee, service charge (including direct wire fees), Credit
Party Expenses, or other payment to which any Credit Party is entitled from the
Loan Parties pursuant hereto or any other Loan Document and may charge the same
to the Loan Account notwithstanding that an Overadvance may result thereby. The
Lender shall advise the Lead Borrower of any such advance or charge promptly
after the making thereof. Such action on the part of the Lender shall not
constitute a waiver of the Lender’s rights and the Borrowers’ obligations under
Section 2.04(b). Any amount which is added to the principal balance of the Loan
Account as provided in this Section 2.02(e) shall bear interest at the interest
rate then and thereafter applicable to Base Rate Loans.

 

(f)                 Except as otherwise provided herein, a LIBO Rate Loan may be
continued or converted only on the last day of an Interest Period for such LIBO
Rate Loan. During the existence of a Default or an Event of Default, no Loans
may be requested as, converted to or continued as LIBO Rate Loans unless the
Lender otherwise consents.

 

(g)                The Lender shall promptly notify the Lead Borrower of the
interest rate applicable to any Interest Period for LIBO Rate Loans upon
determination of such interest rate. At any time that Base Rate Loans are
outstanding, the Lender shall notify the Lead Borrower of any change in the Base
Rate promptly following the public announcement of such change.

 

(h)                After giving effect to all Borrowings, all conversions of
Loans from one Type to the other, and all continuations of Loans as the same
Type, there shall not be more than six (6) Interest Periods in effect with
respect to LIBO Rate Loans.

 

(i)                 The Lender and the L/C Issuer shall have no obligation to
make any Loan or to provide any Letter of Credit if an Overadvance would result.
The Lender may, in its discretion, make Overadvances without the consent of the
Borrowers, and the L/C Issuer and the Borrowers and L/C Issuer shall be bound
thereby. Any Overadvance shall constitute a Loan. An Overadvance is for the
account of the Borrowers and shall constitute a Base Rate Loan and an Obligation
and shall be repaid by the Borrowers in accordance with the provisions of
Section 2.04(b). The making of any such Overadvance on any one occasion shall
not obligate the Lender to make or permit any Overadvance on any other occasion
or to permit such Overadvances to remain outstanding. The making by the Lender
of an Overadvance shall not modify or abrogate any of the provisions of
Section 2.03 regarding the Lender’s obligations to purchase participations with
respect to Letter of Credits.

 

2.03           Letters of Credit.

 

(a)                The Letter of Credit Commitment.

 

(i)                 Subject to the terms and conditions set forth herein, the
L/C Issuer agrees, (1) from time to time on any Business Day during the period
from the Closing Date until the Letter of Credit Expiration Date, to issue
Letters of Credit for the account of the Borrowers, and to amend or extend
Letters of Credit previously issued by it, in accordance with Section 2.03(b)
below, and (2) to honor drawings under the Letters of Credit; provided, that
after giving effect to any L/C Credit Extension with respect to any Letter of
Credit, (x) the Total Outstandings shall not exceed the Loan Cap, and (y) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit. Each request by the Lead Borrower for the issuance or amendment of a
Letter of Credit shall be deemed to be a representation by the Borrowers that
the L/C 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 Borrowers’ ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrowers 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. All Existing Letters
of Credit shall be deemed to have been issued pursuant hereto, and from and
after the Closing Date shall be subject to and governed by the terms and
conditions hereof.

 

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

 

(A)             subject to Section 2.03(b)(iii), the expiry date of such
requested Standby Letter of Credit would occur more than twelve (12) months
after the date of issuance or last extension, unless the Lender has approved
such expiry date; or

 

(B)              subject to Section 2.03(b)(iii), the expiry date of such
requested Commercial Letter of Credit would occur more than one hundred and
twenty (120) days after the date of issuance or last extension, unless the
Lender has approved such expiry date; or

 

(C)              the expiry date of 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 date of issuance of such Letter of
Credit (or such later date as to which the Lender may agree) or the Lender has
approved such expiry date.

 

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

 

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

 

(B)              the issuance of such Letter of Credit would violate one or more
policies of the L/C Issuer applicable to letters of credit generally;

 

(C)              such Letter of Credit is to be denominated in a currency other
than Dollars; provided, that if the L/C Issuer, in its discretion, issues a
Letter of Credit denominated in a currency other than Dollars, all
reimbursements by the Borrowers of the honoring of any drawing under such Letter
of Credit shall be paid in Dollars based on the Spot Rate; or

 

(D)             such Letter of Credit contains any provisions for automatic
reinstatement of the Stated Amount after any drawing thereunder.

 

(iv)             The L/C Issuer shall not amend any Letter of Credit if (A) the
L/C Issuer 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.

 

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(b)                Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.

 

(i)                 Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Lead Borrower delivered to the L/C Issuer
(with a copy to the Lender) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Lead
Borrower. Such Letter of Credit Application must be received by the L/C Issuer
and the Lender not later than 11:00 a.m. at least two (2) Business Days (or such
other later date and time as the Lender and the L/C Issuer may agree in a
particular instance in their 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 satisfactory to the Lender and the L/C Issuer: (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; and (G) such other matters as the Lender or L/C Issuer may 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 satisfactory
to the Lender and the L/C Issuer (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 the Lender or
the L/C Issuer may require. Additionally, the Lead Borrower shall furnish to the
L/C Issuer and the Lender such other documents and information pertaining to
such requested Letter of Credit issuance or amendment, and any Issuer Documents
(including, if requested by the L/C Issuer, a Standby Letter of Credit Agreement
or Commercial Letter of Credit Agreement, as applicable), as the L/C Issuer or
the Lender may require.

 

(ii)               Promptly after receipt of any Letter of Credit Application,
the L/C Issuer will confirm with the Lender (by telephone or in writing) that
the Lender has received a copy of such Letter of Credit Application from the
Lead Borrower and, if not, the L/C Issuer will provide the Lender with a copy
thereof. Unless the L/C Issuer has received written notice from Lender or any
Loan Party, at least one 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 or unless the L/C
Issuer would not be permitted, or would have no obligation, at such time to
issue such Letter of Credit under the terms hereof (by reason of the provisions
of clause (ii) or (iii) of Section 2.03(a) or otherwise), then, subject to the
terms and conditions hereof, the L/C Issuer shall, on the requested date, issue
a Letter of Credit for the account of the applicable Borrower or enter into the
applicable amendment, as the case may be, in each case in accordance with the
L/C Issuer’s usual and customary business practices.

 

(iii)              If the Lead Borrower so requests in any applicable Letter of
Credit Application, the L/C Issuer may, in its sole and absolute discretion,
agree to issue a Standby Letter of Credit that has automatic extension
provisions (each, an “Auto-Extension Letter of Credit”); provided, that any such
Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such
extension at least once in each twelve-month period (commencing with the date of
issuance of such Standby Letter of Credit) by giving prior notice to the
beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in
each such twelve-month period to be agreed upon at the time such Standby Letter
of Credit is issued. Unless otherwise directed by the Lender or the L/C Issuer,
the Lead Borrower shall not be required to make a specific request to the Lender
or the L/C Issuer for any such extension. Once an Auto-Extension Letter of
Credit has been issued, the Lender shall be deemed to have authorized (but may
not require) the L/C Issuer to permit the extension of such Standby Letter of
Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that the Lender shall instruct the L/C
Issuer not to permit any such extension if (A) the L/C Issuer has determined
that it would not be permitted, or would have no obligation, at such time to
issue such Standby Letter of Credit in its revised form (as extended) under the
terms hereof (by reason of the provisions of clause (ii) or (iii) of
Section 2.03(a) or otherwise), or (B) the L/C Issuer has received notice (which
may be by telephone or in writing) on or before the day that is five (5)
Business Days before the Non-Extension Notice Date (1) from the Lender that it
has elected not to permit such extension or (2) from the Lender or the Lead
Borrower that one or more of the applicable conditions specified in Section 4.02
is not then satisfied, and in each such case directing the L/C Issuer not to
permit such extension.

 

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(iv)              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, the L/C Issuer will also deliver to the Lead Borrower
and the Lender a true and complete copy of such Letter of Credit or amendment.

 

(c)                Drawings and Reimbursements.

 

(i)                 Upon receipt from the beneficiary of any Letter of Credit of
any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify
the Lead Borrower and the Lender thereof not less than two (2) Business Days
prior to the Honor Date (as defined below); provided, however, that any failure
to give or delay in giving such notice shall not relieve the Borrowers of their
obligation to reimburse the L/C Issuer and the Lender with respect to any such
payment. On the date of any payment by the L/C Issuer under a Letter of Credit
(each such date, an “Honor Date”), unless (i) the Lead Borrower, in accordance
with Section 2.02(b), has requested a Borrowing of LIBO Rate Loans to be
disbursed on such date to reimburse such payment by the L/C Issuer, or (ii) on
or before such date the Borrowers have deposited with the L/C Issuer cash in an
amount sufficient to reimburse such payment by the L/C Issuer and directed the
L/C Issuer that such cash is to be used to satisfy such payment, then the
Borrowers shall be deemed to have requested a Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the amount of such payment,
without regard to the minimum and multiples specified in Section 2.02(b) for the
principal amount of Base Rate Loans, and without regard to whether the
conditions set forth in Section 4.02 have been met. Any notice given by the L/C
Issuer or the Lender pursuant to this Section 2.03(c)(i) may be given by
telephone if immediately confirmed in writing; provided, that the lack of such
an immediate confirmation shall not affect the conclusiveness or binding effect
of such notice.

 

(ii)               The Lender’s obligation to make Loans to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this
Section 2.03(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 the Lender may have against the L/C Issuer, any Borrower or
any other Person for any reason whatsoever; (B) the occurrence or continuance of
a Default or Event of Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing, and without regard to whether
the conditions set forth in Section 4.02 have been met.

 

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(d)                Obligations Absolute. The obligation of the Borrowers to
reimburse the L/C Issuer for each drawing under each Letter of Credit 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 (provided that nothing herein shall prevent any Borrower from
pursuing any claim it may have against the L/C Issuer as provided in Section
2.03(e)):

 

(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 Borrowers 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), the L/C Issuer
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 the L/C Issuer 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 the L/C Issuer
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 Debtor Relief Law;

 

(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 Borrowers or
any of their Subsidiaries; or

 

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

 

The Lead 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 Lead Borrower’s instructions or other irregularity, the
Lead Borrower will immediately notify the Lender and the L/C Issuer. The
Borrowers shall be conclusively deemed to have waived any such claim against the
L/C Issuer and its correspondents unless such notice is given as aforesaid.

 

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(e)                Role of L/C Issuer. The Lender and the Borrowers agree that,
in paying any drawing under a Letter of Credit, the L/C Issuer shall not 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
L/C Issuer, the Lender, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to the
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lender, 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 Borrowers hereby assume 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 Borrowers’ pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. None of the L/C Issuer, the Lender, any of their respective
Related Parties nor any correspondent, participant or assignee of the L/C Issuer
shall be liable or responsible for any of the matters described in clauses (i)
through (v) of Section 2.03(d) or for any action, neglect or omission under or
in connection with any Letter of Credit or Issuer Documents, including, without
limitation, the issuance or any amendment of any Letter of Credit, the failure
to issue or amend any Letter of Credit, or the honoring or dishonoring of any
demand under any Letter of Credit, and such action or neglect or omission will
bind the Borrowers; provided, however, that anything in Section 2.03(d) to the
contrary notwithstanding, but subject to any applicable rules of the ISP and the
UCP 600, the Borrowers may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to the Borrowers, to the extent, but only to the extent, of
any direct, as opposed to consequential, exemplary or punitive damages suffered
by the Borrowers which the Borrowers prove were caused by the L/C Issuer’s
willful misconduct or gross negligence in (A) making payment under any Letter of
Credit against presentation of a draft or other document that on its face does
not comply with the terms of such Letter of Credit, or (B) failing 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; provided, further, that any claim against the L/C Issuer by
the Borrowers for any loss suffered or incurred by the Borrowers shall be
reduced by an amount equal to the sum of (i) the amount (if any) saved by the
Borrowers as a result of the breach or other wrongful conduct that allegedly
caused such loss, and (ii) the amount (if any) of the loss that would have been
avoided had the Borrowers taken all reasonable steps to mitigate such loss,
including, without limitation, by enforcing their rights against any beneficiary
and, in case of a claim of wrongful dishonor, by specifically and timely
authorizing the L/C Issuer to cure such dishonor. In furtherance and not in
limitation of the foregoing, the L/C Issuer 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 the L/C Issuer 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 the L/C
Issuer 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.
The L/C Issuer shall not be responsible for the wording of any Letter of Credit
(including, without limitation, any drawing conditions or any terms or
conditions that are ineffective, ambiguous, inconsistent, unduly complicated or
reasonably impossible to satisfy), notwithstanding any assistance the L/C Issuer
may provide to the Borrowers with drafting or recommending text for any Letter
of Credit Application or with the structuring of any transaction related to any
Letter of Credit, and the Borrowers hereby acknowledge and agree that any such
assistance will not constitute legal or other advice by the L/C Issuer or any
representation or warranty by the L/C Issuer that any such wording or such
Letter of Credit will be effective. Without limiting the foregoing, the L/C
Issuer may, as it deems appropriate, modify or alter and use in any Letter of
Credit the terminology contained on the Letter of Credit Application for such
Letter of Credit.

 

(f)                 Cash Collateral. Upon the request of the Lender, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Obligation not paid in cash by
the Borrowers or by a Loan in accordance with Section 2.03(c)(i), or (ii) if, as
of the Letter of Credit Expiration Date, any L/C Obligation for any reason
remains outstanding, the Borrowers shall, in each case, immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations.
Sections 2.04(b) and 8.02(c) set forth certain additional requirements to
deliver Cash Collateral hereunder. For purposes of this Section 2.03,
Section 2.04(b) and Section 8.02(c), “Cash Collateralize” means to pledge and
deposit with or deliver to the Lender, for its benefit and the benefit of the
L/C Issuer and the Lender, as collateral for the L/C Obligations, cash or
deposit account balances in an amount equal to 105% of the Outstanding Amount of
all L/C Obligations (other than L/C Obligations with respect to Letters of
Credit denominated in a currency other than Dollars, which L/C Obligations shall
be Cash Collateralized in an amount equal to 115% of the Outstanding Amount of
such L/C Obligations), pursuant to documentation in form and substance
satisfactory to the Lender and the L/C Issuer. The Borrowers hereby grant to the
Lender a security interest in all such cash, deposit accounts and all balances
therein and all proceeds of the foregoing. Cash Collateral shall be maintained
in a Cash Collateral Account at Wells Fargo. If at any time the Lender
determines that any funds held as Cash Collateral are subject to any right or
claim of any Person other than the Lender or that the total amount of such funds
is less than the aggregate Outstanding Amount of all L/C Obligations, the
Borrowers will, forthwith upon demand by the Lender, pay to the Lender, 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 Lender 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 Laws, to reimburse the L/C
Issuer and, to the extent not so applied, shall thereafter be applied to satisfy
other Obligations.

 

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(g)                Applicability of ISP and UCP 600. Unless otherwise expressly
agreed by the L/C Issuer and the Lead Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit), the
rules of the UCP 600 shall apply to each Letter of Credit, provided that solely
to the extent the rules of the UCP 600 do not address an issue relating to a
Standby Letter of Credit, the rules of the ISP shall apply.

 

(h)                Letter of Credit Fees. The Borrowers shall pay to the Lender
a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit
equal to the Applicable Margin times the daily Stated Amount under each such
Letter of Credit (whether or not such maximum amount is then in effect under
such Letter of Credit). For purposes of computing the daily amount available to
be drawn under any Letter of Credit, the amount of the Letter of Credit shall be
determined in accordance with Section 1.06. Letter of Credit Fees shall be (i)
due and payable on the first Business Day after the end of each month commencing
with the first such date to occur after the issuance of such Letter of Credit
and thereafter on demand, and (ii) computed on a monthly basis in arrears. If
there is any change in the Applicable Margin during any quarter, the daily
amount available to be drawn under of each Letter of Credit shall be computed
and multiplied by the Applicable Margin separately for each period during such
quarter that such Applicable Margin was in effect. Notwithstanding anything to
the contrary contained herein, while any Event of Default exists, all Letter of
Credit Fees shall accrue at the Default Rate as provided in Section 2.07(b)
hereof.

 

(i)                 Documentary and Processing Charges Payable to L/C Issuer.
The Borrowers shall pay directly to the L/C Issuer, for its own account, the
customary issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of the L/C Issuer 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.

 

(j)                 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.

 

2.04           Prepayments.

 

(a)                The Borrowers may, upon irrevocable notice from the Lead
Borrower to the Lender, at any time or from time to time voluntarily prepay
Loans in whole or in part without premium or penalty; provided, that (i) such
notice must be received by the Lender not later than 11:00 a.m. (A) two (2)
Business Days prior to any date of prepayment of LIBO Rate Loans and (B) on the
date of prepayment of Base Rate Loans; (ii) any prepayment of LIBO Rate Loans
shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid and, if LIBO Rate Loans, the Interest Period(s)
of such Loans. If such notice is given by the Lead Borrower, the Borrowers shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a LIBO Rate
Loan shall be accompanied by all accrued interest on the amount prepaid,
together with any additional amounts required pursuant to Section 3.05.

 

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(b)                If for any reason the Total Outstandings at any time exceed
the Loan Cap as then in effect, the Borrowers shall immediately prepay the Loans
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess; provided, however, that the Borrowers shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.04(b) unless, after
the prepayment in full of the Loans the Total Outstandings exceed the Loan Cap
as then in effect.

 

(c)                After the occurrence and during the continuance of a Cash
Dominion Event, the Borrower shall prepay the Loans and Cash Collateralize the
L/C Obligations with proceeds and collections received by the Loan Parties to
the extent so required under the provisions of Section 6.13 hereof.

 

(d)                The Borrowers shall prepay the Loans in an amount equal to
the Net Proceeds received by a Loan Party on account of a Prepayment Event,
irrespective of whether a Cash Dominion Event then exists and is continuing,
and, if an Event of Default has occurred and is continuing, apply any remaining
Net Proceeds to the Cash Collateralization of the L/C Obligations.

 

(e)                Prepayments made pursuant to Section 2.04(b), (c) and (d)
above, first, shall be applied ratably to the outstanding Loans, second, shall
be used to Cash Collateralize the remaining L/C Obligations if an Event of
Default has occurred and is continuing, and, third, the amount remaining, if
any, after the prepayment in full of Loans outstanding at such time and the Cash
Collateralization of the remaining L/C Obligations in full may be retained by
the Borrowers for use in the ordinary course of its business. Upon the drawing
of any Letter of Credit that has been Cash Collateralized, the funds held as
Cash Collateral shall be applied (without any further action by or notice to or
from the Borrowers or any other Loan Party) to reimburse the L/C Issuer or the
Lender, as applicable.

 

2.05           Termination or Reduction of the Commitment.

 

(a)                Subject to the payment in full of any applicable Prepayment
Premium, the Borrowers may, upon irrevocable notice from the Lead Borrower to
the Lender, terminate the Commitment or the Letter of Credit Sublimit or from
time to time permanently reduce the Commitment or the Letter of Credit Sublimit;
provided, that (i) any such notice shall be received by the Lender not later
than 11:00 a.m. five (5) Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount of
$10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the
Borrowers shall not terminate or reduce (A) the Commitment if, after giving
effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Commitment and (B) the Letter of Credit Sublimit
if, after giving effect thereto, the Outstanding Amount of L/C Obligations not
fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit.

 

(b)                If, after giving effect to any reduction of the Commitment or
the Letter of Credit Sublimit, the Letter of Credit Sublimit exceeds the amount
of the Commitment, such Letter of Credit Sublimit shall be automatically reduced
by the amount of such excess.

 

(c)                All fees (including, without limitation, commitment fees,
Letter of Credit Fees and any Prepayment Premium) and interest in respect of the
Commitment accrued until the effective date of any termination of the
Commitments shall be paid on the effective date of such termination.

 

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2.06           Repayment of Loans. The Borrower shall repay to the Lender on the
Termination Date the aggregate principal amount of Loans outstanding on such
date.

 

2.07           Interest.

 

(a)                Subject to the provisions of Section 2.07(b) below, (i) each
LIBO Rate Loan shall bear interest on the outstanding principal amount thereof
for each Interest Period at a rate per annum equal to the Adjusted LIBO Rate for
such Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Margin.

 

(b)          (i)                If any amount payable under any Loan Document is
not paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)               If any other Event of Default exists, at the option of the
Lender all outstanding Obligations shall bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.

 

(iii)             Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.

 

(c)                Interest on each Loan shall be due and payable in arrears on
each Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

 

2.08           Fees. In addition to certain fees described in Sections 2.03(h)
and 2.03(i):

 

(a)                Commitment Fee. The Borrowers shall pay to the Lender a
commitment fee calculated on a per annum basis equal to 0.250% times the actual
daily amount by which the Commitment exceeds the Total Outstandings during the
immediately preceding Fiscal Quarter. The commitment fee shall accrue at all
times during the Availability Period, including at any time during which one or
more of the conditions in Article IV is not met, and shall be calculated and due
and payable quarterly in arrears on the first day after the end of each Fiscal
Quarter, commencing with the first such date to occur after the Closing Date,
and on the last day of the Availability Period.

