Exhibit 10.1

 
EXECUTION VERSION
 
SECURED REVOLVING LOAN AGREEMENT
 
SECURED REVOLVING LOAN AGREEMENT, dated as of April 10, 2009 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), between THE TALBOTS, INC., a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Borrower") and AEON CO.,
LTD., a corporation organized and existing under the laws of Japan (the
"Lender").
 
WHEREAS, the Borrower has requested that the Lender extend revolving credit
loans to the Borrower during the period from and after the Closing Date (as
hereafter defined) to the Maturity Date (as hereafter defined), in the aggregate
principal amount at any time outstanding not to exceed $150,000,000, subject to
the terms and conditions set forth herein; and
 
WHEREAS, the Lender is willing to extend such credit to the Borrower, subject to
the terms and conditions hereinafter set forth.
 
NOW, THEREFORE, the Borrower and the Lender hereby agree as follows:
 
1.   Definitions.  (a)  As used in this Credit Agreement, unless otherwise
defined herein, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
 
"Affiliate" shall mean, as to any Person, any corporation or other entity that,
directly or indirectly, controls, is controlled by or is under common control
with such Person.  For purposes of this definition, the term "control"
(including "controlling," "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to vote 10% or
more of the voting stock of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting stock, by contract or otherwise.  For the purposes of Section 3 and
Section 4 of this Credit Agreement, the Lender and its Affiliates (other than
any Person constituting an Affiliate of the Borrower solely by virtue of the
Lender's ownership of voting stock of the Borrower) shall not constitute an
Affiliate of the Borrower.
 
"Applicable Spread" shall mean a rate per annum equal to 6.00%.
 
"Asset Disposition" shall mean any Disposition of property or series of related
Dispositions of property, including any Capital Stock, by the Borrower or any of
its Subsidiaries (excluding any such Disposition permitted by clause (i), (ii),
(iii), (iv) or (v) of Section 4.21).
 
"Assignee" is defined in Section 8.3(a).
 
"Board" shall mean the Board of Governors of the Federal Reserve System of the
United States of America.
 
"Borrower" is defined in the preamble of this Credit Agreement.
 

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“Borrowing Date” shall mean the date on which a Revolving Loan is made by the
Lender in favor of the Borrower.
 
"Borrower's Account" shall mean the bank account established by the Borrower, at
a financial institution designated by the Lender prior to the initial Borrowing
Date, for the purposes of this Credit Agreement (or such other bank account as
the parties hereto may mutually agree).
 
"Business Day" shall mean any day other than a Saturday, Sunday or other day on
which commercial banks are required or authorized to be closed in New York, New
York or Tokyo, Japan; provided, however, that when used in connection with the
payment or prepayment of any amounts accruing interest at such rate or providing
notices in connection with such rate, "Business Day" shall mean any Business Day
in New York, New York or Tokyo, Japan in which dealings in Dollars are carried
on in the London interbank market; provided, further, that when used in
connection with the calculation or determination of LIBOR, "Business Day" shall
mean any Business Day in London, in which dealings in Dollars are carried on in
the London interbank market.
 
"Capital Expenditures" shall mean for any period, with respect to any Person,
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Lease
Obligations which is capitalized on the consolidated balance sheet of such
Person) by such Person and its Subsidiaries during such period for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including capitalized replacements, capitalized
repairs and improvements during such period) that, in conformity with GAAP, are
included in "additions to property, plant or equipment" or comparable items
reflected in the consolidated statement of cash flows of such Person and its
Subsidiaries.
 
"Capital Stock" shall mean (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person, in each case including any warrants,
options or other rights entitling the holder thereof to purchase or acquire any
of the foregoing.
 
"Capitalized Lease Obligations" shall mean obligations for the payment of rent
for any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
 
"Closing Date" shall mean the later to occur of (i) April 10, 2009 and (ii) the
first Business Day after the conditions precedent set forth in Section 5 hereof
have been satisfied or waived in accordance with the terms hereof.
 
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations and published interpretations thereof.
 
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"Collateral" means all "Collateral" referred to in the Collateral Documents,
including the Mortgaged Properties and substantially all of the consumer
credit/charge card receivables owed to the Borrower or any Guarantor from time
to time.
 
"Collateral Documents" means, collectively, the Security Agreement, the
Mortgages and any other documents granting a Lien upon the Collateral as
security for payment of the Obligations.
 
"Credit Card Receivables" shall have the meaning set forth in the Security
Agreement.
 
"Default" shall mean any event or circumstance that with the giving of notice,
the lapse of time or both would constitute an Event of Default.
 
"Default Rate" is defined in Section 2.5.
 
"Dispose" or "Disposition" shall mean any transaction, or series of related
transactions, pursuant to which any Person or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether now
owned or hereafter acquired) to any other Person, in each case, whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person.
 
"Dollars" and the symbol "$" shall mean lawful money of the United States of
America.
 
"Domestic Subsidiary" shall mean, with respect to any Person, each Subsidiary of
such Person organized under the laws of the United States of America, any State
thereof or the District of Columbia.
 
"Eligible Credit Card Receivables" shall have the meaning set forth in the
Security Agreement.
 
"EMAIL" is defined in Section 8.6.
 
"Environmental Action" shall mean any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter or other communication from any governmental
agency, department, bureau, office or other authority, or any third party
involving violations of Environmental Laws or releases of Hazardous Materials
from (i) any assets, properties or businesses of the Borrower or any of its
Subsidiaries or any predecessor in interest; (ii) from adjoining properties or
businesses; or (iii) from or onto any facilities which received Hazardous
Materials generated by the Borrower or any of its Subsidiaries or any
predecessor in interest.
 
"Environmental Law" shall mean any present or future statute, ordinance, rule,
regulation, order, judgment, decree, permit, license or other binding
determination of any Governmental Authority imposing liability or establishing
standards of conduct for protection of the environment as the same may be
amended or supplemented from time to time.
 
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"Environmental Liabilities and Costs" shall mean all liabilities, monetary
obligations, remedial actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigation and feasibility studies), fines, penalties, sanctions and interest
incurred as a result of (i) any claim or demand by any Governmental Authority or
any third party, and which relate to any environmental condition or a release of
Hazardous Materials or (ii) any breach by the Borrower or any of its
Subsidiaries of any Environmental Law.
 
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
 
"ERISA Affiliate" shall mean any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
 
"ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability (or that could reasonably be
expected to result in Withdrawal Liability) or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
 
"Event of Default" is defined in Section 6.1 hereof.
 
"Excluded Subsidiary" shall mean each non wholly-owned Subsidiary of the
Borrower and each Subsidiary of the Borrower that is not a Guarantor.
 
"Excluded Taxes" means, (i) any Taxes imposed on the recipient's overall net
income, or franchise or other taxes imposed in lieu of Taxes on overall net
income (however denominated), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located (or, in the case of the Lender, in which its
applicable lending office is located) or otherwise as a result of a present or
former connection between the recipient and the jurisdiction imposing such Tax,
other than a connection arising from such recipient having executed, received a
payment under or enforced this Credit Agreement and (ii) any branch profits
taxes imposed by the United States; it being understood, for the avoidance of
doubt, that Excluded Taxes shall not include any withholding tax, including,
without limitation, a withholding tax imposed by the United States on payments
to a non-US, person who is not otherwise subject to tax in the United States on
a net income basis, other than any withholding tax that would apply to amounts
payable to a recipient at the time the recipient becomes a party to this
Agreement or is attributable to the recipient's failure to comply with Section
7.2(f).
 
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"Fair Market Value" shall mean, with respect to any asset or property, the price
which could be negotiated in an arm's length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.  Fair Market Value
will be determined in good faith by the board of directors of the Borrower, and,
upon the Lender's request, shall be evidenced by a certificate (together with
supporting calculation) of the Borrower to the Lender.
 
"FAX" is defined in Section 8.6.
 
"Federal Funds Rate" shall mean (i) for any Business Day, the rate on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day by the Federal Reserve Bank
of New York, or, if such rate is not published for any Business Day, the average
of the quotations for such day on such transactions received by the Lender from
three Federal funds brokers of recognized standing selected by the Lender, and
(ii) for any day which is not a Business Day, the Federal Funds Rate for the
preceding Business Day.
 
"GAAP" shall mean generally accepted accounting principles in effect from time
to time in the United States, applied on a consistent basis.
 
"Guaranty" means the Guaranty, in the form of Exhibit C hereto, to be executed
and delivered by each Guarantor in favor of the Lender.
 
"Guarantors" means (a) the Initial Guarantors and (b) each other Person that
becomes a Guarantor after the Closing Date pursuant to Section 4.24, and
"Guarantor" means any one of them.
 
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof and any department, commission, board, bureau,
instrumentality, agency or other entity exercising legislative, judicial
regulatory or administrative functions of or pertaining to government.
 
"Hazardous Materials" shall mean (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminate under any Environmental Law.
 
"Hedging Agreements" shall mean any interest rate, commodity or equity swap,
cap, floor or forward rate agreement or collar arrangements, interest rate
future or option contracts, currency swap agreements, currency future or option
contracts and other similar agreements or arrangements designed to protect
against fluctuations in interest rates or currency, commodity or equity values,
and any confirmation executed in connection with any such agreement or
arrangement.
 
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"Indebtedness" shall mean with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) all obligations of such
Person for the deferred purchase price of assets or services acquired by such
Person which, in accordance with GAAP, would be shown on the liability side of
the balance sheet of such Person, (iii) all obligations of such Person under or
evidenced by bonds, debentures, notes or other similar instruments or upon which
interest payments are customarily made, (iv) all obligations and liabilities,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances and similar facilities, including, without duplication, all drafts
drawn thereunder, (v) all obligations of the kind referred to in clauses (i)
through (iv) and (vi) through (viii) of this definition secured by any Lien on
any property owned by such Person whether or not owing by such Person and even
though such Person has not assumed or become liable for payment thereof, (vi)
all Capitalized Lease Obligations of such Person, (vii) all obligations and
liabilities of such Person created or arising under any conditional sales or
other title retention agreement with respect to property used and/or acquired by
such Person, even though the rights and remedies of the lessor, seller and/or
lender thereunder are limited to repossession or sale of such property, or
agreements to pay a specified purchase price for goods or services whether or
not delivered or accepted, i.e., take-or-pay and similar obligations, (viii)
solely for purposes of Section 6.1(e), contingent obligations of such Person
under any Hedging Agreements, as calculated in accordance with accepted
practice, (ix) all obligations referred to in clauses (i) through (viii) of this
definition of another Person (a) guaranteed directly or indirectly in any manner
by such Person or (b) secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in any property owned by such Person; provided, however, that the term
Indebtedness shall not include (y) trade payables (including trade letters of
credit issued for the account of such Person in the ordinary course of its
business, but excluding drafts drawn thereunder or any reimbursement obligations
in respect thereof) or accrued expenses, in each case arising in the ordinary
course of business and not more than 60 days delinquent or (z) gift cards and
other customer liabilities arising in the ordinary course of business of such
Person.  The Indebtedness of any Person shall include the Indebtedness of any
partnership of or joint venture in which such Person is a general partner or
joint venturer.
 
"Initial Guarantors" shall mean each Domestic Subsidiary of Borrower listed on
Schedule 1(a) hereto.
 
"Interest Payment Date" shall mean the last day of each calendar month.
 
"Interest Period" shall mean, with respect to a Revolving Loan, (a) the period
commencing on and including the Borrowing Date of such Revolving Loan and ending
on but excluding the first Interest Payment Date occurring after the  Borrowing
Date of such Revolving Loan, and (b) thereafter, each period commencing on and
including the immediately preceding Interest Payment Date and ending on but
excluding the next succeeding Interest Payment Date; provided, however, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall end on the immediately preceding Business Day, and (ii) no
Interest Period shall end after the Maturity Date and any Interest Period which
would, but for this clause, end after the Maturity Date shall instead end on the
Maturity Date.
 
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"J. Jill" shall mean the assets and business of the Borrower and its
Subsidiaries compromising the J. Jill brand.
 
"Lender" is defined in the preamble of this Credit Agreement.
 
"LIBOR" shall mean, with respect to any Interest Period pertaining to any
portion of any Revolving Loan:
 
(a)         the rate of interest per annum determined by the Lender on the basis
of the rate for deposits in Dollars for a period comparable to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen or any successor thereto at approximately 11:00 a.m.
(London time) on the date two Business Days prior to the first day of such
Interest Period, or
 
(b)         if the rate in the preceding subsection (a) is not available, the
rate of interest per annum determined by the Lender to be the rate in the London
interbank market at approximately 11:00 a.m. (London time) on the date two
Business Days prior to the first day of such Interest Period for the offering by
Mizuho in the interbank market of deposits in Dollars for a period equal to such
Interest Period in amounts comparable to the principal amount of such Revolving
Loan to which such Interest Period applies, at the time as of which the Lender
makes such determination.
 
