Exhibit 10.2

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and among

GREGG APPLIANCES, INC.

as Borrower

HHG DISTRIBUTING, LLC

as Guarantor

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent and Collateral Agent

WELLS FARGO CAPITAL FINANCE, LLC and J.P. MORGAN SECURITIES LLC

as Joint Lead Arrangers and Joint Bookrunners

J.P. MORGAN CHASE BANK, N.A.

as Syndication Agent

KEYBANK NATIONAL ASSOCIATION, REGIONS BANK and SUNTRUST BANK

as Co-Documentation Agents

and

THE LENDERS FROM TIME TO TIME PARTY HERETO

as Lenders

Dated: March 29, 2011

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TABLE OF CONTENTS

 

          Page  

SECTION 1. DEFINITIONS

     2   

SECTION 2. CREDIT FACILITIES

     34   

2.1

  

Revolving Loans

     34   

2.2

  

Letter of Credit Accommodations

     34   

2.3

  

Increase in Maximum Credit

     38   

2.4

  

Commitments

     40   

2.5

  

Bank Products

     40   

2.6

  

Swing Line Loans.

     40   

SECTION 3. INTEREST AND FEES

     43   

3.1

  

Interest

     43   

3.2

  

Fees

     44   

3.3

  

Changes in Laws and Increased Costs of Loans

     45   

SECTION 4. CONDITIONS PRECEDENT

     47   

4.1

  

Conditions Precedent to Initial Loans and Letter of Credit Accommodations

     47   

4.2

  

Conditions Precedent to All Loans and Letter of Credit Accommodations

     49   

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

     49   

5.1

  

Grant of Security Interest

     49   

5.2

  

Perfection of Security Interests

     51   

5.3

  

Special Provisions Regarding Collateral

     55   

SECTION 6. COLLECTION AND ADMINISTRATION

     55   

6.1

  

Borrower’s Loan Accounts

     55   

6.2

  

Statements

     55   

6.3

  

Collection of Accounts

     56   

6.4

  

Payments

     57   

6.5

  

Authorization to Make Loans

     59   

6.6

  

Use of Proceeds

     59   

6.7

  

Pro Rata Treatment

     59   

6.8

  

Sharing of Payments, Etc.

     59   

6.9

  

Settlement Procedures

     61   

6.10

  

Obligations Several; Independent Nature of Lenders’ Rights

     63   

6.11

  

Taxes

     63   

 

(i)

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SECTION 7. COLLATERAL REPORTING AND COVENANTS

     65   

7.1

  

Collateral Reporting

     65   

7.2

  

Accounts Covenants

     68   

7.3

  

Inventory Covenants

     69   

7.4

  

Equipment and Real Property Covenants

     70   

7.5

  

Power of Attorney

     70   

7.6

  

Right to Cure

     71   

7.7

  

Access to Premises

     72   

SECTION 8. REPRESENTATIONS AND WARRANTIES

     72   

8.1

  

Corporate Existence, Power and Authority

     72   

8.2

  

Name; State of Organization; Chief Executive Office; Collateral Locations

     73   

8.3

  

Financial Statements; No Material Adverse Change

     74   

8.4

  

Priority of Liens; Title to Properties

     74   

8.5

  

Tax Returns

     74   

8.6

  

Litigation

     74   

8.7

  

Compliance with Other Agreements and Applicable Laws

     75   

8.8

  

Environmental Compliance

     75   

8.9

  

Employee Benefits

     76   

8.10

  

Bank Accounts

     77   

8.11

  

Intellectual Property

     77   

8.12

  

Subsidiaries; Affiliates; Capitalization; Solvency

     77   

8.13

  

Labor Disputes

     78   

8.14

  

Restrictions on Subsidiaries

     78   

8.15

  

Material Contracts

     79   

8.16

  

Credit Card Agreements

     79   

8.17

  

Accuracy and Completeness of Information

     79   

8.18

  

Survival of Warranties; Cumulative

     80   

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

     80   

9.1

  

Maintenance of Existence

     80   

9.2

  

New Collateral Locations

     80   

9.3

  

Compliance with Laws, Regulations, Etc.

     81   

9.4

  

Payment of Taxes and Claims

     82   

9.5

  

Insurance

     82   

9.6

  

Financial Statements and Other Information

     84   

9.7

  

Sale of Assets, Consolidation, Merger, Dissolution, Etc.

     86   

9.8

  

Encumbrances

     88   

9.9

  

Indebtedness

     91   

9.10

  

Loans, Investments, Etc.

     93   

9.11

  

Dividends and Redemptions

     99   

9.12

  

Transactions with Affiliates

     100   

9.13

  

Credit Card Agreements

     100   

9.14

  

Compliance with ERISA

     101   

 

(ii)

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9.15

  

End of Fiscal Years; Fiscal Quarters

     101   

9.16

  

Change in Business

     101   

9.17

  

Limitation of Restrictions Affecting Subsidiaries

     102   

9.18

  

Fixed Charge Coverage Ratio

     102   

9.19

  

License Agreements

     102   

9.20

  

After Acquired Real Property

     103   

9.21

  

Costs and Expenses

     104   

9.22

  

Consignment Agreements

     104   

9.23

  

Floor Plan Financing Arrangements

     105   

9.24

  

Further Assurances

     106   

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

     106   

10.1

  

Events of Default

     106   

10.2

  

Remedies

     108   

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

     112   

11.1

  

Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver

     112   

11.2

  

Waiver of Notices

     113   

11.3

  

Amendments and Waivers

     113   

11.4

  

Waiver of Counterclaims

     116   

11.5

  

Indemnification

     116   

SECTION 12. THE AGENT

     116   

12.1

  

Appointment, Powers and Immunities

     116   

12.2

  

Reliance by Agent

     117   

12.3

  

Events of Default

     117   

12.4

  

Wells Fargo in its Individual Capacity

     118   

12.5

  

Indemnification

     118   

12.6

  

Non-Reliance on Agent and Other Lenders

     119   

12.7

  

Failure to Act

     119   

12.8

  

Additional Loans

     119   

12.9

  

Concerning the Collateral and the Related Financing Agreements

     120   

12.10

  

Field Audit, Examination Reports and other Information; Disclaimer by Lenders

     120   

12.11

  

Collateral Matters

     120   

12.12

  

Agency for Perfection

     122   

12.13

  

Successor Agent

     123   

12.14

  

Co-Agents

     123   

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

     123   

13.1

  

Term

     123   

13.2

  

Interpretative Provisions

     124   

13.3

  

Notices

     126   

 

(iii)

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13.4

  

Partial Invalidity

     127   

13.5

  

Confidentiality

     127   

13.6

  

Successors

     128   

13.7

  

Assignments; Participations

     129   

13.8

  

Entire Agreement

     131   

13.9

  

USA Patriot Act

     131   

13.10

  

Foreign Asset Control Regulations

     131   

13.11

  

Counterparts, Etc.

     132   

SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT

     132   

14.1

  

Existing Obligations

     132   

14.2

  

Acknowledgment of Security Interests

     132   

14.3

  

Existing Financing Agreements

     132   

14.4

  

Restatement

     133   

14.5

  

Times of Day

     126   

 

(iv)

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INDEX TO

EXHIBITS AND SCHEDULES

 

Exhibit A

   Form of Assignment and Acceptance

Exhibit B

   Information Certificate

Exhibit C

   Form of Compliance Certificate

Exhibit D

   Borrowing Base Certificate

Exhibit E

   Credit Card Notification

Schedule 1.28

   Commitments

Schedule 1.57

   Existing Letters of Credit

Schedule 1.65

   Frigidaire Consignment Collateral

Schedule 1.105

   Permitted Holders

Schedule 8.16

   Credit Card Agreements

Schedule 9.5

   Leased Locations

Schedule 9.12

   Affiliate Transactions

 

(v)

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Amended and Restated Loan and Security Agreement, dated March 29, 2011 (the
“Agreement”), is entered into by and among Gregg Appliances, Inc., an Indiana
corporation (“Borrower”), HHG Distributing, LLC, an Indiana limited liability
company (“HHG”), the parties hereto from time to time as lenders, whether by
execution of this Agreement or an Assignment and Acceptance (each individually,
a “Lender” and collectively, “Lenders”), Wells Fargo Bank, National Association
(as a successor to Wachovia Capital Finance Corporation (Central)), in its
capacity as administrative agent and collateral agent for Lenders (in such
capacity “Agent”), and for itself as a Lender (including a Swing Line Lender)
and an L/C Issuer, Wells Fargo Capital Finance, LLC and J.P. Morgan Securities
LLC, as joint lead arrangers and joint bookrunners, J.P. Morgan Chase Bank,
N.A., as syndication agent, and KeyBank National Association, Regions Bank and
SunTrust Bank, as co-documentation agents.

W I T N E S S E T H:

WHEREAS, Agent, lenders party thereto, Borrower and HHG have entered into
financing arrangements pursuant to which such lenders have made loans and
advances and provided other financial accommodations to Borrower as set forth in
the Loan and Security Agreement, dated February 3, 2005, by and among Agent,
such lenders, Borrower and HHG, as amended by Amendment No. 1 to Loan and
Security Agreement, dated as of February 13, 2006, and Amendment No. 2 to Loan
and Security Agreement, dated as of January 17, 2007 (the “Original Loan
Agreement,” and together with all agreements, documents and instruments at any
time executed and/or delivered in connection therewith or related thereto, as
from time to time amended, modified, supplemented, extended, renewed, restated
or replaced, collectively, the “Original Financing Agreements”);

WHEREAS, Agent, Existing Lenders, Borrower and HHG restated the Original Loan
Agreement by entering into financing arrangements pursuant to which Existing
Lenders have made loans and advances and provided other financial accommodations
to Borrower as set forth in the Amended and Restated Loan and Security
Agreement, dated July 25, 2007, by and among Agent, Existing Lenders, Borrower
and HHG, as amended by Amendment No. 1 and Joinder to Amended and Restated Loan
and Security Agreement, dated as of September 15, 2009 (the “Existing Loan
Agreement,” and together with all agreements, documents and instruments at any
time executed and/or delivered in connection therewith or related thereto, as
from time to time amended, modified, supplemented, extended, renewed, restated
or replaced, collectively, the “Existing Financing Agreements”);

WHEREAS, Borrower has requested that Agent and Lenders amend and restate the
Existing Loan Agreement and continue the existing financing arrangements with
Borrower pursuant to which Lenders may make loans and provide other financial
accommodations to Borrower; and

WHEREAS, Agent and Lenders have agreed to amend and restate the Existing Loan
Agreement and each Lender (severally and not jointly) has agreed to make such
loans and provide such other financial accommodations to Borrower on a pro rata
basis according to its Commitment (as defined below) on the terms and conditions
set forth herein and Agent has

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agreed to continue to act as agent for Lenders on the terms and conditions set
forth herein and the other Financing Agreements;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

SECTION 1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective
meanings given to them below:

1.1 “Accounts” shall mean, as to Borrower and each Guarantor, all present and
future rights of Borrower and each Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, for services rendered or
to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.

1.2 “ACH Transactions” shall mean the automatic clearing house transfer of funds
by Agent, any Lender or any of their respective Affiliates for the account of
Borrower or its Subsidiaries, in each case pursuant to agreements entered into
with Borrower or any of its Subsidiaries.

1.3 “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period
for any Eurodollar Rate Loan comprising part of the same borrowing (including
conversions, extensions and renewals), the rate per annum determined by dividing
(a) the London Interbank Offered Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Eurodollar Reserve Percentage.
The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.

1.4 “Affiliate” shall mean, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds ten (10%) percent or more of any class of Voting Stock of such Person
or other equity interests in such Person, (b) any Person of which such Person
beneficially owns or holds ten (10%) percent or more of any class of Voting
Stock or in which such Person beneficially owns or holds ten (10%) percent or
more of the equity interests, and (c) any director or executive officer of such
Person. For the purposes of this definition, the term “control” (including with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.

1.5 “Agent” shall mean Wells Fargo, in its capacity as agent on behalf of
Lenders pursuant to the terms hereof and any replacement or successor agent
hereunder.

 

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1.6 “Agent Payment Account” shall mean account no. 4124923723 of Agent at Wells
Fargo, or such other account of Agent as Agent may from time to time designate
to Borrower as the Agent Payment Account for purposes of this Agreement and the
other Financing Agreements.

1.7 “Applicable Margin” shall mean, at any time during any calendar quarter,
(a) as to Base Rate Loans, the applicable percentage (on a per annum basis) set
forth below for Base Rate Loans, and (b) as to Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below for Eurodollar Rate
Loans, in each case, if as of the end of the immediately preceding calendar
quarter the Quarterly Average Excess Availability for such calendar quarter was
at or within the amounts indicated for such percentage:

 

          Applicable Margin  

Tier

  

Quarterly Average Excess Availability

   Base Rate
Loans     Eurodollar
Rate Loans  

Tier I

   Greater than $150,000,000      1.00 %      2.00 % 

Tier II

   Greater than or equal to $75,000,000 but less than or equal to $150,000,000
     1.25 %      2.25 % 

Tier III

   Less than $75,000,000      1.50 %      2.50 % 

provided, that, (i) the Applicable Margin shall be calculated and established
once every calendar quarter, effective as of the first day of such calendar
quarter period and shall remain in effect until adjusted thereafter as of the
last day of the month at the end of such calendar quarter period; (ii) each
adjustment of the Applicable Margin shall be effective as of the first day of a
calendar quarter based on the Quarterly Average Excess Availability for the
immediately preceding calendar quarter and (iii) the Applicable Margin shall be
the applicable percentage calculated based on the percentage set forth in Tier
II of the chart above until the last day of the sixth full month after the
Closing Date. The interest rates will be adjusted every calendar quarter
thereafter based on the chart above. In the event that at any time after the end
of a calendar quarter, Agent shall have determined that the amount of the
Quarterly Average Excess Availability for such quarter initially used for the
determination of the Applicable Margin was greater than the actual amount of the
Quarterly Average Excess Availability for such quarter, the Applicable Margin
shall be appropriately adjusted based on such actual Quarterly Average Excess
Availability and any additional interest for the applicable period payable as a
result of such recalculation shall be promptly paid to Agent, for the benefit of
Lenders. The foregoing shall not be construed to limit the rights of Agent and
Lenders with respect to the amount of interest payable after a Default or Event
of Default whether based on such recalculated percentage or otherwise.

1.8 “Assignment and Acceptance” shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender’s interest hereunder in accordance with the provisions of Section 13.7
hereof.

1.9 “Bank Products” shall mean any one or more of the following types of
services or facilities extended to Borrower or its Subsidiaries by a Bank
Product Provider: (a) credit cards,

 

3

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(b) purchase cards, (c) ACH Transactions, (d) any overdrafts, cash management or
related services, and (e) Hedging Transactions, if and to the extent provided
hereunder.

1.10 “Bank Product Providers” shall mean the Agent, any Lender and any of their
respective Affiliates that may, from time to time, provide any Bank Products to
Borrower, Guarantor or any of their respective Subsidiaries.

1.11 “Base Rate” shall mean the highest of (a) the rate of interest publicly
announced by Wells Fargo as its “prime rate”, subject to each increase or
decrease in such prime rate, effective as of the day any such change occurs,
(b) the one month Adjusted Eurodollar Rate (which rate shall be determined on a
daily basis), plus 1% or (c) the federal funds effective rate from time to time
plus .50%.

1.12 “Base Rate Loans” shall mean any Loans or portion thereof on which interest
is payable based on the Base Rate in accordance with the terms thereof.

1.13 “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.

1.14 “Borrowing Base” shall mean, at any time, the amount equal to:

(a) the sum of (A) ninety (90%) percent of the amount of Eligible Commercial
Accounts, plus (B) ninety (90%) percent of the amount of Eligible Credit Card
Receivables, plus (C) the lesser of (1) ninety (90%) percent of the Net Recovery
Percentage multiplied by the Value of such Eligible Inventory, or
(2) seventy-five (75%) percent of the Value of Eligible Inventory; minus

(b) Reserves.

1.15 “Business Day” shall mean any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized or required to close under the laws
of the State of Illinois, the State of Indiana or the State of New York, and a
day on which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market.

1.16 “Capital Asset” shall mean any asset that should, in accordance with GAAP,
be classified and accounted for as a capital asset on a consolidated balance
sheet of Borrower and its Subsidiaries.

1.17 “Capital Expenditures” shall mean, for any period, as to any Person and its
Subsidiaries, the aggregate amount of all expenditures by such Person and its
Subsidiaries for, or contracts for expenditures (other than contracts for such
expenditures where payments for such expenditures are to be made in any
subsequent period) for, any Capital Assets or for replacements, substitutions or
additions thereto, which have a useful life of more than one (1) year,
including, but not limited to, the direct or indirect acquisition of such
Capital Assets by way of offset items or otherwise and obligations under Capital
Leases incurred in respect of such Capital Assets during such period, but
excluding from such calculations (a) expenditures for Capital Assets having a
cost of $2,500 or less which are expensed and not capitalized in

 

4

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accordance with Borrower’s current practices, (b) expenditures made from any Net
Cash Proceeds received from asset dispositions of such Person and its
Subsidiaries during such period (to the extent permitted hereunder),
(c) expenditures made with the cash proceeds received by Borrower or such
Guarantor from any Insurance and Condemnation Event, (d) the purchase price of
equipment that is purchased simultaneously with the trade-in of existing
equipment to the extent that the gross amount of such purchase price is reduced
by the credit granted by the seller of such equipment being traded in at such
time and (e) the portion of the consideration price for Permitted Acquisitions
that have been or are required to be, in accordance with GAAP, recorded as
capital expenditures.

1.18 “Capital Leases” shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which in accordance with GAAP, is required to be
capitalized on the balance sheet of such Person.

1.19 “Capital Stock” shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person’s capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).

1.20 “Cash Dominion Event” shall mean either (a) an Event of Default shall exist
or have occurred and be continuing, (b) the period commencing (i) on the fifth
(5th) consecutive Business Day on which Excess Availability is less than 12.5%
of the lesser of (A) the Borrowing Base or (B) the Maximum Credit, or (ii) at
any time Excess Availability is less than 10.0% of the lesser of (A) the
Borrowing Base or (B) the Maximum Credit, and in respect of either clause (i) or
(ii), Agent has elected to trigger such Cash Dominion Event and ending on a Cash
Dominion Reversion.

1.21 “Cash Dominion Reversion “ shall mean, unless an Event of Default exists or
has occurred and is continuing, the date on which average daily Excess
Availability for a thirty (30) consecutive day period has been greater than
15.0% of the lesser of (i) the Borrowing Base or (ii) the Maximum Credit;
provided, that no more than two (2) Cash Dominion Reversions shall be permitted
in any rolling twelve (12) month period.

1.22 “Cash Equivalents” shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one (1) year or less issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers’ acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Borrower or any Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies,
Inc. or at least P-1 by Moody’s

 

5

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Investors Service, Inc.; (d) repurchase obligations with a term of not more than
thirty (30) days for underlying securities of the types described in clause
(a) above entered into with any financial institution having combined capital
and surplus and undivided profits of not less than $1,000,000,000;
(e) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or issued by any governmental agency thereof and backed by the
full faith and credit of the United States of America, in each case maturing
within ninety (90) days or less from the date of acquisition; provided, that,
the terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depository Institutions with Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985; and
(f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.

1.23 “Change of Control” shall mean (a) during any period of two (2) consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of Parent (together with any new directors who have been appointed by
any Permitted Holder, or whose nomination for election by the stockholders of
Parent, was approved by a vote of at least a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of Parent, then
still in office, (b) any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) other than a Permitted Holder becomes the
ultimate legal or beneficial owner, directly or indirectly, of thirty-five
percent (35%) or more of the voting power of the total outstanding Voting Stock
of Parent, and the Permitted Holders beneficially own a lesser percentage of
such voting power of the Voting Stock than such Person and Permitted Holders do
not have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of Parent’s Board of Directors, (c) Parent
shall cease to own one hundred percent (100%) of the Capital Stock of Borrower
or (d) there shall have occurred under any indenture or other instrument
evidencing any Indebtedness or Capital Stock, in either case in excess of
$10,000,000, any “change of control” or similar or equivalent event (as set
forth in such indenture, agreement or other evidence of Indebtedness) obligating
Borrower or any of its Subsidiaries to repurchase, redeem or repay all or any
portion of the Indebtedness or Capital Stock provided for therein.

1.24 “Closing Date” shall mean March 29, 2011.

1.25 “Code” shall mean the Internal Revenue Code of 1986, as the same now exists
or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

1.26 “Collateral” shall have the meaning set forth in Section 5 hereof.

1.27 “Collateral Access Agreement” shall mean an agreement in writing, in form
and substance satisfactory to Agent, from any lessor of premises to Borrower or
any Guarantor, or any other person to whom any Collateral (including Inventory,
Equipment, bills of lading or

 

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other documents of title) is consigned or who has custody, control or possession
of any such Collateral or is otherwise the owner or operator of any premises on
which any of such Collateral is located, in favor of Agent with respect to the
Collateral at such premises or otherwise in the custody, control or possession
of such lessor, consignee or other person.

1.28 “Commitment” shall mean, at any time, as to each Lender, the principal
amount set forth next to such Lender’s name on Schedule 1.28 hereto designated
as the Commitment of such Lender or on Schedule 1 to an Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as the “Commitments.”

1.29 “Consolidated Interest Charges” shall mean, for any twelve (12) consecutive
month 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, bankers’ acceptance financing
and net costs in connection with Hedging Transactions (provided that unrealized
gains or losses from Hedging Transactions shall not be included), 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 Leases that is treated as
interest in accordance with GAAP minus (d) interest income during such period
(excluding any portion of interest income representing accruals of amounts
received in a previous period), in each case of or by any Person and its
Subsidiaries for the most recently completed twelve (12) consecutive month
period for which financial statements are available, all as determined on a
consolidated basis in accordance with GAAP.

1.30 “Consolidated Net Income” shall mean, with respect to any Person for any
period, the aggregate of the net income (or loss) of such Person and its
Subsidiaries for such period, on a consolidated basis, as determined in
accordance with GAAP; provided, that, Consolidated Net Income shall not include:
(a) the net income (or loss) of such Person (other than a Subsidiary which shall
be subject to clause (c) below), in which such Person or any of its Subsidiaries
has a joint interest with a third party, except to the extent such net income is
actually paid in cash to such Person or any of its Subsidiaries by dividend or
other distribution during such period, (b) the net income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of such Person or is
merged into or consolidated with such Person or any of its Subsidiaries or that
Person’s assets are acquired by such Person or any of its Subsidiaries except to
the extent included pursuant to the foregoing clause (a), (c) the net income (if
positive) of any Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary to such Person
or any of its Subsidiaries of such net income is not at the time permitted by
operation of the terms of its certificate of incorporation or formation or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary, (d) extraordinary and/or one time or
unusual and non-recurring gains or losses, and (e) gain or loss, together with
any related provision for taxes in respect of such gain or loss, realized upon
the sale or other disposition of any assets that are not sold in the ordinary
course of business (including, without limitation, dispositions pursuant to
Permitted

 

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Sale Leasebacks) or of any Capital Stock and any net income realized or loss
incurred as a result of changes in accounting principles or the application
thereof (to the extent such changes are permitted herein).

1.31 “Cost” shall mean, as to the Inventory as of any date, the cost of such
Inventory as of such date, determined under the weighted average cost-basis
method in accordance with GAAP.

1.32 “Credit Card Acknowledgments” shall mean, collectively, the agreements by
Credit Card Issuers or Credit Card Processors which are parties to Credit Card
Agreements in favor of Agent acknowledging Agent’s first priority security
interest in the monies due and to become due to Borrower (including, without
limitation, credits and reserves) under the Credit Card Agreements, and agreeing
to transfer all such amounts to the Blocked Accounts, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced; sometimes being referred to herein individually as a “Credit Card
Acknowledgment.”

1.33 “Credit Card Agreements” shall mean all agreements now or hereafter entered
into by Borrower with any Credit Card Issuer or any Credit Card Processor, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, including, but not limited to, the
agreements set forth on Schedule 8.16 hereto; sometimes being referred to herein
individually as a “Credit Card Agreement.”

1.34 “Credit Card Issuer” shall mean any person (other than Borrower) 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 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
Discover Financial Services, Inc.

1.35 “Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any of 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.

1.36 “Credit Card Receivables” shall mean, collectively, (a) all present and
future rights of Borrower to payment from any Credit Card Issuer, Credit Card
Processor or other third party arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card, and (b) all present and future rights of Borrower to payment from
any Credit Card Issuer, Credit Card Processor or other third party in connection
with the sale or transfer of Accounts arising pursuant to the sale of goods or
rendition of services to customers who have purchased such goods or services
using a credit card or a debit card, including, but not limited to, all amounts
at any time due or to become due from any Credit Card Issuer or Credit Card
Processor under the Credit Card Agreements or otherwise.

 

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1.37 “Credit Facility” shall mean the Loans and Letter of Credit Accommodations
provided to or for the benefit of Borrower pursuant to Sections 2.1, 2.2 and 2.6
hereof.

1.38 “Default” shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.

1.39 “Defaulting Lender” shall have the meaning set forth in Section 6.9(d)
hereof.

1.40 “Deposit Account Control Agreement” shall mean an agreement in writing, in
form and substance reasonably satisfactory to Agent, by and among Agent,
Borrower or any Guarantor (as the case may be) with a deposit account at any
bank and the bank at which such deposit account is at any time maintained which
provides that such bank will comply with instructions originated by Agent
directing disposition of the funds in the deposit account without further
consent by Borrower or such Guarantor and has such other terms and conditions as
Agent may require.

1.41 “EBITDA” shall mean, as to any Person, with respect to any period, an
amount equal to Consolidated Net Income for such Person and its Subsidiaries on
a consolidated basis for the most recently completed twelve (12) consecutive
months, plus (a) the sum of the following to the extent deducted in determining
Consolidated Net Income: (i) taxes imposed on or measured by its overall income
(however denominated), and franchise or gross receipts taxes imposed on it (in
lieu of net income taxes), (ii) Consolidated Interest Charges,
(iii) amortization (including amortization of goodwill and other intangibles,
but excluding amortization of prepaid cash expenses that were paid in a prior
period), depreciation and other non-cash charges (including non-cash asset
impairment charges, but excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period),
(iv) Transaction Costs, (v) any losses related to the early extinguishment of
Indebtedness, (vi) restructuring and facilities relocation charges,
(vii) non-cash stock option and stock based compensation expenses, and
(viii) expenses and charges resulting from equity offerings, investments,
mergers, recapitalizations, option buyouts, dispositions, acquisitions or
similar transactions (provided that, in the case of this clause (viii), any such
expenses and charges shall have been incurred no later than three (3) months
following the consummation of such transaction) less (b) to the extent included
in determining Consolidated Net Income, (i) federal, state, local and foreign
income tax credits and (ii) all non-cash items increasing Consolidated Net
Income (in each case of or by such Person and its Subsidiaries for such twelve
(12) consecutive month period), all as determined on a consolidated basis in
accordance with GAAP.

1.42 “Eligible Commercial Accounts” shall mean Accounts created by Borrower
which are and continue to be acceptable to Agent in good faith based on the
criteria set forth below. In general, Accounts shall be Eligible Commercial
Accounts if:

(a) such Accounts arise from the actual and bona fide sale and delivery of goods
by Borrower in the ordinary course of its business to customers which are not
individual retail customers which transactions are completed in accordance with
the terms and provisions contained in any documents related thereto;

 

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(b) such Accounts are not unpaid more than ninety (90) days after the original
due date in the case of Accounts that have net thirty (30) day terms; provided,
however, that any Accounts with extended terms may be included to the extent
Agent has provided its approval;

(c) such Accounts comply with the terms and conditions contained in Section 7.2
of this Agreement;

(d) such Accounts do not arise from (i) sales on consignment, guaranteed sale,
sale and return, sale on approval, or other terms under which payment by the
account debtor may be conditional or contingent, (ii) the sale of warranty
contracts or warranty services, (iii) sales of satellite systems in respect of
which Dish Network is the account debtor, (iv) merchandise which is on loan to
builders, and (v) merchandise which is damaged by Borrower’s delivery services,
provided, that, Accounts arising pursuant to clauses (d)(ii) and (iv) hereof
shall be deemed Eligible Commercial Accounts but only to the extent of the
portion of all such Accounts not in excess of $100,000 in the aggregate;

(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America or Canada (provided, that,
at any time promptly upon Agent’s request, Borrower shall execute and deliver,
or cause to be executed and delivered, such other agreements, documents and
instruments as may be required by Agent to perfect the security interests of
Agent in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable Federal or Provincial laws
of Canada) or, at Agent’s option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is located
other than in the United States of America or Canada, then if: (i) the account
debtor has delivered to Borrower an irrevocable letter of credit issued or
confirmed by a bank satisfactory to Agent and payable only in the United States
of America and in U.S. dollars, sufficient to cover such Account, in form and
substance satisfactory to Agent and if required by Agent, the original of such
letter of credit has been delivered to Agent or Agent’s agent and the issuer
thereof, and Borrower has complied with the terms of Section 5.2(f) hereof with
respect to the assignment of the proceeds of such letter of credit to Agent or
naming Agent as transferee beneficiary thereunder, as Agent may specify, or
(ii) such Account is subject to credit insurance payable to Agent issued by an
insurer and on terms and in an amount acceptable to Agent, or (iii) such Account
is otherwise acceptable in all respects to Agent (subject to such lending
formula with respect thereto as Agent may determine);

(f) such Accounts do not consist of progress billings (such that the obligation
of the account debtors with respect to such Accounts is conditioned upon
Borrower’s satisfactory completion of any further performance under the
agreement giving rise thereto), bill and hold invoices or retainage invoices,
except as to bill and hold invoices, if Agent shall have received an agreement
in writing from the account debtor, in form and substance satisfactory to Agent,
confirming the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;

 

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(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and is not owed or does not claim to be owed
any amounts that may give rise to any right of setoff or recoupment against such
Accounts (but only to the extent of the portion of the Accounts of such account
debtor owed by Borrower to such account debtor or claimed to be owed by such
account debtor);

(h) there are no facts, events or occurrences which would impair the validity or
enforceability of such Accounts;

(i) such Accounts are subject to the first priority, valid and perfected
security interest of Agent and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens except those permitted
in this Agreement that are either (A) subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent or (B) inchoate tax liens permitted in accordance
with Section 9.8 hereof, provided, that, such liens do not have priority over
the liens of the Agent therein;

(j) neither the account debtor nor any officer or employee of the account debtor
with respect to such Accounts is an officer, employee, agent or other Affiliate
of Borrower or any Guarantor;

(k) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Agent’s request, the Federal Assignment
of Claims Act of 1940, as amended or any similar State or local law, if
applicable, has been complied with in a manner satisfactory to Agent;

(l) the account debtors with respect to such Accounts are not the subject of any
bankruptcy, dissolution, liquidation, reorganization or similar proceeding;

(m) the aggregate amount of such Accounts owing by a single account debtor do
not constitute more than fifteen (15%) percent of the aggregate amount of all
otherwise Eligible Commercial Accounts (but only to the extent of the portion of
the Accounts in excess of the applicable percentages);

(n) such Accounts are not owed by an account debtor who has Accounts unpaid more
than ninety (90) days after the original due date (in the case of Accounts that
have net thirty (30) day terms or in the case of extended terms to the extent
Agent has provided its approval) for them which constitute more than twenty-five
(25%) percent of the total Accounts of such account debtor;

(o) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit
Borrower to seek judicial enforcement in such State of payment of such Account,
unless Borrower has qualified to do business in such state or has filed a Notice
of Business Activities Report or equivalent report for the then current year or
such failure to file and inability to seek judicial enforcement is capable of
being remedied without any material delay or material cost;

 

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(p) such Accounts are not Credit Card Receivables; and

(q) such Accounts are owed by account debtors deemed creditworthy with respect
to their ability to pay their respective Accounts as determined by Borrower
consistent with their ordinary course business practices and is acceptable to
Agent in good faith.

The criteria for Eligible Commercial Accounts set forth above may only be
changed and any new criteria for Eligible Commercial Accounts may only be
established by Agent in good faith based on either: (i) an event, condition or
other circumstance arising after the date hereof, or (ii) an event, condition or
other circumstance existing on the date hereof to the extent Agent has no
written notice thereof from Borrower prior to the date hereof, in either case
under clause (i) or (ii) which adversely affects or would reasonably be expected
to adversely affect the Accounts in the good faith determination of Agent. Any
Accounts that are not Eligible Commercial Accounts shall nevertheless be part of
the Collateral.

1.43 “Eligible Credit Card Receivables” shall mean the Credit Card Receivables
of Borrower which are and continue to be acceptable to Agent based on the
criteria set forth below. Credit Card Receivables shall be Eligible Credit Card
Receivables if:

(a) such Credit Card Receivables arise from the actual and bona fide sale and
delivery of goods in the ordinary course of the business of Borrower which
transactions are completed in accordance with the terms and provisions contained
in any agreements binding on Borrower or the other party or parties related
thereto,

(b) such Credit Card Receivables do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;

(c) such Credit Card Receivables are not past due (beyond any stated applicable
grace period, if any, therefor) pursuant to the terms set forth in the Credit
Card Agreements with the Credit Card Issuer or Credit Card Processor of the
credit card or debit card used in the purchase which give rise to such Credit
Card Receivables;

(d) such Credit Card Receivables are not unpaid more than ten (10) Business Days
after the date of the sale of Inventory giving rise to such Credit Card
Receivables;

(e) all procedures required by the Credit Card Issuer or the Credit Card
Processor of the credit card or debit card used in the purchase which gave rise
to such Credit Card Receivables shall have been followed in all material
respects by Borrower and all documents required for the authorization and
approval by such Credit Card Issuer or Credit Card Processor shall have been
obtained in connection with the sale giving rise to such Credit Card
Receivables;

(f) the required authorization and approval by such Credit Card Issuer or Credit
Card Processor shall have been obtained for the sale giving rise to such Credit
Card Receivables;

(g) Borrower shall have submitted all sales slips, drafts, charges and other
reports and other materials required by the Credit Card Issuer or Credit Card
Processor obligated in respect

 

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of such Credit Card Receivables in order for Borrower to be entitled to payment
in respect thereof;

(h) such Credit Card Receivables comply with the applicable terms and conditions
contained in Section 7.2 of this Agreement;

(i) the Credit Card Issuer or Credit Card Processor with respect to such Credit
Card Receivables has not asserted a counterclaim, defense or dispute and does
not have any right of setoff against such Credit Card Receivables (other than
transactions in the ordinary course of the business of Borrower) and such Credit
Card Issuer or Credit Card Processor has not setoff against amounts otherwise
payable by such Credit Card Issuer or Credit Card Processor to Borrower for the
purpose of establishing a reserve or collateral for obligations of Borrower to
such Credit Card Issuer or Credit Card Processor (other than any rights of
setoff for fees and chargebacks consistent with the practices of such Credit
Card Issuer or Credit Card Processor with Borrower as of the date hereof or as
such practices may hereafter change as a result of changes to the policies of
such Credit Card Issuer or Credit Card Processor applicable to its customers
generally and unrelated to the circumstances of Borrower);

(j) there are no facts, events or occurrences which would impair in any material
respect the validity, enforceability or collectability of such Credit Card
Receivables or reduce the amount payable or delay payment thereunder (other than
for setoffs for fees and chargebacks consistent with the practices of such
Credit Card Issuer or Credit Card Processor with Borrower as of the date hereof
or as such practices may hereafter change as a result of changes to the policies
of such Credit Card Issuer or Credit Card Processor applicable to its customers
generally and unrelated to the circumstances of Borrower);

(k) such Credit Card Receivables are subject to the first priority, valid and
perfected security interest and lien of Agent, for and on behalf of Lenders, and
any goods giving rise thereto are not, and were not at the time of the sale
thereof, subject to any encumbrances (other than the security interests of
Agent);

(l) there are no proceedings or actions which are pending or to the best of
Borrower’s knowledge threatened, against the Credit Card Issuers or Credit Card
Processors with respect to such Credit Card Receivables which would reasonably
be expected to result in any material adverse change in the continued
collectability of the Credit Card Receivables with respect to the Credit Card
Issuers or Credit Card Processors;

(m) such Credit Card Receivables are owed by Credit Card Issuers or Credit Card
Processors deemed creditworthy at all times by Agent in good faith;

(n) no material default or material event of default has occurred under the
Credit Card Agreement of Borrower with the Credit Card Issuer or Credit Card
Processor who has issued the credit card or debit card or handles payments under
the credit card or debit card used in the sale which gave rise to such Credit
Card Receivables which default gives such Credit Card Issuer or Credit Card
Processor the right to cease or suspend payments to Borrower and no material
default or material event of default shall have occurred which gives such Credit
Card Issuer or Credit Card Processor the right to setoff against amounts
otherwise payable to Borrower (other

 

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than for then current fees and chargebacks consistent with the current practices
of such Credit Card Issuer or Credit Card Processor as of the date hereof or as
such practices may hereafter change as a result of changes to the policies of
such Credit Card Issuer or Credit Card Processor applicable to its customers
generally and unrelated to the circumstances of Borrower) or the right to
establish reserves or establish or demand collateral and such Credit Card
Agreements are otherwise in full force and effect and constitute the legal,
valid, binding and enforceable obligations of the parties thereto;

(o) the terms of the sale giving rise to such Credit Card Receivables and all
practices of Borrower with respect to such Credit Card Receivables comply in all
material respects with applicable Federal, State, and local laws and
regulations;

(p) the Credit Card Issuer or Credit Card Processor has not sent any notice of
default and/or notice of its intention to cease or suspend payments to Borrower
in respect of such Credit Card Receivables or to establish reserves or cash
collateral for obligations of Borrower to such Credit Card Issuer or Credit Card
Processor (other than for then current fees and chargebacks consistent with the
current practices of such Credit Card Issuer or Credit Card Processor as of the
date hereof or as such practices may hereafter change as a result of changes to
the policies of such Credit Card Issuer or Credit Card Processor applicable to
its customers generally and unrelated to the circumstances of Borrower); and

(q) if such Credit Card Receivable arises from a customer’s use of the Private
Label Credit Card, then in addition to the criteria set forth above: (i) the
customer obligated in respect of such Credit Card Receivable has not returned
the Inventory purchased giving rise to such Credit Card Receivable; (ii) all
procedures required by GE Consumer under the Private Label Credit Card Agreement
and by the credit and collection policies of Borrower shall have been followed
by Borrower in all material respects; (iii) the obligations and liabilities of
Borrower to GE Consumer under the Private Label Credit Card Agreement and the
security interest granted by Borrower to GE Consumer thereunder shall be subject
to the terms and conditions of the GE Credit Card Intercreditor Agreement; and
(iv) without the prior written consent of Agent, Borrower shall not agree to
amend, modify, alter or change the terms of the Private Label Credit Card
Agreement in any manner that would make the arrangements of Borrower with GE
Consumer more restrictive or burdensome to Borrower than the terms of the
Private Label Credit Card Agreement as in effect on the date hereof (it being
agreed that the Private Label Credit Card Agreement as in effect on the date
hereof is acceptable to Agent).

General criteria for Eligible Credit Card Receivables may only be changed and
any new criteria for Eligible Credit Card Receivables may only be established by
Agent in good faith, based on either: (i) an event, condition or other
circumstance arising after the date hereof, or (ii) existing on the date hereof
to the extent Agent has no written notice thereof from Borrower prior to the
date hereof, in either case under clause (i) or (ii) which adversely affects or
would reasonably be expected to adversely affect the collectability of the
Credit Card Receivables in the good faith determination of Agent. Any Credit
Card Receivables which are not Eligible Credit Card Receivables shall
nevertheless be part of the Collateral.

1.44 “Eligible Inventory” shall mean, as to Borrower, Inventory of Borrower
consisting of finished goods held for resale in the ordinary course of the
business of Borrower, in

 

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each case that are acceptable to Agent based on the criteria set forth below. In
general, Eligible Inventory shall not include (a) work-in-process; (b) raw
materials; (c) spare parts for equipment and service parts; (d) packaging and
shipping materials; (e) supplies used or consumed in Borrower’s business;
(f) Inventory at premises other than those owned or leased and controlled by
Borrower (Inventory of Borrower which is in-transit from any location of
Borrower permitted herein to another such location shall be considered Eligible
Inventory provided, that, it otherwise satisfies the criteria for Eligible
Inventory set forth herein and is not in-transit more than five (5) consecutive
days); provided, that, (i) as to retail store locations which are leased by
Borrower, Agent may, at its option, establish Reserves in respect of rental
payments and other amounts in respect of such leased location of the type and to
the extent Agent shall determine in accordance with the definition of the term
Reserves herein, (ii) as to all other locations leased by Borrower, if Agent
shall not have received a Collateral Access Agreement from the owner and lessor
with respect to such location, duly authorized, executed and delivered by such
owner and lessor (or Agent shall determine to accept a Collateral Access
Agreement that does not include all required provisions or provisions in the
form otherwise required by Agent), Agent may, at its option, establish such
Reserves in respect of amounts at any time due or to become due to the owner and
lessor thereof as Agent shall determine, and (iii) as to all locations owned and
operated by a person other than Borrower and not covered by clause (i) and
(ii) hereof, if Agent shall not have received a Collateral Access Agreement from
the owner and operator with respect to such location, duly authorized, executed
and delivered by such owner and operator (or Agent) shall determine to accept a
Collateral Access Agreement that does not include all required provisions or
provisions in the form otherwise required by Agent), Agent may, at its option,
establish such Reserves in respect of amounts at any time due or to become due
to the owner and operator thereof as Agent shall determine; provided, that, in
addition, if required by Agent, in order for such Inventory at locations owned
and operated by a third person to be Eligible Inventory, Agent shall have
received: (A) UCC financing statements between the owner and operator, as
consignee or bailee and Borrower, as consignor or bailor, in form and substance
satisfactory to Agent in good faith, which are duly assigned to Agent and the
written authorization to file such financing statements in a form satisfactory
to Agent and (B) a written notice to any lender to the owner and operator of the
first priority security interest in such Inventory of Agent; (g) Inventory
subject to a security interest or lien in favor of any Person other than Agent;
(h) bill and hold goods; (i) Inventory that is not subject to the first
priority, valid and perfected security interest of Agent; (j) damaged and/or
defective Inventory; (k) returned Inventory which is not held for sale in the
ordinary course of business; (l) Inventory purchased or sold on consignment,
including without limitation, Frigidaire Consignment Collateral, and
(m) Inventory located outside the United States of America. The criteria for
Eligible Inventory set forth above may only be changed and any new criteria for
Eligible Inventory may only be established by Agent in good faith based on
either: (i) an event, condition or other circumstance arising after the date
hereof, or (ii) an event, condition or other circumstance existing on the date
hereof to the extent Agent has no written notice thereof from Borrower prior to
the date hereof, in either case under clause (i) or (ii) which adversely affects
or would reasonably be expected to adversely affect the Inventory in the good
faith determination of Agent. Any Inventory that is not Eligible Inventory shall
nevertheless be part of the Collateral.

1.45 “Eligible Transferee” shall mean (a) any Lender; (b) any Affiliate or
Approved Fund (defined below) of such Lender; (c) any Person (whether a
corporation, partnership, trust or otherwise) that is engaged in the business of
making, purchasing, holding or otherwise investing

 

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in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and in each case under this clause (c) is
approved by Agent; and (d) any commercial bank having a combined capital and
surplus of at least $250,000,000 or financial institution having a net worth (or
the equivalent thereof in the case of an investment partnership, managed
account, limited liability company or similar entity) calculated in accordance
with applicable generally accepted accounting principles of not less than
$100,000,000, or “accredited investor” (as defined in Regulation D under the
Securities Act) that is engaged in the business of making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business having a net worth (or the equivalent thereof in
the case of an investment partnership, managed account, limited liability
company or similar entity) calculated in accordance with applicable generally
accepted accounting principles of not less than $100,000,000, and in each case
under this clause (d) is approved by Agent, provided, that, (i) in the case of
the approval of clauses (c) and (d) above, unless an Event of Default has
occurred and is continuing at the time any assignment is effected hereunder,
Borrower shall have the right to approve such assignments, such approval not to
be unreasonably withheld, conditioned or delayed by Borrower, and such approval
shall be deemed to have been given by Borrower if no objection from Borrower is
received by the assigning Lender and Agent within five (5) Business Days after
notice of such proposed assignment has been provided by the assigning Lender or
Agent to Borrower, (ii) neither Borrower nor any Guarantor or any Affiliate of
Borrower or any Guarantor shall qualify as an Eligible Assignee and (iii) no
Person to whom any Indebtedness which is in any way subordinated in right of
payment to any other Indebtedness of Borrower or any Guarantor shall qualify as
an Eligible Transferee, except as Administrative Agent may otherwise
specifically agree. As used herein, the term “Approved Fund” shall mean any
Person (other than a natural person) that is engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business and which Person is administered
or managed by (w) a Lender, (x) an Affiliate of a Lender, (y) an entity or an
Affiliate of an entity that administers or manages a Lender or (z) the same
investment advisor or an advisor under common control with such Lender,
Affiliate or advisor, as applicable.

1.46 “Environmental Laws” shall mean all foreign, Federal, State and local laws
(including common law), legislation, rules, codes, licenses, permits (including
any conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Borrower or any Guarantor and any
Governmental Authority, relating to (a) pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource),
(b) the exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous Materials,
or (c) all laws with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials. The term “Environmental
Laws” includes (i) the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource
Conservation and

 

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Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances
Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the
Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to
such laws and (iii) any common law or equitable doctrine that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Materials.

1.47 “Equipment” shall mean, as to Borrower and each Guarantor, all of
Borrower’s and each Guarantor’s now owned and hereafter acquired equipment,
wherever located, including machinery, data processing and computer equipment
(whether owned or licensed and including embedded software), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.

1.48 “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
together with all rules, regulations and interpretations thereunder or related
thereto, each as amended or modified from time to time.