 

(b)                Other Fees. The Borrower shall pay to the Lender the fees set
forth in the Fee Letter. the Second Amendment Fee Letter and the Third Amendment
Fee Letter in the amounts and at the times specified in the Fee Letter, Second
Amendment Fee Letter and Third Amendment Fee Letter, as applicable. Such fees
shall be fully earned when paid and shall not be refundable for any reason or
under any circumstances whatsoever.

 

2.09           Computation of Interest and Fees. All computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed.
Interest shall accrue on each Loan for the day on which the Loan is made, and
shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid, provided that any Loan that is repaid on the same
day on which it is made shall, subject to Section 2.11(a), bear interest for one
day. Each determination by the Lender of an interest rate or fee hereunder shall
be conclusive and binding for all purposes, absent manifest error.

 

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2.10           Evidence of Debt.

 

(a)                The Credit Extensions made by the Lender shall be evidenced
by one or more accounts or records maintained by the Lender (the “Loan Account”)
in the ordinary course of business. The accounts or records maintained by the
Lender shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lender to the Borrowers and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrowers hereunder to pay any
amount owing with respect to the Obligations. Upon the request of the Lender,
the Borrowers shall execute and deliver to the Lender a Note, which shall
evidence the Lender’s Loans in addition to such accounts or records. The Lender
may attach schedules to the Note and endorse thereon the date, Type (if
applicable), amount and maturity of the Loans and payments with respect thereto.
Upon receipt of an affidavit of the Lender as to the loss, theft, destruction or
mutilation of the Lender’s Note and upon cancellation of such Note, the
Borrowers will issue, in lieu thereof, a replacement Note in favor of the
Lender, in the same principal amount thereof and otherwise of like tenor.

 

(b)                Lender shall render monthly statements regarding the Loan
Account to the Lead Borrower including principal, interest, fees, and including
an itemization of all charges and expenses constituting Credit Party Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Credit Parties unless, within thirty (30) days after receipt
thereof by the Lead Borrower, the Lead Borrower shall deliver to Lender written
objection thereto describing the error or errors contained in any such
statements.

 

2.11           Payments Generally.

 

(a)                General. All payments to be made by the Borrowers shall be
made without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all payments by the
Borrowers hereunder shall be made to the Lender, at the Lender’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. All payments received by the Lender after 2:00 p.m., at the
option of the Lender, shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue. If any payment
to be made by the Borrowers shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of
time shall be reflected in computing interest or fees, as the case may be.

 

(b)                Presumptions by Lender. Unless the Lender shall have received
notice from the Lead Borrower prior to the time at which any payment is due to
the Lender or the L/C Issuer hereunder that the Borrowers will not make such
payment, the Lender may assume that the Borrowers have made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the L/C Issuer the amount due. In such event, if the Borrowers
have not in fact made such payment, then the L/C Issuer agrees to repay to the
Lender forthwith on demand the amount so distributed to the L/C Issuer, in
immediately available funds 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 Lender, at the greater of the Federal Funds Rate and a rate
determined by the Lender in accordance with banking industry rules on interbank
compensation.

 

A notice of the Lender to the Lead Borrower with respect to any amount owing
under this subsection (b) shall be conclusive, absent manifest error.

 

(c)                Funding Source. Nothing herein shall be deemed to obligate
the Lender to obtain the funds for any Loan in any particular place or manner or
to constitute a representation by the Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.

 

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Article III

 

TAXES, YIELD PROTECTION AND ILLEGALITY;
APPOINTMENT OF LEAD BORROWER

 

3.01           Taxes.

 

(a)                Payments Free of Taxes. Any and all payments by or on account
of any obligation of the Borrowers hereunder or under any other Loan Document
shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes, provided that if the Borrowers shall be
required by applicable law to deduct any Indemnified Taxes (including any 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 Lender or the L/C
Issuer, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrowers shall make such
deductions and (iii) the Borrowers shall timely pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.

 

(b)                Payment of Other Taxes by the Borrowers. Without limiting the
provisions of subsection (a) above, the Borrowers shall timely pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)                Indemnification by the Loan Parties. The Loan Parties shall
indemnify the Lender and the L/C Issuer, within fifteen (15) days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Lender or the L/C Issuer, as the
case may be, and 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 Lead Borrower by the Lender or the L/C Issuer, or by
the Lender on behalf of the L/C Issuer, shall be conclusive absent manifest
error.

 

(d)                Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrowers to a Governmental
Authority pursuant to this Section, the Lead Borrower shall deliver to the
Lender 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 Lender.

 

(e)                Treatment of Certain Refunds. If the Lender or the L/C Issuer
determines, in its Permitted Discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrowers or
with respect to which the Borrowers have paid additional amounts pursuant to
this Section, it shall pay to the Borrowers an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
the Borrowers under this Section with respect to the Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of the Lender or the L/C
Issuer, as the case may be, and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund), provided
that the Borrowers, upon the request of the Lender or the L/C Issuer, agree to
repay the amount paid over to the Borrowers (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Lender or
the L/C Issuer in the event the Lender or the L/C Issuer is required to repay
such refund to such Governmental Authority. This subsection shall not be
construed to require the Lender or the L/C Issuer to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to the Borrowers or any other Person.

 

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3.02           Illegality. If the Lender determines that any Change in Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for the Lender to make, maintain or fund LIBO Rate Loans, or to
determine or charge interest rates based upon the LIBO Rate, or any Governmental
Authority has imposed material restrictions on the authority of the Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by the Lender to the Lead Borrower, any
obligation of the Lender to make or continue LIBO Rate Loans or to convert Base
Rate Loans to LIBO Rate Loans shall be suspended until the Lender notifies the
Lead Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, the Borrowers shall, upon demand from the
Lender, prepay or, if applicable, convert all LIBO Rate Loans of the Lender to
Base Rate Loans, either on the last day of the Interest Period therefor, if the
Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBO Rate
Loans. Upon any such prepayment or conversion, the Borrowers shall also pay
accrued interest on the amount so prepaid or converted.

 

3.03           Inability to Determine Rates. If the Lender determines that for
any reason in connection with any request for a LIBO Rate Loan or a conversion
to or continuation thereof that (a) Dollar deposits are not being offered to
banks in the London interbank market for the applicable amount and Interest
Period of such LIBO Rate Loan, (b) adequate and reasonable means do not exist
for determining the LIBO Rate for any requested Interest Period with respect to
a proposed LIBO Rate Loan, (c) the LIBO Rate for any requested Interest Period
with respect to a proposed LIBO Rate Loan does not adequately and fairly reflect
the cost to the Lender of funding such Loan, or (d) the administrator of the
LIBO Rate has issued a public statement or publication of information announcing
that such administrator has ceased or will cease to provide LIBOR, permanently
or indefinitely, the Lender will promptly so notify the Lead Borrower. From and
after the time the LIBO Rate is no longer provided, permanently or indefinitely,
or, with respect to the occurrence of any one or more of the events described in
clauses (a) through (c) of the immediately preceding sentence, then the
obligation of the Lender to make or maintain LIBO Rate Loans shall be suspended
until the Lender revokes such notice. Upon receipt of such notice, the Lead
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of LIBO Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein. With respect to any notice delivered by the Lender as
a result of the occurrence of an event described in clause (d) of the first
sentence of this Section 3.03, the Lead Borrower and the Lender will thereafter
negotiate in good faith an alternate benchmark rate (which may include the
forward-looking term rate based on SOFR that has been selected or recommended by
Federal Reserve Board and/or the Federal Reserve Bank of New York, or a
committee officially endorsed or convened by the Federal Reserve Board and/or
the Federal Reserve Bank of New York or any successor thereto) to replace the
LIBO Rate and such amendments to this Agreement as may be needed to give effect
to such alternate benchmark rate. For purposes hereof, “SOFR” means, with
respect to any day, the secured overnight financing rate published for such day
by the Federal Reserve Bank of New York, as the administrator of the benchmark
(or a successor administrator) on the Federal Reserve Bank of New York’s
Website.

 

3.04           Increased Costs; Reserves on LIBO Rate Loans.

 

(a)                Increased Costs Generally. If any Change in Law shall:

 

(i)                 impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in
by, the Lender (except any reserve requirement reflected in the LIBO Rate) or
the L/C Issuer;

 

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(ii)               subject the Lender or the L/C Issuer to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any LIBO Rate Loan made by it, or change
the basis of taxation of payments to the Lender or the L/C Issuer in respect
thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and
the imposition of, or any change in the rate of, any Excluded Tax payable by the
Lender or the L/C Issuer); or

 

(iii)             impose on the Lender or the L/C Issuer or the London interbank
market any other condition, cost or expense affecting this Agreement or LIBO
Rate Loans made by the Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any LIBO Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to the Lender or the
L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or
of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by the Lender
or the L/C Issuer hereunder (whether of principal, interest or any other amount)
then, upon request of the Lender or the L/C Issuer, the Borrowers will pay to
the Lender or the L/C Issuer, as the case may be, such additional amount or
amounts as will compensate the Lender or the L/C Issuer, as the case may be, for
such additional costs incurred or reduction suffered.

 

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

 

(c)                Certificates for Reimbursement. A certificate of the Lender
or the L/C Issuer setting forth the amount or amounts necessary to compensate
the Lender or the L/C Issuer or its holding company, as the case may be, as
specified in subsection (a) or (b) of this Section and delivered to the Lead
Borrower shall be conclusive absent manifest error. The Borrowers shall pay the
Lender or the L/C Issuer, as the case may be, the amount shown as due on any
such certificate within ten (10) days after receipt thereof.

 

(d)                Delay in Requests. Failure or delay on the part of the Lender
or the L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of the Lender’s or the L/C Issuer’s
right to demand such compensation, provided that the Borrowers shall not be
required to compensate the Lender or the L/C Issuer pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than six (6) months prior to the date that the Lender or the L/C
Issuer, as the case may be, notifies the Lead Borrower of the Change in Law
giving rise to such increased costs or reductions and of the Lender’s or the L/C
Issuer’s intention to claim compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
six-month period referred to above shall be extended to include the period of
retroactive effect thereof).

 

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(e)                Reserves on LIBO Rate Loans. The Borrowers shall pay to the
Lender, as long as the Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency liabilities”), additional interest
on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs
of such reserves allocated to such Loan by the Lender (as determined by the
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
the Lead Borrower shall have received at least ten (10) days’ prior notice of
such additional interest from the Lender. If the Lender fails to give notice ten
(10) days prior to the relevant Interest Payment Date, such additional interest
shall be due and payable ten (10) days from receipt of such notice.

 

3.05           Compensation for Losses. Upon demand of the Lender from time to
time, the Borrowers shall promptly compensate the Lender for and hold the Lender
harmless from any loss, cost or expense incurred by it as a result of:

 

(a)                any continuation, conversion, payment or prepayment of any
Loan other than a Base Rate Loan on a day other than the last day of the
Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise); or

 

(b)                any failure by the Borrowers to prepay, borrow, continue or
convert any Loan other than a Base Rate Loan on the date or in the amount
notified by the Lead Borrower;

 

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrowers shall also pay any customary administrative fees charged by the
Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrowers to the Lender under
this Section 3.05, Lender shall be deemed to have funded each LIBO Rate Loan
made by it at the LIBO Rate for such Loan by a matching deposit or other
borrowing in the London interbank market for a comparable amount and for a
comparable period, whether or not such LIBO Rate Loan was in fact so funded.

 

3.06           Mitigation Obligations; Replacement of Lender. If the Lender
requests compensation under Section 3.04, or the Borrowers are required to pay
any additional amount to the Lender or any Governmental Authority for the
account of the Lender pursuant to Section 3.01, or if the Lender gives a notice
pursuant to Section 3.02, then the 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 the Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need
for the notice pursuant to Section 3.02, as applicable, and (ii) in each case,
would not subject the Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to the Lender. The Borrowers hereby agree to pay
all reasonable costs and expenses incurred by the Lender in connection with any
such designation or assignment.

 

3.07           Survival. All of the Borrowers’ obligations under this Article
III shall survive termination of the Commitment and repayment of all Obligations
hereunder.

 

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3.08           Designation of Lead Borrower as Borrowers’ Agent.

 

(a)                Each Borrower hereby irrevocably designates and appoints the
Lead Borrower as such Borrower’s agent to obtain Credit Extensions, the proceeds
of which shall be available to each Borrower for such uses as are permitted
under this Agreement. As the disclosed principal for its agent, each Borrower
shall be obligated to each Credit Party on account of Credit Extensions so made
as if made directly by the applicable Credit Party to such Borrower,
notwithstanding the manner by which such Credit Extensions are recorded on the
books and records of the Lead Borrower and of any other Borrower. In addition,
each Loan Party other than the Borrowers hereby irrevocably designates and
appoints the Lead Borrower as such Loan Party’s agent to represent such Loan
Party in all respects under this Agreement and the other Loan Documents.

 

(b)                Each Borrower recognizes that credit available to it
hereunder is in excess of and on better terms than it otherwise could obtain on
and for its own account and that one of the reasons therefor is its joining in
the credit facility contemplated herein with all other Borrowers. Consequently,
each Borrower hereby assumes and agrees to discharge all Obligations of each of
the other Borrowers.

 

(c)                The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a “Borrower”) on whose behalf the Lead Borrower has
requested a Credit Extension. Neither the Lender nor any other Credit Party
shall have any obligation to see to the application of such proceeds therefrom.

 

Article IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01           Conditions of Initial Credit Extension. The obligation of the L/C
Issuer and the Lender to make its initial Credit Extension hereunder is subject
to satisfaction of the following conditions precedent:

 

(a)                The Lender’s receipt of the following, each of which shall be
originals, facsimiles or other electronic image scan transmission (e.g., “pdf”
or “tif” via e-mail) (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party or the Lender, as applicable, each dated the Closing Date (or, in the case
of certificates of governmental officials, a recent date before the Closing
Date) and each in form and substance satisfactory to the Lender:

 

(i)                 executed counterparts of this Agreement sufficient in number
for distribution to the Lender and the Lead Borrower;

 

(ii)               a Note executed by the Borrowers in favor of the Lender;

 

(iii)             such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as the Lender may require evidencing (A) the authority of each Loan Party
to enter into this Agreement and the other Loan Documents to which such Loan
Party is a party or is to become a party and (B) the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party or is to become a party;

 

(iv)              copies of each Loan Party’s Organization Documents and such
other documents and certifications as the Lender may reasonably require to
evidence that each Loan Party is duly organized or formed, and that each Loan
Party is validly existing, in good standing and qualified to engage in business
in each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification, except to the extent
that failure to so qualify in such jurisdiction could not reasonably be expected
to have a Material Adverse Effect;

 

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(v)                a favorable opinion of Dorsey & Whitney LLP, counsel to the
Loan Parties, addressed to the Lender, as to such matters concerning the Loan
Parties and the Loan Documents as the Lender may reasonably request;

 

(vi)              a certificate signed by a Responsible Officer of the Lead
Borrower certifying (A) that the conditions specified in Sections 4.02(a) and
4.02(b) have been satisfied, (B) that there has been no event or circumstance
since the date of the Audited Financial Statements that has had or could be
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect, (C) to the Solvency of the Loan Parties as of the Closing Date
after giving effect to the transactions contemplated hereby, and (D) either that
(1) no consents, licenses or approvals are required in connection with the
execution, delivery and performance by such Loan Party and the validity against
such Loan Party of the Loan Documents to which it is a party, or (2) that all
such consents, licenses and approvals have been obtained and are in full force
and effect;

 

(vii)            evidence that all insurance required to be maintained pursuant
to the Loan Documents and all endorsements in favor of the Lender required under
the Loan Documents have been obtained and are in effect;

 

(viii)          the Security Agreement, the Blocked Account Agreements, the DDA
Notifications, the Credit Card Notifications and certificates evidencing any
stock being pledged under any of the foregoing, together with undated stock
powers executed in blank, each duly executed by the applicable Loan Parties;

 

(ix)              all other Loan Documents required to be executed pursuant to
the terms hereof as of such date, each duly executed by the applicable Loan
Parties;

 

(x)                results of searches or other evidence reasonably satisfactory
to the Lender (in each case dated as of a date reasonably satisfactory to the
Lender) indicating the absence of Liens on the assets of the Loan Parties,
except for Permitted Encumbrances;

 

(xi)              (A) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested by
the Lender to be filed, registered or recorded to create or perfect the first
priority Liens intended to be created under the Loan Documents and all such
documents and instruments shall have been so filed, registered or recorded to
the satisfaction of the Lender, (B) the DDA Notifications, Credit Card
Notifications, and Blocked Account Agreements required pursuant to Section 6.13
hereof, (C) control agreements with respect to the Loan Parties’ material
securities and investment accounts, and (D) Collateral Access Agreements as
required by the Lender (but in no case with respect to any Store); and

 

(xii)            such other assurances, certificates, documents, consents or
opinions as the Lender reasonably may require.

 

(b)                After giving effect to (i) the first funding under the Loans,
(ii) any charges to the Loan Account made in connection with the establishment
of the credit facility contemplated hereby and (iii) all Letters of Credit to be
issued at, or immediately subsequent to, such establishment, Availability shall
be not less than $15,000,000.

 

(c)                The Lender shall have received a Borrowing Base Certificate
dated the Closing Date, relating to the month ended on May 26, 2012, and
executed by a Responsible Officer of the Lead Borrower.

 

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(d)                The Lender shall be reasonably satisfied that any financial
statements delivered to it fairly present the business and financial condition
of the Loan Parties and that there has been no Material Adverse Effect since the
date of the Audited Financial Statements.

 

(e)                The Lender shall have received and be satisfied with (i) a
detailed forecast for the Fiscal Year ending February 2, 2013, which shall
include an Availability model, Consolidated income statement, balance sheet, and
statement of cash flow, by month, each prepared in conformity with GAAP and
consistent with the Loan Parties’ then current practices and (b) such other
information (financial or otherwise) reasonably requested by the Lender.

 

(f)                 There shall not be pending any litigation or other
proceeding, the result of which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

(g)                There shall not have occurred any default of any Material
Contract of any Loan Party the result of which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(h)                The consummation of the transactions contemplated hereby
shall not violate any applicable Law or any Organization Document.

 

(i)                 All fees and expenses required to be paid to the Lender on
or before the Closing Date shall have been paid in full.

 

(j)                 The Borrowers shall have paid all fees, charges and
disbursements of counsel to the Lender to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of such fees, charges and
disbursements as shall constitute its reasonable estimate of such fees, charges
and disbursements incurred or to be incurred by it through the Closing Date
(provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrowers and the Lender).

 

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

 

(l)                 No material changes in governmental regulations or policies
affecting any Loan Party or any Credit Party shall have occurred prior to the
Closing Date.

 

(m)              There shall not have occurred any disruption or material
adverse change in the United States financial or capital markets in general that
has had, in the reasonable opinion of the Lender, a material adverse effect on
the market for loan syndications or adversely affecting the syndication of the
Loans.

 

(n)                The Closing Date shall have occurred on or before July 31,
2012. The Lender shall notify the Lead Borrower of the Closing Date, and such
notice shall be conclusive and binding on the Loan Parties.

 

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4.02           Conditions to all Credit Extensions. The obligation of the Lender
to honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Loans to the other Type, or a continuation of
LIBO Rate Loans) and the L/C Issuer to issue each Letter of Credit is subject to
the following conditions precedent:

 

(a)                The representations and warranties of each Loan Party
contained in Article V or in any other Loan Document, or which are contained in
any document furnished at any time under or in connection herewith or therewith,
shall be true and correct in all material respects on and as of the date of such
Credit Extension, except (i) to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date, (ii) in the
case of any representation or warranty qualified by materiality, such
representation or warranty shall be true and correct in all respects, (subject
to such qualification), (iii) for purposes of this Section 4.02, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01, and (iv) for
purposes of this Section 4.02, the representations and warranties with respect
to any Schedules shall be deemed to refer to the most recently updated Schedules
furnished by the Lead Borrower pursuant to Section 6.14(b) and accepted by the
Lender in writing;

 

(b)                No Default or Event of Default shall exist, or would result
from such proposed Credit Extension or from the application of the proceeds
thereof;

 

(c)                The Lender and, if applicable, the L/C Issuer shall have
received a Request for Credit Extension in accordance with the requirements
hereof;

 

(d)                No event or circumstance which could reasonably be expected
to result in a Material Adverse Effect shall have occurred since the date of the
Audited Financial Statements; and

 

(e)                No Overadvance shall result from such Credit Extension:

 

provided, that without limiting the foregoing, the Lender shall have no
obligation to honor a Request for Credit Extension on or after the Closing Date,
until the Lender shall have received from the Borrowers a written report
regarding the results of a commercial finance examination of the Loan Parties,
which shall be satisfactory to the Lender, and until the delivery thereof the
decision to honor any Request for Credit Extension shall be made in the sole
discretion of the Lender or the L/C Issuer, as applicable.