"Lien" shall mean any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature whatsoever.
 
"Loan Account" is defined in Section 2.9 hereof.
 
"Loan Documents" shall mean each of this Credit Agreement, each Note, the
Guaranty, the Collateral Documents and each other document, certificate,
instrument and agreement executed and delivered pursuant to or in connection
herewith or therewith, as the same may be amended, supplemented or otherwise
modified from time to time.
 
"Material Adverse Effect" shall mean a material adverse effect on any of (a) the
operations, business, assets, properties, or condition (financial or otherwise)
of the Borrower and its Subsidiaries, taken as a whole; provided, that, a
general delay in the payment of accounts or expenses payable by the Borrower or
its Subsidiaries shall be excluded, (b) the ability of the Borrower or any of
its Subsidiaries to perform any of its obligations hereunder, under any Note or
under any other Loan Document to which it is a party and (c) the legality,
validity or enforceability of this Credit Agreement, any Note or any other Loan
Document.
 
"Maturity Date" shall mean (i) the earlier of (A) the consummation of a
Qualified Transaction and (B) April 17, 2010, or, if such day is not a Business
Day, the next succeeding Business Day or (ii) such earlier date on which the
Revolving Loans become due and payable (whether at stated maturity, by mandatory
prepayment, by acceleration or otherwise) in accordance with the terms hereof.
 
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"Mortgaged Properties" means the owned real properties and all improvements
thereon of the Borrower or any Guarantor listed on Schedule 1(b) hereto.
 
"Mortgages" means any mortgage, deed of trust or other agreement which conveys
or evidences a Lien in favor of the Lender, on the Mortgaged Properties.
 
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
 
"Non-Cash Pay Preferred Stock" shall mean preferred Capital Stock of the
Borrower that (a) is not required to be prepaid, redeemed, repurchased or
defeased, in whole or in part, whether on one or more fixed dates, upon the
occurrence of one or more events or at the option of any holder thereof, and
which do not require any payment of cash dividends or distributions, in each
case prior to the date that is six months after the Maturity Date and (b) is not
exchangeable or convertible into Indebtedness of the Borrower or any Subsidiary
or any preferred stock or other Capital Stock (other than common equity of the
Borrower or other Non-Cash Pay Preferred Stock).
 
"Note" shall mean a promissory note of the Borrower evidencing a Revolving Loan,
payable to the order of the Lender, substantially in the form of Exhibit A
hereto, as the same may be amended, supplemented and otherwise modified from
time to time, or any substitute therefor.
 
"Notice of Borrowing" is defined in Section 2.2 hereof.
 
"Other Taxes" is defined in Section 7.2(b).
 
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
 
"Permitted Indebtedness" shall mean:
 
(a)         any Indebtedness owing to the Lender under this Credit Agreement and
the other Loan Documents;
 
(b)     any other Indebtedness listed on Schedule 4.17 (including Indebtedness
under lines of credit and other credit facilities described on such Schedule, as
in effect on the date hereof), and the extension of maturity, refinancing or
modification of the terms thereof; provided, however, that after giving effect
to such extension, refinancing or modification: (A) the amount of such
Indebtedness is not greater than the amount of Indebtedness outstanding
immediately prior to such extension, refinancing or modification and (B) such
Indebtedness does not have the benefit of covenants more restrictive in any
material respect than those set forth in this Credit Agreement;
 
(c)         Indebtedness evidenced by Capitalized Lease Obligations entered into
in order to finance Capital Expenditures made by the Borrower in accordance with
the provisions of this Credit Agreement, which Indebtedness, when aggregated
with the principal amount of all Indebtedness incurred under this clause (c) and
clause (d) of this definition, does not exceed $100,000,000 at any time
outstanding;
 
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(d)         Indebtedness permitted by clause (d) or (e) of the definition of
"Permitted Liens";
 
(e)         Indebtedness permitted under Section 4.19;
 
(f)         Subordinated Debt; and
 
(g)         additional Indebtedness incurred by the Borrower or any Guarantor
approved by the Lender, including with respect to a Qualified Transaction.
 
"Permitted Investments" shall mean (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case, maturing within six months from the date of acquisition thereof;
(b) commercial paper, maturing not more than 270 days after the date of issue
rated P-1 by Moody's or A-1 by Standard & Poor's; (c) certificates of deposit
maturing not more than 270 days after the date of issue, issued by commercial
banking institutions and money market or demand deposit accounts maintained at
commercial banking institutions, each of which is a member of the Federal
Reserve System and has a combined capital and surplus and undivided profits of
not less than $500,000,000; (d) repurchase agreements having maturities of not
more than 90 days from the date of acquisition which are entered into with major
money center banks included in the commercial banking institutions described in
clause (c) above and which are secured by readily marketable direct obligations
of the United States Government or any agency thereof; (e) money market accounts
maintained with mutual funds having assets in excess of $2,500,000,000; and
(f) tax exempt securities rated A or better by Moody's or A+ or better by
Standard & Poor's maturing within six months from the date of acquisition
thereof.
 
"Permitted Liens" shall mean:
 
(a)         Liens for taxes, assessments and governmental charges the payment of
which is not required under Section 4.7;
 
(b)         Liens imposed by law, such as carriers', warehousemen's, mechanics',
materialmen's and other similar Liens arising in the ordinary course of business
and securing obligations (other than Indebtedness for borrowed money) that are
not overdue by more than 30 days or are being contested in good faith and by
appropriate proceedings promptly initiated and diligently conducted, and a
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
 
(c)         Liens described on Schedule 4.16, but not the extension of coverage
thereof to other property or the extension of maturity, refinancing or other
modification of the terms thereof or the increase of the Indebtedness secured
thereby;
 
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(d)         (i)            purchase money Liens on equipment acquired or held by
the Borrower or any of its Subsidiaries in the ordinary course of its business
to secure the purchase price of such equipment or Indebtedness incurred solely
for the purpose of financing the acquisition of such equipment or (ii) Liens
existing on such equipment at the time of its acquisition; provided, however,
that (A) no such Lien shall extend to or cover any other property of the
Borrower or any of its Subsidiaries, (B) the principal amount of the
Indebtedness secured by any such Lien shall not exceed the lesser of 90% of the
Fair Market Value or the cost of the property so held or acquired and (C) the
aggregate principal amount of Indebtedness secured by any or all such Liens,
when aggregated with the principal amount of all Indebtedness incurred under
this clause (d) and clauses (c) and (d) of the definition of Permitted
Indebtedness, shall not exceed at any one time outstanding $100,000,000;
 
(e)         deposits and pledges of cash securing (i) obligations incurred in
respect of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations, (iii) obligations on surety or appeal bonds, but only to the extent
such deposits or pledges are incurred or otherwise arise in the ordinary course
of business and secure obligations not past due or (iv) letters of credit or
other extensions of credit extended for any of the foregoing purposes;
 
(f)         easements, zoning restrictions and similar encumbrances on real
property and minor irregularities in the title thereto that do not (i) secure
obligations for the payment of money or (ii) materially impair the value of such
property or its use by the Borrower or any of its Subsidiaries in the normal
conduct of such Person's business;
 
(g)         Liens securing Indebtedness permitted by subsection (b) of the
definition of Permitted Indebtedness; provided, that, the Borrower provides, and
causes its Subsidiaries to provide, concurrently therewith, that the obligations
under this Credit Agreement, the Note and each other Loan Document are equally
and ratably so secured.
 
(h)         Liens securing Indebtedness permitted by subsection (c) of the
definition of Permitted Indebtedness.
 
(i)          Liens in favor of the Lender created by the Collateral Documents.
 
(j)          Liens securing Indebtedness incurred pursuant to a Qualified
Transaction.
 
"Person" shall mean a natural person, corporation, partnership, limited
liability company or partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, Governmental Authority or other
entity.
 
"Plan" shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
 
"Qualified Transaction" shall mean one or more securitization programs or
structured loans by the Borrower or any of its Subsidiaries, in aggregate
equivalent principal amount to the Revolving Loan Commitment, approved in
advance by, and in form and substance satisfactory to, the Lender.
 
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"Restricted Payment" shall mean any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
Capital Stock of the Borrower or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of Capital Stock of
the Borrower or any option, warrant or other right to acquire any such shares of
Capital Stock of the Borrower.
 
"Revolving Commitment Period" shall mean the period from and including the
Closing Date to the Maturity Date.
 
"Revolving Loan" is defined in Section 2.1 hereof.
 
"Revolving Loan Availability" shall mean, at any time of determination, an
amount equal to the Revolving Loan Commitment in effect as such time, less the
aggregate principal amount of Revolving Loans outstanding at such time.
 
"Revolving Loan Commitment" is defined in Section 2.1 hereof.
 
"Secured Party" has the meaning assigned to such term in the Security Agreement.
 
"Security Agreement" means the security agreement to be entered into among the
Borrower, the Guarantors and the Lender, which conveys or evidences a Lien in
favor of the Lender, on the Collateral other than the Mortgaged Properties.
 
"Solvent" shall mean, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is not less than the
total amount of the liabilities of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its existing debts as
they become absolute and matured, (c) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay such debts and liabilities as
they mature, and (e) such Person is not engaged in a business or a transaction,
and is not about to engage in a business or a transaction, for which such
Person's property would constitute unreasonably small capital.
 
"Subordinated Debt" shall mean any Indebtedness of the Borrower that (i) does
not mature prior to August 31, 2012, (ii) is not required to be repaid, prepaid,
redeemed, amortized, repurchased or defeased, in whole or in part, prior to
August 31, 2012 (other than (x) pursuant to an acceleration of the obligations
thereunder by the lenders party thereto following an event of default and (y)
pursuant to customary asset sale or change in control provisions requiring
redemption or repurchase thereof, in each case only if and to the extent then
permitted by this Credit Agreement and the subordination provisions of such
Indebtedness), (iii) is not secured by any assets of the Borrower or any
Subsidiary, (iv) is not exchangeable or convertible into Indebtedness of the
Borrower or any Subsidiary (except other Subordinated Debt) or any preferred
stock other than Non-Cash Pay Preferred Stock, (v) does not have the benefit of
covenants more restrictive in any material respect than those set forth in this
Credit Agreement and (vi) is subordinated to the obligations of the Borrower
under this Credit Agreement pursuant to a written agreement reasonably
satisfactory in form and substance to and approved in writing by the Lender.
 
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"Subsidiary" shall mean, as to any Person, any corporation or other entity of
which Capital Stock or other ownership interests having (in the absence of
contingencies) ordinary voting power to elect at least a majority of the board
of directors (or persons performing similar functions) of such corporation or
other entity which is, at the time of determination, owned directly, or
indirectly through one or more intermediaries, by such Person.
 
"Taxes" is defined in Section 7.2(a).
 
"Threshold Amount" shall mean $10,000,000.
 
"Tilton Property" shall mean that certain real property located in the Town of
Tilton, County of Belknap and State of New Hampshire owned by the Borrower, as
further described in that certain Mortgage, Assignment of Leases and Rents and
Security Agreement dated March 1, 1999, by mortgagor to mortgagee, and record in
the Belknap County Registry of Deeds (the "Recorder's Office") in Book 151 at
Page 0596.
 
"Uniform Commercial Code" is defined in Section 1(c).
 
"USA Patriot Act" is defined in Section 4.14.
 
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
 
(b)         Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation".  The word
"will" shall be construed to have the same meaning and effect as the word
"shall".  Unless the context requires otherwise, (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(ii) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (iii) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Credit Agreement in its entirety and not to any particular provision hereof,
(iv) all references herein to Articles, Sections, Exhibits and Schedules shall
be construed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Credit Agreement and (v) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any right or
interest in or to assets and properties of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible.
 
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(c)         Accounting and Other Terms.  Unless otherwise expressly provided
herein, each accounting term used herein shall have the meaning given it under
GAAP applied on a basis consistent with those used in preparing the financial
statements referred to in Section 3(j).  All terms used in this Credit Agreement
which are defined in Article 8 or Article 9 of the Uniform Commercial Code as in
effect from time to time in the State of New York (the "Uniform Commercial
Code") and which are not otherwise defined herein shall have the same meanings
herein as set forth therein, provided that terms used herein which are defined
in the Uniform Commercial Code as in effect in the State of New York on the date
hereof shall continue to have the same meaning notwithstanding any replacement
or amendment of such statute except as the Lender may otherwise determine.
 