1.49 “ERISA Affiliate” shall mean any person required to be aggregated with
Borrower, any Guarantor or any of its or their respective Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

1.50 “ERISA Event” shall mean (a) any “reportable event,” as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan as to which the requirement of notice has not been waived; (b) the adoption
of any amendment to a Plan that would require the provision of security pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) a complete or partial withdrawal by Borrower, Guarantor or any ERISA
Affiliate from a Multiemployer Plan or a cessation of operations which is
treated as such a withdrawal or notification that a Multiemployer Plan is in
reorganization; (f) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Plan; (g) an event or condition which would reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; or (h) the imposition of any
liability under Title IV of ERISA, other than the Pension Benefit Guaranty
Corporation premiums due but not delinquent under Section 4007 of ERISA, upon
Borrower, Guarantor or any ERISA Affiliate in excess of $1,000,000.

1.51 “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which
interest is payable based on the Adjusted Eurodollar Rate in accordance with the
terms hereof.

1.52 “Eurodollar Reserve Percentage” shall mean for any day, that percentage
(expressed as a decimal and rounded upwards, if necessary, to the nearest 1/100
of 1%) which is in effect for such day under Regulation D of the Board of
Governors of the Federal Reserve

 

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System (or any successor), as such regulation may be amended from time to time
or any successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or marginal
reserves) applicable with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or any other category of liabilities that includes
deposits by reference to which the interest rate of Eurodollar Loans is
determined), whether or not any Lender has any Eurocurrency liabilities subject
to such reserve requirement at that time. Eurodollar Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without benefits of credits for proration, exceptions or
offsets that may be available from time to time to a Lender.

1.53 “Event of Default” shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.

1.54 “Excess Availability” shall mean the amount, as determined by Agent,
calculated at any date of determination in accordance with the terms hereof,
without duplication, equal to: (a) the lesser of (i) the Borrowing Base and
(ii) the Maximum Credit, minus (b) the amount of all then outstanding and unpaid
Obligations (including all outstanding Letter of Credit Accommodations).

1.55 “Exchange Act” shall mean the Securities Exchange Act of 1934, together
with all rules, regulations and interpretations thereunder or related thereto.

1.56 “Existing Lenders” shall mean the financial institutions which are parties
to the Existing Loan Agreement as lenders.

1.57 “Existing Letters of Credit” shall mean, collectively, the letters of
credit issued for the account of Borrower or any Guarantor or for which Borrower
or such Guarantor is otherwise liable listed on Schedule 1.57 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

1.58 “Existing Loan Agreement” shall have the meaning assigned to it in the
recitals to this Agreement.

1.59 “Fee Letter” shall mean the letter agreement, dated March 1, 2011, by and
among Borrower, Agent and joint lead arrangers setting forth, among other fees
certain fees payable by Borrower to Agent for the benefit of itself and Lenders,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

1.60 “Financing Agreements” shall mean, collectively, this Agreement and all
notes, guarantees, security agreements, pledge agreements, deposit account
control agreements, investment property control agreements, collateral access
agreements, intercreditor agreements and all other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
or any Obligor in connection with this Agreement or executed and/or delivered in
connection with the Existing Loan Agreement or the Original Loan Agreement;
provided, that, the Financing Agreements shall not include any agreements with
respect to Hedging Transactions.

 

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1.61 “Fixed Charge Coverage Ratio” shall mean, as to Borrower and its
Subsidiaries on a consolidated basis, the ratio, as of any date of
determination, of (a) LTM EBITDA to (b) Fixed Charges.

1.62 “Fixed Charges” shall mean, as to Borrower and its Subsidiaries (on a
consolidated basis), with respect to any period, the sum of, without
duplication, (a) all cash Consolidated Interest Charges during such period, plus
(b) all cash Capital Expenditures (other than any Capital Expenditures that have
been financed or are attributable to any sale leaseback transaction or Capital
Expenditures that are reimbursed by a lessor for tenant allowances) during such
period, plus (c) all regularly scheduled (as determined at the beginning of the
respective period) principal payments in respect of Indebtedness for borrowed
money and Indebtedness with respect to Capital Leases during such period, plus
(d) all income taxes paid during such period in cash, all as determined in
accordance with GAAP; provided, however, that until the first anniversary of the
Closing Date, the amounts under clauses (a) and (c) of this definition shall be
determined on an annualized basis for the period commencing on the Closing Date.

1.63 “Frigidaire” shall mean Electrolux Home Products, Inc., as successor in
interest to White Consolidated Industries, Inc., and its successors and assigns.

1.64 “Frigidaire Consignment Agreement” shall mean the Consignment Agreement,
dated September 24, 2003, by and between Frigidaire and Borrower with respect to
certain inventory manufactured by Frigidaire and sold by Borrower, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

1.65 “Frigidaire Consignment Collateral” shall mean the items and types of
property described on Schedule 1.65 hereto.

1.66 “Frigidaire Intercreditor Agreement” shall mean the Intercreditor
Agreement, dated February 3, 2005, by and between Agent and Frigidaire, as
acknowledged and agreed to by Borrower, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.

1.67 “GAAP” shall mean generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied, except that, for purposes
of Section 9.18, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation of
the most recent audited financial statements delivered to Agent prior to the
date hereof. In the event that any “Accounting Change” (as defined below) shall
occur and such change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement, then the Borrower and
the Agent shall enter into negotiations in order to amend such provisions of
this Agreement so as to reflect equitably such Accounting Changes with the
desired result that the criteria for evaluating the Borrower’s financial
condition shall be the same after such Accounting Changes as if such Accounting
Changes had not been made. Until such time as such an amendment shall have been
executed and delivered by the Borrower, the Agent and the Required

 

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Lenders, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Changes had not
occurred. “Accounting Changes” refers to changes in, or reinterpretations of,
accounting principles or the application thereof required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.

1.68 “GE Consumer” shall mean GE Capital Consumer Card Co. and its successors
and assigns.

1.69 “GE Credit Card Intercreditor Agreement” shall mean the Intercreditor
Agreement, dated February 3, 2005, by and between Agent and GE Consumer, as
acknowledged and agreed to by Borrower, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.

1.70 “Governmental Authority” shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

1.71 “Guarantors” shall mean, (a) HHG Distributing, LLC, an Indiana limited
liability company and its respective successors and assigns, and (b) any
Subsidiaries of Borrower (together with their respective successors and
assigns); each sometimes being referred to herein individually as a
“Guarantor”).

1.72 “Hazardous Materials” shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).

1.73 “Hedging Transactions” shall mean (a) any and all rate swap transactions,
basis swaps, 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, 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 transaction, currency
options 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, or
(b) any and all transactions of any kind, and the related confirmations, that
are subject to the terms or conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement, as amended, restated, extended,
supplemented or otherwise modified in

 

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writing from time to time, including but not limited to, any such obligations or
liabilities under any such agreement.

1.74 “Indebtedness” shall mean, with respect to any Person, without duplication,
any liability, whether or not contingent, in each case as determined in
accordance with GAAP (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes
(i) an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith and (ii) any unearned portion of
contingent purchase price or earnout obligations to the extent that the
liability on account of any such contingent purchase price or earnout is not
fixed); (c) all obligations as lessee under Capital Leases which have been, or
should be capitalized on the balance sheet of such Person in accordance with
GAAP; (d) any contractual obligation, contingent or otherwise, of such Person to
pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker’s acceptances, drafts or similar documents or
instruments issued for such Person’s account; (g) indebtedness of another Person
otherwise described in this definition which is secured by any consensual lien,
security interest, collateral assignment, conditional sale, mortgage, deed of
trust, or other encumbrance on any assets of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time; provided, that, for the purposes
hereof, to the extent such Indebtedness referred to in this clause (g) is
non-recourse to such Person, the amount of such Indebtedness shall not be deemed
to exceed the lesser of (i) the principal amount of such Indebtedness or
(ii) the value of the asset(s) securing such Indebtedness; (h) the Termination
Value of any Hedging Transactions; (i) all obligations owed by such Person under
License Agreements with respect to non-refundable, advance or minimum guarantee
royalty payments; and (j) the principal portion of all rental obligations of
such Person under any synthetic lease or similar off-balance sheet financing
where such transaction is considered to be borrowed money for tax purposes but
is classified as an operating lease in accordance with GAAP; provided, that,
amounts in respect of landlord improvement allowances that in accordance with
GAAP are included on Borrower’s balance sheet as liabilities shall not be deemed
“Indebtedness.”

1.75 “Information Certificate” shall mean, collectively, the Information
Certificate of Borrower and each Guarantor constituting Exhibit B hereto
containing material information with respect to Borrower and Guarantors, their
respective businesses and assets provided by or on behalf of Borrower and
Guarantors to Agent in connection with the preparation of this

 

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Agreement and the other Financing Agreements and the financing arrangements
provided for herein.

1.76 “Insurance and Condemnation Event” shall mean the receipt by Borrower or
any Guarantor of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage, taking or similar event
with respect to any of their respective property or assets.

1.77 “Intellectual Property” shall mean, as to Borrower and each Guarantor,
Borrower’s and each Guarantor’s now owned and hereafter arising or acquired:
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright applications, copyright registrations,
trademarks, servicemarks, trade names, trade styles, trademark and service mark
applications, and licenses and rights to use any of the foregoing and all
applications, registrations and recordings relating to any of the foregoing as
may be filed in the United States Copyright Office, the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, any political subdivision thereof or in any other country or
jurisdiction, together with all rights and privileges arising under applicable
law with respect to Borrower’s or any Guarantor’s use of any of the foregoing;
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or servicemark, or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and domain
name registration; source codes, object code, executable codes, data, databases
and other physical manifestations or embodiments of any of the foregoing;
software and contract rights relating to computer software programs, in whatever
form created or maintained.

1.78 “Interest Period” shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), three (3) or six (6) months (or such shorter
periods as may be available to all Lenders) duration as Borrower may elect, the
exact duration to be determined in accordance with the customary practice in the
London interbank market; provided, that, Borrower may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.

1.79 “Interest Rate” shall mean,

(r) Subject to clause (b) of this definition below:

(i) as to Base Rate Loans, a rate equal to the then Applicable Margin for Base
Rate Loans on a per annum basis plus the Base Rate, and

(ii) as to Eurodollar Rate Loans, a rate equal to the then Applicable Margin for
Eurodollar Rate Loans on a per annum basis plus the Adjusted Eurodollar Rate.

(s) Notwithstanding anything to the contrary contained in clause (a) of this
definition, the Interest Rate shall mean the per annum rates set forth above
plus (in each case)

 

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two (2%) percent per annum, at Agent’s option (and, in the case of clause
(B) below, at the election of the Required Lenders), without notice: (i) either
(A) for the period from and after the effective date of termination or
non-renewal hereof until Agent and Lenders have received full and final payment
of all outstanding and unpaid Obligations which are not contingent and cash
collateral or letter of credit, as Agent may specify, in the amounts and on the
terms required under Section 13.1 hereof for contingent Obligations
(notwithstanding entry of a judgment against Borrower or any Guarantor) or
(B) from and after the date of the occurrence of an Event of Default under
Sections 10.1(a)(i), 10.1(g) or 10.1(h) and for so long as such Event of Default
is continuing as determined by Agent in good faith and (ii) on Loans at any time
outstanding in excess of the Borrowing Base (whether or not such excess(es)
arise or are made with or without the knowledge or consent of Agent or any
Lender and whether made before or after an Event of Default).

1.80 “Inventory” shall mean, as to Borrower and each Guarantor, all of
Borrower’s and each Guarantor’s now owned and hereafter existing or acquired
goods, wherever located, which (a) are leased by Borrower or any Guarantor as
lessor; (b) are held by Borrower or any Guarantor for sale or lease or to be
furnished under a contract of service; (c) are furnished by Borrower or any
Guarantor under a contract of service; or (d) consist of raw materials, work in
process, finished goods or materials used or consumed in its business.

1.81 “Investment Property Control Agreement” shall mean an agreement in writing,
in form and substance reasonably satisfactory to Agent, by and among Agent,
Borrower or any Guarantor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of Borrower or any Guarantor (as the case may be)
acknowledging, among other things, that such securities intermediary, commodity
intermediary or other person has custody, control or possession of such
investment property on behalf of Agent, that it will comply with entitlement
orders originated by Agent with respect to such investment property, or other
instructions of Agent.

1.82 “Lenders” shall mean the financial institutions which are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Sections 2.3 and/or 13.7 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a “Lender.”

1.83 “Letter of Credit Accommodations” shall mean, collectively, the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Agent or any Lender for the account of Borrower
or any Obligor or (b) with respect to which Agent or Lenders have agreed to
indemnify the issuer or guaranteed to the issuer the performance by Borrower or
any Obligor of its obligations to such issuer; sometimes being referred to
herein individually as “Letter of Credit Accommodation.”

1.84 [Intentionally Omitted].

1.85 “License Agreements” shall have the meaning set forth in Section 8.11
hereof.

1.86 “Loans” shall mean the loans now or hereafter made by or on behalf of any
Lender or by Agent for the account of any Lender on a revolving basis pursuant
to the Credit

 

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Facility (involving advances, repayments and readvances) as set forth in
Section 2.1 and Section 2.6 hereof.

1.87 “London Interbank Offered Rate” shall mean, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBOR01 Page (or any successor page) as the London interbank
offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London
time) two (2) Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, that, if more than one rate
is specified on Reuters Screen LIBOR01 Page (or any successor page), the
applicable rate shall be the arithmetic mean of all such rates. If, for any
reason, such rate is not available, the term “London Interbank Offered Rate”
shall mean, with respect to any Eurodollar Loan for the Interest Period
applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by Agent to be the arithmetic
mean of the rate per annum at which deposits in U.S. Dollars in minimum amounts
of at least $5,000,000 would be offered by first class banks in the London
interbank market to Agent at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.

1.88 “LTM EBITDA” shall mean as of the end of any fiscal month, the EBITDA of
Borrower and its Subsidiaries for the twelve (12) consecutive fiscal months then
ended.

1.89 “Material Adverse Effect” shall mean, with respect to Borrower or any of
its Subsidiaries, a material adverse effect on (a) the financial condition,
business, performance or operations of Borrower and its Subsidiaries (taken as a
whole); (b) the legality, validity or enforceability of this Agreement or any of
the other Financing Agreements or any of the terms and provisions hereunder or
thereunder; (c) the legality, validity, enforceability, perfection or priority
of the security interests and liens of Agent upon the Collateral (taken as a
whole); (d) the ability of Borrower or any Material Subsidiary to perform its
obligations under this Agreement or any of the other Financing Agreements.

1.90 “Material Contract” shall mean any contract or agreement (other than the
Financing Agreements), whether written or oral, to which Borrower or any
Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto has or would reasonably be expected to
have a Material Adverse Effect.

1.91 “Material Obligor” shall mean an Obligor which represented at least five
(5%) percent of the EBITDA or consolidated total assets of Borrower and its
Subsidiaries for the most recently completed fiscal year.

1.92 “Material Subsidiary” shall mean a Subsidiary which represented at least
five (5%) percent of the EBITDA or consolidated total assets of Borrower and its
Subsidiaries for the most recently completed fiscal year.

1.93 “Maximum Credit” shall mean $300,000,000 (which may be increased in
accordance with the exercise of an increase in the Maximum Credit permitted by
Section 2.3 hereof upon the effective date of such increase).

 

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1.94 “Multiemployer Plan” shall mean a “multi-employer plan” as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by Borrower, Guarantor
or any ERISA Affiliate.

1.95 “Net Cash Proceeds” shall mean, as applicable, (a) with respect to any sale
or other disposition of Borrower or any Guarantor, the gross cash proceeds
received by Borrower or such Guarantor therefrom less the sum of (i) taxes
assessed by a Governmental Authority as a result of such sale and any other fees
and expenses incurred in connection therewith, (ii) the principal amount of,
premium, if any, and interest on any Indebtedness secured by a lien on the asset
(or a portion thereof) sold, which Indebtedness is required to be repaid in
connection with such sale, (iii) all amounts applied to the Obligations in
accordance with the terms of this Agreement, (iv) all distributions and other
payments required to be made to any other Person owning a beneficial interest in
the assets subject to the a disposition of assets permitted under Section 9.7(b)
hereof (including minority interest holders in Subsidiaries or joint venture
partners), (v) any reserve, established in accordance with GAAP against
liabilities associated with the assets disposed of in such asset disposition,
until such amounts are released (other than in connection with the payment of
such liability), and (vi) any reserves established in accordance with GAAP with
respect to purchase price adjustments, indemnification obligations or
post-employment severance obligations relating to such asset disposition or
otherwise arising in connection therewith, until such amounts are released
(other than in connection with the payment of such liability), (b) with respect
to any issuance of Capital Stock or Indebtedness by Borrower or any Guarantor,
the gross cash proceeds received by Borrower or such Guarantor therefrom less
the sum of all legal, underwriting and other fees and expenses incurred in
connection therewith and (c) with respect to any Insurance and Condemnation
Event involving Borrower or any Guarantor, the gross cash proceeds received by
Borrower or such Guarantor therefrom less the sum of (i) all fees and expenses
in connection therewith, (ii) the principal amount of, premium, if any, and
interest on any Indebtedness secured by a lien on the asset (or a portion
thereof) subject to such Insurance and Condemnation Event, which Indebtedness is
required to be repaid in connection therewith and (iii) all amounts applied to
the Obligations in accordance with the terms of this Agreement.

1.96 “Net Recovery Percentage” shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time on an “in-store going out of
business sale” basis as set forth in the most recent acceptable appraisal of
Inventory received by Agent in accordance with Section 7.3, net of operating
expenses, liquidation expenses and commissions, and (b) the denominator of which
is the applicable original Cost of the aggregate amount of the Inventory subject
to such appraisal.

1.97 “Obligations” shall mean (a) any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower or any Guarantor to Agent or any
Lender and/or any of their respective Affiliates, in each case, including
principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, arising under
this Agreement or any of the other Financing Agreements, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower or any Guarantor under the United States Bankruptcy Code or
any similar statute (including the payment of interest and other amounts

 

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which would accrue and become due but for the commencement of such case, whether
or not such amounts are allowed or allowable in whole or in part in such case),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, or secured or unsecured
and (b) for purposes only of Section 5.1 hereof and subject to the priority in
right of payment set forth in Section 6.4 hereof, upon Borrower’s request (which
request may be evidenced by its signature on the agreement referred to in clause
(i) below) and with the prior consent of Agent, all obligations, liabilities and
indebtedness of every kind, nature and description owing by any or all of
Borrower or any Guarantor to Agent or any Bank Product Provider arising under or
pursuant to any Bank Products, whether now existing or hereafter arising to the
extent such obligations, liabilities and indebtedness would not cause the total
amount of the Obligations to exceed the value of the Collateral; provided, that
(i) as to any such obligations, liabilities and indebtedness arising under or
pursuant to a Hedging Transaction, the same shall only be included within the
Obligations if upon Agent’s request, Agent shall have entered into an agreement,
in form and substance satisfactory to Agent, with such Bank Product Provider
that is a counterparty to such Hedging Transaction, as acknowledged and agreed
to by Borrower and each Guarantor, providing for the delivery to Agent by such
counterparty of information with respect to the amount of such obligations and
providing for the other rights of Agent and such Bank Product Provider in
connection with such arrangements, and (ii) in no event shall any Bank Product
Provider to whom such obligations, liabilities or indebtedness are owing be
deemed a Lender for purposes hereof to the extent of and as to such obligations,
liabilities or indebtedness other than for purposes of Section 5.1 hereof and
other than for purposes of Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12
and 13.5 hereof and in no event shall the approval of any such person be
required in connection with the release or termination of any security interest
or lien of Agent.

1.98 “Obligor” shall mean any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations (including, without limitation,
Guarantor), other than Borrower.

1.99 “Original Loan Agreement” shall have the meaning assigned to it in the
recitals to this Agreement.

1.100 “Other Taxes” shall mean any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any of the other Financing
Agreements.

1.101 “Parent” shall mean hhgregg, Inc., a Delaware corporation, and its
successors and assigns.

1.102 “Parent Overhead Expenses” shall mean (a) accounting and auditing costs
and expenses incurred by Parent in the ordinary course of its business in
connection with preparing financial reports and tax filings, (b) customary fees
and expenses payable to the SEC and other reasonable and customary costs and
expenses payable in connection with Parent being a publicly traded company
(including, without limitation, reasonable and customary fees and expenses
required to be paid for professional fees and expenses, listing expenses and
regulatory compliance), (c) reasonable and customary legal fees and expenses
required for the corporate

 

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maintenance of Parent and its Subsidiaries, (d) reasonable and customary
director fees and reimbursements, (e) reasonable and customary costs and
expenses payable for director and officer insurance, (f) transfer agent fees
payable in connection with Capital Stock of Parent, (g) franchise taxes and
other fees payable to the jurisdiction of incorporation or qualification of
Parent incurred in the ordinary course of conducting its business, (h) taxes
attributable to the consolidated operations of Borrower and its Subsidiaries,
and (i) salaries and bonuses and other customary payroll and benefit expenses of
employees of Parent who are principally engaged in the consolidated operations
of Borrower and its Subsidiaries.

1.103 “Participant” shall mean any financial institution that acquires and holds
a participation in the interest of any Lender in any of the Loans and Letter of
Credit Accommodations in conformity with the provisions of Section 13.7 of this
Agreement governing participations.

1.104 “Payment Conditions” shall mean satisfaction of each of the following
conditions as of the date of any payment, advance, loan, distribution or
dividend (each, a “Payout”), and after giving effect to such Payout: (a) no
Default or Event of Default shall exist or have occurred and be continuing;
(b) the Fixed Charge Coverage Ratio for the immediately preceding twelve month
period for which financial statements have been delivered pursuant to
Section 9.6 shall have been not less than 1.0:1.0 after giving effect to such
Payout on a pro forma basis using the most recent financial statements delivered
to Agent; (c) receipt by Agent of reasonable projections for the period
commencing on the anticipated date of the first Payout and ending on the date
that is no less than six months after the date of such Payout (or, if a series
of related Payouts are contemplated, such projections shall initially cover a 12
month period commencing on the anticipated date of the first Payout and shall be
updated on the 6 month anniversary thereof (if additional Payouts are
contemplated after the first 6 months) such that Agent shall always have
projections covering a period of at least 6 months after the next scheduled
Payout) showing, on a pro forma basis after giving effect to each anticipated
Payout or Payouts, minimum Excess Availability at the end of each month during
such period of not less than the greater of (i) 20% of the Borrowing Base or
(B) $15,000,000 until September 30, 2012 and $20,000,000 thereafter; and (d) at
the time of, and immediately after giving pro forma effect to, such Payout,
Excess Availability shall not be less than 20% of the Borrowing Base.

1.105 “Permitted Acquisition” shall have the meaning set forth in
Section 9.10(h) hereof.

1.106 “Permitted Holders” shall mean the persons listed on Schedule 1.105 hereto
and their respective successors.

1.107 “Permitted Sale Leasebacks” shall mean any sale and leaseback transaction
with any Person (other than Borrower or its Subsidiaries) providing for the
leasing by Borrower or any of its Subsidiaries of Real Property (including any
improvements thereon) consisting of built to suit retail store, warehouse or
distribution center properties; provided that:

(a) such sale and leaseback transaction is consummated within eighteen
(18) months of the date of completion of the construction of such improvements,

 

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(b) as of each fiscal quarter end, any Permitted Sale Leaseback transaction that
has been initiated and not completed as of such date shall be disclosed in the
compliance certificate delivered in respect of such fiscal quarter pursuant to
Section 9.6(a) hereof (such disclosure to include, without limitation, (i) the
date of completion of the construction of such improvements, (ii) a description
of the Real Property involved in the sale and leaseback transaction, and
(iii) the aggregate fair market value of the property and related Real Property
sold or to be sold in such sale and leaseback transaction), and

(c) in each case the property is sold by Borrower or such Subsidiary for fair
value and cash consideration only.

1.108 “Person” or “person” shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

1.109 “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of
ERISA) which Borrower or any Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions other than any
Multiemployer Plan.

1.110 “Prime Rate” shall mean the rate from time to time publicly announced by
Wells Fargo, or its successors, as its prime rate, whether or not such announced
rate is the best rate available at such bank.

1.111 “Private Label Credit Card” shall mean the private label credit card or
private label credit cards issued by GE Consumer (or any subsequent Credit Card
Issuer replacing GE Consumer reasonably acceptable to Agent) with respect to
such private label credit card or private label credit cards to customers or
prospective customers of Borrower pursuant to the Private Label Credit Card
Agreement.

1.112 “Private Label Credit Card Agreement” shall mean the Private Label
Consumer Credit Card Program Agreement, dated as of August 26, 2004, by and
between Borrower and GE Consumer, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

1.113 “Pro Rata Share” shall mean as to any Lender, the fraction (expressed as a
percentage) the numerator of which is such Lender’s Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Sections 2.3 and 13.7 hereof; provided, that, if the Commitments have been
terminated, the numerator shall be the unpaid amount of such Lender’s Loans and
its interest in the Letter of Credit Accommodations and the denominator shall be
the aggregate amount of all unpaid Loans and Letter of Credit Accommodations.

1.114 “Quarterly Average Excess Availability” shall mean, for any calendar
quarter, the daily average of the aggregate amount of the Excess Availability of
Borrower for such calendar quarter period as calculated by Agent.

 

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1.115 “Real Property” shall mean all now owned and hereafter acquired real
property of Borrower and each Guarantor, including leasehold interests, together
with all of Borrower’s and each Guarantor’s right, title and interest in and to
all buildings, structures, and other improvements located thereon and all of
Borrower’s and each Guarantor’s right, title and interest in and to all
licenses, easements and appurtenances relating thereto, wherever located.

1.116 “Receivables” shall mean all of the following now owned or hereafter
arising or acquired property of Borrower and each Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of Borrower or any Guarantor; (d) all
letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued or payable to Borrower or any Guarantor or otherwise in
favor of or delivered to Borrower or any Guarantor in connection with any
Account; or (e) all other accounts, contract rights, chattel paper, instruments,
notes, general intangibles and other forms of obligations owing to Borrower or
any Guarantor, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by Borrower or any
Guarantor or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of Borrower or any Guarantor) or
otherwise associated with any Accounts, Inventory or general intangibles of
Borrower or any Guarantor (including, without limitation, choses in action,
causes of action, tax refunds, tax refund claims, any funds which may become
payable to Borrower or any Guarantor in connection with the termination of any
Plan or other employee benefit plan and any other amounts payable to Borrower or
any Guarantor from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, casualty or any similar types of insurance and
any proceeds thereof and proceeds of insurance covering the lives of employees
on which Borrower or any Guarantor is a beneficiary).

1.117 “Records” shall mean, as to Borrower and each Guarantor, all of Borrower’s
and each Guarantor’s present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of Borrower or any Guarantor with respect to the foregoing
maintained with or by any other person).

1.118 “Register” shall have the meaning set forth in Section 13.7 hereof.

1.119 “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata
Shares aggregate more than fifty (50%) percent of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders then holding more than fifty (50%) percent of the sum of, without
duplication, the then outstanding Loans and outstanding Letter of Credit
Accommodations (with the aggregate amount of each Lender’s risk participation
and funded participation in Letter of Credit Accommodations and Swing Line Loans
being deemed “held” by such Lender for purposes of this definition).

 

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1.120 “Reserves” shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letter of Credit Accommodations which would otherwise be
available to Borrower under the lending formula(s) provided for herein: (a) to
reflect events, conditions, contingencies or risks which, as determined by Agent
in good faith, adversely affect, or would have a reasonable likelihood of
adversely affecting, either (i) the Collateral or any other property which is
security for the Obligations, its value or the amount that might be received by
Agent from the sale or other disposition or realization upon such Collateral, or
(ii) the assets, business or prospects of Borrower or any Obligor or (iii) the
security interests and other rights of Agent or any Lender in the Collateral
(including the enforceability, perfection and priority thereof) or (b) to
reflect Agent’s good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Agent is or
may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Agent determines in good faith
constitutes a Default or an Event of Default. Without limiting the generality of
the foregoing, Reserves may, at Agent’s option, be established to reflect:
(i) dilution with respect to the Accounts (based on the ratio of the aggregate
amount of non-cash reductions in Accounts for any period to the aggregate dollar
amount of the sales of Borrower for such period) as calculated by Agent for any
period is or is reasonably anticipated to be greater than five (5%) percent (the
“Dilution Reserve”); provided, that, as of the date of this Agreement, the
Dilution Reserve shall be two (2%) percent until otherwise adjusted by Agent;
(ii) inventory shrinkage and variances between the perpetual inventory records
of Borrower and the results of the test counts of Inventory conducted by Agent
with respect thereto in excess of the percentage acceptable to Agent, (iii) cost
variances (pursuant to discrepancies between the purchase order price of
Inventory and the actual cost thereof), (iv) retail markdowns or markups
inconsistent with prior period practice and performance and any increase in the
number of days of the turnover of Inventory or a change in the mix of the
Inventory that results in an overall decrease in the value thereof or a
deterioration in its nature or quality (but only to the extent not addressed by
the lending formulas in a manner satisfactory to Agent) or any material increase
(in the good faith determination of Agent) in levels of slow moving or obsolete
Inventory, (v) amounts past due in respect of sales, use and/or withholding
taxes, (vi) any rental payments, service charges or other amounts to become due
to lessors of real property to the extent Inventory or Records are located in or
on such property or such Records are needed to monitor or otherwise deal with
the Collateral (other than for those locations where Agent has received a
Collateral Access Agreement that Agent has accepted in writing); provided, that,
the Reserves established pursuant to this clause (vi) as to retail store
locations that are leased shall not, except as Agent may otherwise determine in
good faith, exceed at any time the aggregate of amounts payable for the next two
(2) months from any such time to the lessors of such retail store locations
located in those States where any right of the lessor to Collateral may have
priority over the security interest and lien of Agent therein, provided, that,
such general practice with respect to the amount of the Reserves pursuant to
this clause (vi) shall only apply so long as: (A) no Default or Event of Default
shall exist or have occurred and be continuing, (B) neither Borrower nor Agent
shall have received notice of any event of default by the lessee under the lease
with respect to such location, and (C) Borrower shall not have granted to the
lessor a security interest or lien upon any assets of Borrower, (vii) amounts
owing by Borrower to Credit Card Issuers or Credit Card Processors in connection
with the Credit Card Agreements, (viii) with respect to merchandise gift
certificates, customer deposits, gift cards, vouchers, and coupons, an amount

 

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equal to fifty (50%) percent of the aggregate amount thereof, (ix) the purchase
price of layaway goods and the amount of all check request refunds, (x) amounts
which must be paid by Borrower as royalties, fees or other charges in respect of
licenses or other agreements to use Intellectual Property owned by third parties
other than Guarantor, (xi) the dollar amount of merchandise returned by
customers which gave rise to Eligible Credit Card Receivables, (xii) at any time
that a Default or Cash Dominion Event has occurred and is continuing, amounts
owing by Borrower to Frigidaire under the Frigidaire Consignment Agreement, and
(xiii) obligations, liabilities or indebtedness (contingent or otherwise) of
Borrower or any Guarantor to Agent or any Bank Product Provider arising under or
in connection with any Bank Products or as such Bank Product Provider may
otherwise require in connection therewith to the extent that such obligations,
liabilities or indebtedness constitute Obligations as such term is defined
herein or otherwise receive the benefit of the security interest of Agent in any
Collateral. To the extent Agent may revise the lending formulas used to
determine the Borrowing Base or establish new criteria or revise existing
criteria for Eligible Commercial Receivables, Eligible Credit Card Receivables
or Eligible Inventory so as to address any circumstances, condition, event or
contingency in a manner satisfactory to Agent, Agent shall not establish a
Reserve for the same purpose. The amount of any Reserve established by Agent
shall have a reasonable relationship to the event, condition or other matter
which is the basis for such reserve as determined by Agent in good faith.

1.121 “Revolving Loans” shall have the meaning set forth in Section 2.1(a).

1.122 “Scheduled Maturity Date” shall the meaning set forth in Section 13.1
hereof.

1.123 “Securities Act” shall mean the Securities Act of 1933, as amended, or any
comparable statement under any similar federal statute then in force.

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

1.125 “Solvent” shall mean, as to any Person on any particular date, that such
Person (a) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage and is able to pay
its debts as they mature, (b) has assets having a value, both at fair valuation
and at present fair saleable value, greater than the amount required to pay its
probable liabilities (including contingencies), and (c) does not believe that it
will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.

1.126 “Special Agent Advances” shall have the meaning set forth in Section 12.11
hereof.

1.127 “Store Accounts” shall have the meaning set forth in Section 6.3 hereof.

1.128 “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the

 

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happening of any contingency), managers, trustees or other controlling persons,
or an equivalent controlling interest therein, of such Person is, at the time,
directly or indirectly, owned by such Person and/or one or more subsidiaries of
such Person.

1.129 “Supermajority Lenders” shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate at least 66.67% of the aggregate of the Commitments of all
Lenders, or if the Commitments shall have been terminated, Lenders then holding
at least 66.67% of the sum of, without duplication, the then outstanding Loans
and outstanding Letter of Credit Accommodations (with the aggregate amount of
each Lender’s risk participation and funded participation in Letter of Credit
Accommodations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition).

1.130 [Intentionally Omitted].

1.131 “Swing Line Borrowing” shall mean a borrowing of a Swing Line Loan
pursuant to Section 2.6.

1.132 “Swing Line Lender” shall mean Wells Fargo, in its capacity as provider of
Swing Line Loans, or any successor swing line lender hereunder.

1.133 “Swing Line Loan” shall have the meaning specified in Section 2.6.

1.134 “Swing Line Loan Notice” shall mean a notice of a Swing Line Borrowing
pursuant to Section 2.6.

1.135 “Swing Line Sublimit” shall mean an amount equal to 35,000,000.

1.136 “Taxes” shall mean 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.

1.137 “Termination Value” shall mean, in respect to any one or more Hedging
Transactions, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedging Transactions, (a) for any date on or
after the date such Hedging Transactions 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 Hedging Transactions, as
determined by the applicable counterparty in accordance with the terms thereof
and in accordance with customary methods for calculating mark-to-market values
under similar arrangements by such counterparty.

1.138 “Transaction Costs” shall mean all transaction fees, expenses, charges and
other amounts related to the Transactions (including, without limitation, any
financing fees, rating agency fees, the Termination Value associated with the
termination of Hedging Transactions, legal fees and expenses, due diligence fees
or any other fees and expenses in connection therewith) not to exceed
$7,500,000.

 

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1.139 “Transactions” shall mean, collectively, the transactions contemplated to
occur on the Closing Date by this Agreement and the repayment of all existing
Indebtedness of Borrower and Guarantors (other than the Indebtedness permitted
hereunder).

1.140 “UCC” shall mean 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.

1.141 “Value” shall mean, as determined by Agent in good faith, with respect to
Inventory, the lower of (a) Cost or (b) market value, provided, that, for
purposes of the calculation of the Borrowing Base, (i) the Value of the
Inventory shall not include: (A) the portion of the value of Inventory equal to
the profit earned by any Affiliate on the sale thereof to Borrower, (B) storage
and purchasing costs in respect of Inventory of Borrower which are capitalized,
(C) vendor rebates or (D) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same manner
and consistent with the most recent appraisal of the Inventory received and
accepted by Agent prior to the date hereof, if any.

1.142 “Voting Stock” shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.

1.143 “Weekly Reporting Period” shall mean at any time during which (a) Excess
Availability is less than the greater of, for any period of five consecutive
Business Days (i) 12.5% of the lesser of (A) the Borrowing Base or (B) the
Maximum Credit or (ii) $15,000,000 until September 30, 2012 and $20,000,000
thereafter or (b) an Event of Default has occurred and is continuing.

1.144 “Wells Fargo” shall mean Wells Fargo Bank, National Association and its
successors.

 

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SECTION 2. CREDIT FACILITIES

2.1 Revolving Loans.

(a) Subject to and upon the terms and conditions contained herein, each Lender
severally (and not jointly) agrees to make its Pro Rata Share of revolving loans
(each such loan, a “Revolving Loan”) to Borrower from time to time in amounts
requested by Borrower up to the aggregate amount outstanding for all Lenders at
any time equal to the lesser of (i) Borrowing Base or (ii) the Maximum Credit
less, in each case, the outstanding amount of Swing Line Loans and Letter of
Credit Accommodations.

(b) Except in Agent’s discretion, with the consent of all Lenders, or as
otherwise provided herein, (i) the aggregate amount of the Loans (including
Swing Line Loans) and the Letter of Credit Accommodations outstanding at any
time shall not exceed the Maximum Credit, and (ii) the aggregate principal
amount of the Loans (including Swing Line Loans) and the Letter of Credit
Accommodations outstanding at any time shall not exceed the Borrowing Base.

(c) In the event that the aggregate principal amount of the Loans (including
Swing Line Loans) and the amount of Letter of Credit Accommodations outstanding
to Borrower exceed the Borrowing Base, or the aggregate amount of the
outstanding Letter of Credit Accommodations exceeds the sublimit for Letter of
Credit Accommodations set forth in Section 2.2(e), or the aggregate amount of
the Loans (including Swing Line Loans) and Letter of Credit Accommodations
exceed the Maximum Credit, such event shall not limit, waive or otherwise affect
any rights of Agent or Lenders in such circumstances or on any future occasions
and Borrower shall, upon at least one (1) day’s prior written notice from Agent
to Borrower, which may be made at any time or from time to time, immediately
repay to Agent the entire amount of any such excess(es) for which payment is
demanded.

(d) Borrower may from time to time request and repay Revolving Loans subject to
the provisions of this Agreement and the other Financing Agreements.

2.2 Letter of Credit Accommodations.

(a) Subject to and upon the terms and conditions contained herein, at the
request of Borrower, Agent agrees, for the ratable risk of each Lender according
to its Pro Rata Share, to provide or arrange for Letter of Credit Accommodations
for the account of Borrower or a Guarantor containing terms and conditions
acceptable to Agent and the issuer thereof. Any payments made by or on behalf of
Agent or any Lender to any issuer thereof and/or related parties in connection
with the Letter of Credit Accommodations provided to or for the benefit of
Borrower shall constitute additional Revolving Loans to Borrower pursuant to
this Section 2.

(b) In addition to any charges, fees or expenses charged by any bank or issuer
in connection with the Letter of Credit Accommodations, Borrower shall pay to
Agent, for the

 

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account of Lenders, on the daily outstanding balance of Letter of Credit
Accommodations, a letter of credit fee calculated at a rate per annum based on
the then Applicable Margin for Eurodollar Rate Loans, except that Agent may, and
upon the written direction of Required Lenders shall, require Borrower to pay to
Agent for the benefit of Lenders such letter of credit fee, at a rate equal to
two (2%) percent per annum in excess of the Applicable Margin on such daily
outstanding balance for: (A) the period from and after the date of termination
hereof until Agent and Lenders have received full and final payment of all
Obligations (notwithstanding entry of a judgment against Borrower) and (B) the
period from and after the date of the occurrence of an Event of Default under
Sections 10.1(a)(i), 10.1(g) and 10.1(h) for so long as such Event of Default is
continuing as determined by Agent. Such letter of credit fee shall be payable
monthly in arrears on the first day of each month and calculated on the basis of
a three hundred sixty (360) day year and actual days elapsed and the obligation
of Borrower to pay such fee shall survive the termination of this Agreement. In
addition to the letter of credit fees set forth above, Borrower agrees to pay to
Agent, for the account of Agent, in respect of each Letter of Credit
Accommodation issued pursuant to the terms of this Agreement, a fronting fee at
a rate equal to one-eighth of one (1/8%) percent (on a per annum basis)
calculated upon the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month.

(c) Borrower shall give Agent two (2) Business Days’ prior written notice of
Borrower’s request for the issuance of a Letter of Credit Accommodation. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit Accommodation requested, the effective date (which date shall
be a Business Day and in no event shall be a date less than ten (10) days prior
to the end of the then current term of this Agreement) of issuance of such
requested Letter of Credit Accommodation, whether such Letter of Credit
Accommodations may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit Accommodation is to expire (which date shall be
a Business Day), the purpose for which such Letter of Credit Accommodation is to
be issued, and the beneficiary of the requested Letter of Credit Accommodation.
Borrower shall attach to such notice the proposed terms of the Letter of Credit
Accommodation.

(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) Borrower shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such times and in such
manner as such proposed issuer may require, an application, in form and
substance reasonably satisfactory to Agent and satisfactory to such proposed
issuer, for the issuance of the Letter of Credit Accommodation and such other
documents as may be required pursuant to the terms thereof, and the form and
terms of the proposed Letter of Credit Accommodation shall be satisfactory to
Agent and such proposed issuer, (ii) as of the date of issuance, no order of any
court, arbitrator or other Governmental Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing letters of credit
of the type and in the amount of the proposed Letter of Credit Accommodation,
and no law, rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally shall
prohibit, or request that the proposed issuer of such Letter of Credit
Accommodation refrain from, the

 

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issuance of letters of credit generally or the issuance of such Letters of
Credit Accommodation and (iii) after giving effect to any Letter of Credit
Accommodation, the aggregate outstanding amount of Loans and Letter of Credit
Accommodations shall not exceed the lesser of (A) the Borrowing Base then in
effect and (B) the Maximum Credit.

(e) Except in Agent’s discretion, with the consent of all Lenders, the amount of
all outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Agent or any Lender in connection therewith
shall not at any time exceed $60,000,000.

(f) Borrower and each Guarantor shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or willful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Borrower and each Guarantor assume all risks with respect to the
acts or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
Borrower’s agent. Borrower and each Guarantor each assumes all risks for, and
agrees to pay, all foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit Accommodations or any
documents, drafts or acceptances thereunder. Borrower and each Guarantor each
hereby releases and holds Agent and Lenders harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by Borrower, Guarantor, by
any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation, except for the gross negligence or willful
misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the termination
of this Agreement.

(g) In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, Borrower and each Guarantor shall, at Agent’s request, instruct
all suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver them to Agent and/or subject to
Agent’s order, and if they shall come into Borrower’s or any Guarantor’s
possession, to deliver them, upon Agent’s request, to Agent in their original
form. Borrower and each Guarantor shall also, at Agent’s request, designate
Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents.

(h) Borrower and each Guarantor each hereby irrevocably authorizes and directs
any issuer of a Letter of Credit Accommodation to name Borrower or such
Guarantor as the account party therein and to deliver to Agent all instruments,
documents and other writings and property received by issuer pursuant to the
Letter of Credit Accommodations and to accept and rely upon Agent’s instructions
and agreements with respect to all matters arising in connection with the Letter
of Credit Accommodations or the applications therefor. Nothing

 

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contained herein shall be deemed or construed to grant Borrower or any Guarantor
any right or authority to pledge the credit of Agent or any Lender in any
manner. Agent and Lenders shall have no liability of any kind with respect to
any Letter of Credit Accommodation provided by an issuer other than Agent or any
Lender unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Borrower and each Guarantor shall be bound by
any reasonable interpretation made in good faith by Agent, or any other issuer
or correspondent under or in connection with any Letter of Credit Accommodation
or any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of Borrower or such
Guarantor.

(i) So long as no Event of Default exists or has occurred and is continuing,
Borrower may (i) approve or resolve any questions of non-compliance of
documents, (ii) give any instructions as to acceptance or rejection of any
documents or goods, (iii) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders, and (iv) with Agent’s
consent, grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents, and agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral.

(j) At any time an Event of Default exists or has occurred and is continuing,
Agent shall have the right and authority to, and Borrower shall not, without the
prior written consent of Agent, (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, (iv) grant any
extensions of the maturity of, time of payments for, or time of presentation of,
any drafts, acceptances, or documents, and (v) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit Accommodations,
or documents, drafts or acceptances thereunder or any letters of credit included
in the Collateral. Agent may take such actions either in its own name or in
Borrower’s name.

(k) Any rights, remedies, duties or obligations granted or undertaken by
Borrower or any Guarantor to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by Borrower or such Guarantor to Agent
for the ratable benefit of Lenders. Any duties or obligations undertaken by
Agent to any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrower and each Guarantor to Agent
for the ratable benefit of Lenders and to apply in all respects to Borrower and
each Guarantor.

(l) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to

 

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the extent of such Lender’s Pro Rata Share of the liability with respect to such
Letter of Credit Accommodation (including, without limitation, all Obligations
with respect thereto).

(m) Borrower is irrevocably and unconditionally obligated, without presentment,
demand or protest, to pay to Agent any amounts paid by an issuer of a Letter of
Credit Accommodation with respect to such Letter of Credit Accommodation
(whether through the borrowing of Loans in accordance with Section 2.2(a) or
otherwise). In the event that Borrower fails to pay Agent on the date of any
payment under a Letter of Credit Accommodation in an amount equal to the amount
of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each Lender of the unreimbursed amount of such payment and each
Lender agrees, upon one (1) Business Day’s notice, to fund to Agent the purchase
of its participation in such Letter of Credit Accommodation in an amount equal
to its Pro Rata Share of the unpaid amount. The obligation of each Lender to
deliver to Agent an amount equal to its respective participation pursuant to the
foregoing sentence is absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other event
or circumstance. If such amount is not made available by a Lender when due,
Agent shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by Borrower in
respect of Loans that are Base Rate Loans as set forth in Section 3.1(a) hereof.

2.3 Increase in Maximum Credit.

(a) Borrower may, at any time, deliver a written request to Agent to increase
the Maximum Credit. Any such written request shall specify the amount of the
increase in the Maximum Credit that Borrower is requesting, provided, that,
(i) in no event shall the aggregate amount of any such increase in the Maximum
Credit cause the Maximum Credit to exceed $400,000,000, (ii) such request shall
be for an increase of not less than $25,000,000 and integral multiples of
$5,000,000 in excess of such amount, (iii) any such request shall be
irrevocable, and (iv) in no event shall more than one such written request be
delivered to Agent in any calendar quarter.