 

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of LIBO Rate
Loans) submitted by the Lead Borrower shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in Sections 4.02(a) and
(b) have been satisfied on and as of the date of the applicable Credit
Extension.

 

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Article V
REPRESENTATIONS AND WARRANTIES

 

To induce the Credit Parties to enter into this Agreement and to make Loans and
to issue Letters of Credit hereunder, each Loan Party represents and warrants to
the Credit Parties that:

 

5.01           Existence, Qualification and Power. Each Loan Party (a) is a
corporation, limited liability company, partnership or limited partnership, duly
incorporated, organized or formed, validly existing and, where applicable, in
good standing under the Laws of the jurisdiction of its incorporation,
organization, or formation, (b) has all requisite power and authority and all
requisite governmental licenses, permits, authorizations, consents and approvals
to (i) own or lease its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and (c) is duly qualified and is licensed and, where applicable, in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i) or
(c), to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect. Schedule 5.01 annexed hereto sets forth, as of
the Third Amendment Effective Date, each Loan Party’s name as it appears in
official filings in its state of incorporation or organization, its state of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization, and its federal employer
identification number.

 

5.02           Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is a
party has been duly authorized by all necessary corporate or other
organizational action, and does not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach, termination, or contravention of, or constitute a default under, or
require any payment to be made under (i) any Material Contract or any Material
Indebtedness to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; (c) result in or require the
creation of any Lien upon any asset of any Loan Party (other than Liens in favor
of the Lender under the Security Documents); or (d) violate any Law.

 

5.03           Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, except for
(a) the perfection or maintenance of the Liens created under the Security
Documents (including the first priority (subject to the Intercreditor Agreement)
nature thereof) or (b) such as have been obtained or made and are in full force
and effect.

 

5.04           Binding Effect. This Agreement has been, and each other Loan
Document, when delivered, will have been, duly executed and delivered by each
Loan Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

 

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5.05           Financial Statements; No Material Adverse Effect.

 

(a)                The Audited Financial Statements (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; (ii) fairly present the financial
condition of the Lead Borrower and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all Material Indebtedness and
other material liabilities, direct or contingent, of the Lead Borrower and its
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness, in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein.

 

(b)                The unaudited Consolidated and consolidating balance sheet of
the Lead Borrower and its Subsidiaries dated April 28, 2012, and the related
Consolidated and consolidating statements of income or operations, and cash
flows for the Fiscal Quarter ended on that date (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present the financial
condition of the Lead Borrower and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby, subject, in the case
of clauses (i) and (ii), to the absence of footnotes and to normal year-end
audit adjustments. Schedule 5.05 sets forth all Material Indebtedness.

 

(c)                Since the date of the Audited Financial Statements, there has
been no event or circumstance, either individually or in the aggregate, that has
had or could reasonably be expected to have a Material Adverse Effect.

 

(d)                To the best knowledge of the Lead Borrower, no Internal
Control Event exists or has occurred since the date of the Audited Financial
Statements that has resulted in or could reasonably be expected to result in a
misstatement in any material respect (i) in any financial information delivered
or to be delivered to the Lender, (ii) of the Borrowing Base, (iii) of covenant
compliance calculations provided hereunder or (iv) of the assets, liabilities,
financial condition or results of operations of the Lead Borrower and its
Subsidiaries on a Consolidated basis.

 

(e)                The Consolidated and consolidating forecasted balance sheet
and statements of income and cash flows of the Lead Borrower and its
Subsidiaries delivered pursuant to Section 6.01(c) were 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.

 

5.06           Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Loan Parties, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Loan Party or any of its Subsidiaries or against
any of its properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as specifically disclosed in Schedule 5.06, either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect, and since the Third Amendment
Effective Date, there has been no adverse change in the status, or financial
effect on any Loan Party or any Subsidiary thereof, of the matters described on
Schedule 5.06.

 

5.07           No Default. No Loan Party is in default under or with respect to,
or party to, any Material Contract or any Material Indebtedness. No Default or
Event of Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Loan Document.

 

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5.08           Ownership of Property; Liens.

 

(a)                Each of the Loan Parties has good record and marketable title
in fee simple to or valid leasehold interests in, all Real Estate necessary or
used in the ordinary conduct of its business. Each of the Loan Parties has good
and marketable title to, valid leasehold interests in, or valid licenses to use
all personal property and assets material to the ordinary conduct of its
business.

 

(b)                Schedule 5.08(b)(1) sets forth the address (including street
address, county and state) of all Real Estate that is owned by the Loan Parties,
together with a list of the holders of any mortgage or other Lien thereon as of
the Third Amendment Effective Date. Each Loan Party has good, marketable and
insurable fee simple title to the Real Estate owned by such Loan Party, free and
clear of all Liens, other than Permitted Encumbrances. Schedule 5.08(b)(2) sets
forth the address (including street address, county and state) of all Leases of
the Loan Parties, together with a list of the lessor and its contact information
with respect to each such Lease as of the Third Amendment Effective Date. Each
of such Leases is in full force and effect and the Loan Parties are not in
default of the terms thereof, except as could not reasonably be expected to have
a Material Adverse Effect.

 

(c)                Schedule 7.01 sets forth a complete and accurate list of all
Liens on the property or assets of each Loan Party, other than statutory or
common law Liens against or by landlords of the Stores, showing as of the Third
Amendment Effective Date the lienholder thereof, the principal amount of the
obligations secured thereby and the property or assets of such Loan Party
subject thereto. The property of each Loan Party is subject to no Liens, other
than Permitted Encumbrances.

 

(d)                Schedule 7.02 sets forth a complete and accurate list of all
Investments held by any Loan Party on the Third Amendment Effective Date,
showing as of the Third Amendment Effective Date the amount, obligor or issuer
and maturity, if any, thereof.

 

(e)                Schedule 7.03 sets forth a complete and accurate list of all
Indebtedness of each Loan Party on the Third Amendment Effective Date, showing
as of the Third Amendment Effective Date the amount, obligor or issuer and
maturity thereof.

 

5.09           Environmental Compliance.

 

(a)                Except as specifically disclosed in Schedule 5.09, no Loan
Party (i) 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, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) has a Responsible Officer with knowledge of any basis for any Environmental
Liability, except, in each case, as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(b)                Except as otherwise set forth in Schedule 5.09, (i) none of
the properties currently owned by any Loan Party is listed or proposed for
listing on the NPL or on the CERCLIS or any analogous foreign, state or local
list or is adjacent to any such property, and (ii) to the knowledge of any
Responsible Officer of any Loan Party none of the properties currently operated
or formerly owned by any Loan Party is listed or proposed for listing on the NPL
or on the CERCLIS or any analogous foreign, state or local list or is adjacent
to any such property in connection with any matter for which any Loan Party
would have any material liability; there are not and never have been any
underground or above-ground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or have
been treated, stored or disposed by any Loan Party in violation of any
Environmental Laws on any property currently owned or operated by any Loan Party
or, to the knowledge of any Responsible Officer of any Loan Party, on any
property formerly owned by any Loan Party; there is no friable asbestos or
friable asbestos-containing material on any property currently owned or operated
by any Loan Party; and Hazardous Materials have not been released, discharged or
disposed of by any Loan Party in violation of any Environmental Laws on any
property currently owned or operated or formerly owned by any Loan Party.

 

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(c)                Except as otherwise set forth on Schedule 5.09, no Loan Party
is undertaking, and no Loan Party has completed, either individually or together
with other potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law; and all Hazardous Materials generated,
used, treated, handled or stored at, or transported to or from, any property
currently or formerly owned or operated by any Loan Party have been disposed of
in a manner not reasonably expected to result in material liability to any Loan
Party.

 

5.10           Insurance. The properties of the Loan Parties are insured with
financially sound and reputable insurance companies which are not Affiliates of
the Loan Parties, in such amounts, with such deductibles and covering such risks
(including, without limitation, workmen’s compensation, public liability,
business interruption and property damage insurance) as are customarily carried
by companies engaged in similar businesses and owning similar properties in
localities where the Loan Parties operate. Schedule 5.10 sets forth a
description of all insurance maintained by or on behalf of the Loan Parties as
of the Third Amendment Effective Date. Each insurance policy listed on Schedule
5.10 is in full force and effect and all premiums in respect thereof that are
due and payable have been paid.

 

5.11           Taxes. The Loan Parties have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings being diligently conducted, for which adequate
reserves have been provided in accordance with GAAP, as to which Taxes no Lien
has been filed and which contest effectively suspends the collection of the
contested obligation and the enforcement of any Lien securing such obligation.
There is no proposed tax assessment against any Loan Party that would, if made,
have a Material Adverse Effect. No Loan Party is a party to any tax sharing
agreement.

 

5.12           ERISA Compliance.

 

(a)                Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Lead Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification. The Loan Parties and each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan. No Lien imposed under the Code or ERISA exists or is likely
to arise on account of any Plan.

 

(b)                There are no pending or, to the best knowledge of the Lead
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Effect.

 

(c)                (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Sections 4069 or 4212(c) of ERISA, in each case except
as could not reasonably be expected to result in a Material Adverse Effect.

 

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5.13           Subsidiaries; Equity Interests. The Loan Parties have no
Subsidiaries other than those specifically disclosed in Part (a) of Schedule
5.13, which Schedule sets forth the legal name, jurisdiction of incorporation or
formation and authorized Equity Interests of each such Subsidiary. All of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are
fully paid and non-assessable and are owned by a Loan Party (or a Subsidiary of
a Loan Party) in the amounts specified on Part (a) of Schedule 5.13 free and
clear of all Liens except for those created under the Security Documents and
those in favor of the Term Loan Lender created under the Term Loan Documents.
Except as set forth in Schedule 5.13, there are no outstanding rights to
purchase any Equity Interests in any Subsidiary. The Loan Parties have no equity
investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.13. All of the outstanding Equity Interests
in the Loan Parties have been validly issued, and are fully paid and
non-assessable and are owned in the amounts specified on Part (c) of Schedule
5.13 free and clear of all Liens except for those created under the Security
Documents and those in favor of the Term Loan Lender under the Term Loan
Documents. The copies of the Organization Documents of each Loan Party and each
amendment thereto provided pursuant to Section 4.01 are true and correct copies
of each such document, each of which is valid and in full force and effect.

 

5.14           Margin Regulations; Investment Company Act.

 

(a)                No Loan Party is engaged or will be engaged, principally or
as one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock. None of
the proceeds of the Credit Extensions shall be used directly or indirectly for
the purpose of purchasing or carrying any margin stock, for the purpose of
reducing or retiring any Indebtedness that was originally incurred to purchase
or carry any margin stock or for any other purpose that might cause any of the
Credit Extensions to be considered a “purpose credit” within the meaning of
Regulations T, U, or X issued by the FRB.

 

(b)                None of the Loan Parties, any Person Controlling any Loan
Party, or any Subsidiary is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

 

5.15           Disclosure. Each Loan Party has disclosed to the Lender all
agreements, instruments and corporate or other restrictions to which it is
subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
No report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of any Loan Party to the Lender
in connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder or under any other Loan Document (in each
case, as modified or supplemented by other information so furnished) contains
any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, that with respect to projected
financial information, the Loan Parties represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time of preparation thereof.

 

5.16           Compliance with Laws. Each of the Loan Parties is in compliance
(a) in all material respects with the requirements of all Laws and all orders,
writs, injunctions and decrees applicable to it or to its properties, except in
such instances in which (i) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently
conducted or (ii) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
and (b) with Sections 9.16 and 9.17 hereof.

 

5.17           Intellectual Property; Licenses, Etc. The Loan Parties own, or
possess the right to use, all of the Intellectual Property, licenses, permits
and other authorizations that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person. To the knowledge of the Lead Borrower, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by any Loan Party infringes upon
any rights held by any other Person. Except as specifically disclosed in
Schedule 5.17, no claim or litigation regarding any of the foregoing is pending
or, to the best knowledge of the Lead Borrower, threatened, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

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5.18           Labor Matters. There are no strikes, lockouts, slowdowns or other
material labor disputes against any Loan Party pending or, to the knowledge of
any Loan Party, threatened. The hours worked by and payments made to employees
of the Loan Parties comply with the Fair Labor Standards Act and any other
applicable federal, state, local or foreign Law dealing with such matters. No
Loan Party has incurred any liability or obligation under the Worker Adjustment
and Retraining Act or similar state Law. All payments due from any Loan Party,
or for which any claim may be made against any Loan Party, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
properly accrued in accordance with GAAP as a liability on the books of such
Loan Party. Except as set forth on Schedule 5.18, no Loan Party is a party to or
bound by any collective bargaining agreement. There are no representation
proceedings pending or, to any Loan Party’s knowledge, threatened to be filed
with the National Labor Relations Board, and no labor organization or group of
employees of any Loan Party has made a pending demand for recognition. There are
no complaints, unfair labor practice charges, grievances, arbitrations, unfair
employment practices charges or any other claims or complaints against any Loan
Party pending or, to the knowledge of any Loan Party, threatened to be filed
with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any employee of any Loan Party. The consummation of the
transactions contemplated by the Loan Documents will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Loan Party is bound.

 

5.19           Security Documents.

 

(a)                The Security Agreement creates in favor of the Lender, for
the benefit of the Secured Parties (as defined in the Security Agreement)
referred to therein, a legal, valid, continuing and enforceable security
interest in the Collateral (as defined in the Security Agreement), the
enforceability of which is subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law. The financing statements, releases and other
filings are in appropriate form and have been or will be filed in the offices
specified in Schedule II of the Security Agreement. Upon such filings and/or the
obtaining of “control” (as defined in the UCC), the Lender will have a perfected
Lien on, and security interest in, to and under all right, title and interest of
the grantors thereunder in all Collateral that may be perfected by filing,
recording or registering a financing statement or analogous document (including
without limitation the proceeds of such Collateral subject to the limitations
relating to such proceeds in the UCC) or by obtaining control, under the UCC (in
effect on the date this representation is made) in each case prior and superior
in right to any other Person (other than to the extent subject to the
Intercreditor Agreement, the Term Loan Lender with respect to the Term Loan
Priority Collateral).

 

(b)                When the Security Agreement (or a short form thereof) is
filed in the United States Patent and Trademark Office and when financing
statements, releases and other filings in appropriate form are filed in the
offices specified in Schedule II of the Security Agreement, the Lender shall
have a fully perfected Lien on, and security interest in, all right, title and
interest of the applicable Loan Parties in the Intellectual Property (as defined
in the Security Agreement) in which a security interest may be perfected by
filing, recording or registering a security agreement, financing statement or
analogous document in the United States Patent and Trademark Office in each case
prior and superior in right to any other Person (other than to the extent
subject to the Intercreditor Agreement, the Term Loan Lender with respect to
Term Loan Priority Collateral) (it being understood that subsequent recordings
in the United States Patent and Trademark Office may be necessary to perfect a
Lien on registered trademarks and trademark applications acquired by the Loan
Parties after the Closing Date).

 

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5.20           Solvency. After giving effect to the transactions contemplated by
this Agreement, and before and after giving effect to each Credit Extension, as
well as the extensions of credit to be made under the Term Loan Agreement on the
same date of such Credit Extension, the Loan Parties, on a Consolidated basis,
are Solvent. No transfer of property has been or will be made by any Loan Party
and no obligation has been or will be incurred by any Loan Party in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of any Loan Party.

 

5.21           Deposit Accounts; Credit Card Arrangements.

 

(a)                Annexed hereto as Schedule 5.21(a) is a list of all DDAs
maintained by the Loan Parties as of the Third Amendment Effective Date, which
Schedule includes, with respect to each DDA (i) the name and address of the
depository; (ii) the account number(s) maintained with such depository; (iii) a
contact person at such depository, and (iv) the identification of each Blocked
Account Bank.

 

(b)                Annexed hereto as Schedule 5.21(b) is a list describing all
arrangements as of the Third Amendment Effective Date to which any Loan Party is
a party with respect to the processing and/or payment to such Loan Party of the
proceeds of any credit card charges and debit card charges for sales made by
such Loan Party.

 

5.22           Brokers. No broker or finder brought about the obtaining, making
or closing of the Loans or transactions contemplated by the Loan Documents, and
no Loan Party or Affiliate thereof has any obligation to any Person in respect
of any finder’s or brokerage fees in connection therewith.

 

5.23           Customer and Trade Relations. There exists no actual or, to the
knowledge of any Loan Party, threatened, termination or cancellation of, or any
material adverse modification or change in the business relationship of any Loan
Party with any supplier material to its operations.

 

5.24           Material Contracts. Schedule 5.24 sets forth all Material
Contracts to which any Loan Party is a party or is bound as of the Third
Amendment Effective Date. The Loan Parties have delivered true, correct and
complete copies of such Material Contracts to the Lender on or before the
Closing Date or the Third Amendment Effective Date, as applicable. The Loan
Parties are not in breach or in default in any material respect of or under any
Material Contract and have not received any notice of the intention of any other
party thereto to terminate any Material Contract.

 

5.25           Casualty. Neither the businesses nor the properties of any Loan
Party or any of its Subsidiaries are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

5.26           OFAC; Sanctions.

 

No Loan Party nor any of its Subsidiaries is in violation of any Sanctions. No
Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party,
any director, officer, employee, agent or Affiliate of such Loan Party or such
Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets
located in Sanctioned Entities, or (c) to the knowledge of such Loan Party,
derives revenues from investments in, or transactions with Sanctioned Persons or
Sanctioned Entities. Each of the Loan Parties and its Subsidiaries has
implemented and maintains in effect policies and procedures designed to ensure
compliance by the Loan Parties and their Subsidiaries and their respective
directors, officers, employees, agents and Affiliates with all Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties
and its Subsidiaries, and to the knowledge of each such Loan Party, each
director, officer, employee, agent and Affiliate of each such Loan Party and
each such Subsidiary, is in compliance with all applicable Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws in all material respects. No
proceeds of any Loan made or Letter of Credit issued hereunder will be used
directly, or to the knowledge of any Loan Party, indirectly, to fund any
operations in, finance any investments or activities in, or make any payments
to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner
that would result in a violation of any applicable Sanctions, Anti-Corruption
Laws or Anti-Money Laundering Laws by any Person (including any Credit Party or
other individual or entity participating in any transaction).

 

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5.27           Beneficial Ownership Certification.

 

As of the Third Amendment Effective Date, the information included in the
Beneficial Ownership Certification is true and correct in all respects.

 

Article VI

AFFIRMATIVE COVENANTS

 

So long as the Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied (other than contingent
indemnification obligations for which a claim has not been asserted), or any
Letter of Credit shall remain outstanding, the Loan Parties shall:

 

6.01           Financial Statements. Deliver to the Lender, in form and detail
satisfactory to the Lender:

 

(a)                as soon as available, but in any event within ninety (90)
days after the end of each Fiscal Year of the Lead Borrower, a Consolidated and
consolidating balance sheet of the Lead Borrower and its Subsidiaries as at the
end of such Fiscal Year, and the related consolidated and consolidating
statements of income or operations, Shareholders’ Equity and cash flows for such
Fiscal Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all in reasonable detail and prepared in accordance with
GAAP, such consolidated statements to be audited and accompanied by (i) a report
and unqualified opinion of Deloitte & Touche LLP or another Registered Public
Accounting Firm of nationally recognized standing reasonably acceptable to the
Lender, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit and (ii) if required by the SEC, an opinion of Deloitte &
Touche LLP or such other Registered Public Accounting Firm independently
assessing Loan Parties’ internal controls over financial reporting in accordance
with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2, and
Section 404 of Sarbanes-Oxley expressing a conclusion that contains no statement
that there is a material weakness in such internal controls, except for such
material weaknesses as to which the Lender do not object, and such consolidating
statements to be certified by a Responsible Officer of the Lead Borrower to the
effect that such statements are fairly stated in all material respects when
considered in relation to the consolidated financial statements of the Lead
Borrower and its Subsidiaries;

 

(b)                as soon as available, but in any event on or before the third
Friday (or if such day is not a Business Day, on the next succeeding Business
Day) after the end of each of the Fiscal Months of each Fiscal Year of the Lead
Borrower, a Consolidated and consolidating balance sheet of the Lead Borrower
and its Subsidiaries as at the end of such Fiscal Month, and the related
Consolidated and consolidating statements of income or operations, and cash
flows for such Fiscal Month, and for the portion of the Lead Borrower’s Fiscal
Year then ended, setting forth in each case in comparative form the figures for
(A) such period set forth in the budget delivered pursuant to Section 6.01(c)
hereof, (B) the corresponding Fiscal Month of the previous Fiscal Year and (C)
the corresponding portion of the previous Fiscal Year, all in reasonable detail,
such consolidated statements to be certified by a Responsible Officer of the
Lead Borrower as fairly presenting the financial condition, results of
operations, and cash flows of the Lead Borrower and its Subsidiaries as of the
end of such Fiscal Month in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes, and such consolidating
statements to be certified by a Responsible Officer of the Lead Borrower to the
effect that such statements are fairly stated in all material respects when
considered in relation to the consolidated financial statements of the Lead
Borrower and its Subsidiaries; and

 

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(c)                as soon as available, but in any event no more than
forty-five (45) days after the end of each Fiscal Year of the Lead Borrower,
budgets prepared by management of the Lead Borrower and approved by the board of
directors of the Lead Borrower, in form satisfactory to the Lender, of
consolidated balance sheets and statements of income or operations and cash
flows of the Lead Borrower and its Subsidiaries on a monthly basis for the
immediately following Fiscal Year (including the Fiscal Year in which the
Maturity Date occurs), and as soon as available, any significant revisions to
such budget with respect to such Fiscal Year.