(d)         Time References.  Unless otherwise indicated herein, all references
to time of day refer to Eastern Standard Time or Eastern daylight saving time,
as in effect in New York City on such day.  For purposes of the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding"; provided, however, that with respect to a computation of fees or
interest payable to the Lender, such period shall in any event consist of at
least one full day.
 
2.           The Revolving Loans
 
2.1           The Revolving Loan Commitment.  Upon satisfaction or waiver of all
terms and conditions precedent to borrowing (including absence of any Default)
set forth herein, the Lender agrees, from time to time on any Business Day
during the Revolving Commitment Period, to make revolving loans to the Borrower
(the "Revolving Loans") in amounts, which together with all outstanding
Revolving Loans, will not exceed in the aggregate the principal amount of
$150,000,000 (the "Revolving Loan Commitment").  The Revolving Loan Commitment
shall be subject to reduction and/or termination as herein provided (including,
without limitation, pursuant to Sections 2.6 and 6.2 hereof).  On the terms and
subject to the conditions hereof, the Borrower may from time to time borrow,
prepay, and re-borrow the Revolving Loans.  Any such borrowing may be
denominated in Dollars, as hereinafter provided, and shall be in the aggregate
principal amount of $10,000,000 or any whole multiple thereof in excess of
$10,000,000.  On the Maturity Date, the Revolving Loan Commitment shall
terminate and the Lender shall have no obligation whatsoever to make any further
Revolving Loans to the Borrower.
 
2.2           Making the Revolving Loans.  Each Revolving Loan shall be made
upon written notice (in form and substance satisfactory to the Lender, a "Notice
of Borrowing"), given by the Borrower to the Lender at least three Business Days
prior to the proposed Borrowing Date thereof.  Each Notice of Borrowing shall be
irrevocable and shall specify therein (A) the proposed Borrowing Date, which
shall be a Business Day and (B) the principal amount of such Revolving
Loan.  Upon fulfillment of the applicable conditions set forth in Section 5
hereof (or the waiver thereof by the Lender as herein prescribed), the Lender
shall make such Revolving Loan to be made by it hereunder by wire transfer of
immediately available funds by 2:00 p.m., New York City time on the Borrowing
Date, to the Borrower's Account.
 
2.3           Interest.
 
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(a)         Each Revolving Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the sum of (a)
LIBOR and (b) the Applicable Spread.
 
(b)         Subject to Section 2.5, interest shall be payable on each Revolving
Loan (i) in arrears on each Interest Payment Date and (ii) on the date on which
the principal amount of such Revolving Loan becomes due and payable hereunder
(whether at stated maturity, by mandatory prepayment, optional prepayment,
acceleration or otherwise).
 
(c)         Notwithstanding anything herein to the contrary, all accrued
interest shall be payable on each date principal is payable hereunder pursuant
to Sections 2.4 and 2.8 or such earlier date as herein required.
 
(d)         Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
 
(e)         In the event, and on each occasion, that on the date two Business
Days prior to the commencement of any Interest Period during which any Revolving
Loan accrues interest at a rate based upon LIBOR, the Lender shall have in good
faith determined that Dollar deposits are generally not available in the London
interbank market, or that reasonable means do not exist for ascertaining LIBOR,
or that the rates at which such Dollar deposits are being offered will not
adequately and fairly reflect the cost of making or maintaining such Revolving
Loan at LIBOR during such Interest Period, the Lender shall, as soon as
practicable thereafter, give written or telecopy notice of such determination to
the Borrower.  In the event of any such determination, interest shall accrue
with respect to such Revolving Loan during such Interest Period at a rate equal
to the Federal Funds Rate plus the Applicable Spread.  Each determination by the
Lender hereunder shall be conclusive absent manifest error.
 
2.4           Principal Repayment; Note.
 
(a)         The Borrower shall repay the outstanding principal amount of all
outstanding Revolving Loans, together with all other outstanding amounts due and
owing hereunder or under the other Loan Documents, on the Maturity Date.
 
(b)         The Lender may request that the Revolving Loans be evidenced by a
Note.  In such event, the Borrower shall execute and deliver to the Lender a
Note payable to the order of the Lender, in a principal amount equal to the
Revolving Loans.  Thereafter, the Revolving Loans evidenced by such Note and
interest thereon shall at all times (including after assignment pursuant to
Section 8.3) be represented by one or more Notes in such form payable to the
order of the payee named therein.  The Lender is hereby authorized by the
Borrower to endorse on the schedule attached to a Note (or on a continuation of
such schedule attached to such Note and made a part thereof) an appropriate
notation evidencing the date and amount of the Revolving Loans made by the
Lender, the date and amount of each principal payment and prepayment with
respect thereto and the interest rate applicable thereto; provided, however,
that the failure of the Lender to make any such notation (or any error in such
notation) shall not affect any obligations of the Borrower hereunder or under
any Note.  The Notes and the books and records of the Lender shall be conclusive
evidence of the information set forth therein absent manifest error.
 
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2.5           Default Interest.  If at any time any Event of Default occurs and
is continuing, the principal, interest, fees and all other amount payable
hereunder or under any other Loan Document shall bear interest, from the date
such Event of Default occurred until such Event of Default is fully cured or
waived, payable on demand, at a rate equal at all times to 15.00% per annum (the
"Default Rate").
 
2.6           Termination or Reduction of Revolving Loan Commitment.
 
(a)         Optional Termination or Reduction.  The Borrower shall have the
right at any time or from time to time, without premium or penalty, upon not
less than three Business Days' prior irrevocable written notice to the Lender,
to terminate or reduce the Revolving Loan Commitment.  Any such reduction of the
Revolving Loan Commitment shall be in an amount that is an integral multiple of
$10,000,000 and not less than $10,000,000.  Any termination or reduction of the
Revolving Loan Commitment pursuant to this Section 2.6(a) shall be permanent.
 
(b)         Mandatory Reduction and Termination.  Upon the consummation of a
Qualified Transaction, the Revolving Loan Commitment shall be reduced to zero,
and any Revolving Loans outstanding in excess of the then Revolving Loan
Availability shall be prepaid in accordance with Section 2.7(b).  Any such
reduction and termination of the Revolving Loan Commitment pursuant to this
Section 2.6(b) shall be permanent.
 
2.7           Prepayments.
 
(a)         Optional Prepayments.  The Borrower may, upon at least three (3)
Business Days' prior written notice to the Lender, prepay all or any portion of
the aggregate principal amount of the outstanding Revolving Loans.  Each such
prepayment shall be in an amount not less than $10,000,000 or an integral
multiple thereof and any portion of the Revolving Loans may be designated by the
Borrower to be prepaid if and only to the extent that prepayment is made on an
Interest Payment Date or subject to the payment of amounts described in Section
7.1(d) and (e).  Each prepayment made pursuant to this Section shall be
accompanied by the payment of (i) accrued interest to date of such prepayment on
the amount prepaid and (ii) any and all payments required pursuant to Section
7.1 in respect of such prepayment.
 
(b)         Mandatory Prepayments.   If at any time the outstanding amount of
the Revolving Loans causes the Revolving Loan Availability to be less than zero,
the Borrower will immediately prepay the Revolving Loans in an amount necessary
to eliminate such deficiency.
 
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2.8           Method of Payment.
 
(a)         Payments Generally.  The Borrower shall make each payment required
to be made by it hereunder or under any other Loan Document (whether of
principal, interest, fees or reimbursement of amounts payable under Section 7.1,
or otherwise) by the time expressly required hereunder or under such other Loan
Document for such payment (or, if no such time is expressly required, by 12:00
p.m., New York City time), on the date when due, in immediately available funds,
without setoff or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Lender, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest
thereon.  Any prepayments made pursuant to Section 2.7 made on a date other than
an Interest Payment Date shall subject to the amounts payable in Section 7.1(d)
and (e).  The Borrower will make each payment under this Credit Agreement to the
Lender's Account in Dollars and in immediately available funds, except that
payments pursuant to Section 7.1 shall be made directly to the Persons entitled
thereto and payments pursuant to other Loan Documents shall be made to the
Persons specified therein.  All payments under each Loan Document shall be made
in Dollars.
 
(b)         Any payments shall be applied first to default charges, indemnities,
expenses and other non-principal and interest amounts owed under any of the Loan
Documents, if any, then to interest due and payable on the Revolving Loans, and
thereafter to the principal amount of the Revolving Loans due and payable.
 
(c)         All computations of interest and fees shall be made by the Lender on
the basis of a year of 365/6 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest is payable; provided, however, that if a Revolving Loan is repaid on
the same day on which it is made, one day's interest shall be paid on such
Revolving Loan.
 
(d)         Whenever any payment to be made hereunder or under any instrument
delivered hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest; provided, however, that if such extension would cause such
payment to be made in a new calendar month or beyond the Maturity Date, such
payment shall be made on the immediately preceding Business Day.
 
2.9           Loan Account.  The Lender will maintain on its books a loan
account in the Borrower's name (the "Loan Account"), showing the Revolving
Loans, prepayments, the computation and payment of interest, and any other
amounts due and sums paid hereunder and under the other Loan Documents.  The
entries made by the Lender in the Loan Account shall be conclusive and binding
on the Borrower as to the amount at any time due from the Borrower, absent
manifest error.
 
2.10         Use of Proceeds.  The Borrower shall apply the proceeds of the
Revolving Loans solely to (a)­­­­­­­­­­­­­­­­­­­­­­­ fund working capital and
other general corporate purposes of the Borrower and (b) pay fees and expenses
in connection with the transactions contemplated hereby.
 
2.11         Upfront Fee.  On or prior to the initial Borrowing Date, the
Borrower shall pay to the Lender a non refundable upfront fee equal to 1.00% of
the Revolving Loan Commitment, which shall be deemed fully earned when paid.
 
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3.           Representations and Warranties.  The Borrower hereby represents and
warrants to the Lender as follows:
 
3.1           Organization.  The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.  Each Subsidiary of the Borrower is duly organized and existing and in
good standing under the laws of the jurisdiction of its organization.  Schedule
3.1 contains a true and complete list of the Subsidiaries of the Borrower as of
the date hereof.
 
3.2           Power and Authority.  Each of the Borrower and its Subsidiaries
has all requisite corporate power and authority to carry on its present
business, to own its property and assets and to execute, deliver and perform
this Credit Agreement, each Note, if any, and each other Loan Document to which
it is a party.  Each of the Borrower and its Subsidiaries is duly qualified or
licensed as a foreign corporation authorized to conduct its activities and is in
good standing in all jurisdictions in which the character of the properties
owned or leased by it or the nature of the activities conducted makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not be reasonably likely to result in a Material
Adverse Effect.
 
3.3           Authorization of Borrowing.  All appropriate and necessary
corporate, shareholder and other actions and approvals have been taken or
obtained by the Borrower and each of its Subsidiaries to authorize the execution
and delivery of this Credit Agreement, each Note, if any, and the other Loan
Documents to which it is a party and to authorize the performance and observance
of the terms of each.
 
3.4           Agreement Binding; No Conflicts.  This Credit Agreement
constitutes, and each Note, if any, and the other Loan Documents when executed
and delivered pursuant hereto will constitute, the legal, valid and binding
obligations of the Borrower or its Subsidiaries, as the case may be, enforceable
against the Borrower or such Subsidiaries in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally, and by general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or equity).  The
execution, delivery and performance of this Credit Agreement, the Notes, if any,
and the other Loan Documents which the Borrower and its Subsidiaries are a party
and the use of the proceeds of the Revolving Loans do not and will not (i)
violate or conflict with (A) any provisions of law or any order, rule, directive
or regulation of any court or other Governmental Authority, (B) the charter,
by-laws or other organizational documents of the Borrower or such Subsidiary or
(C) except as would not be reasonably likely to result in a Material Adverse
Effect, any agreement, document or instrument to which the Borrower or any such
Subsidiary is a party or by which its respective assets or properties are bound,
(ii) except as would not be reasonably likely to result in a Material Adverse
Effect, constitute a default or an event or circumstance that with the giving of
notice or the passing of time, or both, would constitute a default under any
such agreement, document or instrument, (iii) except as would not be reasonably
likely to result in a Material Adverse Effect, result in the creation or
imposition of any Lien, charge or encumbrance of any nature whatsoever upon any
assets or properties of the Borrower or any such Subsidiary, or (iv) except as
would not be reasonably likely to result in a Material Adverse Effect, result in
any suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to its respective operations or
any of its properties.
 