(b) Upon the receipt by Agent of any such written request, Agent shall seek
increased Commitments from existing Lenders or new Commitments from such
Eligible Transferees as it may determine, after consultation with Borrower. In
the event Lenders (or Lenders and any such Eligible Transferees, as the case may
be) have committed in writing to provide increases in their Commitments or new
Commitments in an aggregate amount in excess of the increase in the Maximum
Credit requested by Borrower or permitted hereunder, Agent shall then have the
right to allocate such commitments in such amounts and manner as Agent may
determine, after consultation with Borrower. No Lender shall be obligated to
provide an increase in its Commitment, and any determination to increase the
Commitment of a Lender shall be within the sole and absolute discretion of such
Lender.

 

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(c) The Maximum Credit shall be increased by the amount of the increase in
Commitments from Lenders or new Commitments from Eligible Transferees, allocated
by Agent as provided above, for which Agent has received Assignment and
Acceptances thirty (30) days after the date of the request by Borrower for the
increase or such earlier date as Agent and Borrower may agree (but subject to
the satisfaction of the conditions set forth below), whether or not the
aggregate amount of the increase in Commitments and new Commitments, as the case
may be, equal or exceed the amount of the increase in the Maximum Credit
requested by Borrower in accordance with the terms hereof, effective on the date
that each of the following conditions have been satisfied:

(i) Agent shall have received from each Lender or Eligible Transferee that is
providing an additional or new Commitment as part of the increase in the Maximum
Credit, an Assignment and Acceptance duly executed by such Lender or Eligible
Transferee and Borrower, provided, that, the aggregate Commitments set forth in
such Assignment and Acceptance(s) shall be not less than $5,000,000;

(ii) the conditions precedent to the making of Loans set forth in Section 4.2
shall be satisfied as of the date of the increase in the Maximum Credit, both
before and after giving effect to such increase;

(iii) if requested by Agent, Agent shall have received an opinion of counsel to
Borrower in form and substance and from counsel reasonably satisfactory to Agent
addressing such matters as Agent may reasonably request (including an opinion as
to no conflicts with other Indebtedness);

(iv) such increase in the Maximum Credit on the date of the effectiveness
thereof shall not violate any applicable law, regulation or order or decree of
any court or other Governmental Authority and shall not be enjoined,
temporarily, preliminarily or permanently;

(v) there shall have been paid to each Lender and Eligible Transferee providing
an additional or new Commitment in connection with such increase in the Maximum
Credit all fees and expenses due and payable to such Person on or before the
effectiveness of such increase; and

(vi) there shall have been paid to Agent, for the account of Agent and Lenders
(in accordance with any agreement among them), all fees and expenses (including
reasonable fees and expenses of counsel) due and payable pursuant to any of the
Financing Agreements on or before the effectiveness of such increase.

(d) As of the effective date of any such increase in the Maximum Credit, each
reference to the term Maximum Credit herein, and in any of the other Financing
Agreements shall be deemed amended to mean the amount of the Maximum Credit
specified in the most recent written notice from Agent to Borrower of the
increase in the Maximum Credit.

 

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2.4 Commitments. Notwithstanding anything herein to the contrary, the aggregate
amount of each Lender’s Pro Rata Share of the Loans, Letter of Credit
Accommodations (and participations required to be purchased hereunder under any
circumstances) and Special Agent Advances shall not exceed the amount of such
Lender’s Commitment, as the same may from time to time be amended in accordance
with the provisions hereof.

2.5 Bank Products. Borrower or any of its Subsidiaries may (but no such Person
is required to) request that the Bank Product Providers provide or arrange for
such Person to obtain Bank Products from Bank Product Providers, and each Bank
Product Provider may, in its sole discretion, provide or arrange for such Person
to obtain the requested Bank Products. Borrower or any of its Subsidiaries that
obtains Bank Products shall indemnify and hold Agent, each Lender and their
respective Affiliates harmless from any and all obligations now or hereafter
owing to any other Person by any Bank Product Provider in connection with any
Bank Products other than for gross negligence or willful misconduct on the part
of any such indemnified Person. Borrower and its Subsidiaries acknowledge and
agree that the obtaining of Bank Products from Bank Product Providers (a) is in
the sole discretion of such Bank Product Provider, and (b) is subject to all
rules and regulations of such Bank Product Provider.

2.6 Swing Line Loans.

(a) The Swing Line. Subject to the terms and conditions set forth herein, the
Swing Line Lender may, in reliance upon the agreements of the other Lenders set
forth in this Section 2.6, make loans (each such loan, a “Swing Line Loan”) to
Borrower from time to time on any Business Day in an aggregate amount not to
exceed at any time outstanding the amount of the Swing Line Sublimit; provided,
however, that after giving effect to any Swing Line Loan, the aggregate
outstanding amount of all Loans and Letter of Credit Accommodations shall not
exceed the lesser of (i) the Borrowing Base or (ii) the Maximum Credit, and
provided, further, that the Borrower shall not use the proceeds of any Swing
Line Loan to refinance any outstanding Swing Line Loan, and provided further
that the Swing Line Lender shall not be obligated to make any Swing Line Loan at
any time when any Lender is at such time a Defaulting Lender hereunder, unless
the Swing Line Lender has entered into satisfactory arrangements with Borrower
or such Lender to eliminate the Swing Line Lender’s risk with respect to such
Lender. Within the foregoing limits, and subject to the other terms and
conditions hereof, Borrower may borrow under this Section 2.6, request and
prepay in accordance with Section 2.1(d), and reborrow under this Section 2.6.
Each Swing Line Loan shall bear interest only at a rate based on the Base Rate.
Immediately upon the making of a Swing Line Loan, each Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Lender’s Pro Rata Share times the amount of such
Swing Line Loan. The Swing Line Lender shall have all of the benefits and
immunities (A) provided to the Agent in Section 12 with respect to any acts
taken or omissions suffered by the Swing Line Lender in connection with Swing
Line Loans made by it or proposed to be made by it as if the term “Agent” as
used in Section 12 included the Swing Line Lender with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the Swing
Line Lender.

 

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(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon
Borrower’s irrevocable notice to the Swing Line Lender and the Agent, which may
be given by telephone. Each such notice must be received by the Swing Line
Lender and the Agent not later than 1:00 p.m. on the requested borrowing date,
and shall specify (i) the amount to be borrowed, which shall be a minimum of
$100,000, and (ii) the requested borrowing date, which shall be a Business Day.
Each such telephonic notice must be confirmed promptly by delivery to the Swing
Line Lender and the Agent of a written Swing Line Loan Notice, appropriately
completed and signed by an authorized officer of Borrower. Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with the Agent (by telephone or in writing) that
the Agent has also received such Swing Line Loan Notice and, if not, the Swing
Line Lender will notify the Agent (by telephone or in writing) of the contents
thereof. Unless the Swing Line Lender has received notice (by telephone or in
writing) from the Agent at the request of the Required Lenders prior to 2:00
p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing
Line Lender not to make such Swing Line Loan as a result of the limitations set
forth in the proviso to the first sentence of Section 2.6(a), or (B) that one or
more of the applicable conditions specified in Section 4 is not then satisfied,
then, subject to the terms and conditions hereof, the Swing Line Lender may, not
later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Notice, make the amount of its Swing Line Loan available Borrower at its office
by crediting the account of Borrower on the books of the Swing Line Lender in
immediately available funds.

(c) Refinancing of Swing Line Loans.

(i) The Swing Line Lender at any time in its sole and absolute discretion may
request (and shall request no less frequently than weekly in respect of each
borrowing of a Swing Line Loan), on behalf of Borrower (which hereby irrevocably
authorizes the Swing Line Lender to so request on its behalf), that each Lender
make a Base Rate Loan in an amount equal to such Lender’s Pro Rata Share of the
amount of Swing Line Loans then outstanding. Such request shall be made in
writing and subject to the unutilized portion of the lesser of (A) the Borrowing
Base or (B) the Maximum Credit and the conditions set forth in Section 4.2. The
Swing Line Lender shall furnish Borrower with a copy of the applicable notice
promptly after delivering such notice to the Agent. Each Lender shall make an
amount equal to its Pro Rata Share of the amount specified in such notice
available to the Agent in immediately available funds for the account of the
Swing Line Lender at the Agent’s office not later than 1:00 p.m. on the day
specified in such notice, whereupon, subject to Section 2.6(c)(ii), each Lender
that so makes funds available shall be deemed to have made a Base Rate Loan to
Borrower in such amount. The Agent shall remit the funds so received to the
Swing Line Lender.

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a
borrowing in accordance with Section 2.6(c)(i), the request for Base Rate Loans
submitted by the Swing Line Lender as set forth herein shall be deemed to be a
request by the Swing Line Lender that each of the Lenders fund its risk
participation in the relevant Swing Line Loan and each Lender’s payment to the
Agent for the account of the Swing Line Lender pursuant to Section 2.6(c)(i)
shall be deemed payment in respect of such participation.

 

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(iii) If any Lender fails to make available to the Agent for the account of the
Swing Line Lender any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.6(c) by the time specified in
Section 2.6(c)(i), the Swing Line Lender shall be entitled to recover from such
Lender (acting through the Agent), on demand, such amount with interest thereon
for the period from the date such payment is required to the date on which such
payment is immediately available to the Swing Line Lender at a rate per annum
equal to the greater of the Prime Rate and a rate determined by the Swing Line
Lender in accordance with banking industry rules on interbank compensation plus
any administrative, processing or similar fees customarily charged by the Swing
Line Lender in connection with the foregoing. If such Lender pays such amount
(with interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Loan included in the relevant borrowing or funded participation in the
relevant Swing Line Loan, as the case may be. A certificate of the Swing Line
Lender submitted to any Lender (through the Agent) with respect to any amounts
owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Lender’s obligation to make Loans pursuant to Section 2.1 or to
purchase and fund risk participations in Swing Line Loans pursuant to this
Section 2.6(c) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Lender, Borrower
or any other Person for any reason whatsoever, (B) the occurrence or continuance
of a Default or an Event of Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Loans pursuant to this Section 2.6(c) is
subject to the conditions set forth in Section 4. No such funding of risk
participations shall relieve or otherwise impair the obligation of the Borrower
to repay Swing Line Loans, together with interest as provided herein.

(d) Repayment of Participations.

(i) At any time after any Lender has purchased and funded a risk participation
in a Swing Line Loan, if the Swing Line Lender receives any payment on account
of such Swing Line Loan, the Swing Line Lender will distribute to such Lender
its Pro Rata Share of such payment (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender’s risk
participation was funded) in the same funds as those received by the Swing Line
Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender, each Lender shall pay to the Swing Line Lender its Pro Rata Share
thereof on demand of the Agent, plus interest thereon from the date of such
demand to the date such amount is returned, at a rate per annum equal to the
Prime Rate. The Agent will make such demand upon the request of the Swing Line
Lender. The obligations of the Lenders under this clause shall survive the
payment in full of the Obligations and the termination of this Agreement.

(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing Borrower for interest on the Swing Line Loans. Until
each Lender funds its Base Rate Loan or risk participation pursuant to this
Section 2.6 to refinance such

 

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Lender’s Pro Rata Share of any Swing Line Loan, interest in respect of such Pro
Rata Share shall be solely for the account of the Swing Line Lender.

(f) Payments Directly to Swing Line Lender. Borrower shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the Swing
Line Lender.

SECTION 3. INTEREST AND FEES

3.1 Interest.

(a) Borrower shall pay to Agent, for the benefit of Lenders, interest on the
outstanding principal amount of the Loans at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or termination
hereof shall be payable on demand.

(b) Borrower may from time to time request Eurodollar Rate Loans or may request
that Base Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period.
Notwithstanding anything herein to the contrary, Swing Line Loans shall always
be the Base Rate Loans. Such request from Borrower shall specify the amount of
the Eurodollar Rate Loans or the amount of the Base Rate Loans to be converted
to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be
continued (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by Agent of such a
request from Borrower, such Eurodollar Rate Loans shall be made or Base Rate
Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans
shall continue, as the case may be, provided, that, (i) no Default or Event of
Default shall exist or have occurred and be continuing, (ii) no party hereto
shall have sent any notice of termination of this Agreement, Borrower shall have
complied with such customary procedures as are established by Agent and
specified by Agent to Borrower from time to time for requests by Borrower for
Eurodollar Rate Loans, (iii) no more than eight (8) Interest Periods may be in
effect at any one time, (iv) the aggregate amount of the Eurodollar Rate Loans
must be in an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, (v) at all times that a Cash Dominion Event has
occurred and is continuing (and at all other times, Borrower shall use its best
efforts to ensure that) the maximum amount of the Eurodollar Rate Loans in the
aggregate at any time requested by Borrower shall not exceed the amount equal to
the lowest principal amount of the Loans which it is anticipated will be
outstanding during the applicable Interest Period, in each case as determined by
Agent in good faith (but with no obligation of Agent or Lenders to make such
Loans), and (vi) Agent and each Lender shall have determined that the Interest
Period or Adjusted Eurodollar Rate is available to Agent and such Lender and can
be readily determined as of the date of the request for such Eurodollar Rate
Loan by Borrower. Any request by or on behalf of Borrower for Eurodollar Rate
Loans or to convert Base Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to
the contrary contained herein, Agent and Lenders shall not be required to
purchase United States Dollar deposits in the London interbank

 

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market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Agent and Lenders had purchased such deposits to fund the
Eurodollar Rate Loans.

(c) Any Eurodollar Rate Loans shall automatically convert to Base Rate Loans
upon the last day of the applicable Interest Period, unless Agent has received
and approved a request to continue such Eurodollar Rate Loan at least three
(3) Business Days prior to such last day in accordance with the terms hereof.
Any Eurodollar Rate Loans shall, at Agent’s option, upon notice by Agent to
Borrower, be subsequently converted to Base Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrower shall pay to Agent, for
the benefit of Lenders, upon demand by Agent (or Agent may, at its option,
charge any loan account of Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Base Rate Loans.

(d) Interest (other than interest on Eurodollar Rate Loans) shall be payable by
Borrower to Agent, for the account of Lenders, monthly in arrears not later than
the first day of each calendar month and shall be calculated on the basis of a
three hundred sixty (360) day year and actual days elapsed. Interest on
Eurodollar Rate Loans shall be payable by Borrower to Agent, for the account of
Lenders, on the last day of each Interest Period applicable to such Loan;
provided, that if any Interest Period for a Eurodollar Rate Loan exceeds three
months, interest shall also be payable on the date that falls on the three month
anniversary of the beginning of such Interest Period. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Base Rate
effective on the first day of the month after any change in such Base Rate is
announced based on the Base Rate in effect on the last day of the month in which
any such change occurs. In no event shall charges constituting interest payable
by Borrower to Agent and Lenders exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision of
this Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.

3.2 Fees.

(a) Borrower shall pay to Agent, for the account of Lenders, monthly an unused
line fee at the Unused Line Rate (defined below) then applicable calculated upon
the amount by which the Maximum Credit exceeds the average daily principal
balance of the outstanding Revolving Loans and Letter of Credit Accommodations
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears. The
“Unused Line Rate” shall be a rate per annum set forth below and determined
based on the amount of the daily average of the outstanding Revolving Loans and
Letter of Credit Accommodations for the immediately preceding calendar quarter
period as set forth below:

 

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Tier    Daily Average Revolving Loans and Letter of Credit Accommodations   
Unused Line Rate   1    Greater than or equal to 50% of the Borrowing Base     
0.375 %  2    Less than 50% of the Borrowing Base      0.50 % 

provided, that, the Unused Line Rate set forth in Tier 2 of the chart above
shall be in effect from the Closing Date until the last day of the sixth full
month after the Closing Date. The Unused Line Rate shall be calculated and
established thereafter once every calendar quarter, effective as of the first
day of such calendar quarter period and shall remain in effect until the next
quarterly adjustment date. Swing Line Loans will not be considered in the
calculation of the Unused Line Rate.

(b) Borrower agrees to pay to Agent the other fees and amounts set forth in the
Fee Letter in the amounts and at the times specified therein.

3.3 Changes in Laws and Increased Costs of Loans.

(a) If after the date hereof, either (i) any change in, or in the interpretation
of, any law or regulation is introduced, including, without limitation, with
respect to reserve requirements, applicable to Lender or any banking or
financial institution from whom any Lender borrows funds or obtains credit (a
“Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future
guideline or request from any central bank or other Governmental Authority or
(iii) a Funding Bank or any Lender determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any
Lender’s capital as a consequence of its obligations hereunder to a level below
that which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank’s or Lender’s policies
with respect to capital adequacy) by an amount deemed by such Lender, in good
faith, to be material, and the result of any of the foregoing events described
in clauses (i), (ii) or (iii) is or results in an actual increase in the cost to
any Lender of funding or maintaining the Loans, the Letter of Credit
Accommodations or its Commitment, then Borrower and each Guarantor shall from
time to time upon demand by Agent pay to Agent additional amounts sufficient to
indemnify Lenders against such actual increased cost on an after-tax basis
(after taking into account applicable deductions and credits in respect of the
amount indemnified). A certificate as to the amount of such actual increased
cost and showing in reasonable detail the computation thereof shall be submitted
to Borrower by Agent and shall be conclusive, absent manifest error. For
purposes of this Agreement, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, BASEL III and all requests, guidelines or directives in
connection with the foregoing are deemed to have gone into effect and been
adopted after the Closing Date.

 

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(b) If prior to the first day of any Interest Period, (i) Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon Borrower and each Guarantor) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
London Interbank Offered Rate for such Interest Period, (ii) Agent has received
notice from the Required Lenders that the London Interbank Offered Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal
amounts of the Eurodollar Rate Loans to which such Interest Period is to be
applicable are not generally available in the London interbank market, Agent
shall give telecopy or telephonic notice thereof to Borrower as soon as
practicable thereafter, and will also give prompt written notice to Borrower
when such conditions no longer exist. If such notice is given (A) any Eurodollar
Rate Loans requested to be made on the first day of such Interest Period shall
be made as Base Rate Loans, (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Eurodollar Rate Loans
shall be converted to or continued as Base Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Base Rate Loans. Until such notice has been
withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall Borrower have the right to convert Base Rate Loans to
Eurodollar Rate Loans.

(c) Notwithstanding any other provision herein, if the adoption of or any change
in any law, treaty, rule or regulation or final, non-appealable determination of
an arbitrator or a court or other Governmental Authority or in the
interpretation or application thereof occurring after the date hereof shall make
it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as
contemplated by this Agreement, (i) Agent or such Lender shall promptly give
written notice of such circumstances to Borrower (which notice shall be
withdrawn whenever such circumstances no longer exist), (ii) the commitment of
such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate
Loans as such and convert Base Rate Loans to Eurodollar Rate Loans shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then
have a commitment only to make a Base Rate Loan when a Eurodollar Rate Loan is
requested and (iii) such Lender’s Loans then outstanding as Eurodollar Rate
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Rate Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, Borrower and each Guarantor shall
pay to such Lender such amounts, if any, as may be required pursuant to
Section 3.3(d) below.

(d) Borrower and each Guarantor shall indemnify Agent and each Lender and to
hold Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after Borrower has given a notice requesting the same in accordance with the
provisions of this Loan Agreement, (ii) default by Borrower in making any
prepayment of a Eurodollar Rate Loan after Borrower has given a notice thereof
in accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include

 

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an amount equal to the excess, if any, of (A) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to
borrow, convert or extend to the last day of the applicable Interest Period (or,
in the case of a failure to borrow, convert or extend, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Rate Loans provided for herein over (B) the
amount of interest (as determined by such Agent or such Lender) which would have
accrued to Agent or such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the London interbank market. This
covenant shall survive the termination or non-renewal of this Loan Agreement and
the payment of the Obligations.

SECTION 4. CONDITIONS PRECEDENT

4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations.
Each of the following is a condition precedent to Agent and Lenders making the
initial Loans and providing the initial Letter of Credit Accommodations
hereunder:

(a) all requisite corporate action or limited liability company action, as
applicable, and proceedings in connection with this Agreement and the other
Financing Agreements shall be reasonably satisfactory in form and substance to
Agent, and Agent shall have received all information and copies of all
documents, including records of requisite corporate action and proceedings which
Agent may have reasonably requested in connection therewith, such documents
where requested by Agent or its counsel to be certified by appropriate corporate
officers or Governmental Authority (and including a copy of the certificate of
incorporation of Borrower and each Guarantors certified by the Secretary of
State (or equivalent Governmental Authority) which shall set forth the same
complete corporate or limited liability company name of Borrower or such
Guarantor, as the case may be, as is set forth herein and such document as shall
set forth the organizational identification number of Borrower or such
Guarantor, if one is issued in its jurisdiction of incorporation or
organization);

(b) no material adverse change shall have occurred in the assets, business or
prospects of Borrower and Guarantors since December 31, 2010 and no change or
event shall have occurred which would impair in any material respect the ability
of Borrower or any Obligor to perform its obligations hereunder or under any of
the other Financing Agreements to which it is a party or of Agent or any Lender
to enforce the Obligations or realize upon the Collateral;

(c) Agent shall have received, in form and substance reasonably satisfactory to
it in good faith, an executed letter, from the Term Loan Lenders (as defined in
the Existing Loan Agreement) to Agent (i) specifying the payoff amount necessary
to repay in full all of the obligations of Borrower and Guarantors owing to the
Term Loan Lenders under the Term Loan Documents (as defined in the Existing Loan
Agreement), and (ii) providing for the release of any interest existing in favor
of the Term Loan Lenders in and to the assets of the Borrower and Guarantors
upon receipt of the specified payoff amount, together with authorization by the
Term Loan Lenders for Borrower or Agent to file UCC termination statements and
an undertaking to deliver other documentation evidencing the termination by the
Term Loan Lenders of any interest in and to any assets and properties of
Borrower and Guarantors; and the payoff and

 

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release of liens described in such letter shall have been consummated prior to
or simultaneously with the closing of this Credit Facility.

(d) Agent and Lenders shall have received the payment of all fees required to be
paid under the terms hereof and the Fee Letter.

(e) Borrower shall have Excess Availability of not less than $100,000,000 based
on the Borrower’s Borrowing Base as of February 28, 2011 after giving pro forma
effect to the application of proceeds of the initial Loans and after provision
for payment of all fees and expenses of the transaction. The term “Excess
Availability” for purposes of determining opening day availability means the
lesser of the Borrowing Base or the Maximum Credit, minus outstanding
Obligations (excluding Hedging Transactions and inchoate reimbursement and
indemnification obligations);

(f) Agent shall have received, in form and substance reasonably satisfactory to
Agent, Deposit Account Control Agreements by and among Agent, Borrower and each
Guarantor, as the case may be and each bank where Borrower (or any Guarantor)
has a deposit account (other than Store Accounts), in each case, duly
authorized, executed and delivered by such bank, Borrower or such Guarantor, as
the case may be;

(g) Agent shall have received evidence, in form and substance satisfactory to
Agent, that Agent has a valid perfected first priority security interest in all
of the Collateral;

(h) Agent shall have received (i) projected monthly balance sheets, income
statements, statements of cash flows and availability of Borrower and Guarantors
for the period through the end of the fiscal year ending March 31, 2012,
(ii) projected annual balance sheets, income statements, statements of cash
flows and availability of Borrower and Guarantors through the end of the 2015
fiscal year, in each case as to the projections described in clauses (i) and
(ii), with the results and assumptions set forth in all of such projections in
form and substance consistent with the projected financial statements heretofore
delivered to Agent, and (iii) any updates or modifications to the projected
financial statements of Borrower and Guarantors previously received by Agent, in
each case under this clause (iii) in form and substance satisfactory to Agent;

(i) Agent shall have received an updated certificate of Borrowing Base in form
satisfactory to Agent reflecting the Borrowing Base as of February 28, 2011;

(j) Agent shall have received and reviewed lien search results for the
jurisdiction of incorporation and organization of Borrower and Guarantors and
judgment search results for the jurisdiction of the chief executive office of
Borrower and Guarantors, which search results shall be in form and substance
reasonably satisfactory to Agent;

(k) Agent shall have received evidence of insurance and loss payee endorsements
required hereunder and under the other Financing Agreements, in form and
substance reasonably satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent as loss payee;

 

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(l) Agent shall have received, in form and substance reasonably satisfactory to
Agent, such opinion letters of counsel to Borrower and Guarantors with respect
to the Financing Agreements and such other matters as Agent may request; and

(m) the other Financing Agreements and all instruments and documents hereunder
and thereunder shall have been duly executed and delivered to Agent, in form and
substance reasonably satisfactory to Agent.

4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations. Each
of the following is an additional condition precedent to the Loans and/or
providing Letter of Credit Accommodations to Borrower, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:

(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on and
as of the date of the making of each such Loan or providing each such Letter of
Credit Accommodation and after giving effect thereto, except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
accurate on and as of such earlier date);

(b) no law, regulation, order, judgment or decree of any Governmental Authority
shall exist, and no action, suit, investigation, litigation or proceeding shall
be pending or threatened in any court or before any arbitrator or Governmental
Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect
(A) the making of the Loans or providing the Letter of Credit Accommodations, or
(B) the consummation of the transactions contemplated pursuant to the terms of
this Agreement, the other Financing Agreements, or (ii) has or would reasonably
be expected to have a Material Adverse Effect; and

(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

5.1 Grant of Security Interest. To secure payment and performance of all
Obligations, subject to Section 5.3 hereof, Borrower and each Guarantor hereby
grants to Agent, for itself and the benefit of Lenders and Bank Product
Providers, a continuing security interest in, a lien upon, and a right of set
off against, and hereby assigns to Agent, for itself and the benefit of Lenders
and Bank Product Providers, as security, and hereby confirms, reaffirms and
restates the prior grant thereof to Agent, for itself and the benefit of Lenders
and Bank Product Providers pursuant to the Existing Financing Agreements, all
personal and real property and fixtures, and interests in property and fixtures,
of Borrower and such Guarantor, whether now owned or hereafter acquired or
existing, and wherever located, subject to Section 5.3 hereof (together with all
other collateral security for

 

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the Obligations at any time granted to or held or acquired by Agent or any
Lender, collectively, the “Collateral”), including:

(a) all Accounts;

(b) all general intangibles, including, without limitation, all Intellectual
Property;

(c) all goods, including, without limitation, Inventory and Equipment;

(d) all fixtures;

(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;

(f) all instruments, including, without limitation, all promissory notes;

(g) all documents and all credit card sales drafts, credit card sales slips or
charge slips or receipts and other forms of store receipts;

(h) all deposit accounts;

(i) all letters of credit, banker’s acceptances and similar instruments and
including all letter-of-credit rights;

(j) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;

(k) all (i) investment property (including securities, whether certificated or
uncertificated, securities accounts, security entitlements, commodity contracts
or commodity accounts) and (ii) monies, credit balances, deposits and other
property of Borrower or Guarantors now or hereafter held or received by or in
transit to Agent, any Lender or its Affiliates or at any other depository or
other institution from or for the account of Borrower or any Guarantor, whether
for safekeeping, pledge, custody, transmission, collection or otherwise;

(l) all commercial tort claims, including, without limitation, those identified
in the Information Certificate;

(m) to the extent not otherwise described above, all Receivables;

(n) all Records; and

 

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(o) all products and proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

5.2 Perfection of Security Interests.

(a) Borrower and each Guarantor each irrevocably and unconditionally authorizes
Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and Borrower or such Guarantor as debtor, as Agent may require,
and including any other information with respect to Borrower or Guarantors or
otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as Agent may determine, together with any amendment and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Borrower and
each Guarantor hereby ratifies and approves all financing statements naming
Agent or its designee as secured party and Borrower or any Guarantor, as the
case may be, as debtor with respect to the Collateral (and any amendments with
respect to such financing statements) filed by or on behalf of Agent prior to
the date hereof and ratifies and confirms the authorization of Agent to file
such financing statements (and amendments, if any). Borrower and each Guarantor
hereby authorizes Agent to adopt on behalf of Borrower and such Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and Borrower or any Guarantor as debtor includes
assets and properties of Borrower or any Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower or such Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. Until such time
as all of the Obligations have been paid in full in accordance with
Section 13.1(a) hereof, in no event shall Borrower or any Guarantor at any time
file, or permit or cause to be filed, any correction statement or termination
statement with respect to any financing statement (or amendment or continuation
with respect thereto) naming Agent or its designee as secured party and Borrower
or any Guarantor as debtor.

(b) Neither Borrower nor any Guarantor has any chattel paper (whether tangible
or electronic) or instruments as of the date hereof, except as set forth in the
Information Certificate. In the event that Borrower or any Guarantor shall be
entitled to or shall receive any chattel paper or instrument after the date
hereof, Borrower and such Guarantor shall promptly notify Agent thereof in
writing. Promptly upon the receipt thereof by or on behalf of Borrower or any
Guarantor (including by any agent or representative), Borrower or such Guarantor
shall deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that Borrower or such Guarantor has or may at any time acquire,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify, in each case except as Agent may
otherwise agree. At Agent’s option, Borrower and each Guarantor shall, or Agent
may at any time on behalf of Borrower or such Guarantor, cause the original of
any such instrument or chattel paper to be conspicuously marked in a form and
manner

 

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acceptable to Agent with the following legend referring to chattel paper or
instruments as applicable: “This [chattel paper][instrument] is subject to the
security interest of Wells Fargo Bank, National Association, as Agent and any
sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party.”

(c) In the event that Borrower or any Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any “transferable record”
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) with a value in
excess of $250,000, in the aggregate, Borrower or such Guarantor shall promptly
notify Agent thereof in writing. Promptly upon Agent’s request, Borrower or such
Guarantor shall take, or cause to be taken, such actions as Agent may request to
give Agent control of such electronic chattel paper under Section 9-105 of the
UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.

(d) Neither Borrower nor any Guarantor has any deposit accounts as of the date
hereof, except as set forth in the Information Certificate. Borrower and
Guarantors shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Agent shall have received not less than five
(5) Business Days prior written notice of the intention of Borrower or any
Guarantor to open or establish such account, which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the bank at which such account
is to be opened or established, the individual at such bank with whom Borrower
or such Guarantor is dealing and the purpose of the account, (ii) the bank where
such account is opened or maintained shall be reasonably acceptable to Agent,
and (iii) on or before the opening of such deposit account (other than the
opening of a Store Account), Borrower or such Guarantor shall, as Agent may
specify, either (A) deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by
Borrower or such Guarantor and the bank at which such deposit account is opened
and maintained or (B) arrange for Agent to become the customer of the bank with
respect to the deposit account on terms and conditions acceptable to Agent. The
terms of this subsection (d) shall not apply to deposit accounts specifically
and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Borrower’s or any Guarantor’s
employees.

(e) Neither Borrower nor any Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.

(i) In the event that Borrower or any Guarantor shall be entitled to or shall at
any time after the date hereof hold or acquire any certificated securities,
Borrower or such Guarantor shall promptly endorse, assign and deliver the same
to Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as Agent may from time to

 

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time specify. If any securities, now or hereafter acquired by Borrower or any
Guarantor are uncertificated and are issued to Borrower or such Guarantor or its
nominee directly by the issuer thereof, Borrower or such Guarantor shall
immediately notify Agent thereof and shall as Agent may specify, either
(A) cause the issuer to agree to comply with instructions from Agent as to such
securities, without further consent of Borrower or such Guarantor or such
nominee, or (B) arrange for Agent to become the registered owner of the
securities.

(ii) Neither Borrower nor any Guarantor shall, directly or indirectly, after the
date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (A) Agent shall have received not less
than five (5) Business Days prior written notice of the intention of Borrower or
any Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the securities intermediary or
commodity intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower or such Guarantor is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be reasonably acceptable to Agent, and (C) on or before the opening of
such investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, Borrower or such Guarantor
shall as Agent may specify either (1) execute and deliver, and cause to be
executed and delivered to Agent, an Investment Property Control Agreement with
respect thereto duly authorized, executed and delivered by Borrower or such
Guarantor and such securities intermediary or commodity intermediary or
(2) arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.

(f) Neither Borrower nor any Guarantor is the beneficiary or otherwise entitled
to any right to payment under any letter of credit, banker’s acceptance or
similar instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower or any Guarantor shall be entitled to or
shall receive any right to payment under any letter of credit, banker’s
acceptance or any similar instrument with a principal amount in excess of
$250,000, individually, and $500,000, in the aggregate whether as beneficiary
thereof or otherwise after the date hereof, Borrower or such Guarantor shall
promptly notify Agent thereof in writing. Borrower or Guarantors shall
immediately, as Agent may specify, either (i) deliver, or cause to be delivered
to Agent, with respect to any such letter of credit, banker’s acceptance or
similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent by
Borrower or such Guarantor and agreeing to make all payments thereon directly to
Agent or as Agent may otherwise direct or (ii) cause Agent to become, at
Borrower’s expense, the transferee beneficiary of the letter of credit, banker’s
acceptance or similar instrument (as the case may be).

(g) Neither Borrower nor any Guarantors has any commercial tort claims as of the
date hereof, except as set forth in the Information Certificate. In the event
that Borrower or any Guarantor shall at any time after the date hereof have any
commercial tort claims for an

 

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amount in excess of $250,000, individually, and $500,000 in the aggregate,
Borrower or such Guarantor shall promptly notify Agent thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by Borrower or such
Guarantor to Agent of a security interest in such commercial tort claim (and the
proceeds thereof). In the event that such notice does not include such grant of
a security interest, the sending thereof by Borrower or such Guarantor to Agent
shall be deemed to constitute such grant to Agent. Upon the sending of such
notice, any commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by
the execution by Borrower or such Guarantor of this Agreement or any of the
other Financing Agreements, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and Borrower or such Guarantor as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, Borrower and Guarantors shall promptly upon Agent’s
request, execute and deliver, or cause to be executed and delivered, to Agent
such other agreements, documents and instruments as Agent may require in
connection with such commercial tort claim.

(h) Borrower and Guarantors do not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth in the Information Certificate and except for goods
located in the United States in transit to a location of Borrower or a Guarantor
permitted herein in the ordinary course of business of Borrower or such
Guarantor in the possession of the carrier transporting such goods. In the event
that any goods, documents of title or other Collateral (other than goods
in-transit) with a Value in excess of $500,000 (as may be increased by Agent in
its sole discretion) either individually or in the aggregate, are at any time
after the date hereof in the custody, control or possession of any other person
not referred to in the Information Certificate or such carriers, Borrower and
Guarantors shall promptly notify Agent thereof in writing. Promptly upon Agent’s
request, Borrower and Guarantors shall deliver to Agent a Collateral Access
Agreement duly authorized, executed and delivered by such person and the
Borrower or such Guarantor that is the owner of such Collateral.

(i) Borrower and each Guarantor shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first or second priority of, and the ability of Agent to enforce, the security
interest of Agent in any and all of the Collateral, including, without
limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC or other applicable
law, to the extent, if any, that Borrower’s or any Guarantor’s signature thereon
is required therefor, (ii) causing Agent’s name to be noted as secured party on
any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, or (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction, subject to

 

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the liens, security interest or other encumbrances that are permitted under
Section 9.8 hereof and such other exceptions with respect to priority and
perfection as are set forth herein and in the other Financing Agreements.

(j) Borrower and each Guarantor shall deliver to Agent copies of notifications
(each, a “Credit Card Notification”) substantially in the form of Exhibit E
attached hereto which have been executed on behalf of Borrower or such Guarantor
and delivered to Borrower’s or such Guarantor’s credit card clearinghouses and
processers listed on Schedule 8.16.

5.3 Special Provisions Regarding Collateral. Notwithstanding anything to the
contrary contained in this Section 5, the types or items of Collateral described
in Section 5.1 shall not include (a) any personal or real property leasehold
rights or interests, (b) any motor vehicles or certificates of title relating
thereto, (c) any rights or interest in any contract (other than a lease of
personal or real property), license, permit or license agreement covering
personal or real property of Borrower or any Guarantor, so long as under the
terms of such contract, license, permit or license agreement, or applicable law
with respect thereto, the grant of a security interest or lien therein to Agent
is prohibited and such prohibition has not been or is not waived or the consent
of the other party to such contract, license, permit or license agreement has
not been or is not otherwise obtained or (d) any “intent to use” trademark
applications for which a statement of use has not been filed (but only until
such statement is filed); provided, that, the foregoing exclusion in clause
(c) shall in no way be construed (i) to apply if any such prohibition is
unenforceable under the UCC or other applicable law or (ii) so as to limit,
impair or otherwise affect Agent’s unconditional continuing security interests
in and liens upon any rights or interests of Borrower or any Guarantor in or to
monies due or to become due under any such contract, license, permit or license
agreement (including any Receivables).

SECTION 6. COLLECTION AND ADMINISTRATION

6.1 Borrower’s Loan Accounts. Agent shall maintain one or more loan account(s)
on its books in which shall be recorded (a) all Loans, Letter of Credit
Accommodations and other Obligations and the Collateral, (b) all payments made
by or on behalf of Borrower or any Guarantor and (c) all other appropriate
debits and credits as provided in this Agreement, including fees, charges,
costs, expenses and interest. All entries in the loan account(s) shall be made
in accordance with Agent’s customary practices as in effect from time to time.

6.2 Statements. Agent shall render to Borrower each month a statement setting
forth the balance in the Borrower’s loan account(s) maintained by Agent for
Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and each Guarantor and
conclusively binding upon Borrower and each Guarantor as an account stated
except to the extent that Agent receives a written notice from Borrower of any
specific exceptions of Borrower thereto within thirty (30) days after the date
such statement has been received by Borrower. Until such time as

 

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Agent shall have rendered to Borrower a written statement as provided above, the
balance in Borrower’s loan account(s) shall be presumptive evidence of the
amounts due and owing to Agent and Lenders by Borrower and each Guarantor.

6.3 Collection of Accounts.

(a) Borrower and each Guarantor shall establish and maintain, at its expense,
deposit account arrangements and merchant payment arrangements with the banks
set forth on Schedule 8.10 to the Information Certificate and, subject to
Section 5.2(d) hereof, such other banks as Borrower may hereafter select. The
banks set forth on Schedule 8.10 to the Information Certificate constitute all
of the banks with which Borrower and each Guarantor have deposit account
arrangements and merchant payment arrangements as of the date hereof and
identifies each of the deposit accounts at such banks that are used solely for
receiving receipts from one or more retail store locations, warehouses or
distribution centers of Borrower and making ordinary course disbursements on
account of each such retail store location, warehouse and distribution center
(together with any other deposit accounts at any time established or used by
Borrower for receiving such receipts from any retail store location, warehouse
or distribution center, collectively, the “Store Accounts” and each
individually, a “Store Account”) or otherwise describes the nature of the use of
such deposit account by Borrower.

(i) Borrower shall deposit all proceeds from sales of Inventory in every form,
including, without limitation, cash, checks, credit card sales drafts, credit
card sales or charge slips or receipts and other forms of daily store receipts
(other than nominal amounts retained in registers at the retail store locations
as cash on hand), from each retail store location of Borrower on each Business
Day into the Store Account of Borrower used solely for such purpose. All such
funds deposited into the Store Accounts shall be sent by wire transfer or other
electronic funds transfer no less frequently than three (3) times a week (or
more frequently upon Agent’s request at any time after the occurrence of a Cash
Dominion Event) to the Blocked Accounts as provided in Section 6.3(a)(ii) below,
except nominal amounts which are required to be maintained in such Store
Accounts under the terms of Borrower’s arrangements with the bank at which such
Store Accounts are maintained, which nominal amounts shall not exceed $5,000 at
any time as to any individual retail store location and shall not exceed
$1,000,000 in the aggregate any time as to all retail store locations.

(ii) Borrower shall establish and maintain, at its expense, deposit accounts
with such banks as are reasonably acceptable to Agent (the “Blocked Accounts”)
into which Borrower shall promptly either cause all amounts on deposit in the
Store Accounts of Borrower to be sent as provided in Section 6.3(a)(i) above or
shall itself deposit or cause to be deposited all proceeds from sales of
Inventory, and all other amounts payable to Borrower from Credit Card Issuers
and Credit Card Processors and all other proceeds of Collateral. Borrower and
each Guarantor shall deliver, or cause to be delivered to Agent a Deposit
Account Control Agreement duly authorized, executed and delivered by each bank
where a Blocked Account is maintained as provided in Section 5.2 hereof or at
any time and from time to time Agent may become the bank’s customer with respect
to any of the Blocked Accounts and promptly upon Agent’s request, Borrower shall
execute and deliver such agreements and documents as Agent

 

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may require in connection therewith. Borrower and each Guarantor each agree that
all payments made to such Blocked Accounts or other funds received and collected
by Agent, whether in respect of the Receivables, as proceeds of Inventory or
other Collateral or otherwise shall be treated as payments to Agent in respect
of the Obligations and therefore shall constitute the property of Agent to the
extent of the then outstanding Obligations; provided, that, each Deposit Account
Control Agreement shall provide that the applicable depository banks at which
the Blocked Accounts are maintained are authorized by Agent to transfer the
funds on deposit in the Blocked Accounts to such operating bank account of
Borrower as Borrower may specify in writing to Agent until such time as Agent
shall notify the depository bank otherwise. Agent may instruct the depository
banks at which the Blocked Accounts are maintained to transfer all funds
received or deposited into the Blocked Accounts to the Agent Payment Account at
any time a Cash Dominion Event shall exist or have occurred.

(b) For purposes of calculating the amount of the Loans available to Borrower,
such payments shall be applied (conditional upon final collection) to the
Obligations, in accordance with Section 6.4(a) hereof on the Business Day of
receipt by Agent of immediately available funds in the Agent Payment Account
provided such payments and notice thereof are received in accordance with
Agent’s usual and customary practices, as in effect from time to time, by 11:00
a.m. Boston, Massachusetts time and if not, then on the next Business Day. For
the purposes of calculating interest on the Obligations, such payments or other
funds received will be applied (conditional upon final collection) to the
Obligations on the date of receipt of immediately available funds by Agent in
the Agent Payment Account and within sufficient time to credit Borrower’s loan
account on such day, and if not, then on the next Business Day.

(c) Upon the occurrence and during the continuance of an Event of Default,
Borrower and each Guarantor and their respective shareholders, directors,
employees, agents, Subsidiaries or other Affiliates shall, acting as trustee for
Agent, receive, as the property of Agent, any monies, cash, checks, drafts,
notes, credit card sales drafts, credit card sales or charge slips or receipts,
other forms of store receipts or any other payment relating to and/or proceeds
of Accounts or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall remit the same or cause the
same to be remitted, in kind, to Agent, or shall deposit or cause the same to be
deposited in the applicable Store Account of Borrower and all such funds
deposited into such Store Account shall be sent by wire transfer or other
electronic funds transfer on each Business Day to a Blocked Account; provided,
that, at any time a Cash Dominion Event has occurred and is continuing, Borrower
shall promptly upon Agent’s request cause the portion thereof representing sales
and/or use taxes payable in connection with such sales or otherwise to be
deposited into a separate bank account or accounts established for such purpose.
Borrower agrees to reimburse Agent on demand for any amounts owed or paid to any
bank or other financial institution at which a Blocked Account or any other
deposit account or investment account is established or any other bank,
financial institution or other person involved in the transfer of funds to or
from the Blocked Accounts arising out of Agent’s payments to or indemnification
of such bank, financial institution or other person. The obligations of Borrower
to reimburse Agent for such amounts pursuant to this Section 6.3 shall survive
the termination of this Agreement.

6.4 Payments.

 

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(a) All Obligations shall be payable to the Agent Payment Account or such other
place as Agent may designate from time to time. Subject to the other terms and
conditions contained herein, Agent shall apply payments received or collected
from Borrower or any Guarantor or for the account of Borrower or such Guarantor
(including the monetary proceeds of collections or of realization upon any
Collateral) as follows: first, to pay any fees, indemnities or expense
reimbursements then due to Agent and Lenders from Borrower and Guarantors;
second, to pay interest due in respect of any Loans (and including any Special
Agent Advances); third, to pay or prepay principal in respect of Special Agent
Advances; fourth, to pay or prepay principal in respect of the Swing Line Loans;
fifth, to pay or prepay principal in respect of the other Loans; sixth, and to
pay or prepay any Obligations arising under or pursuant to any Hedging
Transactions of Borrower or any Guarantor with any Bank Product Provider (up to
the amount of the any then effective Reserve established in respect of such
Obligations), on a pro rata basis; seventh, to pay or prepay any other
Obligations (but not including for this purpose any Obligations arising under or
pursuant to any Bank Products) whether or not then due, in such order and manner
as Agent determines and, at any time on or after an Event of Default and for so
long as same is continuing, to be held as cash collateral with respect to any
Letter of Credit Accommodation or other contingent Obligations (but not
including for this purpose any Obligations arising under or pursuant to any Bank
Products); and eighth, at any time after an Event of Default and for so long as
same is continuing, to pay or prepay any Obligations arising under or pursuant
to any Bank Products (other than to the extent provided for above) on a pro rata
basis. Notwithstanding anything to the contrary contained in this Agreement,
(i) unless so directed by Borrower, or unless a Default or an Event of Default
shall exist or have occurred and be continuing, Agent shall not apply any
payments which it receives to any Eurodollar Rate Loans, except (A) on the
expiration date of the Interest Period applicable to any such Eurodollar Rate
Loans or (B) in the event that there are no outstanding Base Rate Loans and
(ii) to the extent Borrower uses any proceeds of the Loans or Letter of Credit
Accommodations to acquire rights in or the use of any Collateral or to repay any
Indebtedness used to acquire rights in or the use of any Collateral, payments in
respect of the Obligations shall be deemed applied first to the Obligations
arising from Loans and Letter of Credit Accommodations that were not used for
such purposes and second to the Obligations arising from Loans and Letter of
Credit Accommodations the proceeds of which were used to acquire rights in or
the use of any Collateral in the chronological order in which Borrower acquired
such rights in or the use of such Collateral.

(b) At Agent’s option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan account(s) of Borrower maintained by Agent,
provided, that, Agent shall use best efforts to notify Borrower no less than
three (3) Business Days prior to charging Borrower’s loan account for any fees,
costs or expenses. Borrower and each Guarantor shall make all payments to Agent
and Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to any Person
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be

 

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reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or such
Lender. Borrower and each Guarantor shall be liable to pay to Agent, and do
hereby indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4(b) shall remain
effective notwithstanding any contrary action which may be taken by Agent or any
Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive
the payment of the Obligations and the termination of this Agreement.