 

6.02           Certificates; Other Information. Deliver to the Lender, in form
and detail satisfactory to the Lender:

 

(a)                [Reserved];

 

(b)                concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and 6.01(b), a duly completed Compliance
Certificate signed by a Responsible Officer of the Lead Borrower, and in the
event of any change in generally accepted accounting principles used in the
preparation of such financial statements, the Lead Borrower shall also provide a
statement of reconciliation conforming such financial statements to GAAP;

 

(c)                on or before the third Friday of each Fiscal Month (or, if
such day is not a Business Day, on the next succeeding Business Day), a
Borrowing Base Certificate showing the Borrowing Base as of the close of
business as of the last day of the immediately preceding Fiscal Month (provided
that the Appraised Value percentage applied to the Eligible Inventory set forth
in each Borrowing Base Certificate shall be the percentage set forth in the most
recent appraisal obtained by the Lender pursuant to Section 6.10 hereof for the
applicable month in which such Borrowing Base Certificate is delivered), each
Borrowing Base Certificate to be certified as complete and correct by a
Responsible Officer of the Lead Borrower; provided, that (i) at any time that an
Accelerated Borrowing Base Delivery Event has occurred and is continuing, at the
election of the Lender, or (ii) at any time, at the option of the Borrowers,
such Borrowing Base Certificate shall (or may, in the instance of clause (ii))
be delivered on Wednesday of each week (or, if Wednesday is not a Business Day,
on the next succeeding Business Day), as of the close of business on the
immediately preceding Saturday; provided, further, that if the Borrowers elect
to deliver Borrowing Base Certificates in accordance with the preceding clause
(ii), the Borrowers shall continue to deliver Borrowing Base Certificates weekly
for a period of fifty-six (56) days (or such longer period as required by the
occurrence of an Accelerated Borrowing Base Delivery Event); provided, further,
that should any of the information contained in any Borrowing Base Certificate
be incorrect or misleading in any material respect, the Lead Borrower shall
advise the Lender in writing of such revisions or updates as may be necessary or
appropriate to update or correct the same, in which case such revision or update
shall be deemed to the have modified the applicable Borrowing Base Certificate
if accepted by the Lender in writing; provided, further, that notwithstanding
the foregoing proviso, no such revision or update to any Borrowing Base
Certificate shall be deemed the Credit Parties’ waiver of any Default or Event
or Default resulting from the matters disclosed therein;

 

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(d)                promptly upon receipt, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or
the audit committee of the board of directors) of any Loan Party by its
Registered Public Accounting Firm in connection with the accounts or books of
the Loan Parties, or any audit of any of them, including, without limitation,
specifying any Internal Control Event;

 

(e)                promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Lead Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which any Loan Party
may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or with any national securities exchange, and in
any case not otherwise required to be delivered to the Lender pursuant hereto;

 

(f)                 the financial and collateral reports described on Schedule
6.02 hereto, at the times set forth in such Schedule;

 

(g)                promptly after the furnishing thereof, copies of any
statement or report furnished to any holder of debt securities of any Loan Party
or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit
or similar agreement and not otherwise required to be furnished to the Lender
pursuant to Section 6.01 or any other clause of this Section 6.02;

 

(h)                as soon as available, but in any event within thirty (30)
days after the end of each Fiscal Year of the Loan Parties, a report summarizing
the insurance coverage (specifying type, amount and carrier) in effect for each
Loan Party and its Subsidiaries and containing such additional information as
the Lender may reasonably specify;

 

(i)                 promptly after the Lender’s request therefor, copies of all
Material Contracts and documents evidencing Material Indebtedness;

 

(j)                 promptly, and in any event within five (5) Business Days
after receipt thereof by any Loan Party, copies of each notice or other
correspondence received from any Governmental Authority (including, without
limitation, the SEC (or comparable agency in any applicable non-U.S.
jurisdiction)) concerning any proceeding with, or investigation or possible
investigation or other inquiry by such Governmental Authority regarding
financial or other operational results of any Loan Party or any other matter
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect;

 

(k)                promptly, following any request therefor, information and
documentation reasonably requested by the Lender for purposes of compliance with
applicable “know your customer” requirements under the act, the Beneficial
Ownership Regulation or other applicable Anti-Corruption Laws and Anti-Money
Laundering Laws; and

 

(l)                 promptly, such additional information regarding the business
affairs, financial condition or operations of any Loan Party, or compliance with
the terms of the Loan Documents, as the Lender may from time to time reasonably
request.

 

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Documents required to be delivered pursuant to Sections 6.01(a) or 6.01(b) or
Section 6.02(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Lead Borrower posts such documents, or provides a link thereto on the Lead
Borrower’s website on the Internet at the website address listed on Schedule
9.02; or (ii) on which such documents are posted on the Lead Borrower’s behalf
on an Internet or intranet website, if any, to which the Lender has access
(whether a commercial, third-party website or whether sponsored by the Lender);
provided, that: (i) the Lead Borrower shall deliver paper copies of such
documents to the Lender upon request to deliver such paper copies until a
written request to cease delivering paper copies is given by the Lender and (ii)
the Lead Borrower shall notify the Lender (by facsimile or electronic mail) of
the posting of any such documents and provide to the Lender by electronic mail
electronic versions (i.e., soft copies) of such documents. Notwithstanding
anything contained herein, in every instance the Lead Borrower shall be required
to provide paper copies of the Compliance Certificates required by
Section 6.02(b) to the Lender.

 

6.03           Notices. Promptly notify the Lender:

 

(a)                of the occurrence of any Default or Event of Default;

 

(b)                of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect;

 

(c)                of any breach or non-performance of, or any default under, a
consignment agreement, any agreement governing PMSI Inventory Indebtedness, or a
Material Contract or with respect to Material Indebtedness of any Loan Party
thereof;

 

(d)                of any material dispute, litigation, investigation,
proceeding or suspension between any Loan Party or any Subsidiary thereof and
any Governmental Authority or the commencement of, or any material development
in, any litigation or proceeding affecting any Loan Party or any Subsidiary
thereof, including pursuant to any applicable Environmental Laws;

 

(e)                of the occurrence of any ERISA Event;

 

(f)                 of any material change in accounting policies or financial
reporting practices by any Loan Party;

 

(g)                of any change in any Loan Party’s senior executive officers;

 

(h)                of the discharge by any Loan Party of its present Registered
Public Accounting Firm or any withdrawal or resignation by such Registered
Public Accounting Firm;

 

(i)                 of any collective bargaining agreement or other labor
contract to which a Loan Party becomes a party, or the application for the
certification of a collective bargaining agent;

 

(j)                 of the filing of any Lien for unpaid Taxes against any Loan
Party;

 

(k)                of any casualty or other insured damage to any material
portion of the Collateral or the commencement of any action or proceeding for
the taking of any interest in a material portion of the Collateral under power
of eminent domain or by condemnation or similar proceeding or if any material
portion of the Collateral is damaged or destroyed;

 

(l)                 of any transaction of the nature contained in Article VII
hereof;

 

(m)              of any failure by any Loan Party to pay rent at (i) any
distribution centers or warehouses; (ii) ten percent (10%) or more of such Loan
Party’s locations; or (iii) any of such Loan Party’s locations if such failure
continues for more than ten (10) days following the day on which such rent first
came due and such failure would be reasonably likely to result in a Material
Adverse Effect; and

 

(n)                any change in the information provided in the Beneficial
Ownership Certification that would result in a change to the list of beneficial
owners identified in parts (c) or (d) of such certification.

 

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Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Lead Borrower setting forth details of the occurrence
referred to therein and stating what action the Lead Borrower has taken and
proposes to take with respect thereto. Each notice pursuant to Section 6.03(a)
shall describe with particularity any and all provisions of this Agreement and
any other Loan Document that have been breached.

 

6.04           Payment of Obligations. Pay and discharge as the same shall
become due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, (b) all lawful claims (including, without limitation,
claims of landlords, warehousemen, customs brokers, freight forwarders,
consolidators and carriers) which, if unpaid, would by law become a Lien upon
its property; and (c) all Indebtedness, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, except, in each case, where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Loan Party has set aside on its books adequate reserves with respect
thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and enforcement of any Lien securing such
obligation, (d) no Lien has been filed with respect thereto and (e) the failure
to make payment pending such contest could not reasonably be expected to result
in a Material Adverse Effect. Nothing contained herein shall be deemed to limit
the rights of the Lender with respect to determining Reserves pursuant to this
Agreement.

 

6.05           Preservation of Existence, Etc. Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization or formation except in a transaction
permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain
all rights, privileges, permits, licenses and franchises necessary or desirable
in the normal conduct of its business, except to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its Intellectual Property, except to the extent such
Intellectual Property is no longer used or useful in the conduct of the business
of the Loan Parties.

 

6.06           Maintenance of Properties. (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
and (b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

6.07           Maintenance of Insurance.

 

(a)                Maintain with financially sound and reputable insurance
companies reasonably acceptable to the Lender not Affiliates of the Loan
Parties, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business and operating in the same or similar locations or as is
required by applicable Law, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons and as are reasonably
acceptable to the Lender.

 

(b)                Cause fire and extended coverage policies maintained with
respect to any Collateral to be endorsed or otherwise amended to include (i) a
non-contributing mortgage clause (regarding improvements to Real Estate) and
lenders’ loss payable clause (regarding personal property), in form and
substance satisfactory to the Lender, which endorsements or amendments shall
provide that the insurer shall pay all proceeds otherwise payable to the Loan
Parties under the policies directly to the Lender, (ii) a provision to the
effect that none of the Loan Parties, Credit Parties or any other Person shall
be a co-insurer and (iii) such other provisions as the Lender may reasonably
require from time to time to protect the interests of the Credit Parties.

 

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(c)                Cause commercial general liability policies to be endorsed to
name the Lender as an additional insured.

 

(d)                Cause business interruption policies to name the Lender as a
loss payee and to be endorsed or amended to include (i) a provision that, from
and after the Closing Date, the insurer shall pay all proceeds otherwise payable
to the Loan Parties under the policies directly to the Lender, (ii) a provision
to the effect that none of the Loan Parties, the Lender or any other Credit
Party shall be a co-insurer and (iii) such other provisions as the Lender may
reasonably require from time to time to protect the interests of the Credit
Parties.

 

(e)                Cause each such policy referred to in this Section 6.07 to
also provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium except upon not less than ten (10) days’ prior
written notice thereof by the insurer to the Lender (giving the Lender the right
to cure defaults in the payment of premiums) or (ii) for any other reason except
upon not less than thirty (30) days’ prior written notice thereof by the insurer
to the Lender.

 

(f)                 Deliver to the Lender, prior to the cancellation,
modification or non-renewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Lender, including an insurance binder) together with evidence
satisfactory to the Lender of payment of the premium therefor.

 

(g)                [Reserved].

 

(h)                Maintain for themselves, a Directors and Officers insurance
policy, and a “Blanket Crime” policy including employee dishonesty, forgery or
alteration, theft, disappearance and destruction, robbery and safe burglary,
property, and computer fraud coverage with responsible companies in such amounts
as are customarily carried by business entities engaged in similar businesses
similarly situated, and will upon request by the Lender furnish the Lender
certificates evidencing renewal of each such policy.

 

(i)                 Permit any representatives that are designated by the Lender
to inspect the insurance policies maintained by or on behalf of the Loan Parties
and to inspect books and records related thereto and any properties covered
thereby.

 

(j)                 None of the Credit Parties, or their agents or employees
shall be liable for any loss or damage insured by the insurance policies
required to be maintained under this Section 6.07. Each Loan Party shall look
solely to its insurance companies or any other parties other than the Credit
Parties for the recovery of such loss or damage and such insurance companies
shall have no rights of subrogation against any Credit Party or its agents or
employees. If, however, the insurance policies do not provide waiver of
subrogation rights against such parties, as required above, then the Loan
Parties hereby agree, to the extent permitted by law, to waive their right of
recovery, if any, against the Credit Parties and their agents and employees. The
designation of any form, type or amount of insurance coverage by any Credit
Party under this Section 6.07 shall in no event be deemed a representation,
warranty or advice by such Credit Party that such insurance is adequate for the
purposes of the business of the Loan Parties or the protection of their
properties.

 

6.08           Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been set aside and maintained by the
Loan Parties in accordance with GAAP; (b) such contest effectively suspends
enforcement of the contested Laws, and (c) the failure to comply therewith could
not reasonably be expected to have a Material Adverse Effect.

 

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6.09           Books and Records; Accountants.

 

(a)                (i) Maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and
business of the Loan Parties; and (ii) maintain such books of record and account
in material conformity with all applicable requirements of any Governmental
Authority having regulatory jurisdiction over the Loan Parties.

 

(b)                At all times retain Deloitte & Touche LLP or another
Registered Public Accounting Firm which is reasonably satisfactory to the Lender
and shall instruct Deloitte & Touche LLP or such other Registered Public
Accounting Firm to cooperate with, and be available to, the Lender or its
representatives to discuss the Loan Parties’ financial performance, financial
condition, operating results, controls, and such other matters, within the scope
of the retention of Deloitte & Touche LLP or such other Registered Public
Accounting Firm, as may be raised by the Lender.

 

6.10           Inspection Rights.

 

(a)                Permit representatives and independent contractors of the
Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with its directors, officers,
and Registered Public Accounting Firm, and permit the Lender or professionals
(including investment bankers, consultants, accountants, and lawyers) retained
by the Lender to conduct evaluations of the Loan Parties’ business plan,
forecasts and cash flows, all at the expense of the Loan Parties and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Lead Borrower; provided, however,
that when a Default or Event of Default exists the Lender (or any of its
representatives or independent contractors) may do any of the foregoing at the
expense of the Loan Parties at any time during normal business hours and without
advance notice.

 

(b)                Upon the request of the Lender after reasonable prior notice,
permit the Lender or professionals (including investment bankers, consultants,
accountants, and lawyers) retained by the Lender to conduct commercial finance
examinations and other evaluations, including, without limitation, of (i) the
Lead Borrower’s practices in the computation of the Borrowing Base, and (ii) the
assets included in the Borrowing Base and related financial information such as,
but not limited to, sales, gross margins, payables, accruals and reserves.
During any two (2) successive Fiscal Years in which (i) no Loans are outstanding
and (ii) the aggregate balance of cash deposits in Blocked Accounts maintained
at Wells Fargo is equal to or greater than $5,000,000, the Loan Parties shall
pay the fees and expenses of the Lender and such professionals with respect to
one (1) such commercial finance examination undertaken by the Lender during such
two Fiscal Years; provided, that the Lender may, in its discretion undertake two
(2) commercial finance examinations at the Loan Parties’ expense in any Fiscal
Year in which (i) the outstanding principal amount of the Loans is greater than
zero or (ii) the aggregate balance of cash deposits in Blocked Accounts
maintained at Wells Fargo is less than $5,000,000; provided, further, that the
Lender may in its discretion undertake three (3) commercial finance examinations
at the Loan Parties’ expense in any Fiscal Year in which Availability is less
than thirty percent (30%) of the Loan Cap. Notwithstanding the foregoing, the
Lender may cause additional commercial finance examinations to be undertaken (i)
as it in its discretion deems necessary or appropriate, at its own expense or
(ii) if required by Law or if a Default or Event of Default shall have occurred
and be continuing, at the expense of the Loan Parties.

 

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(c)                Upon the request of the Lender after reasonable prior notice,
permit the Lender or professionals (including appraisers) retained by the Lender
to conduct appraisals of the Collateral, including, without limitation, the
assets included in the Borrowing Base. During any Fiscal Year in which no Loans
are outstanding, the Loan Parties shall pay the fees and expenses of the Lender
and such professionals with respect to one (1) such inventory appraisal
undertaken by the Lender during such Fiscal Year; provided, that the Lender may
in its discretion undertake two (2) inventory appraisals at the Loan Parties’
expense in any Fiscal Year in which the outstanding principal amount of the
Loans is greater than zero; provided, further, that the Lender may in its
discretion undertake three (3) inventory appraisals at the Loan Parties’ expense
in any Fiscal Year in which Availability is less than thirty percent (30%) of
the Loan Cap.

 

6.11           Use of Proceeds. Use the proceeds of the Credit Extensions (a) to
finance the acquisition of assets of the Borrowers in the ordinary course of
business, including the purchase of inventory and equipment, (b) to finance
Capital Expenditures of the Borrowers, and (c) for general corporate purposes of
the Loan Parties, in each case to the extent not prohibited under applicable Law
or the Loan Documents.

 

6.12           Additional Loan Parties. Notify the Lender at the time that any
Person (x) becomes a Subsidiary, and in each case promptly thereafter (and in
any event within fifteen (15) days), cause any such Person (a) which is not a
CFC, to (i) become a Loan Party by executing and delivering to the Lender a
Joinder to this Agreement or a Facility Guaranty or such other documents as the
Lender shall deem appropriate for such purpose, (ii) grant a Lien to the Lender
on such Person’s assets of the same type that constitute Collateral to secure
the Obligations, and (iii) deliver to the Lender documents of the types referred
to in clauses (iii) and (iv) of Section 4.01(a) and, upon the reasonable request
of the Lender, customary opinions of counsel to such Person (which shall cover,
among other things, the legality, validity, binding effect and enforceability of
the documentation referred to in clause (a)), and (b) if any Equity Interests or
Indebtedness of such Person are owned by or on behalf of any Loan Party, to
pledge such Equity Interests and promissory notes evidencing such Indebtedness
(except that, if such Subsidiary is a CFC, the Equity Interests of such
Subsidiary to be pledged may be limited to 65% of the outstanding voting Equity
Interests of such Subsidiary and 100% of the non-voting Equity Interests of such
Subsidiary) in each case in form, content and scope reasonably satisfactory to
the Lender. In no event shall compliance with this Section 6.12 waive or be
deemed a waiver or consent to any transaction giving rise to the need to comply
with this Section 6.12 if such transaction was not otherwise expressly permitted
by this Agreement or constitute or be deemed to constitute, with respect to any
Subsidiary, an approval of such Person as a Borrower or permit the inclusion of
any acquired assets in the computation of the Borrowing Base.

 

6.13           Cash Management.

 

(a)                On or prior to the Closing Date:

 

(i)                 deliver to the Lender copies of notifications (each, a
“Credit Card Notification”) substantially in the form attached hereto as Exhibit
F which have been executed on behalf of such Loan Party and delivered to such
Loan Party’s Credit Card Issuers and Credit Card Processors listed on Schedule
5.21(b); and

 

(ii)               enter into a Blocked Account Agreement satisfactory in form
and substance to the Lender with each Blocked Account Bank (collectively, the
“Blocked Accounts”); and

 

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(iii)             at the request of the Lender, deliver to the Lender copies of
notifications (each, a “DDA Notification”) substantially in the form attached
hereto as Exhibit G which have been executed on behalf of such Loan Party and
delivered to each depository institution listed on Schedule 5.21(a).

 

(b)                From and after the Closing Date, the Loan Parties shall ACH
or wire transfer no less frequently than each Business Day (or, in the case of
subclause (iii) below, on Monday, Wednesday and Friday of each week (to the
extent such Monday, Wednesday or Friday is a Business Day and, if such day is
not a Business Day, on the next succeeding Business Day) so long as a Cash
Dominion Event has not occurred and is continuing and on each Business Day if a
Cash Dominion Event has occurred and is continuing) and whether or not there are
then any outstanding Obligations, to a Blocked Account all of the following:

 

(i)                 all amounts on deposit in each DDA (net of any minimum
balance, not to exceed $5,000.00, as may be kept in the subject DDA under the
Borrowers’ policies as in effect on the Third Amendment Effective Date);

 

(ii)               all payments from Credit Card Processors and Credit Card
Issuers and proceeds of all credit card charges;

 

(iii)             all cash receipts from the Disposition of Inventory and other
assets (whether or not constituting Collateral) (other than cash kept in Stores
in the ordinary course of business consistent with the Borrowers’ policies as in
effect on the Third Amendment Effective Date);

 

(iv)              all proceeds of Accounts; and

 

(v)                all Net Proceeds, and all other cash payments received by a
Loan Party from any Person or from any source or on account of any Disposition
or other transaction or event, including, without limitation, any Prepayment
Event.