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3.5           Compliance with Law.  There does not exist any conflict with, or
violation, or breach of, any law or any regulation, order, writ, injunction or
decree of any court or governmental instrumentality, which conflict, violation
or breach could reasonably be expected to result in a Material Adverse Effect.
 
3.6           Taxes.  The Borrower and each of its Subsidiaries has filed all
Tax returns required to be filed and has paid all taxes, assessments, fees and
other governmental charges due upon it with respect to the conduct of its
operations or otherwise the failure of which to file or to pay could reasonably
be expected to result in a Material Adverse Effect, except to the extent that
the Borrower or any Subsidiary is contesting in good faith its obligation to pay
such taxes or charges and the Borrower or any such Subsidiary has adequately
accrued for such payments in accordance with and to the extent required by
GAAP.  There are no tax audits presently being conducted in respect of the
Borrower or any of its Subsidiaries that could reasonably be expected to result
in a Material Adverse Effect.
 
3.7           Governmental Consents.  No consent, approval, authorization or
order of, notice to or declaration or filing with, any administrative body or
agency or other Governmental Authority on the part of the Borrower or any of its
Subsidiaries is required for the valid execution, delivery and performance by
the Borrower or any of its Subsidiaries of this Credit Agreement, the Notes, if
any, or the other Loan Documents, except for such as have been obtained or made
and are in full force and effect.
 
3.8           Litigation.  There are no pending or, to the knowledge of the
Borrower, threatened legal actions, suits, claims or administrative, arbitration
or other proceedings against the Borrower or any of its Subsidiaries that if
adversely determined could reasonably be expected to result in a Material
Adverse Effect.
 
3.9           Other Obligations.  None of the Borrower or any of its
Subsidiaries is in default in any material respect in the performance,
observance or fulfillment of any obligation, covenant or condition in any
agreement, document or instrument to which it is a party or by which it is bound
which is reasonably likely to result in a Material Adverse Effect.
 
3.10         Financial Information.
 
(a)         The Borrower has heretofore furnished to the Lender its consolidated
balance sheets, its consolidated statements of earnings, its consolidated
statements of cash flows and its consolidated statements of stockholder's equity
as of and for the fiscal year ended February 2, 2008, reported on by Deloitte &
Touche LLP, independent registered public accounting firm, and (B) as of and for
the fiscal quarter and the portion of the fiscal year ended November 2,
2008.  Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (B) above.
 
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(b)         All other financial information provided to the Lender by or on
behalf of the Borrower and its Affiliates has been prepared in accordance with
GAAP and fairly presents, in accordance with GAAP consistently applied, the
financial position and results of operations for the periods therein indicated,
and, except as has been previously disclosed to Lender prior to or on the date
hereof, there has been no material adverse change in the financial condition,
operations, business or prospects since February 2, 2008.
 
3.11         Accuracy of Information.  All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Lender for purposes of or in connection with this Credit
Agreement, any other Loan Document or any transaction contemplated hereby or
thereby (true and complete copies of which were furnished to the Lender in
connection with its execution and delivery hereof) is, and all other factual
information hereafter furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Lender will be, true and accurate in every material respect
on the date as of which such information is dated or certified and, in respect
of such information heretofore or contemporaneously furnished to the Lender, as
of the date of the execution and delivery of this Credit Agreement by the Lender
and such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading.  With respect to any such factual information pertaining to Persons
other than the Borrower, its Subsidiaries or its Affiliates, the foregoing
representation is made to the best knowledge of the Borrower.  All projections
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
of its Subsidiaries to the Lender for purposes of or in connection with this
Credit Agreement or any transaction contemplated hereby have been prepared by
the Borrower or such Subsidiaries based upon estimates and assumptions stated
therein, all of which the Borrower believes to be reasonable and fair in light
of current conditions and current facts known to the Borrower and, as of the
Closing Date, reflect the Borrower's good faith and reasonable estimates of the
future financial performance of the Borrower and its Subsidiaries and of the
other information projected therein for the periods set forth therein; provided,
however, that any and all financial projections are subject to uncertainties and
contingencies, many of which are beyond the Borrower's control and no assurance
is or can be given that any financial projections or other results contemplated
therein will be realized.
 
3.12         Seniority.  The obligations of the Borrower and the Guarantors
under this Credit Agreement and the other Loan Documents to which it is a party
rank, and at all times shall rank, at least pari passu in priority of payment
and in all other respects with all other unsecured Indebtedness of the Borrower
and each of the Guarantors.
 
3.13         Investment Company Act.  Neither the Borrower nor any of its
Subsidiaries is an "investment company" or an "affiliated person" or "promoter"
of, or "principal underwriter" of or for, an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended.
 
3.14         Permits, Etc.  Each of the Borrower and its Subsidiaries has all
permits, consents, licenses, authorizations, approvals, entitlements and
accreditations required for it lawfully to own, lease, manage or operate, or to
acquire each business currently owned, leased, managed or operated, or to be
acquired, by it, except for failures which are not reasonably likely to result
in an Material Adverse Effect.  No condition exists or event has occurred which,
in itself or with the giving of notice or lapse of time or both, would result in
the suspension, revocation, impairment, forfeiture or non-renewal of any such
permit, consent, license, authorization, approval, entitlement or accreditation
and which is reasonably likely to result in a Material Adverse Effect, a Default
or an Event of Default and there is no written claim that any such permit,
consent, license, authorization, approval, entitlement or accreditation is not
in full force and effect.
 
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3.15         Environmental Matters.  Except to the extent not reasonably likely
to result in a Material Adverse Effect, (i) none of the operations of the
Borrower or any of its Subsidiaries violate any Environmental Law, (ii) no
Environmental Actions have been asserted against the Borrower or any of its
Subsidiaries in writing nor does the Borrower have any knowledge of any
threatened or pending Environmental Action against the Borrower, any of its
Subsidiaries or any predecessor in interest, (iii) neither the Borrower nor any
of its Subsidiaries has incurred any Environmental Liabilities and Costs and
(iv) to the Borrower's knowledge, neither the Borrower nor any of its
Subsidiaries has any contingent liability in connection with any release of any
Hazardous Material into the environment.
 
3.16         Solvency.  Each of the Borrower and its Subsidiaries will be
Solvent after giving effect to the transactions contemplated by this Credit
Agreement and the other Loan Documents.
 
3.17         ERISA; Margin Regulations.  (a)  No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.  The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the Fair Market Value of the assets of such Plan by an amount that would
reasonably be expected to have a Material Adverse Effect, and the present value
of all accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the Fair Market Value of the assets of all such
underfunded Plans by an amount that would reasonably be expected to have a
Material Adverse Effect.
 
(b)         None of the Borrower or any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.  No part of the
proceeds of any Revolving Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, in any manner or for any
purpose that would result in a violation by the Lender, the Borrower or such
Subsidiary of the regulations of the Board, including Regulation U or X.
 
3.18         Properties; Intellectual Property; Eligible Credit Card
Receivables.  (a)  The Borrower and each Subsidiary has good title to, or valid
leasehold interests in, all its material real and personal property free and
clear of all Liens, except for Permitted Liens and defects in title, in each
case that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.  The
Borrower or any Subsidiary, as applicable, owns good, marketable and
indefeasible title to the Mortgaged Properties in fee.
 
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(b)         The Borrower and each Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except, in
each case, for any matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
 
(c)         The Mortgages, when properly recorded in the appropriate records,
together with any Uniform Commercial Code financing statements required to be
filed in connection therewith, will create valid, perfected first priority liens
on the Mortgaged Properties, as the case may be, subject only to Permitted
Liens. The Permitted Liens do not and will not materially adversely affect or
interfere with the value, or current use or operation, of the Mortgaged
Properties, or the security intended to be provided by the Mortgaged Properties
or Borrower's or any Subsidiary's ability to repay the Obligations in accordance
with the terms of the Loan Documents.
 
(d)         As of the end of the most recently completed month, the Borrower and
the Guarantors collectively own no less than $135 million in Credit Card
Receivables of which at least 90% are Eligible Credit Card Receivables (as such
terms are defined in the Security Agreement), in each case, free and clear of
all Liens, except Permitted Liens.
 
3.19         Security Interest in Collateral.  The provisions of this Agreement
and the other Loan Documents create legal and valid Liens on all the Collateral
of the type in which a security interest can be created under Article 9 of the
Uniform Commercial Code in favor of the Lender; and upon the proper filing of
UCC financing statements required pursuant to Section 5.1(a)(v)) and the
Mortgages with respect to the Mortgaged Properties, such Liens will constitute
perfected and continuing Liens on the Collateral (to the extent a security
interest in such Collateral and any proceeds of any item of Collateral can be
perfected through the filing of UCC financing statements), securing the
Obligations, enforceable against the Borrower and each Subsidiary, as
applicable, and all third parties, and having priority over all other Liens on
the Collateral.
 
4.           Covenants.  The Borrower hereby covenants to the Lender that,
during the term of this Credit Agreement, or so long as (a) any amounts owed
hereunder or under any other Loan Document are outstanding or (b) this Credit
Agreement and the other Loan Documents have not been terminated, the Borrower
shall, and shall cause each of its Subsidiaries to, as applicable (unless the
prior written consent of the Lender has been obtained) perform the following
obligations:
 
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4.1           Financial Statements; Proxy Statements; Additional Information;
Notices.
 
(a)  Financial Statements.  The Borrower shall deliver to the Lender:
 
(i)         within 120 days after the end of each fiscal year of the Borrower
its consolidated balance sheets as of the end of such fiscal year and the
related consolidated statements of earnings, consolidated statements of cash
flows and consolidated statements of stockholder's equity of the Borrower and
its Subsidiaries, which shall be in reasonable detail and shall be audited by
independent certified public accountants of nationally recognized standing
selected by the Borrower and reasonably satisfactory to the Lender, and as to
which such accountants shall have expressed a written opinion (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) that such statements fairly present the
financial position of the Borrower and its Subsidiaries for the period then
ended and have been prepared in accordance with GAAP, and that the examination
of such accounts was made in accordance with the Standards of Public Company
Accounting Oversight Board (United States) and accordingly included such tests
of the accounting records and such other auditing procedures as were considered
necessary under the circumstances;
 
(ii)         as soon as available and in any event within 60 days after the end
of each fiscal quarter of the Borrower commencing with the first fiscal quarter
of the Borrower ending after the Closing Date, consolidated balance sheets,
consolidated statements of earnings, consolidated statements of cash flows and
consolidated statements of stockholder's equity of the Borrower and its
Subsidiaries as at the end of such quarter, and for the period commencing at the
end of the immediately preceding fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding date or period of the immediately preceding fiscal year, all in
reasonable detail and certified by an authorized officer of the Borrower as
fairly presenting, in all material respects, the financial position of the
Borrower and its Subsidiaries as of the end of such quarter and the results of
operations and cash flows of the Borrower and its Subsidiaries for such quarter,
in accordance with GAAP applied in a manner consistent with that of the most
recent audited financial statements of the Borrower and its Subsidiaries
furnished to the Lender, subject to normal year-end adjustments;
 
(iii)         simultaneously with the delivery of the financial statements of
the Borrower and its Subsidiaries required by clauses (i) and (ii) of this
Section 4.1(a), a certificate of an authorized officer of the Borrower stating
that such authorized officer has reviewed the provisions of this Credit
Agreement and the other Loan Documents and has made or caused to be made under
his or her supervision a review of the condition and operations of the Borrower
and its Subsidiaries during the period covered by such financial statements with
a view to determining whether the Borrower and its Subsidiaries were in
compliance with all of the provisions of this Credit Agreement and such Loan
Documents at the times such compliance is required hereby and thereby, and that
such review has not disclosed, and such authorized officer has no knowledge of,
the existence during such period of an Event of Default or Default or, if an
Event of Default or Default existed, describing the nature and period of
existence thereof and the action which the Borrower and its Subsidiaries propose
to take or have taken with respect thereto; and
 
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(iv)        Within 30 days after the end of each fiscal month during the
Revolving Commitment Period, receipt by the Lender of a financial report of the
Borrower and its consolidated subsidiaries for such month, in form and substance
reasonably satisfactory to the Lender, including  a reasonably detailed
calculation of the Borrower's and each Subsidiaries Credit Card Receivables.
 
(b)         Proxy Statements, etc.  Promptly after the sending or filing
thereof, the Borrower will provide to the Lender copies of all proxy statements,
financial statements, and reports which the Borrower sends to its stockholders,
and copies of all regular, periodic, and special reports, and all registration
statements which the Borrower files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or with any
national securities exchange.
 