6.5 Authorization to Make Loans. Agent and Lenders are authorized to make the
Revolving Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the discretion of Agent,
if such Loans are necessary to satisfy any Obligations. All requests for
Revolving Loans or Letter of Credit Accommodations hereunder shall specify the
date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the amount of
the requested Revolving Loan. Requests received after 11:00 a.m. Boston,
Massachusetts time on any day shall be deemed to have been made as of the
opening of business on the immediately following Business Day. All Loans and
Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of,
Borrower or Guarantors when deposited to the credit of Borrower or Guarantors or
otherwise disbursed or established in accordance with the instructions of
Borrower or Guarantors or in accordance with the terms and conditions of this
Agreement.

6.6 Use of Proceeds. All Loans made or Letter of Credit Accommodations provided
to or for the benefit of Borrower pursuant to the provisions hereof shall be
used by Borrower only for general corporate purposes of Borrower not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans to be considered a “purpose credit” within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended.

6.7 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.

6.8 Sharing of Payments, Etc.

 

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(a) Borrower and each Guarantor, jointly and severally agrees that, in addition
to (and without limitation of) any right of setoff, banker’s lien or
counterclaim Agent or any Lender may otherwise have, each Lender shall be
entitled, at its option (but subject, as among Agent and Lenders, to the
provisions of Section 12.3(b) hereof), to offset balances held by it for the
account of Borrower or any Guarantor at any of its offices, in dollars or in any
other currency, against any principal of or interest on any Loans owed to such
Lender or any other amount payable to such Lender hereunder, that is not paid
when due (after the expiration of any particular grace period and regardless of
whether such balances are then due to Borrower or any Guarantor), in which case
it shall promptly notify Borrower and Agent thereof; provided, that, such
Lender’s failure to give such notice shall not affect the validity thereof.

(b) If any Lender (including Agent) shall obtain from Borrower or any Guarantor
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any of the other Financing Agreements
through the exercise of any right of setoff, banker’s lien or counterclaim or
similar right or otherwise (other than from Agent as provided herein), and, as a
result of such payment, such Lender shall have received more than its Pro Rata
Share of the principal of the Loans or more than its share of such other amounts
then due hereunder or thereunder by Borrower or Guarantors to such Lender than
the percentage thereof received by any other Lender, it shall promptly pay to
Agent, for the benefit of Lenders, the amount of such excess and simultaneously
purchase from such other Lenders a participation in the Loans or such other
amounts, respectively, owing to such other Lenders (or such interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all Lenders shall share
the benefit of such excess payment (net of any expenses that may be incurred by
such Lender in obtaining or preserving such excess payment) in accordance with
their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end
all Lenders shall make appropriate adjustments among themselves (by the resale
of participation sold or otherwise) if such payment is rescinded or must
otherwise be restored.

(c) Borrower and each Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker’s lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.

(d) Nothing contained herein shall require any Lender to exercise any right of
setoff, banker’s lien, counterclaims or similar rights or shall affect the right
of any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other Indebtedness or obligation of Borrower or Guarantors.
If, under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, assign such rights to Agent for the
benefit of Lenders and, in any event, exercise its rights in respect of such
secured claim in a manner consistent with the rights of Lenders entitled under
this Section to share in the benefits of any recovery on such secured claim.

 

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6.9 Settlement Procedures.

(a) In order to administer the Credit Facility in an efficient manner and to
minimize the transfer of funds between Agent and Lenders, Agent may, at its
option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to Borrower’s loan
account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof,
without requirement of prior notice to Lenders of the proposed Loans.

(b) With respect to all Loans made by Agent on behalf of Lenders as provided in
this Section, the amount of each Lender’s Pro Rata Share of the outstanding
Loans shall be computed weekly, and shall be adjusted upward or downward on the
basis of the amount of the outstanding Loans as of 3:00 p.m. Boston,
Massachusetts time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a “Settlement Period”). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. Boston,
Massachusetts time, then such Lender shall make the settlement transfer
described in this Section by no later than 3:00 p.m. Boston, Massachusetts time
on the same Business Day and if received by a Lender after 12:00 p.m. Boston,
Massachusetts time, then such Lender shall make the settlement transfer by not
later than 3:00 p.m. Boston, Massachusetts time on the next Business Day
following the date of receipt. If, as of the end of any Settlement Period, the
amount of a Lender’s Pro Rata Share of the outstanding Loans is more than such
Lender’s Pro Rata Share of the outstanding Loans as of the end of the previous
Settlement Period, then such Lender shall forthwith (but in no event later than
the time set forth in the preceding sentence) transfer to Agent by wire transfer
in immediately available funds the amount of the increase. Alternatively, if the
amount of a Lender’s Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender’s Pro Rata Share of the
outstanding Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Lender agrees to mark
its books and records at the end of each Settlement Period to show at all times
the dollar amount of its Pro Rata Share of the outstanding Loans and Letter of
Credit Accommodations. Each Lender shall only be entitled to receive interest on
its Pro Rata Share of the Loans to the extent such Loans have been funded by
such Lender. Because the Agent on behalf of Lenders may be advancing and/or may
be repaid Loans prior to the time when Lenders will actually advance and/or be
repaid such Loans, interest with respect to Loans shall be allocated by Agent in
accordance with the amount of Loans actually advanced by and repaid to each
Lender and the Agent and shall accrue from and including the date such Loans are
so advanced to but excluding the date such Loans are either repaid by Borrower
or actually settled with the applicable Lender as described in this Section.

 

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(c) To the extent that Agent has made any such amounts available and the
settlement described above shall not yet have occurred, upon repayment of any
Loans by Borrower, Agent may apply such amounts repaid directly to any amounts
made available by Agent pursuant to this Section. In lieu of weekly or more
frequent settlements, Agent may, at its option, at any time require each Lender
to provide Agent with immediately available funds representing its Pro Rata
Share of each Loan, prior to Agent’s disbursement of such Loan to Borrower. In
such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender’s obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender’s obligation to make a Loan hereunder.

(d) If Agent is not funding a particular Loan to Borrower pursuant to Sections
6.9(a) and 6.9(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.9(c) above, Agent may assume that each Lender will make available to
Agent such Lender’s Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of Borrower on
such day. If Agent makes such corresponding amount available to Borrower and
such corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank of New
York or at Agent’s option based on the arithmetic mean determined by Agent of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading brokers
of Federal funds transactions in New York City selected by Agent) and if such
amounts are not paid within three (3) days of Agent’s demand, at the highest
Interest Rate provided for in Section 3.1 hereof applicable to Base Rate Loans.
During the period in which such Lender has not paid such corresponding amount to
Agent, notwithstanding anything to the contrary contained in this Agreement or
any of the other Financing Agreements, the amount so advanced by Agent to or for
the benefit of Borrower shall, for all purposes hereof, be a Loan made by Agent
for its own account. Upon any such failure by a Lender to pay Agent, Agent shall
promptly thereafter notify Borrower of such failure and Borrower shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Borrower’s receipt of such notice. A Lender who fails to pay Agent its Pro
Rata Share of any Loans made available by the Agent on such Lender’s behalf, or
any Lender who fails to pay any other amount owing by it to Agent, is a
“Defaulting Lender.” Agent shall not be obligated to transfer to a Defaulting
Lender any payments received by Agent for the Defaulting Lender’s benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, relend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero (0); provided, that the Commitment of such Defaulting Lender may not be
increased or extended without such Defaulting Lender’s consent. This Section
shall remain

 

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effective with respect to a Defaulting Lender until such default is cured. The
operation of this Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the performance by Borrower
or any Obligor of their duties and obligations hereunder.

(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that Borrower may have against
any Lender as a result of any default by any Lender hereunder in fulfilling its
Commitment.

6.10 Obligations Several; Independent Nature of Lenders’ Rights. The obligation
of each Lender hereunder is several, and no Lender shall be responsible for the
obligation or commitment of any other Lender hereunder. Nothing contained in
this Agreement or any of the other Financing Agreements and no action taken by
the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and subject to Section 12.3 hereof, each Lender
shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.

6.11 Taxes.

(a) Any and all payments by Borrower and any Guarantors to Agent or any Lender
under this Agreement and any of the other Financing Agreements shall be made
free and clear of, and without deduction or withholding for, any Taxes. In
addition, Borrower shall pay all Other Taxes (or Agent may, at its option, pay
such Other Taxes and charge the loan account of Borrower for such amounts so
paid).

(b) Subject to the last sentence of Section 6.11(f), Borrower and Guarantors
shall indemnify and hold harmless Agent and Lenders for the full amount of Taxes
or Other Taxes paid by Agent or any Lender (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section, but not
including Other Taxes that arise as a result of Agent’s or any Lender’s
arrangements with the applicable taxing jurisdiction, if any, and not as a
result of this Agreement) and any liability (including penalties, interest and
expenses (including reasonable attorney’s fees and expenses) other than those
resulting solely from a failure by Agent or any Lender to pay any Taxes or Other
Taxes which it is required to pay and for which it received an indemnity
payment) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. Payment under this indemnification shall be made within ten (10) days
after the date Agent or any Lender makes written demand therefor. If Borrower
reasonably believes that such Taxes or Other Taxes were not correctly or legally
asserted, Agent or such Lender shall, upon Borrower’s request and at Borrower’s
expense, provide such documents to

 

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Borrower in form and substance reasonably satisfactory to Borrower, to enable
Borrower to contest such Taxes or Other Taxes pursuant to appropriate
proceedings then available to Borrower (so long as providing such documents
shall not, in the good faith determination of Agent, have a reasonable
likelihood of resulting in any liability of Agent or any Lender).

(c) If Borrower or any Guarantor shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder or
under the other Financing Agreements to Agent or any Lender, then:

(i) subject to the last sentence of Section 6.11(f) the sum payable shall be
increased as necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) Agent or such Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings been
made;

(ii) Borrower or such Guarantor shall make such deductions and withholdings;

(iii) Borrower or such Guarantor shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and

(iv) to the extent not paid to Agent or Lenders pursuant to Section 6.11(c)(i),
Borrower or such Guarantor shall also pay to Agent or any Lender, at the time
interest is paid, all additional amounts which are necessary to preserve the
after-tax yield Agent or such Lender would have received pursuant to the
Financing Agreements if such Taxes or Other Taxes had not been imposed.

(d) Within thirty (30) days after the date of any payment by Borrower or any
Guarantor of Taxes or Other Taxes, Borrower or such Guarantor shall furnish to
Agent the original or a certified copy of a receipt or any other or other
evidence of payment reasonably satisfactory to Agent.

(e) If Borrower or any Guarantor otherwise would be required to pay additional
amounts to Agent or a Lender pursuant to Section 6.11(c), then upon Borrower’s
written request, such Lender shall use reasonable efforts at Borrower’s expense
(consistent with legal and regulatory restrictions) to take such action,
including changing the jurisdiction of its lending office so as to eliminate any
such additional payment by Borrower or such Guarantor which may thereafter
accrue. Borrower hereby agrees to pay all reasonable costs and expenses incurred
by such Lender in connection with any action taken by such Lender in accordance
with this Section 6.11(e).

(f) In the event that Borrower or any Guarantor is required to pay additional
amounts or to make indemnity payments pursuant to this Section 6.11, Borrower
may, upon notice to Agent and the applicable Lender, either prepay in whole or
in part the outstanding balance of any Loan being maintained by the applicable
Lender or require such Lender to assign and delegate without recourse all of its
interests, rights and obligations under this Agreement to an Eligible Transferee
selected by Borrower or Agent.

 

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(g) In the event a Lender shall assign the Obligations and its rights hereunder
to an assignee which is organized under the laws of a jurisdiction outside the
United States, such assignee of a Lender shall provide Borrower with an IRS Form
W-8BEN or Form W-8ECI or other applicable form, certificate or document
prescribed by the Internal Revenue Service certifying as to such assignee’s
being entitled to full exemption from United States withholding tax with respect
to all payments to be made to such assignee hereunder and under any of the other
Financing Agreements (unless such assignee of a Lender is unable to do so by
reason of a change in law, including, without limitation, any statute, treaty,
ruling, determination or regulation occurring subsequent to the effective date
of such assignment). Notwithstanding anything to the contrary contained in this
Section 6.11, unless Borrower has received forms or other documents indicating
that payments to such assignee hereunder or under any of the other Financing
Agreements are not subject to United States of America withholding tax, Borrower
shall, in the case of payments to or for any assignee of a Lender organized
under the laws of a jurisdiction outside the United States (i) withhold taxes
from such payments at the applicable statutory rate, or at a rate reduced by an
applicable tax treaty and (ii) pay such assignee such payment net of any taxes
so withheld. Such assignee will be required to use reasonable efforts (including
reasonable efforts to change its lending office) to avoid or to minimize any
amounts which might otherwise be payable by Borrower or any Guarantor pursuant
to this Section 6.11; provided, that, such efforts shall not cause the
imposition on such assignee of any additional costs or legal or regulatory
burdens deemed by such assignee in good faith to be material.

(h) If Agent or any Lender receives a permanent tax benefit in respect of any
Taxes or Other Taxes for which Agent or such Lender has received an
indemnification payment from Borrower or any Guarantor hereunder, so long as no
Event of Default shall exist or have occurred and be continuing, Agent or such
Lender (as the case may be) shall credit to the loan account of Borrower the
amount of such permanent tax benefit.

(i) Each Person that is a Lender as of the date of this Agreement or becomes a
Lender after the date of this Agreement (i) either (a) represents and warrants
to Borrower that such Person is incorporated or organized under the laws of the
United States or a state thereof or (b) if such Person is organized under the
laws of any jurisdiction other than the United States or any State thereof,
agrees to furnish to Agent and Borrower prior to the time that Agent or Borrower
is required to make any payment of principal, interest or fees hereunder,
duplicate executed originals of either U.S. Internal Revenue Service Form W-8BEN
or W-8ECI, as applicable (wherein such Lender claims entitlement to the benefits
of a tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new forms upon
the expiration of any previously delivered form or comparable statements in
accordance with applicable U.S. law and regulations and amendments thereto, duly
executed and completed by such Lender, and (ii) agrees to comply with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption.

SECTION 7. COLLATERAL REPORTING AND COVENANTS

7.1 Collateral Reporting.

 

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(a) Borrower shall provide Agent with the following documents in a form
satisfactory to Agent:

(i) as soon as possible after the end of each month (except during a Weekly
Reporting Period, then as soon as possible after the end of each week), but in
any event within ten (10) Business Days after the end of such month (or during a
Weekly Reporting Period by the third (3rd) Business Day after the end of such
week) or as more frequently as Borrower may desire, (A) a Borrowing Base
certificate executed by the Borrower, substantially in the form of Exhibit D
attached hereto (which Agent shall make available to Lenders after receipt from
Borrower), (B) schedules of sales made, credits issued and cash received during
such period, (C) inventory reports by categories, location, and mix (including
indicating the amounts of Inventory at warehouses and stores, and detail
regarding Inventory subject to the Frigidaire Consignment Agreement) as of the
end of such period, (D) reports of sales of Inventory, indicating gross sales,
returns, allowances and net sales, and reports of aggregate Inventory purchases
(including all costs related thereto, such as freight, duty and taxes) during
such period, and (E) a report of credit card sales during such period, including
the amount of the chargebacks and credits with respect thereto and providing an
aging of such sales identifying those outstanding more than ten (10) Business
Days since the sale date giving rise thereto; provided, that, this report under
clause (E) does not have to be provided to Agent unless a Weekly Reporting
Period has occurred and is continuing;

(ii) as soon as possible after the end of each month (but in any event within
ten (10) Business Days after the end thereof), or during a Weekly Reporting
Period, more frequently as Agent may request, (A) agings of accounts receivable
(together with a reconciliation to the previous month’s aging and general
ledger), and (B) agings of accounts payable (including information indicating
the aggregate amount owing to owners and lessors of leased premises, warehouses,
fulfillment centers, processors and other third parties from time to time in
possession of any Collateral) as of the end of such month;

(iii) as soon as possible after the end of each month (but in any event ten
(10) Business Days after the end thereof), in each case certified by the chief
financial officer, treasurer or controller of Borrower as true and correct:
(A) a statement confirming the payment of rent and other amounts due to owners
and lessors of real property used by Borrower in the immediately preceding
month, subject to year-end or monthly percentage rent payment adjustments,
(B) the addresses of all new retail store locations of Borrower opened and
existing retail store locations closed or sold (including a report of results by
category of inventory of any going out of business sales and identifying the
proceeds of any other assets of Borrower sold in connection with such store
closures), in each case since the date of the most recent certificate delivered
to Agent containing the information required under this clause, (C) reports
regarding consigned inventory, (D) reports regarding inventory subject to the
Frigidaire Consignment Agreement, (E) reports regarding customer deposits and
gift cards, (F) a report of any new deposit account established or used by
Borrower with any bank or other financial institution, including the name of the
account, the account number, the name and address of the financial institution
at which such account is maintained, the purpose of such account and, if any,
the amount held in such account on or about the date of such report;

 

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(iv) as soon as possible after the end of each fiscal quarter (but in any event
within ten (10) Business Days after the end thereof), (A) a report from the
chief financial officer, treasurer or controller of Borrower certifying the
number of shares of Capital Stock issued by Parent during the immediately
preceding fiscal quarter and the parties to whom such shares were issued; and
(B) a report from the chief financial officer, treasurer or controller of
Borrower certifying the addresses of all new retail store locations opened by
Borrower during the immediately preceding fiscal quarter;

(v) upon Agent’s request, (A) reports of sales for each category of Inventory,
(B) reports of aggregate Inventory purchases (including all costs related
thereto, such as freight, duty and taxes) and identifying items of Inventory in
transit to Borrower related to the applicable documentary letter of credit
and/or bill of lading number, (C) copies of purchase orders, sales invoices,
credit memos, remittance advices and reports, and copies of deposit slips and
bank statements, (D) copies of shipping and delivery documents, (E) copies of
purchase orders, invoices and delivery documents for Inventory and Equipment
acquired by Borrower, (F) reports by retail store location of sales and
operating profits for each such retail store location, (G) reports on sales and
use tax collections, deposits and payments, including monthly sales and use tax
accruals, (H) perpetual inventory reports, and (I) the monthly statements
received by Borrower or any of its Affiliates from any Credit Card Issuers or
Credit Card Processors, together with such additional information with respect
thereto as shall be sufficient to enable Agent to monitor credit card
transactions;

(vi) the following field examinations and appraisals at the expense of Borrower:

 

  (A) subject to clause (B) below, one (1) field examination and one
(1) appraisal in any twelve (12) month period so long as Excess Availability for
any period of five (5) consecutive Business Days is greater than 25% of the
lesser of the Borrowing Base or the Maximum Credit,

 

  (B) two (2) field examinations and two (2) appraisals in any twelve (12) month
period if Excess Availability for any period of five (5) consecutive Business
Days is less than the greater of (A) 25% of the lesser of the Borrowing Base or
the Maximum Credit or (B) $15,000,000 until September 30, 2012 and $20,000,000
thereafter (the “Examination Criteria”), to continue until Quarterly Average
Excess Availability has exceeded the Examination Criteria for three
(3) consecutive calendar quarters, and

 

  (C) such other field examinations and appraisals as the Agent may request upon
the occurrence and the continuance of an Event of Default;

provided, that Agent may conduct additional field examinations and appraisals as
it may elect at the expense of Agent and Lenders, provided,

 

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further, that together with field examinations and appraisals, if any, done
pursuant to clauses (A) and (B) above, Agent may not conduct more than four
(4) field examinations and four (4) appraisals in any twelve (12) month period,
but without limit during the continuation of an Event of Default; and

(vii) such other reports as to the Collateral as Agent shall reasonably request
from time to time.

(b) If Borrower’s or any Guarantor’s records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower and each Guarantor hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Agent and to follow Agent’s instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.

7.2 Accounts Covenants. (a) Borrower shall, to the extent any of the following
exceeds $1,000,000, notify Agent promptly of: (i) any material delay in
Borrower’s performance of any of its material obligations to any account debtor
or the assertion of any material claims, offsets, defenses or counterclaims by
any account debtor, Credit Card Issuer or Credit Card Processor or any material
disputes with account debtors, or any settlement, adjustment or compromise
thereof, and (ii) all material adverse information known to Borrower or
Guarantors relating to the financial condition of any account debtor, Credit
Card Issuer or Credit Card Processor and (iii) any event or circumstance which,
to the best of Borrower’s or any Guarantor’s knowledge, would cause Agent to
consider any then existing Accounts as no longer constituting Eligible Accounts.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor, Credit Card Issuer or Credit
Card Processor without Agent’s consent, except in the ordinary course of
Borrower’s or such Guarantor’s business in accordance with current practices of
Borrower in effect on the date hereof or as such practices may hereafter change
as a result of changes to the policies of Borrower applicable to its similarly
situated customers generally and unrelated to the circumstances of Borrower or
otherwise with the prior approval of Agent. So long as no Event of Default
exists or has occurred and is continuing, Borrower and Guarantors shall settle,
adjust or compromise any claim, offset, counterclaim or dispute with any account
debtor, Credit Card Issuer or Credit Card Processor. At any time that an Event
of Default exists or has occurred and is continuing, Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors, Credit Card Issuer or Credit Card
Processor or grant any credits, discounts or allowances.

(b) With respect to each Account: (i) no payments shall be made thereon except
payments delivered to Agent pursuant to the terms of this Agreement, (ii) there
shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto, if in the aggregate with all other
Accounts, the same exceed $500,000 and (iii) none of the transactions giving
rise thereto will violate any applicable foreign, Federal, State or local laws
or regulations, all documentation relating thereto will be legally sufficient
under such

 

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laws and regulations and all such documentation will be legally enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws limiting creditors’ rights
generally and be general equitable principles.

(c) Borrower shall notify Agent promptly of: (i) any notice of a material
default by Borrower under any of the Credit Card Agreements or of any default
which has a reasonable likelihood of resulting in the Credit Card Issuer or
Credit Card Processor ceasing to make payments or suspending payments to
Borrower, (ii) any notice from any Credit Card Issuer or Credit Card Processor
that such person is ceasing or suspending, or will cease or suspend, any present
or future payments due or to become due to Borrower from such person, or that
such person is terminating or will terminate any of the Credit Card Agreements,
and (iii) the failure of Borrower to comply with any material terms of the
Credit Card Agreements or any terms thereof which has a reasonable likelihood of
resulting in the Credit Card Issuer or Credit Card Processor ceasing or
suspending payments to Borrower.

(d) Agent shall have the right at any time or times (but prior to the occurrence
of a Cash Dominion Event, not more frequently than once per fiscal quarter), in
Agent’s name or in the name of a nominee of Agent, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
mail, telephone, facsimile transmission or otherwise.

7.3 Inventory Covenants. With respect to the Inventory: (a) Borrower and each
Guarantor shall at all times maintain inventory records reasonably satisfactory
to Agent, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, Borrower’s or any Guarantor’s
cost therefor and daily withdrawals therefrom and additions thereto;
(b) Borrower and Guarantors shall conduct a physical count of the Inventory
either through periodic cycle counts or wall to wall counts, so that all
Inventory is subject to such counts at least once each year but at any time or
times as Agent may request after an Event of Default has occurred and is
continuing, and promptly following such physical inventory (whether through
periodic cycle counts or wall to wall counts) shall supply Agent with a report
in the form and with such specificity as may be satisfactory to Agent concerning
such physical count; (c) Borrower and Guarantors shall not remove any Inventory
from the locations set forth or permitted herein, without the prior written
consent of Agent, except for sales of Inventory in the ordinary course of its
business and except to move Inventory directly from one location set forth or
permitted herein to another such location and except for Inventory shipped from
the manufacturer thereof to Borrower or Guarantors which is in transit to the
locations set forth or permitted herein; (d) upon Agent’s request, Borrower
shall deliver or cause to be delivered to Agent written appraisals as to the
Inventory in form, scope and methodology reasonably acceptable to Agent and by
an appraiser reasonably acceptable to Agent, addressed to Agent and Lenders and
upon which Agent and Lenders are expressly permitted to rely in accordance with
Section 7.1(a)(vi); (e) Borrower and Guarantors shall produce, use, store and
maintain the Inventory with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including the requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders related thereto); (f) in
the event any count conducted pursuant to Section 7.3(b) above indicates any
material irregularities or other adverse information regarding Inventory, in the
good faith determination of Agent, upon Agent’s request,

 

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Borrower shall, at its expense, conduct through RGIS Inventory Specialists, Inc.
or another inventory counting service reasonably acceptable to Agent, a count of
the Inventory in form, scope and methodology reasonably acceptable to Agent no
more than one (1) time in any twelve (12) month period, but at any time or times
as Agent may request at any time an Event of Default exists or has occurred and
is continuing or at any time or times as Agent may request in the event of test
count variances in excess of the shrinkage reserve established by Borrower, the
results of which shall be reported directly by such inventory counting service
to Agent and Borrower shall promptly deliver confirmation in a form satisfactory
to Agent that appropriate adjustments have been made to the inventory records of
Borrower to reconcile the inventory count to Borrower’s inventory records;
(g) none of the Inventory or other Collateral constitutes farm products or the
proceeds thereof; (h) Borrower and each Guarantor assumes all responsibility and
liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (i) Borrower and Guarantors shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate Borrower or any Guarantor to repurchase such
Inventory; except for the right of return given to retail customers of Borrower
in the ordinary course of the business of Borrower in accordance with the then
current return policy of Borrower; and (j) Borrower and Guarantors shall keep
the Inventory in good and marketable condition (subject to Borrower’s normal
reserves for damaged and defective Inventory).

7.4 Equipment and Real Property Covenants. With respect to the Equipment and
Real Property: (a) upon Agent’s request, at any time or times as Agent may
request on or after an Event of Default has occurred and is continuing, Borrower
shall deliver or cause to be delivered to Agent written appraisals as to the
Equipment and/or the Real Property acquired by Borrower pursuant to Section 9.20
hereof in form, scope and methodology acceptable to Agent and by an appraiser
acceptable to Agent, addressed to Agent and upon which Agent is expressly
permitted to rely; (b) Borrower and Guarantors shall keep the Equipment used or
useful in the ordinary course of Borrower’s business in good order, repair, and
in running and marketable condition (ordinary wear and tear excepted);
(c) Borrower and Guarantors shall use the Equipment and Real Property with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity in all material respects with all applicable laws;
(d) the Equipment is and shall be used in the business of Borrower and
Guarantors and not for personal, family, household or farming use; (e) Borrower
and Guarantors shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent expressly permitted under this Agreement
or necessary to have any Equipment repaired or maintained in the ordinary course
of its business or to move Equipment directly from one location set forth or
permitted herein to another such location and except for the movement of motor
vehicles used by or for the benefit of Borrower or any Guarantor in the ordinary
course of business; (f) the Equipment is now and shall remain personal property
and Borrower and Guarantors shall not permit any of the Equipment to be or
become a part of or affixed to Real Property; and (g) Borrower and each
Guarantor assumes all responsibility and liability arising from the use of the
Equipment and Real Property.

7.5 Power of Attorney. Borrower and each Guarantor hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as Borrower’s and such
Guarantor’s true and lawful attorney-in-fact,

 

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and authorizes Agent, in Borrower’s, such Guarantor’s or Agent’s name, to:
(a) at any time an Event of Default exists or has occurred and is continuing
(i) demand payment on Receivables or other Collateral, (ii) enforce payment of
Receivables by legal proceedings or otherwise, (iii) exercise all of Borrower’s
or such Guarantor’s rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such amount
and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any
Receivable, (vii) prepare, file and sign Borrower’s or such Guarantor’s name on
any proof of claim in bankruptcy or other similar document against an account
debtor or other obligor in respect of any Receivables or other Collateral,
(viii) notify the post office authorities to change the address for delivery of
remittances from account debtors or other obligors in respect of Receivables or
other proceeds of Collateral to an address designated by Agent, and open and
dispose of all mail addressed to Borrower or such Guarantor and handle and store
all mail relating to the Collateral; and (ix) do all acts and things which are
necessary, in Agent’s determination, to fulfill Borrower’s or such Guarantor’s
obligations under this Agreement and the other Financing Agreements and (b) at
any time to (i) take control in any manner of any item of payment in respect of
Receivables or constituting Collateral or otherwise received in or for deposit
in the Blocked Accounts or otherwise received by Agent or any Lender, (ii) have
access to any lockbox or postal box into which remittances from account debtors
or other obligors in respect of Receivables or other proceeds of Collateral are
sent or received, (iii) endorse Borrower’s or such Guarantor’s name upon any
items of payment in respect of Receivables or constituting Collateral or
otherwise received by Agent and any Lender and deposit the same in Agent’s
account for application to the Obligations, (iv) endorse Borrower’s or such
Guarantor’s name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Receivable or any goods pertaining
thereto or any other Collateral, including any warehouse or other receipts, or
bills of lading and other negotiable or non-negotiable documents, (v) clear
Inventory the purchase of which was financed with Letter of Credit
Accommodations through U.S. Customs or foreign export control authorities in
Borrower’s or any Guarantor’s name, Agent’s name or the name of Agent’s
designee, and to sign and deliver to customs officials powers of attorney in
Borrower’s or such Guarantor’s name for such purpose, and to complete in
Borrower’s or such Guarantor’s or Agent’s name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect the proceeds
thereof, and (vi) sign Borrower’s or such Guarantor’s name on any verification
of Receivables and notices thereof to account debtors or any secondary obligors
or other obligors in respect thereof. Borrower and each Guarantor hereby
releases Agent and Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Agent’s or any Lender’s own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.

7.6 Right to Cure. Agent may, at its option, upon notice to Borrower, (a) cure
any default by Borrower or any Guarantor under any material agreement with a
third party that affects the Collateral, its value or the ability of Agent to
collect, sell or otherwise dispose of the Collateral or the rights and remedies
of Agent or any Lender therein or the ability of Borrower or any Guarantor to
perform its obligations hereunder or under any of the other Financing
Agreements, at any time

 

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on or after a Default or Event of Default exists or has occurred and is
continuing, or if after giving effect to any Reserve in respect of such default
Excess Availability is or would be less than $10,000,000; (b) pay or bond on
appeal any judgment entered against Borrower, any Guarantor or any Subsidiary of
Borrower, at any time on or after a Default or Event of Default exists or has
occurred and is continuing, or if after giving effect to any Reserve in respect
of such judgment Excess Availability is or would be less than $10,000,000;
(c) discharge taxes, liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and pay any amount, incur
any expense or perform any act which, in Agent’s judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Agent and Lenders with respect thereto; provided, that Agent shall not
exercise its right pursuant to this Section 7.6(c) to discharge such taxes,
liens, security interest or other encumbrances that are permitted under
Section 9.8 hereof, unless either (i) a Default or Event of Default shall exist
or have occurred and be continuing, or (ii) with respect to liens, security
interests or other encumbrances, the beneficiary or holder of such lien,
security interest or other encumbrance has the right to take action against or
with respect to the Collateral which right is not subject to an effective stay
pursuant to applicable law. Agent may add any amounts so expended to the
Obligations and charge Borrower’s account therefor, such amounts to be repayable
by Borrower on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of Borrower or any Guarantor. Any payment
made or other action taken by Agent under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.

7.7 Access to Premises. From time to time as requested by Agent, at the cost and
expense of Borrower (subject to the limitations on expense reimbursements set
forth in Section 7.1(a)(vi) hereof), (a) Agent or its designee shall have
complete access to all of Borrower’s and Guarantors’ premises during normal
business hours and after notice to Borrower, or at any time and without notice
to Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
Borrower’s and Guarantors’ books and records, including the Records, and
(b) Borrower and Guarantors shall promptly furnish to Agent such copies of such
books and records or extracts therefrom as Agent may request, and Agent or any
Lender or Agent’s designee may use during normal business hours of Borrower’s
and such Guarantor’s personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Receivables and realization of
other Collateral.

SECTION 8. REPRESENTATIONS AND WARRANTIES

Borrower and each Guarantor hereby represents and warrants to Agent and Lenders
the following (which shall survive the execution and delivery of this
Agreement):

8.1 Corporate Existence, Power and Authority. Borrower and each Guarantor is a
corporation or limited liability company, as applicable, each duly organized and
in good standing under the laws of its state of incorporation

 

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or formation, and duly qualified as a foreign corporation or limited liability
company and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect. The execution, delivery and performance of this Agreement, the
other Financing Agreements and the transactions contemplated hereunder and
thereunder (a) are all within Borrower’s and Guarantors’ corporate or limited
liability company powers, as applicable, (b) have been duly authorized, (c) are
not in contravention of law or the terms of Borrower’s or any Guarantor’s
organizational documentation, or any indenture, agreement or undertaking to
which Borrower or any Guarantor is a party or by which Borrower or any Guarantor
or its property are bound and (d) will not result in the creation or imposition
of, or require or give rise to any obligation to grant, any lien, security
interest, charge or other encumbrance upon any property of Borrower or any
Guarantor. This Agreement and the other Financing Agreements to which Borrower
and each Guarantor is a party constitute legal, valid and binding obligations of
Borrower and such Guarantor enforceable in accordance with their respective
terms except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or similar laws limiting creditors’ rights generally and by general
equitable principles.

8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.

(a) The exact legal name of Borrower and each Guarantor is as set forth on the
signature page of this Agreement and in the Information Certificate. Neither
Borrower nor any Guarantor has, during the five years prior to the date of this
Agreement, been known by or used any other corporate or fictitious name or been
a party to any merger or consolidation, or acquired all or substantially all of
the assets of any Person, or acquired any of its property or assets out of the
ordinary course of business, except as set forth in the Information Certificate.

(b) Borrower and each Guarantor is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower and each Guarantor or accurately states that Borrower or such Guarantor
has none and accurately sets forth the federal employer identification number of
Borrower and each Guarantor.

(c) The chief executive office and mailing address of Borrower and each
Guarantor and Borrower’s and each Guarantor’s Records concerning Accounts are
located only at the address identified as such in Schedule 8.2 to the
Information Certificate and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to
the Information Certificate, subject to the rights of Borrower and Guarantors to
establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by
Borrower or Guarantors and sets forth the owners and/or operators thereof.

 

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8.3 Financial Statements; No Material Adverse Change. All financial statements
relating to Borrower or Guarantors which have been or may hereafter be delivered
by Borrower or Guarantors to Agent and Lenders have been prepared in accordance
with GAAP (except as to any interim financial statements, to the extent such
statements are subject to normal year-end adjustments and do not include any
notes) and fairly present in all material respects the financial condition and
the results of operations of Borrower and each Guarantor as at the dates and for
the periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrower and each Guarantor to Agent prior to the date
of this Agreement, there has been no act, condition or event which has had or
would reasonably be expected to have a Material Adverse Effect since the date of
the most recent audited financial statements of Borrower or Guarantors furnished
by Borrower to Agent prior to the date of this Agreement.

8.4 Priority of Liens; Title to Properties. The security interests and liens
granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first or second priority liens and security
interests in and upon the Collateral, subject only to (i) the liens indicated on
Schedule 8.4 to the Information Certificate, (ii) the other liens permitted
hereunder and (iii) the exceptions to perfection set forth in Section 5.3
hereof. Borrower and each Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.

8.5 Tax Returns. Borrower and each Guarantor has filed, or caused to be filed,
in a timely manner all tax returns, reports and declarations which are required
to be filed by it. All information in such tax returns, reports and declarations
is complete and accurate in all material respects. Borrower and each Guarantor
has paid or caused to be paid all taxes due and payable or claimed due and
payable in any assessment received by it, except taxes the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or Guarantors and with respect to which adequate reserves
have been set aside on its books. Adequate provision has been made for the
payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.

8.6 Litigation. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of Borrower’s or any Guarantor’s knowledge threatened,
against or affecting Borrower or such Guarantor, its or their assets or business
and (b) there is no action, suit, proceeding or claim by any Person pending, or
to the best of Borrower’s or any Guarantor’s knowledge threatened, against
Borrower or such Guarantor or its or their assets or goodwill, or against or
affecting any transactions contemplated by this Agreement and the other
Financing Agreements, in each case, which if adversely

 

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determined against Borrower or any Guarantor has or would reasonably be expected
to have a Material Adverse Effect.

8.7 Compliance with Other Agreements and Applicable Laws.

(a) Borrower and Guarantors are not in default in any respect under, or in
violation in any respect of the terms of, any material agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound, except for defaults or violations which would not
be reasonably expected to result in a Material Adverse Effect. Borrower and
Guarantors are in compliance with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Authority relating to their
respective businesses, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as
amended, and the rules and regulations thereunder, and all Environmental Laws,
except for instances of non-compliance which would not be reasonably expected to
result in a Material Adverse Effect.

(b) Borrower and Guarantors have obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the “Permits”). All
of the Permits are valid and subsisting and in full force and effect. There are
no actions, claims or proceedings pending or to the best of Borrower’s or any
Guarantor’s knowledge, threatened that seek the revocation, cancellation,
suspension or modification of any of the Permits to the extent the same would be
reasonably expected to have a Material Adverse Effect.

8.8 Environmental Compliance.

(a) Except as set forth on Schedule 8.8 to the Information Certificate, neither
Borrower, nor any Guarantor nor any Subsidiary of Borrower or any Guarantor has
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off its premises (whether or not
owned by it) in any manner which at any time violates any applicable
Environmental Law or Permit, and the operations of Borrower, Guarantors and any
Subsidiary of Borrower or any Guarantor complies with all Environmental Laws and
all Permits except for any violation or non-compliance which would not
reasonably be expected to have a Material Adverse Effect.

(b) Except as set forth on Schedule 8.8 to the Information Certificate, there is
no outstanding investigation by any Governmental Authority or any outstanding
proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
Borrower’s or any Guarantor’s knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
Borrower or Guarantors and any Subsidiary of Borrower or any Guarantor or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, in each case, which if adversely

 

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determined against Borrower or any Guarantor would reasonably be expected to
have a Material Adverse Effect.

(c) Except as set forth on Schedule 8.8 to the Information Certificate,
Borrower, Guarantors and their Subsidiaries have no liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials, except for any liability which would not reasonably be expected to
have a Material Adverse Effect.

(d) Borrower, Guarantors and their Subsidiaries have all Permits required to be
obtained or filed in connection with the operations of Borrower and Guarantors
under any Environmental Law and all of such licenses, certificates, approvals or
similar authorizations and other Permits are valid and in full force and effect.

8.9 Employee Benefits.

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or State law. Each Plan which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best of
Borrower’s and each Guarantor’s knowledge, nothing has occurred which would
cause the loss of such qualification. Borrower and its ERISA Affiliates have
made all required contributions to any 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.

(b) There are no pending, or to the best of Borrower’s and each Guarantor’s
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan except
where such prohibited transaction or violation would not reasonably be expected
to have a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) the
current value of each Plan’s assets (determined in accordance with the
assumptions used for funding such Plan pursuant to Section 412 of the Code) are
not less than such Plan’s liabilities under Section 4001(a)(16) of ERISA;
(iii) Borrower and Guarantors have not incurred and do not reasonably expect to
incur, any liability under Title IV of ERISA with respect to any Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) Borrower
and Guarantors have not incurred and do not reasonably expect 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 Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) Borrower,
Guarantors, and their ERISA Affiliates, have not engaged in a transaction that
would be subject to Section 4069(a) or 4212(c) of ERISA.

 

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8.10 Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by Borrower and Guarantors maintained at any
bank or other financial institution are set forth on Schedule 8.10 to the
Information Certificate, subject to the right of Borrower and Guarantors to
establish new accounts in accordance with Section 5.2 hereof.

8.11 Intellectual Property. Borrower and each Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrower and Guarantors do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of Borrower’s
and each Guarantor’s knowledge, no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing or
using any Intellectual Property presently contemplated to be sold by or employed
by Borrower or any Guarantor infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other
Person presently and no claim or litigation is pending or threatened against or
affecting Borrower or any Guarantor contesting its right to sell or use any such
Intellectual Property. Schedule 8.11 to the Information Certificate sets forth
all of the agreements or other arrangements of Borrower and Guarantors pursuant
to which Borrower and Guarantors have a license (other than commercially
available off-the-shelf software) or other right to use any trademarks, logos,
designs, representations or other Intellectual Property owned by another person
as in effect on the date hereof (other than such Intellectual Property as may be
associated with Inventory that any Borrower or Guarantor is permitted to sell
under applicable law, including the United States Copyright Act of 1976) and the
dates of the expiration of such agreements or other arrangements of Borrower or
Guarantors as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by Borrower or
Guarantors after the date hereof, collectively, the “License Agreements” and
individually, a “License Agreement”). No trademark, servicemark, copyright or
other Intellectual Property at any time used by Borrower or Guarantors which is
owned by another person, or owned by Borrower or Guarantors subject to any
security interest, lien, collateral assignment, pledge or other encumbrance in
favor of any person other than Agent, is affixed to any Eligible Inventory,
except (a) to the extent permitted under the term of the license agreements
listed on Schedule 8.11 to the Information Certificate and (b) to the extent the
sale of Inventory to which such Intellectual Property is affixed is permitted to
be sold by Borrower or Guarantors under applicable law (including the United
States Copyright Act of 1976).

8.12 Subsidiaries; Affiliates; Capitalization; Solvency.

 

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(a) Neither Borrower nor any Guarantor has any direct or indirect Subsidiaries
or is engaged in any joint venture or partnership except as set forth in
Schedule 8.12 to the Information Certificate.

(b) Borrower and Guarantors are the record and beneficial owners of all of the
issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by
Borrower or Guarantors and there are no proxies, irrevocable or otherwise, with
respect to such shares and no equity securities of any of the Subsidiaries are
or may become required to be issued by reason of any options, warrants, rights
to subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of its Capital Stock or
securities convertible into or exchangeable for such shares.

(c) The issued and outstanding shares of Capital Stock of Borrower and
Guarantors are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and in the case of the Capital Stock of Borrower are fully paid
and non-assessable, free and clear of all claims, liens, pledges and
encumbrances of any kind, except as disclosed in writing to Agent prior to the
date hereof.

(d) Borrower and Guarantors, on a consolidated basis, are Solvent and will
continue to be Solvent after the creation of the Obligations, the security
interests of Agent and the consummation of the Transactions.

8.13 Labor Disputes.

(a) Set forth on Schedule 8.13 to the Information Certificate is a list
(including dates of termination) of all collective bargaining or similar
agreements between or applicable to Borrower and any Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of
Borrower or any Guarantor on the date hereof.

(b) There is (i) no significant unfair labor practice complaint pending against
Borrower or any Guarantor or, to the best of Borrower’s and each Guarantor’s
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or any Guarantor or, to best of Borrower’s or any Guarantor’s
knowledge, threatened against it, and (ii) no significant strike, labor dispute,
slowdown or stoppage is pending against Borrower or any Guarantor or, to the
best of Borrower’s or any Guarantor’s knowledge, threatened against Borrower or
any Guarantor.

8.14 Restrictions on Subsidiaries. Except for restrictions contained in this
Agreement or any other agreement with respect to Indebtedness of Borrower or
Guarantors permitted hereunder as in effect on the date hereof, there are no
contractual or consensual restrictions on Borrower or Guarantors or any of their

 

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respective Subsidiaries which prohibit or otherwise restrict (a) the transfer of
cash or other assets (i) between Borrower or any Guarantor and any of its or
their Subsidiaries or (ii) between any Subsidiaries of Borrower or any Guarantor
or (b) the ability of Borrower or any Guarantor or any of its or their
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral, other than such restrictions as are permitted by
Section 9.17 hereof.

8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets forth
all Material Contracts to which Borrower and each Guarantor is a party or is
bound as of the date hereof. Borrower and each Guarantor 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.

8.16 Credit Card Agreements. Set forth in Schedule 8.16 hereto is a correct and
complete list of all of the Credit Card Agreements. The Credit Card Agreements
constitute all of such agreements necessary for Borrower to operate its business
as presently conducted with respect to credit cards and debit cards and no
Accounts of Borrower or any Guarantor arise from purchases by customers of
Inventory with credit cards or debit cards, other than those which are issued by
Credit Card Issuers with whom Borrower has entered into one of the Credit Card
Agreements set forth on Schedule 8.16 hereto or with whom Borrower has entered
into a Credit Card Agreement in accordance with Section 9.13 hereof. Each of the
Credit Card Agreements constitutes the legal, valid and binding obligations of
Borrower and each Guarantor that is a party thereto and to the best of
Borrower’s and such Guarantor’s knowledge, the other parties thereto,
enforceable in accordance with their respective terms and are in full force and
effect. No default or event of default, or act, condition or event which after
notice or passage of time or both, would constitute a default or an event of
default under any of the Credit Card Agreements exists or has occurred. Borrower
and each Guarantor and the other parties thereto have complied with all of the
terms and conditions of the Credit Card Agreements to the extent necessary for
Borrower and each Guarantor to be entitled to receive all payments thereunder.
Borrower has delivered, or caused to be delivered to Agent, true, correct and
complete copies of all of the Credit Card Agreements.

8.17 Accuracy and Completeness of Information. All information (excluding
financial projections) furnished by or on behalf of Borrower or any Guarantor in
writing to Agent or any Lender in connection with this Agreement or any of the
other Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. All financial projections furnished by Borrower to
Agent or any Lender have been prepared in good faith on the basis of assumptions
believed in good faith to be reasonable. No event or circumstance has occurred
which has had or would reasonably be expected to have a Material Adverse Effect,
which has not been fully and accurately disclosed to Agent in writing prior to
the date hereof.

 

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8.18 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or any Lender. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or warranties which Borrower or Guarantors shall now or
hereafter give, or cause to be given, to Agent or any Lender.

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

9.1 Maintenance of Existence.

(a) Borrower and each Guarantor shall at all times preserve, renew and keep in
full force and effect its corporate and limited liability (as the case may be)
existence and rights and franchises with respect thereto and maintain in full
force and effect all licenses, trademarks, tradenames, approvals,
authorizations, leases, contracts and Permits, in each case, necessary to carry
on the business as presently or proposed to be conducted, except as permitted in
Section 9.7 hereof.

