Exhibit 10.3

[EXECUTION VERSION]

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of February 16, 2012

by and among

THE TALBOTS, INC.,

THE TALBOTS GROUP, LIMITED PARTNERSHIP,

and

TALBOTS CLASSICS FINANCE COMPANY, INC.,

as the Borrowers,

THE OTHER PERSONS PARTY HERETO THAT ARE

DESIGNATED AS CREDIT PARTIES,

GENERAL ELECTRIC CAPITAL CORPORATION,

for itself, as a Lender and Swingline Lender and as Agent for all Lenders,

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO,

as Lenders

****************************************

GE CAPITAL MARKETS, INC.,

as Lead Arranger and Bookrunner

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TABLE OF CONTENTS

 

ARTICLE I.

   THE CREDITS      8   

1.1

   Amounts and Terms of Commitments      8   

1.2

   Notes      15   

1.3

   Interest      16   

1.4

   Loan Accounts      17   

1.5

   Procedure for Revolving Credit Borrowing      18   

1.6

   Conversion and Continuation Elections      19   

1.7

   Optional Prepayments of Loans and Commitment Reductions      20   

1.8

   Mandatory Prepayments of Loans      21   

1.9

   Fees      22   

1.10

   Payments by the Borrowers      23   

1.11

   Payments by the Lenders to Agent; Settlement      26   

1.12

   Borrower Representative      29    ARTICLE II.    CONDITIONS PRECEDENT     
29   

2.1

   Conditions of Initial Loans      29   

2.2

   Conditions to All Borrowings      31    ARTICLE III.    REPRESENTATIONS AND
WARRANTIES      32   

3.1

   Corporate Existence and Power      32   

3.2

   Corporate Authorization; No Contravention      33   

3.3

   Governmental Authorization      33   

3.4

   Binding Effect      33   

3.5

   Litigation      34   

3.6

   No Default      34   

3.7

   ERISA, Canadian Pension Plan and Canadian Benefit Plan Compliance      35   

3.8

   Use of Proceeds; Margin Regulations      36   

3.9

   Ownership of Property; Liens      37   

3.10

   Taxes      37   

3.11

   Financial Condition      37   

3.12

   Environmental Matters      38   

3.13

   Regulated Entities      39   

3.14

   Solvency      39   

 

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3.15

   Labor Relations      39   

3.16

   Intellectual Property      40   

3.17

   Brokers’ Fees; Transaction Fees      40   

3.18

   Insurance      40   

3.19

   Ventures, Subsidiaries and Affiliates; Outstanding Stock      41   

3.20

   Jurisdiction of Organization; Chief Executive Office      41   

3.21

   Locations of Inventory, Equipment and Books and Records      41   

3.22

   Deposit Accounts and Other Accounts      42   

3.23

   Government Contracts      42   

3.24

   Trade Relations      42   

3.25

   Bonding; Licenses      42   

3.26

   Subordinated Debt      42   

3.27

   Full Disclosure      42   

3.28

   Foreign Assets Control Regulations and Anti-Money Laundering      43   

3.29

   Patriot Act; Proceeds of Crime Act      43   

3.30

   Collateral Documents      43   

3.31

   J. Jill Entities      45   

ARTICLE IV.

   AFFIRMATIVE COVENANTS      45   

4.1

   Financial Statements      45   

4.2

   Appraisals; Certificates; Other Information      46   

4.3

   Notices      50   

4.4

   Preservation of Corporate Existence, Etc      53   

4.5

   Maintenance of Property      54   

4.6

   Insurance      54   

4.7

   Payment of Obligations      55   

4.8

   Compliance with Laws      56   

4.9

   Inspection of Property and Books and Records      56   

4.10

   Use of Proceeds      58   

4.11

   Cash Management Systems      58   

4.12

   Leases      60   

4.13

   Further Assurances      61   

4.14

   Environmental Matters      62   

4.15

   Intentionally Omitted      63   

 

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4.16

   Lien Searches      63   

4.17

   Maintenance of New York Process Agent      63   

4.18

   Canadian Pension Benefit Plans      63   

4.19

   Post-Closing Covenant      63    ARTICLE V.    NEGATIVE COVENANTS      64   

5.1

   Limitation on Liens      64   

5.2

   Disposition of Assets      66   

5.3

   Consolidations and Mergers      66   

5.4

   Acquisitions; Loans and Investments      66   

5.5

   Limitation on Indebtedness      70   

5.6

   Employee Loans and Transactions with Affiliates      71   

5.7

   Compensation      71   

5.8

   Margin Stock; Use of Proceeds      72   

5.9

   Contingent Obligations      72   

5.10

   Compliance with ERISA; Canadian Pension Plan      73   

5.11

   Restricted Payments      74   

5.12

   Change in Business      74   

5.13

   Change in Structure      74   

5.14

   Changes in Accounting, Name or Jurisdiction of Organization      74   

5.15

   Amendments to Subordinated Indebtedness      74   

5.16

   No Negative Pledges      75   

5.17

   OFAC; Patriot Act, Proceeds of Crime Act      75   

5.18

   Sale-Leasebacks      75   

5.19

   Hazardous Materials      75   

5.20

   Prepayments of Other Indebtedness      76   

5.21

   Amendments or Waivers of Term Loan B Credit Documents and the Supplemental
L/C Facility Documents      76   

5.22

   Cash Accumulation      76   

5.23

   Collateral Proceeds      77   

5.24

   Private Label Credit Card Agreements      77   

5.25

   J. Jill Entities      77    ARTICLE VI.    [INTENTIONALLY OMITTED]      78   
ARTICLE VII.    EVENTS OF DEFAULT      78   

 

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7.1

   Events of Default      78   

7.2

   Remedies      81   

7.3

   Rights Not Exclusive      82   

7.4

   Cash Collateral for Letters of Credit      82    ARTICLE VIII.    THE AGENT
     83   

8.1

   Appointment and Duties      83   

8.2

   Binding Effect      84   

8.3

   Use of Discretion      84   

8.4

   Delegation of Rights and Duties      84   

8.5

   Reliance and Liability      85   

8.6

   Agent Individually      87   

8.7

   Lender Credit Decision      87   

8.8

   Expenses; Indemnities; Withholding      88   

8.9

   Resignation of Agent or L/C Issuer      89   

8.10

   Release of Collateral or Guarantors      90   

8.11

   Additional Secured Parties      90   

8.12

   Documentation Agent and Syndication Agent      91   

8.13

   Intercreditor Agreements      91   

8.14

   Information Regarding Bank Products and Secured Rate Contracts      91   

8.15

   Quebec Security      91    ARTICLE IX.    MISCELLANEOUS      92   

9.1

   Amendments and Waivers      92   

9.2

   Notices      94   

9.3

   Electronic Transmissions      95   

9.4

   No Waiver; Cumulative Remedies      97   

9.5

   Costs and Expenses      97   

9.6

   Indemnity      98   

9.7

   Marshaling; Payments Set Aside      99   

9.8

   Successors and Assigns      99   

9.9

   Assignments and Participations; Binding Effect      99   

9.10

   Non-Public Information; Confidentiality      103   

9.11

   Set-off; Sharing of Payments      105   

9.12

   Counterparts; Facsimile Signature      106   

 

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9.13

   Severability      106   

9.14

   Captions      106   

9.15

   Independence of Provisions      106   

9.16

   Interpretation      106   

9.17

   No Third Parties Benefited      106   

9.18

   Governing Law and Jurisdiction      107   

9.19

   Waiver of Jury Trial      107   

9.20

   Entire Agreement; Release; Survival      108   

9.21

   Anti-Money Laundering Legislation Acts      108   

9.22

   Replacement of Lender      109   

9.23

   Joint and Several      109   

9.24

   Creditor-Debtor Relationship      111   

9.25

   Actions in Concert      111    ARTICLE X.    TAXES, YIELD PROTECTION AND
ILLEGALITY      111   

10.1

   Taxes      111   

10.2

   Illegality      116   

10.3

   Increased Costs and Reduction of Return      116   

10.4

   Funding Losses      118   

10.5

   Inability to Determine Rates      118   

10.6

   Reserves on LIBOR Rate Loans      119   

10.7

   Certificates of Lenders      119    ARTICLE XI.    DEFINITIONS      119   

11.1

   Defined Terms      119   

11.2

   Other Interpretive Provisions      160   

11.3

   Accounting Terms and Principles      161   

11.4

   Payments      161   

11.5

   Amendment and Restatement of Existing Credit Agreement      162   

11.6

   Québec Matters      162   

11.7

   Language      162   

11.8

   Unlimited Liability Companies      163   

11.9

   Intercreditor Agreement      164   

11.10

   Credit Parties’ Acknowledgment of Term Loan Push Down Reserve and Term Loan
Reserve Amount      164   

 

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SCHEDULES

 

Schedule 1.1(a)

   Revolving Loan Commitments Schedule 1.1(b)    Specified Secured Debt
Schedule 3.5    Governmental Investigations Schedule 3.7    ERISA Schedule 3.9
   Ownership of Property; Liens Schedule 3.10    Audits Schedule 3.11(a)   
Historical Financial Statements Schedule 3.11(b)    Pro Forma Financial
Statements Schedule 3.11(e)    Projections Schedule 3.12    Environmental
Schedule 3.15    Labor Relations Schedule 3.16    Intellectual Property Schedule
3.17    Certain Transaction Fees Schedule 3.18    Insurance Schedule 3.19   
Ventures, Subsidiaries and Affiliates; Outstanding Stock Schedule 3.20   
Jurisdiction of Organization; Chief Executive Office Schedule 3.21    Locations
of Inventory and Books and Records Schedule 3.22    Deposit Accounts and Other
Accounts Schedule 3.23    Government Contracts Schedule 3.25    Bonding;
Licenses Schedule 4.2(g)    Financial and Collateral Reporting Schedule 4.19   
Post-Closing Schedule 5.1    Liens Schedule 5.4    Investments Schedule 5.5   
Indebtedness Schedule 5.6    Affiliate Transactions Schedule 5.9(c)   
Contingent Obligations Schedule 5.9(i)    J. Jill Sale Contingent Obligations
Schedule 11.1(a)    Credit Card Agreements Schedule 11.1(b)    Private Label
Credit Card Agreements Schedule 11.1(c)    Outstanding Letters of Credit

EXHIBITS

 

Exhibit 1.1(b)    Form of L/C Request Exhibit 1.1(c)    Form of Swing Loan
Request Exhibit 1.6    Form of Notice of Conversion/Continuation Exhibit 2.1   
Closing Checklist Exhibit 4.2(b)    Financial Statement Compliance Certificate
Exhibit 11.1(a)    Form of Assignment Exhibit 11.1(b)    Form of Borrowing Base
Certificate Exhibit 11.1(c)    Form of Notice of Borrowing Exhibit 11.1(d)   
Form of Revolving Note Exhibit 11.1(e)    Form of Swingline Note

 

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AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT (including all exhibits and schedules
hereto, as the same may be amended, modified and/or restated from time to time,
this “Agreement”) is entered into as of February 16, 2012, by and among THE
TALBOTS, INC., a Delaware corporation (the “Company”), THE TALBOTS GROUP,
LIMITED PARTNERSHIP, a Massachusetts limited partnership (“Talbots Group”),
TALBOTS CLASSICS FINANCE COMPANY, INC., a Delaware corporation (“Talbots
Finance”) (the Company, the Talbots Group and Talbots Finance are sometimes
referred to herein collectively as the “Borrowers” and individually as a
“Borrower”), the Company, as Borrower Representative, each other Person from
time to time party hereto as a “Credit Party”, GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, “GE Capital”),
as Agent for the several financial institutions from time to time party to this
Agreement (collectively, the “Lenders” and individually each a “Lender”) and for
itself as a Lender (including as Swingline Lender), and such Lenders.