 

(c)                Each Blocked Account Agreement shall require upon notice from
Lender, which notice shall be delivered only after the occurrence and during the
continuance of a Cash Dominion Event, the ACH or wire transfer no less
frequently than daily (and whether or not there are then any outstanding
Obligations) to the concentration account maintained by the Lender at Wells
Fargo (the “Concentration Account”), of all cash receipts and collections
received by each Loan Party from all sources (the “Receipts and Collections”),
including, without limitation, the following:

 

(i)                 the then entire ledger balance of each Blocked Account (net
of any minimum balance, not to exceed $5,000.00, as may be kept in the subject
Blocked Account under the Borrowers’ policies as in effect on the Third
Amendment Effective Date);

 

(ii)               all amounts required to be deposited into the Blocked
Accounts pursuant to clause (b) above; and

 

(iii)             any other cash amounts received by any Loan Party from any
other source, on account of any type of transaction or event;

 

provided, however, the Lender may, in its sole discretion, permit the Loan
Parties to have one or more “intermediate” Blocked Account Agreements, whereby
such agreements would provide, upon notice from the Lender, which notice shall
be delivered only after the occurrence and during the continuance of a Cash
Dominion Event, the ACH or wire transfer no less frequently than daily (and
whether or not there are then any outstanding Obligations) of all Receipts and
Collections to another Blocked Account, as opposed to the Concentration Account.

 

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(d)                The Concentration Account shall at all times be under the
sole dominion and control of the Lender. The Lender shall cause all funds on
deposit in the Concentration Account to be applied to the Obligations, which
amounts shall be applied to the Obligations in the order proscribed in either
Section 2.04(e) or Section 8.03 of this Agreement, as applicable. The Loan
Parties hereby acknowledge and agree that (i) the Loan Parties have no right of
withdrawal from the Concentration Account, and (ii) the funds on deposit in the
Concentration Account shall at all times be collateral security for all of the
Obligations. In the event that, notwithstanding the provisions of this
Section 6.13, any Loan Party receives or otherwise has dominion and control of
any such cash receipts or collections, such receipts and collections shall be
held in trust by such Loan Party for the Lender, shall not be commingled with
any of such Loan Party’s other funds or deposited in any account of such Loan
Party and shall, not later than the Business Day after receipt thereof, be
deposited into the Concentration Account or dealt with in such other fashion as
such Loan Party may be instructed by the Lender.

 

(e)                Upon the request of the Lender, the Loan Parties shall cause
bank statements and/or other reports to be delivered to the Lender not less
often than monthly, accurately setting forth all amounts deposited in each
Blocked Account to ensure the proper transfer of funds as set forth above.

 

(f)                 If the Lender does not require DDA Notifications to be
delivered on the Closing Date in accordance with Section 6.13(a)(iii) above,
then the Loan Parties shall, upon the request of the Lender at any time after
the Closing Date, deliver to the Lender copies of DDA Notifications, which have
been executed on behalf of the applicable Loan Party and delivered to each
depository institution listed on Schedule 5.21(a).

 

(g)                Notwithstanding the foregoing, subject to the Intercreditor
Agreement, all Net Proceeds of Term Loan Priority Collateral shall be paid in
accordance with the Term Loan Agreement (and shall be applied in accordance with
the Term Loan Agreement) or otherwise paid to a Term Loan Priority Account.

 

6.14           Information Regarding the Collateral.

 

(a)                Furnish to the Lender at least thirty (30) days prior written
notice of any change in: (i) any Loan Party’s name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties; (ii) the location of any Loan Party’s chief executive office, its
principal place of business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located (including the establishment of any such new office or
facility), excluding Store locations; (iii) any Loan Party’s organizational
structure or jurisdiction of incorporation or formation; or (iv) any Loan
Party’s Federal Taxpayer Identification Number or organizational identification
number assigned to it by its state of organization. The Loan Parties agree not
to effect or permit any change referred to in the preceding sentence unless all
filings have been made under the UCC or otherwise that are required in order for
the Lender to continue at all times following such change to have a valid, legal
and perfected first priority (subject to the Intercreditor Agreement) security
interest in all the Collateral for its own benefit and the benefit of the other
Credit Parties.

 

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(b)                Should any of the information on any of the Schedules hereto
(other than Schedule 5.08(b)(2)) become inaccurate or misleading in any material
respect as a result of changes after the Closing Date, the Lead Borrower shall
advise the Lender in writing of such revisions or updates as may be necessary or
appropriate to update or correct the same. From time to time as may be
reasonably requested by the Lender (which request shall not be made (i) more
than one (1) time in each Fiscal Quarter with respect to Schedule 5.08(b)(2) and
(ii) more than two (2) times in any Fiscal Year with respect to all other
Schedules, in each case so long as no Default or Event of Default has occurred
and is continuing), the Lead Borrower shall supplement each Schedule hereto, or
any representation herein or in any other Loan Document, with respect to any
matter arising after the Closing Date that, if existing or occurring on the
Closing Date, would have been required to be set forth or described in such
Schedule or as an exception to such representation or that is necessary to
correct any information in such Schedule or representation which has been
rendered inaccurate thereby (and, in the case of any supplements to any
Schedule, such Schedule shall be appropriately marked to show the changes made
therein). Notwithstanding the foregoing, no supplement or revision to any
Schedule or representation shall be deemed the Credit Parties’ consent to the
matters reflected in such updated Schedules or revised representations nor
permit the Loan Parties to undertake any actions otherwise prohibited hereunder
or fail to undertake any action required hereunder from the restrictions and
requirements in existence prior to the delivery of such updated Schedules or
such revision of a representation; nor shall any such supplement or revision to
any Schedule or representation be deemed the Credit Parties’ waiver of any
Default or Event of Default resulting from the matters disclosed therein.

 

6.15           Physical Inventories.

 

(a)                Cause not less than one (1) physical inventory to be
undertaken, at the expense of the Loan Parties, in each Fiscal Year, and cycle
counts, in each case consistent with past practices, conducted by such inventory
takers as are satisfactory to the Lender and following such methodology as is
consistent with past practices. The Lender, at the expense of the Loan Parties,
may participate in and/or observe each scheduled physical count of Inventory
which is undertaken on behalf of any Loan Party. The Lead Borrower, within
thirty (30) days following the completion of such inventory, shall, upon the
written request of the Lender given at or prior to the time of completion of
such inventory, provide the Lender with a reconciliation of the results of such
inventory (as well as of any other physical inventory or cycle counts undertaken
by a Loan Party) and shall post such results to the Loan Parties’ stock ledgers
and general ledgers, as applicable.

 

(b)                Permit the Lender, in its discretion, if any Default or Event
of Default exists, to cause additional such inventories to be taken as the
Lender determines (each, at the expense of the Loan Parties).

 

6.16           Environmental Laws. (a) Conduct its operations and keep and
maintain its Real Estate 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 required to 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 Estate, 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.

 

6.17           Further Assurances.

 

(a)                Execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements and other documents), that may be
required under any applicable Law, or which the Lender may request, to grant,
preserve, protect, perfect or enforce the Liens created or intended to be
created by the Security Documents or the validity or priority of any such Lien,
all at the expense of the Loan Parties. The Loan Parties also agree to provide
to the Lender, from time to time upon request, evidence satisfactory to the
Lender as to the perfection and priority of the Liens created or intended to be
created by the Security Documents.

 

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(b)                If any material assets are acquired by any Loan Party after
the Closing Date (other than assets constituting Collateral under the Security
Documents that become subject to the perfected first-priority Lien (subject to
Permitted Encumbrances) under the Security Documents upon acquisition thereof),
notify the Lender thereof, and the Loan Parties will cause such assets to be
subjected to a Lien securing the Obligations and will take such actions as shall
be necessary or shall be requested by the Lender to grant and perfect such
Liens, including actions described in paragraph (a) of this Section 6.17, all at
the expense of the Loan Parties. In no event shall compliance with this
Section 6.17(b) waive or be deemed a waiver or consent to any transaction giving
rise to the need to comply with this Section 6.17 if such transaction was not
otherwise expressly permitted by this Agreement or constitute or be deemed to
constitute consent to the inclusion of any acquired assets in the computation of
the Borrowing Base.

 

(c)                Upon the request of the Lender, cause each of its customs
brokers, freight forwarders, consolidators and/or carriers in possession of a
material portion of its Eligible Inventory to deliver an agreement (including,
without limitation, a Customs Broker/Carrier Agreement) to the Lender covering
such matters and in such form as the Lender may reasonably require.

 

(d)                Upon the request of the Lender, cause any of its landlords to
deliver a Collateral Access Agreement to the Lender in such form as the Lender
may reasonably require; provided, that the foregoing will not apply to Store
locations.

 

(e)                Upon the request of the Lender, execute any and all further
documents, agreements and instruments, and take all such further actions
(including the filing of the Security Agreement or a short form thereof in the
United States Copyright Office or United States Patent and Trademark Office),
that may be required under any applicable Law or which the Lender may request in
order for the Lender to have a fully perfected Lien on, and security interest
in, all right, title and interest of the applicable Loan Parties in any
registered copyright and copyright application that is material to the Business.

 

(f)                 Cause all Related Intellectual Property, including upon any
Disposition thereof, to be subject to a non-exclusive royalty-free license of
such Related Intellectual Property in favor of the Lender for use in connection
with the exercise of rights and remedies of the Credit Parties under the Loan
Documents in respect of the Collateral, which license shall be substantially
similar to the license described in Section 6.1 of the Security Agreement (or
otherwise reasonably satisfactory to the Lender).

 

6.18           Compliance with Terms of Leaseholds. Except as otherwise
expressly permitted hereunder, (a) make all payments and otherwise perform all
obligations in respect of all Leases to which any Loan Party is a party, and
keep such Leases in full force and effect, (b) not allow such Leases to lapse or
be terminated or any rights to renew such Leases to be forfeited or cancelled,
and (c) notify the Lender of any default by any party with respect to such
Leases and cooperate with the Lender in all respects to cure any such default,
in each case to the extent failure to do so could not reasonably be expected to
have a Material Adverse Effect.

 

6.19           Material Contracts. (a) Perform and observe all material terms
and provisions of each Material Contract to be performed or observed by it, (b)
maintain each such Material Contract in full force and effect (except to the
extent such Person elects to terminate the same in accordance with its terms and
so notifies the Lender and, unless the failure to do so could not reasonably be
expected to have a Material Adverse Effect, makes reasonable arrangements for a
suitable replacement of the same), (c) enforce each such Material Contract in
accordance with such Person’s reasonable business judgment, (d) take all such
action to such end as may be from time to time reasonably requested by the
Lender in its Permitted Discretion, and (e) upon the reasonable request of the
Lender, 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 is entitled
to make under such Material Contract.

 

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6.20           OFAC; Sanctions. Each Loan Party will, and will cause each of its
Subsidiaries to comply with all applicable Sanctions, Anti-Corruption Laws and
Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries shall
implement and maintain in effect policies and procedures designed to ensure
compliance by the Loan Parties and their Subsidiaries and their respective
directors, officers, employees, agents and Affiliates with all applicable
Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.

 

6.21           Credit Card Processors. The Lead Borrower will, and will cause
its Subsidiaries to (a) comply in all material respects with all obligations of
such Person under each credit card processing agreement to which such Person is
a party, (b) maintain each credit card processing agreement set forth on
Schedule 5.21(b) and each credit card processing agreement entered into after
the Closing Date in full force and effect (except to the extent such Person
elects to terminate the same in accordance with the terms thereof and so
notifies the Lender) and take or cause to be taken all actions necessary to
maintain, preserve and protect the rights and interests of the Lender in all
material respects with respect to all such agreements, and (c) promptly notify
the Lender of the entry by such Person into any credit card processing agreement
with any Credit Card Processor or Credit Card Issuer after the Closing Date and
deliver to the Lender a copy of the Credit Card Notification delivered to each
such Credit Card Processor or Credit Card Issuer contemporaneously with the
entry by such Person into such credit processing agreement.

 

Article VII

NEGATIVE COVENANTS

 

So long as the Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding (other than contingent indemnification obligations for
which a claim has not been asserted), no Loan Party shall, directly or
indirectly:

 

7.01           Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired or
sign or file or suffer to exist under the UCC or any similar Law or statute of
any jurisdiction a financing statement that names any Loan Party as debtor; sign
or suffer to exist any security agreement authorizing any Person thereunder to
file such financing statement; sell any of its property or assets subject to an
understanding or agreement (contingent or otherwise) to repurchase such property
or assets with recourse to it; or assign or otherwise transfer any accounts or
other rights to receive income, other than, as to all of the above, Permitted
Encumbrances.

 

7.02           Investments. Make any Investments, except Permitted Investments.

 

7.03           Indebtedness; Disqualified Stock. (a) Create, incur, assume,
guarantee, suffer to exist or otherwise become or remain liable with respect to,
any Indebtedness, except Permitted Indebtedness; (b) issue Disqualified Stock;
or (c) issue and sell any other Equity Interests unless (i) such Equity
Interests shall be issued solely by the Lead Borrower and not by a Subsidiary of
a Loan Party, (ii) such Equity Interests shall not be subject to redemption
other than redemption at the option of the Loan Party issuing such Equity
Interests and in accordance with the limitations contained in this Agreement,
and (iii) all Restricted Payments in respect of such Equity Interests are
permitted pursuant to Section 7.06.

 

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7.04           Fundamental Changes. Merge, dissolve, divide, liquidate,
consolidate with or into another Person, (or agree to do any of the foregoing),
except that, so long as no Default or Event of Default shall have occurred and
be continuing prior to or immediately after giving effect to any action
described below or would result therefrom:

 

(a)                any Subsidiary which is not a Loan Party may merge with (i) a
Loan Party, provided that the Loan Party shall be the continuing or surviving
Person, or (ii) any one or more other Subsidiaries which are not Loan Parties,
provided that when any wholly-owned Subsidiary is merging with another
Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving
Person;

 

(b)                any Subsidiary which is a Loan Party may merge into any
Subsidiary which is a Loan Party or into a Borrower, provided that in any merger
involving a Borrower, such Borrower shall be the continuing or surviving Person;

 

(c)                in connection with a Permitted Acquisition, any Subsidiary of
a Loan Party may merge with or into or consolidate with any other Person or
permit any other Person to merge with or into or consolidate with it; provided,
that (i) the Person surviving such merger shall be a wholly-owned Subsidiary of
a Loan Party and such Person shall become a Loan Party in accordance with the
provisions of Section 6.12 hereof, and (ii) in the case of any such merger to
which any Loan Party is a party, such Loan Party is the surviving Person; and

 

(d)                any CFC that is not a Loan Party may merge into any CFC that
is not a Loan Party.

 

7.05           Dispositions. Make any Disposition or enter into any agreement to
make any Disposition, except Permitted Dispositions.

 

7.06           Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that, so long as no Default or Event of Default shall have occurred and
be continuing prior to or immediately after giving effect to any action
described below or would result therefrom:

 

(a)                each Subsidiary of a Loan Party may make Restricted Payments
to any Loan Party, including at such time as a Default or an Event of Default
shall have occurred and is continuing;

 

(b)                the Loan Parties and each Subsidiary may declare and make
dividend payments or other distributions payable solely in the common stock or
other common Equity Interests of such Person;

 

(c)                if the Payment Conditions are satisfied, the Loan Parties and
each Subsidiary may purchase, redeem or otherwise acquire Equity Interests
issued by it;

 

(d)                if the Payments Conditions are satisfied, the Lead Borrower
may declare or pay cash dividends to its stockholders;

 

(e)                at any time following the date that is eighteen (18) months
after the Closing Date and if the Adjusted Payment Conditions are satisfied, the
Lead Borrower, in addition to the dividend payments described in clause (d)
above, may pay a one-time dividend to its shareholders (as announced in a filing
with the SEC) in an aggregate amount not to exceed $5,000,000;

 

(f)                 any transaction expressly permitted pursuant to Section
7.09(f); and

 

(g)                so long as no Default or Event of Default has occurred and is
continuing or would result from the making of any such Restricted Payment, the
Loan Parties may make Restricted Payments in an amount not to exceed $2,000,000
in the aggregate from the Third Amendment Effective Date through the Maturity
Date.

 

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7.07           Prepayments of Indebtedness.

 

(a)                Prepay, redeem, purchase, defease or otherwise satisfy prior
to the scheduled maturity thereof in any manner any Indebtedness (other than
Term Loan Obligations, as to which clause (b) below shall apply), except (i) as
long as no Default or Event of Default then exists, regularly scheduled or
mandatory repayments, repurchases, redemptions or defeasances of Permitted
Indebtedness (other than Term Loan Obligations), (ii) voluntary prepayments,
repurchases, redemptions or defeasances of Permitted Indebtedness (excluding on
account of the Term Loan Obligations) as long as the Payment Conditions are
satisfied, and (iii) Permitted Refinancings of any such Indebtedness; or

 

(b)                Prepay, redeem, purchase, defease or otherwise satisfy prior
to the scheduled maturity thereof in any manner any Term Loan Obligations,
except (i) as long as no Default or Event of Default then exists, regularly
scheduled or mandatory repayments of Term Loan Obligations in accordance with
the Term Loan Documents as in effect on the Third Amendment Effective Date or as
permitted to be amended in accordance with the Intercreditor Agreement and
(ii) Permitted Refinancings of the Term Loan Obligations.

 

7.08           Change in Nature of Business. Engage in any line of business
substantially different from the Business conducted by the Loan Parties on the
Third Amendment Effective Date or any business substantially related or
incidental thereto.

 

7.09           Transactions with Affiliates. Enter into, renew, extend or be a
party to any transaction of any kind with any Affiliate of any Loan Party,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Loan Parties or such
Subsidiary as would be obtainable by the Loan Parties or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate; provided, that the foregoing restriction shall not apply to (a) a
transaction between or among the Loan Parties, (b) transactions described on
Schedule 7.09 hereto, (c) advances for commissions, travel and other similar
purposes in the ordinary course of business to directors, officers and
employees, (d) the issuance of Equity Interests in the Lead Borrower to any
officer, director, employee or consultant of the Lead Borrower or any of its
Subsidiaries, (e) the payment of reasonable fees and out-of-pocket costs to
directors, and compensation and employee benefit arrangements paid to, and
indemnities provided for the benefit of, directors, officers or employees of the
Lead Borrower or any of its Subsidiaries, and (f) any issuances of securities of
the Lead Borrower (other than Disqualified Stock and other Equity Interests not
permitted hereunder) or other payments, awards or grants in cash, securities or
otherwise pursuant to, or the funding of, severance agreements, retention plans,
employment agreements, deferred compensation agreements, stock options,
restricted stock agreements and stock ownership plans (in each case in respect
of Equity Interests in the Lead Borrower) of the Lead Borrower or any of its
Subsidiaries.

 

7.10           Burdensome Agreements. Enter into or permit to exist any
Contractual Obligation (other than this Agreement, any other Loan Document or
the Term Loan Documents (subject to and in accordance with the Intercreditor
Agreement)) that: (a) limits the ability (i) of any Subsidiary to make
Restricted Payments or other distributions to any Loan Party or to otherwise
transfer property to or invest in a Loan Party, (ii) of any Subsidiary to
Guarantee the Obligations, (iii) of any Subsidiary to make or repay loans to a
Loan Party, or (iv) of the Loan Parties or any Subsidiary to create, incur,
assume or suffer to exist Liens on property of such Person in favor of the
Lender; provided, however, that this clause (iv) shall not prohibit any negative
pledge incurred or provided in favor of any holder of Indebtedness permitted
under clauses (c), (f), or (l) of the definition of Permitted Indebtedness
solely to the extent any such negative pledge relates to the property financed
by or the subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person.

 

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7.11           Use of Proceeds. Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (a) to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose, (b) to make any payments to a Sanctioned Entity or a
Sanctioned Person, to finance any investments in a Sanctioned Entity or a
Sanctioned Person, to fund any operations of a Sanctioned Entity or a Sanctioned
Person, or in any other manner that would result in a violation of Sanctions by
any Person, (c) for any purpose which would breach any Anti-Corruption Laws or
Anti-Money Laundering Laws, or (d) for purposes other than those permitted under
this Agreement.

 

7.12           Amendment of Material Documents. Amend, modify or waive any of a
Loan Party’s rights under (a) its Organization Documents in a manner adverse to
the Credit Parties, or (b) any Material Contract or Material Indebtedness (other
than on account of any refinancing thereof otherwise permitted hereunder) to the
extent that such amendment, modification or waiver would result in a Default or
Event of Default under any of the Loan Documents, would be materially adverse to
the Credit Parties or otherwise would be reasonably likely to have a Material
Adverse Effect; provided that the foregoing restrictions shall not apply to the
Term Loan Documents, which may be amended and modified solely to the extent in
accordance with the terms of the Intercreditor Agreement.

 

7.13           Fiscal Year. Change the Fiscal Year of any Loan Party, or the
accounting policies or reporting practices of the Loan Parties, except as
required by GAAP.