(b) Neither Borrower nor any Guarantor shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Borrower of such proposed change in
its name, which notice shall accurately set forth the new name; and (ii) Agent
shall have received a copy of the amendment to the Certificate of Incorporation
(or Certificate of Formation, as the case may be), of Borrower or such Guarantor
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of Borrower or such Guarantor as
soon as it is available.

(c) Neither Borrower nor any Guarantor shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than thirty (30) days’ prior written notice from Borrower of such proposed
change, which notice shall set forth such information with respect thereto as
Agent may require and Agent shall have received such agreements as Agent may
reasonably require in connection therewith. Neither Borrower nor any Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure.

9.2 New Collateral Locations. Borrower and Guarantors may only open a new
warehouse, distribution center or other new location (other than a retail store
location) within the continental United States provided Borrower or such
Guarantor (i) gives Agent thirty (30) days prior written notice of the intended
opening of any such new location and (ii) if requested by Agent, executes and
delivers, or causes to be executed and delivered, to Agent, in form and
substance reasonably satisfactory to Agent, a

 

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Collateral Access Agreement as Agent may deem reasonably necessary or desirable
to protect its interests in the Collateral at such location; provided, that,
without limiting the obligations of Borrower under Section 7.1(a)(iv) hereof or
as may otherwise be provided herein, Borrower and Guarantors shall not be
required to give such notice or cause to be executed or delivered any Collateral
Access Agreement pursuant to this Section 9.2 with respect to any retail store
location opened after the date hereof.

9.3 Compliance with Laws, Regulations, Etc.

(a) Borrower and Guarantors shall, and shall cause any Subsidiary to, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority,
the failure to comply with or observe would reasonably be expected to have a
Material Adverse Effect.

(b) Borrower and Guarantors shall give written notice to Agent promptly upon
Borrower’s or any Guarantor’s receipt of any notice of, or Borrower’s or such
Guarantor’s otherwise obtaining knowledge of, (i) the occurrence of any material
event involving the release, spill or discharge, threatened or actual, of any
Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any material
non-compliance with or violation of any Environmental Law by Borrower or any
Guarantor or (B) the material release, spill or discharge, threatened or actual,
of any Hazardous Material other than in the ordinary course of business and
other than as permitted under any applicable Environmental Law. Copies of all
environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations shall be promptly furnished, or caused to be furnished,
by Borrower or such Guarantor to Agent. Borrower and Guarantors shall take
prompt action to respond to any material non-compliance with any of the
Environmental Laws and shall regularly report to Agent on such response.

(c) Without limiting the generality of the foregoing, whenever Agent reasonably
determines that there is non-compliance by Borrower or Guarantors, or any
condition which requires any action by or on behalf of Borrower or any Guarantor
in order to avoid any non-compliance by Borrower or any Guarantor, with any
Environmental Law, Borrower shall, at Agent’s request and Borrower’s expense:
(i) cause an independent environmental engineer reasonably acceptable to Agent
to conduct such tests of the site where non-compliance or alleged non-compliance
with such Environmental Laws has occurred as to such non-compliance and prepare
and deliver to Agent a report as to such non-compliance setting forth the
results of such tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof and
(ii) provide to Agent a supplemental report of such engineer whenever the scope
of such non-compliance, or Borrower’s or such Guarantor’s response thereto or
the estimated costs thereof, shall change in any material respect.

(d) Borrower and Guarantors shall each indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys’ fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release,

 

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threatened release, spill, discharge, disposal or presence of a Hazardous
Material, including the costs of any required or necessary repair, cleanup or
other remedial work with respect to any property of Borrower or Guarantors and
the preparation and implementation of any closure, remedial or other required
plans (“Losses”) unless it is determined pursuant to a final non-appealable
order of a court of competent jurisdiction that the Losses were the result of
acts or omissions constituting gross negligence or willful misconduct of Agent
or any Lender (but without limiting the obligations of Borrower or Guarantors as
to any other Indemnitee (other than any officers, directors, agents or employees
of the Indemnitee whose gross negligence or willful misconduct resulted in such
losses, claims, damages, liabilities, costs or expenses)). All representations,
warranties, covenants and indemnifications in this Section 9.3 shall survive the
payment of the Obligations and the termination of this Agreement.

9.4 Payment of Taxes and Claims. Borrower and Guarantors shall, and shall cause
any Subsidiary to, duly pay and discharge all taxes, assessments, contributions
and governmental charges upon or against it or its properties or assets, except
for taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower, any Guarantor or
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books. Borrower and Guarantors shall be liable for any tax
or penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and Borrower and each Guarantor agrees to
indemnify and hold Agent and Lenders harmless with respect to the foregoing, and
to repay to Agent, for the benefit of Lenders, on demand the amount thereof, and
until paid by Borrower or Guarantors such amount shall be added and deemed part
of the Loans, provided, that, nothing contained herein shall be construed to
require Borrower or Guarantors to pay any income, or franchise taxes
attributable to the income of Lenders from any amounts charged by or paid
hereunder to Lenders. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.

9.5 Insurance.

(a) Borrower and Guarantors shall, and shall cause any Subsidiary to, at all
times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be reasonably satisfactory
to Agent as to form, amount and insurer. Borrower and Guarantors shall furnish
certificates, policies or endorsements to Agent as Agent shall reasonably
require as proof of such insurance, and, if Borrower or any Guarantor fails to
do so, Agent is authorized, but not required, to obtain such insurance at the
expense of Borrower. All policies shall provide for at least thirty (30) days
prior written notice to Agent of any cancellation or reduction of coverage and
that Agent may act as attorney for Borrower and Guarantors at any time an Event
of Default exists or has occurred and is continuing, in adjusting, settling,
amending and canceling such insurance. Borrower and Guarantors shall cause Agent
to be named as a loss payee and an additional insured (but without any liability
for any premiums) under such insurance policies and Borrower

 

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and Guarantors shall obtain non-contributory lender’s loss payable endorsements
to all insurance policies in form and substance satisfactory to Agent. Such
lender’s loss payable endorsements shall specify that the proceeds of such
insurance shall be payable to Agent as its interests may appear and further
specify that Agent and Lenders shall be paid regardless of any act or omission
by Borrower, any Guarantor or any of its or their Affiliates.

(b) Agent shall apply any insurance proceeds of Collateral (other than insurance
proceeds of Equipment which is subject to purchase money security interests or
liens permitted by Section 9.8 hereof, in which case Agent shall, to the extent
it receives such insurance proceeds, remit same to Borrower) received by Agent
at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Agent may in good faith determine or hold such proceeds as cash
collateral for the Obligations, except, that, Agent shall not apply such
insurance proceeds or hold such proceeds as cash collateral for the Obligations
unless either an Event of Default has occurred and is continuing or Excess
Availability is equal to less than $25,000,000 (provided, that, for purposes of
calculating the Borrowing Base in order to determine Excess Availability for
this purpose, the Borrowing Base shall be calculated after giving effect to any
change to the Borrowing Base that may occur as a result of the casualty or
condemnation event). Notwithstanding anything to the contrary contained herein,
to the extent that any Equipment is lost, physically damaged or destroyed, upon
the written request of Borrower, Agent shall release the net cash proceeds from
insurance received by Agent pursuant to this Section 9.5 to Borrower as a result
of such loss, damage or destruction to the extent necessary for the repair,
refurbishing or replacement of such Equipment, provided, that, each of the
following conditions is satisfied: (i) no Event of Default shall exist or have
occurred and be continuing at the time immediately after giving effect to such
release, (ii) such proceeds shall be used solely to repair, refurbish or replace
the property so lost, damaged or destroyed (free and clear of any security
interests, liens, claims or other encumbrances other than as permitted in
Section 9.8 hereof), (iii) the repair, refurbishing or replacement of the
property so lost, damaged or destroyed shall be commenced as soon as reasonably
practicable and shall be diligently pursued to satisfactory completion, (iv) so
long as a Cash Dominion Event has occurred and is continuing, the proceeds shall
be held by Agent as cash collateral for the Obligations and shall be disbursed
from such cash collateral from time to time as needed and/or, at Agent’s option,
released by Agent directly to the contractor, subcontractor, materialmen,
laborers, engineers, architects and other persons rendering services or
materials to repair, refurbish or replace the property so lost, damaged or
destroyed, (v) the amount of the insurance proceeds and Borrower’s unrestricted
cash available for such purposes are sufficient in Agent’s reasonable
determination, to allow Borrower to effect such repair, refurbishing or
replacement in a satisfactory manner, (vi) the repair, refurbishing or
replacement to which the proceeds are applied shall cause the Equipment so lost,
damaged, destroyed to be of at least equal value and substantially the same
character as prior to such loss, damage or destruction, and (vii) the casualty
shall have resulted in payment of $5,000,000 in insurance proceeds or less. Upon
completion of the work and payment in full therefor, or upon the failure to
commence, or diligently to continue the work or the replacement of the
Collateral, Agent may, at Agent’s option and after prior notice to Borrower,
either apply the amount of any such proceeds then or thereafter in the
possession of Agent to the payment of the Obligations or hold such proceeds as
cash collateral for the Obligations on terms and conditions acceptable to Agent
and not release such funds to Borrower, provided, that, nothing contained herein
shall limit the

 

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right of Agent to apply any or all of such proceeds to the Obligations at any
time an Event of Default shall exist or have occurred and be continuing.

(c) Notwithstanding anything to the contrary set forth in Section 9.5(a) and
(b) above, Agent acknowledges that with respect to certain retail store location
leases identified on Schedule 9.5 hereof, Borrower has obtained separate
property insurance policies covering (i) the improvements and fixtures owned by
the lessor of such retail store location, under which such lessor is named as
the “loss payee” thereunder, provided, that, Borrower represents and warrants
that none of such lessors have any interest in Borrower’s business interruption
insurance or the Collateral, and (ii) the Collateral constituting tangible
personal property located at the premises demised under such leases, under which
Agent and Lenders are named as the “loss payee” thereunder. In no event shall
any such lessor be named as a “loss payee” or “additional insured” under the
insurance policies described in clause (ii) above. Any amounts received by or on
behalf of Borrower in respect of its rights as a lessee in respect of a
leasehold, or improvements thereon as a result of any casualty or condemnation
event affecting such lease or the real property and improvements demised under
such lease, shall be paid to Agent, in accordance with Section 9.5(a) hereof, to
the extent that Borrower has used its own funds or proceeds of Loans to fund
such restoration costs) of restoration costs for the affected premises.

9.6 Financial Statements and Other Information.

(a) Borrower and Guarantors shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Borrower, Guarantors and their Subsidiaries in accordance with sound business
practices sufficient to permit the preparation of financial statements in
accordance with GAAP. Borrower and Guarantors shall promptly furnish to Agent
and Lenders all such financial and other information as Agent shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrower and Guarantors, and Borrower shall notify the auditors and accountants
of Borrower and Guarantors that Agent is authorized to obtain such information
directly from them. Without limiting the foregoing, Borrower and Guarantors
shall furnish or cause to be furnished to Agent (and Agent shall make available
to Lenders after receipt from Borrower), the following: (i) within thirty
(30) days (or earlier if required by applicable law) after the end of each
fiscal month (except for fiscal months which are the end of fiscal quarters,
then within forty-five (45) days (or earlier if required by applicable law)
after the end of the first three fiscal quarters and within ninety (90) days (or
earlier if required by applicable law) after the end of the fourth fiscal
quarter), monthly, and with respect to any fiscal quarter end, quarterly
unaudited consolidated financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders’ equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Borrower and its Subsidiaries as of the end of and through such fiscal month
(together with a comparison to the applicable prior year period), certified to
be correct by the chief financial officer of Borrower, subject to normal
year-end adjustments and no footnotes and, in the case of financial statements
as of the end of a fiscal quarter of Borrower, accompanied by a compliance
certificate substantially in the form of Exhibit C hereto, along with a schedule
in a form satisfactory to Agent of the calculations used in determining, as of
the end of such quarter, whether Borrower and Guarantors are in compliance with
the covenants set forth in Section 9.18 of this Agreement as of the end of

 

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such quarter and (ii) within ninety (90) days (or earlier if required by
applicable law) after the end of each fiscal year, audited consolidated
financial statements and unaudited consolidating financial statements of
Borrower and its Subsidiaries (including in each case balance sheets, statements
of income and loss, statements of cash flow, and statements of shareholders’
equity), and the accompanying notes thereto, all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
the operations of Borrower and its Subsidiaries as of the end of and for such
fiscal year, together with the unqualified opinion of independent certified
public accountants with respect to the audited consolidated financial
statements, which accountants shall be KPMG LLP or another independent
accounting firm of nationally recognized reputation selected by Borrower, that
such audited consolidated financial statements have been prepared in accordance
with GAAP, and present fairly in all material respects the results of operations
and financial condition of Borrower and its Subsidiaries as of the end of and
for the fiscal year then ended.

(b) Borrower and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $5,000,000 (or
$2,000,000 to the extent any such loss, damage, investigation, action, suit,
proceeding or claim relates to Collateral in the Borrowing Base) or which if
adversely determined would be reasonably expected to result in a Material
Adverse Effect, (ii) any Material Contract being terminated or amended or any
new Material Contract entered into (in which event Borrower or the applicable
Guarantor shall provide Agent with a copy of such Material Contract upon the
request of Agent), (iii) any order, judgment or decree in excess of $2,000,000
shall have been entered against Borrower or any Guarantor any of its or their
properties or assets, (iv) any notification of a material violation of laws or
regulations received by Borrower or any Guarantor, (v) any ERISA Event, and
(vi) the occurrence of any Default or Event of Default. Borrower shall also
disclose in each compliance certificate delivered pursuant to clause (a) above
with the financial statements for each fiscal quarter, any Permitted Sale
Leasebacks that were initiated and not completed as of such fiscal quarter end.

(c) Borrower and Guarantors shall promptly after the sending or filing thereof
furnish or cause to be furnished to Agent copies of all reports and registration
statements which Borrower or any Guarantor files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.

(d) Borrower and Guarantors shall furnish or cause to be furnished to Agent as
soon as the same are complete, but in no event more than forty-five (45) days
after the commencement of each fiscal year of Borrower, a consolidated budget
presented on a monthly basis for such fiscal year (including a projected
consolidated balance sheet and related statements of projected operations and
cash flow as of the end of and for such fiscal year) and, during a Cash Dominion
Event, furnish or cause to be furnished to Agent, no less frequently than
monthly, any significant revisions of such budget.

(e) Agent is hereby authorized to deliver a copy of any financial statement or
any other information relating to the business of Borrower and Guarantors to any
court or other Governmental Authority or to any Lender or Participant or
prospective Lender or Participant or any Affiliate of any Lender or Participant
or prospective Lender or Participant or any Affiliate or Participant subject to
Section 13.5 hereof. Borrower and each Guarantor hereby irrevocably

 

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authorizes and directs all accountants or auditors to deliver to Agent, at
Borrower’s expense, copies of the financial statements of Borrower and
Guarantors and any reports or management letters prepared by such accountants or
auditors on behalf of Borrower or Guarantors and to disclose to Agent and
Lenders, subject to Section 13.5 hereof, such information as they may have
regarding the business of Borrower and Guarantors. Any documents, schedules,
invoices or other papers delivered to Agent or any Lender may be destroyed or
otherwise disposed of by Agent or such Lender one (1) year after the same are
delivered to Agent or such Lender, except as otherwise designated by Borrower to
Agent or such Lender in writing.

(f) Documents required to be delivered to Agent and Lenders pursuant to Sections
9.6(a) or 9.6(c) hereof (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
Borrower posts such documents, or provides a link thereto on Borrower’s website
on the Internet at the following website address: www.hhgregg.com; or (ii) on
which such documents are posted on Borrower’s behalf on an internet or intranet
website, if any, to which Agent and each Lender have access (whether a
commercial website, third-party website or whether sponsored by Agent);
provided, that: (A) Borrower shall deliver paper copies of such documents to
Agent or any Lender that requests Borrower to deliver such paper copies until a
written request to cease delivering paper copies is given by Agent or such
Lender and (B) Borrower shall notify Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance Borrower shall be
required to provide to Agent paper copies of the compliance certificate required
by Section 9.6(a) hereof.

9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.

Borrower and each Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly,

(a) merge into or with or consolidate with any other Person or permit any other
Person to merge into or with or consolidate with it, except, that, Guarantor or
any wholly owned Subsidiary of Guarantor or Borrower may merge with and into or
consolidate with Borrower or any other wholly owned Subsidiary of Borrower,
provided, that, each of the following conditions is satisfied as determined by
Agent: (i) Agent shall have received not less than five (5) days’ prior written
notice of the consummation of any merger or consolidation of Borrower or any
Guarantor to so merge or consolidate and such information with respect thereto
as Agent may reasonably request, (ii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Event of Default or Default,
shall exist or have occurred, (iii) Agent shall have received, true, correct and
complete copies of all agreements, documents and instruments relating to such
merger, including, but not limited to, the certificate or certificates of merger
as filed with each appropriate Secretary of State, (iv) the surviving entity of
a merger between Borrower and any Guarantor or a merger between Borrower and any
other Subsidiary of Borrower or any Guarantor shall be Borrower, and (v) the
surviving entity of a merger between any Guarantor and any other Subsidiary of
Borrower or any Guarantor shall be a Guarantor;

 

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(b) sell, issue, assign, lease, license, transfer, abandon or otherwise dispose
of any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person, except for:

(i) sales of Inventory in the ordinary course of business,

(ii) the sale or other disposition (other than in connection with the closing or
sale of a retail store location) of worn-out or obsolete Equipment or Equipment
no longer used or useful in the business of Borrower or any Guarantor;

(iii) the issuance and sale by Borrower or any Guarantor of Capital Stock of
Borrower or such Guarantor after the date hereof; provided, that, (A) Borrower
or such Guarantor shall not be required to pay any cash dividends or repurchase
or redeem such Capital Stock or make any other payments in respect thereof,
except as otherwise permitted in Section 9.11 hereof, (B) the terms of such
Capital Stock, and the terms and conditions of the purchase and sale thereof,
shall not include any terms that include any limitation on the right of Borrower
to request or receive Loans or Letter of Credit Accommodations or the right of
Borrower and Guarantors to amend or modify any of the terms and conditions of
this Agreement or any of the other Financing Agreements or otherwise in any way
relate to or affect the arrangements of Borrower and Guarantors with Agent and
Lenders or are more restrictive or burdensome to Borrower or Guarantors than the
terms of any Capital Stock in effect on the date hereof, (C) except as Agent may
otherwise agree in writing or as is otherwise permitted in
Section 9.9(1)(iii)(B)(2) hereof, all of the proceeds of the sale and issuance
of such Capital Stock shall be paid to Agent for application to the Obligations
in such order and manner as Agent may determine so long as a Cash Dominion Event
has occurred and is continuing, and (D) in no event shall Borrower or Guarantors
issue or sell Capital Stock which would result in a Change of Control or would
result in any Subsidiary ceasing to be wholly owned (directly or indirectly) by
Borrower;

(iv) sales or other dispositions of assets in connection with the closing or
sale of a retail store location, warehouse or distribution center in the
ordinary course of business which consist of leasehold interests in the premises
of such facility, the Equipment and fixtures located at such premises and the
books and records relating exclusively and directly to the operations of such
facility; provided, that, as to each and all such sales, (A) on the date of, and
after giving effect to, any such sale of a retail store, in any calendar year,
Borrower and each Guarantor shall not have closed or sold retail store locations
(excluding any retail store locations closed or sold pursuant to “in-market”
relocations so long as the Borrower or its Subsidiaries have opened another
retail store location in such market within the nine (9) month period following
such closure or sale) accounting for more than five (5%) percent of all sales of
Borrower and its Subsidiaries in the immediately preceding twelve (12) month
period, (B) Agent shall have received not less than three (3) Business Days
prior written notice of such sale, which notice shall set forth in reasonable
detail satisfactory to Agent, the parties to such sale or other disposition, the
assets to be sold or otherwise disposed of, the purchase price and the manner of
payment thereof and such other information with respect thereto as Agent may
request, (C) as of the date of such sale or other disposition and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing, (D) such sale shall be on commercially reasonable prices and
terms in a bona fide arm’s length transaction, and (E) any and all net

 

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proceeds payable or delivered to Borrower in respect of such sale or other
disposition shall be paid or delivered, or caused to be paid or delivered, to
Agent in accordance with the terms of this Agreement,

(v) Permitted Sale Leasebacks; and

(vi) additional sales or other dispositions of assets by Borrower or any of its
Subsidiaries not otherwise permitted pursuant to this Section 9.7(b) in an
amount not to exceed $15,000,000 in any fiscal year and an amount not to exceed
$45,000,000 during the term of this Agreement; and

(c) wind up, liquidate or dissolve except that any Guarantor or any Subsidiary
may wind up, liquidate and dissolve; provided, that, each of the following
conditions is satisfied: (i) the winding up, liquidation and dissolution of such
Guarantor or Subsidiary shall not violate any law or any order or decree of any
court or other Governmental Authority in any material respect and shall not
conflict with or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or any other agreement or instrument to
which Borrower or such Guarantor is a party or may be bound, (ii) such winding
up, liquidation or dissolution shall be done in accordance with the requirements
of all applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such Guarantor
or Subsidiary shall be duly and validly transferred and assigned to Borrower or
such Guarantor, free and clear of any liens, restrictions or encumbrances other
than the security interest and liens of Agent or as permitted under Section 9.8
of this Agreement (and Agent shall have received such evidence thereof as Agent
may require) and Agent shall have received such deeds, assignments or other
agreements as Agent may request to evidence and confirm the transfer of such
assets to of such Guarantor or Subsidiary to Borrower, or such Guarantor, as
applicable, (iv) Agent shall have received all documents and agreements that
Borrower or such Guarantor has filed with any Governmental Authority or as are
otherwise required to effectuate such winding up, liquidation or dissolution,
(v) neither Borrower nor any Guarantor shall assume any Indebtedness,
obligations or liabilities as a result of such winding up, liquidation or
dissolution, or otherwise become liable in respect of any obligations or
liabilities of the entity that is winding up, liquidating or dissolving, unless
such Indebtedness is otherwise expressly permitted hereunder, (vi) Agent shall
have received not less than five (5) Business Days prior written notice of the
intention of such Guarantor to wind up, liquidate or dissolve, and (vii) as of
the date of such winding up, liquidation or dissolution and after giving effect
thereto, no Default or Event of Default shall exist or have occurred; or

(d) agree to do any of the foregoing unless the consummation of the applicable
agreement is contingent upon Borrower’s obtaining Agent and Lenders’ consent to
such transaction.

9.8 Encumbrances. Borrower and Guarantors shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral,

 

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or file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any security interest or lien with respect
to any such assets or properties, except:

(a) the security interests and liens of Agent for itself and the benefit of
Lenders and the Bank Product Providers (but only to the extent provided for
herein);

(b) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet delinquent or the validity of which are being
contested in good faith by appropriate proceedings and available to Borrower,
any Guarantor or any Subsidiary, as the case may be, and with respect to which
adequate reserves have been set aside on its books;

(c) non-consensual statutory or common law liens (other than liens securing the
payment of taxes) arising in the ordinary course of Borrower’s, any Guarantor’s
or Subsidiary’s business to the extent: (i) such liens secure Indebtedness which
is not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower, any
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;

(d) zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of Real Property which do not interfere in any material
respect with the use of such Real Property or ordinary conduct of the business
of Borrower, any Guarantor or such Subsidiary as presently conducted thereon or
materially impair the value of the Real Property which may be subject thereto;

(e) security interests and mortgages to secure Indebtedness permitted under
Section 9.9(b) hereof so long as such security interests and mortgages do not
apply to any property of Borrower, any Guarantor or any Subsidiary other than
the Equipment or Real Property so acquired (and the proceeds thereof) and such
security interests are granted within two hundred seventy (270) days of the date
of such acquisition or completion of construction, remodeling or improvement of
such Equipment or Real Property, as the case may be;

(f) pledges and deposits of cash by Borrower or any Guarantor after the date
hereof in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security
benefits;

(g) pledges and deposits of cash by Borrower or any Guarantor after the date
hereof to secure the performance of tenders, bids, leases, contracts (other than
for the repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business of Borrower or such
Guarantor; provided, that, in connection with any performance bonds issued by a
surety or other person, the issuer of such bond shall have waived in writing any
rights in or to, or other interest in, any of the Collateral in an agreement, in
form and substance satisfactory to Agent;

(h) liens and the precautionary UCC financing statement filings in respect
thereof arising from (i) operating leases and (ii) equipment or other materials
which are not

 

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owned by Borrower or any Guarantor but are located on the premises of Borrower
or any Guarantor (but not in connection with, or as part of, the financing
thereof) from time to time in the ordinary course of business and consistent
with current practices of Borrower or such Guarantor;

(i) liens or rights of setoff against credit balances of Borrower with Credit
Card Issuers or Credit Card Processors or amounts owing by such Credit Card
Issuers or Credit Card Processors to Borrower in the ordinary course of
business, but not liens on or rights of setoff against any other property or
assets of Borrower, pursuant to the Credit Card Agreements (as in effect on the
date hereof) to secure the obligations of Borrower to the Credit Card Issuers or
Credit Card Processors as a result of fees and chargebacks;

(j) statutory or common law liens or rights of setoff of depository banks with
respect to funds of Borrower at such banks to secure fees and charges in
connection with returned items or the standard fees and charges of such banks in
connection with the deposit accounts maintained by Borrower at such banks (but
not any other Indebtedness or obligations);

(k) deposits of cash with the owner or lessor of premises leased and operated by
Borrower in the ordinary course of the business of Borrower to secure the
performance by Borrower of their respective obligations under the terms of the
lease for such premises;

(l) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default; provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such lien is imposed within the period specified in
Section 10.1(d) hereof in effect and (iv) Agent may establish a Reserve with
respect thereto;

(m) the security interests and liens upon the Frigidaire Consignment Collateral
in favor of Frigidaire to secure Indebtedness owing to Frigidaire under the
Frigidaire Consignment Agreement as permitted in Section 9.9(i) hereof;
provided, that, such security interests and liens shall at all times be subject
to the terms of the Frigidaire Intercreditor Agreement;

(n) the liens of customs brokers on Inventory of Borrower incurred in the
ordinary course of business in the connection with the importation of Inventory;
provided, that, such Inventory is not Eligible Inventory;

(o) the first priority security interests in and liens upon Equipment, owned
Real Property and certain Intellectual Property of Borrower and Guarantors to
secure Indebtedness permitted under Section 9.9(j); provided, that, such
security interests and liens shall be subject to the terms of an intercreditor
agreement, in form and substance satisfactory to the Agent;

(p) the security interests and liens upon the portion of Collateral that secures
any Indebtedness and other liabilities owing in connection with any floor plan
financing arrangements to the extent permitted under Section 9.23 hereof;
provided, that, such security

 

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interests and liens shall at all times be subject to the terms of the
intercreditor agreement referred to in Section 9.23 hereof;

(q) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate; and

(r) other liens securing obligations of Borrower and Guarantors permitted
hereunder in an aggregate amount not to exceed $7,500,000 at any time.

9.9 Indebtedness. Borrower and Guarantors shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:

(a) the Obligations;

(b) Indebtedness (including Capital Leases) arising after the date hereof to the
extent secured by security interests in Equipment (including Capital Leases) and
mortgages on Real Property to finance the acquisition, construction, remodeling
or improvement thereof not to exceed $30,000,000 in the aggregate at any time
outstanding so long as the Indebtedness secured thereby does not exceed the cost
of the Equipment or Real Property so acquired, constructed, remodeled or
improved, as the case may be;

(c) guarantees by any Guarantor of the Obligations of Borrower or any other
Guarantor in favor of Agent for the benefit of Lenders;

(d) the Indebtedness of Borrower or any Guarantor arising after the date hereof
pursuant to loans by Borrower or any Guarantor to the other permitted under
Section 9.10(f) hereof;

(e) unsecured subordinated Indebtedness of Borrower or Guarantors arising after
the date hereof to any third person (but not to Borrower or any other
Guarantor), provided, that, each of the following conditions is satisfied as
determined by Agent: (i) such Indebtedness shall mature at least six months past
the Scheduled Maturity Date, no payments of principal on such Indebtedness shall
be made unless each Payment Condition has been satisfied and such Indebtedness
shall otherwise be on terms and conditions acceptable to Agent and shall be
subject and subordinate in right of payment to the right of Agent and Lenders to
receive the prior indefeasible payment and satisfaction in full payment of all
of the Obligations pursuant to the terms of an intercreditor agreement between
Agent and such third party, in form and substance satisfactory to Agent,
(ii) Agent shall have received not less than ten (10) days prior written notice
of the intention of Borrower or any Guarantor to incur such Indebtedness, which
notice shall set forth in reasonable detail satisfactory to Agent the amount of
such Indebtedness, the person or persons to whom such Indebtedness will be owed,
the interest rate, the schedule of repayments and maturity date with respect
thereto and such other information as Agent may request with respect thereto,
(iii) Agent shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such
Indebtedness,

 

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(iv) except as Agent may otherwise agree in writing, all of the proceeds of the
loans or other accommodations giving rise to such Indebtedness shall be paid to
Agent for application to the Obligations in such order and manner as Agent may
determine (to the extent payable to Agent pursuant to this clause (iv)), (v) in
no event shall the aggregate outstanding principal amount of such Indebtedness,
plus the aggregate amounts of Indebtedness made pursuant to Sections 9.9(h) and
9.9(j) hereof, exceed $125,000,000 at any time, (vi) as of the date of incurring
such Indebtedness and after giving effect thereto, no Default or Event of
Default shall exist or have occurred, (vii) Borrower and Guarantors shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, Borrower or any Guarantor may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness (except for
regularly scheduled payments permitted herein or permitted by the intercreditor
agreement referenced in clause (i) of this Section 9.9(f)), or set aside or
otherwise deposit or invest any sums for such purpose, and (viii) Borrower and
Guarantors shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by Borrower or any Guarantor or on its behalf
promptly after the receipt thereof, or sent by Borrower or any Guarantor or on
its behalf concurrently with the sending thereof, as the case may be;

(f) Indebtedness of Borrower or any Guarantor entered into in the ordinary
course of business pursuant to a Hedging Transaction; provided, that (i) such
arrangements are either with a Bank Product Provider or other financial
institutions acceptable to Agent, (ii) such arrangements are not for speculative
purposes, and (iii) such Indebtedness shall be unsecured, except as to
obligations under Hedging Transactions with Bank Product Providers, but only to
the extent of the security interest of Agent in the Collateral as provided
herein;

(g) the Indebtedness set forth on Schedule 9.9 to the Information Certificate;
provided, that, (i) Borrower and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrower and Guarantors shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such Indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof except, that, Borrower and Guarantors may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose except as permitted in Section 9.9(i)(i) hereof, and
(iii) Borrower and Guarantors shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by Borrower or any Guarantor
or on its behalf, promptly after the receipt thereof, or sent by Borrower or any
Guarantor or on its behalf, concurrently with the sending thereof, as the case
may be;

(h) unsecured Indebtedness of Borrower and Guarantors arising after the date
hereof to any third person (but not to Borrower or any other Guarantor) that is
not otherwise

 

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permitted pursuant to Sections 9.9(a) through (g), provided, that, each of the
following conditions is satisfied as determined by Agent: (i) in no event shall
the aggregate outstanding principal amount of such Indebtedness plus the
aggregate amounts of Indebtedness made pursuant to Sections 9.9(e) and 9.9(j)
hereof, exceed $125,000,000 at any time, (ii) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (iii) such Indebtedness shall mature past the
Scheduled Maturity Date, (iv) no payments of principal on such Indebtedness
shall be made unless each Payment Condition has been satisfied except for
scheduled principal payments not exceeding five percent (5.0%) of the principal
balance of such Indebtedness per annum (v) representations, warranties,
covenants and defaults relating to such Indebtedness shall not be more
restrictive than the representations, warranties, covenants and defaults set
forth herein, and (iii) Borrower and Guarantors shall furnish to Agent all
material notices or demands in connection with such Indebtedness either received
by Borrower or any Guarantor or on its behalf promptly after the receipt
thereof, or sent by Borrower or any Guarantor or on its behalf concurrently with
the sending thereof, as the case may be;

(i) unsecured guarantees by Borrower or any Guarantor in respect of (i) leases
and Capital Leases permitted hereunder that are entered into by Borrower’s
Subsidiaries in the ordinary course of business or (ii) obligations of
Borrower’s Subsidiaries (other than for Indebtedness for borrowed money)
otherwise permitted hereunder and incurred in the ordinary course of business;

(j) additional Indebtedness of Borrower and Guarantors; provided, that (x) in no
event shall the aggregate outstanding principal amount of such Indebtedness plus
the aggregate amounts of Indebtedness made pursuant to Sections 9.9(e) and
9.9(h) hereof, exceed $125,000,000 at any time, (y) Agent shall have received
true, correct and complete copies of all of the agreements, documents, and
instruments evidencing or otherwise related to such Indebtedness, each as
executed and delivered by the parties thereto which shall be in form and
substance reasonably satisfactory to Agent, including, without limitation, terms
providing that such Indebtedness shall mature past the Scheduled Maturity Date
and (z) Borrower and Guarantors shall not make any payments of principal on such
Indebtedness unless each Payment Condition has been satisfied except for
scheduled principal payments not exceeding five percent (5.0%) of the principal
balance of such Indebtedness per annum; and

(k) Indebtedness arising under any floor plan financing arrangements to the
extent permitted under Section 9.23 hereof.

9.10 Loans, Investments, Etc.

Borrower and Guarantors shall not, and shall not permit any Subsidiary to,
directly or indirectly, make any loans or advance money or property to any
person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:

(a) the endorsement of instruments for collection or deposit in the ordinary
course of business;

 

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(b) investments in cash or Cash Equivalents, provided, that the terms and
conditions of Section 5.2 hereof shall have been satisfied with respect to the
deposit account, investment account or other account in which such cash or Cash
Equivalents are held;

(c) the existing equity investments of Borrower as of the date hereof in its
Subsidiaries, and so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, additional investments by Borrower or any
Guarantor not otherwise permitted under this Section in any Guarantor,

(d) loans and advances by Borrower or any Guarantor to employees of Borrower or
any Guarantor in the ordinary course of business not to exceed the principal
amount of $4,000,000;

(e) stock or obligations issued to Borrower or any Guarantor by any Person (or
the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower or any Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent, upon Agent’s request, together with such stock power, assignment or
endorsement by Borrower or such Guarantor as Agent may request;

(f) loans by Borrower or any Guarantor to the other after the date hereof,
provided, that,

(i) as to all of such loans, (A) the Indebtedness arising pursuant to any such
loan shall not be evidenced by a promissory note or other instrument, unless the
single original of such note or other instrument is promptly delivered to Agent
upon its request to hold as part of the Collateral, with such endorsement and/or
assignment by the payee of such note or other instrument as Agent may require,
and (B) as of the date of any such loan and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing,

(ii) as to loans by any Guarantor to Borrower, (A) the Indebtedness arising
pursuant to such loan shall be subject to, and subordinate in right of payment
to, the right of Agent and Lenders to receive the prior final payment and
satisfaction in full of all of the Obligations on terms and conditions
acceptable to Agent, (B) promptly upon Agent’s request, Agent shall have
received a subordination agreement, in form and substance satisfactory to Agent,
providing for the terms of the subordination in right of payment of such
Indebtedness of Borrower to the prior final payment and satisfaction in full of
all of the Obligations, duly authorized, executed and delivered by such
Guarantor and Borrower, and (C) Borrower shall not, directly or indirectly make,
or be required to make, any payments in respect of such Indebtedness during an
Event of Default, and

(iii) as to loans by Borrower to any Guarantor, other than loans to a Guarantor
made for the purpose of acquiring a Subsidiary in accordance with
Section 9.10(g) below, as of the date of any such loan and after giving effect
thereto, the Excess Availability of Borrower shall be not less than $10,000,000,
and

 

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(g) loans of money or property (other than Collateral) after the date hereof by
Borrower or any Guarantor to any Person (other than to Borrower or another
Guarantor) or investments after the date hereof by Borrower or any Guarantor by
capital contribution in any Person not otherwise permitted pursuant to this
Section 9.10; provided, that, as to any such loans or investments, each of the
following conditions is satisfied or waived as determined, in good faith, by
Agent:

(i) as of the date of any such loan or investment, and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing;

(ii) the aggregate outstanding amount of all such loans and investments shall
not exceed $10,000,000 in any fiscal year;

(iii) in the case of an investment by capital contribution, at the option of
Agent, the original stock certificate or other instrument evidencing such
capital contribution (or such other evidence as may be issued in the case of a
limited liability company) shall be promptly delivered to Agent, together with
such stock power, assignment or endorsement as Agent may request, and promptly
upon Agent’s reasonable request, Borrower or such Guarantor making such
investment shall execute and deliver to Agent, in form and substance reasonably
satisfactory to Agent, a pledge and security agreement (in form and substance
substantially similar to the same type of agreement executed by Borrower in
favor of Agent on or prior to the date hereof), granting to Agent a pledge of,
security interest in and lien upon all of the issued and outstanding shares of
such stock or other instrument or interest (and in the case of a limited
liability company take such other actions as Agent shall reasonably require with
respect to Agent’s security interests therein);

(iv) in the case of loans of money or property, the original of any promissory
note or other instrument evidencing the Indebtedness arising pursuant to such
loans shall be delivered, or caused to be delivered, to Agent, at its option,
together with an appropriate endorsement, in form and substance reasonably
satisfactory to Agent;

(v) Agent shall have received (A) prompt written notice thereof setting forth in
reasonable detail the nature and terms thereof, (B) true, correct and complete
copies of all material agreements, documents and instruments relating thereto
and (C) such other information with respect thereto as Agent may reasonably
request; and

(vi) the requirements (other than the dollar limitations) of any applicable
clause of this Section shall apply to such additional investment;

(h) the formation or acquisition by Borrower or any Guarantor after the date
hereof of any direct wholly-owned Subsidiary of Borrower or any Guarantor
organized under the laws of a jurisdiction in the United States of America or
the purchase by Borrower or any Guarantor of all or a substantial part of the
assets or properties (other than Capital Stock) of any third Person organized
under the laws of a jurisdiction in the United States of America; provided,
that, as to the formation or acquisition of any such Subsidiary, or the purchase
of the assets of any such third Person, each of the following conditions is
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good faith, by Agent (subject to Required Lender consent in the case of any
waiver to clause (ii) set forth below):

(i) as of the date of the formation or acquisition of such Subsidiary or the
making of any payments in connection with the formation or acquisition of such
Subsidiary, or the purchase of the assets of any third Person, and in each case
after giving effect thereto, no Default or Event of Default shall exist or shall
have occurred and be continuing;

(ii) the aggregate amount of all investments and payments made in connection
with the acquisition or formation of Subsidiaries (or series of related
acquisitions) plus the aggregate amount of the purchase price in respect of all
acquisitions (or series of related acquisitions) of the assets of any third
Person, including in each case any and all payments made after the closing
thereof, shall not exceed $10,000,000 in any fiscal year,

(iii) in the case of the formation or acquisition of any Subsidiary by Borrower
or any Guarantor, the Subsidiary formed or acquired shall be engaged in a
business related, ancillary or complementary to the business of Borrower and in
the case of the purchase of the assets or properties of any third Person by
Borrower or any Guarantor, the assets or properties being acquired shall be
related, ancillary or complementary to the business of the Borrower;

(iv) in the case of the formation or acquisition by Borrower or any Guarantor of
any Subsidiary, as to any such Subsidiary, (A) Borrower or the Guarantor forming
or acquiring such Subsidiary shall cause any such Subsidiary to execute and
deliver to Agent, the following (each in form and substance satisfactory to
Agent), (1) an absolute and unconditional guarantee of payment of the
Obligations, (2) a security agreement granting to Agent a security interest and
lien (except as otherwise consented to in writing by Agent and such liens as are
otherwise permitted to exist under the terms of the Financing Agreements) upon
all of the assets of any such Subsidiary, (3) a joinder agreement which will
evidence that such Subsidiary shall be a Guarantor under the Loan Agreement,
and/or (4) such other agreements, documents and instruments as Agent may
require, including, but not limited to, supplements and amendments hereto (all
such agreements to be in form and substance substantially similar to the same
types of agreements executed in connection with this Agreement on or prior to
the date hereof), and (B) Borrower or the Guarantor forming such Subsidiary
shall (1) execute and deliver to Agent, a pledge and security agreement (in form
and substance substantially similar to the same type of agreement executed by
Borrower in favor of Agent on or prior to the date hereof) granting to Agent a
pledge of and lien on all of the issued and outstanding shares of Capital Stock
of such Subsidiary, and (2) deliver to Agent the original stock certificates
evidencing such shares of Capital Stock (or such other evidence as may be issued
in the case of a limited liability company), together with stock powers with
respect thereto duly executed in blank (or the equivalent thereof in the case of
a limited liability company in which such interests are certificated, or
otherwise take such actions as Agent shall reasonably require with respect to
Agent’s security interests therein);

(v) the assets of any Subsidiary formed or acquired by Borrower or any
Guarantor, or the assets acquired by Borrower or any Guarantor, as applicable,
shall in each case be free and clear of any security interests, mortgages,
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encumbrances (other than those permitted in this Agreement) and Agent shall have
received evidence satisfactory to it of the same,

(vi) Agent shall have received (A) not less than five (5) Business Days’ prior
written notice thereof setting forth in reasonable detail, to the extent
applicable, (1) the nature and terms of such formation, acquisition or purchase,
(2) the proposed date and amount of such formation, acquisition or purchase,
(3) a description of all assets to be acquired, and (4) the total purchase price
for the assets to be purchased (and the terms of payment of such purchase
price), (B) true, correct and complete copies of all material agreements,
documents and instruments relating to such formation, acquisition or purchase,
(C) in the case of any acquisition of a Subsidiary, evidence reasonably
satisfactory to Agent that such acquisition has been approved by the board of
directors (or equivalent governing body) of the Subsidiary to be acquired and
(D)such other information with respect thereto as Agent may reasonably request;

(vii) the formation or acquisition of such Subsidiary by Borrower or such
Guarantor or the purchase of such assets by Borrower or such Guarantor shall not
violate any law or regulation or any order or decree of any court or
Governmental Authority in any material respect and shall not and will not
conflict with or result in the breach of, or constitute a material default in
any respect under, any Material Contract, document or instrument to which
Borrower or such Guarantor (including the Subsidiary formed or acquired) is a
party or may be bound, or result in the creation or imposition of, or the
obligation to grant, any lien, charge, security interest, claim or other
encumbrance upon any assets or properties of Borrower or such Guarantor
(including the Subsidiary formed or acquired or the assets being purchased),
other than the security interests and liens of Agent or violate any provision of
the certificate of incorporation, by-laws, certificate of formation, operating
agreement or other organizational documentation of Borrower or such Guarantor
(including the Subsidiary being formed or acquired);

(viii) neither Borrower nor any Guarantor shall become obligated with respect to
any Indebtedness, nor any of its property become subject to any security
interest or lien, pursuant to such formation, acquisition or purchase unless
Borrower or such Guarantor could incur such Indebtedness or create such security
interest or lien hereunder or under the other Financing Agreements other than as
set forth in clause (v) above;

(ix) Agent shall have received, in form and substance reasonably satisfactory to
Agent, (A) evidence that Agent has valid and perfected security interests in and
liens upon all purchased assets to the extent such assets constitute Collateral
hereunder, (B) UCC financing statements or other similar registrations required
in any foreign jurisdiction), (C) all Collateral Access Agreements and other
consents, waivers, acknowledgments and other agreements from third persons which
Agent may reasonably deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the assets purchased consistent
with the requirements of Section 5 hereof and the other provisions regarding
Collateral set forth herein and in the other Financing Agreements, (D) if
requested by Agent, the agreement of the seller consenting to the collateral
assignment by Borrower or such Guarantor purchasing such assets of all rights
and remedies and claims for damages of Borrower or such Guarantor relating to
the Collateral under the agreements, documents and instruments relating to such
acquisition, which if requested by Agent, Borrower and Guarantors shall use
commercially

 

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reasonable efforts to obtain, and (E) such other agreements, documents and
instruments as Agent may reasonably request in connection therewith, and

(x) in no event shall any Accounts or Inventory so acquired by Borrower pursuant
to such acquisition be deemed Eligible Commercial Accounts, Eligible Credit Card
Receivables or Eligible Inventory unless and until Agent shall have conducted a
field examination with respect thereto and then only to the extent the criteria
for Eligible Commercial Accounts, Eligible Credit Card Receivables or Eligible
Inventory and set forth herein are satisfied with respect thereto in accordance
with this Agreement (or such other or additional criteria as Agent may, at its
option, establish with respect thereto in accordance with this Agreement and
subject to such Reserves as Agent may establish in accordance with this
Agreement), and upon the request of Agent, the Accounts and Inventory acquired
by Borrower or such Guarantor pursuant to such acquisition shall at all times
after such acquisition be separately identified and reported to Agent in a
manner satisfactory to Agent;

(i) the loans and advances set forth on Schedule 9.10 to the Information
Certificate; provided, that, as to such loans and advances, Borrower and
Guarantors shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and Borrower and Guarantors shall furnish to Agent all material
notices or demands in connection with such loans and advances either received by
Borrower or Guarantors or on their behalf, promptly after the receipt thereof,
or sent by Borrower or such Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be;

(j) loans and advances to Parent, the proceeds of which shall be used to make
repurchases of Capital Stock of Parent issued to employees of Parent, Borrower
or any Guarantor, provided, that, as to any such loan, each of the following
conditions is satisfied in the determination of Agent: (i) as of the date of any
such loan and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing, (ii) such repurchase by Parent shall
be paid with funds legally available therefore, (iii) such repurchase shall not
violate any law or regulation or the terms of any indenture, agreement or
undertaking to which Parent, Borrower or any Guarantor is a party or by which
Parent, Borrower or such Guarantor or its or their property are bound, and
(iv) the aggregate amount of all payments for such repurchases in any fiscal
year, when taken together with the dividends and distributions for repurchases
permitted under Section 9.11(d) hereof, shall not exceed $2,000,000 (net of cash
proceeds of any sales of Capital Stock to other employees and excluding the
cancellation of stock purchase notes); and

(k) additional investments so long as on date of the making of such investments
and after giving effect thereto, each of the Payment Conditions is satisfied;
provided, that for any investments made pursuant to this subsection (k), the
limitations (other than dollar limitations) and requirements of the applicable
clauses of this Section shall apply to such additional investments.