W I T N E S S E T H:

    WHEREAS, the Borrowers, the other Credit Parties, the various financial
institutions party thereto as lenders and GE Capital, as agent, are parties to a
Credit Agreement, dated as of April 7, 2010 (as amended and in effect
immediately prior to giving effect to this Agreement, the “Existing Credit
Agreement”);

WHEREAS, the Borrowers have requested certain modifications to the terms of the
Existing Credit Agreement, and the Lenders and Agent have agreed to the
requested modifications on the terms and conditions set forth herein; and

WHEREAS, this Agreement is given in amendment to, restatement of and
substitution for the Existing Credit Agreement.

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

ARTICLE I.

THE CREDITS

1.1 Amounts and Terms of Commitments.

(a) The Revolving Credit.

(i) Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties of the Credit Parties contained herein, each
Lender severally and not jointly agrees to make Loans to the Borrowers (each
such Loan, a “Revolving Loan”) from time to time on any Business Day during the
period from the Restatement Effective Date through the Final Availability Date,
in an aggregate

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amount not to exceed at any time outstanding the amount set forth opposite such
Lender’s name in Schedule 1.1(a) under the heading “Revolving Loan Commitments”
(such amount as the same may be reduced or increased from time to time in
accordance with this Agreement, being referred to herein as such Lender’s
“Revolving Loan Commitment”); provided, however, that, after giving effect to
any Borrowing of Revolving Loans, (x) the Aggregate Revolving Exposure shall not
exceed the Maximum Borrowing Availability and (y) the Revolving Exposure of any
Lender shall not exceed such Lender’s Revolving Loan Commitment. Subject to the
other terms and conditions hereof, amounts borrowed under this subsection 1.1(a)
may be repaid and reborrowed from time to time.

(ii) Notwithstanding anything to the contrary contained in this Agreement, if
the Borrower Representative requests that Lenders make, or permit to remain
outstanding Revolving Loans that, when aggregated with the outstanding Letter of
Credit Obligations and Swing Loans, would be in excess of the Borrowing Base
minus the Availability Block at such time (any such excess Revolving Loan is
herein referred to as an “Overadvance”), Agent may, in its sole discretion,
elect to make, or permit to remain outstanding such Overadvance so long as Agent
deems, in its sole discretion, such Overadvance necessary or desirable to
preserve or protect any Collateral, or to enhance the collectibility or
repayment of Obligations, or to pay any other amounts chargeable to Credit
Parties under any Loan Documents, including costs, fees and expenses; provided,
however, that (A) no Overadvance shall remain outstanding for more than sixty
(60) consecutive days during any one hundred eighty (180) consecutive day period
(provided that no Overadvance may be funded to fully refinance an existing
Overadvance) and (B) Agent may not cause Lenders to make, or permit to remain
outstanding, (1) aggregate Revolving Loans in excess of the Aggregate Revolving
Loan Commitment less the sum of outstanding Swing Loans plus the aggregate
amount of Letter of Credit Obligations or (2) an Overadvance in an aggregate
amount in excess of 10% of the Aggregate Revolving Loan Commitment. If an
Overadvance is made, or permitted to remain outstanding, pursuant to the
preceding sentence, then all Lenders shall be bound to make, or permit to remain
outstanding, such Overadvance based upon their Revolving Loan Commitment
Percentage of the Aggregate Revolving Loan Commitment in accordance with the
terms of this Agreement, regardless of whether the conditions to lending set
forth in Section 2.2 have been met. Furthermore, Required Lenders may
prospectively revoke Agent’s ability to make or permit Overadvances by written
notice to Agent. All Overadvances shall constitute Base Rate Loans, shall bear
interest at the Base Rate plus the Applicable Margin for Revolving Loans and the
default rate under subsection 1.3(c), and shall be due and payable upon demand
of the Agent.

(iii) Any Revolving Loan outstanding at the time of the Restatement Effective
Date under the Existing Credit Agreement shall, for the avoidance of doubt,
continue as a Revolving Loan under this Agreement, at the applicable rates and
on such other terms as set forth herein.

 

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(b) Letters of Credit.

(i) Conditions. On the terms and subject to the conditions contained herein,
each L/C Issuer may, in its sole discretion, Issue, at the request of the
Borrower Representative, in accordance with such L/C Issuer’s usual and
customary business practices, and for the account of the Credit Parties, Letters
of Credit (denominated in Dollars) from time to time on any Business Day during
the period from the Restatement Effective Date through the earlier of (x) the
Revolving Termination Date and (y) seven (7) days prior to the date specified in
clause (a) of the definition of Revolving Termination Date; provided, however,
that no L/C Issuer shall Issue any Letter of Credit upon the occurrence of any
of the following or, if after giving effect to such Issuance:

(A) (i) (x) the Aggregate Revolving Exposure would exceed the Maximum Borrowing
Availability, or (y) the Revolving Exposure of any Lender would exceed such
Lender’s Revolving Loan Commitment, (ii) the Letter of Credit Obligations for
all Letters of Credit would exceed $25,000,000 (the “L/C Sublimit”), or
(iii) the Availability would be less than zero;

(B) the expiration date of such Letter of Credit (i) is not a Business Day,
(ii) is more than one year after the date of issuance thereof or (iii) is later
than seven (7) days prior to the date specified in clause (a) of the definition
of Revolving Termination Date; provided, however, that any Letter of Credit with
a term not exceeding one year may provide for its renewal for additional periods
not exceeding one year as long as (x) each Borrower and such L/C Issuer have the
option to prevent such renewal before the expiration of such term or any such
period and (y) neither such L/C Issuer nor any Borrower shall permit any such
renewal to extend such expiration date beyond the date set forth in clause
(iii) above; or

(C) (i) any fee due in connection with, and on or prior to, such Issuance has
not been paid, (ii) such Letter of Credit is requested to be issued in a form
that is not acceptable to such L/C Issuer or (iii) such L/C Issuer shall not
have received, each in form and substance reasonably acceptable to it and duly
executed by the Credit Parties or the Borrower Representative on their behalf,
the applicable L/C Reimbursement Agreement.

Nothing herein shall be construed as a commitment on the part of GE Capital or
any other L/C Issuer to issue Letters of Credit, or to issue Letters of Credit
in any specific form or to any specified beneficiary.

Furthermore, GE Capital as an L/C Issuer may elect only to issue Letters of
Credit in its own name and may only issue Letters of Credit to the extent
permitted by Requirements of Law, and such Letters of Credit may not be accepted
by certain beneficiaries such as insurance companies.

For each Issuance, the applicable L/C Issuer may, but shall not be required to,
determine that, or take notice whether, the conditions precedent set forth in
Section 2.2 have been satisfied or waived in connection with the Issuance of any
Letter of Credit; provided, however, that no Letter of

 

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Credit shall be Issued during the period starting on the first Business Day
after the receipt by such L/C Issuer of notice from Agent or the Required
Lenders that any condition precedent contained in Section 2.2 is not satisfied
and ending on the date all such conditions are satisfied or duly waived. If
(i) any Lender is a Non-Funding Lender or Agent determines that any of the
Lenders is an Impacted Lender and (ii) the reallocation of that Non-Funding
Lender’s or Impacted Lender’s Letter of Credit Obligations to the other Lenders
would reasonably be expected to cause the Letter of Credit Obligations and
Revolving Exposure of any Lender to exceed its Revolving Loan Commitment, taking
into account the amount of outstanding Loans and expected advances of Revolving
Loans as determined by Agent, then no Letters of Credit may be issued or renewed
unless the Non-Funding Lender or Impacted Lender has been replaced, the Letter
of Credit Obligations of that Non-Funding Lender or Impacted Lender have been
cash collateralized, or the Revolving Loan Commitments of the other Lenders have
been increased in accordance with Section 9.1 of this Agreement by an amount
sufficient to satisfy Agent that all future Letter of Credit Obligations will be
covered by all Lenders who are not Non-Funding Lenders or Impacted Lenders.

(ii) Notice of Issuance. The Borrower Representative shall give the relevant L/C
Issuer and Agent a notice of any requested Issuance of any Letter of Credit,
which shall be effective only if received by such L/C Issuer and Agent not later
than 2:00 p.m. on the third Business Day prior to the date of such requested
Issuance. Such notice shall be made in a writing or Electronic Transmission
substantially in the form of Exhibit 1.1(b) duly completed or in a writing in
any other form acceptable to such L/C Issuer (an “L/C Request”).

(iii) Reporting Obligations of L/C Issuers. Each L/C Issuer agrees to provide
Agent, in form and substance satisfactory to Agent, each of the following on the
following dates: (A) (i) on or prior to any Issuance of any Letter of Credit by
such L/C Issuer, (ii) immediately after any drawing under any such Letter of
Credit or (iii) immediately after any payment (or failure to pay when due) by
the Borrowers of any related L/C Reimbursement Obligation, notice thereof, which
shall contain a reasonably detailed description of such Issuance, drawing or
payment, and Agent shall provide copies of such notices to each Lender
reasonably promptly after receipt thereof; (B) upon the request of Agent (or any
Lender through Agent), copies of any Letter of Credit Issued by such L/C Issuer
and any related L/C Reimbursement Agreement and such other documents and
information as may reasonably be requested by Agent; and (C) on the first
Business Day of each calendar week, a schedule of the Letters of Credit Issued
by such L/C Issuer, in form and substance reasonably satisfactory to Agent,
setting forth the Letter of Credit Obligations for such Letters of Credit
outstanding on the last Business Day of the previous calendar week.

(iv) Acquisition of Participations. Upon any Issuance of a Letter of Credit in
accordance with the terms of this Agreement resulting in any increase in the
Letter of Credit Obligations, each Lender shall be deemed to have acquired,

 

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without recourse or warranty, an undivided interest and participation in such
Letter of Credit and the related Letter of Credit Obligations in an amount equal
to its Revolving Loan Commitment Percentage of such Letter of Credit
Obligations.