 

7.14           Deposit Accounts; Credit Card Processors. Open new DDAs or
Blocked Accounts unless the Loan Parties shall have delivered to the Lender
appropriate DDA Notifications (to the extent requested by Lender pursuant to the
provisions of Section 6.13) or Blocked Account Agreements consistent with the
provisions of Section 6.13 and otherwise satisfactory to the Lender. No Loan
Party shall maintain any bank accounts or enter into any agreements with Credit
Card Issuers or Credit Card Processors other than the ones expressly
contemplated herein or in Section 6.13 hereof.

 

7.15           Financial Covenant. Permit Availability at any time to be less
than the greater of (a) ten percent (10%) of the Loan Cap and (b) $3,000,000.

 

Article VIII

EVENTS OF DEFAULT AND REMEDIES

 

8.01           Events of Default. Any of the following shall constitute an Event
of Default:

 

(a)                Non-Payment. The Borrowers or any other Loan Party fails to
pay when and as required to be paid herein, (i) any amount of principal of any
Loan or any L/C Obligation, or deposit any funds as Cash Collateral in respect
of L/C Obligations, or (ii) any interest on any Loan or on any L/C Obligation,
or any fee due hereunder, or (iii) any other amount payable hereunder or under
any other Loan Document; or

 

(b)                Specific Covenants. Any Loan Party fails to perform or comply
with any term, covenant or agreement contained in any of Section 6.01, 6.02,
6.03, 6.05, 6.07, 6.10, 6.11, 6.12, 6.13 or 6.14 or Article VII; or

 

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(c)                Other Defaults. Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for fifteen (15) days; or

 

(d)                Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of any
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith (including, without
limitation, any Borrowing Base Certificate) shall be incorrect or misleading in
any material respect when made or deemed made; or

 

(e)                Cross-Default. (i) Any Loan Party or any Subsidiary thereof
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Material
Indebtedness (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement), or (B) fails to observe or perform any other agreement or
condition relating to any such Material Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Material Indebtedness or the beneficiary or
beneficiaries of any Guarantee thereof (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; or (ii) there occurs under any
Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which a
Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such
Swap Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party
(as so defined) and, in either event, the Swap Termination Value owed by the
Loan Party or such Subsidiary as a result thereof is greater than $5,000,000; or

 

(f)                 Insolvency Proceedings, Etc. Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or a proceeding shall be commenced or a
petition filed, without the application or consent of such Person, seeking or
requesting the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed and the appointment
continues undischarged, undismissed or unstayed for thirty (30) calendar days or
an order or decree approving or ordering any of the foregoing shall be entered;
or any proceeding under any Debtor Relief Law relating to any such Person or to
all or any material part of its property is instituted without the consent of
such Person and continues undismissed or unstayed for thirty (30) calendar days,
or an order for relief is entered in any such proceeding; or

 

(g)                Inability to Pay Debts; Attachment. (i) Any Loan Party or any
Subsidiary thereof becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due in the ordinary course of
business, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
any such Person; or

 

(h)                Judgments. There is entered against any Loan Party or any
Subsidiary thereof (i) one or more judgments or orders for the payment of money
in an aggregate amount (as to all such judgments and orders) exceeding
$4,000,000 (to the extent not covered by independent third-party insurance as to
which the insurer is rated at least “A” by A.M. Best Company, has been notified
of the potential claim and does not dispute coverage), or (ii) any one or more
non-monetary judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are commenced by any creditor upon such judgment or
order, or (B) there is a period of thirty (30) consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, is not in effect; or

 

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(i)                 ERISA. (i) An ERISA Event occurs with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of any Loan Party under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$4,000,000 or which would reasonably likely result in a Material Adverse Effect,
or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $4,000,000 or which would reasonably
likely result in a Material Adverse Effect; or

 

(j)                 Invalidity of Loan Documents. (i) Any provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect; or any Loan Party or
any Affiliate thereof contests in any manner the validity or enforceability of
any provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any provision of any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document or
seeks to avoid, limit or otherwise adversely affect any Lien purported to be
created under any Security Document; or (ii) except as expressly permitted by
the Loan Documents and the Intercreditor Agreement, any Lien purported to be
created under any Security Document shall cease to be, or shall be asserted by
any Loan Party or any Affiliate thereof not to be, a valid and perfected Lien on
any Collateral, with the priority required by the applicable Security Document;
or

 

(k)                Change of Control. There occurs any Change of Control; or

 

(l)                 Cessation of Business. Except as otherwise expressly
permitted hereunder (including, without limitation, in connection with a
Permitted Disposition), any Loan Party shall take any action to suspend the
operation of its business in the ordinary course, liquidate all or a material
portion 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 material portion of its business; or

 

(m)              Loss of Collateral. There occurs any uninsured loss to any
portion of the Collateral with a fair market value in excess of $5,000,000; or

 

(n)                Indictment. The indictment or institution of any legal
process or proceeding against, any Loan Party or any Subsidiary thereof, under
any federal or state criminal statute, rule, regulation, order, or other
requirement having the force of law for a felony; or

 

(o)                Guaranty. The termination or attempted termination of any
Facility Guaranty except as expressly permitted hereunder or under any other
Loan Document; or

 

(p)                Subordination. (i) The provisions of the Intercreditor
Agreement (or any other intercreditor agreement entered into by Lender after the
date hereof, any such provisions being referred to collectively as the
“Intercreditor Provisions”), shall, without Lender consent, 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 Indebtedness, in each case
other than in accordance with its terms; or (ii) any 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, or (B) that the Intercreditor Provisions exist for the benefit of
the Credit Parties.

 

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8.02           Remedies Upon Event of Default. If any Event of Default occurs
and is continuing, the Lender may take any or all of the following actions:

 

(a)                declare the Commitments of the Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such Commitments and obligation shall be terminated;

 

(b)                declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other Obligations to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Loan
Parties;

 

(c)                require that the Loan Parties Cash Collateralize the L/C
Obligations; and

 

(d)                whether or not the maturity of the Obligations shall have
been accelerated pursuant hereto, proceed to protect, enforce and exercise all
rights and remedies of the Credit Parties under this Agreement, any of the other
Loan Documents or applicable Law, including, but not limited to, by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations are
evidenced, 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 Credit Parties;

 

provided, however, that upon the occurrence of any Event of Default with respect
to any Loan Party under Section 8.01(f), the obligation of the Lender to make
Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, and the obligation of the Loan Parties to Cash Collateralize the
L/C Obligations as aforesaid shall automatically become effective, in each case
without further act of the Lender.

 

No remedy herein is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of Law.

 

8.03           Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become immediately due
and payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Lender in the
following order:

 

First, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting fees, indemnities, Credit Party Expenses and other
amounts (including fees, charges and disbursements of counsel to the Lender and
amounts payable under Article III) payable to the Lender;

 

Second, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting indemnities, Credit Party Expenses, and other amounts
(other than principal, interest and fees) payable to the L/C Issuer (including
fees, charges and disbursements of counsel to the L/C Issuer and amounts payable
under Article III);

 

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Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and other Obligations, and fees (including Letter
of Credit Fees but excluding any Prepayment Premium), ratably among the Lender
and the L/C Issuer in proportion to the respective amounts described in this
clause Third payable to them;

 

Fourth, to the payment of that portion of the Obligations constituting unpaid
principal of the Loans;

 

Fifth, to the Lender for the account of the L/C Issuer, to Cash Collateralize
that portion of L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit;

 

Sixth, to payment of all other Obligations (including without limitation any
Prepayment Premium and the cash collateralization of asserted but unliquidated
indemnification obligations of the Loan Parties under Section 9.04, but
excluding any Other Liabilities), ratably among the Credit Parties in proportion
to the respective amounts described in this clause Sixth held by them;

 

Seventh, to payment of that portion of the Obligations arising from Cash
Management Services to the extent secured under the Security Documents, ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Seventh held by them;

 

Eighth, to payment of that portion of the Obligations arising from Bank Products
to the extent secured under the Security Documents, ratably among the Credit
Parties in proportion to the respective amounts described in this clause Eighth
held by them; 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 Law.

 

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth 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.

 

Article IX

MISCELLANEOUS

 

9.01           Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by any
Loan Party therefrom, shall be effective unless in writing signed by the Lender
and the Lead Borrower or the applicable Loan Party, as the case may be, and each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by the L/C Issuer, affect
the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it.

 

Notwithstanding anything to the contrary in this Agreement or any other Loan
Document, no provider or holder of any Bank Products or Cash Management Services
shall have any voting or approval rights hereunder (or be deemed the Lender)
solely by virtue of its status as the provider or holder of such agreements or
products or the Obligations owing thereunder, nor shall the consent of any such
provider or holder be required (other than in its capacity as the Lender, to the
extent applicable) for any matter hereunder or under any of the other Loan
Documents, including as to any matter relating to the Collateral or the release
of Collateral or any Loan Party.

 

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9.02           Notices; Effectiveness; Electronic Communications.

 

(a)                Notices Generally.

 

(i)                 Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, to the address,
facsimile number, electronic mail address or telephone number specified for such
person on Schedule 9.02:

 

(ii)               Notices sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when
received; notices sent by facsimile shall be deemed to have been given when sent
(except that, if not given during normal business hours for the recipient, shall
be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the
extent provided in subsection (b) below, shall be effective as provided in such
subsection (b).

 

(b)                Electronic Communications. Notices and other communications
to the Loan Parties, the Lender and the L/C Issuer hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by the Lender, provided that approval
of such procedures may be limited to particular notices or communications.

 

Unless the Lender otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the intended recipient’s
receipt of the notice or communication, which shall be evidenced by an
acknowledgment from the intended recipient (such as by the “delivery receipt”
function, as available, return e-mail or other written acknowledgement),
provided that if such notice or other communication is not sent during the
normal business hours of the recipient, such notice or communication shall be
deemed to have been sent at the opening of business on the next Business Day for
the recipient, and provided further that if the sender receives an
“out-of-office” reply e-mail, that notice or other communication shall be deemed
received upon the sender’s compliance with the instructions in such
“out-of-office” reply e-mail regarding notification to another person in the
intended recipient’s absence, and (ii) notices or communications 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 (i) of notification that such notice or communication is available and
identifying the website address therefor.

 

(c)                Change of Address, Etc. Each of the Loan Parties, the Lender,
and the L/C Issuer may change its address, facsimile or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.

 

(d)                Reliance by Lender and L/C Issuer. The Lender and the L/C
Issuer shall be entitled to rely and act upon any notices (including telephonic
Committed Loan Notices) purportedly given by or on behalf of the Loan Parties
even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof, except to the extent reliance on the same
would constitute gross negligence or willful misconduct. The Loan Parties shall
indemnify the Lender and the L/C Issuer, and the Related Parties of each of them
from all losses, costs, expenses and liabilities resulting from the reliance by
such Person on each notice purportedly given by or on behalf of the Loan
Parties. All telephonic notices to and other telephonic communications with the
Lender may be recorded by the Lender, and each of the parties hereto hereby
consents to such recording.

 

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9.03           No Waiver; Cumulative Remedies. No failure by any Credit Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. 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 or Event of Default, regardless of whether any Credit Party may have
had notice or knowledge of such Default or Event of Default at the time.

 

9.04           Expenses; Indemnity; Damage Waiver.

 

(a)                Costs and Expenses. The Borrowers shall pay all Credit Party
Expenses.

 

(b)                Indemnification by the Loan Parties. The Loan Parties shall
indemnify the Lender (and any sub-agent thereof), each other Credit Party, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless (on an after
tax basis) from, any and all losses, claims, causes of action, damages,
liabilities, settlement payments, costs, and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee), incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by any
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Lender (and any sub-agents thereof) and their
Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer 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,
any bank advising or confirming a Letter of Credit or any other nominated person
with respect to a Letter of Credit seeking to be reimbursed or indemnified or
compensated, and any third party seeking to enforce the rights of a Borrower,
beneficiary, nominated person, transferee, assignee of Letter of Credit
proceeds, or holder of an instrument or document related to any Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by any Loan Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any
Credit Party to, a Blocked Account Bank or other Person which has entered into a
control agreement with any Credit Party hereunder, or (v) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by any Borrower or any other Loan Party or any of
the Loan Parties’ directors, shareholders or creditors, and regardless of
whether any Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided, that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
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 a Borrower or any other Loan Party against an Indemnitee for breach
in bad faith of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Borrowers or such Loan Party 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)                Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable Law, the Loan Parties shall not assert, and hereby
waive, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

 

(d)                Payments. All amounts due under this Section shall be payable
on demand therefor.

 

(e)                Survival. The agreements in this Section shall survive the
assignment of any Commitment or Loan by the Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.

 

9.05           Payments Set Aside. To the extent that any payment by or on
behalf of the Loan Parties is made to any Credit Party, or any Credit Party
exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Credit Party in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such setoff had
not occurred.

 

9.06           Successors and Assigns.

 

(a)                Successors and Assigns Generally. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that no
Loan Party may assign or otherwise transfer any of its rights or obligations
hereunder or under any other Loan Document without the prior written consent of
the Lender. The Lender may at any time, without consent of, or notice to, the
Loan Parties, assign or otherwise transfer any of its rights or obligations
hereunder (i) to an Eligible Assignee pursuant to an Assignment and Assumption,
(ii) by way of participation in accordance with the provisions of subsection
Section 9.06(b), or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 9.06(d); provided however, that the
Lender may not assign or otherwise transfer any of its rights and obligations
hereunder if the result of such assignment or transfer would be to require
payment by any Loan Party of additional amounts under Sections 3.01 or 3.04, or
if the assignee or transferee of such rights or obligations would be entitled to
invoke rights under Sections 3.02 or 3.03 and the Lender has not already invoked
such rights; and provided further, to the extent that the Lender assigns any
portion of its rights and/or obligations under this Agreement, the Borrowers
agree to enter into any such amendments to this Agreement or the other Loan
Documents as may be reasonably required by Lender in connection therewith,
including, but not limited to, accommodating for multiple lenders and agents, as
necessary. Nothing in this Agreement, expressed or implied, shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
subsection (b) of this Section and, to the extent expressly contemplated hereby,
the Related Parties of each of the Credit Parties) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

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(b)                Participations. Lender may at any time, without the consent
of, or notice to, the Loan Parties, sell participations to any Person (each, a
“Participant”) in all or a portion of the Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the
Loans (including the Lender’s participations in L/C Obligations) owing to it);
provided, that (i) the Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Loan Parties and the
L/C Issuer shall continue to deal solely and directly with Lender in connection
with Lender’s rights and obligations under this Agreement, and (iv) so long as
no Specified Event of Default shall have occurred and be continuing, the Lender
shall not sell participations to any Person that is a Competitor of the Loan
Parties. Any Participant shall agree in writing to comply with all
confidentiality obligations set forth in Section 9.07 as if such Participant was
the Lender hereunder.

 

Any agreement or instrument pursuant to which the Lender sells such a
participation shall provide that the 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 the Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification that would reduce the principal
of or the interest rate on the Loans, extend the term or increase the amount of
the Commitment, as it relates to such Participant, or reduce the amount of any
commitment fee payable pursuant to Section 2.08(a) to which such Participant is
entitled. Subject to subsection (c) of this Section, the Loan Parties agree that
each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05 to the same extent as if it were the Lender and had acquired its interest
by assignment pursuant to Section 9.06(a)

 

(c)                Limitations upon Participant Rights. A Participant shall not
be entitled to receive any greater payment under Section 3.01 or 3.04 than the
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Lead Borrower’s prior written consent.

 

(d)                Certain Pledges. The Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of the Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided, that no such pledge or assignment shall release the Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
the Lender as a party hereto.

 

(e)                Electronic Execution of Assignments. The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

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(f)                 Resignation as L/C Issuer after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time the Lender assigns all
of its Commitment and Loans pursuant to subsection (a) above, Wells Fargo may
resign as L/C Issuer upon thirty (30) days prior written notice to the Lead
Borrower. In the event of any such resignation as L/C Issuer, the Lead Borrower
shall be entitled to appoint from among the Lenders a successor L/C Issuer;
provided, however, that no failure by the Lead Borrower to appoint any such
successor shall affect the resignation of Wells Fargo as L/C Issuer unless none
of the other Lenders has the capabilities to issue letters of credit sufficient
to meet the reasonable business needs of the Borrowers and is willing to accept
such appointment. If Wells Fargo resigns as L/C Issuer, it shall retain all the
rights, powers, privileges and duties of the L/C Issuer hereunder with respect
to all Letters of Credit outstanding as of the effective date of its resignation
as L/C Issuer and all L/C Obligations with respect thereto (including the right
to require the Lender to make Base Rate Loans pursuant to Section 2.03(c)). Upon
the appointment of a successor L/C Issuer, (a) such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or make other arrangements satisfactory to Wells Fargo
to effectively assume the obligations of Wells Fargo with respect to such
Letters of Credit.

 

9.07           Treatment of Certain Information; Confidentiality. Each of the
Credit Parties agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates
and to its and its Affiliates’ respective partners, directors, officers,
employees, agents, funding sources, attorneys, advisors and representatives in
connection with the transactions contemplated hereby (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), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to any Loan Party and its obligations, (g) with the consent of the Lead
Borrower, or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
any Credit Party or any of their respective Affiliates on a non-confidential
basis from a source other than the Loan Parties.

 

For purposes of this Section, “Information” means all information received from
the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any
Subsidiary thereof or their respective businesses pursuant to the terms of the
Loan Documents, other than any such information that is available to any Credit
Party on a non-confidential basis prior to disclosure by the Loan Parties or any
Subsidiary thereof. 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 its own confidential information.

 

Each of the Credit Parties acknowledges that (a) the Information may include
material non-public information concerning the Loan Parties or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of
material non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including Federal and state
securities Laws.

 

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9.08           Right of Setoff. If an Event of Default shall have occurred and
be continuing or if the Lender shall have been served with a trustee process or
similar attachment relating to property of a Loan Party, the Lender, the L/C
Issuer and each of their respective Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by applicable law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by Lender, the L/C Issuer
or any such Affiliate to or for the credit or the account of the Borrowers or
any other Loan Party against any and all of the Obligations now or hereafter
existing under this Agreement or any other Loan Document to the Lender or the
L/C Issuer, regardless of the adequacy of the Collateral, and irrespective of
whether or not the Lender or the L/C Issuer shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrowers or such Loan Party may be contingent or unmatured or are owed to a
branch or office of the Lender or the L/C Issuer different from the branch or
office holding such deposit or obligated on such indebtedness. The rights of the
Lender, the L/C Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
the Lender, the L/C Issuer or their respective Affiliates may have. The Lender
and the L/C Issuer agree to notify the Lead Borrower promptly after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.

 

9.09           Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”). If the Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrowers. In determining whether the interest
contracted for, charged, or received by the Lender exceeds the Maximum Rate,
such Person may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.

 

9.10           Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents 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 Lender and when the Lender shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile, pdf., or other electronic transmission
shall be as effective as delivery of a manually executed counterpart of this
Agreement.

 

9.11           Survival. All representations and warranties made hereunder and
in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and
delivery hereof and thereof. Such representations and warranties have been or
will be relied upon by the Credit Parties, regardless of any investigation made
by any Credit Party or on their behalf and notwithstanding that any Credit Party
may have had notice or knowledge of any Default or Event of Default at the time
of any Credit Extension, and shall continue in full force and effect as long as
any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or
any Letter of Credit shall remain outstanding. Further, the provisions of
Sections 3.01, 3.04, 3.05 and 9.04 shall survive and remain in full force and
effect regardless of the repayment of the Obligations, the expiration or
termination of the Letters of Credit and the Commitment 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 Lender may require such indemnities and collateral security as
they shall reasonably deem necessary or appropriate to protect the Credit
Parties against (x) loss on account of credits previously applied to the
Obligations that may subsequently be reversed or revoked, (y) any obligations
that may thereafter arise with respect to the Other Liabilities and (z) any
Obligations that may thereafter arise under Section 9.04.

 

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9.12           Severability. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

9.13           Governing Law; Jurisdiction; Etc.

 

(a)                GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE 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)                SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY
AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE LOAN PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.
EACH OF THE LOAN 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 IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE 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 IF REQUIRED TO REALIZE UPON ANY COLLATERAL.

 

(c)                WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE
LOAN PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)                SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02, EXCLUDING
SERVICE OF PROCESS BY E-MAIL. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW.