 

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9.11 Dividends and Redemptions. Borrower and Guarantors shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of Borrower or any Guarantor now or hereafter outstanding, or
set aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except that:

(a) Borrower or any Guarantor may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Event of Default
shall exist or occur);

(b) Borrower and Guarantors may pay dividends to the extent permitted in
Section 9.12 below;

(c) any Subsidiary of Borrower or any Guarantor may pay dividends to Borrower or
any Guarantor;

(d) Borrower and Guarantors may pay dividends or make distributions to Parent to
repurchase Capital Stock of Parent issued to employees of Parent, Borrower or
any of their respective Subsidiaries; provided, that, as to any such dividend or
distribution, each of the following conditions is satisfied: (i) as of the date
of such dividend or distribution and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
dividend or distribution and the proposed repurchase shall not violate any law
or regulation or the terms of any indenture, agreement or undertaking to which
Borrower or any Guarantor is a party or by which Borrower or such Guarantor or
its or their property are bound, and (iii) the aggregate amount of all such
dividends or distributions in any fiscal year (when taken together with the
aggregate amount of loans made by Borrower to Parent in accordance with
Section 9.10 (j) hereof) shall not exceed $2,000,000 (net of cash proceeds of
any sales of Capital Stock to other employees and excluding the cancellation of
stock purchase notes);

(e) Borrower may pay dividends and make distributions to Parent to allow Parent
to repurchase the Capital Stock of Parent or to pay dividends thereon; provided,
that, (i) on date of the payment of such dividends or the making of such
distributions, no Default or Event of Default has occurred and is continuing and
no Default or Event of Default would result after giving effect to such
dividends or distributions, (ii) at the time of, and after giving effect to such
dividends or distributions, Excess Availability is not less than 10.0% of the
lesser of (A) the Borrowing Base or (B) the Maximum Credit and (iii) the
aggregate amount of all such dividends and distributions shall not exceed
$30,000,000 during the term of this Agreement;

(f) Borrower may pay dividends and make distributions to Parent to pay Parent
Overhead Expenses; and

(g) additional dividends and distributions so long as on date of payment of such
dividends and making of such distributions and after giving effect thereto, each
of the

 

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Payment Conditions is satisfied; provided, that for any additional dividends and
distributions paid or made pursuant to this subsection (g) for Capital Stock
repurchases of the type described in Section 9.11(d), the limitation in
Section 9.11(d)(ii) shall apply to such additional dividends and distributions.

9.12 Transactions with Affiliates. Borrower and Guarantors shall not, directly
or indirectly:

(a) except for the existing arrangements described on Schedule 9.12 hereto,
purchase, acquire or lease any property from, or sell, transfer or lease any
property to (other than Capital Stock of Parent, as permitted herein), any
officer, director or other Affiliate of Borrower or any Guarantor, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower’s or
any Guarantor’s business (as the case may be) and upon fair and reasonable terms
no less favorable to Borrower or such Guarantor than Borrower or such Guarantor
would obtain in a comparable arm’s length transaction with an unaffiliated
person; or

(b) make any payments (whether by dividend, loan or otherwise) of management,
consulting or other fees for management or similar services, or of any
Indebtedness owing to any officer, employee, shareholder, director or any other
Affiliate of Borrower or any Guarantor, except (i) reasonable compensation to
officers, employees and directors for services rendered to Borrower or
Guarantors in the ordinary course of business, (ii) payment of fees by the
Borrower to Freeman Spogli & Co. LLC (or by Borrower to Parent to pay Freeman
Spogli & Co. LLC) for any financial or M&A advisory, financing, underwriting or
placement services (whether structured as a fee or an underwriting discount) in
connection with financings, acquisitions or divestitures, provided, that,
(A) the fees for any such transaction shall not exceed the greater of 2% of the
transaction value and 5% of the amount of any new equity invested by Freeman
Spogli & Co. LLC in connection with such transaction, (B) each such payment
shall be approved by a majority of the disinterested members of the Board of
Directors of Parent, and (C) as of the date of any such fee payment and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, (iii) loans and advances to employees permitted
under Section 9.10(d) hereof, and (iv) payments to Affiliates permitted under
Sections 9.11(d), (e) and (f) hereof.

9.13 Credit Card Agreements. Borrower shall (a) observe and perform all material
terms, covenants, conditions and provisions of the Credit Card Agreements to be
observed and performed by it at the times set forth therein; and (b) at all
times maintain in full force and effect the Credit Card Agreements and not
terminate, cancel, surrender, modify, amend, waive or release any of the Credit
Card Agreements, or consent to or permit to occur any of the foregoing; except,
that, (i) Borrower may terminate, cancel or amend in any manner that would not
have a Material Adverse Effect any of the Credit Card Agreements in the ordinary
course of the business of Borrower; provided, that, Borrower shall give Agent
not less than fifteen (15) days prior written notice of its intention to so
terminate, cancel, amend or modify any of the Credit Card Agreements; (c) not
enter into any new Credit Card Agreements with any new Credit Card Issuer or
Credit Card Processor unless (i) Agent shall have received not less than thirty
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Borrower to enter into such agreement (together with such other information with
respect thereto as Agent may request) and (ii) Borrower delivers, or causes to
be delivered to Agent, a Credit Card Acknowledgment in favor of Agent duly
authorized, executed and delivered by the new Credit Card Issuer or Credit Card
Processor; (d) give Agent immediate written notice of any Credit Card Agreement
entered into by Borrower after the date hereof, together with a true, correct
and complete copy thereof and such other information with respect thereto as
Agent may request; and (e) furnish to Agent, promptly upon the request of Agent,
such information and evidence as Agent may reasonably require from time to time
concerning the observance, performance and compliance by Borrower or the other
party or parties thereto with the terms, covenants or provisions of the Credit
Card Agreements.

9.14 Compliance with ERISA. Borrower and Guarantors shall: (a) maintain each
Plan in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal and State law; (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification;
(c) not terminate any of such Plans so as to incur any material liability to the
Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any
prohibited transaction involving any of such Plans or any trust created
thereunder which would subject Borrower or Guarantors to a material tax or
penalty or other material liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA; (e) make all required contributions to any
Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code; (f) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Plan; or (g) not allow nor
suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such Plan that is a single employer plan, which
termination would result in any material liability of the Borrower or Guarantors
to the Pension Benefit Guaranty Corporation.

9.15 End of Fiscal Years; Fiscal Quarters. Borrower and each Guarantor shall,
for financial reporting purposes, cause its, and each of its Subsidiaries’
(a) fiscal years to end on March 31st of each year and (b) fiscal quarters to
end on June 30th, September 30th, December 31st, and March 31st of each year;
provided that Borrower and Guarantors may, upon not less than five (5) Business
Days’ prior written notice to Agent, change its fiscal year end and fiscal
quarter ends as necessary to provide for a 52 or 53 week fiscal year that ends
on the Saturday closest to the end of January of each year.

9.16 Change in Business. Borrower and Guarantors shall not engage in any
business other than the business of Borrower or Guarantors on the date hereof
and any business reasonably related, ancillary or complementary to the business
in which Borrower or such Guarantor is engaged on the date hereof.

 

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9.17 Limitation of Restrictions Affecting Subsidiaries. Borrower and Guarantors
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower or any Guarantor to (a) pay dividends or make other
distributions or pay any Indebtedness owed to Borrower or any Guarantor or any
Subsidiary of Borrower or any Guarantor; (b) make loans or advances to Borrower
or any Guarantor or any Subsidiary of Borrower or any Guarantor, (c) transfer
any of its properties or assets to Borrower or any Guarantor or any Subsidiary
of Borrower or such Guarantor, or (d) create, incur, assume or suffer to exist
any lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than encumbrances and restrictions arising under
(i) applicable law, (ii) this Agreement, (iii) customary provisions restricting
subletting or assignment of any agreement, lease or license of Borrower or such
Guarantor or any Subsidiary of Borrower or any Guarantor, (iv) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of Borrower or such Guarantor or any Subsidiary of Borrower
or such Guarantor, (v) any agreement relating to permitted Indebtedness incurred
by a Subsidiary of Borrower or such Guarantor prior to the date on which such
Subsidiary was acquired by Borrower or such Guarantor and outstanding on such
acquisition date, (vi) any agreement restricting liens on property securing
Indebtedness permitted to be incurred under Section 9.9(b) hereof, and (vii) the
extension or continuation of contractual obligations in existence on the date
hereof; provided, that, any such encumbrances or restrictions contained in such
extension or continuation are no less favorable to Agent and Lenders than those
encumbrances and restrictions under or pursuant to the contractual obligations
so extended or continued.

9.18 Fixed Charge Coverage Ratio. At all times during which Excess Availability
is less than the greater of (i) 10.0% of the lesser of (A) the Borrowing Base or
(B) the Maximum Credit or (ii) $15,000,000 until September 30, 2012 and
$20,000,000 thereafter, Borrower and Guarantors, on a consolidated basis shall,
when measured as of the fiscal month most recently ended for which Agent has
received financial statements in accordance with Section 9.6(a)(i), for the
twelve (12) immediately preceding consecutive fiscal months then ended,
maintain, a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0.

9.19 License Agreements.

(a) Borrower and Guarantors shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of the
material License Agreements to which it is a party to be observed and performed
by it, at the times set forth therein, if any, (ii) not do, permit, suffer or
refrain from doing anything that would reasonably be expected to result in a
material default under or material breach of any of the terms of any material
License Agreement, (iii) not cancel, surrender, modify, amend, waive or release
any material License Agreement in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing; except, that, subject to Section 9.19(b)
below, Borrower or Guarantors may amend, modify, cancel, surrender or release
any material License in the ordinary course of the business of Borrower or any
Guarantor; provided, that, Borrower or any Guarantor (as the case may be) shall

 

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give Agent not less than thirty (30) days prior written notice of its intention
to so amend, modify, cancel, surrender and release any such material License
Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by Borrower or any Guarantor after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by Borrower or any Guarantor in the case of a notice to
Borrower or such Guarantor and concurrently with the sending thereof in the case
of a notice from Borrower or such Guarantor) a copy of each notice of default
and every other notice and other communication received or delivered by Borrower
or any Guarantor in connection with any material License Agreement which relates
to the right of Borrower or any Guarantor to continue to use the property
subject to such License Agreement, and (vi) furnish to Agent, promptly upon the
request of Agent, such information and evidence as Agent may reasonably require
from time to time concerning the observance, performance and compliance by
Borrower or any Guarantor or the other party or parties thereto with the
material terms, covenants or provisions of any material License Agreement

(b) Borrower and Guarantors will either exercise any option to renew or extend
the term of each material License Agreement to which it is a party in such
manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
Borrower or such Guarantor does not intend to renew or extend the term of any
such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration. In the event of the failure of Borrower or such
Guarantor to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of Borrower or such
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of Borrower or such Guarantor under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from Borrower or such Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.

9.20 After Acquired Real Property. If Borrower or any Guarantor hereafter
acquires any fee interest in Real Property, and if such Real Property, has a
fair market value in an amount equal to or greater than $2,000,000 (or if a
Default or Event of Default exists, then regardless of the fair market value of
such assets), without limiting any other rights of Agent or any Lender, or
duties or obligations of Borrower or such Guarantor, promptly upon Agent’s
request, Borrower or such Guarantor shall execute and deliver to Agent a
mortgage, deed of trust or deed to secure debt, as Agent may determine, in form
and substance reasonably satisfactory to Agent and in form appropriate for
recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Agent a lien and mortgage on
and security interest in such Real Property and related fixtures or other
property (except for and subject to encumbrances that Borrower or such Guarantor
would otherwise be permitted to incur under Section 9.8 hereof or as otherwise

 

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consented to in writing by Agent) and such other agreements, documents and
instruments as Agent may require in connection therewith; provided that Borrower
and Guarantors shall not be required to take any the foregoing actions with
respect to any Real Property that is or will be the subject of a Permitted Sale
Leaseback transaction.

9.21 Costs and Expenses. Borrower and Guarantors shall pay to Agent and Wells
Fargo Capital Finance, LLC on demand all costs, expenses, filing fees and taxes
paid or payable in connection with the preparation, negotiation, due diligence,
execution, delivery, recording, structuring, arrangement, syndication,
administration, collection, liquidation, restructuring, enforcement and defense
of the Obligations, Agent’s rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
title insurance premiums, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees, costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Agent’s customary charges
and fees with respect thereto; (c) charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations; (d) costs and
expenses of preserving and protecting the Collateral; (e) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of Agent, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Agent or any Lender arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); (f) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Agent during the course
of periodic field examinations of the Collateral and Borrower’s or such
Guarantor’s operations, plus a per diem charge at Agent’s then standard rate for
Agent’s examiners in the field and office subject to the limitations on
reimbursement set forth in Section 7.1(a)(vi); and (g) the reasonable fees and
disbursements of (i) counsel (including legal assistants) to Agent in connection
with any of the foregoing and (ii) one additional counsel (including legal
assistants) for Lenders, unless the interests of any group of Lenders are
sufficiently mutually divergent, in which case one additional counsel for such
group of Lenders.

9.22 Consignment Agreements. Borrower and each Guarantor shall not, and shall
not permit any Subsidiary to, after the date hereof, enter into consignment
arrangements where it acts as consignee unless such consignment arrangements are
in the ordinary course of business and such consignee party has subjected the
consigned assets to tracking and identification procedures that clearly mark the
ownership of such assets. Promptly upon entering into any such consignment
arrangement, Borrower shall provide Agent with notice thereof, including the
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description of inventory and goods subject to such consignment and a copy of any
UCC financing statements to filed in connection with such arrangements.

9.23 Floor Plan Financing Arrangements. Borrower and each Guarantor shall not
incur, create, assume, become or be liable (whether or not such liabilities
constitute Indebtedness) in any manner with respect to, or permit to exist, any
amounts to be owed to any other Person in connection with any floor plan
financing arrangements unless:

(a) Agent shall have received, in form and substance reasonably satisfactory to
Agent, true, correct and complete copies of all agreements, documents and
instruments executed and delivered in connection with such floor plan financing
arrangements, as duly authorized, executed and delivered by the parties thereto;

(b) the outstanding principal amount of the Indebtedness outstanding to any
Person in connection with such floor plan financing arrangements shall not, at
any time, exceed $35,000,000, plus commencing with the fiscal year ending
March 31, 2009 and thereafter, an additional $500,000 for each newly opened
retail store location, plus interest or any late fees thereon at the rates which
are reasonable and customary for similar transactions;

(c) no Default or Event of Default shall have occurred and be continuing at the
time such floor planning transaction is originally entered into;

(d) Agent shall have received, in form and substance reasonably satisfactory to
Agent, an intercreditor agreement among Agent and the provider of the floor plan
financing arrangements which shall set forth the respective rights and
priorities of the parties thereto with respect to that portion of the Collateral
that shall secure the applicable floor plan financing arrangements;

(e) Borrower and Guarantors shall not, directly or indirectly, amend, modify,
alter or change the terms of any of such floor plan financing arrangements
(including without limitation any expansion of the list of vendors and their
products subject thereto) or any agreement, document or instrument executed and
delivered in connection therewith or related thereto, except, that, Borrower
may, after prior written notice to Agent, amend, modify, alter or change the
payment terms thereof so as to extend the maturity thereof, or defer the timing
of any payments in respect thereof, or to forgive or cancel any portion of such
amounts owing with respect thereto (other than pursuant to payments thereof), or
to reduce the interest rate, late charge or any fees in connection therewith or
to make any other change that does not adversely affect the Obligations or the
rights and interests of Agent or any Lender; and

(f) Borrower shall furnish to Agent all material notices or demands in
connection with such floor plan financing arrangements either received by
Borrower or on its behalf promptly after the receipt thereof, or sent by
Borrower or on its behalf concurrently with the sending thereof, as the case may
be.

 

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9.24 Further Assurances. At the request of Agent at any time and from time to
time, Borrower and each Guarantor shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments (including without limitation consents, waivers,
acknowledgments and other agreements from third persons), and do or cause to be
done such further acts as may be necessary or proper to evidence, perfect,
maintain, permit, protect and enforce the security interests of Agent and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Agent may
at any time and from time to time request a certificate from an officer of
Borrower or any Guarantor representing that all conditions precedent to the
making of Loans and providing Letter of Credit Accommodations contained herein
are satisfied. In the event of such request by Agent, Agent and Lenders may, at
Agent’s option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied. At the time
any Person becomes a direct or indirect Subsidiary of Borrower, such new
Subsidiary and Borrower shall comply with the requirements of
Section 9.10(h)(iv).

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

10.1 Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default,”
and collectively as “Events of Default”:

(a) (i) Borrower or any Obligor fails to pay any of the Obligations within two
(2) days of when due (other than payments of principal in respect of the Loans
which shall be paid when due) or (ii) Borrower or any Obligor fails to perform
any of the covenants contained in Sections 9.3, 9.4, 9.13, 9.14, 9.15, and 9.16
of this Agreement and such failure shall continue for fifteen (15) days;
provided, that, such fifteen (15) day period shall not apply in the case of:
(A) any failure to observe any such covenant which is not capable of being cured
at all or within such fifteen (15) day period or which has been the subject of a
prior failure within a six (6) month period or (B) an intentional breach by
Borrower or any Obligor of any such covenant or (iii) Borrower or any Obligor
fails to perform any of the terms, covenants, conditions or provisions contained
in this Agreement or any of the other Financing Agreements other than those
described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

(b) any representation, warranty or statement of fact made by Borrower or any
Guarantor in this Agreement, the other Financing Agreements or any other written
agreement, schedule, confirmatory assignment or otherwise shall when made or
deemed made be false or misleading in any material respect;

(c) any Obligor revokes or terminates or purports to revoke or terminate or
fails to perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of Agent or any
Lender;

(d) (i) any judgment for the payment of money is rendered against Borrower or
any Obligor in excess of $5,000,000 in any one case or in excess of $10,000,000
in the aggregate (to the extent not covered by insurance where the insurer has
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writing for such judgment) and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or (ii) any judgment (other than for the payment of money),
or injunction, attachment, garnishment or execution is rendered against Borrower
or any Obligor or any of the Collateral having a value in excess of $3,000,000
and shall remain undischarged, unvacated or unstayed pending appeal for a period
in excess of twenty (20) days;

(e) Borrower or, except as permitted by Section 9.7, any Material Obligor, which
is a partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;

(f) Borrower or any Material Obligor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;

(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower or any Material Obligor or all or any part of its
properties and such petition or application is not dismissed within sixty
(60) days after the date of its filing or Borrower or any Material Obligor shall
file any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner,

(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by Borrower or any Material Obligor or for all or any part of its
property;

(i) any default in respect of any Indebtedness of Borrower or any Obligor (other
than Indebtedness owing to Agent and Lenders hereunder), in any case in an
amount in excess of $10,000,000, which default continues for more than the
applicable cure period, if any, with respect thereto or any default by Borrower
or any Obligor under any Material Contract (including, without limitation, any
of the Credit Card Agreements or the Frigidaire Consignment Agreement), which
default continues for more than the applicable cure period, if any, with respect
thereto and/or is not waived in writing by the other parties thereto or any
Credit Card Issuer or Credit Card Processor withholds payment of amounts
otherwise payable to Borrower to fund a reserve account or otherwise hold as
collateral, or shall require Borrower to pay funds into a reserve account or for
such Credit Card Issuer or Credit Card Processor to otherwise hold as
collateral, or Borrower shall provide a letter of credit, guarantee, indemnity
or similar instrument to or in favor of such Credit Card Issuer or Credit Card
Processor or any Credit Card Issuer, or Credit Card Processor shall debit or
deduct any amounts from any deposit account of Borrower, such that in the
aggregate all of such funds in the reserve account, other amounts held as
collateral and the amount of such letters of credit, guarantees, indemnities or
similar instruments or debits shall exceed in the aggregate $3,000,000;

 

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(j) any Credit Card Issuer or Credit Card Processor shall send notice to
Borrower that it is ceasing to make or suspending payments to Borrower of
amounts due or to become due to Borrower or shall cease or suspend such
payments, or shall send notice to Borrower that it is terminating its
arrangements with Borrower or such arrangements shall terminate as a result of
any event of default under such arrangements, which continues for more than the
applicable cure period, if any, with respect thereto, unless Borrower shall have
entered into arrangements with another Credit Card Issuer or Credit Card
Processor, as the case may be, within thirty (30) days after the date of any
such notice;

(k) any material provision hereof or of any of the other Financing Agreements
shall for any reason cease to be valid, binding and enforceable with respect to
any party hereto or thereto (other than Agent) in accordance with its terms, or
any such party shall challenge the enforceability hereof or thereof, or shall
assert in writing, or take any action or fail to take any action based on the
assertion that any provision hereof or of any of the other Financing Agreements
has ceased to be or is otherwise not valid, binding or enforceable in accordance
with its terms, or any security interest provided for herein or in any of the
other Financing Agreements shall cease to be a valid and perfected first
priority (or second priority, as applicable) security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);

(l) an ERISA Event shall occur which results in or would reasonably be expected
to result in liability of Borrower in an aggregate amount in excess of
$5,000,000;

(m) any Change of Control;

(n) the indictment by any Governmental Authority, or the threatened indictment
by any Governmental Authority of Borrower or any Obligor of which Borrower, any
Obligor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against Borrower or any
Obligor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $1,500,000 or (ii) any other property of Borrower or any
Guarantor which is necessary or material to the conduct of its business; or

(o) there shall be an event of default under any of the other Financing
Agreements.

10.2 Remedies.

(a) At any time an Event of Default exists or has occurred and is continuing,
Agent and Lenders shall have all rights and remedies provided in this Agreement,
the other Financing Agreements, the UCC and other applicable law, all of which
rights and remedies may be exercised without notice to or consent by Borrower or
any Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers granted
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Agreements, the UCC or other applicable law, are cumulative, not exclusive and
enforceable, in Agent’s discretion, alternatively, successively, or concurrently
on any one or more occasions, and shall include, without limitation, the right
to apply to a court of equity for an injunction to restrain a breach or
threatened breach by Borrower or any Obligor of this Agreement or any of the
other Financing Agreements. Subject to Section 12 hereof, Agent may, and at the
direction of the Required Lenders shall, at any time or times, proceed directly
against Borrower or any Obligor to collect the Obligations without prior
recourse to the Collateral.

(b) Without limiting the generality of the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, at its option and
shall upon the direction of the Required Lenders, (i) upon notice to Borrower,
accelerate the payment of all Obligations and demand immediate payment thereof
to Agent for itself and the benefit of Lenders and the Bank Product Providers
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), and (ii) terminate the Commitments and this
Agreement (provided, that, upon the occurrence of any Event of Default described
in Sections 10.1(g) and 10.1(h) hereof, the Commitments and any other obligation
of the Agent or a Lender hereunder shall automatically terminate).

(c) Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion (i) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require Borrower or any Obligor, at Borrower’s
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral,
(iv) remove any or all of the Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker’s board, at any office of Agent or elsewhere) at such prices or terms as
Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of Borrower or any Obligor, which right or equity of
redemption is hereby expressly waived and released by Borrower and Obligors
and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Borrower designating the time and place of any public
sale or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
Borrower and Obligors waive any other notice. In the event Agent institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrower and each Obligor waives the posting of any bond
which might otherwise be required. At any time an Event of Default exists or has
occurred and is continuing, upon Agent’s request, Borrower will either, as Agent
shall specify, furnish cash collateral to the issuer to be used to secure and
fund Agent’s reimbursement obligations to the issuer in connection with any
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Accommodations or furnish cash collateral to Agent for the Letter of Credit
Accommodations. Such cash collateral shall be in the amount equal to one hundred
five (105%) percent of the amount of the Letter of Credit Accommodations plus
the amount of any fees and expenses payable in connection therewith through the
end of the latest expiration date of such Letter of Credit Accommodations.

(d) At any time or times that an Event of Default exists or has occurred and is
continuing, Agent may, in its discretion, enforce the rights of Borrower or any
Obligor against any account debtor, secondary obligor or other obligor in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, Agent may, in its discretion, at such time or times
(i) notify any or all account debtors, secondary obligors or other obligors in
respect thereof that the Receivables have been assigned to Agent and that Agent
has a security interest therein and Agent may direct any or all accounts
debtors, secondary obligors and other obligors to make payment of Receivables
directly to Agent, (ii) extend the time of payment of, compromise, settle or
adjust for cash, credit, return of merchandise or otherwise, and upon any terms
or conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto, and (iv) take
whatever other action Agent may reasonably deem necessary or desirable for the
protection of its interests and the interests of Lenders. At any time that an
Event of Default exists or has occurred and is continuing, at Agent’s request,
all invoices and statements sent to any account debtor shall state that the
Accounts and such other obligations have been assigned to Agent and are payable
directly and only to Agent and Borrower and each Obligors shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrower shall, upon Agent’s request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely according to
Agent’s instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent’s prior written consent.

(e) To the extent that applicable law imposes duties on Agent or any Lender to
exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), Borrower and each Guarantor acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
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specialists, (v) to advertise dispositions of Collateral through publications or
media of general circulation, whether or not the Collateral is of a specialized
nature, (vi) to contact other persons, whether or not in the same business as
Borrower or Guarantors, for expressions of interest in acquiring all or any
portion of the Collateral, (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or
credit enhancements to insure Agent or Lenders against risks of loss, collection
or disposition of Collateral or to provide to Agent or Lenders a guaranteed
return from the collection or disposition of Collateral, or (xii) to the extent
deemed appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Borrower and each Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to Borrower or
any Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.

(f) For the purpose of enabling Agent to exercise the rights and remedies
hereunder, Borrower and each Obligor hereby grants to Agent or its designee, to
the extent assignable under each of the applicable licenses or sublicenses, an
irrevocable, non-exclusive license (exercisable at any time an Event of Default
shall exist or have occurred and for so long as the same is continuing) without
payment of royalty or other compensation to Borrower or any Obligor, to use,
assign, license or sublicense any of the trademarks, service-marks, trade names,
business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
hereafter acquired by Borrower or any Obligor, wherever the same maybe located,
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout thereof.

(g) At any time an Event of Default exists or has occurred and is continuing,
Agent may apply the cash proceeds of Collateral actually received by Agent from
any sale, lease, foreclosure or other disposition of the Collateral to payment
of the Obligations, in whole or in part and in accordance with the terms hereof,
whether or not then due or may hold such proceeds as cash collateral for the
Obligations. Borrower and Guarantors shall remain liable to Agent and Lenders
for the payment of any deficiency with interest at the highest rate provided for
herein and all costs and expenses of collection or enforcement, including
attorneys’ fees and expenses.

(h) Without limiting the foregoing, upon the occurrence of a Default or an Event
of Default, (i) Agent and Lenders may, at Agent’s option, and upon the
occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or arranging for
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lending formulas or amounts of Loans and Letter of Credit Accommodations
available to Borrower and/or (B) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made by
Agent and Lenders to Borrower and (ii) Agent may, at its option, establish such
Reserves as Agent determines, without limitation or restriction, notwithstanding
anything to the contrary contained herein.

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a) The validity, interpretation and enforcement of this Agreement and the other
Financing Agreements (except as otherwise provided therein) and any dispute
arising out of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the State
of New York but excluding any principles of conflicts of law or other rule of
law that would cause the application of the law of any jurisdiction other than
the laws of the State of New York.

(b) Borrower, each Guarantor, Agent and Lenders irrevocably consent and submit
to the non-exclusive jurisdiction of the Supreme Court of the State of New York
for New York County and the United States District Court for the Southern
District of New York, whichever Agent may elect, and waive any objection based
on venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or
the transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Agent and Lenders shall have the right to
bring any action or proceeding against Borrower or any Guarantor or its or their
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or Guarantors or its or their property).

(c) Borrower and Guarantors each hereby waive personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent’s option,
by service upon Borrower or such Guarantor (or Borrower on behalf of such
Guarantor) in any other manner provided under the rules of any such courts.

(d) BORROWER, EACH GUARANTOR, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN

 

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RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
EACH GUARANTOR, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.

(e) Agent and Lenders shall not have any liability to Borrower or Guarantors
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
or Guarantors in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and such
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it or they
acted in good faith and with the exercise of ordinary care in the performance by
it or them of the terms of this Agreement. Borrower and Guarantors each:
(i) certifies that neither Agent, any Lender nor any representative, agent or
attorney acting for or on behalf of Agent or any Lender has represented,
expressly or otherwise, that Agent and Lenders would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement or
any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent and Lenders are
relying upon, among other things, the waivers and certifications set forth in
this Section 11.1 and elsewhere herein and therein.

11.2 Waiver of Notices. Borrower and each Guarantor hereby expressly waive
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and chattel paper, included in or evidencing
any of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for herein.
No notice to or demand on Borrower or any Guarantor which Agent or any Lender
may elect to give shall entitle Borrower or any Guarantor to any other or
further notice or demand in the same, similar or other circumstances.

11.3 Amendments and Waivers.

(a) Neither this Agreement nor any other Financing Agreement nor any terms
hereof or thereof may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed by Agent and
the Required Lenders or at Agent’s option, by Agent with the authorization of
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to any of the Financing Agreements (other than with respect to any provision of
Section 12 hereof), by Borrower; except, that, no such amendment, waiver,
discharge or termination shall:

(i) reduce the interest rate or any fees or extend the time of payment of
principal (including the extension of the Scheduled Maturity Date), interest or
any fees or reduce the principal amount of any Loan or Letter of Credit
Accommodations, in each case without the consent of each Lender directly
affected thereby; provided, that only the consent of Required Lenders shall be
necessary to waive any obligation of Borrower to pay interest or fees on Letter
of Credit Accommodation at the default rate,

(ii) increase the Commitment of any Lender over the amount thereof then in
effect or provided hereunder, in each case without the consent of the Lender
directly affected thereby,

(iii) release all or substantially all of the Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof), without the consent
of Agent and all of Lenders,

(iv) reduce any percentage specified in the definition of Required Lenders,
without the consent of Agent and all of Lenders,

(v) except as expressly permitted under this Agreement, consent to the release
of Borrower or any Guarantor of its obligations hereunder or consent to the
assignment or transfer by Borrower or any Guarantor of any of their rights and
obligations under this Agreement, in each case without the consent of Agent and
all of Lenders,

(vi) amend, modify or waive any terms of this Section 11.3 hereof, without the
consent of Agent and all of Lenders,

(vii) increase the advance rates constituting part of the Borrowing Base,
without the consent of Agent and all of Lenders;

(viii) as to any Lender, change Section 6.4 or Section 6.7 in a manner that
would alter the pro rata sharing or ordering of payments required thereby
without the consent of such Lender;

(ix) except as expressly permitted herein or in any other Financing Agreement,
subordinate the Obligations hereunder or the liens granted hereunder or under
the other Financing Agreements, to any other Indebtedness or lien, as the case
may be without the consent of each Lender;

(x) amend, modify or waive any other provision of this Agreement that expressly
requires the consent of all Lenders as set forth in such provision without the
consent of each Lender; or

(xi) subject to clause (vii) above, change the definition of the term “Borrowing
Base” or any component definition thereof if as a result thereof the amounts
available to be borrowed by the Borrower would be increased without the consent
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Supermajority Lenders, provided that the foregoing shall not limit the
discretion of the Agent to (A) change, establish or eliminate any eligibility
criteria to the extent such modification does not make the criteria less
restrictive than permitted as of the Closing Date and (B) change, establish or
eliminate any Reserves.

(b) Agent and Lenders shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its or their rights, powers
and/or remedies unless such waiver shall be in writing and signed as provided
herein. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Agent or any Lender of any right, power and/or remedy
on any one occasion shall not be construed as a bar to or waiver of any such
right, power and/or remedy which Agent or any Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.

(c) Notwithstanding anything to the contrary contained in Section 11.3(a) above,
in connection with any amendment, waiver, discharge or termination, in the event
that any Lender whose consent thereto is required shall fail to consent or fail
to consent in a timely manner (such Lender being referred to herein as a
“Non-Consenting Lender”), but the consent of any other Lenders to such
amendment, waiver, discharge or termination that is required are obtained, if
any, then Wells Fargo shall have the right, but not the obligation, at any time
thereafter, and upon the exercise by Wells Fargo of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Wells Fargo or such Eligible Transferee as Wells Fargo may specify, the
Commitment of such Non-Consenting Lender and all rights and interests of such
Non-Consenting Lender pursuant thereto. Wells Fargo shall provide the
Non-Consenting Lender with prior written notice of its intent to exercise its
right under this Section, which notice shall specify on date on which such
purchase and sale shall occur. Such purchase and sale shall be pursuant to the
terms of an Assignment and Acceptance (whether or not executed by the
Non-Consenting Lender), except that on the date of such purchase and sale, Wells
Fargo, or such Eligible Transferee specified by Wells Fargo, shall pay to the
Non-Consenting Lender (except as Wells Fargo and such Non-Consenting Lender may
otherwise agree) the amount equal to: (i) the principal balance of the Loans
held by the Non-Consenting Lender outstanding as of the close of business on the
business day immediately preceding the effective date of such purchase and sale,
plus (ii) amounts accrued and unpaid in respect of interest and fees payable to
the Non-Consenting Lender to the effective date of the purchase (but in no event
shall the Non-Consenting Lender be deemed entitled to any early termination
fee). Such purchase and sale shall be effective on the date of the payment of
such amount to the Non-Consenting Lender and the Commitment of the
Non-Consenting Lender shall terminate on such date.

(d) The consent of Agent shall be required for any amendment, waiver or consent
affecting the rights or duties of Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Commercial Accounts, Eligible
Credit Card Receivables or Eligible Inventory shall not be deemed an amendment
to the advance rates or Borrowing Base provided for in this Section 11.3. The
consent of the Swing Line Lender shall be required for any amendment, waiver or
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11.4 Waiver of Counterclaims. Borrower and each Guarantor waive all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.

11.5 Indemnification. Borrower and Guarantors shall, jointly and severally,
indemnify and hold Agent, each Lender, Wells Fargo Capital Finance, LLC, J.P.
Morgan Securities LLC and their respective officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an “Indemnitee”), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including attorneys’ fees and
expenses) imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrower and each Guarantor shall not have any obligation
under this Section 11.5 to indemnify an Indemnitee with respect to a matter
covered hereby resulting from the gross negligence or willful misconduct of such
Indemnitee as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction (but without limiting the obligations of Borrower or any
Guarantor as to any other Indemnitee (other than any officers, directors, agents
or employees of the Indemnitee whose gross negligence or willful misconduct
resulted in such losses, claims, damages, liabilities, costs or expenses)). To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Borrower and each Guarantor shall pay the maximum portion which it is permitted
to pay under applicable law to Agent and Lenders in satisfaction of indemnified
matters under this Section. To the extent permitted by applicable law, Borrower
and Guarantors shall not assert, and Borrower and each Guarantor hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any of the other Financing Agreements or any undertaking or transaction
contemplated hereby. All amounts due under this Section shall be payable upon
demand. The foregoing indemnity shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.

SECTION 12. THE AGENT

12.1 Appointment, Powers and Immunities. Each Lender irrevocably designates,
appoints and authorizes Wells Fargo to act as Agent hereunder and under the
other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent
(a) shall have no duties or responsibilities except those expressly set forth in
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Financing Agreements, and shall not by reason of this Agreement or any other
Financing Agreement be a trustee or fiduciary for any Lender; (b) shall not be
responsible to Lenders for any recitals, statements, representations or
warranties contained in this Agreement or in any of the other Financing
Agreements, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any other Financing
Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent. The identification
of Wells Fargo Capital Finance, LLC and J.P. Morgan Securities LLC as joint lead
arrangers and joint book runners shall not create any rights in favor of such
parties in such capacities nor subject such parties to any duties or obligations
in such capacities.

12.2 Reliance by Agent. Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telecopy,
telex, telegram or cable) believed by it to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Required Lenders or all of Lenders as
is required in such circumstance, and such instructions of such Lenders and any
action taken or failure to act pursuant thereto shall be binding on all Lenders.

12.3 Events of Default.

(a) Agent shall not be deemed to have knowledge or notice of the occurrence of a
Default or an Event of Default or other failure of a condition precedent to the
Loans and Letter of Credit Accommodations hereunder, unless and until Agent has
received notice from a Lender, or Borrower specifying such Event of Default or
any unfulfilled condition precedent, and stating that such notice is a “Notice
of Default or Failure of Condition.” In the event that Agent receives such a
Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders to the extent provided for herein;
provided, that, unless and until Agent shall have received such directions,
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from taking such action, with respect to or by reason of such Event of Default
or failure of condition precedent, as it shall deem advisable in the best
interest of Lenders. Without limiting the foregoing, and notwithstanding the
existence or occurrence and continuance of an Event of Default or any other
failure to satisfy any of the conditions precedent set forth in Section 4 of
this Agreement to the contrary, unless and until otherwise directed by the
Required Lenders, Agent may, but shall have no obligation to, continue to make
Loans and issue or cause to be issued Letter of Credit Accommodations for the
ratable account and risk of Lenders from time to time if Agent believes making
such Loans or issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.

(b) Except with the prior written consent of Agent, no Lender may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Accommodations or other Obligations, as against Borrower or any Obligor
or any of the Collateral or other property of Borrower or any Obligor.

12.4 Wells Fargo in its Individual Capacity. With respect to its Commitment and
the Loans made and Letter of Credit Accommodations issued or caused to be issued
by it (and any successor acting as Agent), so long as Wells Fargo shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as Agent,
and the term “Lender” or “Lenders” shall, unless the context otherwise
indicates, include Wells Fargo in its individual capacity as Lender hereunder.
Wells Fargo (and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) lend money to, make investments in and
generally engage in any kind of business with Borrower (and any of its
Subsidiaries or Affiliates) as if it were not acting as Agent, and Wells Fargo
and its Affiliates may accept fees and other consideration from Borrower or any
Guarantor and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.

12.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrower hereunder and without limiting any obligations of
Borrower and Guarantors hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Financing Agreement or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.

 

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12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has,
independently and without reliance on Agent or other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of Borrower and Obligors and has made its own decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by Borrower or any Obligor of any term or provision of
this Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of Borrower or any Obligor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from Borrower or any Obligor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from Borrower or any Lender; provided, that, Agent shall not
be liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents expressly required
to be furnished to Lenders by Agent or deemed requested by Lenders hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any
other credit or other information concerning the affairs, financial condition or
business of Borrower or any Obligor that may come into the possession of Agent.

12.7 Failure to Act. Except for action expressly required of Agent hereunder and
under the other Financing Agreements, Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.

12.8 Additional Loans. Agent shall not make any Loans or provide any Letter of
Credit Accommodations to Borrower on behalf of Lenders intentionally and with
actual knowledge that such Loans or Letter of Credit Accommodations would cause
the aggregate amount of the total outstanding Loans and Letter of Credit
Accommodations to Borrower to exceed the Borrowing Base, without the prior
consent of all Lenders, except, that, Agent may make such additional Loans or
provide such additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations will cause the total outstanding Loans and Letter of Credit
Accommodations to Borrower to exceed the Borrowing Base, as Agent may deem
necessary or advisable in its discretion, provided, that: (a) the total
principal amount of the additional Loans or additional Letter of Credit
Accommodations to Borrower which Agent may make or provide after obtaining such
actual knowledge that the aggregate principal amount of the Loans equal or
exceed the Borrowing Base, plus the amount of Special Agent Advances made
pursuant to Section 12.11(a) hereof then outstanding, shall not exceed the
aggregate amount equal to ten (10%) percent of the Maximum Credit and shall not
cause the total principal amount of the Loans and Letter of Credit
Accommodations to exceed the

 

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Maximum Credit and (b) no such additional Loan or Letter of Credit Accommodation
shall be outstanding more than ninety (90) days after the date such additional
Loan or Letter of Credit Accommodation is made or issued (as the case may be),
except as the Required Lenders may otherwise agree. Each Lender shall be
obligated to pay Agent the amount of its Pro Rata Share of any such additional
Loans or Letter of Credit Accommodations, subject to the limitation set forth in
Section 2.4.

12.9 Concerning the Collateral and the Related Financing Agreements. Each Lender
authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders (or all Lenders if applicable) in accordance with the terms of
this Agreement or the other Financing Agreements and the exercise by Agent or
Required Lenders (or all Lenders if applicable) of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

12.10 Field Audit, Examination Reports and other Information; Disclaimer by
Lenders. By signing this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report and
report with respect to the Borrowing Base prepared or received by Agent (each
field audit or examination report and report with respect to the Borrowing Base
being referred to herein as a “Report” and collectively, “Reports”), appraisals
with respect to the Collateral and financial statements with respect Borrower
and its Subsidiaries received by Agent;

(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or any other party performing any audit or
examination will inspect only specific information regarding Borrower and
Guarantors and will rely significantly upon Borrower’s and Guarantor’s books and
records, as well as on representations of Borrower’ and any Guarantor’s
personnel; and

(d) agrees to keep all Reports confidential and strictly for its internal use in
accordance with the terms of Section 13.5 hereof, and not to distribute or use
any Report in any other manner.

12.11 Collateral Matters.

(a) Agent may, at its option, from time to time, at any time on or after an
Event of Default and for so long as the same is continuing or upon any other
failure of a

 

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condition precedent to the Loans and Letter of Credit Accommodations hereunder,
make such disbursements and advances (“Special Agent Advances”) which Agent, in
its sole discretion, (i) deems necessary or desirable either to preserve or
protect the Collateral or any portion thereof or (ii) to enhance the likelihood
or maximize the amount of repayment by Borrower and Guarantors of the Loans and
other Obligations, or (iii) to pay any other amount chargeable to Borrower or
any Guarantor pursuant to the terms of this Agreement or any of the other
Financing Agreements consisting of (A) costs, fees and expenses and (B) payments
to any issuer of Letter of Credit Accommodations; provided, that, the aggregate
principal amount of the Special Agent Advances pursuant to this
Section 12.11(a), plus the then outstanding principal amount of the additional
Loans and Letter of Credit Accommodations which Agent may make or provide as set
forth in Section 12.8 hereof, shall not exceed the aggregate amount of ten
(10%) percent of the Maximum Credit. Special Agent Advances shall be repayable
on demand and together with all interest thereon shall constitute Obligations
secured by the Collateral. Special Agent Advances shall not constitute Loans but
shall otherwise constitute Obligations hereunder. Interest on Special Agent
Advances shall be payable at the Interest Rate then applicable to Base Rate
Loans and shall be payable on demand. Without limitation of its obligations
pursuant to Section 6.10, each Lender agrees that it shall make available to
Agent, upon Agent’s demand, in immediately available funds, the amount equal to
such Lender’s Pro Rata Share of each such Special Agent Advance; subject to the
limitation set forth in Section 2.4. If such funds are not made available to
Agent by such Lender, such Lender shall be deemed a Defaulting Lender and Agent
shall be entitled to recover such funds, on demand from such Lender together
with interest thereon for each day from the date such payment was due until the
date such amount is paid to Agent at the Federal Funds Rate for each day during
such period (as published by the Federal Reserve Bank of New York or at Agent’s
option based on the arithmetic mean determined by Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent’s demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Base Rate Loans.

(b) Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to release, or in the case of clause (v) of this subsection (b),
subordinate, any security interest in, mortgage or lien upon, any of the
Collateral (i) upon termination of the Commitments and payment and satisfaction
of all of the Obligations and delivery of cash collateral to the extent required
under Section 13.1 below, or (ii) constituting property being sold or disposed
of if Borrower certifies to Agent that the sale or disposition is made in
compliance with Section 9.7 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) constituting property in which
Borrower or any Guarantor did not own an interest at the time the security
interest, mortgage or lien was granted or at any time thereafter, or (iv) having
a value in the aggregate in any twelve (12) month period of less than
$25,000,000, and to the extent Agent may release its security interest in and
lien upon any such Collateral pursuant to the sale or other disposition thereof,
such sale or other disposition shall be deemed consented to by Lenders, or
(v) constituting property to be subject to Liens permitted by Section 9.8(o) to
secure financing permitted by Section 9.9(j) (or subordinate if permitted by the
Person providing such financing) or (vi) if required or permitted under the
terms of any of the other Financing Agreements, including any intercreditor
agreement, or (vii) approved, authorized or ratified in writing by all of
Lenders. Except as provided above, Agent will not release any security interest
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or lien upon, any of the Collateral without the prior written authorization of
all of Lenders. Upon request by Agent at any time, Lenders will promptly confirm
in writing Agent’s authority to release particular types or items of Collateral
pursuant to this Section.

(c) Without in any manner limiting Agent’s authority to act without any specific
or further authorization or consent by the Required Lenders, each Lender agrees
to confirm in writing, upon request by Agent, the authority to release
Collateral conferred upon Agent under this Section. Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the security interest, mortgage or liens granted to
Agent upon any Collateral to the extent set forth above; provided, that,
(i) Agent shall not be required to execute any such document on terms which, in
Agent’s opinion, would expose Agent to liability or create any obligations or
entail any consequence other than the release of such security interest,
mortgage or liens without recourse or warranty and (ii) such release shall not
in any manner discharge, affect or impair the Obligations or any security
interest, mortgage or lien upon (or obligations of Borrower or Guarantors in
respect of) the Collateral retained by Borrower or Guarantors.

(d) Agent shall have no obligation whatsoever to any Lender or any other Person
to investigate, confirm or assure that the Collateral exists or is owned by
Borrower or any Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
subject to the other terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent’s own interest in
the Collateral as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender.