(v) Reimbursement Obligations of the Borrowers. The Borrowers agree to pay to
the L/C Issuer of any Letter of Credit each L/C Reimbursement Obligation owing
with respect to such Letter of Credit no later than the first Business Day after
the Borrowers or the Borrower Representative receive notice from such L/C Issuer
that payment has been made under such Letter of Credit or that such L/C
Reimbursement Obligation is otherwise due (the “L/C Reimbursement Date”) with
interest thereon computed as set forth in clause (A) below. In the event that
any L/C Issuer incurs any L/C Reimbursement Obligation which is not repaid by
the Borrowers as provided in this clause (v) (or any such payment by the
Borrowers is rescinded or set aside for any reason), such L/C Issuer shall
promptly notify Agent of such failure (and, upon receipt of such notice, Agent
shall notify each Lender) and, irrespective of whether such notice is given,
such L/C Reimbursement Obligation shall be payable on demand by the Borrowers
with interest thereon computed (A) from the date on which such L/C Reimbursement
Obligation arose to the L/C Reimbursement Date, at the interest rate applicable
during such period to Revolving Loans that are Base Rate Loans and
(B) thereafter until payment in full, at the interest rate applicable during
such period to past due Revolving Loans that are Base Rate Loans.

(vi) Reimbursement Obligations of the Lenders. If no Lender is a Non-Funding
Lender, upon receipt of the notice described in clause (v) above from Agent,
each Lender shall pay to Agent for the account of such L/C Issuer its Revolving
Loan Commitment Percentage of such Letter of Credit Obligations. If any Lender
is a Non-Funding Lender, that Non-Funding Lender’s Letter of Credit Obligations
shall be reallocated to and assumed by the other Lenders pro rata in accordance
with their Revolving Loan Commitment Percentages of the Loan (calculated as if
the Non-Funding Lender’s Revolving Loan Commitment Percentage was reduced to
zero and each other Lender’s Revolving Loan Commitment Percentage had been
increased proportionately). If any Lender is a Non-Funding Lender, upon receipt
of the notice described in clause (v) above from Agent, each Lender that is not
a Non-Funding Lender shall pay to Agent for the account of such L/C Issuer its
pro-rata share (increased as described in the immediately preceding sentence) of
the Letter of Credit Obligations that from time to time remain outstanding;
provided that no Lender shall be required to fund any amount which would result
in the sum of its outstanding Revolving Loans (including Overadvances),
outstanding Letter of Credit Obligations, amount of its participations in Swing
Loans and its pro rata share of unparticipated amounts in Swing Loans to exceed
its Revolving Loan Commitment. By making such payment (other than during the
continuation of an Event of Default under subsection 7.1(f) or 7.1(g)), such
Lender shall be deemed to have made a Revolving Loan to the Borrowers, which,
upon receipt thereof by such L/C Issuer, the Borrowers shall be deemed to have
used in whole to repay such L/C Reimbursement Obligation. Any such payment that
is not deemed a Revolving Loan shall be deemed a funding by such Lender of its
participation in the applicable Letter of Credit and the Letter of Credit
Obligation in respect of the related L/C Reimbursement Obligations. Such
participation shall not otherwise be required to be funded. Following

 

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receipt by any L/C Issuer of any payment from any Lender pursuant to this clause
(vi) with respect to any portion of any L/C Reimbursement Obligation, such L/C
Issuer shall promptly pay over to such Lender all duplicate payments received
from Persons other than Lenders making payment on behalf of a Credit Party by
such L/C Issuer with respect to such portion of such L/C Reimbursement
Obligation.

(vii) Obligations Absolute. The obligations of the Borrowers and the Lenders
pursuant to clauses (iv), (v) and (vi) above shall be absolute, unconditional
and irrevocable and performed strictly in accordance with the terms of this
Agreement irrespective of (A) (i) the invalidity or unenforceability of any term
or provision in any Letter of Credit, any document transferring or purporting to
transfer a Letter of Credit, any Loan Document (including the sufficiency of any
such instrument), or any modification to any provision of any of the foregoing,
(ii) any document presented under a Letter of Credit being forged, fraudulent,
invalid, insufficient or inaccurate in any respect or failing to comply with the
terms of such Letter of Credit or (iii) any loss or delay, including in the
transmission of any document, (B) the existence of any setoff, claim, abatement,
recoupment, defense or other right that any Person (including any Credit Party)
may have against the beneficiary of any Letter of Credit or any other Person,
whether in connection with any Loan Document or any other Contractual Obligation
or transaction, or the existence of any other withholding, abatement or
reduction, (C) in the case of the obligations of any Lender, (i) the failure of
any condition precedent set forth in Section 2.2 to be satisfied (each of which
conditions precedent the Lenders hereby irrevocably waive) or (ii) any adverse
change in the condition (financial or otherwise) of any Credit Party and (D) any
other act or omission to act or delay of any kind of Agent, any Lender or any
other Person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
clause (vii), constitute a legal or equitable discharge of any obligation of the
Borrowers or any Lender hereunder. No provision hereof shall be deemed to waive
or limit the Borrowers’ right to seek repayment of any payment of any L/C
Reimbursement Obligations from the L/C Issuer under the terms of the applicable
L/C Reimbursement Agreement or applicable law.

(viii) Outstanding Letters of Credit. For the avoidance of doubt, any
Outstanding Letters of Credit at the time of the restatement Effective Date
under the Existing Credit Agreement shall continue as Letters of Credit under
this Agreement, at the applicable rates and on such other terms as set forth
herein.

(c) Swing Loans.

(i) Availability. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of the Credit Parties contained
herein, the Swingline Lender may, in its sole discretion, make Loans (each a
“Swing Loan”) available to the Borrowers under the Revolving Loan Commitments
from time to time on any Business Day during the period from the Restatement
Effective Date through the Final Availability Date in an aggregate principal
amount at any time outstanding not to exceed its Swingline Commitment; provided,
however, that the Swingline Lender may not make any Swing Loan (x) to the extent
that after giving effect

 

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to such Swing Loan, the Aggregate Revolving Exposure would exceed the Maximum
Borrowing Availability, (y) the Revolving Exposure of any Lender would exceed
such Lender’s Revolving Loan Commitment and (z) during the period commencing on
the first Business Day after it receives notice from Agent or the Required
Lenders that one or more of the conditions precedent contained in Section 2.2
are not satisfied and ending when such conditions are satisfied or duly waived.
In connection with the making of any Swing Loan, the Swingline Lender may but
shall not be required to determine that, or take notice whether, the conditions
precedent set forth in Section 2.2 have been satisfied or waived. Each Swing
Loan shall be a Base Rate Loan and must be repaid as provided herein, but in any
event must be repaid in full on the Revolving Termination Date. Within the
limits set forth in the first sentence of this clause (i), amounts of Swing
Loans repaid may be reborrowed under this clause (i).

(ii) Borrowing Procedures. In order to request a Swing Loan, the Borrower
Representative shall give to Agent a notice to be received not later than 2:00
p.m. on the day of the proposed Borrowing, which shall be made in a writing or
in an Electronic Transmission substantially in the form of Exhibit 1.1(c) or in
a writing in any other form acceptable to Agent duly completed (a “Swingline
Request”), provided, that any Swingline Request received after 2:00 p.m. may, in
the Agent’s discretion, be deemed to be received on the next Business Day. In
addition, if any Notice of Borrowing of Revolving Loans requests a Borrowing of
Base Rate Loans, the Swingline Lender may (except during the period commencing
on the first Business Day after it receives notice from Agent or the Required
Lenders that one or more of the conditions precedent contained in Section 2.2
are not satisfied and ending when such conditions are satisfied or duly waived),
notwithstanding anything else to the contrary herein, make a Swing Loan to the
Borrowers in an aggregate amount not to exceed the lesser of (x) its Swingline
Commitment or (y) such proposed Borrowing, and the aggregate amount of the
corresponding proposed Borrowing shall be reduced accordingly by the principal
amount of such Swing Loan. Agent shall promptly notify the Swingline Lender of
the details of the requested Swing Loan. Upon receipt of such notice and subject
to the terms of this Agreement, the Swingline Lender may make a Swing Loan
available to the Borrowers by making the proceeds thereof available to Agent
and, in turn, Agent shall make such proceeds available to the Borrowers not
later than 5:00 p.m. on the date of such Swingline Request or Notice of
Borrowing.

(iii) Refinancing Swing Loans. If no Lender is a Non-Funding Lender, the
Swingline Lender may at any time (and shall, no less frequently than once each
week) forward a demand to Agent (which Agent shall, upon receipt, forward to
each Lender) that each Lender pay to Agent, for the account of the Swingline
Lender, such Lender’s Revolving Loan Commitment Percentage of the outstanding
Swing Loans. If any Lender is a Non-Funding Lender, that Non-Funding Lender’s
reimbursement obligations with respect to the Swing Loans shall be reallocated
to and assumed by the other Lenders pro rata in accordance with their Revolving
Loan Commitment Percentages of the Revolving Loans (calculated as if the
Non-Funding Lender’s Revolving Loan Commitment Percentage was reduced to zero
and each other Lender’s Revolving Loan Commitment Percentage had been increased
proportionately). If any Lender is a Non-Funding Lender, upon receipt of the
demand described above, each

 

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Lender that is not a Non-Funding Lender will be obligated to pay to Agent for
the account of the Swingline Lender its pro rata share of the outstanding Swing
Loans (increased as described above); provided that no Lender shall be required
to fund any amount which would result in its Revolving Exposure exceeding its
Revolving Loan Commitment. Each Lender shall pay the amount owing by it to Agent
for the account of the Swingline Lender on the Business Day following receipt of
the notice or demand therefor. Payments received by Agent after 1:00 p.m. may,
in the Agent’s discretion, be deemed to be received on the next Business Day.
Upon receipt by Agent of such payment (other than during the continuation of any
Event of Default under subsection 7.1(f) or 7.1(g)), such Lender shall be deemed
to have made a Revolving Loan to the Borrowers, which, upon receipt of such
payment by the Swingline Lender from Agent, the Borrowers shall be deemed to
have used in whole to refinance such Swing Loan. In addition, regardless of
whether any such demand is made, upon the occurrence of any Event of Default
under subsection 7.1(f) or 7.1(g), each Lender shall be deemed to have acquired,
without recourse or warranty, an undivided interest and participation in each
Swing Loan in an amount equal to such Lender’s Revolving Loan Commitment
Percentage of such Swing Loan. If any payment made by any Lender as a result of
any such demand is not deemed a Revolving Loan, such payment shall be deemed a
funding by such Lender of such participation. Such participation shall not be
otherwise required to be funded. Upon receipt by the Swingline Lender of any
payment from any Lender pursuant to this clause (iii) with respect to any
portion of any Swing Loan, the Swingline Lender shall promptly pay over to such
Lender all payments of principal (to the extent received after such payment by
such Lender) and interest (to the extent accrued with respect to periods after
such payment) on account of such Swing Loan received by the Swingline Lender
with respect to such portion.