 

-95-

 

 

(e)                ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AND,
EXCEPT AS PROVIDED IN THE LAST SENTENCE OF SECTION 9.13(b), EACH CREDIT PARTY,
AGREES THAT ANY ACTION COMMENCED BY IT ASSERTING ANY CLAIM OR COUNTERCLAIM
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK
COUNTY OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

9.14           Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
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 OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

9.15           No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby, the Loan Parties each
acknowledge and agree that: (i) the credit facility provided for hereunder and
any related arranging or other services in connection therewith (including in
connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between the Loan
Parties, on the one hand, and the Credit Parties, on the other hand, and each of
the Loan Parties is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, each Credit Party is and has been acting solely as a principal
and is not the financial advisor, agent or fiduciary, for the Loan Parties or
any of their respective Affiliates, stockholders, creditors or employees or any
other Person; (iii) none of the Credit Parties has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Loan Parties with
respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification
hereof or of any other Loan Document (irrespective of whether any of the Credit
Parties has advised or is currently advising any Loan Party or any of its
Affiliates on other matters) and none of the Credit Parties has any obligation
to any Loan Party or any of its Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; (iv) the Credit Parties and their respective
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Loan Parties and their respective
Affiliates, and none of the Credit Parties has any obligation to disclose any of
such interests by virtue of any advisory, agency or fiduciary relationship; and
(v) the Credit Parties have not provided and will not provide any legal,
accounting, regulatory or tax advice with respect to any of the transactions
contemplated hereby (including any amendment, waiver or other modification
hereof or of any other Loan Document) and each of the Loan Parties has consulted
its own legal, accounting, regulatory and tax advisors to the extent it has
deemed appropriate. Each of the Loan Parties hereby waives and releases, to the
fullest extent permitted by law, any claims that it may have against each of the
Credit Parties with respect to any breach or alleged breach of agency or
fiduciary duty.

 

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9.16           USA PATRIOT Act Notice. The Lender hereby notifies the Loan
Parties that, pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies each Loan Party, which
information includes the name and address of each Loan Party and other
information that will allow the Lender, as applicable, to identify each Loan
Party in accordance with the Act. Each Loan Party is in compliance, in all
material respects, with the Act. No part of the proceeds of the Loans will be
used by the Loan Parties, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

9.17           Foreign Asset Control Regulations. Neither of the advance of the
Loans nor the use of the proceeds of any thereof will violate the Trading With
the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy
Act”) or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign
Assets Control Regulations”) or any enabling legislation or executive order
relating thereto (which for the avoidance of doubt shall include, but shall not
be limited to, (a) Executive Order 13224 of September 21, 2001 Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b)
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore,
none of the Borrowers or their Affiliates (a) is or will become a “blocked
person” as described in the Executive Order, the Trading With the Enemy Act or
the Foreign Assets Control Regulations or (b) engages or will engage in any
dealings or transactions, or be otherwise associated, with any such “blocked
person” or in any manner violative of any such order.

 

9.18           Time of the Essence. Time is of the essence of the Loan
Documents.

 

9.19           Publicity. Each Loan Party consents to the publication by the
Lender of advertising material, including any “tombstone” or comparable
advertising, on its website or in other marketing materials of Lender, relating
to the financing transactions contemplated by this Agreement using any Loan
Party’s name, product photographs, logo, trademark or other insignia. The Lender
shall provide a draft reasonably in advance of any advertising material to the
Lead Borrower for review and comment prior to the publication thereof. The
Lender reserves the right to provide to industry trade organizations and loan
syndication and pricing reporting services information necessary and customary
for inclusion in league table measurements. Notwithstanding the foregoing or
anything in the Loan Documents to the contrary, the Lender consents to the
disclosure by the Loan Parties of all information required to be disclosed in
accordance with applicable Securities Laws, as determined by the Lead Borrower
in good faith.

 

9.20           Additional Waivers.

 

(a)                The Obligations are the joint and several obligation of each
Loan Party. To the fullest extent permitted by Applicable Law, the obligations
of each Loan Party shall not be affected by (i) the failure of any Credit Party
to assert any claim or demand or to enforce or exercise any right or remedy
against any other Loan Party under the provisions of this Agreement, any other
Loan Document or otherwise, (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, this
Agreement or any other Loan Document, or (iii) the failure to perfect any
security interest in, or the release of, any of the Collateral or other security
held by or on behalf of the Lender or any other Credit Party.

 

-97-

 

 

(b)                The obligations of each Loan Party shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Obligations after the
termination of the Commitment), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of any of
the Obligations or otherwise. Without limiting the generality of the foregoing,
the obligations of each Loan Party hereunder shall not be discharged or impaired
or otherwise affected by the failure of the Lender or any other Credit Party to
assert any claim or demand or to enforce any remedy under this Agreement, any
other Loan Document or any other agreement, by any waiver or modification of any
provision of any thereof, any default, failure or delay, willful or otherwise,
in the performance of any of the Obligations, or by any other act or omission
that may or might in any manner or to any extent vary the risk of any Loan Party
or that would otherwise operate as a discharge of any Loan Party as a matter of
law or equity (other than the indefeasible payment in full in cash of all the
Obligations after the termination of the Commitment).

 

(c)                To the fullest extent permitted by applicable Law, each Loan
Party waives any defense based on or arising out of any defense of any other
Loan Party or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any other Loan
Party, other than the indefeasible payment in full in cash of all the
Obligations and the termination of the Commitment. The Lender and the other
Credit Parties may, at their election, foreclose on any security held by one or
more of them by one or more judicial or non-judicial sales, accept an assignment
of any such security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with any other Loan Party, or
exercise any other right or remedy available to them against any other Loan
Party, without affecting or impairing in any way the liability of any Loan Party
hereunder except to the extent that all the Obligations have been indefeasibly
paid in full in cash and the Commitment has been terminated. Each Loan Party
waives any defense arising out of any such election even though such election
operates, pursuant to applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Loan Party against
any other Loan Party, as the case may be, or any security.

 

(d)                Each Borrower is obligated to repay the Obligations as joint
and several obligors under this Agreement. Upon payment by any Loan Party of any
Obligations, all rights of such Loan Party against any other Loan Party arising
as a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all the
Obligations and the termination of the Commitment. In addition, any indebtedness
of any Loan Party now or hereafter held by any other Loan Party is hereby
subordinated in right of payment to the prior indefeasible payment in full of
the Obligations and no Loan Party will demand, sue for or otherwise attempt to
collect any such indebtedness; provided, that payment of such indebtedness on
ordinary business terms is permitted except after the occurrence and during the
continuance of an Event of Default. If any amount shall erroneously be paid to
any Loan Party on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of any Loan Party, such
amount shall be held in trust for the benefit of the Credit Parties and shall
forthwith be paid to the Lender to be credited against the payment of the
Obligations, whether matured or unmatured, in accordance with the terms of this
Agreement and the other Loan Documents. Subject to the foregoing, to the extent
that any Borrower shall, under this Agreement as a joint and several obligor,
repay any of the Obligations constituting Loans made to another Borrower
hereunder or other Obligations incurred directly and primarily by any other
Borrower (an “Accommodation Payment”), then the Borrower making such
Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other Borrowers in an amount, for each
of such other Borrowers, equal to a fraction of such Accommodation Payment, the
numerator of which fraction is such other Borrower’s Allocable Amount and the
denominator of which is the sum of the Allocable Amounts of all of the
Borrowers. As of any date of determination, the “Allocable Amount” of each
Borrower shall be equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder without (a)
rendering such Borrower “insolvent” within the meaning of Section 101 (31) of
the Bankruptcy Code, Section 2 of the Uniform Voidable Transactions Act
(“UVTA”), Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2
of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Borrower
with unreasonably small capital or assets, within the meaning of Section 548 of
the Bankruptcy Code, Section 4 of the UVTA, Section 4 of the UFTA, or Section 5
of the UFCA, or (c) leaving such Borrower unable to pay its debts as they become
due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the
UVTA, Section 4 of the UFTA, or Section 5 of the UFCA.

 

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9.21           No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

 

9.22           Attachments. The exhibits, schedules and annexes attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits and the provisions of
this Agreement, the provisions of this Agreement shall prevail.

 

9.23           Amendment and Restatement. Effective immediately upon the Closing
Date, the terms and conditions of the Existing Credit Agreement shall be amended
and restated as set forth herein and the Existing Credit Agreement shall be
superseded by this Agreement. On the Closing Date, the rights and obligations of
the parties evidenced by the Existing Credit Agreement shall be evidenced by
this Agreement and the other Loan Documents and the grant of security interests
and Liens in the Collateral by the Borrowers and the Guarantors under the
Existing Credit Agreement and the other “Loan Documents” (as defined in the
Existing Credit Agreement) shall continue under this Agreement and the other
Loan Documents, and shall not in any event be terminated, extinguished or
annulled but shall hereafter continue to be in full force and effect and be
governed by this Agreement and the other Loan Documents. All Obligations (as
defined in the Existing Credit Agreement) under the Existing Credit Agreement
and the other “Loan Documents” (as defined in the Existing Credit Agreement)
shall continue to be outstanding except as expressly modified by this Agreement
and shall be governed in all respects by this Agreement and the other Loan
Documents, it being agreed and understood that this Agreement does not
constitute a novation, satisfaction, payment or reborrowing of any Obligation
(as defined in the Existing Credit Agreement) under the Existing Credit
Agreement or any other “Loan Document” (as defined in the Existing Credit
Agreement), nor does it operate as a waiver of any right, power or remedy of the
Lender under any “Loan Document” (as defined in the Existing Credit Agreement).
All references to the Existing Credit Agreement in any Loan Document or other
document or instrument delivered in connection therewith shall be deemed to
refer to this Agreement and the provisions hereof.

 

9.24           Keepwell. Each Qualified ECP Guarantor hereby jointly and
severally absolutely, unconditionally and irrevocably undertakes to provide such
funds or other support as may be needed from time to time by each other Loan
Party to honor all of its obligations under the Facility Guaranty in respect of
Swap Obligations (provided, however, that each Qualified ECP Guarantor shall
only be liable under this Section 9.24 for the maximum amount of such liability
that can be hereby incurred without rendering its obligations under this Section
9.24, or otherwise under the Facility Guaranty, voidable under applicable Law
relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount). The obligations of each Qualified ECP Guarantor under this
Section shall remain in full force and effect until payment in full of the
Obligations. Each Qualified ECP Guarantor intends that this Section 9.24
constitutes, and this Section 9.24 shall be deemed to constitute, a “keepwell,
support, or other agreement” for the benefit of each other Loan Party for all
purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

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9.25           Acknowledgement Regarding Any Supported QFCs. To the extent that
the Loan Documents provide support, through a guarantee or otherwise, for Swap
Contracts or any other agreement or instrument that is a QFC (such support, “QFC
Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge
and agree as follows with respect to the resolution power of the Federal Deposit
Insurance Corporation under the Federal Deposit Insurance Act and Title II of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in
respect of such Supported QFC and QFC Credit Support (with the provisions below
applicable notwithstanding that the Loan Documents and any Supported QFC may in
fact be stated to be governed by the laws of the State of New York and/or of the
United States or any other state of the United States). In the event a Covered
Entity that is party to a Supported QFC (each, a “Covered Party”) becomes
subject to a proceeding under a U.S. Special Resolution Regime, the transfer of
such Supported QFC and the benefit of such QFC Credit Support (and any interest
and obligation in or under such Supported QFC and such QFC Credit Support, and
any rights in property securing such Supported QFC or such QFC Credit Support)
from such Covered Party will be effective to the same extent as the transfer
would be effective under the U.S. Special Resolution Regime if the Supported QFC
and such QFC Credit Support (and any such interest, obligation and rights in
property) were governed by the laws of the United States or a state of the
United States. In the event a Covered Party or a BHC Act Affiliate of a Covered
Party becomes subject to a proceeding under a U.S. Special Resolution Regime,
Default Rights under the Loan Documents that might otherwise apply to such
Supported QFC or any QFC Credit Support that may be exercised against such
Covered Party are permitted to be exercised to no greater extent than such
Default Rights could be exercised under the U.S. Special Resolution Regime if
the Supported QFC and the Loan Documents were governed by the laws of the United
States or a state of the United States. Without limitation of the foregoing, it
is understood and agreed that rights and remedies of the parties with respect to
a Defaulting Lender shall in no event affect the rights of any Covered Party
with respect to a Supported QFC or any QFC Credit Support.

 

As used in this Section 9.25, the following terms have the following meanings:

 

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

“Covered Entity” means any of the following:

 

(i)                 a “covered entity” as that term is defined in, and
interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(ii)               a “covered bank” as that term is defined in, and interpreted
in accordance with, 12 C.F.R. § 47.3(b); or

 

(iii)             a “covered FSI” as that term is defined in, and interpreted in
accordance with, 12 C.F.R. § 382.2(b).

 

“Default Right” has the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.

 

“QFC” has the meaning assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

[ Signature pages follow ]

 

-100-

 

 

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

 

  BORROWERS:

 

  CHRISTOPHER & BANKS CORPORATION

 

  By:     Name:     Title:         CHRISTOPHER & BANKS, INC.     By:     Name:
             Title:       CHRISTOPHER & BANKS COMPANY     By:     Name:    
Title:  

 

Signature Page to Credit Agreement

 

 

 

 

  LENDER AND L/C ISSUER:     WELLS FARGO BANK, NATIONAL ASSOCIATION       By:
          Name:   Title:

 

Signature Page to Credit Agreement

 

 

 

 

ANNEX II

Schedules to Credit Agreement

 

See attached.

 

 

 

 

SCHEDULE 1.01

 

Borrowers

 

Christopher & Banks Corporation

Christopher & Banks, Inc.

Christopher & Banks Company

 

 

 

 

SCHEDULE 1.03

 

Existing Letters of Credit

 

 

Letter of
Credit Number Account Party Beneficiary Stated
Amount Issue Date IS000009149U   CHRISTOPHER & BANKS, INC.   THE CIT
GROUP/COMMERCIAL SERVICES, INC.  $      2,000,000 08/10/2017 IS000031246U   
CHRISTOPHER & BANKS, INC. UNITED STATES FIRE INSURANCE COMPANY  $      1,155,000
02/09/2018 IS000037605U    CHRISTOPHER & BANKS, INC. 2400 XENIUM, LLC
 $      1,750,000 04/24/2018 IS000060088U    CHRISTOPHER & BANKS, INC.
ENTERPRISE FM TRUST, A DELAWARE STATUTORY TRUST  $            50,000 10/25/2018
IS000069082U    CHRISTOPHER & BANKS, INC. ROSENTHAL &amp; ROSENTHAL, INC.
 $      1,500,000 01/09/2019 IS000077024U    CHRISTOPHER & BANKS, INC. THE CIT
GROUP/COMMERCIAL SERVICES, INC.  $          500,000 03/20/2019 IS000078714U   
CHRISTOPHER & BANKS, INC. ATLANTIC SPECIALTY INSURANCE COMPANY  $      1,000,000
04/04/2019 IS000081320U    CHRISTOPHER & BANKS, INC. WELLS FARGO TRADE CAPITAL
SERVICES, INC.  $          250,000 04/30/2019 IS000081317U    CHRISTOPHER &
BANKS, INC. WELLS FARGO TRADE CAPITAL SERVICES INC.  $          100,000
04/30/2019 IS000082051U    CHRISTOPHER & BANKS, INC. WORLDPAY, LLC
 $          500,000 05/31/2019 IS000088899U    CHRISTOPHER & BANKS, INC.
ATLANTIC SPECIALTY INSURANCE COMPANY  $          225,000 07/02/2019

 

 

 

 

Letter of
Credit Number Account Party Beneficiary Stated Amount Issue Date IS000109236U   
CHRISTOPHER & BANKS, INC. INTERNATIONAL FIDELITY INSURANCE COMPANY
 $      1,650,000 12/04/2019 IS0502947U      CHRISTOPHER & BANKS, INC. ATLANTIC
SPECIALTY INSURANCE COMPANY  $      1,050,000 05/01/2017 NZS901428      
CHRISTOPHER & BANKS, INC. SENTRY INSURANCE MUTUAL CO  $          150,000
04/10/2006 NZS903311       CHRISTOPHER & BANKS, INC. FEDERAL INSURANCE CO
 $            51,812 02/26/2007

 

 

 

 

SCHEDULE 5.01

 

organizational information

 

Christopher & Banks Corporation

State of Incorporation: Delaware

Organization Type: Corporation

Organization Number: 2108619

Federal Employer Identification Number: 061195422

 

Christopher & Banks, Inc.

State of Incorporation: Minnesota

Organization Type: Corporation

Organization Number: 1B-321

Federal Employer Identification Number: 410851237

 

Christopher & Banks Company

State of Incorporation: Minnesota

Organization Type: Corporation

Organization Number: 11X-528

Federal Employer Identification Number: 412022506

 

 

 

 

SCHEDULE 5.05

 

supplement to interim financial statements
(MATERIAL INDEBTEDNESS)

 

None.

 

 

 

 

SCHEDULE 5.06

 

Litigation

 

On August 14, 2019, Mark Gottlieb, a Company stockholder, filed a purported
class action proceeding against Jonathan Duskin; Seth Johnson; Keri Jones; Kent
Kleeberger; William Sharpe, III; Joel Waller and Laura Weil (the “Named
Directors”), B. Riley FBR, Inc. and B. Riley Financial Inc., in the Court of
Chancery in the State of Delaware, on behalf of himself and all stockholders who
held shares as of December 20, 2018.  The lawsuit alleges that the Named
Directors breached their duty of loyalty in connection with the Company’s
rejection in December of 2018, of an unsolicited bid to acquire the Company. 
The lawsuit further alleges that the B. Riley firms aided and abetted the
asserted breach of the duty of loyalty by the Named Directors.  The Company
believes the Complaint is without merit.  The Named Directors and the Company on
their behalf, together with the B. Riley firms, intend to defend the lawsuit
vigorously. On September 18, 2019, the Named Defendants filed a motion to
dismiss the Plaintiff’s complaint for failure to state a claim upon which relief
can be granted. The motion has been briefed by Plaintiff and the Defendants and
oral argument on the motion was held before the Court of Chancery on February
13, 2020.

 

 

 

 

SCHEDULE 5.08(b)(1)

 

owned Real Estate

 

None.

 

 

 

 

SCHEDULE 5.08(b)(2)

 

leased Real estate

 

2400 Xenium Lane North, Plymouth, MN 55441

 

See attached “Store Locations” list, current as of February 19, 2020

  

 

 

 

SCHEDULE 5.09

 

environmental matters

 

None.

 

 

 

 

SCHEDULE 5.10

 

insurance

 

See attached schedule.

 

 

 

 

Christopher & Banks Insurance Policy Schedule
Effective 2/19/2020

 

Insurance Coverage Insurance Provider Policy Dates Broker Commercial Property
Affiliated FM 2/1/20 – 2/1/21 Willis Towers Watson Cargo Travelers Property
Casualty Company 2/1/20 – 2/1/21 Willis Towers Watson Commercial General
Liability

Crum & Forster – The North River Insurance Company

(United States Fire Insurance Company)

2/1/20 – 2/1/21 Willis Towers Watson Commercial Auto

Crum & Forster – The North River Insurance Company

(United States Fire Insurance Company)

2/1/20 – 2/1/21 Willis Towers Watson Workers’ Compensation, and General
Liability

Crum & Forster – The North River Insurance Company

(United States Fire Insurance Company)

2/1/20 – 2/1/21 Willis Towers Watson International Package Continental Insurance
Company (CNA) 2/1/20 – 2/1/21 Willis Towers Watson Commercial Umbrella

Crum & Forster – The North River Insurance Company

(United States Fire Insurance Company) – Primary - $10M

 

Liberty Insurance (Ohio Casualty Insurance Company) - $15M x $10M

 

2/1/20 – 2/1/21 Willis Towers Watson Excess Follow Form liability Continental
Insurance Company (CNA) - $25M x $25M 2/1/20 – 2/1/21 Willis Towers Watson
Surety – Custom’s Bond International Fidelity Insurance Company (IFIC) 12/8/19 –
12/7/20 Willis Towers Watson Cyber Insurance Coverage

Beazley - $10M

 

AIG - $10M x $10M

2/1/20 – 1/31/21 Willis Towers Watson Primary Directors & Officers Liability
National Union Fire Ins. Co of Pittsburgh (AIG) – Extension - $10M 2/1/20 –
2/1/21 Willis Towers Watson 1st Excess Directors & Officers Liability Endurance
Risk Solutions Assurance Co (Sompo) – Extension $10M x $10M 2/1/20 – 2/1/21
Willis Towers Watson

 

 

 

 

Insurance Coverage Insurance Provider Policy Dates Broker 2nd Excess Directors &
Officers Liability Continental Casualty Company (CNA) – Extension - $10M x $20M
2/1/20 – 2/1/21 Willis Towers Watson 3rd Excess Directors & Officers Liability
XL Specialty Insurance Company – Extension - $5M x $30M 2/1/20 – 2/1/21 Willis
Towers Watson 4th Excess Directors & Officers Liability Beazley Insurance
Company – Extension - $10M x $35M 2/1/20 – 2/1/21 Willis Towers Watson 5th
Excess Directors & Officers Liability National Union Fire Insurance Co of
Pittsburgh (AIG) – Extension - $10M x $45M 2/1/20 – 2/1/21 Willis Towers Watson
Primary Employment Practices Liability National Union Fire Ins. Co of Pittsburgh
(AIG) - $5M 2/1/20 – 2/1/21 Willis Towers Watson 1st Excess Employment Practices
Liability AXIS Insurance Company - $5M x $5M 2/1/20 – 2/1/21 Willis Towers
Watson Fiduciary Liability National Union Fire Ins. Co of Pittsburgh 2/1/20 –
2/1/21 Willis Towers Watson Crime Coverage AXIS 2/28/20 – 2/28/21 Willis Towers
Watson

 

 

 

 

SCHEDULE 5.13

 

subsidiaries; other equity investments

 

(a)       Ownership of Christopher & Banks, Inc. and Christopher & Banks
Company:

 

Owner Issuer Type of Equity Interests # of Equity Interests Certificate Number
Percentage Ownership Christopher & Banks Corporation Christopher & Banks, Inc.
Common Stock 1,000 Shares 3 100% Christopher & Banks, Inc. Christopher & Banks
Company Common Stock 1,000 Shares 1 100%

 

 

(b)       None.