(e) Without limiting the generality of the foregoing, each Lender (i) consents
to the terms and provisions of the Frigidaire Intercreditor Agreement and the GE
Credit Card Intercreditor Agreement, (ii) agrees that it is and will be bound
(as a Lender) by the terms and conditions of the Frigidaire Intercreditor
Agreement and the GE Credit Card Intercreditor Agreement, whether or not such
Lender executes the Frigidaire Intercreditor Agreement or the GE Credit Card
Intercreditor Agreement, and (iii) will not take any actions contrary to the
provisions of the Frigidaire Intercreditor Agreement or the GE Credit Card
Intercreditor Agreement.

12.12 Agency for Perfection. Each Lender hereby appoints Agent and each other
Lender as agent and bailee for the purpose of perfecting the security interests
in and liens upon the Collateral of Agent in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession (or where

 

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the security interest of a secured party with possession has priority over the
security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s
request therefor shall deliver such Collateral to Agent or in accordance with
Agent’s instructions.

12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days’ notice
to Lenders and Borrower. If Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor agent for Lenders. If
no successor agent is appointed prior to the effective date of the resignation
of Agent, Agent may appoint, after consulting with Lenders and Borrower, a
successor agent from among Lenders. Upon the acceptance by the Lender so
selected of its appointment as successor agent hereunder, such successor agent
shall succeed to all of the rights, powers and duties of the retiring Agent and
the term “Agent” as used herein and in the other Financing Agreements shall mean
such successor agent and the retiring Agent’s appointment, powers and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 12 shall inure to its benefit as to any
actions taken or omitted by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is thirty
(30) days after the date of a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nonetheless thereupon become effective and
Lenders shall perform all of the duties of Agent hereunder until such time, if
any, as the Required Lenders appoint a successor agent as provided for above.

12.14 Co-Agents. Agent may at any time and from time to time determine that a
Lender may, in addition, be a “Co-Agent,” “Co-Lead Arranger,” “Co-Documentation
Agent,” “Syndication Agent” or similar designation hereunder and enter into an
agreement with such Lender to have it so identified for purposes of this
Agreement. Agent shall provide written notice to Borrower of any such agreement.
Any Lender that is designated as a Co-Agent, Co-Lead Arranger, Co-Documentation
Agent, Syndication Agent, or such similar designation by Agent shall have no
right, power, obligation, liability, responsibility or duty under this Agreement
or any of the other Financing Agreements other than those applicable to all
Lenders as such. Without limiting the foregoing, the Lenders so identified shall
not have or be deemed to have any fiduciary relationship with any Lender and no
Lender shall be deemed to have relied, nor shall any Lender rely, on a Lender so
identified as a Co-Agent, Co-Lead Arranger, Co-Documentation Agent, Syndication
Agent, or such similar designation in deciding to enter into this Agreement or
in taking or not taking action hereunder. The identification of Wells Fargo
Capital Finance, LLC and J.P. Morgan Securities LLC, as joint lead arrangers and
joint book runners shall not create any rights in favor of such parties in such
capacities nor subject such parties to any duties or obligations in such
capacities.

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

13.1 Term.

 

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(a) This Agreement and the other Financing Agreements shall become effective as
of the date set forth on the first page hereof and shall continue in full force
and effect for a term ending on the date five (5) years from the date hereof
(the “Scheduled Maturity Date”), unless sooner terminated pursuant to the terms
hereof. In addition, Borrower may terminate this Agreement at any time upon
thirty (30) days prior written notice to Agent (which notice shall be
irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time on or after an Event of
Default. Upon the Scheduled Maturity Date or any other effective date of
termination of the Financing Agreements, Borrower shall pay to Agent all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
(or at Agent’s option, a letter of credit issued for the account of Borrower and
at Borrower’s expense, in form and substance satisfactory to Agent, by an issuer
acceptable to Agent and payable to Agent as beneficiary) in such amounts as
Agent determines are reasonably necessary to secure Agent and Lenders from loss,
cost, damage or expense, including attorneys’ fees and expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment and any continuing obligations of Agent or any Lender
pursuant to any Deposit Account Control Agreement. The amount of such cash
collateral (or letter of credit, as Agent may determine) as to any Letter of
Credit Accommodations shall be in the amount equal to one hundred five
(105%) percent of the amount of the Letter of Credit Accommodations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of such Letter of Credit Accommodations. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Borrower for such purpose. Interest shall be due until and including the next
Business Day, if the amounts so paid by Borrower to the Agent Payment Account or
other bank account designated by Agent are received in such bank account later
than 12:00 noon, Boston, Massachusetts time.

(b) No termination of this Agreement or the other Financing Agreements shall
relieve or discharge Borrower or any Guarantor of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all outstanding Obligations have been fully and finally discharged and
paid as set forth in clause (a) hereof and Agent’s continuing security interest
in the Collateral and the rights and remedies of Agent and Lenders hereunder,
under the other Financing Agreements and applicable law, shall remain in effect
until all such Obligations outstanding on the date of termination have been
fully and finally discharged and paid as provided for in Section 13.1(a) hereof.
Accordingly, Borrower and each Guarantor waives any rights it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral and Agent shall not be required to send such termination statements
to Borrower or Guarantors, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its terms and
all Obligations paid and satisfied in full in immediately available funds or as
otherwise provided for in Section 13.1(a) hereof.

13.2 Interpretative Provisions.

 

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(a) All terms used herein which are defined in Article 1, Article 8 or Article 9
of the UCC shall have the meanings given therein unless otherwise defined in
this Agreement.

(b) All references to the plural herein shall also mean the singular and to the
singular shall also mean the plural unless the context otherwise requires.

(c) All references to Borrower, Guarantor, Agent and Lenders pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.

(d) The words “hereof’, “herein,” “hereunder,” “this Agreement” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

(e) The word “including” when used in this Agreement shall mean “including,
without limitation” and the word “will” when used in this Agreement shall be
construed to have the same meaning and effect as the word “shall.”

(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined, in good faith, by Agent.

(g) All references to the terms “good faith” “or “reasonable” or “reasonably”
used herein or in the other Financing Agreements when applicable to Agent or any
Lender shall mean, notwithstanding anything to the contrary contained herein or
in the UCC, honesty in fact in the conduct or transaction concerned and the
observance of reasonable commercial standards of fair dealing based on how an
asset-based lender with similar rights providing a credit facility of the type
set forth herein would act in similar circumstances at the time with the
information then available to it. Borrower and Guarantors shall have the burden
of proving any lack of good faith on the part of Agent or any Lender alleged by
Borrower or Guarantors at any time.

(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Borrower most recently received by
Agent prior to the date hereof. Notwithstanding anything to the contrary
contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term “unqualified
opinion” as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and also does not include
any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or the scope of the audit.

 

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(i) 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.”

(j) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and
(ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.

(k) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.

(l) This Agreement and other Financing Agreements may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

(m) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent’s or any Lender’s involvement in their preparation.

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

13.3 Notices. All notices, requests and demands hereunder shall be in writing
and deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one
(1) Business Day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing. All notices, requests and demands upon
the parties are to be given to the following addresses (or to such other address
as any party may designate by notice in accordance with this Section):

 

If to Borrower or any    Gregg Appliances, Inc. Guarantor:    4151 East 96th
Street    Indianapolis, Indiana 46240    Attention: Chief Financial Officer   
Telephone No.: (317) 848-8710    Telecopy No.: (317) 848-8788 with copies to:   
Bingham McCutchen LLP

 

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   355 S. Grand Avenue, Suite 4400    Los Angeles, California 90071   
Attention: Roger H. Lustberg, Esq.    Telephone No.: (213) 680-6400    Telecopy
No.: (213) 680-6499 If to Agent:    Wells Fargo Bank, National Association   
One Boston Place, 18th Floor    Boston, Massachusetts 02108    Attention: Gregg
Appliances Loan Portfolio Manager    Telephone No.: (617) 854-7292    Telecopy
No.: (617) 523-4027

13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

13.5 Confidentiality.

(a) Agent and each Lender shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public information
supplied to it by Borrower pursuant to this Agreement which is clearly and
marked as confidential at the time such information is furnished by Borrower to
Agent or such Lender, provided, that, nothing contained herein shall limit the
disclosure of any such information: (i) to the extent required by statute, rule,
regulation, subpoena or court order, (ii) to bank examiners and other
regulators, auditors and/or accountants, or in connection with any litigation to
which Agent or such Lender is a party, (iii) to any Lender or Participant (or
prospective Lender or Participant) or to any Affiliate of any Lender so long as
such Lender or Participant (or prospective Lender or Participant) or Affiliate
shall have been instructed to treat such information as confidential in
accordance with this Section 13.5, or (iv) to counsel for Agent or any Lender or
Participant (or prospective Lender or Participant) so long as such counsel shall
have been instructed to treat such information as confidential in accordance
with Section 13.5.

(b) In the event that Agent or any Lender receives a request or demand to
disclose any confidential information pursuant to any subpoena or court order,
Agent or such Lender, as the case may be, agrees (i) to the extent permitted by
applicable law or if permitted by applicable law, to the extent Agent or such
Lender determines in good faith that it will not create any risk of liability to
Agent or such Lender, Agent or such Lender will promptly notify Borrower of such
request so that Borrower may seek a protective order or other appropriate relief
or remedy and (ii) if disclosure of such information is required, disclose such
information and, subject to reimbursement by Borrower of Agent’s or such
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Borrower in the reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such portion of the
disclosed information which Borrower so designates, to the extent permitted by
applicable law or if permitted by applicable law, to the extent Agent or such
Lender determines in good faith that it will not create any risk of liability to
Agent or such Lender.

(c) In no event shall this Section 13.5 or any other provision of this
Agreement, any of the other Financing Agreements or applicable law be deemed:
(i) to apply to or restrict disclosure of information that has been or is made
public by Borrower, Guarantor or any third party or otherwise becomes generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender (or any Affiliate of any Lender) on a
non-confidential basis from a person other than Borrower or Guarantors, (iii) to
require Agent or any Lender to return any materials furnished by Borrower or
Guarantors to Agent or a Lender or prevent Agent or a Lender from responding to
routine informational requests in accordance with the Code of Ethics for the
Exchange of Credit Information promulgated by The Robert Morris Associates or
other applicable industry standards relating to the exchange of credit
information. The obligations of Agent and Lenders under this Section 13.5 shall
supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof or any other arrangements
concerning the confidentiality of information provided by Borrower or Guarantors
to Agent or any Lender.

(d) Borrower and Guarantors each acknowledge and agree that Agent and Lenders
may share with their respective affiliates any information relating to the
Credit Facility and Borrower and Guarantors so long as such affiliates have been
instructed to treat such information as confidential in accordance with this
Section 13.5. Borrower and Guarantors each further acknowledge and agree to the
disclosure by Agent and Lenders and their respective affiliates of information
relating to the Credit Facility to Gold Sheets and other similar bank trade
publications, with such information to consist of deal terms and other
information customarily found in such publications. In addition, Borrower and
each Guarantor hereby authorizes Agent and Lenders and their respective
affiliates to use the name, logos and other insignia of Borrower and such
Guarantor and the amount of the Credit Facility in any “tombstone” or comparable
advertising, on its website or in other marketing materials of the Agent and
Lenders and their respective affiliates.

13.6 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Agent, Lenders, Borrower, Guarantor and their
respective successors and assigns, except that neither Borrower nor any
Guarantor may assign its rights under this Agreement, the other Financing
Agreements and any other document referred to herein or therein without the
prior written consent of Agent and Lenders. Any such purported assignment
without such express prior written consent shall be void. No Lender may assign
its rights and obligations under this Agreement without the prior written
consent of Agent, except as provided in Section 13.7 below. The terms and
provisions of this Agreement and the other Financing Agreements are for the
purpose of defining the relative rights and obligations of Borrower, Guarantor,
Agent and

 

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Lenders with respect to the transactions contemplated hereby and there shall be
no third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.

13.7 Assignments; Participations.

(a) Each Lender may, with the prior written consent of Agent, assign all or, if
less than all, a portion equal to at least $10,000,000 in the aggregate for the
assigning Lender, of such rights and obligations under this Agreement to one or
more Eligible Transferees (but not including for this purpose any assignments in
the form of a participation), each of which assignees shall become a party to
this Agreement as a Lender by execution of an Assignment and Acceptance;
provided, that, (i) such transfer or assignment will not be effective until
recorded by Agent on the Register, (ii) Agent’s consent shall not be required in
connection with an assignment made to an Eligible Transferee under clause (b) of
the definition thereof and (iii) Agent shall have received for its sole account
payment of a processing fee from the assigning Lender or the assignee in the
amount of $5,000.

(b) Agent shall maintain a register of the names and addresses of Lenders, their
Commitments and the principal amount of their Loans (the “Register”). Agent
shall also maintain a copy of each Assignment and Acceptance delivered to and
accepted by it and shall modify the Register to give effect to each Assignment
and Acceptance. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and Borrower, Obligors, Agent and Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Borrower and any Lender at any reasonable time and from time
to time upon reasonable prior notice.

(c) Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the other Financing Agreements and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of
Credit Accommodations) of a Lender hereunder and thereunder and the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement.

(d) By execution and delivery of an Assignment and Acceptance, the assignor and
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance,
the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no

 

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responsibility with respect to the financial condition of Borrower, any Obligor
or any of their Subsidiaries or the performance or observance by Borrower or any
Obligor of any of the Obligations; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Financing Agreements, together
with such other documents and information it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such assignee will, independently and without reliance upon the assigning
Lender, Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Financing Agreements,
(v) such assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other
Financing Agreements as are delegated to Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto, and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Financing
Agreements are required to be performed by it as a Lender. Agent and Lenders may
furnish any information concerning Borrower or any Obligor in the possession of
Agent or any Lender from time to time to assignees and Participants.

(e) Each Lender may sell participations to one or more banks or other entities
in or to all or a portion of its rights and obligations under this Agreement and
the other Financing Agreements (including, without limitation, all or a portion
of its Commitments and the Loans owing to it and its participation in the Letter
of Credit Accommodations, without the consent of Agent or the other Lenders);
provided, that, (i) such Lender’s obligations under this Agreement (including,
without limitation, its Commitment hereunder) and the other Financing Agreements
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and Borrower,
Guarantor, the other Lenders and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Financing Agreements, and
(iii) the Participant shall not have any rights under this Agreement or any of
the other Financing Agreements (the Participant’s rights against such Lender in
respect of such participation to be those set forth in the agreement executed by
such Lender in favor of the Participant relating thereto) and all amounts
payable by Borrower or any Obligor hereunder shall be determined as if such
Lender had not sold such participation.

(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging
its Loans hereunder to a Federal Reserve Bank in support of borrowings made by
such Lenders from such Federal Reserve Bank; provided, that, no such pledge
shall release such Lender from any of its obligations hereunder or substitute
any such pledgee for such Lender as a party hereto.

(g) Borrower and Guarantors shall assist Agent to sell assignments or
participations under this Section 13.7 in connection with Agent’s original
syndication of this credit facility whatever manner reasonably necessary in
order to enable or effect any such assignment or participation, including (but
not limited to) the execution and delivery of any and all agreements, notes and
other documents and instruments as shall be requested and the delivery of
informational materials, appraisals or other documents for, and the
participation of relevant management in meetings and conference calls with,
potential Lenders or Participants. Borrower

 

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shall certify the correctness, completeness and accuracy, in all material
respects, of all descriptions of Borrower and Guarantors and their affairs
provided, prepared or reviewed by Borrower or any Guarantor that are contained
in any selling materials and all other information provided by it and included
in such materials.

13.8 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.

13.9 USA Patriot Act. Each Lender that is subject to the Act (as hereinafter
defined) and the Agent (for itself and not on behalf of any Lender) hereby
notifies Borrower and Guarantors 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 Borrower and each Guarantor, which information includes the name and
address of Borrower and each Guarantor and other information that will allow
such Lender or the Agent, as applicable, to identify Borrower and each Guarantor
in accordance with the Act. Borrower and each Guarantor are in compliance, in
all material respects, with the Patriot Act. No part of the proceeds of the
Loans will be used by Borrower and Guarantors, 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.

13.10 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,
neither Borrower nor any of its Affilites (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

 

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associated, with any such “blocked person” or in any manner violative of any
such order.

13.11 Counterparts, Etc. This Agreement or any of the other Financing Agreements
may be executed in any number of counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.

SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT

14.1 Existing Obligations. Borrower and each Guarantor hereby acknowledges,
confirms and agrees that, as of the close of business on March 29, 2011,
Borrower is indebted to Agent and Existing Lenders in respect of Loans under the
Existing Loan Agreement in the aggregate principal amount of $0 and Existing
Letters of Credit under the Existing Loan Agreement in the aggregate face amount
of $4,784,200, in each case together with all fees, costs, expenses and other
charges relating thereto, all of which are unconditionally owing by Borrower and
each Guarantor to Agent and Existing Lenders, without offset, defense or
counterclaim of any kind, nature or description whatsoever.

14.2 Acknowledgment of Security Interests.

(a) Borrower and each Guarantor hereby acknowledges, confirms and agrees that
Agent on behalf of Lenders shall continue to have a security interest in and
lien upon the Collateral heretofore granted to Agent pursuant to the Original
Financing Agreements and the Existing Financing Agreements (as such terms are
defined in the recitals to this Agreement) to secure the Obligations, as well as
any Collateral granted to Agent under this Agreement or under any of the other
Financing Agreements or otherwise granted to or held by Agent or any Lender.

(b) The liens and security interests of Agent and Lenders in the Collateral
shall be deemed to be continuously granted and perfected from the earliest date
of the granting and perfection of such liens and security interests to Agent and
Lenders, whether under the Original Financing Agreements, the Existing Financing
Agreements, this Agreement or any of the other Financing Agreements.

14.3 Original Financing Agreements and Existing Financing Agreements. Borrower
and each Guarantor hereby acknowledges, confirms and agrees that: (a) the
Original Financing Agreements and the Existing Financing Agreements have been
duly executed and delivered by Borrower and each Guarantor and are in full force
and effect as of the date hereof (to the extent not superseded and replaced by
the Existing Loan Agreement and this

 

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Agreement) and (b) the agreements and obligations of Borrower and each Guarantor
contained in the Original Financing Agreements and the Existing Financing
Agreements (to the extent not superseded and replaced by the Existing Loan
Agreement and this Agreement) constitute the legal, valid and binding
obligations of Borrower and each Guarantor enforceable against each of them in
accordance with their respective terms and Borrower and each Guarantor have no
valid defense to the enforcement of such obligations and (c) Agent on behalf of
Lenders is entitled to all of the rights and remedies provided for in favor of
Agent and Lenders in the Original Financing Agreements and the Existing
Financing Agreements, as amended and restated by this Agreement.

14.4 Restatement.

(a) Except as otherwise stated in this Section 14.4, as of the date hereof, the
terms, conditions, agreements, covenants, representations and warranties set
forth in the Existing Loan Agreement are hereby amended and restated in their
entirety by the terms, conditions, agreements, covenants, representations and
warranties set forth in this Agreement. The amendment and restatement contained
herein shall not, in any manner, be construed to constitute payment of, or
impair, limit, cancel or extinguish, or constitute a novation in respect of, the
Indebtedness and other obligations and liabilities of Borrower or Guarantors
evidenced by or arising under the Existing Financing Agreements, and the liens
and security interests in the Collateral (as such term is defined herein) of
Agent and Lenders securing such Indebtedness and other obligations and
liabilities, which shall not in any manner be impaired, limited, terminated,
waived or released, shall continue in full force and effect in favor of Agent
for the benefit of Lenders.

(b) The face amount of the Existing Letters of Credit outstanding as of the date
hereof under the Existing Loan Agreement shall be deemed to be Letter of Credit
Accommodations hereunder.

 

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

 

GREGG APPLIANCES, INC., as Borrower By:  

/s/ Jeremy J. Aguilar

Name:  

Jeremy J. Aguilar

Title:  

Chief Financial Officer

[Signature Page to Amended and Restated Loan and Security Agreement]

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

HHG DISTRIBUTING, LLC, as a Guarantor By:  

GREGG APPLIANCES, INC.,

its sole member

By:  

/s/ Jeremy J. Aguilar

Name:  

Jeremy J. Aguilar

Title:  

Chief Financial Officer

[Signature Page to Amended and Restated Loan and Security Agreement]

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

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent and Collateral Agent

By:  

/s/ Jason B. Searle

Name:  

Jason B. Searle

Title:  

Director

[Signature Page to Amended and Restated Loan and Security Agreement]

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

JPMORGAN CHASE BANK, N.A., as a Lender By:  

/s/ Sarah L. Freedman

Name:  

Sarah L. Freedman

Title:  

Vice President

[Signature Page to Amended and Restated Loan and Security Agreement]

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

KEYBANK NATIONAL ASSOCIATION, as Co-Documentation Agent and Lender By:  

/s/ Paul A. Taubeneck

Name:  

Paul A. Taubeneck

Title:  

Vice President

[Signature Page to Amended and Restated Loan and Security Agreement]

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

REGIONS BANK, as a Lender By:  

/s/ Barry S. Renow

Name:  

Barry S.Renow

Title:  

Senior Vice President

[Signature Page to Amended and Restated Loan and Security Agreement]

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

BARCLAYS BANK PLC, as a Lender By:  

/s/ Diane Rolfe

Name:  

Diane Rolfe

Title:  

Director

[Signature Page to Amended and Restated Loan and Security Agreement]

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

RBS BUSINESS CAPITAL, a division of RBS ASSET FINANCE, INC., a subsidiary of RBS
CITIZENS, N.A., as a Lender By:  

/s/ David Slattery

Name:  

David Slattery

Title:  

Assistant Vice President

[Signature Page to Amended and Restated Loan and Security Agreement]

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

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender By:  

/s/ Shaheen Malik

Name:  

Shaheen Malik

Title:  

Vice President

By:  

/s/ Rahul Parmar

Name:  

Rahul Parmar

Title:  

Associate

[Signature Page to Amended and Restated Loan and Security Agreement]

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

SUNTRUST BANK, as a Lender By:  

/s/ Jamie Hurley

Name:  

Jamie Hurley

Title:  

Director

[Signature Page to Amended and Restated Loan and Security Agreement]

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

EXHIBIT A

to

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”)
dated as of             , 20     is made between
                                         (the “Assignor”) and
                     (the “Assignee”).

W I T N E S S E T H:

WHEREAS, Wells Fargo Bank, National Association, in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the financial institutions which are parties thereto as lenders (in such
capacity, “Agent”), and the financial institutions which are parties to the Loan
Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”)
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to Gregg Appliances, Inc. (“Borrower”) as set forth in the
Amended and Restated Loan and Security Agreement, dated [                 ],
2011, by and among Borrower, certain of its affiliates, Agent and Lenders (as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the “Loan Agreement”), and the other
agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, as provided under the Loan Agreement, Assignor committed to making
Loans (the “Committed Loans”) to Borrower in an aggregate amount not to exceed
$             (the “Commitment”);

WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights and
obligations of Assignor under the Loan Agreement in respect of its Commitment in
an amount equal to $             (the “Assigned Commitment Amount”) on the terms
and subject to the conditions set forth herein and Assignee wishes to accept
assignment of such rights and to assume such obligations from Assignor on such
terms and subject to such conditions;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

1. Assignment and Acceptance.

(a) Subject to the terms and conditions of this Assignment and Acceptance,
Assignor hereby sells, transfers and assigns to Assignee, and Assignee hereby
purchases, assumes and undertakes from Assignor, without recourse and without
representation or warranty (except as provided in this Assignment and
Acceptance) an interest in (i) the Commitment and each of the Committed Loans of
Assignor and (ii) all related rights, benefits, obligations, liabilities and

 

A-1

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indemnities of the Assignor under and in connection with the Loan Agreement and
the other Financing Agreements, so that after giving effect thereto, the
Commitment of Assignee shall be as set forth below and the Pro Rata Share of
Assignee shall be              percent (    %).

(b) With effect on and after the Effective Date (as defined in Section 5
hereof), Assignee shall be a party to the Loan Agreement and succeed to all of
the rights and be obligated to perform all of the obligations of a Lender under
the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender. It is the intent of the parties
hereto that the Commitment of Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Commitment Amount and Assignor shall
relinquish its rights and be released from its obligations under the Loan
Agreement to the extent such obligations have been assumed by Assignee;
provided, that, Assignor shall not relinquish its rights under Sections 2.2,
6.4, 6.8, 11.5 and 12.5 of the Loan Agreement to the extent such rights relate
to the time prior to the Effective Date.

(c) After giving effect to the assignment and assumption set forth herein, on
the Effective Date Assignee’s Commitment will be $            .

(d) After giving effect to the assignment and assumption set forth herein, on
the Effective Date Assignor’s Commitment will be $             (as such amount
may be further reduced by any other assignments by Assignor on or after the date
hereof).

2. Payments.

(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, Assignee shall pay to Assignor on the Effective Date in
immediately available funds an amount equal to $            , representing
Assignee’s Pro Rata Share of the principal amount of all Committed Loans.

(b) Assignee shall pay to Agent the processing fee in the amount specified in
Section 13.7(a) of the Loan Agreement.

3. Reallocation of Payments. Any interest, fees and other payments accrued to
the Effective Date with respect to the Commitment, Committed Loans and
outstanding Letter of Credit Accommodations shall be for the account of
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Commitment Amount shall be for the
account of Assignee. Each of Assignor and Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.

4. Independent Credit Decision. Assignee acknowledges that it has received a
copy of the Loan Agreement and the Schedules and Exhibits thereto, together with
copies of the most recent financial statements of                     and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision

 

A-2

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to enter into this Assignment and Acceptance and agrees that it will,
independently and without reliance upon Assignor, Agent or any Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Loan Agreement.

5. Effective Date; Notices.

(a) As between Assignor and Assignee, the effective date for this Assignment and
Acceptance shall be                    , 20     (the “Effective Date”);
provided, that, the following conditions precedent have been satisfied on or
before the Effective Date:

(i) this Assignment and Acceptance shall be executed and delivered by Assignor
and Assignee;

(ii) the consent of Agent as required for an effective assignment of the
Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained
and shall be in full force and effect as of the Effective Date;

(iii) written notice of such assignment, together with payment instructions,
addresses and related information with respect to Assignee, shall have been
given to Borrower and Agent;

(iv) Assignee shall pay to Assignor all amounts due to Assignor under this
Assignment and Acceptance; and

(v) the processing fee referred to in Section 2(b) hereof shall have been paid
to Agent.

(b) Promptly following the execution of this Assignment and Acceptance, Assignor
shall deliver to Borrower and Agent for acknowledgment by Agent, a Notice of
Assignment in the form attached hereto as Schedule 1.

6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]

(a) Assignee hereby appoints and authorizes Assignor in its capacity as Agent to
take such action as agent on its behalf to exercise such powers under the Loan
Agreement as are delegated to Agent by Lenders pursuant to the terms of the Loan
Agreement.

(b) Assignee shall assume no duties or obligations held by Assignor in its
capacity as Agent under the Loan Agreement.]

7. Withholding Tax. Assignee (a) represents and warrants to Assignor, Agent and
Borrower that under applicable law and treaties no tax will be required to be
withheld by Assignee, Agent or Borrower with respect to any payments to be made
to Assignee hereunder or under any of the Financing Agreements, (b) agrees to
furnish (if it is organized under the laws of any jurisdiction other than the
United States or any State thereof) to Agent and Borrower prior to the time that
Agent or Borrower are required to make any payment of principal, interest or
fees hereunder, duplicate executed originals of either U.S. Internal Revenue
Service Form W-8BEN or W-8ECI,

 

A-3

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

as applicable (wherein. Assignee claims entitlement to the benefits of a tax
treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new such forms
upon the expiration of any previously delivered form or comparable statements in
accordance with applicable U.S. law and regulations and amendments thereto, duly
executed and completed by Assignee, and (c) agrees to comply with all applicable
U.S. laws and regulations with regard to such withholding tax exemption.

8. Representations and Warranties.

(a) Assignor represents and warrants that (i) it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any security interest, lien, encumbrance or other adverse
claim, (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder, (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors’ rights and to general equitable principles.

(b) Assignor makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Loan Agreement or any of the other Financing Agreements or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement or any other instrument or document furnished
pursuant thereto. Assignor makes no representation or warranty in connection
with, and assumes no responsibility with respect to, the solvency, financial
condition or statements of Borrower, Guarantor or any of their respective
Affiliates, or the performance or observance by Borrower, Guarantor or any other
Person, of any of its respective obligations under the Loan Agreement or any
other instrument or document furnished in connection therewith.

(c) Assignee represents and warrants that (i) it is duly organized and existing
and it has full power and authority to take, and has taken, all action necessary
to execute and deliver this Assignment and Acceptance and any other documents
required or permitted to be executed or delivered by it in connection with this
Assignment and Acceptance, and to fulfill its obligations hereunder, (ii) no
notices to, or consents, authorizations or approvals of, any Person are required
(other than any already given or obtained) for its due execution, delivery and
performance of this Assignment and Acceptance, and apart from any agreements or
undertakings or filings required by the Loan Agreement, no further action by, or
notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iii) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of

 

A-4

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

Assignee, enforceable against Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors’ rights to general equitable principles.

9. Further Assurances. Assignor and Assignee each hereby agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to Borrower or Agent, which may be required in
connection with the assignment and assumption contemplated hereby.

10. Miscellaneous

(a) Any amendment or waiver of any provision of this Assignment and Acceptance
shall be in writing and signed by the parties hereto. No failure or delay by
either party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof and any waiver of any breach of the provisions of
this Assignment and Acceptance shall be without prejudice to any rights with
respect to any other for further breach thereof.

(b) All payments made hereunder shall be made without any set-off or
counterclaim.

(c) Assignor and Assignee shall each pay its own costs and expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Assignment and Acceptance.

(d) This Assignment and Acceptance may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and Assignee each
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
court sitting in New York County, New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.

(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT
AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).

 

A-5

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

IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed and delivered by their duly authorized officers as of
the date first above written.

 

[ASSIGNOR] By:  

 

Title:  

 

[ASSIGNEE] By:  

 

Title:  

 

 

A-6

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

EXHIBIT B

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Information Certificate

See attached

 

B-1

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

INFORMATION CERTIFICATE

OF

GREGG APPLIANCES, INC.

Dated: March 29, 2011

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

In connection with certain financings (the “Financings”) provided or to be
provided by you and the other Lenders (as hereinafter defined), the undersigned
(the “Company”) represents and warrants to you and the other Lenders the
following information about it, its organizational structure and other matters
of interest to you and the other Lenders in connection with the financing
arrangements contemplated by the Amended and Restated Loan and Security
Agreement (the “Loan Agreement”), dated of even date herewith, by and among the
financial institutions party thereto as lenders (collectively, Lenders”), you,
in capacity agent for and on behalf of Lenders (in such capacity, “Agent”), HHG
Distributing, LLC (“Guarantor”) and the undersigned:

 

1. The full and exact name of the Company as set forth in its certificate of
incorporation (or its certificate of formation or other organizational document
filed with the applicable state governmental authority, as the case may be) is
as follows:

Gregg Appliances, Inc.

 

2. The Company uses and owns the following trade name(s) in the operation of its
business (e.g. billing, advertising, etc.; note: do not include names which are
product names only):

hhgregg

 

3. The Company is a registered organization of the following type (for example,
corporation, limited partnership, limited liability company, etc.):

corporation

 

4. The Company was organized on the date indicated below, under the laws of the
State indicated below, and the Company is in good standing under the laws of
such State.

June 1, 1960 under the laws of the State of Indiana

 

5. The organizational identification number of the Company issued by its
jurisdiction of organization is as set forth below (or if none is issued by the
jurisdiction of organization indicate “none”):

194302-153

 

6. The Federal Employer Identification Number of the Company is as follows:

35-1049508

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

7. The Company is duly qualified and authorized to transact business as a
foreign organization in the following states and is in good standing in such
states:

Alabama

Delaware

Florida

Georgia

Kentucky

Maryland

Mississippi

New Jersey

New York

North Carolina

Ohio

Pennsylvania

South Carolina

Tennessee

Virginia

West Virginia

 

8. Since the date of its organization, the name of the Company as set forth in
its organizational documentation as filed of record with the applicable state
authority has been changed as follows:

 

Date of Change

   Prior Name  

N/A

  

 

9. Since the date of its organization, the Company has made or entered into the
following mergers or acquisitions:

 

Merger/Acquisition

   Date

GMT, Inc. and Gregg’s Inc. merged with and into the Company

   April 1, 1980

J.D. Rich merged with and into the Company

   March 31, 1988

Gregg Investment Corporation, LLC merged with and into the Company

   February 3, 2005

 

10. The chief executive office and mailing address of the Company is located at
the address indicated on Schedule 8.2 hereto.

 

11. The books and records of the Company pertaining to accounts, contract
rights, inventory, and other assets are located at the addresses indicated on
Schedule 8.2 hereto.

 

2

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

12. The Company has other places of business and/or maintains inventory or other
assets only at the addresses (indicate whether locations are owned, leased or
operated by third parties and if leased or operated by third parties, their name
and address) indicated on Schedule 8.2 hereto.

 

13. The places of business or other locations of any assets used by the Company
during the last four (4) months other than those listed above are as indicated
on Schedule 8.2 hereto.

 

14. Other than liens, mortgages, pledges, security interests, encumbrances or
charges granted, or to be granted, to the Agent in connection with the
Financings, the Company’s assets are owned and held free and clear of liens,
mortgages, pledges, security interests, encumbrances or charges except as set
forth on Schedule 8.4 hereto.

 

15. Except as set forth on Schedule 8.6 hereto, there are no judgments or
litigation pending by or against the Company, its subsidiaries and/or affiliates
or any of its officers/principals which, if adversely determined against the
Company or any of such subsidiaries or affiliates, has or would reasonably be
expected to have a Material Adverse Effect.

 

16. The Company is in compliance with all environmental laws applicable to its
business or operations except as set forth on Schedule 8.8 hereto.

 

17. The Company does not have any deposit accounts, investment accounts,
securities account or similar accounts with any bank, savings and loan or other
financial institution, except as set forth on Schedule 8.10 hereto for the
purposes and of the types indicated therein.

 

18. The Company does not own or license any trademarks, patents, copyrights or
other intellectual property, except as set forth on Schedule 8.11 hereto
(indicate type of intellectual property and whether owned or licensed,
registration number, date of registration, and, if licensed, the name and
address of the licensor).

 

19. The Company is affiliated with, or has ownership in, the corporations
(including subsidiaries) and other organizations set forth on Schedule 8.12
hereto.

 

20. The names of the stockholders (or members or partners, including general
partners and limited partners) of the Company and their holdings are as set
forth on Schedule 8.12 hereto (if stock or other interests are widely held
indicate only holders owning 10% or more of the voting stock or other
interests).

 

21. The Company is not a party to or bound by any collective bargaining or
similar agreement with any union, labor organization or other bargaining agent
except as set forth on Schedule 8.13 hereto (indicate date of agreement, parties
to agreement, description of employees covered, and date of termination).

 

3

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

22. The Company is not a party to or bound by any “material contract” except as
set forth on Schedule 8.15 hereto. For this purpose a “material contract” shall
have the meaning set forth in the Loan Agreement.

 

23. The Company has no “indebtedness” other than (a) the “indebtedness” set
forth on Schedule 9.9 hereto and (b) “indebtedness” otherwise permitted pursuant
to Section 9.9 of the Loan Agreement. For this purpose, the term “indebtedness”
shall have the meaning set forth in the Loan Agreement.

 

24. The Company has not made any loans or advances or guaranteed or otherwise
become liable for the obligations of any others, except as set forth on Schedule
9.10 hereto.

 

25. The Company does not have any chattel paper (whether tangible or electronic)
or instruments as of the date hereof, except as follows:

None

 

26. The Company does not have any commercial tort claims, except as follows:

None

 

27. There is no provision in the certificate of incorporation, certificate of
formation, articles of organization, by-laws or operating agreement of the
Company (as applicable) or the other organizational documents of the Company, or
in the laws of the State of its organization, requiring any vote or consent of
it shareholders, members or other holders of the equity interests therein to
borrow or to authorize the mortgage or pledge of or creation of a security
interest in any assets of the Company or any subsidiary. Such power is vested
exclusively in its Board of Directors (or in the case of a limited partnership,
the general partner that is the signatory hereto, or in the case of a limited
liability company, the manager that is the signatory hereto).

 

28. The officers of the Company and their respective titles are as follows:

 

Jerry W. Throgmartin    Executive Chairman Dennis L. May    President and CEO
Gregg W. Throgmartin    COO Jeremy J. Aguilar    CFO Michael D. Stout    CAO

The following will have signatory powers as to all transactions of the Company
with Agent and Lenders:

Jerry W. Throgmartin

Dennis L. May

Gregg W. Throgmartin

Jeremy J. Aguilar

Kevin J. Kovacs

 

4

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

29. The members of the Board of Directors of the Company are:

Lawrence P. Castellani

Benjamin D. Geiger

Catherine A. Langham

Dennis L. May

John M. Roth

Charles P. Rullman

Michael L. Smith

Peter M. Starrett

Kathleen C. Tierney

Jerry W. Throgmartin

 

30. At the present time, there are no delinquent taxes due (including, but not
limited to, all payroll taxes, personal property taxes, real estate taxes or
income taxes) except as follows:

None

 

31. Certified Public Accountants for the Company is the firm of:

Name:    KPMG, LLP Address:    2400 First Indiana Plaza, 135 N. Pennsylvania
Street, Indianapolis, IN    46204-2452 Partner Handling Relationship: Paul Fultz
Were statements uncertified for any fiscal year?    No

[[THIS SPACE INTENTIONALLY LEFT BLANK -

SIGNATURE PAGE TO FOLLOW]]

 

5

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

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

 

GREGG APPLIANCES, INC.,

as Borrower

By:  

LOGO [g166780ex10_2pg156.jpg]

  Jeremy J. Aguilar   Chief Financial Officer

[Signature Page to Amended and Restated Loan and Security Agreement]

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

Agent and Lenders shall be entitled to rely upon the foregoing in all aspects
and the undersigned is duly authorized to execute and deliver this Information
Certificate on behalf of the Company for which he or she is signing

 

Very truly yours, GREGG APPLIANCES, INC. By:  

LOGO [g166780ex10_2pg157.jpg]

  Jeremy J. Aguilar   Chief Financial Officer

SIGNATURE PAGE TO INFORMATION CERTIFICATE (BORROWER)

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

SCHEDULE 8.2

to

INFORMATION CERTIFICATE

Locations

 

A. Part 1 - Chief Executive Office

4151 East 96th Street

Indianapolis, IN 46240

 

B. Part 2 - Location of Books and Records

4151 East 96th Street

Indianapolis, IN 46240

 

C. Part 3 - Locations of Inventory, Equipment and Other Assets

Leased Locations

 

File Id    File Name    Address    Address 2    Lessor

000

   Indianapolis CDC    4161 E. 96th Street    Indianapolis, IN 46240   

***

001

   North (w/Fine Lines)    4161 E. 96th Street    Indianapolis, IN 46240   

***

002

   South    8921 S. US 31    Indianapolis, IN 46227   

***

003

   East    10101 E. Washington Street    Indianapolis, IN 46229   

***

004

   West    3651 Commercial Drive    Indianapolis, IN 46222   

***

005

   Kokomo    2021 E. Markland    Kokomo, IN 46902   

***

006

   Anderson    1921 E. 53rd Street    Anderson, IN 46013   

***

007

   Lafayette    2415 Sagamore Parkway    Lafayette, IN 47905   

***

008

   Terre Haute    290 Honey Creek Parkway    Terre Haute, IN 47802   

***

009

   Muncie    4301 W. Clara Lane    Muncie, IN 47305   

***

010

   Bloomington    606 Gourley Pike    Bloomington, IN 47404   

***

011

   Ft. Wayne    4201 Parnell Ave    Ft. Wayne, IN 46805   

***

012

   Richmond    3783 National Road East    Richmond, IN 47374   

***

013

   Commons    1050 E. Lewis and Clark Parkway    Clarksville, IN 47129   

***

014

   Stonybrook    9132 Taylorsville Rd.    Jeffersontown, KY 40299   

***

015

   Louisville RDC    2701 Stanley Gault Parkway    Louisville, KY 40223   

***

016

   Avon    10101 East State Road 36    Avon, IN 46123   

***

017

   Outer Loop    4140 Outer Loop Rd.    Louisville, KY 40219   

***

018

   Lexington    1937 Star Shoot Parkway    Lexington, KY 40509   

***

022

   Greenville    36 Park Woodruff Rd.    Greenville, SC 29607   

***

023

   Concord    8054 Concord Mills Blvd.    Concord, NC 28027   

***

024

   Matthews Corners    2314 Matthews Township Parkway    Matthews, NC 28105   

***

025

   Pineville    9509 South Blvd.    Charlotte, NC 28273   

***

026

   Harbison    1130 Bower Parkway    Columbia, SC 29212   

***

027

   Sand Hill    230 Forum Dr.    Columbia, SC 29223   

***

029

   Nashville RDC    1001 Space Park South Bldy 8    Nashville, TN 37211   

***

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

030    Rivergate    2190 N. Gallatin Pike    Madison, TN 37115   

***

031    100 Oaks    719 Thompson Lane #161    Nashville, TN 37204   

***

033    Bowling Green    2475 Scottsville Rd.    Bowling Green, KY 42103   

***

034    Clarksville    2886 Wilma Rudolph Blvd    Clarksville, TN 37040   

***

035    Cool Springs    1735 Galleria Blvd. Suite 100    Franklin, TN 37064   

***

036    Murfreesboro    468 N. Thompson Lane    Murfreesboro, TN 37129   

***

037    Turkey Creek    11370 Parkside Dr.    Knoxville, TN 37922   

***

038    Northwest Crossing    6741 Clinton Highway    Knoxville, TN 37912   

***

039    Cincinnati RDC    2939 Crescentville Road West    Chester, OH 45069   

***

040    Colerain    9930 Colerain Ave.    Cincinnati, OH 45251   

***

041    Eastgate    4468 Eastgate Rd.    Cincinnati, OH 45245   

***

042    Western Hills    5111 Glencrossing Way    Cincinnati, OH 45238   

***

043    Hamilton    3175 Princeton Rd.    Hamilton, OH 45011   

***

044    Fields Ertel    4786 Fields Ertel Road    Cincinnati, OH 45249   

***

045    Birmingham RDC    3536 US Highway 31 South Suite B    Calera, AL 35040   

***

046    Florence    7601 Mall Road    Florence, KY 41042   

***

047    Noblesville    16680 Mercantile Blvd.    Noblesville, IN 46060   

***

048    Tri-County    650 Kemper Common Circle    Springdale, OH 45246   

***

049    Carolina RDC    1962 West Highway 160 Suite 101    Fort Mill, SC 29708   

***

050    Beavercreek    2720 Town Drive 100    Beavercreek, OH 45431   

***

052    Piqua    1258 E. Ash St.    Piqua, OH 45356   

***

053    Newnan    231 Newnan Crossing Bypass    Newnan, GA 30265   

***

054    Columbus    6499 Whittlesey Blvd.    Columbus, GA 31909   

***

055    Augusta    207 Robert C. Daniel Jr. Parkway    Augusta, GA 30909   

***

056    Huntsville    930 A Old Monrovia Rd.    Huntsville, AL 35806   

***

057    Macon    4551 Billy Williamson Drive    Macon, GA 31206   

***

058    Montgomery    2654 Eastern Blvd.    Montgomery, AL 36117   

***

059    Columbus RDC    3240 Urbancrest Industrial Drive    Grove City, OH 43123
  

***

060    Taylor Park    2339 Taylor Park Drive    Reynoldsburg, OH 43068   

***

061    Hilliard    1881 Hilliard Rome Rd.    Hilliard, OH 43228   

***

062    Chillicothe    1059 N. Bridge Street    Chillicothe, OH 45601   

***

063    Newark    901 Hebron Road    Heath, OH 43056   

***

064    Zanesville    3528 Maple Ave.    Zanesville, OH 43701   

***

066    Sawmill    6440 Sawmill Rd.    Columbus, OH 43235   

***

068    Easton (w/Fine Lines)    4099 Easton Loop West    Columbus, OH 43219   

***

069    Cleveland RDC    10601 Memphis Ave Room 6A    Brooklyn, OH 44144   

***

070    Mentor    7900 Plaza Blvd. Space 100    Mentor, OH 44060   

***

072    Canton    5509 Dressler Rd.    Canton, OH 44720   

***

074    Chapel Hill    430 Howe Ave    Cuyahoga Falls, OH 44221   

***

075    Fairlawn    160 Rothrock Road    Akron, OH 44321   

***

076    North Olmsted    4706 Great Northern Blvd.    North Olmsted, OH 44070   

***

077    Hoover (w/Fine Lines)    1773 Montgomery Way South    Hoover, AL 35244   

***

078    Trussville    3695 Roosevelt Blvd.    Trussville, AL 35235   

***

079    Atlanta CDC    3000 Southpark Blvd Suite1000    Ellenwood, GA 30294   

***

081    Douglasville    6967 Concourse Parkway    Douglasville, GA 30134   

***

082    Stonecrest    7342 Stonecrest Concourse Parkway    Lithonia, GA 30038   

***

083    Kennesaw    2555 Cobb Place Lane 100    Kennesaw, GA 30144   

***

084    Gwinnett    2131 Pleasant Hill Rd 121    Duluth, GA 30096   

***

085    Fayetteville    395 Pavillion Parkway    Fayetteville, GA 30214   

***

086    Southlake    1905-C Mt. Zion Rd.    Morrow, GA 30260   

***

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

087    Mall of Georgia    3230 Woodward Crossing Blvd.    Buford, GA 30519   

***

088    Alpharetta    5530 Windward Parkway Suite 200    Alpharetta, GA 30004   

***

089    Smyrna    2784 Cumberland Blvd.    Smyrna, GA 30080   

***

091    Northlake Village (w/Fine Lines)    7024 Smith Corners Blvd.   
Charlotte, NC 28269   

***

093    Anderson    162 Station Drive    Anderson, SC 29621   

***

094    Hickory    1835 Catawba Valley Blvd.    Hickory, NC 28602   

***

095    Gastonia    3940 East Franklin Blvd.    Gastonia, NC 28056   

***

096    Inverness    4639 Highway N 280    Birmingham, AL 35242   

***

101    Chattanooga    2565 Lifestyle Way    Chattanooga, TN 37421   

***

102    Mt. Juliet    56 Belinda Parkway    Mt. Juliet, TN 37122   

***

103    Spartanburg    108 Franklin Ave Unit B    Spartanburg, SC 29301   

***

104    Grove City    1700 Buckeye Place    Grove City, OH 43123   

***

105    Huber Heights    5545 Executive Blvd.   

Huber Heights, OH

45424

  