(iv) Obligation to Fund Absolute. Each Lender’s obligations pursuant to clause
(iii) above shall be absolute, unconditional and irrevocable and shall be
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever, including (A) the existence of any setoff, claim,
abatement, recoupment, defense or other right that such Lender, any Affiliate
thereof or any other Person may have against the Swingline Lender, Agent, any
other Lender or L/C Issuer or any other Person, (B) the failure of any condition
precedent set forth in Section 2.2 to be satisfied or the failure of the
Borrower Representative to deliver a Notice of Borrowing (each of which
requirements the Lenders hereby irrevocably waive) and (C) any adverse change in
the condition (financial or otherwise) of any Credit Party.

1.2 Notes.

(a) The Revolving Loans made by each Lender shall be evidenced by this Agreement
and, if requested by such Lender, a Revolving Note payable to the order of such
Lender in an amount equal to such Lender’s Revolving Loan Commitment.

(b) Swing Loans made by the Swingline Lender shall be evidenced by this
Agreement and, if requested by such Lender, a Swingline Note in an amount equal
to the Swingline Commitment.

 

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1.3 Interest.

(a) Subject to subsections 1.3(c) and 1.3(d), each Loan shall bear interest on
the outstanding principal amount thereof from the date when made at a rate per
annum equal to the LIBOR or the Base Rate, as the case may be, plus the
Applicable Margin; provided Swing Loans may not be LIBOR Rate Loans. The
Applicable Margin for Loans shall be subject to adjustment as set forth in the
definition of Applicable Margin. Agent will with reasonable promptness notify
the Borrower Representative and the Lenders of the effective date and the amount
of each such change, provided that any failure to do so shall not relieve the
Borrowers of any liability hereunder or provide the basis for any claim against
Agent. Each determination of an interest rate by Agent shall be conclusive and
binding on each Borrower and the Lenders in the absence of manifest error. All
computations of fees and interest payable under this Agreement shall be made on
the basis of a 360-day year and actual days elapsed. Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.

(b) Interest on each Loan shall be paid in arrears on each Interest Payment
Date. Interest shall also be paid on the date of any payment or prepayment of
Loans in full.

(c) At the election of Agent or the Required Lenders while any Event of Default
exists (or automatically while any Event of Default under subsection 7.1(a),
7.1(f) or 7.1(g) exists), the Borrowers shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on the Loans
under the Loan Documents from and after the date of occurrence of such Event of
Default, at a rate per annum which is determined by adding two percent
(2.00%) per annum to the Applicable Margin then in effect for such Loans (plus
the LIBOR or Base Rate, as the case may be). All such interest shall be payable
on demand of Agent or the Required Lenders.

(d) Anything herein to the contrary notwithstanding, the obligations of the
Borrowers or any Credit Party hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by the respective Lender would be contrary to the
provisions of any law applicable to such Lender limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such
Lender, and in such event the Borrowers or the applicable Credit Party shall pay
such Lender interest at the highest rate permitted by applicable law (“Maximum
Lawful Rate”); provided, however, that if at any time thereafter the rate of
interest payable hereunder is less than the Maximum Lawful Rate, the Borrowers
or applicable Credit Party shall continue to pay interest hereunder at the
Maximum Lawful Rate until such time as the total interest received by Agent, on
behalf of Lenders, is equal to the total interest that would have been received
had the interest payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Restatement Effective Date as
otherwise provided in this Agreement.

 

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1.4 Loan Accounts.

(a) Agent, on behalf of the Lenders, shall record on its books and records the
amount of each Loan made, the interest rate applicable, all payments of
principal and interest thereon and the principal balance thereof from time to
time outstanding. Agent shall deliver to the Borrower Representative on a
monthly basis a loan statement setting forth such record for the immediately
preceding calendar month. Such record shall, absent manifest error, be
conclusive evidence of the amount of the Loans made by the Lenders to the
Borrowers and the interest and payments thereon. Any failure to so record or any
error in doing so, or any failure to deliver such loan statement shall not,
however, limit or otherwise affect the obligation of the Borrowers hereunder
(and under any Note) to pay any amount owing with respect to the Loans or
provide the basis for any claim against Agent.

(b) Agent, acting as a non-fiduciary agent of the Borrowers solely for tax
purposes and solely with respect to the actions described in this subsection
1.4(b), shall establish and maintain at its address referred to in Section 9.2
(or at such other address as Agent may notify the Borrower Representative) (A) a
record of ownership (the “Register”) in which Agent agrees to register by book
entry the interests (including any rights to receive payment hereunder) of
Agent, each Lender and each L/C Issuer in Revolving Loans, Swing Loans, L/C
Reimbursement Obligations, and Letter of Credit Obligations, each of their
obligations under this Agreement to participate in each Loan, Letter of Credit,
Letter of Credit Obligations, and L/C Reimbursement Obligations, and any
assignment of any such interest, obligation or right and (B) accounts in the
Register in accordance with its usual practice in which it shall record (1) the
names and addresses of the Lenders and the L/C Issuers (and each change thereto
pursuant to Sections 9.9 and 9.22), (2) the Commitments of each Lender, (3) the
amount of each Loan and each funding of any participation described in clause
(A) above, and for LIBOR Rate Loans, the Interest Period applicable thereto,
(4) the amount of any principal or interest due and payable or paid, (5) the
amount of the L/C Reimbursement Obligations due and payable or paid in respect
of Letters of Credit and (6) any other payment received by Agent from a Borrower
and its application to the Obligations.

(c) Notwithstanding anything to the contrary contained in this Agreement, the
Loans (including any Notes evidencing such Loans and, in the case of Revolving
Loans, the corresponding obligations to participate in Letter of Credit
Obligations and Swing Loans) and the L/C Reimbursement Obligations are
registered obligations, the right, title and interest of the Lenders and the L/C
Issuers and their assignees in and to such Loans or L/C Reimbursement
Obligations, as the case may be, shall be transferable only upon notation of
such transfer in the Register and no assignment thereof shall be effective until
recorded

 

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therein. This Section 1.4 and Section 9.9 shall be construed so that the Loans
and L/C Reimbursement Obligations are at all times maintained in “registered
form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the
Code.

(d) The Credit Parties, Agent, the Lenders and the L/C Issuers shall treat each
Person whose name is recorded in the Register as a Lender or L/C Issuer, as
applicable, for all purposes of this Agreement. Information contained in the
Register with respect to any Lender or any L/C Issuer shall be available for
access by the Borrowers, the Borrower Representative, Agent, such Lender or such
L/C Issuer during normal business hours and from time to time upon at least one
Business Day’s prior notice. No Lender or L/C Issuer shall, in such capacity,
have access to or be otherwise permitted to review any information in the
Register other than information with respect to such Lender or L/C Issuer unless
otherwise agreed by Agent.

1.5 Procedure for Revolving Credit Borrowing.

(a) Each Borrowing of a Revolving Loan shall be made upon the Borrower
Representative’s irrevocable (subject to Section 10.5) written notice delivered
to Agent substantially in the form of a Notice of Borrowing or in a writing in
any other form acceptable to Agent, which notice must be received by Agent prior
to 11:00 a.m. (i) on the requested Borrowing date of each Base Rate Loan equal
to or less than $50,000,000, (ii) on the date which is three (3) Business Days
prior to the requested Borrowing date of each Base Rate Loan in excess of
$50,000,000 and (iii) on the day which is three (3) Business Days prior to the
requested Borrowing date in the case of each LIBOR Rate Loan. Such Notice of
Borrowing shall specify:

(i) the amount of the Borrowing (which shall be in an aggregate minimum
principal amount of $100,000);

(ii) the requested Borrowing date, which shall be a Business Day;

(iii) whether the Borrowing is to be comprised of LIBOR Rate Loans or Base Rate
Loans; and

(iv) if the Borrowing is to be LIBOR Rate Loans, the Interest Period applicable
to such Loans.

(b) Upon receipt of a Notice of Borrowing, Agent will promptly notify each
Lender of such Notice of Borrowing and of the amount of such Lender’s Revolving
Loan Commitment Percentage of the Borrowing.

(c) Unless Agent is otherwise directed in writing by the Borrower
Representative, the proceeds of each requested Borrowing after the Restatement
Effective Date will be made available to the Borrowers by Agent no later than
(i) 5:00 p.m., in the case of each Base Rate Loan equal to or less than

 

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$50,000,000, and (ii) 2:00 p.m., in the case of each Base Rate Loan in excess of
$50,000,000 and each LIBOR Rate Loan, in each case, on the relevant Borrowing
date by wire transfer of such amount to the Borrowers pursuant to the wire
transfer instructions specified on the signature page hereto.

1.6 Conversion and Continuation Elections.

(a) The Borrowers shall have the option to (i) request that any Revolving Loan
be made as a LIBOR Rate Loan, (ii) convert at any time all or any part of
outstanding Revolving Loans from Base Rate Loans to LIBOR Rate Loans,
(iii) convert any LIBOR Rate Loan to a Base Rate Loan, subject to Section 10.4
if such conversion is made prior to the expiration of the Interest Period
applicable thereto, or (iv) continue all or any portion of any Loan as a LIBOR
Rate Loan upon the expiration of the applicable Interest Period. Any Loan or
group of Loans having the same proposed Interest Period to be made or continued
as, or converted into, a LIBOR Rate Loan must be in a minimum amount of
$5,000,000. Any such election must be made by Borrower Representative by 2:00
p.m. on the 3rd Business Day prior to (1) the date of any proposed Revolving
Loan which is to bear interest at LIBOR, (2) the end of each Interest Period
with respect to any LIBOR Rate Loans to be continued as such, or (3) the date on
which the Borrowers wish to convert any Base Rate Loan to a LIBOR Rate Loan for
an Interest Period designated by Borrower Representative in such election. If no
election is received with respect to a LIBOR Rate Loan by 2:00 p.m. on the 3rd
Business Day prior to the end of the Interest Period with respect thereto, that
LIBOR Rate Loan shall be converted to a Base Rate Loan at the end of its
Interest Period. Borrower Representative must make such election by notice to
Agent in writing, including by Electronic Transmission. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a “Notice of Conversion/Continuation”) substantially in the form of
Exhibit 1.6 or in a writing in any other form acceptable to Agent. No Loan shall
be made, converted into or continued as a LIBOR Rate Loan, if the conditions to
Loans in Section 2.2 are not met at the time of such proposed conversion or
continuation and Agent or Required Lenders have determined not to make or
continue any Loan as a LIBOR Rate Loan as a result thereof.