(c)         Additional Information.  The Borrower shall make available and
provide to the Lender such further information and documents concerning its
business and affairs including, without limitation, (i) the budgets and business
plans of the Borrower and its Subsidiaries and (ii) using commercially
reasonable efforts to provide to the Lender information with respect to
accountant's letters, in each case as the Lender may from time to time
reasonably request.
 
(d)         Notices.  The Borrower shall promptly notify the Lender of:
 
(i)           any investigation by or proceeding in or before any court,
arbitrator, administrative body or agency or other Governmental Authority (other
than routine inquiries by a governmental agency), including, without limitation,
any Environmental Action, which investigation, proceeding or action is
reasonably likely to result in a Material Adverse Effect, Default or Event of
Default and, upon request, provide the Lender with all material documents and
information furnished by the Borrower or any Subsidiary in connection therewith;
 
(ii)         the occurrence of any Default or Event of Default or any other
development which is reasonably likely to result in a Material Adverse Effect,
which notice shall be provided to the Lender as soon as possible, but in no
event later than five (5) days after the Borrower or any Subsidiary becomes
aware of the same and shall include a statement as to what action the Borrower
or such Subsidiary has taken and/or proposes to take with respect thereto;
 
(iii)         any change in the Borrower's key management personnel, including
without limitation, its President, Controller or Treasurer; and
 
(iv)         the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect.
 
4.2           Compliance with Laws, Etc.  The Borrower shall and shall cause
each of its Subsidiaries to comply in all material respects with the
requirements of all applicable laws (including, without limitation, any
Environmental Law) and maintain and preserve its corporate existence and, except
to the extent that the failure to do so could not reasonably be expected to have
a Material Adverse Effect, rights and privileges.
 
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4.3           Books and Records.  The Borrower shall and shall cause each of its
Subsidiaries to keep and maintain adequate records and books of account, with
complete entries made in accordance with GAAP, consistently applied.
 
4.4           Inspection Rights.  The Borrower shall and shall cause each of its
Subsidiaries to permit the Lender or any of its agents and representatives at
any time and from time to time during reasonable business hours and, provided no
Default or Event of Default has occurred and is continuing, on reasonable prior
notice to the Borrower, to examine and make copies of and abstracts from its
records and books of account, to visit and inspect its properties, to conduct
audits and make examinations and discuss its affairs, finances and accounts with
any of its directors, officers, employees, accountants or other representatives.
 
4.5           Maintenance of Property; Compliance with Legal Requirements;
Eligible Credit Card Receivables.
 
(a)         Borrower will keep the Mortgaged Properties in good working order
and repair, reasonable wear and tear excepted.  Borrower shall from time to time
make, or cause to be made, all reasonably necessary and desirable repairs,
renewals, replacements, betterments and improvements thereto.  Borrower shall
comply with, and shall cause the Mortgaged Properties to be operated,
maintained, repaired and improved in compliance in all material respects with,
all requirements of applicable law and insurance.
 
(b)         Borrower shall ensure that at least $135 million of Credit Card
Receivables are owed to the Borrower and the Guarantors and that at least 90% of
such Credit Card Receivables are Eligible Credit Card Receivables (as such terms
are defined in the Security Agreement), measured as of the last day of any
calendar month, and are possessed by the Borrower and the Guarantors, in each
case, free and clear of all Liens, except Permitted Liens.
 
4.6           Insurance.  The Borrower shall maintain or cause to be maintained,
and cause each of its Subsidiaries to maintain or cause to be maintained (in
each case in the Borrower's name or in the name of such Subsidiary, as the case
may be), with responsible, financially sound and reputable insurance companies
insurance with respect to its properties and business against such casualties
and contingencies and of such types and in such amounts as is customary in the
case of similar businesses.
 
4.7           Taxes.  The Borrower shall and shall cause each of its
Subsidiaries to timely pay and discharge all material taxes, assessments, levies
and governmental charges upon it or against any of its properties, assets or
income except to the extent that the Borrower or any Subsidiary, as applicable,
shall be contesting in good faith its obligation to pay such taxes or charges
and the Borrower or such Subsidiary, as applicable, has adequately accrued for
such payments in accordance with and to the extent required by GAAP.
 
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4.8           Further Assurances.
 
(a)         The Borrower shall do, and shall cause each of its Subsidiaries to,
execute, acknowledge and deliver at the sole cost and expense of the Borrower or
its Subsidiaries, all documents, financing statements, instruments and
agreements and take such further acts (including the filing and recording of
financing statements and other documents) and deeds as the Lender may reasonably
require from time to time to carry out the intention or facilitate the
performance of the terms of this Credit Agreement or any other Loan Document or
to grant, preserve, protect or perfect the Liens created or intended to be
created by the Collateral Documents or the validity or priority of any such
Lien, all at the expense of the Borrower.  The Borrower also agrees to provide
to the Lender, from time to time upon request, evidence reasonably satisfactory
to the Lender as to the perfection and priority of the Liens created or intended
to be created by the Collateral Documents.
 
(b)         If any material assets which would otherwise constitute Collateral
are acquired by the Borrower or any Guarantor after the Closing Date (other than
assets constituting Collateral under the applicable Collateral Document that
become subject to the Lien of such Collateral Document upon acquisition
thereof), the Borrower will notify the Lender thereof, and will cause such
assets to be subjected to a Lien securing the Obligations and will take such
actions as shall be necessary or reasonably requested by the Lender to grant and
perfect such Liens, including actions described in paragraph (a) of this Section
4.8, all at the expense of the Borrower.
 
4.9           Merger, Consolidation, etc.  The Borrower shall not and shall
cause each of its Subsidiaries not to:
 
(a)         merge, consolidate or amalgamate with or into any other Person
unless:  (i) the Borrower is the surviving entity, (ii) the Borrower provides
the Lender with at least 30 days' prior written notice thereof, (iii) the
documentation in connection therewith is reasonably satisfactory in form and
substance to the Lender, (iv) the Borrower provides the Lender with such
documents, certificates and opinions as the Lender may reasonably request, in
form and substance reasonably satisfactory to the Lender, including, without
limitation, a legal opinion given by counsel reasonably satisfactory to the
Lender regarding the legal, valid and binding nature of the Loan Documents and
the enforceability thereof and such other matters as the Lender may reasonably
request, and (v) no Material Adverse Effect or any Default or Event of Default
shall occur and be continuing both immediately before and immediately after such
merger, consolidation or amalgamation;
 
(b)         dissolve, wind-up or liquidate; provided, that, any Subsidiary may
be dissolved or liquidated if the board of directors of the Borrower determines
in good faith such liquidation or dissolution is in the best interests of the
Borrower and not materially disadvantageous to the Lender;
 
(c)         purchase or otherwise acquire all or substantially all of the
assets, liabilities or properties of any other Person; provided, that, the
Borrower or any wholly-owned Guarantor may acquire all or substantially all of
the assets, liabilities or properties of any wholly-owned Guarantor; or
 
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(d)         Dispose of all or substantially all of its non-"Margin Stock" (as
defined in Regulation U of the Board) assets or properties whether in any single
transaction or one or more transactions in the aggregate; except to the Borrower
or any wholly-owned Guarantor.
 
4.10         Change in Nature of Business.  The Borrower shall not and shall
cause each of its Subsidiaries not to make any material changes in the nature of
its business activities as presently conducted to the extent reasonably likely
to result in a Material Adverse Effect.
 
4.11         Transactions with Affiliates.  The Borrower shall not and shall
cause each of its Subsidiaries not to enter into any transaction with any of its
Affiliates (other than between or among Borrower and/or one or more wholly-owned
Guarantors), unless such transaction is otherwise permitted hereunder or is in
the ordinary course of business of the Borrower or such Subsidiary, as
applicable, and upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary, as applicable, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
 
4.12         Corporate Documents.  The Borrower shall not and shall cause each
of its Subsidiaries not to amend its certificate of incorporation in any manner
which is reasonably likely to materially adversely affect the Lender's rights
under any of the Loan Documents or the Lender's ability to enforce any such
rights.
 
4.13         Fiscal Year.  The Borrower shall not and shall cause each of its
Subsidiaries not to permit its fiscal year to end on a day other than the first
Saturday between January 28th and February 3rd of any given year.
 
4.14         USA PATRIOT Act Compliance.  The Borrower shall provide, and shall
cause each of its Subsidiaries and Affiliates to provide, such information and
take such actions as are reasonably requested by the Lender in order to assist
the Lender in maintaining compliance with the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (as amended, the "USA Patriot Act") or similar laws and the rules and
regulations promulgated thereunder, in each case, as the same may be in effect
from time to time.
 
4.15         Seniority.  The obligations of the Borrower and each of the
Guarantors under this Credit Agreement and the other Loan Documents to which it
is a party shall at all times rank at least pari passu in priority of payment
and in all other respects with all other unsecured senior Indebtedness of the
Borrower and each of the Guarantors.
 
4.16         Liens, Etc.  The Borrower shall not, and shall not permit its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of its properties, whether now owned or hereafter acquired; file
or suffer to exist under the Uniform Commercial Code or any similar law or
statute of any jurisdiction, a financing statement (or the equivalent thereof)
that names it or any of its Subsidiaries as debtor; sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof); sell any of its property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable other
than in connection with collection of defaulted accounts receivable) with
recourse to it or any of its Subsidiaries or assign or otherwise transfer; or
permit any of its Subsidiaries to assign or otherwise transfer, any account or
other right to receive income, other than, as to all of the above, Permitted
Liens.
 
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4.17         Indebtedness.  The Borrower shall not, and shall not permit its
Subsidiaries to, create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain liable with respect to, or permit any of its
Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise
become or remain liable with respect to, any Indebtedness other than Permitted
Indebtedness.
 
4.18         Restricted Payments.  The Borrower shall not, and shall not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except (i) the Borrower may declare and
pay dividends with respect to its Capital Stock payable solely in additional
shares of its common stock, (ii) any Subsidiary may declare and pay dividends to
the Borrower or, in the case of any Subsidiary that is wholly owned by another
Subsidiary, to such other Subsidiary, (iii) the Borrower may make Restricted
Payments pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Borrower and its Subsidiaries, and (iv)
netting shares under employee benefit plans to settle option price payments owed
by employees and directors with respect thereto and settling employees' and
directors' federal, state and income tax liabilities (if any) related thereto.
 
4.19         Loans, Advances, Investments, Etc.  The Borrower shall not, and
shall not permit its Subsidiaries to, make or commit or agree to make any loan,
advance, guarantee of obligations, other extension of credit or capital
contributions to, or hold or invest in or commit or agree to hold or invest in,
or purchase or otherwise acquire or commit or agree to purchase or otherwise
acquire any shares of the Capital Stock, bonds, notes, debentures or other
securities of, or make or commit or agree to make any other investment in, any
other Person, or purchase or own any futures contract or otherwise become liable
for the purchase or sale of currency or other commodities at a future date in
the nature of a futures contract, or permit any of its Subsidiaries to do any of
the foregoing, except for:
 
(a)         investments existing on the date hereof, as set forth on
Schedule 4.19 hereto, but not any increase in the amount thereof as set forth in
such Schedule or any other modification of the terms thereof;
 
(b)         loans, advances and other investments by the Borrower to any
wholly-owned Guarantor, by any such wholly-owned Guarantor to the Borrower or by
any such wholly-owned Guarantor to any other such wholly-owned Guarantor, made
in the ordinary course of business and, which such loans, advances or
investments, when aggregated with all loans, advances and investments made to
Excluded Subsidiaries under clause (iii) below, does not exceed in the aggregate
for the Borrower and all of its Subsidiaries at any one time outstanding
$50,000,000 (calculated on the basis of the actual amount of all such loans,
advances and investments (net of any amounts repaid to the Borrower or such
Subsidiaries) and without regard to any increase or decrease in the value
thereof or to any write off, write down or other similar reduction);
 
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(c)         loans, advances and other investments by the Borrower to any
Excluded Subsidiary, by any Excluded Subsidiary to the Borrower or by any such
Excluded Subsidiary to any other such Excluded Subsidiary, made in the ordinary
course of business and not exceeding in the aggregate for the Borrower and all
of the Excluded Subsidiaries at any one time outstanding $10,000,000, plus the
value of inventory advanced to such Excluded Subsidiaries in the ordinary course
of business (and receivables/payables related to such inventory) (calculated on
the basis of the actual amount of all such loans, advances and investments (net
of any amounts repaid to the Borrower or such Excluded Subsidiaries) and without
regard to any increase or decrease in the value thereof or to any write off,
write down or other similar reduction);
 
(d)         loans, advances and other investments by the Borrower to any
wholly-owned Guarantor, by any such wholly-owned Guarantor to the Borrower or by
any such wholly-owned Guarantor to any other such wholly-owned Guarantor, made
pursuant to a Qualified Transaction; and
 
(e)         Permitted Investments.
 