***

106    Mansfield    919 Lexington Springmill Rd., North    Mansfield, OH 44906
  

***

108    Mooresville    657 River Highway    Mooresville, NC 28117   

***

109    Elizabethtown    157 Towne Drive    Elizabethtown, KY 42701   

***

110    Mishawaka    5802 Grape Road    Mishawaka, IN 46545   

***

111    Wilmington    830 Inspiration Drive    Wilmington, NC 28405   

***

112    Mayfield Heights    1536 Golden Gate Plaza    Mayfield Heights, OH 44124
  

***

113    Snellville    2059 Scenic Highway Suite 105    Snellville, GA 30078   

***

114    Savannah    7805 Abercorn St. Suite 14A    Savannah, GA 31406   

***

115    Evansville    225 North Burkhardt Rd.    Evansville, IN 47715   

***

116    Johnson City    3211 Peoples St., Space A    Johnson City, TN 37604   

***

117    Memphis Wolfchase    8045 Giacosa Dr.    Memphis, TN 38133   

***

118    Southaven    6680 Southcrest Pkwy    Southaven, MS 38671   

***

120    Raleigh RDC    100 Innovation Drive    Morrisville, NC 27560   

***

121    Fayetteville    1912 Skibo Road    Fayetteville, NC 28314   

***

122    Town Center    6180 Capital Blvd.    Raleigh, NC 27616   

***

123    Briercreek    7801 Alexander Promenade Place    Raleigh, NC 27617   

***

124    Greensboro    5400 Hornaday Rd.    Greensboro, NC 27407   

***

125    Apex    1275 Haddon Hall Rd.    Apex, NC 27502   

***

126    Durham    8160 Renaissance Pkwy    Durham, NC 27713   

***

127    Winston Salem    2051 Griffith Rd.   

Winston Salem, NC

27103

  

***

128    Cary    1401 Piney Plains Rd.    Cary, NC 27518   

***

132    North Charleston    2150 Morris Baker Blvd.    North Charleston, SC 29406
  

***

137    Asheville    80 S. Tunnel Road    Asheville, NC 28805   

***

140    Jacksonville RDC    4030 Deerpark Blvd Suite 1    Elkton, FL 32033   

***

141    Regency    651-100 Commerce Center Dr.    Jacksonville, FL 32225   

***

142    Daytona Beach    2455 W. International Speedway Suite 910    Daytona
Beach, FL 32114   

***

143    Oakleaf (Jacksonville)    8380 Merchants Way    Jacksonville, FL 32222   

***

144    Avenues Walk    10320 Shops Lane Suite 200    Jacksonville, FL 32258   

***

146    Gainesville    3606 SW 34th Street    Gainesville, FL 32608   

***

146    Gainesville Parking    3606 SW 34th Street    Gainesville, FL 32608   

***

149    Tallahassee    1719 Apalachee Pkwy    Tallahassee, FL 32301   

***

150    Orlando CDC    220 Deen Still Rd. #100    Davenport, FL 33897   

***

151    East Colonial    3222 E. Colonial Drive #14    Orlando, FL 32803   

***

152    Kissimmee    3052 Dyer Blvd.    Kissimmee, FL 34741   

***

153    Florida Mall (South OBT)    8410 S. Orange Blossom Trail    Orlando, FL
32809   

***

154    Sanford    1810 Rinehart Road    Sanford, FL 32771   

***

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

158    Ocoee (Colonial Town Center)    8010 W. Colonial Blvd.    Orlando, FL
32818   

***

159    Lakeland    4000 US Hwy 98 North    Lakeland, FL 33809   

***

162    Ocala (Berkshire Oaks)    4205 SW 38th Ct., Suite 102    Ocala, FL 34474
  

***

163    West Melbourne    205 Palm Bay Road Suite 145    West Melbourne, FL 32904
  

***

164    Pensacola    1210 Airport Blvd Unit 600    Pensacola, FL 32504   

***

171    Clearwater    2669 Gulf to Bay Blvd.    Clearwater, FL 33759   

***

172    Tampa Palms    6250 Commerce Palms Drive    Tampa, FL 33647   

***

173    Sarasota Crossings    5511 Fruitville Rd.    Sarasota, FL 34232   

***

174    Bradenton    4495 14th Street West    Bradenton, FL 34207   

***

176    Brandon    10277 East Adamo Dr.    Tampa, FL 33619   

***

177    Spring Hill (Tampa)    13199 Cortez Blvd.    Brooksville, FL 34613   

***

181    Naples    5052 Airport Pulling Rd.    Naples, FL 34105   

***

182    Ft. Myers    5100 South Cleveland Ave. Suite 101    Ft. Myers, FL 33907
  

***

191    Short Pump    11732 West Broad St.    Henrico, VA 23233   

***

192    Chesterfield    1321 Huguenot Rd.    Midlothian, VA 23113   

***

194    Newport News    12140 Jefferson Ave.    Newport News, VA 23602   

***

195    Virginia Beach    3421 Virginia Beach Blvd.    Virginia Beach, VA 23452
  

***

196    Chesapeake    1543 Sams Circle    Chesapeake, VA 23320   

***

197    Fredericksburg    1371 Carl D. Silver Parkway    Fredericksburg, VA 22401
  

***

198    Colonial Heights    820 Southpark Blvd.    Colonial Heights, VA 23834   

***

199    Roanoke    1900 Valley View Blvd., NW    Roanoke, VA 24012   

***

201    Lower Paxton    5125 Jonestown Rd.    Harrisburg, PA 17112   

***

202    York    351 Loucks Rd Bldg B    York, PA 17404   

***

203    Mechanicsburg    5800 Carlisle Pike    Mechanicsburg, PA 17050   

***

204    Lancaster    1700 Fruitville Pike    Lancaster, PA 17603   

***

205    Hagerstown    17766 Garland Groh Blvd.    Hagerstown, MD 21740   

***

206    Wilkes-Barre    101 Wyoming Valley Mall Unit 900    Wilkes-Barre, PA
18702   

***

207    Dickson City    620 Commerce Blvd.    Dickson City, PA 18519   

***

208    Winchester    2580 South Pleasant Valley Rd    Winchester, VA 22601   

***

210    Philly RDC    2100 Center Square Rd Suite 300    Logan Township, NJ 8085
  

***

211    Wyomissing    1101 Woodland Ave.    Wyomissing, PA 19610   

***

212    Downingtown    10 Quarry Road    Downingtown, PA 19335   

***

213    Berwyn (King of Prussia)    400 West Swedesford Rd.    Berwyn, PA 19312
  

***

214    Montgomeryville    1251 Knapp Rd.    North Wales, PA 19454   

***

215    NE Philadelphia    9733 E Roosevelt Blvd.    Philadelphia, PA   

***

216    Langhorne    2424 E. Lincoln Hwy Suite 100    Langhorne, PA 19047   

***

217    Whitehall    740 Lehigh Valley Mall    Whitehall, PA 18052   

***

221    Lawrenceville    3371 US Hwy 1    Lawrenceville, NJ 08648   

***

223    Deptford    2000 Clements Bridge Rd.    Woodbury, NJ 08096   

***

224    Mays Landing    4215 Black Horse Pike    Mays Landing, NJ 08330   

***

226    Newark DE    700 Center Blvd.    Newark, DE 19702   

***

227    Dover    1380 N. Dupont Hwy    Dover, DE 19901   

***

228    Wilmington    3040 Brandywine Parkway    Wilmington, DE 19803   

***

230    Mid-Atlantic CDC    14301 Mattawoman Drive    Brandywine, MD 20613   

***

231    Springfield    6640 Loisdale Rd.    Springfield, VA 22150   

***

232    Sterling    46301 Potomac Run Plaza #120    Sterling, VA 20164   

***

233    Fairfax    12189 Fair Lakes Promenade Dr.    Fairfax, VA 22033   

***

234    Bailey’s Crossroads    5718 Columbia Pike    Falls Church, VA 22041   

***

235    Woodbridge    14500 Potomac Mills Rd.    Woodbridge, VA 22193   

***

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

236    Manassas    7412 Stream Walk Ln    Manassas, VA 20109   

***

237    Largo    1020 Shoppers Way    Largo, MD 20774   

***

238    Waldorf    3000 Festival Way    Waldorf, MD 20601   

***

240    Rockville    1501 Rockville Pike    Rockville, MD 20852   

***

242    Frederick    7320 Guilford Drive    Frederick, MD 21704   

***

243    Catonsville    6026 Baltimore National Pike Suite A    Catonsville, MD
21228   

***

244    Hanover    7667 Arundel Mills Blvd.    Hanover, MD 21076   

***

245    Bel Air    680 Marketplace Dr.    Bel Air, MD 21014   

***

246    Towson    801 Goucher Blvd.    Towson, MD 21286   

***

249    Annapolis    150 - A Jennifer Rd.    Annapolis, MD 21401   

***

250    Glen Burnie    6711 Ritchie Hwy    Glen Burnie, MD 21060   

***

266    Erie    7451 Peach Street Suite C    Erie, PA 16509   

***

C50    Beavercreek    2500 N. Fairfield #D-2    Beavercreek, OH 45431   

***

C70    Mentor    7307 Mentor Ave.    Mentor, OH 44060   

***

C74    Chapel Hill (closed)    1850 Buchholzer Blvd.    Akron, OH 44310   

***

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

SCHEDULE 8.4

to

INFORMATION CERTIFICATE

Existing Liens*

 

Name and Address of Secured Party

 

Description of Collateral

 

File No. of Financing

Statement/Jurisdiction

(Optional)

a.      GE Capital Consumer Card Co.

  All of Retailer’s right, title and interest, if any, now existing or hereafter
arising in (i) all accounts, account documentation and indebtedness; (ii)
deposits, credit balances and reserves on Bank’s books relating to any such
accounts; and (iii) all proceeds of any of the foregoing, in each case arising
in connection with the consumer credit card program established by the secured
party and made available to the debtor.   Original File No. 200400008721064
filed on 9/20/2004 with the Indiana Secretary of State. Continuation filed on
9/11/2009.

b.      TCF Inventory Finance, Inc.

  All inventory manufactured by, distributed by, Electrolux Home Products, Inc.,
wherever located, now existing and hereafter acquired, including but not limited
to all Electrolux, Gibson, Kelvinators, Tappan, White Westinghouse and/or
Frigidaire brand, refrigerators, freezers, air conditioners, dehumidifiers,
clothes washers, clothes dryers, ranges, stoves, dishwashers, humidifiers and
other kinds of household and commercial appliances, and replacement parts
(collectively the “Consigned Inventory”).   File No. 200100009887237 filed on
12/19/2001 with the Indiana Secretary of State. Amended on 11/15/2004 to correct
the debtor’s name. Amended on 11/16/2004 to change the secured party’s name to
Electrolux Home Products, Inc. Continuation filed on 06/22/2006. Assignment from
Electrolux Home Products, Inc. to TCF Inventory Finance, Inc. filed on
04/02/2009. Amended on 06/29/2009 to restate the collateral description in its
entirety.

 

* Do not indicate liens of existing lender(s) to be repaid with proceeds of
initial disbursements of loans in connection with the Financings.

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

Name and Address of Secured Party

 

Description of Collateral

 

File No. of Financing

Statement/Jurisdiction

(Optional)

c.      United Rentals (North America), Inc.

  Equipment described as Customer #: 272689, Equipment #: 03207766HR, QTY: 1,
INVOICE/SEQ#: 85807264-001, MAKE: JLG, MODEL: 3246ES, DESCRIPTION: SCISSOR
30’-35’ ELEC46-48 and the proceeds of the equipment.   File No. 201000000908525
filed with the Indiana Secretary of State on 02/01/2010

d.      United Rentals (North America), Inc.

  Equipment described as: Customer #: 272689, Equipment #: 03203470HR, QTY: 1,
INVOICE/SEQ#: 85807264-001, MAKE: JLG, MODEL: 3246ES, description: SCISSOR
30’-35’ ELEC46-48 and the proceeds of the equipment.   File No. 201000000909213
filed with the Indiana Secretary of State on 02/01/2010

e.      United Rentals (North America), Inc.

  Equipment described as: Customer #: 272689, EQUIPMENT #: 03207784HR, QTY: 1,
INVOICE/SEQ#: 86645464-001, MAKE: JLG, MODEL: 3246ES, DESCRIPTION: SCISSOR
30’-35’ ELEC46-48 and the proceeds of the equipment.   File No. 201000002624633
filed with the Indiana Secretary of State on 03/29/2010

f.       Cisco Systems Capital Corporation

  Equipment (all items sold, leased or financed under specific contract)  
200900008040790 filed with the Indiana Secretary of State on 10/07/2009

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

SCHEDULE 8.6

to

INFORMATION CERTIFICATE

Pending Litigation

None.

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

SCHEDULE 8.8

to

INFORMATION CERTIFICATE

Environmental Compliance

None.

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

SCHEDULE 8.10

to

INFORMATION CERTIFICATE

Deposit Accounts; Investment Accounts

See attached Excel spreadsheet

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

BANK ACCOUNTS

              

ACCOUNT NAME

  

ACCT#

  

routing number

  

BANK

  

MONTH OPENED/
CLOSED

  

PHONE #

Store 82

   ***       ***       ***

Store 94

   ***       ***      

Store 116

   ***       ***    Opened July   

Store 128

   ***       ***    Opened July   

Store 180

   ***       ***    Sep-10   

Store 181

   ***       ***    Sep-10   

Store 182

   ***       ***    Opened 9/10/2010, Closed 03/10/11

Store 197

   ***       ***      

Store 198

   ***       ***      

Store 199

   ***       ***      

Store 231

   ***       ***      

Store 233

   ***       ***      

Store 234

   ***       ***      

Store 235

   ***       ***      

Store 236

   ***       ***      

Store 240

   ***       ***      

Store 242

   ***       ***      

Store 7

   ***       ***       ***

Store 9

   ***       ***       ***

Store 11

   ***       ***       ***

Store 12

   ***       ***       ***

Store 13

   ***       ***       ***

Store 50

   ***       ***       ***

Store 52

   ***       ***       ***

Store 61

   ***       ***      

Store 67

   ***       ***      

Store 68

   ***       ***      

Store 106

   ***       ***      

Store 109

   ***       ***      

Store 110

   ***       ***      

Store 8

   ***       ***      

Store 10

   ***       ***      

Store 30

   ***       ***      

Store 35

   ***       ***      

Store 41

   ***       ***       ***

Store 43

   ***       ***       ***

Store 44

   ***       ***      

Store 115

   ***       ***    Opened July   

Store 1

   ***       ***      

Store 2

   ***       ***      

Store 3

   ***       ***      

Store 4

   ***       ***      

Store 5

   ***       ***      

Store 6

   ***       ***      

Store 14

   ***       ***      

Store 15

   ***       ***      

Store 16

   ***       ***      

Store 17

   ***       ***      

Store 18

   ***       ***      

Store 21

   ***       ***      

Store 33

   ***       ***      

Store 39

   ***       ***      

Store 40

   ***       ***      

Store 42

   ***       ***      

Store 46

   ***       ***      

Store 47

   ***       ***      

Store 48

   ***       ***      

Store 51

   ***       ***      

Store 59

   ***       ***      

Store 60

   ***       ***      

Store 62

   ***       ***      

Store 63

   ***       ***      

Store 64

   ***       ***      

Store 66

   ***       ***      

Store 69

   ***       ***      

Store 70

   ***       ***      

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

Store 71

   ***       ***      

Store 72

   ***       ***      

Store 73

   ***       ***      

Store 74

   ***       ***      

Store 75

   ***       ***      

Store 76

   ***       ***      

Store 104

   ***       ***      

Store 105

   ***       ***      

Store 112

   ***       ***      

Store 154

   ***       ***      

Store 201

   ***       ***      

Store 202

   ***       ***      

Store 203

   ***       ***      

Store 204

   ***       ***      

Store 205

   ***       ***      

Store 206

   ***       ***      

Store 207

   ***       ***      

Store 211

   ***       ***      

Store 214

   ***       ***      

Store 215

   ***       ***      

Store 221

   ***       ***      

Store 224

   ***       ***      

Store 266

   ***       ***      

Store 29

   ***       ***       ***

Store 31

   ***       ***       ***

Store 36

   ***       ***       ***

Store 37

   ***       ***       ***

Store 38

   ***       ***       ***

Store 54

   ***       ***       ***

Store 57

   ***       ***       ***

Store 81

   ***       ***       ***

Store 89

   ***       ***       ***

Store 101

   ***       ***       ***

Store 102

   ***       ***      

Store 111

   ***       ***    Opened June   

Store 114

   ***       ***    Opened July   

Store 137

   ***       ***    Opened April   

Store 140

   ***       ***       ***

Store 149

   ***       ***       ***

Store 150

   ***       ***      

Store 177

   ***       ***    Opened 09/09   

Store 191

   ***       ***    Opened 10/09   

Store 192

   ***       ***    Opened 10/09   

Store 194

   ***       ***    10-Jan   

Store 195

   ***       ***    10-Jan   

Store 196

   ***       ***    10-Jul   

Store 230

   ***       ***      

Store 232

   ***       ***    10-Jul   

Store 237

   ***       ***    10-Jul   

Store 238

   ***       ***    10-Jul   

Store 34

   ***       ***       ***

Store 22

   ***       ***       ***

Store 23

   ***       ***       ***

Store 24

   ***       ***       ***

Store 25

   ***       ***       ***

Store 26

   ***       ***       ***

Store 27

   ***       ***       ***

Store 45

   ***       ***       ***

Store 49

   ***       ***       ***

Store 53

   ***       ***       ***

Store 55

   ***       ***      

Store 56

   ***       ***       ***

Store 58

   ***       ***       ***

Store 77

   ***       ***       ***

Store 78

   ***       ***       ***

Store 79

   ***       ***       ***

Store 83

   ***       ***       ***

Store 84

   ***       ***       ***

Store 85

   ***       ***       ***

Store 86

   ***       ***       ***

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

Store 87

   ***       ***       ***

Store 88

   ***       ***       ***

Store 91

   ***       ***       ***

Store 92

   ***       ***       ***

Store 93

   ***       ***       ***

Store 95

   ***       ***       ***

Store 096

   ***       ***       ***

store 103

   ***       ***       ***

store 107

   ***       ***       ***

Store 108

   ***       ***      

Store 113

   ***       ***      

Store 117

   ***       ***    Opened 09/09   

Store 118

   ***       ***    Opened 09/09   

Store 120

   ***       ***       ***

Store 121

   ***       ***       ***

Store 122

   ***       ***       ***

Store 123

   ***       ***       ***

Store 124

   ***       ***       ***

Store 125

   ***       ***      

Store 126

   ***       ***      

Store 127

   ***       ***      

Store 132

   ***       ***      

Store 141

   ***       ***       ***

Store 142

   ***       ***       ***

Store 143

   ***       ***      

Store 144

   ***       ***      

Store 145

   ***       ***      

Store 146

   ***       ***      

Store 151

   ***       ***      

Store 152

   ***       ***      

Store 153

   ***       ***      

Store 158

   ***       ***      

Store 159

   ***       ***      

Store 162

   ***       ***      

Store 163

   ***       ***      

Store 164

   ***       ***    Opened 01/11   

Store 171

   ***       ***    Opened 09/09   

Store 172

   ***       ***    Opened 09/09   

Store 173

   ***       ***    Opened 09/09   

Store 174

   ***       ***    Opened 09/09   

Store 176

   ***       ***    Opened 09/09   

Store 182

   ***       ***    11-Feb   

Store 208

   ***       ***    Opened 03/10   

Store 210

   ***       ***    Opened 04/10   

Store 212

   ***       ***    Opened 04/10   

Store 213

   ***       ***    Opened 04/10   

Store 216

   ***       ***    Opened 04/10   

Store 217

   ***       ***    Opened 04/10   

Store 223

   ***       ***    Opened 04/10   

Store 226

   ***       ***    Opened 04/10   

Store 227

   ***       ***    Opened 04/10   

Store 228

   ***       ***    Opened 04/10   

Store 243

   ***       ***    Opened 04/10   

Store 244

   ***       ***    Opened 04/10   

Store 245

   ***       ***    Opened 04/10   

Store 246

   ***       ***    Opened 04/10   

Store 249

   ***       ***    Opened 04/10   

Store 250

   ***       ***    Opened 04/10   

Chase Concentration

   ***    ***         

Fifth Third Concentration acct

   ***    ***         

Suntrust Concentration

   ***    ***         

Wachovia Concentration

   ***    ***         

Wachovia MidAtlantic Cons

   ***            

Note- All store accounts are one way depository accounts.

              

***

   Investment Account    ***    ***      

Account

   PNC conversion information for Corporate accounts                Current NCB
account number    New PNC Account Number    New PNC Check & ACH    New PNC Wire
Transfer             Routing Transit Number (RTN)    Routing Transit Number
(RTN)   

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

Ohio Worker’s

   ***    ***    ***    ***   

Dishonored Checks

   ***    ***    ***    ***   

Stock Option Withholding Tax

   ***    ***    ***    ***   

Stock Option Proceeds

   ***    ***    ***    ***   

Congress Financial Corp (Central)

   ***    ***    ***    ***   

Novus

   ***    ***    ***    ***   

Bank Cards

   ***    ***    ***    ***   

C/O HH Gregg Inc KBA

   ***    ***    ***    ***   

MGA/HRSI

   ***    ***    ***    ***   

GE

   ***    ***    ***    ***   

AMEX

   ***    ***    ***    ***   

Corporate

   ***    ***    ***    ***   

Bad Checks

   ***    ***    ***    ***   

Master

   ***    ***    ***    ***   

Payroll

   ***    ***    ***    ***   

checking

   ***    ***    ***    ***   

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

SCHEDULE 8.11

to

INFORMATION CERTIFICATE

Intellectual Property

 

A. Trademarks

 

  1. Owned

 

Trademark

   Registration
Number      Registration
Date  

EXTRAORDINARY APPLIANCES FOR THE HEART OF YOUR HOME

     3,307,127         10/9/07   

HHGREGG.COM

     2,557,080         04/02/02   

WELCOME TO THE REVOLUTION

     2,476,625         08/07/01   

HHG

     2,646,349         11/05/02   

WEBSTOCK

     3,520,019         10/21/08    LOGO [g166780ex10_2pg172a.jpg]      3,530,456
        11/11/08   

HHGREGG

     3,520,020         10/21/08    LOGO [g166780ex10_2pg172b.jpg]      3,530,455
        11/11/08   

FINE LINES

     3,546,276         12/16/08   

FINE POINTS

     3,520,018         10/21/08    LOGO [g166780ex10_2pg172c.jpg]      3,530,454
        11/11/08    LOGO [g166780ex10_2pg172d.jpg]      3,633,848         6/9/09
  

HHGREEN

     3,613,710         4/28/09   

GIVING YOU THE POWER TO GO GREEN

     3,613,720         4/28/09   

hhgold

     3,860,068         10/12/10   

Trademark Application

   Application/Serial
Number      Application
Date  

None

     

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

  2. Licensed

 

Trademark

   Registration
Number      Registration
Date      Expiration
Date      Owner/
Licensor  

None

                       

 

Trademark Application

   Application/Serial
Number      Application
Date  

None

           

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

Patents

 

  1. Owned

 

Patent Description

   Registration
Number      Registration
Date      Expiration
Date  

None

        

 

Patent Application

   Application/Serial
Number      Application
Date  

None

     

 

  2. Licensed

 

Patent Description

   Registration
Number      Registration
Date      Expiration
Date      Owner/
Licensor  

None

           

 

Patent Application

   Application/Serial
Number      Application
Date  

None

     

 

B. Copyrights

 

  1. Owned

 

Copyright

   Registration
Number      Registration
Date  

None

     

 

  2. Licensed

 

Copyright Description

   Registration
Number      Registration
Number      Expiration
Date      Owner/
Licensor  

None

           

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

C. License Agreements

 

Name of Document

   Date of
Document   

Licensor

   Term   

Licensed Intellectual Property

Ordering Document

   08/27/03    Oracle Corporation    Perpetual    Diagnostics Pak and other
database and processing software

License Agreement

   06/23/03    New Era Consulting Corporation    Perpetual    Client POS and
Sales Management Software

Software License and Warranty

   10/01/03    Symantec Corporation    Perpetual    Anti-Virus Programs

Payment Invoice Agreement

   N/A    Speedware Corporation    Perpetual    Payment invoices with standard
terms and conditions for purchase of hardware.

License Agreement

   03/18/02    HighJump System    Perpetual    Data Collection Advantage System

Software License and Services Agreement

   12/26/01    Peoplesoft USA, Inc.    Perpetual    PeopleSoft HRNS software
modules

End User License Agreement

   N/A    Altiris    Perpetual    Computer programs, associated media and
accompanying documentation.

Software License Agreement

   N/A    Quest Software, Inc.    N/A   

Agreements Containing Certain Grants of Intellectual Property:

 

  1. Business Television Master Agreement, as amended, dated October 1, 2002, by
and between the Company and EchoStar Satellite Corporation.

 

  2. Time Warner Cable Service Sales Program Agreement dated October 23, 2001,
by and between the Company and Time Warner Cable, a Division of Time Warner
Entertainment Company, L.P.

 

  3. Major Appliances Associate Contract Distributor and Retail Dealer Sales
Agreement dated December 31, 2003, by and between the Company and Whirlpool
Corporation.

 

  4. KitchenAid Outdoor Products Associate Contract Distributor Sales Agreement
dated April 30, 2004, by and between the Company and Whirlpool Corporation.

 

  5. Gladiator Garageworks Dealer Agreement dated January 13, 2003, by and
between the Company and Whirlpool Corporation.

 

  6. Marketing Agreement dated December 15, 2003, by and between the Company and

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

 

Insight Communications Company, L.P.

 

  7. Dealer Agreement dated September 4, 2002, by and between the Company and
Sharp Electronics Corp.

 

  8. Retail Dealer Agreement, as amended, dated May 29, 2002, by and between the
Company and GE-Zurich Warranty Management, Inc.

 

  9. Minolta Corporation Consumer Products Group Reseller Agreement dated
February 19, 2002, by and between the Company and Minolta Corporation.

 

  10. Thales Navigation, Inc. Retail Dealer Agreement dated April 12, 2007, by
and between the Company and Thales Navigation, Inc.

 

  11. Nikon Inc. Imaging Division Retail Dealer Sales Agreement by and between
the Company and Nikon Inc.

 

  12. JBL Dealer Agreement dated February 20, 2001, by and between the Company
and JBL, Inc.

 

  13. Harman/Kardon Dealer Agreement dated February 20, 2001, by and between the
Company and Harman Kardon, Inc.

 

  14. Olympus America, Inc. Authorized Digital Imaging Products Dealer Agreement
dated December 27, 2000, by and between the Company and Olympus America, Inc –
Consumer Products Group.

 

  15. Panasonic Authorized Internet Dealer Agreement dated May 12, 2004, by and
between the Company and Panasonic Consumer Electronics Company, Division of
Matsushita Electric Corporation of America.

 

  16. Sony Electronics Inc. Consumer Sales Company Dealer Agreement dated
January 1, 2003, as amended, by and between the Company and the Consumer Sales
Company of Sony Electronics, Inc.

 

  17. Select Merchant Payment Card Processing Agreement dated October 1, 2006,
by and between the Company and Fifth Third Bank.

 

  18. Private Label Consumer Credit Card Program Agreement dated as of
August 26, 2004, by and between the Company and GE Capital Consumer Card Co.

 

  19. Retailer Agreement dated December 31, 2004 by and between the Company and
EchoStar Satellite, LLC (f/k/a Echostar Satellite Corporation.

 

  20. Retail Dealer Agreement dated June 4, 1996, by and between the Company and
Mitsubishi Digital Electronics America, Inc. (with renewal letter dated June 30,
2004).

 

  21. Agreement dated June 1, 2004, by and between the Company and Ultra 8
International, LLC.

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

  22. Delivery Service Agreement dated July 24, 2004, by and between the Company
and Spirit Delivery and Distribution Services, Inc., as amended pursuant to the
First Amendment to the Delivery Service Agreement.

 

  23. Independent Contractor Agreement dated March 4, 2003, by and between the
Company and Affinity Logistics Corp., as amended pursuant to the First Amendment
to the Independent Contractor Agreement.

 

  24. Authorized Agency Agreement, dated May 5, 2005, between the Company and
Cingular Wireless II, LLC.

 

  25. Dealer Sales Agreement, dated April 27, 2007, between the Company and
Canon U.S.A., Inc.

Domain Names:

 

  1. hhgregg.com

 

  2. hhgreggfinelines.com

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

SCHEDULE 8.12

to

INFORMATION CERTIFICATE

Subsidiaries; Affiliates; Investments

 

A. Subsidiaries (More than 50% owned by Company)

 

Name

  

Jurisdiction of

Incorporation/Organization

  

Percentage Owned

HHG Distributing, LLC (“HHG”)

   Indiana    100%

 

B. Affiliates (Less than 50% Owned by Company)

 

Name

  

Jurisdiction of

Incorporation/Organization

  

Percentage Owned

None

     

 

C. Affiliates (Subject to common ownership with Company)

 

Affiliate

   Jurisdiction of
Incorporation      Parent      Percentage
Owned  

None

        

 

D. Shareholders (If widely held, only holders with more than 10%)

 

Name

   Jurisdiction of
Incorporation*      Percentage Owned  

hhgregg, Inc.

     Delaware         100 % 

 

* If shareholders are individuals, indicate “N/A”

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

SCHEDULE 8.13

to

INFORMATION CERTIFICATE

Labor Matters

 

Name of Agreement

   Date of
Agreement      Parties to
Agreement      Date of
Expiration/Termination  

None

        

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

SCHEDULE 8.15

to

INFORMATION CERTIFICATE

Material Contracts

None.

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

SCHEDULE 9.9

to

INFORMATION CERTIFICATE

Existing Indebtedness

 

1. Direct Debt

None.

 

2. Guarantees

None.

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

SCHEDULE 9.10

to

INFORMATION CERTIFICATE

Loans and Advances

 

Name/Address of Debtor

 

Outstanding Balance

of Loan as of

 

Secured/Unsecured

 

Due Date

None.

     

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

EXHIBIT C

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Form of Compliance Certificate

 

To:   

Wells Fargo Bank, National Association,

as Agent and Lender

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Ladies and Gentlemen:

I hereby certify to you pursuant to Section 9.6 of the Loan Agreement (as
defined below) as follows:

1. I am the duly elected Chief Financial Officer of Gregg Appliances, Inc., an
Indiana corporation (“Borrower”). Capitalized terms used herein without
definition shall have the meanings given to such terms in the Amended and
Restated Loan and Security Agreement, dated [                 ], 2011, by and
among Wells Fargo Bank, National Association, as agent for the financial
institutions party thereto as lenders (in such capacity, “Agent”), and the
financial institutions party thereto as lenders (collectively, “Lenders”),
Borrower and certain of its affiliates (as such Loan and Security Agreement is
amended, modified or supplemented, from time to time, the “Loan Agreement”).

2. I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrower and Guarantors, during the
immediately preceding fiscal month.

3. The review described in Section 2 above did not disclose the existence during
or at the end of such fiscal month, and I have no knowledge of the existence and
continuance on the date hereof, of any condition or event which constitutes a
Default or an Event of Default, except as set forth on Schedule I attached
hereto. Described on Schedule I attached hereto are the exceptions, if any, to
this Section 3 listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which Borrower or any
Guarantor has taken, is taking, or proposes to take with respect to such
condition or event.

4. I further certify that, based on the review described in Section 2 above,
neither Borrower nor any Guarantor has at any time during or at the end of such
fiscal month, except as specifically described on Schedule II attached hereto or
as permitted by the Loan Agreement, done any of the following:

 

  (a) Changed its respective corporate name, or transacted business under any
trade name, style, or fictitious name, other than those previously described to
you and set forth in the Financing Agreements.

 

C-1

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

  (b) Changed the location of its chief executive office, changed its
jurisdiction of incorporation, changed its type of organization or changed the
location of or disposed of any of its properties or assets (other than pursuant
to the sale of Inventory in the ordinary course of its business or as otherwise
permitted by Section 9.7 of the Loan Agreement), or established any new asset
locations.

 

  (c) Materially changed the terms upon which it sells goods (including sales on
consignment) or provides services, nor has any vendor or trade supplier to
Borrower or Guarantors during or at the end of such period materially adversely
changed the terms upon which it supplies goods to Borrower or Guarantors.

 

  (d) Permitted or suffered to exist any security interest in or liens on any of
its properties, whether real or personal, other than as specifically permitted
in the Financing Agreements.

 

  (e) Received any notice of, or obtained knowledge of any of the following not
previously disclosed to Agent: (i) the occurrence of any event involving the
release, spill or discharge of any Hazardous Material in violation of applicable
Environmental Law in a material respect or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any applicable Environmental Law by Borrower
or Guarantors in any material respect or (B) the release, spill or discharge of
any Hazardous Material in violation of applicable Environmental Law in a
material respect or (C) the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials in
violation of applicable Environmental Laws in a material respect or (D) any
other environmental, health or safety matter, which has a material adverse
effect on Borrower or any Guarantor or its business, operations or assets or any
properties at which Borrower or any Guarantor transported, stored or disposed of
any Hazardous Materials.

 

  (f) Become aware of, obtained knowledge of, or received notification of, any
breach or violation of any material covenant contained in any instrument or
agreement in respect of Indebtedness for money borrowed by Borrower or any
Guarantor.

 

  (g) As of the date hereof, Borrower is current with respect to sales and use
tax collections, deposits and payments, including monthly sales and use tax
accruals.

5. Attached hereto as Schedule III are the calculations used in determining, as
of the end of such fiscal month whether Borrower and Guarantors are in
compliance with the covenants set forth in Section 9.18 of the Loan Agreement
for such fiscal month.

 

C-2

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

6. [During the immediately preceding fiscal quarter, Borrower made the following
transactions for which the Payment Conditions were required to be satisfied:
                     [Please provide detailed description of each Payout (as
defined in the definition of Payment Conditions)]

7. [During the immediately preceding fiscal month, Borrower and/or Guarantor
made the following intercompany loans:                      and received the
following payments:                      in the outstanding amount equal to
                     as of the last day of the immediately preceding month]

8. [During the immediately preceding fiscal quarter, Borrower initiated but did
not complete the following Permitted Sale Leaseback transactions:
                     [Please provide (i) the date of completion of the
construction of any improvements, (ii) a description of the Real Property
involved in the sale and leaseback transaction and (iii) the aggregate fair
market value of the property and related Real Property sold or to be sold in
such sale and leaseback transaction)]

The foregoing certifications are made and delivered this day of
                     20    .

 

Very truly yours, GREGG APPLIANCES, INC. By:  

 

Title:  

 

 

C-3

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

EXHIBIT D

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Form of Borrowing Base Certificate

See attached

 

D-1

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

Gregg Appliances, Inc.

Borrowing Base Calculation

 

Date of Delivery

 

Balances as of:    Date balance as of  

Inventory

  

Gross Inventory per stock ledger

  

Ineligibles:

  

Frigidare Consigned Inventory

  

Vendor Returns

  

Service

  

Shrinkage Reserve

           

Total Ineligibles

     —              

Total Eligible Inventory

     —     

Advance Rate

     62.10 %          

Subtotal Inventory Availability

     —     

Accounts Receivable

  

MC/Visa

  

Discover

  

MGA

  

American Express

  

GE

           

Credit Card Receivables

     —              

Trade Account Receivables

  

Sub-total A/R

     —     

Ineligibles:

  

Trade Receivables over 90 days

  

Credits in 90 days >

  

Finance Charges

  

Government A/R

  

Consignment sales

     —     

Sale of warranty contracts or warranty services

  

A/R for Merchandise on Loan

  

Direct TV

  

Dish Network

  

Affinity (delivery service)

  

Spirit (delivery service)

  

UPS

  

FSA (delivery service)

     —              

Total Ineligibles

     —              

Subtotal Eligible A/R

     —     

Dilution

     —              

Eligible A/R

     —     

Net Recovery Percentage

     90.0 %          

Subtotal A/R Availability

     —              

Total Borrowing Base

     —     

Reserves

  

Customer Retail Credits

     —     

Customer Deposits

     —     

Check Request Refunds

     —     

Gift Cards

     —     

Landlord Lien Reserve

     —              

Total Reserves

     —              

Net Availability before Letter of Credit Reserve

     —     

Maximum Credit Available Under the Facility

     300,000,000   

Actual Availability before Letter of Credit Reserve (Lesser of Net Availability
or Maximum Credit Available)

     —     

Less: Letters of Credit

           

Net Availability after Letters of Credit Reserve

     —     

Less: Balance on Line of Credit (2/28/11)

     —              

Net Availability after Letters of Credit Reserve & Line of Credit Balance

   $ 0             For purposes of inducing Wells Fargo Bank N.A. to grant loans
to us, we hereby certify that the foregoing statement of inventory and accounts
receivable are true and correct as of this report date, as acceptable collateral
in accordance with the terms of the agreement date March 29, 2011 between Gregg
Appliances, Inc. and Wells Fargo Bank N.A.   

 

 

Kevin Kovacs, Director of Tax and Treasury

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

EXHIBIT E

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Form of Credit Card Notification

LETTER OF INSTRUCTION

[            ], 2011

 

[Name of Credit Card Processor]

 

 

Attn:  

 

 

  Re: Security Agreement - Assignment of Credit Card Receivables

Dear Sir/Madam:

GREGG APPLIANCES, INC. (the “Company”) has recently entered into a credit
facility with WELLS FARGO BANK, NATIONAL ASSOCIATION, as agent for certain
lenders (the “Secured Party”). In accordance with the terms of that credit
facility, the Company granted to Secured Party a security interest in
substantially all of the Company’s now owned or hereafter acquired personal
property, including, without limitation, all rights of the Company to receive
payments in respect of credit or charge card sales (“Card Sales”) processed or
otherwise paid by [Name of Credit Card Processor] (the “Processor”) to the
Company pursuant to that certain [Title of Credit Card Processing Agreement]
between the Processor and the Company in effect as of the date hereof (the
“Agreement”).

Pursuant to the facility, the Company has assigned to Secured Party the right to
receive payments with respect to all Card Sales and to otherwise directly
collect all amounts due to the Company from the Processor. In furtherance
thereof, the Company is obligated to arrange for the proceeds of Card Sales [to
be routed by the Processor to a deposit account under the control of the Secured
Party, as opposed to the account routing instructions that are presently in
place] [to continue to be routed to a deposit account under the control of the
Secured Party]. Accordingly, by this letter the Company and the Secured Party
instruct the Processor to [immediately begin] [continue] routing all proceeds of
Card Sales and any other amounts due to the Company from the Processor to the
following deposit account (the “Account”):

[Name of Bank]

[Bank’s Address]

ABA #                                         

For Credit to the Account of: [Name of Debtor]

Account No.                              

All payments under the Agreement should continue to be made to the Account and
to no other account unless and until you receive written notification from
Secured Party.

 

E-1

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

The Company acknowledges and agrees that, except as expressly set forth herein,
all of the terms of the Agreement continue to be in full force and effect.

The Company and the Secured Party appreciate the Processor’s anticipated
cooperation and assistance in effectuating this change. Should you have any
questions concerning this matter, please do not hesitate to contact the Company
or the Secured Party at the contact information below.

[Signature Pages Follow]

 

E-2

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

Very truly yours, GREGG APPLIANCES, INC. By:  

 

Name:   Title:  

 

Gregg Appliances, Inc. 4151 East 96th Street, Indianapolis, IN 46240 Attention:
Jeremy Aguilar, Chief Financial Officer Telephone No.:  

 

  Telecopy No.:  

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

 

Name:   Title:  

 

Wells Fargo Bank, National Association One Boston Place Boston, Massachusetts
02109 Attention: Jason Searle Telephone No.:   (617) 854-7292   Telecopy No.:  

 

 

 

E-3

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

Schedule 1.25

Commitments

 

Wells Fargo Bank, National Association

   $ 90,000,000.00   

JPMorgan Chase Bank, N.A.

   $ 55,000,000.00   

KeyBank National Association

   $ 30,000,000.00   

SunTrust

   $ 30,000,000.00   

Regions Bank

   $ 30,000,000.00   

RBS Business Capital

   $ 30,000,000.00   

Barclays Bank PLC

   $ 20,000,000.00   

Credit Suisse AG, Cayman Islands Branch

   $ 15,000,000.00   

Total

   $ 300,000,000.00   

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

SCHEDULE 1.57

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Existing Letters of Credit

 

Beneficiary

   Amount      Expiration Date*      Dated Issued  

Ohio Bureau of Worker’s Compensation

   $ 454,200         12/31/2011         December-2010   

The Travelers Indemnity Company

   $ 4,290,000         10/31/2011         October-2010   

Arrowood Indemnity Company

   $ 40,000         10/31/2011         October-2010   

TOTAL

   $ 4,784,200         

 

* Each Existing Letters of Credit has an evergreen provision

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

SCHEDULE 1.65

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Frigidaire Consignment Collateral

All inventory manufactured or distributed by Electrolux Home Products, Inc.,
wherever located, now existing and hereafter acquired, including but not limited
to all Electrolux, Gibson, Kelvinators, Tappan, White Westinghouse and/or
Frigidaire brand, refrigerators, freezers, air conditioners, dehumidifiers,
clothes washers, clothes dryers, ranges, stoves, dishwashers, humidifiers and
other kinds of household and commercial appliances, and replacement parts
consigned to Borrower by Frigidaire.

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

SCHEDULE 1.106

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Permitted Holders

 

1. Jerry W. Throgmartin, for so long as he is a shareholder in Parent, and a
member of the senior management of Borrower or Parent;

 

2. Gregg Throgmartin, for so long as he is a shareholder in Parent, and a member
of the senior management of Borrower or Parent;

 

3. Dennis L. May, for so long as he is a shareholder in Parent, and a member of
the senior management of Borrower or Parent;

 

4. Freeman Spogli & Co. LLC (and any successor entity thereof or other entity
controlled by a majority of the principals of Freeman Spogli & Co. LLC (in their
capacity as principals of Freeman Spogli & Co. LLC), including, without
limitation, FS Equity Partners V, L.P., FS Affiliates V, L.P., but excluding any
of Freeman Spogli & Co. LLC’s portfolio companies);

 

5. A.S.F. Co-Investment Partners II, L.P. and any successor entity thereof or
other entity controlled thereby;

unless with respect to the Persons listed in item 5 of this Schedule 1.105, on
the relevant date of determination, such Persons Beneficially Own, directly or
indirectly, an equal or greater aggregate percentage of voting power of the
Voting Stock of the Borrower than the aggregate percentage Beneficially Owned,
directly or indirectly, by the Persons described in item 4 of this Schedule
1.105.

For purposes of this Schedule 1.105, “Beneficial Owner” has the meaning assigned
to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular “person” (as that term is
used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to
have beneficial ownership of all securities that such “person” has the right to
acquire by conversion or exercise of other securities, whether such right is
currently exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms “Beneficially Owns” and “Beneficially Owned” shall have a
corresponding meaning.

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

SCHEDULE 8.16

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Credit Card Agreements

 

1. Private Label Consumer Credit Card Program Agreement, dated August 26, 2004,
as amended, between Borrower and GE Capital Consumer Card Co, as amended,
restated, supplemented or otherwise modified from time to time.

 

2. Bank Card Merchant Agreement, dated on or about September 19, 2006, between
Borrower and Fifth Third Bank., as amended, restated, supplemented or otherwise
modified from time to time.

 

3. Merchant Service Agreement, dated December 5, 1991, between Borrower and
Discover Financial Services, Inc., as amended, restated, supplemented or
otherwise modified from time to time.

 

4. American Express Card Acceptance Agreement between Borrower and American
Express Travel Related Services Company, Inc., as amended, restated,
supplemented or otherwise modified from time to time.

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

SCHEDULE 9.5

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Leased Locations

None.

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

SCHEDULE 9.12

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Affiliate Transactions

 

1. Lease, dated April 1, 1988, by and between Borrower and W.G. Throgmartin for
3651 Commercial Drive, Indianapolis, Indiana. Landlord status transferred to WGT
V, LLC.

 

2. Lease, dated April 1, 1999, by and between Borrower and WGT Limited for 606
Gourley Pike, Bloomington, Indiana. Landlord status transferred to WGT V, LLC.

 

3. Lease, dated November 1, 1993, between Borrower and WGT Limited Partnership
for 4201 Parnell Avenue, Fort Wayne, Indiana. Landlord status transferred to WGT
V, LLC.

 

4. Lease, dated June 14, 2004, between Borrower and WGT V, LLC for 3230 Woodward
Crossing Blvd., Buford, Georgia.

 

5. Lease, dated June 11, 2004, between Borrower and WGT V, LLC for 160 Rothroek
Road, Montrose, Ohio.

 

6.

Lease, dated June 1, 2000, between Borrower and W. Gerald Throgmartin for 4141,
4151 and 4161 East 96th Street, Indianapolis, Indiana.

 

7. Lease, dated August 31, 2007, between Borrower and Don Throgmartin for 2021
East Markland, Kokomo, Indiana.

 

8.

Lease, dated March 6, 2009, between Borrower and WGT V, LLC for 3606 SW 34th
Street, Gainesville, Florida.

 

9. Lease, dated April 1, 2010, between Borrower and Throgmartin Leasing, LLC for
Airplane, Cessna Citation Bravo, U.S. Registration No. N322GT