(b) Upon receipt of a Notice of Conversion/Continuation, Agent will promptly
notify each Lender thereof. In addition, Agent will, with reasonable promptness,
notify the Borrower Representative and the Lenders of each determination of
LIBOR; provided that any failure to do so shall not relieve any Borrower of any
liability hereunder or provide the basis for any claim against Agent. All
conversions and continuations shall be made pro rata according to the respective
outstanding principal amounts of the Loans held by each Lender with respect to
which the notice was given.

(c) Notwithstanding any other provision contained in this Agreement, after
giving effect to any Borrowing, or to any continuation or conversion of any
Loans, there shall not be more than seven (7) different Interest Periods in
effect.

 

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1.7 Optional Prepayments of Loans and Commitment Reductions.

(a) Reductions in Revolving Loan Commitments. Borrowers may, at any time upon at
least two (2) Business Days’ (or such shorter period as is acceptable to Agent)
prior notice by Borrower Representative to Agent, permanently reduce (but not
terminate) the Aggregate Revolving Loan Commitment; provided that (i) such
reductions shall be in a minimum amount equal to $5,000,000 and in increments of
$500,000 in excess thereof, and (ii) the Aggregate Revolving Loan Commitment
shall not be reduced to an amount less than the Aggregate Revolving Exposure at
such time. In addition, Borrowers may, at any time on at least ten (10) days’
prior written notice by Borrower Representative to Agent, terminate the
Aggregate Revolving Loan Commitment; provided that upon such termination, all
Obligations shall be immediately due and payable in full. Optional reductions or
terminations of the Revolving Loan Commitment shall be without premium or
penalty except as provided in Sections 1.9(d) and 10.4. All reductions of the
Aggregate Revolving Loan Commitment shall be allocated pro rata in accordance
with their Revolving Loan Commitment Percentages among all Lenders with a
Revolving Loan Commitment.

(b) Optional Prepayments. The Borrowers may, upon prior notice by Borrower
Representative to Agent, at any time or from time to time voluntarily prepay the
Revolving Loans in whole or in part without premium or penalty or any reduction
in the Aggregate Revolving Loan Commitment; provided that (i) such notice must
be received by the Agent not later than 11:00 a.m. (A) three Business Days prior
to any date of prepayment of LIBOR Rate Loans and (B) on the date of prepayment
of Base Rate Loans; and (ii) any such prepayment shall be in a minimum amount
equal to $5,000,000 and in increments of $500,000 in excess thereof, or if less,
the entire principal amount thereof then outstanding (it being understood that
no notice or minimum amount set forth herein shall be applicable with respect to
any payments effected pursuant to Section 4.11(d)).

(c) Notice. Once provided, any notice of a reduction in the Aggregate Revolving
Loan Commitment and prepayment of Revolving Loans shall not thereafter be
revocable by the Borrowers or Borrower Representative and Agent will promptly
notify each Lender thereof and of such Lender’s Revolving Loan Commitment
Percentage of such reduction or prepayment, as the case may be. In the case of
any notice of prepayment, the payment amount specified in such notice shall be
due and payable on the date specified therein. Together with each prepayment
under this Section 1.7, the Borrowers shall pay any amounts required pursuant to
Sections 1.9 and 10.4.

 

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1.8 Mandatory Prepayments of Loans.

(a) Advances in Excess of Maximum Borrowing Availability. If at any time the
then Aggregate Revolving Exposure exceeds the Maximum Borrowing Availability
(other than as a result of an Overadvance permitted pursuant to
Section 1.1(a)(ii)), then the Borrowers shall immediately prepay outstanding
Revolving Loans and then cash collateralize (in accordance herewith and in a
manner satisfactory to the L/C Issuers) outstanding Letters of Credit in an
amount sufficient to eliminate such excess.

(b) Loans. The Borrowers shall repay to the Lenders in full on the date
specified in clause (a) of the definition of “Revolving Termination Date” the
aggregate principal amount of the Revolving Loans and Swing Loans outstanding on
the Revolving Termination Date.

(c) Asset Dispositions. If a Credit Party or any Subsidiaries of a Credit Party
shall at any time or from time to time:

(i) make a Disposition; or

(ii) suffer an Event of Loss;

then (A) the Borrower Representative shall promptly notify Agent of such
Disposition or Event of Loss (including the amount of the estimated Net Proceeds
to be received by a Credit Party and/or such Subsidiary in respect thereof) and
(B) promptly upon receipt by a Credit Party and/or such Subsidiary of any Net
Proceeds of such Disposition or Event of Loss (x) in the case of any ABL
Priority Collateral, (y) in the case of any Term Priority Collateral that are
not applied to the repayment of the Term Loan B Obligations or reinvested by the
applicable Credit Party, in each case pursuant to the express terms of the Term
Loan B Agreement (and subject in all cases to the terms of the Term Loan B
Intercreditor Agreement), and (z) in the case of any other Second Priority
Collateral, subject to the Supplemental L/C Facility Intercreditor Agreement,
the Credit Parties shall deliver, or cause to be delivered, such Net Proceeds to
Agent for distribution to the Lenders as a prepayment of the Loans, which
prepayment shall be applied in accordance with Section 1.10(c)(i) or
Section 1.10(c)(ii), as the case may be.

(d) Issuance of Securities. Immediately upon the receipt by any Credit Party or
any Subsidiary of any Credit Party of the Net Issuance Proceeds in excess of
$50,000 in the aggregate in any Fiscal Year from the issuance of Stock or Stock
Equivalents (including any capital contribution) or debt securities (other than
Net Issuance Proceeds from the issuance of (i) debt securities in respect of
Indebtedness permitted hereunder, and (ii) Excluded Equity Issuances), the
Credit Parties shall deliver, or cause to be delivered, to Agent an amount equal
to such Net Issuance Proceeds, for application to the Loans in accordance with
Section 1.10(c)(i) or Section 1.10(c)(ii), as the case may be.

 

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(e) No Implied Consent. Provisions contained in this Section 1.8 for the
application of proceeds of certain transactions shall not be deemed to
constitute consent of the Lenders to transactions that are not otherwise
permitted by the terms hereof or the other Loan Documents.

(f) No Reduction in the Aggregate Revolving Loan Commitment. No prepayment made
pursuant to this Section 1.8 shall reduce the Aggregate Revolving Loan
Commitment.

1.9 Fees.

(a) Fees. The Borrowers shall pay to Agent, for Agent’s own account, fees in the
amounts and at the times set forth in the Fee Letter.

(b) Unused Commitment Fee. The Borrowers shall pay to Agent a fee (the “Unused
Commitment Fee”) in an amount equal to

(i) the average daily balance of the Aggregate Revolving Loan Commitment during
the preceding calendar month, less

(ii) the sum of (x) the average daily balance of all Revolving Loans outstanding
plus (y) the average daily amount of Letter of Credit Obligations, in each case,
during the preceding calendar month,

multiplied by the Unused Commitment Fee Rate per annum. Such fee shall be
payable monthly in arrears on the second day of the Fiscal Month following the
date hereof and the second day of each Fiscal Month thereafter; provided,
however, that, while an Event of Default exists, such Unused Commitment Fee
shall be payable on demand of Agent or the Required Lenders. All computations of
such fee shall be made on the basis of a 360-day year and actual days elapsed.
The Unused Commitment Fee provided in this subsection 1.9(b) shall accrue at all
times from and after mutual execution and delivery of this Agreement. Following
receipt of the Unused Commitment Fee, Agent shall pay to each Lender from, and
to the extent of, the Unused Commitment Fee an amount equal to its pro rata
share thereof.

(c) Letter of Credit Fee. The Borrowers agree to pay to Agent for the ratable
benefit of the Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (i) without duplication of costs and expenses
otherwise payable to Agent or Lenders hereunder or fees otherwise paid by the
Borrowers, all reasonable costs and expenses incurred by Agent or any Lender on
account of such Letter of Credit Obligations, and (ii) for each calendar month
during which any Letter of Credit Obligation shall remain outstanding, a fee
(the “Letter of Credit Fee”) (A) for all documentary Letters of Credit, in an
amount equal to the product of the average daily undrawn face amount of all such
commercial Letters of Credit issued, guaranteed or supported by risk
participation agreements multiplied by a per annum rate equal to one-half ( 1/2)
of the Applicable Margin with respect to Revolving Loans which are LIBOR Rate
Loans and (B)

 

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for all standby Letters of Credit, in an amount equal to the product of the
average daily undrawn face amount of all such standby Letters of Credit issued,
guaranteed or supported by risk participation agreements multiplied by a per
annum rate equal to the Applicable Margin with respect to Revolving Loans which
are LIBOR Rate Loans; provided, however, at Agent’s or Required Lenders’ option,
while an Event of Default exists (or automatically while an Event of Default
under subsection 7.1(f) or 7.1(g) exists), each such rate shall be increased by
two percent (2.00%) per annum. Such fee shall be paid to Agent for the benefit
of the Lenders in arrears, on the second day of each Fiscal Month and on the
date on which all Letter of Credit Obligations have been discharged. In
addition, the Borrowers shall pay to any L/C Issuer, on demand, its customary
fees at then prevailing rates, without duplication of fees otherwise payable
hereunder (including all per annum fees (including any fronting fees agreed to
by the Borrowers and the applicable L/C Issuer)), charges and expenses of such
L/C Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued.

(d) Prepayment Fee. If the Revolving Loan Commitments are reduced or terminated
on or prior to the first anniversary of the Restatement Effective Date (whether
voluntarily or involuntarily and whether before or after acceleration), the
Borrowers shall pay to Agent, for the pro rata benefit of the Lenders, as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount equal to one percent (1.00%) multiplied by
the amount of the reduction of the Aggregate Revolving Loan Commitment or the
amount of the Aggregate Revolving Loan Commitment so terminated. The Credit
Parties agree that the amounts payable hereunder are a reasonable calculation of
Lenders’ lost profits in view of the difficulties and impracticality of
determining actual damages resulting from an early reduction or termination of
the Revolving Loan Commitments. Notwithstanding the foregoing, solely in the
event that the Revolving Loan Commitments are reduced or terminated prior to the
first anniversary of the Restatement Effective Date in connection with a Change
of Control not arising in connection with a liquidation of all or substantially
all of the Company’s assets (whether or not waived by the Lenders), then each
such Lender hereunder agrees to waive its portion of the prepayment fee due and
payable pursuant to this Section 1.9(d).