4.20         Sale/Leaseback Transactions.  Except for sale/leaseback
transactions entered into in the ordinary course of business with respect to a
retail location, the Borrower will not, and will not permit any of its
Subsidiaries to, enter into any arrangement, directly or indirectly, whereby it
shall sell or transfer any property, real or personal, used in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property that it intends to use for substantially the same
purpose or purposes as the property sold or transferred.
 
4.21         Asset Dispositions.  The Borrower will not, and will not permit any
of its Subsidiaries to Dispose of any asset which has a Fair Market Value in
excess of $1,000,000, including any Capital Stock owned by it, nor will the
Borrower permit any of its Subsidiaries to issue any additional Capital Stock in
such Subsidiary, except:
 
(a)         (i) sales of inventory in the ordinary course of business on
ordinary business terms and (ii) sales, transfers, licenses, leases or other
dispositions of the Tilton Property or other used, surplus, obsolete or worn-out
assets (including real property) and Permitted Investments in the ordinary
course of business;
 
(b)         sales, transfers, licenses, leases or other dispositions of assets
(including Capital Stock) or issuances of any additional Capital Stock by
Borrower to any wholly-owned Subsidiaries, by any such wholly-owned Subsidiary
to Borrower, and by any such wholly-owned Subsidiary to any other such
wholly-owned Subsidiary, including pursuant to a Qualified Transaction;
provided, that, any such dispositions to a Subsidiary shall be made in
compliance with Section 4.11;
 
(c)         sales transfers, licenses, leases or other dispositions deemed to
occur as a result of the creation of Liens permitted by Section 4.16;
 
(d)         sale/leasebacks permitted by Section 4.20; and
 
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(e)         the termination, surrender or sublease of a real estate lease of the
Borrower or any of its Subsidiaries.
 
4.22         Capital Expenditures.  The Borrower will not, nor will it permit
any Subsidiary to contract for, purchase or make any expenditure or commitments
for Capital Expenditures in any fiscal year in excess of the amount contained in
a budget approved by the Lender.
 
4.23         Subordinated Debt.  The Borrower will not, nor will it permit any
Subsidiary to, make or agree to make, directly or indirectly, any payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any Subordinated Debt or other
Indebtedness expressly subordinated in right of payment to the obligations of
the Borrower hereunder, including any sinking fund or similar deposit with
respect to any of them, or any prepayment, purchase, redemption, retirement,
acquisition, cancellation or termination of any such Subordinated Debt or other
Indebtedness prior to its scheduled maturity, except regularly scheduled
interest payments, as and when due (other than interest payments prohibited by
the subordination provisions thereof).
 
4.24         Formation of Subsidiaries.  At the time that the Borrower forms any
direct or indirect Domestic Subsidiary (other than a Subsidiary formed in
connection with a Qualified Transaction) or acquires any direct or indirect
Domestic Subsidiary after the Closing Date, the Borrower shall within 30 days of
such formation or acquisition cause any such new Subsidiary to become a party to
(i) the Guaranty by executing a Guaranty Agreement Supplement in the form
provided in the Guaranty and (ii) each applicable Collateral Document in the
manner provided therein and promptly take such actions to create and perfect
Liens on such Material Subsidiary’s assets that would otherwise constitute
Collateral to secure the Obligations as any Agent shall reasonably
request.  Notwithstanding the foregoing, if the Borrower does not Dispose of J.
Jill on or prior to December 31, 2009, then the Borrower shall cause each of J.
Jill, GP, J. Jill, LLC and Birch Pond Realty Corporation to become parties to
the Guaranty within thirty days thereafter.
 
4.25         Negative Pledge Clauses.  The Borrower shall not, and shall cause
each of its Subsidiaries not to, enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any the Borrower
or any Subsidiary to create, incur, assume or suffer to exist any Lien upon any
of its property or revenues, whether now owned or hereafter acquired, other than
(i) this Credit Agreement and the other Loan Documents, (ii) customary
non-assignment provisions in licenses or sublicenses of intellectual property
and (iii) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby).
 
4.26         Clauses Restricting Subsidiary Distributions.  The Borrower shall
not, and shall cause each of its Subsidiaries not to, enter into or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the Borrower to (i) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (ii) make loans
or advances to, or other investments in, the Borrower or any other Subsidiary of
the Borrower or (iii) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (A) any restrictions existing under the Loan
Documents, (B) any restrictions with respect to a Subsidiary imposed pursuant to
an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary and
(C) contractual encumbrances or restrictions in effect on the Closing Date under
Indebtedness existing on the Closing Date.
 
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5.           Conditions Precedent.
 
5.1           Conditions Precedent to the Closing.  The obligation of the Lender
to make the Revolving Loans is subject to the prior fulfillment of the following
conditions:
 
(a)         Documents.  The Lender shall have received the following, each in
form and substance satisfactory to the Lender:
 
(i)          Executed Agreement.  This Credit Agreement, duly executed by an
authorized officer of the Borrower.
 
(ii)         Note.  To the extent requested by the Lender, the Lender (or its
counsel) shall have received a Note, in the amount of the Revolving Loan, duly
executed by an authorized officer of the Borrower.
 
(iii)    Officer's Certificate.  A certificate of an authorized officer of each
of the Borrower and each Guarantor, substantially in the form of Exhibit B
hereto, certifying, among other things, as to (w) the organizational documents
and by-laws of such Person, (x) resolutions of the board of directors of such
Person (or a committee of the board of directors authorized to approve this
transaction) authorizing such Person to execute, deliver and perform this Credit
Agreement, each Note, if any, and each other Loan Document to which it is a
party; (y) the names and signatures of the officers of such Person authorized to
execute this Credit Agreement, each Note, if any, and each other Loan Documents
to which it is a party; and (z) the absence of any amendment or modification to
any of the attached organizational documents or by-laws (or the equivalent
thereof), if any, of such Person since the date of the most recent certification
thereof.
 
(iv)    Executed Guaranty.  The Guaranty, duly executed by an authorized officer
of each of the Guarantors.
 
(v)     Lien Searches.  The results, dated as of a recent date prior to the
Closing Date, of searches conducted in each applicable governmental offices in
each jurisdiction in which filings would be made to perfect a Lien over the
Collateral, which in each case shall have revealed no Liens with respect to any
of the Collateral except Permitted Liens or Liens as to which the Lender shall
have received (and is authorized to file) termination statements or similar
documents as shall be required by applicable law to terminate such Liens fully
executed for filing.
 
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(vi)    Opinion of Counsel to the Borrower.  A favorable written opinion of
Dewey & LeBoeuf LLP, counsel for the Borrower, in form and substance reasonably
satisfactory to the Lender and covering such matters relating to the Borrower
and the Guarantors, the Loan Documents and such other matters reasonably
requested by the Lender.
 
(vii)   Good Standing.  A certificate of the appropriate official(s) of the
state of organization of the Borrower and each of the Guarantors certifying as
of a recent date not more than 30 days prior the Closing Date as to the
subsistence in good standing of, and the payment of taxes by, the Borrower and
such Guarantor in such states.
 
(viii)  Existing Indebtedness.  Evidence that the Borrower's Indebtedness
existing on the Closing Date is in full force and effect, without amendment or
modification thereto in a manner adverse to the Lender in any material respect.
 
(ix)         Other Items.  Such other agreements, instruments, approvals,
opinions and documents as the Lender may reasonably request.
 
(b)         Legality.  The making of the Revolving Loans and the consummation of
the transactions contemplated hereunder shall not contravene any law, rule or
regulation applicable to the Lender, the Borrower or any of its Subsidiaries.
 
(c)         Representations and Warranties.  All of the representations and
warranties contained in Section 3 of this Credit Agreement, in each other Loan
Document and in each certificate and other writing delivered to the Lender
pursuant hereto or thereto on or prior to the Closing Date shall be true and
correct in all material respects as though made on and as of such date.
 
(d)         Defaults; Material Adverse Effect.  No Default or Event of Default
shall have occurred and be continuing on the Closing Date or would result from
making the Revolving Loans.  No Material Adverse Effect shall have occurred and
be continuing since February 2, 2008 or would result from making any Revolving
Loan.
 
(e)         Proceedings.  There shall not exist any threatened or pending
action, proceeding or counterclaim by or before any court or governmental,
administrative or regulatory agency or authority, domestic or foreign, (i)
challenging the consummation of the transactions contemplated hereby or which
would restrain, prevent or impose burdensome conditions on any transaction
contemplated hereunder, which could reasonably be expected to have a Material
Adverse Effect, (ii) seeking to prohibit the ownership or operation by the
Borrower of any of its Subsidiaries of all or a material portion of its business
or assets which could reasonably be expected to have a Material Adverse Effect,
or (iii) seeking to obtain, or having resulted in the entry of any judgment,
order or injunction that (A) would restrain, prohibit or impose adverse
conditions on the ability of the Lender to make the Revolving Loans, (B) could
reasonably be expected to affect the legality, validity or enforceability of any
of the Loan Documents or the ability of any party thereto to perform its
obligations thereunder or (C) is seeking any material damages as a result
thereof.
 
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(f)         Approvals.  Other than as contemplated by Section 5.2(f), all
consents, authorizations and approvals of, and filings and registrations with,
and all other actions in respect of, any Governmental Authority or other Person
required in connection with the making of the Revolving Loans or the conduct of
business of the Borrower and its Subsidiaries shall have been obtained and shall
be in full force and effect.
 
5.2           Conditions Precedent to Revolving Loans. The obligation of the
Lender to make Revolving Loans after the Closing Date and prior to the Maturity
Date shall, in addition to the fulfillment of the conditions set forth in
Section 5.1 above, be subject to the following:
 
(a)         Notice of Borrowing. The Lender shall have received a Notice of
Borrowing, duly executed by an authorized officer of the Borrower as required
under Section 2.2 hereof.  The submission by the Borrower of such Notice of
Borrowing to the Lender and the Borrower's acceptance of the proceeds of such
subsequent Revolving Loans shall be deemed to be a representation and warranty
by the Borrower that all of the applicable conditions precedent set forth herein
have been satisfied.
 
(b)         Documents.  The Lender shall have received the following, each in
form and substance satisfactory to the Lender:
 
(i)          Mortgages.   Each of the Mortgages, duly executed by the Borrower
and each Subsidiary a party thereto.  Each document (including any UCC financing
statement) required by the Mortgages or under law or reasonably requested by the
Lender to be filed, registered or recorded in order to create in favor of the
Lender, a perfected Lien on the Collateral described therein, prior and superior
in right to any other Person (other than with respect to Permitted Liens), shall
be in proper form for filing, registration or recordation. The Lender shall have
a security interest in the Collateral of the type and priority described in the
Mortgages (subject only to Permitted Liens.
 
(ii)         Security Agreement.   The Security Agreement, duly executed by the
Borrower and each Subsidiary a party thereto.  Each document (including any UCC
financing statement) required by the Security Agreement or under law or
reasonably requested by the Lender to be filed, registered or recorded in order
to create in favor of the Lender, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Permitted Liens), shall be in proper form for filing, registration or
recordation. The Lender shall have a security interest in the Collateral of the
type and priority described in the Security Agreement (subject only to Permitted
Liens).  
 
(iii)         Other Items.  Such other agreements, instruments, approvals,
opinions and documents as the Lender may reasonably request.
 
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(c)         Fees and Expenses. The Lender shall have received all of the fees,
costs and expenses that are then due and payable hereunder and under the other
Loan Documents.
 
(d)         Legality. The making of such Revolving Loans and the consummation of
the transactions contemplated hereunder shall not contravene any law, rule or
regulation applicable to the Lender or the Borrower.
 
(e)         Representations and Warranties.  All of the representations and
warranties contained in Section 3 of this Credit Agreement, in each other Loan
Document and in each certificate and other writing delivered to the Lender
pursuant hereto or thereto on or prior to the Borrowing Date of such Revolving
Loans shall be true and correct in all material respects as though made on and
as of such date.
 