 

 

 

 

SCHEDULE 5.17

 

intellectual property matters

 

None.

 

 

 

 

SCHEDULE 5.18

 

Labor matters

 

None.

 

 

 

 

SCHEDULE 5.21(a)

 

DDAs

 

Information is on file with Wells.

 

 

 

 

SCHEDULE 5.21(b)

 

CRedit card arrangements

 

Information is on file with Wells.

 

 

 

 

 

SCHEDULE 5.24

 

material contracts

 

[***]

 

 

 

 

SCHEDULE 6.02

 

Financial and Collateral Reporting

 

Concurrently with the delivery of Borrowing Base Certificates to the Lender in
accordance with Section 6.02(c) of the Credit Agreement, the Loan Parties shall
provide to Lender:

 

1.                   a consigned inventory report (in form and detail as the
Lender from time to time may specify), which report shall include (i) the
aggregate cost of goods which are consigned to a Loan Party as of the close of
business as of the last day of the immediately preceding Fiscal Month and (ii)
the aggregate amount of payables owed to consignors as of the close of business
as of the last day of the immediately preceding Fiscal Month; provided, that at
any time that an Accelerated Borrowing Base Delivery Event has occurred and is
continuing, at the election of the Lender, such consigned inventory report shall
specify the required information as of the close of business on the immediately
preceding Saturday; and

 

2.                   a PMSI Inventory report (in form and detail as the Lender
from time to time may specify), which report shall include (i) the aggregate
cost of PMSI Inventory which the Loan Party owns as of the close of business as
of the last day of the immediately preceding Fiscal Month and (ii) the aggregate
amount of payables owed to the creditors of any PMSI Inventory Indebtedness as
of the close of business as of the last day of the immediately preceding Fiscal
Month; provided, that at any time that an Accelerated Borrowing Base Delivery
Event has occurred and is continuing, at the election of the Lender, such
consigned PMSI Inventory report shall specify the required information as of the
close of business on the immediately preceding Saturday.

 

 

 

 

SCHEDULE 7.01

 

EXISTING LIENS

 

Christopher & Banks Corporation Lienholder Amount of Obligation Secured
Property/Asset Secured N/A    

 

Christopher & Banks, Inc. Lienholder Amount of Obligation Secured Property/Asset
Secured N/A    

 

Christopher & Banks Company Lienholder Amount of Obligation Secured
Property/Asset Secured N/A    

 

 

 

 

SCHEDULE 7.02

 

InvestmentS

 

None.

 

INVESTMENT policy

 

See attached.

 

 

 

 

CHRISTOPHER & BANKS CORPORATION

AND SUBSIDIARIES

 

INVESTMENT POLICY

 

Approved by the Audit Committee on December 3, 2014 and supersedes all prior
Investment Policies and Addendums thereto.

 

Contents

Statement of Purpose   23  Policy Review & Approval   23  Investment Objectives 
 23  Investment Committee   23  Investment Advisers   23  Legal & Regulatory
Compliance   24  Investment Guidelines   24 

 

 

 

 

Statement of Purpose

 

The purpose of this Investment Policy (the “Policy”) is to establish guidelines
for the investment of the general funds of Christopher & Banks Corporation and
its subsidiaries (“the Company”).

 

Specifically, the Policy:

 

1.Identifies investment objectives;

2.Specifies investment authority and responsibility; and

3.Establishes investment portfolio guidelines.

 

The Company believes a sound Investment Policy is essential to developing
strategies that ensure the investment objectives of the Company are achieved.

 

Policy Review & Approval

 

Senior management, with the assistance of its investment advisers, if any, shall
annually review the Policy with the Audit Committee of the Company’s Board of
Directors. Changes in this Policy must be approved by the Audit Committee of the
Board of Directors, and following any such revisions or approvals, the updated
Policy will be provided to the other members of the Company’s Board of
Directors.

 

Investment Objectives

 

The Company’s primary investment objectives are, in order of importance, as
follows:

 

1.Safety of principal;

2.Maintenance of adequate liquidity; and

3.Maximization of after-tax, after-fees return on investment.

 

Investment Committee

 

There shall be an Investment Committee consisting of (i) the Chief Executive
Officer (“CEO”), (ii) the Chief Financial Officer (“CFO”), (iii) the Vice
President, Controller (“Controller”) and (iv) the Vice President, Tax and
Treasury (“VP Tax”) (collectively, the “Committee”). The Committee shall meet
periodically and at any meeting at which the CEO and two (2) or more other
members are present the Committee shall have the authority to retain investment
advisers, open securities accounts, and transfer cash or securities between
sub-portfolios, securities custodial accounts or the Company’s cash
concentration account. Any one member of the Committee may transfer cash between
the Company’s cash concentration account and its money market account or other
operating account utilized for meeting the Company’s immediate liquidity needs,
consistent with the Company’s internal control procedures. The Committee also
may take one or more of the above actions by unanimous written consent.

 

Investment Advisers

 

The Company may choose to hire the services of one or more investment management
firms and give such parties discretionary authority over individual security
selection and transaction execution, provided that each such firm and its
affiliates may not have more than seventy-five percent (75%) of the Company’s
investable assets under its management at any one time and that they agree in
writing to:

 

1.Manage the Company’s assets in accordance with all applicable laws and
regulations and this Policy;

 

 

 

 

2.Promptly inform the Company of material events related to the credit markets
as a whole as well as those matters effecting the safety or liquidity of any of
the Company’s specific investments;

3.Contact a member of the Committee promptly upon the occurrence of any of the
following events:

(i)a security held in the portfolio is placed on “Negative Outlook” or
“CreditWatch with Negative Implications”;

(ii)a security held in the portfolio is downgraded and note whether or not it
causes the credit quality of that security to fall below the minimum standards
stated in this Policy; or

(iii)the value of the investments under its management decreases by the lesser
of $500,000 or five percent (5%).*

4.Conduct the purchase and sale of securities designed to receive the best price
and execution, provided that, in any individually managed portfolio, no
securities shall be sold that result in a loss of $10,000 or more without the
prior written approval of the CEO and either the CFO or VP Tax;

5.Provide monthly written reports within 10 days following the last trading day
of the month describing portfolio holdings, transactions, and performance. Such
reports must be made available to the Company via the manager’s or custodian’s
website or in paper copy;

6.In the event of a change in the Company’s tax status, the Company will inform
the managers of the portfolios effected who will then be responsible for
factoring such change into the portfolio’s reported after-tax yield;

7.Promptly inform the Company of matters pertinent to the placement of its
assets with the investment management firm such as significant changes in
ownership and relevant personnel changes;

8.Meet in person with Company management at least quarterly or more often if
deemed necessary by the Company;

9.Attend the Company’s Audit Committee meetings if requested by management or
the Committee;

10.At least annually, review and recommend changes to this Investment Policy as
appropriate; and

11.Limit fund transfers to and from the Company’s securities custodial accounts
to its designated cash concentration account.

 

*Note: Promptly following any notice under Section 3(iii) above, a member of the
Investment Committee shall promptly notify the members of the Audit Committee.
In addition, a member of the Investment Committee shall also promptly notify the
members of the Audit Committee if the value in the aggregate of the investable
assets covered by this Policy decreases by the lesser of $500,000 or five
percent (5%).

 

Legal & Regulatory Compliance

 

The management and investment of Company funds is to be done in full compliance
with all applicable laws and regulations and shall be reviewed and modified as
necessary to comply with changes in laws and regulations.

 

Investment Guidelines

 

The Company will maintain adequate cash to meet its daily, weekly, and monthly
liquidity needs in bank accounts or money market funds.

 

Remaining corporate funds shall be invested only in Eligible Investments and
further classified into one of three sub-portfolios – Enhanced Cash, Short
Duration and Intermediate Duration – each as further described in Tables I and
II below. The amount of funds allocated to each sub-portfolio may change over
time as directed by the Company.

 

 

 

 

 

Table I. Eligible Investments Instrument (Abbreviation)

Minimum Credit Rating (Note 1)

(S&P/Moody’s/Fitch)

Short Term Long Term Money Market Mutual Funds MMF N/A Other Mutual Funds MF
Notes 2, 4 Repurchase Agreements Repo Note 3 Derivatives -- Note 4 U.S.
Treasuries UST N/A Federal Agencies USA N/A FDIC Insured Certificates of Deposit
CD N/A N/A Commercial Paper – Taxable CCP A-1/P-1/F-1 N/A Commercial Paper – Tax
Exempt MCP A-1/MIG 1 or VMIG 1/F-1 N/A Sovereigns (dollars only) SOV N/A
AA-/Aa3/AA- Corporate Bonds Corp N/A A-/A3/A- Municipal Bonds Muni N/A A-/A3/A-

1.     Investments will be considered to have the highest rating if there is
more than rating agency rating the investment.

2.     An open-end mutual fund may be an Eligible Investment provided that its
stated investment objectives are consistent with the Company’s investment
objectives and portfolio guidelines as described herein and it complies with all
applicable requirements of the Investment Company Act of 1940, as amended,
including the provision of a daily liquidity feature at net asset value.

3.     Repurchase agreements must be collateralized with U.S. Treasury or Agency
securities.

4.     Prohibited Investments: Direct investment in derivatives is prohibited;
however a qualifying Mutual Fund as defined in Note 2 may use interest rate
swaps, futures, or options to hedge against changes in interest rates and lock
in yields.

 

 

 

 

Table II. Portfolio Guidelines

Min Wtd Avg Portfolio Quality

(Notes 1 & 2)

Investment Sub-Portfolio Sub-Portfolio Yield Benchmarks Max Duration
Sub-Portfolio Concentration Limits Instrument

Per Issue

(Note 3)

Sub-Portfolio Max Name Max Maturity

AA-/

Aa3/AA-

Enhanced Cash Note 4 N/A MMFs N/A none Up to 100% USTs 1 year Up to 100% USAs 1
year Up to 75% Repos 7 days Up to 50% CDs 1 year 5% or less of sub-portfolio Up
to 25% CCP or MCP 1 year Up to 75% Corps 1 year Up to 25% Munis 1 year Up to
100%

Short Duration

(~1-3 yr maturities)

BAML 1-3 Year Treasury Index

or

Barclays Capital 1 Year Municipal Bond Index

2 years or less USTs N/A none Up to 100% USAs Up to 75% MFs Up to 100% SOVs 5%
or less of sub-portfolio Up to 25% MRS Up to 25% ABS Up to 25% Corps Up to 25%
Munis Up to 100%

Intermediate Duration

(~4-7 yr maturities)

BAML 1-3 Year Treasury Index

or

Barclays Capital 5 Year Municipal Bond Index

4 years or less USTs N/A none Up to 100% USAs Up to 75% MFs Up to 100% SOVs 5%
or less of sub-portfolio Up to 25% MRS Up to 25% ABS Up to 25% Corps Up to 25%
Munis Up to 100%

1.    Initial Quality: At the time of purchase, no more than 10% of the
securities in a sub-portfolio may be rated A-/A3/A- or less. Also at the time of
purchase, no more than 5% of the securities in a sub-portfolio may be unrated.

2.    Downgrades: In the event a security in an individually managed
sub-portfolio is downgraded subsequent to purchase and causes a violation of
minimum weighted average portfolio quality, the downgraded security may be held
by the manager only after obtaining the Company’s written approval. If such
approval is not obtained, the security must be sold as soon as practical but in
all instances within 30 days of the downgrade.

3.     Per Issue Limit: The “per issue limit” of 5% or less is determined at
time of purchase, for example, if $50 million is allocated to a given
sub-portfolio, then the maximum investment in any one municipal or corporate
issue would be $2.5 million.

4.    Yield Benchmarks: Acceptable yield benchmarks for the Enhanced Cash
sub-portfolio include the Lipper Money Market Fund Index, the Lipper Short US
Treasury Index, the Barclays 1-3 Month Treasury Index, the Bank of America
Merrill Lynch (“BAML”) 1-3 Month Treasury Index, and the BAML 6 Month Treasury
Index.

 

 

 

 

SCHEDULE 7.03

 

Existing indebtedness

 

None.

 

 

 

 

SCHEDULE 7.09

 

affiliate Transactions

 

None.

 

 

 

 

Schedule 9.02

 

Lender’s Office; Certain Addresses for Notices

 

Borrowers

 

Christopher & Banks Corporation

2400 Xenium Lane North

Plymouth, MN 55441

Attention:      General Counsel

Telephone:    (763) 551-2807

Facsimile:       (763) 551-5199

E-mail:             lkomarek@christopherandbanks.com

 

 

with a copy to:

 

Dorsey & Whitney LLP

50 South Sixth Street, Suite 1500

Minneapolis, MN 55402

Attention: Thomas O. Kelly, III

Telephone:    (612) 492-6029

Facsimile:       (612) 340-2868

E-mail:             kelly.tom@dorsey.com

 

Website: www.christopherandbanks.com

 

Lender and L/C Issuer

 

Wells Fargo Bank, National Association

125 High Street, 11th Floor

Boston, Massachusetts 02110

Attention:      Michael Watson

Telephone:    (617) 854-7276

Facsimile:       (866) 210-8898

E-mail:             michael.s.watson@wellsfargo.com

 

with a copy to:

 

Choate, Hall & Stewart LLP

Two International Place

Boston, Massachusetts 02110

Attention:      Kevin J. Simard

Telephone:    (617) 248-4086

Facsimile:       (617) 502-4086

E-mail:             ksimard@choate.com

 

 

 

 

ANNEX III

Exhibits to Credit Agreement

 

See attached.

 

 

 

 

EXHIBIT B

 

FORM OF NOTE

 

NOTE

 

$                                          ,        

 

 

FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and,
collectively, the “Borrowers”), jointly and severally promise to pay to the
order of Wells Fargo Bank, National Association (hereinafter, with any
subsequent holders, the “Lender”), 125 High Street, 11th Floor, Boston, MA
02110, the principal sum of ___________________ ($______________), or, if less,
the aggregate unpaid principal balance of Loans made by the Lender to or for the
account of any Borrower pursuant to the Second Amended and Restated Credit
Agreement dated as of July 12, 2012 (as amended, modified, supplemented or
restated and in effect from time to time, the “Credit Agreement”) by and among
the Borrowers and the Lender.

 

This is a “Note” to which reference is made in the Credit Agreement and is
subject to all terms and provisions thereof. The principal of, and interest on,
this Note shall be payable at the times, in the manner, and in the amounts as
provided in the Credit Agreement and shall be subject to prepayment and
acceleration as provided therein. Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

 

The Lender’s books and records concerning the Loans, the accrual of interest
thereon, and the repayment of such Loans, shall be prima facie evidence of the
indebtedness to the Lender hereunder.

 

No delay or omission by the Lender in exercising or enforcing any of such
Lender’s powers, rights, privileges, remedies, or discretions hereunder shall
operate as a waiver thereof on that occasion nor on any other occasion. No
waiver of any Event of Default shall operate as a waiver of any other Event of
Default, nor as a continuing waiver of any such Event of Default.

 

Each Borrower, and each endorser and guarantor of this Note, waives presentment,
demand, notice, and protest, and also waives any delay on the part of the holder
hereof. Each Borrower assents to any extension or other indulgence (including,
without limitation, the release or substitution of Collateral) permitted by the
Lender with respect to this Note and/or any Collateral or any extension or other
indulgence with respect to any other liability or any collateral given to secure
any other liability of any Borrower or any other Person obligated on account of
this Note.

 

This Note shall be binding upon each Borrower, and each endorser and guarantor
hereof, and upon their respective successors, assigns, and representatives, and
shall inure to the benefit of the Lender and its successors, endorsees, and
assigns.

 

The liabilities of each Borrower, and of any endorser or guarantor of this Note,
are joint and several, provided, however, the release by the Lender of any one
or more such Persons shall not release any other Person obligated on account of
this Note. Each reference in this Note to any Borrower, any endorser, and any
guarantor, is to such Person individually; each reference to the Borrowers, the
endorsers or the guarantors is to all such Persons jointly. No Person obligated
on account of this Note may seek contribution from any other Person also
obligated unless and until all of the Obligations have been paid in full in
cash.

 

 

 

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES
THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

Each of the Borrowers iRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
BORROWERS IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE
COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT. EACH OF THE BORROWERS 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
NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS NOTE OR ANY
OTHER LOAN DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS
OF ANY JURISDICTION.

 

EACH OF THE Borrowers IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE.
EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

Each Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Lender, in the establishment and
maintenance of their respective relationship with the Borrowers contemplated by
this Note, are each relying thereon. EACH BORROWER, EACH GUARANTOR, ENDORSER AND
SURETY, AND THE LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY 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 NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THE
CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS HEREIN.

 

2

 

 

[This Note amends and restates the Revolving Note, dated as of August 3, 2018,
made by the Borrowers in favor of the Lender in the stated principal amount of
$50,000,000.00 (the “Revolving Note”) and is not given in payment or
satisfaction of the Revolving Note and is a not a novation.]

 

[Signature Page to Follow]

 

3

 

 

IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed as
of the date set forth above.

 

  BORROWERS:       CHRISTOPHER & BANKS CORPORATION           By:   Name:        
  CHRISTOPHER & BANKS, INC.           By:   Name:   Title:           CHRISTOPHER
& BANKS COMPANY           By:                      Name:   Title:

 

[Signature Page to Note]

 

 

 

 

Christopher Banks   As of Date:       Borrowing Base Certificate   Certificate #
0    

 

Credit Card Receivables

Revolving Borrowing
Base Credit Card Receivables as of:   1/0/1900   $ - Less: Credit Card Fees    
  $ - Less:  Amounts over 5 days       - Less: Dilution         Eligible Credit
Card Receivables       $ - Advance Rate       90.0% Total Credit Card
Receivables Availability $ -     RETAIL INVENTORY At Cost Christopher & Banks
Inventory       $ - C.J. Banks Inventory       $ - Outlet Sotres Inventory      
$ - Ecommerce Inventory at 3rd Party DC       $ - MPW Stores Inventory       $ -
Ending Inventory as of:   1/0/1900   - Less Ineligibles:         Shrink Reserve
      $ - Aged Inventory in excess of 180 days       $ - Other (Shortage,
samples, returns)       $ - Total Ineligibles       $ - Eligible Inventory      
$ -     NOLV     Advance Rate 90.0% 0.0%   0.00% Total Inventory Availability $
- Ending In-Transit Inventory as of:   1/0/1900   $ - Less Ineligibles;        
Reserve for Domestic Freight Costs on IT Inventory       $ - Reserve for Import
Freight/Duty/Landed Costs on IT Inventory       $ - Total Ineligibles       $ -
Eligible In-Transit Inventory       $ -     NOLV     Advance Rate 90.0% 0.0%  
0.00% Total In-Transit Inventory Availability (Capped at $7,500,000) $ -    
Gross Borrowing Base Availability $ -

 

Less: Availability Reserves

 

 

1/0/1900

    Gift Certificates/Cards (50%)       $ - Customer Deposits/Layaway (100%)    
  $ - Rent Reserve (PA, WA, and VA) (estimated one months  rent)     $ - Other  
    - Total Availability Reserves $ -     Total Borrowing Base $ -     Total
Capped Borrowing Base ($50,000,000) $ -

 

Less: Revolving Loan

     

 

-

Less: Standby Letters of Credit         Less: Commercial Letters of Credit      
- Availability $ -     Financial Covenant (Greater of 10% of the Revolving Loan
Cap and  $3,000,000) $ 3,000,000     Net Availability After Covenant $
(3,000,000)    

 

 

The undersigned, a Responsible Officer of Christopher & Banks Corporation (the
“Lead Borrower”), represents and warrants that (A) the information set forth
above and the supporting documentation and information delivered herewith (i) is
true and correct in all respects, (ii) has been prepared in accordance with the
requirements of that certain Credit Agreement dated July 12, 2012 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; capitalized terms used in this certification without definition
shall have the meanings ascribed to such terms in the Credit Agreement), by,
among others, (1) the Lead Borrower, as agent for itself and the other Borrowers
party thereto, (2) the Borrowers from time to time party thereto, and (3) Wells
Fargo Bank, National Association, as Lender and as L/C Issuer, and (B) all
accounts payable more than thirty (30) days past due and all Taxes (other than
accounts payable and Taxes being contested in good faith not to exceed
$1,000,000 in the aggregate at any time) are being paid in the ordinary course
of the Borrowers’ business consistent with practices in effect on the Closing
Date and (C) no Default or Event of Default has occurred and is continuing.

 

 

Responsible Officer

  _____________