1.10 Payments by the Borrowers.

(a) All payments (including prepayments) to be made by each Credit Party on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off, recoupment, counterclaim or deduction of any kind,
shall, except as otherwise expressly provided herein, be made to Agent (for the
ratable account of the Persons entitled thereto) at the address for payment
specified in the signature page hereof in relation to Agent (or such other
address as Agent may from time to time specify in accordance with Section 9.2),
including payments utilizing the ACH system, and shall be made in Dollars and

 

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by wire transfer or ACH transfer in immediately available funds (which shall be
the exclusive means of payment hereunder), no later than 1:00 p.m. on the date
due. Any payment which is received by Agent later than 1:00 p.m. may in Agent’s
discretion be deemed to have been received on the immediately succeeding
Business Day and any applicable interest or fee shall continue to accrue. Each
Borrower and each other Credit Party hereby irrevocably waives the right to
direct the application during the continuance of an Event of Default of any and
all payments in respect of any Obligation and any proceeds of Collateral. Each
Borrower hereby authorizes Agent and each Lender to make a Revolving Loan (which
shall be a Base Rate Loan and which may be a Swing Loan) to pay interest,
principal (including Swing Loans), L/C Reimbursement Obligations, agent fees,
Unused Commitment Fees, Letter of Credit Fees, and other fees, costs and
expenses payable by a Borrower or any of its Subsidiaries hereunder or under the
other Loan Documents, in each instance, on the date due.

(b) Subject to the provisions set forth in the definition of “Interest Period”
herein, if any payment 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
interest or fees, as the case may be.

(c) (i) So long as no Event of Default has occurred and is continuing, all
payments received by Agent in respect of any Obligation and all funds
transferred and credited to the Collection Account shall be applied to the
Obligations as follows:

first, to the payment of any Overadvance funded by the Agent;

second, to payment of interest, fees, costs and expenses and any other amounts
then due and payable by the Credit Parties under this Agreement and the other
Loan Documents;

third, to payment of all Swing Loans;

fourth, to payment of all Revolving Loans that are Base Rate Loans;

fifth, to payment of all Revolving Loans that are LIBOR Rate Loans; and

sixth, to the Borrower Representative’s operating account or for the account of
and paid to whoever may be lawfully entitled thereto.

In carrying out the foregoing, (A) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category and (B) each of the Lenders or other Persons entitled to
payment shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant to clauses third, fourth, and fifth above.

 

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(i) During the continuance of an Event of Default, Agent may, and shall upon the
direction of Required Lenders apply any and all payments received by Agent in
respect of any Obligation in accordance with clauses first through eighth below.
Notwithstanding any provision herein to the contrary, all amounts collected or
received by Agent after any or all of the Obligations have been accelerated (so
long as such acceleration has not been rescinded), including proceeds of
Collateral, shall be applied as follows:

first, to the payment of any Overadvance funded by the Agent and fees, costs and
expenses, including Attorney Costs, of Agent payable or reimbursable by the
Credit Parties under the Loan Documents;

second, to payment of Attorney Costs of Lenders payable or reimbursable by the
Borrowers under this Agreement;

third, to payment of all accrued unpaid interest on the Obligations and fees
owed to Agent, the Lenders and L/C Issuers;

fourth, to payment of principal of the Obligations (other than Bank Products)
then due and payable including, without limitation, L/C Reimbursement
Obligations then due and payable and cash collateralization in an amount of 107%
of unmatured L/C Reimbursement Obligations to the extent not then due and
payable;

fifth, to payment of any Obligations under any Secured Rate Contract solely to
the extent that Agent has been notified of the amount and type of such Secured
Rate Contract prior to the occurrence of the Event of Default and a Reserve has
been instituted by Agent in connection therewith;

sixth, to payment of any Obligations constituting Bank Products solely to the
extent that Agent has been notified of the amount and type of such Bank Products
prior to the occurrence of the Event of Default and a Reserve has been
instituted by Agent in connection therewith;

seventh, to payment of any other amounts owing constituting Obligations
(including Secured Rate Contracts and Bank Products not otherwise paid pursuant
to Sections 1.10(c)(ii) fifth and 1.10(c)(ii) sixth herein above); and

eighth, any remainder shall be for the account of and paid to whoever may be
lawfully entitled thereto.

 

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In carrying out the foregoing, (A) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category and (B) each of the Lenders or other Persons entitled to
payment shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant to clauses third, fourth, fifth and sixth above.

(d) Agent is hereby authorized by the Borrowers to, and at its sole election
may, charge to the Loan balance on behalf of each Borrower and cause to be paid
all fees, expenses, charges, costs and interest and principal, other than
principal of the Loans, owing by the Borrowers and the Credit Parties under this
Agreement or any of the other Loan Documents if and to the extent the Credit
Parties fail to pay promptly any such amounts as and when due, even if the
amount of such charges would exceed the Borrowing Base or Aggregate Revolving
Loan Commitments at such time. At Agent’s option and to the extent permitted by
law, any charges so made shall constitute part of the Loans hereunder.

1.11 Payments by the Lenders to Agent; Settlement.

(a) Agent may, on behalf of Lenders, disburse funds to the Borrowers for Loans
requested. Each Lender shall reimburse Agent on demand for all funds required to
be funded by it under this Agreement and the other Loan Documents and disbursed
on its behalf by Agent, or if Agent so requests, each Lender will remit to Agent
its Revolving Loan Commitment Percentage of any Loan before Agent disburses same
to the Borrowers. If Agent elects to require that each Lender make funds
available to Agent prior to disbursement by Agent to the Borrowers, Agent shall
advise each Lender by telephone or fax of the amount of such Lender’s Revolving
Loan Commitment Percentage of the Loan requested by the Borrower Representative
no later than the Business Day prior to the scheduled Borrowing date applicable
thereto, and each such Lender shall pay Agent such Lender’s Revolving Loan
Commitment Percentage of such requested Loan, in same day funds, by wire
transfer to Agent’s account, as set forth on Agent’s signature page hereto, no
later than 1:00 p.m. on such scheduled Borrowing date. Nothing in this
subsection 1.11(a) or elsewhere in this Agreement or the other Loan Documents,
including the remaining provisions of Section 1.11, shall be deemed to require
Agent to advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Revolving Loan Commitments hereunder or to prejudice
any rights that Agent, any Lender or the Borrowers may have against any Lender
as a result of any default by such Lender hereunder.

(b) At least once each calendar week or more frequently at Agent’s election
(each, a “Settlement Date”), Agent shall advise each Lender by telephone or fax
of the amount of such Lender’s Revolving Loan Commitment Percentage of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each Lender has funded all

 

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payments required to be made by it and funded all purchases of participations
required to be funded by it under this Agreement and the other Loan Documents as
of such Settlement Date, Agent shall pay to each Lender such Lender’s pro rata
share of principal, interest and fees paid by the Borrowers since the previous
Settlement Date for the benefit of such Lender on the Loans held by it. Such
payments shall be made by wire transfer to such Lender not later than 2:00 p.m.
on the next Business Day following each Settlement Date. Agent shall be entitled
to set off the funding shortfall against any Non-Funding Lender’s pro rata share
of all payments received from the Borrowers and hold, in a non-interest bearing
account, all payments received by Agent for the benefit of any Non-Funding
Lender pursuant to this Agreement as cash collateral for any unfunded
reimbursement obligations of such Non-Funding Lender until the Obligations are
paid in full in cash, all Letter of Credit Obligations have been discharged or
cash collateralized in a manner acceptable to the relevant L/C Issuer and all
Revolving Loan Commitments have been terminated, and upon such unfunded
obligations owing by a Non-Funding Lender becoming due and payable, Agent shall
be authorized to use such cash collateral to make such payment on behalf of such
Non-Funding Lender. Any amounts owing by a Non-Funding Lender to Agent which are
not paid when due shall accrue interest at the interest rate applicable during
such period to Revolving Loans that are Base Rate Loans.

(c) Availability of Lender’s Revolving Loan Commitment Percentage. Agent may
assume that each Lender will make its Revolving Loan Commitment Percentage of
each Revolving Loan available to Agent on each Borrowing date that Lenders are
required to make under this Agreement and the other Loan Documents. If such
Revolving Loan Commitment Percentage is not, in fact, paid to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without setoff, counterclaim or deduction of any kind. If any Lender
fails to pay the amount of its Revolving Loan Commitment Percentage forthwith
upon Agent’s demand, Agent shall promptly notify the Borrower Representative and
the Borrowers shall immediately repay such amount to Agent. Nothing in this
subsection 1.11(c) or elsewhere in this Agreement or the other Loan Documents
shall be deemed to require Agent to advance funds on behalf of any Lender or to
prejudice any rights that the Borrowers may have against any Lender as a result
of any default by such Lender hereunder. Nothing in this subsection 1.11(c)
shall be deemed to relieve any Lender from its obligation to fulfill its
Revolving Loan Commitments hereunder. Without limiting the provisions of
subsection 1.11(b), to the extent that Agent advances funds to the Borrowers on
behalf of any Lender and is not reimbursed therefor on the same Business Day as
such advance is made, Agent shall be entitled to retain for its account all
interest accrued on such advance from the date such advance was made until
reimbursed by the applicable Lender.

(d) Return of Payments.

(i) If Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent

 

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from the Borrowers and such related payment is not received by Agent, then Agent
will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by Agent under
this Agreement or any other Loan Document must be returned to any Credit Party
or paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Credit Party or such other
Person, without setoff, counterclaim or deduction of any kind, and Agent will be
entitled to set-off against future distributions to such Lender any such amounts
(with interest) that are not repaid on demand.

(e) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Loan, Letter of Credit Obligation or any payment required by it
hereunder, or to fund any purchase of any participation required to be made or
funded by it on the date specified therefor shall not relieve any other Lender
(each such other Lender, an “Other Lender”) of its obligations to make such loan
or fund the purchase of any such participation on such date, but neither Agent
nor, other than as expressly set forth herein, any Other Lender shall be
responsible for the failure of any Non-Funding Lender to make a loan, fund the
purchase of a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary and without any
further action by, or consent of, any Credit Party, a Non-Funding Lender shall
not have any voting or consent rights under or with respect to any Loan Document
or constitute a “Lender” or a “Lender” (or be, or have its Loans and Revolving
Loan Commitments, included in the determination of “Required Lenders” or
“Lenders directly affected” pursuant to Section 9.1) for any voting or consent
rights under or with respect to any Loan Document. Moreover, for the purposes of
determining Required Lenders or all affected Lenders (other than for the
purposes of Section 9.1(a)(i) – (iii)), the Loans and Revolving Loan Commitments
held by Non-Funding Lenders shall be excluded from the total Loans and Revolving
Loan Commitments outstanding.