(f)          Consents and Approvals.  All necessary consents and approvals to
the transactions contemplated hereby from each of the existing lenders to the
Borrower and its Subsidiaries, including the granting of the Liens in favor of
the Lender on the Collateral, shall have been obtained without the requirement
of prepayment or the establishment of a pari passu Lien on the Collateral, and
in form reasonably satisfactory to the Lender.
 
(g)         Opinions of Counsel to the Borrower.  A favorable written opinion of
New York and Massachusetts counsel for the Borrower, in form and substance
reasonably satisfactory to the Lender, and covering such matters relating to the
Borrower and the Guarantors, the Loan Documents and such other matters
reasonably requested by the Lender.
 
(h)         Defaults.  No Default, Event of Default or Material Adverse Effect
shall have occurred and be continuing on the date of such Revolving Loans or
would result from making of such Revolving Loans.
 
(i)          Availability.  After giving effect to the making of such Revolving
Loans, the Revolving Loan Availability shall be not less than zero.
 
6.           Events of Default.
 
6.1           Events of Default.  Each of the following events and occurrences
shall constitute an "Event of Default" under this Credit Agreement:
 
(a)         The Borrower or any Subsidiary shall fail to pay when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
(i) any principal of any Revolving Loan or any Note, or (ii) any interest on any
Revolving Loan or any Note, any fee, any indemnity or any other amount payable
hereunder or under any other Loan Document and any such failure referred to in
this clause (ii) shall continue for three (3) Business Days; or
 
(b)         Any representation or warranty made or deemed made by the Borrower
or any Subsidiary in any Loan Document or any certificate, report or other
document delivered to the Lender pursuant to any Loan Document shall have been
incorrect or misleading in any material respect when made or deemed made; or
 
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(c)         The Borrower or any Subsidiary shall fail to perform or shall
violate any provision, covenant, condition or agreement in Section 4 of this
Credit Agreement (other than 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, and 4.8) of this
Credit Agreement; or
 
(d)         The Borrower or any Subsidiary shall fail to perform or shall
violate any provision, covenant, condition or agreement of this Credit Agreement
or any other Loan Document on its part to be performed or observed (other than
those set forth in paragraphs (a), (b) and (c) of this Section 6.1) and such
failure or violation is not remediable or, if remediable and would not
materially adversely impact the Lender's Liens on the Collateral, continues
unremedied for a period of thirty (30) days after the earlier of (i) notice from
the Lender or (ii) such time as the Borrower or any Subsidiary becomes aware of
the same; or
 
(e)         Any event or condition shall occur (i) that results in the
acceleration of the maturity of any Indebtedness of the Borrower or any
Subsidiary under any agreement, document or instrument with respect to an
aggregate amount of Indebtedness equal to or greater than the Threshold Amount
(or the equivalent thereof in any foreign currency), or (ii) that after any
grace period provided for therein enables the holder of such Indebtedness or any
Person acting on such holder's behalf to accelerate the maturity thereof; or
 
(f)         The Borrower or any Subsidiary is adjudicated a bankrupt or
insolvent, or admits in writing its inability to pay its debts as they become
due or makes an assignment for the benefit of creditors, or ceases doing
business as a going concern or applies for or consents to the appointment of any
receiver or trustee, or such receiver, trustee or similar officer is appointed
with the application or consent of the Borrower or any Subsidiary, or
bankruptcy, dissolution, liquidation or reorganization proceedings (or
proceedings similar in purpose and effect) are instituted by the Borrower or any
Subsidiary or are instituted against (and not vacated or discharged within 60
days) the Borrower or any Subsidiary; or
 
(g)         Any money judgment or warrant of attachment or similar process
involving, individually or in the aggregate, in excess of the Threshold Amount
(or the equivalent thereof in any foreign currency) shall be entered or filed
against the Borrower or any Subsidiary and shall remain undischarged, unvacated
or unbonded for a period of 30 days; or
 
(h)         The validity or enforceability of this Credit Agreement or any other
Loan Document shall be contested by or on behalf of the Borrower or any
Subsidiary; or a proceeding shall be commenced by a Governmental Authority
having jurisdiction over the Borrower or any Subsidiary seeking to establish the
invalidity thereof; or the Borrower or any Subsidiary shall deny that it has any
further liability or obligation under any Loan Document to which it is a party;
or  any Collateral Document or financing statement after delivery thereof shall
for any reason (other than as permitted under any Collateral Document) cease to
create a valid and perfected Lien on and security interest in any material
amount of the Collateral purported to be covered thereby; or
 
(i)         The occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
a Material Adverse Effect.
 
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6.2           Consequence of Default.  Upon the occurrence of any Event of
Default (i) described in subsection (f) of Section 6.1, the Revolving Loan
Commitment shall automatically be reduced to zero and the outstanding amount of
all Revolving Loans and all other amounts payable hereunder, under any Note and
under any other Loan Document shall automatically become immediately due and
payable, without presentment, demand, protest or other requirement of any kind,
all of which are hereby expressly waived by the Borrower or (ii) described in
any other subsection of Section 6.1 and during the continuance thereof, the
Lender may, by notice of default given to the Borrower, terminate the Revolving
Loan Commitment and declare all of the outstanding principal amount of the
Revolving Loans and all other amounts payable hereunder, under any Note and
under any other Loan Document to be immediately due and payable, whereupon the
Revolving Loan Commitment shall be terminated and the unpaid principal amount of
any Note, together with accrued interest thereon, and all such other amounts,
shall be immediately due and payable without presentment, protest, demand or
other requirement of any kind, each of which is hereby expressly waived by the
Borrower.
 
7.           Additional Costs and Expenses; Indemnity.
 
7.1           (a)  The Borrower shall pay to (x) the Lender on demand all
reasonable out-of-pocket costs and expenses of the Lender actually incurred in
connection with the preparation, execution and delivery of this Credit
Agreement, each Note and any other Loan Documents or any amendment, modification
or waiver of the provisions hereof or thereof, and (y) the Lender all
out-of-pocket costs and expenses incurred in connection with:  (i) the
negotiation of any restructuring, work-out or renegotiation of any terms of this
Credit Agreement, any Note or any other Loan Documents or the obligations of the
Borrower hereunder or thereunder, (ii) the enforcement of the preservation or
protection of the Lender' rights under this Credit Agreement and the other Loan
Documents and (iii) the response to any subpoena or similar process compelling
the production of documents or other response in connection with this Credit
Agreement, any Note or any other Loan Documents, including without limitation,
in each case, the reasonable and actual fees and expenses of outside counsel for
the Lender, and the Borrower further agrees to indemnify the Lender and their
respective officers, directors and employees against any losses, damages, claims
and expenses arising out of the use or proposed use by the Borrower of any
Revolving Loan hereunder.  In addition, the Borrower agrees to defend, indemnify
and hold harmless the Lender and their respective officers, directors and
employees from and against any losses, damages, liabilities, obligations,
penalties, fees, costs and expenses, including without limitation, the
reasonable and actual fees and expenses of outside counsel for the Lender,
arising out of or relating to the negotiation, preparation, execution, delivery
and performance and administration of this Credit Agreement and the other Loan
Documents, and the consummation of the transactions contemplated hereunder and
thereunder and any claim, litigation, investigation or proceeding relating to
any of the foregoing including, without limitation, all Environmental
Liabilities and Costs arising from or in connection with:  (i) the past, present
or future operations of the Borrower or any of its Subsidiaries involving any
damage to real or personal property or natural resources or harm or injury
alleged to have resulted from any release of Hazardous Materials, (ii) any
Environmental Action or (iii) a breach by the Borrower or any of its
Subsidiaries of any Environmental Law; provided, however, that none of the
foregoing indemnity obligations of the Borrower shall extend to any liability,
obligation, loss, damage, penalty, claim, action, suit, cost, expense or
disbursement to the extent resulting from the willful misconduct or gross
negligence of the Lender as determined by a final non-appealable judgment of a
court of competent jurisdiction. 
 
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(b)         If any future applicable law, regulation or directive, or any change
of any existing law, regulation or directive or in the interpretation thereof,
or compliance by the Lender with any request or requirement (whether or not
having the force of law) of any relevant central bank or other comparable
agency, imposes, modifies or deems applicable any reserve, special deposit,
premium, assessment or similar requirement against assets held by, or deposits
in or for the account of, or advances or loans by, or any other acquisition of
funds by the Lender, any capital adequacy standard or other condition with
respect to this Credit Agreement, any Note or any other Loan Document, and the
result of any of the foregoing is to increase the cost to the Lender of
maintaining advances or credit or to reduce any amount receivable in respect
thereof, then the Lender may notify the Borrower, and the Borrower shall pay
within five (5) Business Days of the date of such notice such amount as the
Lender may specify to be necessary to compensate the Lender for such reduced
receipt, together with interest on such amount from the date demanded until
payment in full thereof at the same rate applicable to the Revolving Loans.  The
determination by the Lender of any amount due under this Section 7.1(b) as set
forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest error, be conclusive evidence thereof.
 
(c)         If, after the date hereof, by reason of any applicable law or
regulation or regulatory requirement or the interpretation or application
thereof, it shall become unlawful or otherwise prohibited for the Lender to make
or maintain its Revolving Loan or any portion thereof or give effect to any of
its obligations or benefits as contemplated by this Credit Agreement and the
other Loan Documents, the obligation of the Lender to make, fund and maintain
its Revolving Loan or any portion thereof under this Credit Agreement shall be
suspended until the Lender shall notify the Borrower that the circumstances
causing such suspension no longer exist and the Borrower shall forthwith prepay
to the Lender the principal amount of the Revolving Loans owed to the Lender,
together with interest accrued thereon and all other amounts owed with respect
thereto.
 
(d)         If, due to any prepayment pursuant to Section 2.7 hereof or any
acceleration of the maturity of the Revolving Loans pursuant to Section 6 hereof
or any other prepayment hereunder, the Lender is subject to a change of interest
rate on the Revolving Loans or the Lender receives payment of principal of the
Revolving Loans other than as provided herein, the Borrower shall, promptly
after demand by the Lender, pay to the Lender any amounts required to compensate
the Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such change or payment, including, without limitation, any
loss, cost or expense incurred by reason of liquidation or reemployment of
deposits or other funds acquired by the Lender to fund or maintain the Lender's
Revolving Loans.  A certificate setting forth the amount of such additional
losses, costs or expenses submitted to the Borrower by the Lender shall, in the
absence of manifest error, be conclusive evidence thereof.
 
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(e)         If, due to any prepayment pursuant to Section 2.7 hereof or any
acceleration of the maturity of the Revolving Loans pursuant to Section 6 hereof
or any other prepayment hereunder other than on an Interest Payment Date, the
Borrower shall, promptly after demand by the Lender, pay to the Lender any
amounts required to compensate the Lender for any additional losses, costs or
expenses which it may reasonably incur in connection with the termination of any
Hedging Agreements with respect to the Revolving Loans.  A certificate setting
forth the amount of such additional losses, costs or expenses submitted to the
Borrower by the Lender shall, in the absence of manifest error, be conclusive
evidence thereof.
 
(f)         Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 7.1 shall survive the payment in full of the principal, interest
and all other amounts under this Credit Agreement and under any other Loan
Document and the termination of this Credit Agreement and each other Loan
Document.
 
7.2           Taxes.
 
(a)         Any and all payments made by the Borrower hereunder shall be made
free and clear of and without deduction for any present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto (all such taxes, levies, imposts, deductions, charges, withholdings and
liabilities, being hereinafter referred to as "Taxes"), except as otherwise
required by law.  If and to the extent that Taxes are required to be withheld
from any payment, (i) other than Excluded Taxes, the amount of such payment
shall be increased to the extent necessary to cause the Lender to receive (after
the withholding of such Taxes) an amount equal to the amount it would have
received had the withholding of such Taxes not been required, and (ii) the
Borrower shall withhold such Taxes from such increased payment and pay such
Taxes to the relevant taxation authority or other authority for the account of
the Lender in accordance with applicable law.
 
(b)         In addition, the Borrower agrees to pay 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 under any other Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Credit Agreement or any other Loan Document, excluding taxes,
for the avoidance of doubt, on the overall net income of the Lender (hereinafter
referred to as "Other Taxes").
 
(c)         The Borrower shall indemnify and agrees to hold harmless the Lender
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 7.2), other than Excluded Taxes, paid by the Lender or any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted.  This indemnification shall be made within five (5) days after
the date the Lender makes written demand therefor, specifying in reasonable
detail the basis, calculation and amount of such Taxes or Other Taxes and any
liabilities arising therefrom.
 