(f) Procedures. Agent is hereby authorized by each Credit Party and each other
Secured Party to establish procedures (and to amend such procedures from time to
time) to facilitate administration and servicing of the Loans and other matters
incidental thereto. Without limiting the generality of the foregoing, Agent is
hereby authorized to establish procedures to make available or deliver, or to
accept, notices, documents and similar items on, by posting to or submitting
and/or completion on, E-Systems. Agent shall endeavor to provide prompt notice
to the Borrower Representative of any modification, after the Restatement
Effective Date, to any such procedures which directly impact actions taken, or
to be taken, by any Credit Party hereunder or under any other Loan Document;
provided that Agent shall have no liability to any Credit Party for the failure
to provide any such notice.

 

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1.12 Borrower Representative. Each Credit Party hereby designates and appoints
the Company as its representative and agent on its behalf (the “Borrower
Representative”) for the purposes of issuing Notices of Borrowings, Notices of
Conversion/Continuation, L/C Requests and Swingline Requests, delivering
certificates including Borrowing Base Certificates, giving instructions with
respect to the disbursement of the proceeds of the Loans, selecting interest
rate options, executing Loan Documents on behalf of such Credit Party, giving
and receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Credit Party or the Credit Parties under the
Loan Documents. Borrower Representative hereby accepts such appointment. Agent
and each Lender may regard any notice or other communication pursuant to any
Loan Document from Borrower Representative as a notice or communication from all
Credit Parties. Each warranty, covenant, agreement and undertaking made on
behalf of a Credit Party by Borrower Representative shall be deemed for all
purposes to have been made by such Credit Party and shall be binding upon and
enforceable against such Credit Party to the same extent as if the same had been
made directly by such Credit Party.

ARTICLE II.

CONDITIONS PRECEDENT

2.1 Conditions of Initial Loans. The obligation of each Lender to continue its
Loans hereunder and of each L/C Issuer to continue its Letters of Credit
hereunder is subject to satisfaction of the following conditions in a manner
satisfactory to Agent:

(a) Loan Documents, Etc. Agent shall have received on or before the Restatement
Effective Date all Loan Documents and all of the agreements, documents,
instruments, legal opinions and other items set forth on the closing checklist
attached hereto as Exhibit 2.1, each in form and substance reasonably
satisfactory to Agent;

(b) Term Loan B Documents and Certain Other Documents. Agent shall have received
a duly executed certificate of a Responsible Officer of the Company,
(i) attaching true, correct and complete, fully-executed copies of each of the
Term Loan B Documents, each of which shall be in form and substance, and on
terms and conditions, reasonably satisfactory to Agent, and (ii) certifying that
(x) the transactions contemplated under the Term Loan B Documents shall have
been consummated in accordance with the terms of the Term Loan B Documents and
(y) the principal amount of the Term Loan B shall not be less than $75,000,000;

(c) Term Loan B Intercreditor Agreement. Agent and the Lenders shall have agreed
to satisfactory intercreditor arrangements with the Term Loan B Agent and the
Term Loan B Lenders, and Agent shall have received

 

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a fully executed Term Loan B Intercreditor Agreement, in form and substance
satisfactory to Agent and the Lenders, and such Term Loan B Intercreditor
Agreement shall be in full force and effect.

(d) Approvals. Agent shall have received (i) satisfactory evidence that the
Credit Parties have obtained all required consents and approvals of all Persons
including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the consummation
of the other transactions contemplated hereby or (ii) an officer’s certificate
in form and substance reasonably satisfactory to Agent affirming that no such
consents or approvals are required;

(e) Minimum Availability. After giving effect to (i) the first funding of the
Term Loan B, (ii) payment of all fees and expenses associated in connection with
this Agreement and the Term Loan B Agreement, and (iii) any charges made in
connection with the Term Loan B Agreement, Availability shall be not less than
$100,000,000.

(f) Lease Payments. Agent shall have received satisfactory evidence that the
Credit Parties shall have made all payments due and payable on or prior to the
Restatement Effective Date under all leases and other agreements with respect to
each leased location or warehouse location of the Credit Parties other than
unpaid lease payments (i) relating to closed Stores (including, without
limitation, Stores owned by the J. Jill Entities) where no Collateral included
in the calculation of the Borrowing Base most recently delivered by the Borrower
Representative to the Agent is or may be located or (ii) which are the subject
of a good faith, bona fide dispute (including such payments that are the subject
of an earnest internal review by such Credit Party in the determination of
whether a good faith, bona fide dispute exists with respect to such payments),
in each case, to the extent (x) consistent with past practices, and
(y) reasonably satisfactory to Agent;

(g) Payment of Fees. The Borrowers shall have paid the fees required to be paid
on the Restatement Effective Date in the respective amounts specified in
Section 1.9 (including the fees specified in the Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Restatement Effective Date;

(h) Completion of Due Diligence. Agent and its counsel shall have completed all
legal due diligence (including, without limitation, legal due diligence with
respect to all factoring and other sales arrangements with respect to Credit
Card Receivables (including those arising from Private Label Credit Cards) of
the Borrowers and their Subsidiaries), and with respect to the Credit Parties’
Benefit Plans), and Agent shall be reasonably satisfied with the results of such
due diligence;

 

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(i) Collateral Audits and Appraisals and Financial Information. Agent shall have
received (i) the results of updated audits and collateral appraisals (consistent
with the most recent audits and collateral appraisals provided to Agent by
Borrowers), in each case, as reasonably requested by the Agent and with results
reasonably satisfactory to Agent and (ii) all financial statements, models,
projections and forecasts, in each case, as reasonably requested by the Agent;

(j) Cash Dominion. Agent shall be satisfied that it has Control Agreements
providing for “full” cash dominion with respect to each Control Account,
securities, commodity or similar account maintained by any Credit Party as of
the Restatement Effective Date;

(k) Exiting Lender Acknowledgement. Agent shall have received an acknowledgment,
in form and substance satisfactory to Agent, from each Exiting Lender that from
and after the Restatement Effective Date all obligations and liabilities in
respect of any “Swap Rate Contracts” or “Bank Products” (as each is defined in
the Existing Credit Agreement) of such Exiting Lender do not constitute
Obligations hereunder and are no longer secured by any of the Collateral.

(l) Funds Flow Memorandum. Agent shall have received a funds-flow memorandum
from the Company setting forth the sources and uses of the proceeds of the Term
Loan B and any Revolving Loans to be borrowed or any Letters of Credit to be
Issued on the Restatement Effective Date, which funds-flow memorandum shall be
in form and substance reasonably satisfactory to Agent (the “Funds Flow
Memorandum”) and shall contain a description of the Credit Parties’ sources and
uses of funds on the Restatement Effective Date, the details of how funds from
each source are to be transferred to particular uses and the wire transfer
instructions for the particular uses of such funds.

(m) Other Agreements, Etc. Agent shall have received such other assurances,
certificates, documents, agreements and information as Agent may reasonably
request.

2.2 Conditions to All Borrowings. Except as otherwise expressly provided herein,
no Lender or L/C Issuer shall be obligated to fund any Loan or incur any Letter
of Credit Obligation, if, as of the date thereof:

(a) any representation or warranty by any Credit Party contained herein or in
any other Loan Document is untrue or incorrect in any material respect (except
that such materiality qualifier shall not be applicable to any representations
and warranties which are already qualified or modified by materiality in the
text thereof) as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date (in which event such
representations and warranties were untrue or incorrect in any material respect
(except that such materiality qualifier shall not be applicable to any

 

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representations and warranties which are already qualified or modified by
materiality in the text thereof) as of such earlier date), and Agent or Required
Lenders have determined not to make such Loan or incur such Letter of Credit
Obligation as a result of the fact that such warranty or representation is so
untrue or incorrect;

(b) any Default or Event of Default has occurred and is continuing or would
result after giving effect to any Loan (or the incurrence of any Letter of
Credit Obligation), and Agent or Required Lenders shall have determined not to
make any Loan or incur any Letter of Credit Obligation as a result of that
Default or Event of Default;

(c) after giving effect to any Loan (or the incurrence of any Letter of Credit
Obligations), the Aggregate Revolving Exposure would exceed the Maximum
Borrowing Availability (except as provided in subsection 1.1(a)(ii)); or

(d) after giving effect to any Loan and the contemporaneous uses of proceeds
thereof, the Credit Parties’ cash and Cash Equivalents would violate any
provision of Section 5.22.

The request by Borrower Representative and acceptance by the Borrowers of the
proceeds of any Loan or the incurrence of any Letter of Credit Obligations shall
be deemed to constitute, as of the date thereof, (i) a representation and
warranty by the Borrowers that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by each Credit Party of the granting and
continuance of Agent’s Liens, on behalf of itself and the Secured Parties,
pursuant to the Collateral Documents.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

The Credit Parties, jointly and severally, represent and warrant to Agent and
each Lender that the following are true, correct and complete:

3.1 Corporate Existence and Power. Each Credit Party and each of their
respective Subsidiaries:

(a) is a corporation, limited liability company, limited partnership, unlimited
company, unlimited liability company, unlimited liability corporation, general
partnership or chartered national bank, as applicable, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, organization or formation, as applicable;

(b) has the power and authority and all governmental licenses, authorizations,
Permits, consents and approvals to execute, deliver, and perform its obligations
under, the Loan Documents to which it is a party;

 

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(c) (i) has the power and authority and all governmental licenses,
authorizations, Permits, consents and approvals to own its assets, carry on its
business and (ii) is duly qualified as a foreign corporation, limited liability
company, unlimited company, unlimited liability company, unlimited liability
corporation, or limited partnership, as applicable, and licensed and in good
standing, under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification
or license; and

(d) is in compliance with all Requirements of Law;

except, in each case referred to in clause (c) or clause (d), to the extent that
the failure to do so could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

3.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by each of the Credit Parties of this Agreement, and by each Credit
Party and each of their respective Subsidiaries of any other Loan Document to
which such Person is party, have been duly authorized by all necessary action,
and do not and will not:

(i) contravene the terms of any of that Person’s Organization Documents;

(ii) conflict with or result in any breach or contravention of, or result in the
creation of any Lien under, any document evidencing any material Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its Property is
subject; or

(iii) violate any Requirement of Law.

3.3 Governmental Authorization. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority is
necessary or required in connection with the execution, delivery or performance
by any Credit Party or any Subsidiary of any Credit Party of this Agreement or
any other Loan Document except (a) for recordings and filings in connection with
the Liens granted to Agent under the Collateral Documents, (b) those obtained or
made on or prior to the Restatement Effective Date and (c) for the recording and
filing of this Agreement (and all required exhibits and schedules) with the
Securities and Exchange Commission or other Governmental Authority.

3.4 Binding Effect. This Agreement and each other Loan Document to which any
Credit Party or any Subsidiary of any Credit Party is a party constitute the
legal, valid and binding obligations of each such Person which is a party
thereto, enforceable against such Person in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors’ rights
generally or by equitable principles relating to enforceability.