(d)         Within 30 days after the date of the Borrower's payment or a payment
on behalf of the Borrower of any Taxes with respect to any payment due hereunder
or under any other Loan Document, the Borrower will furnish to the Lender, at
its address referred to in Section 8.6 hereof, the original or a certified copy
of a receipt evidencing payment thereof.
 
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(e)         Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations contained in this Section 7.2
shall survive the payment in full of the principal, interest and all other
amounts under this Credit Agreement and under any other Loan Document and the
termination of this Credit Agreement and each other Loan Document until the
expiration of the statute of limitations applicable to the subject Taxes.
 
(f)         The Lender agrees that, at the request of the Borrower, it will
deliver to the Borrower two properly completed and duly executed copies of
Internal Revenue Service form W-8BEN or any subsequent version thereof or
successor thereto, certifying that the Lender is entitled to a reduced rate of
withholding from United States backup withholding tax on payments pursuant to
this Credit Agreement (and shall deliver to the Borrower additional copies of
the relevant forms on or before the date that such form expires, and shall
promptly notify the Borrower of any form or other documentation previously
submitted that becomes incorrect).
 
(g)         The Borrower shall not be required to indemnify the Lender, or pay
any additional amounts to the Lender, in respect of Taxes and liabilities
arising therefrom pursuant to this Section 7.2 to the extent that the obligation
to pay such additional amounts would not have arisen but for a failure by the
Lender to comply with the provisions of clause (f) above.
 
(h)         If the Lender determines, in its sole discretion, that it has
received a credit or refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts, in either case pursuant to this Section 7.2 it shall pay to
the Borrower an amount equal to such credit or refund recovered (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section with respect to the Taxes or Other Taxes giving rise to such
refund or recovery), net of all out-of-pocket expenses of the Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such credit, refund or recovery); provided, however, that the
Borrower shall promptly repay the amount paid over to the Borrower to the Lender
in the event in the event the Lender is required to repay such refund to the
relevant Governmental Authority.  This Section 7.2(h) shall not be construed to
require the Lender to make available its tax returns (or any other information
that it deems confidential) to the Borrower or any other Person.
 
8.           Miscellaneous.
 
8.1           Entire Agreement.  This Credit Agreement, the other Loan Documents
and the documents referred to herein and therein constitute the entire
obligation of the parties with respect to the subject matter hereof and shall
supersede any prior expressions of intent or understanding with respect to the
transactions herein and therein contemplated.
 
8.2           No Waiver; Cumulative Rights.  The failure or delay of the Lender
to require performance by the Borrower of any provision of this Credit Agreement
shall not operate as a waiver thereof, nor shall it affect the Lender' rights to
require performance of such provision at any time thereafter, nor shall it
affect or impair any of the remedies, powers or rights of the Lender with
respect to any other or subsequent failure, delay or default.  Each and every
right granted to the Lender hereunder or under any other Loan Document or in
connection herewith or therewith shall be cumulative and may be exercised at any
time.
 
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8.3           Assignment; Binding Effect.
 
(a)         Successors and Assigns.  The provisions of this Credit Agreement
shall be binding upon and inure to the benefit of each of the parties hereto and
its successors and assigns permitted hereby, except that (i) the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void), it being
understood that mergers, consolidations and other corporate changes permitted by
Section 4.9 of this Credit Agreement shall not be deemed to be assignments for
purposes of this sentence, and (ii) (1) the Lender may assign to one or more
assignees (each, an "Assignee") all or a portion of its rights and obligations
under this Credit Agreement with notice to the Borrower or (2) the Lender may at
any time, with notice to the Borrower, sell participations to any Person;
provided, that if no Default or Event of Default shall have occurred and be
continuing, the prior written consent of the Borrower (which shall not be
unreasonably withheld) shall be required.
 
(b)         The Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Credit Agreement to secure
obligations of the Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided, that, no such pledge
or assignment of a security interest shall release the Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for the Lender
as a party hereto.
 
8.4           GOVERNING LAW; JURY TRIAL.  THIS CREDIT AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.  THE BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY
ACTION RELATED TO THIS CREDIT AGREEMENT, ANY NOTE EXECUTED PURSUANT HERETO OR
ANY OTHER LOAN DOCUMENT.
 
8.5           Submission to Jurisdiction.
 
(a)         The Borrower hereby irrevocably agrees that any legal action or
proceedings against it with respect to this Credit Agreement, any Note or any
other Loan Document may be brought in any court of the State of New York or any
Federal Court of the United States of America located in the City or State of
New York, or both, as the Lender may elect, and by execution and delivery of
this Credit Agreement the Borrower hereby submits to and accepts with regard to
any such action or proceeding service of process by the mailing of
copies thereof by registered or certified airmail, postage prepaid, to the
Borrower at its address set forth in Section 8.6 hereof.
 
(b)         The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Credit Agreement, any Note or any
other Loan Document in the State of New York and hereby further irrevocably
waives any claim that the State of New York is not a convenient forum for any
such suit, action or proceeding.
 
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(c)         To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Credit Agreement and any other Loan Document to which it is a party.
 
8.6           Notices.  Any notice hereunder shall be in writing and shall be
personally delivered, transmitted by postage prepaid registered or certified
mail or by overnight mail, or transmitted by telephonic facsimile ("FAX") and
electronic mail ("EMAIL")to the parties as follows:
 
To the Borrower:
 
THE TALBOTS, INC.
One Talbots Drive
Hingham, Massachusetts  02043
Telephone:  (781) 749-7600
FAX:  (781) 749-0865
EMAIL:
Attention:  Michael Scarpa, CFO
 
with a copy (which shall not constitute notice) to:
 
THE TALBOTS, INC.
211 South Ridge Street
Suite 100
Rye Brook, NY  10573
Attn: Richard T. O'Connell, Jr., Executive Vice President and General Counsel
 
To the Lender:
 
AEON CO., LTD.
5-1, 1-chome, Nakase
Mihama-ku, Chiba-shi
Chiba, 261-8515 Japan
Telephone:  +81-043-212-6089
FAX: +81-043-212-6813
EMAIL:  h_wakabaya@aeon.biz
Attention:  International Division
 
All notices and other communications shall be deemed to have been duly given on
(i) the date of receipt if delivered personally, (ii) the date five (5) days
after posting if transmitted by registered or certified mail, (iii) on the
Business Day after having been sent if transmitted by overnight mail with a
reputable courier, or (iv) the date of transmission if transmitted by FAX and
receipt is confirmed.
 
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8.7           Amendments, Etc.  No amendment or waiver of any provision of this
Credit Agreement and the other Loan Documents, and no consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Lender and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was
given.  Notwithstanding the foregoing, the terms hereof may only be amended in
accordance with the provisions of the Subordination Agreement.
 
8.8           Release of Collateral.  Upon the sale, lease, transfer or other
disposition of any item of Collateral (including, without limitation, as a
result of the sale, in accordance with the terms of the Loan Documents, of the
Subsidiary that owns such Collateral) in accordance with the terms of the Loan
Documents, the Lender, at the Borrower's expense, execute and deliver to the
Borrower or such Guarantor such documents in form and substance reasonably
satisfactory to the Lender as may be reasonably requested to evidence the
release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents in accordance with the terms of the Loan
Documents.
 
8.9           Usury.  Anything in this Credit Agreement to the contrary
notwithstanding, the obligation of the Borrower to pay interest on the Revolving
Loans and any Notes or any other amount due and owing hereunder or under any
other Loan Document shall be subject to the limitation that no payment of such
interest shall be required to the extent that receipt of such payment would be
contrary to applicable usury laws.
 
8.10         Counterparts; Facsimile Signature.  This Credit Agreement may be
signed in any number of counterparts.  Either a single counterpart or a set of
counterparts when signed by all the parties hereto shall constitute a full and
original agreement for all purposes.  Delivery of any executed signature page
hereof or of any amendment, waiver or consent to this Credit Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart thereof.
 
8.11         Severability.  Any provision of this Credit Agreement or any other
Loan Document that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
 
8.12         No Party Deemed Drafter.  The Borrower and the Lender agree that no
party hereto shall be deemed to be the drafter of this Credit Agreement.
 
8.13         USA Patriot Act Notification.  The following notification is
provided to the Borrower pursuant to Section 326 of the USA Patriot Act:
 
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IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan, other
extension of credit or other financial services product.  WHAT THIS MEANS FOR
THE BORROWER:  When the Borrower opens an account, the Lender will ask the
Borrower for certain information, including, without limitation, the Borrower's
name, tax identification number, business address and other information that
will allow the Lender to identify the Borrower.  The Lender may also seek to see
the Borrower's legal organizational documents or other identifying documents,
among other things.  The Borrower agrees to cooperate with the Lender and
provide true, accurate complete information to the Lender in response to any
such request.
 
[SIGNATURE PAGE FOLLOWS.]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
executed by their duly authorized representatives as of the date first written
above.
 

  THE TALBOTS, INC.                      
 
By:
/s/ Michael Scarpa        Name:  Michael Scarpa       Title:
Chief Operating Officer &
Chief Financial Officer
            Signed in:  Hingham, MA USA           

 
 

AEON CO., LTD.                      
 
By:
/s/ Masaaki Toyoshima         Name:  Masaaki Toyoshima        Title:
Vice President &
Chief Financial Officer
            Signed in:                     

 
[Loan Agreement]

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EXHIBIT A
 
NOTE
 
US$_____________
________     , 20__

 
FOR VALUE RECEIVED, The Talbots Inc. (the "Borrower") unconditionally promises
to pay to the order of Aeon Co., Ltd. a corporation organized under the laws of
Japan (the "Lender"), to the Lender's Account specified in the Credit Agreement
described below, the principal sum of ___________________________
($_____________) or such lesser amount as may be outstanding from time to time
hereunder and to pay interest thereon at such rates and according to such
methods of calculation as are provided pursuant to the Secured Revolving Loan
Agreement, dated as of April 10, 2009, by and among the Borrower and the Lender
(as the same may be amended, supplemented, or otherwise modified from time to
time, the "Credit Agreement").  The Borrower hereby authorizes the Lender to
enter on the schedule attached hereto the dates, amounts, denomination,
maturities, interest rates and interest periods applicable to each borrowing and
absent manifest error such notations shall be binding and conclusive upon the
Borrower; provided, however, that failure by the Lender to make any notation on
such schedule or any error in such notations shall in no way affect the
Borrower's obligation to repay outstanding amounts on this Note.
 
The outstanding principal of this Note and any accrued interest thereon shall be
repaid as set forth in the Credit Agreement, with final payment on the Maturity
Date (as defined in the Credit Agreement).
 
All payments of principal and interest on this Note shall be payable in lawful
money of the United States of America in immediately available funds without
set-off, defense or counterclaim.
 
This Note is issued pursuant to the terms of the Credit Agreement and is subject
to the terms and conditions and entitled to the benefits therein provided.  Upon
the occurrence of an Event of Default (as defined in the Credit Agreement), the
principal of and the accrued interest on this Note may become due and payable in
the manner and with the same effect as provided in the Credit Agreement, without
presentment, demand, protest or notice of any kind unless otherwise expressly
required therein.
 
Failure or delay of the holder of this Note to enforce any provision of this
Note shall not be deemed a waiver of any such provision, nor shall the holder of
this Note be estopped from enforcing any such provision at a later time.  Any
waiver of any provision hereof must be in writing.  This Note shall be governed
by and interpreted in accordance with the laws of the State of New York without
regard to the conflict of law provisions thereof.
 

  THE TALBOTS, INC.                      
 
By:
        Name:          Title:            

A-1

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SCHEDULE
 
Date of
Loan
Amount
of Loan
Interest
Amount
Paid/Prepaid
Unpaid
 Principal
Balance
Maturity
 Date
Notation
 Made By
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           
 
 
 
 
           

 
A-2

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A-3

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Schedule 1(a)

Initial Guarantors

Guarantor
Jurisdiction
Talbots Classics, Inc.
Massachusetts
The Talbots Group, Limited Partnership
Massachusetts
Talbots Import, LLC
Delaware
Talbots International Retailing Limited, Inc.
Delaware
Talbots Classics Finance Company, Inc.
Delaware
Talbots (U.K.) Retailing Limited
Delaware
Talbots (Canada), Inc.
Delaware

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Schedule 1(b)

Mortgaged Properties

The real property and all improvements thereon at the Talbots headquarters
complex located at 175 Beal Street, Hingham, MA 02043

The real property and all improvements thereon at Talbots' Lakeville
Distribution Center located at 175 Kenneth Welch Drive, Lakeville, MA  02348.
 
 
 
 
 
 
 

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