 

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3.5 Litigation. There are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of each Credit Party, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against any Credit Party, any Subsidiary of any Credit Party or any
of their respective Properties which:

(a) purport to affect or pertain to this Agreement or any other Loan Document,
or any of the transactions contemplated hereby or thereby; or

(b) could reasonably be expected to result in, individually or in the aggregate,
a Material Adverse Effect.

No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided. Except as set forth on
Schedule 3.5, as of the Restatement Effective Date, no Credit Party or any
Subsidiary of any Credit Party is the subject of an audit or, to each Credit
Party’s knowledge, any review or investigation by any Governmental Authority
(excluding the IRS and other taxing authorities) concerning the violation or
possible violation of any Requirement of Law.

3.6 No Default. No Default or Event of Default exists or would result from the
incurring of any Obligations by any Credit Party or the grant or perfection of
Agent’s Liens on the Collateral. No Credit Party and no Subsidiary of any Credit
Party is in default under or with respect to any Contractual Obligation in any
respect which, individually or together with all such defaults, could reasonably
be expected to have a Material Adverse Effect. Each Credit Party has timely and
fully paid and performed its obligations under all leases and other agreements
with respect to each leased location or public warehouse where any Collateral is
or may be located, except for such payments or other obligations that (a) relate
to closed Stores (including, without limitation, Stores owned by the J. Jill
Entities) where no Collateral included in the calculation of the Borrowing Base
most recently delivered by the Borrower Representative to the Agent is or may be
located or (b)(i)are either (1) being contested in good faith by appropriate
proceedings or (2) the subject of a good faith, bona fide dispute related to the
leased premises (including such payments and such obligations that are the
subject of an earnest internal review by such Credit Party in the determination
of whether a good faith, bona fide dispute exists with respect to such payments
and such obligations) consistent with the practices of the Borrowers and their
Subsidiaries on the Restatement Effective Date, provided that, in the case of
this clause (2), upon receipt of any notice of default under the applicable
lease, the applicable Credit Party or Subsidiary of a Credit Party shall
promptly pay and perform its obligations under such lease, irrespective of
whether the bona fide dispute is then continuing, except solely to the extent
that (A) the continued failure to so pay or perform in connection with such good
faith, bona fide dispute could not reasonably be expected to result in the
termination of any such lease (provided that such Credit Party or such
Subsidiary of a Credit Party shall promptly at the time the continued failure to
so pay or perform could reasonably be expected to result in the termination of
any such lease, either (x) commence a proceeding pursuant to clause (b)(i)(1)

 

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above, which proceeding seek to stay any such termination and such relief shall
have been granted by the relevant court, or (y) deem the applicable Store
subject to such lease a closed Store pursuant to clause (a) above (it being
agreed that all Collateral located at such store shall be promptly excluded from
the calculation of the Borrowing Base and the Borrowers shall deliver an updated
Borrowing Base Certificate to the Agent demonstrating the exclusion of such
Collateral)) and (B) the failure to so pay or perform under such lease,
individually or in the aggregate with all other leases which are the subject of
a bona fide dispute, could not reasonably be expected to result in a Material
Adverse Effect, and (ii) in any case, for which adequate reserves in accordance
with GAAP are being maintained by such Person.

3.7 ERISA, Canadian Pension Plan and Canadian Benefit Plan Compliance.

(a) Schedule 3.7 sets forth, as of the Restatement Effective Date, a complete
and correct list of, and that separately identifies, (i) all Title IV Plans,
(ii) all Multiemployer Plans and (iii) all material Benefit Plans. Each Benefit
Plan, and each trust thereunder, intended to qualify for tax exempt status under
Section 401 or 501 of the Code or other Requirements of Law so qualifies. Except
for those that could not reasonably be expected to result in Liabilities in
excess of $2,000,000 in the aggregate, (x) each Benefit Plan is in compliance
with applicable provisions of ERISA, the Code and other Requirements of Law,
(y) there are no existing or pending (or to the knowledge of any Credit Party,
threatened) claims (other than routine claims for benefits in the normal
course), sanctions, actions, lawsuits or other proceedings or investigation
involving any Benefit Plan to which any Credit Party incurs or otherwise has or
could have an obligation or any Liability and (z) no ERISA Event is reasonably
expected to occur. On the Restatement Effective Date, no ERISA Event has
occurred in connection with which obligations and liabilities (contingent or
otherwise) remain outstanding.

(b) (i) As of the Restatement Effective Date, there are no Canadian Pension
Plans. No Canadian Pension Plan has been terminated or partially terminated by
any such Person, nor have any proceedings been instituted to terminate, in whole
or in part, or reorganize any Canadian Pension Plan.

(i) None of the Credit Parties nor any of their Subsidiaries has ceased to
participate (in whole or in part) as a participating employer in any Canadian
Pension Plan or has withdrawn from any Canadian Pension Plan which is
multi-employer pension plan within the meaning of the Pension Benefits Act
(Ontario) or other applicable pension benefits standards legislation of any
other Canadian province.

(ii) Except for those that could not reasonably be expected to result in
Liabilities in excess of $2,000,000, none of the Credit Parties nor any of their
Subsidiaries has any unfunded liability or windup or withdrawal liability,
including contingent withdrawal or windup liability, to any Canadian Pension
Plan or any solvency deficiency in respect of any Canadian Pension Plan. The
Credit Parties and their Subsidiaries have made all contributions to any
Canadian Pension Plan or Canadian

 

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Benefit Plan required by law or the terms thereof to be made by it when due, and
it is not in arrears in the payment of any contribution, payment, remittance or
assessment or in default in filing any reports, returns, statements, and similar
documents in respect of such Canadian Pension Plan or Canadian Benefit Plan
required to be made or paid by it pursuant to said Canadian Pension Plan or
Canadian Benefit Plan, any law, act, regulation, directive or order or any
employment, union, pension, deferred profit sharing, benefit, bonus or other
similar agreement or arrangement.

(iii) None of the Credit Parties nor any of their Subsidiaries is liable or, to
the best of the Credit Parties’ knowledge, alleged to be liable, to any employee
or former employee, director or former director, officer or former officer or
other Person resulting from any violation or alleged violation of any Canadian
Pension Plan or Canadian Benefit Plan, any fiduciary duty, any law or agreement
in relation to any Canadian Pension Plan or Canadian Benefit Plan or has any
unfunded pension or like obligations or solvency deficiency (including any past
service or experience deficiency funding liabilities), other than accrued
obligations not yet due, for which it has made full provision in its books and
records.

(iv) None of the Credit Parties nor any of their Subsidiaries has made any
application for a funding waiver or extension of any amortization period in
respect of any Canadian Pension Plan.

(v) There has been no prohibited transaction or violation of any fiduciary
responsibilities with respect to any Canadian Pension Plan.

(vi) There are no outstanding or pending or, to the knowledge of any Credit
Party, any threatened investigations, claims, suits or proceedings in respect of
any Canadian Pension Plans (including to assert rights or claims to benefits)
that could give rise to a Material Adverse Effect.

(vii) There have been no improper withdrawals or applications of the assets of
the Canadian Pension Plan.

(viii) All employer and employee payments, contributions or premiums to be
remitted, paid to or in respect of each Canadian Pension Plan or Canadian
Benefit Plan have been paid in a timely fashion in accordance with the terms
thereof, any funding agreement and all applicable laws.

3.8 Use of Proceeds; Margin Regulations.

(a) No Credit Party and no Subsidiary of any Credit Party is engaged in the
business of purchasing or selling Margin Stock or extending credit for and no
Loan will be used for the purpose of purchasing or carrying Margin Stock.

(b) The Loans will be used to pay Transaction Expenses on the Restatement
Effective Date and thereafter for working capital, capital expenditures and
other lawful general corporate purposes that, in each case, do not violate the
terms of the Loan Documents.

 

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3.9 Ownership of Property; Liens. As of the Restatement Effective Date, the Real
Estate listed in Schedule 3.9 constitutes all of the Real Estate of each Credit
Party and each of their respective Subsidiaries. Each of the Credit Parties and
each of their respective Subsidiaries has good record and marketable title in
fee simple to, or valid leasehold interests in, all Real Estate, and good and
valid title to all owned personal property and valid leasehold interests in all
leased personal property, in each instance, necessary in the ordinary conduct of
their respective businesses. As of the Restatement Effective Date, none of the
Real Estate of any Credit Party or any Subsidiary of any Credit Party is subject
to any Liens other than Permitted Liens. As of the Restatement Effective Date,
Schedule 3.9 also describes any purchase options, rights of first refusal or
other similar contractual rights pertaining to any Real Estate. As of the
Restatement Effective Date, all material permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and used for all
of the purposes for which it is currently occupied and used have been lawfully
issued and are in full force and effect.

3.10 Taxes. All federal, state, provincial, territorial, local and foreign
income and franchise and other material tax returns, reports and statements
(collectively, the “Tax Returns”) required to be filed by any Tax Affiliate have
been filed with the appropriate Governmental Authorities, all such Tax Returns
are true and correct in all material respects, and all material taxes,
assessments and other governmental charges and impositions reflected therein or
otherwise due and payable have been paid or remitted prior to the date on which
any Liability may be added thereto for non-payment or non-remittance thereof
except for those contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves are maintained on the books of the
appropriate Tax Affiliate in accordance with GAAP. As of the Restatement
Effective Date, except as set forth on Schedule 3.10, no Tax Return is under
audit or examination by any Governmental Authority, and no notice of any audit
or examination or any assertion of any claim for Taxes has been given or made in
writing or, to the knowledge of the Credit Parties or their Subsidiaries,
otherwise by any Governmental Authority. Proper and accurate amounts have been
withheld by each Tax Affiliate from their respective employees for all periods
in full and complete compliance with the tax, social security and unemployment
withholding provisions of applicable Requirements of Law and such withholdings
have been timely paid to the respective Governmental Authorities. No Tax
Affiliate has participated in a “listed transaction” or, to their knowledge, a
“reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b) or has been a member of an affiliated, combined or unitary
group other than the group of which a Tax Affiliate is the common parent. As of
the Restatement Effective Date, to the knowledge of the Borrowers and their
Subsidiaries, there are no Liens for taxes, fees, assessments, or governmental
charges.

3.11 Financial Condition.

(a) Each of (i) the audited consolidated balance sheet of the Company and its
Subsidiaries dated January 29, 2011, and the related audited

 

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consolidated statements of income or operations, shareholders’ equity and cash
flows for the Fiscal Year ended on that date and (ii) the unaudited consolidated
balance sheet of the Company and its Subsidiaries dated October 29, 2011 and the
related unaudited consolidated statements of income and cash flows for the nine
Fiscal Months then ended, in each case, as attached hereto as Schedule 3.11(a):

(A) were prepared in accordance with GAAP consistently applied throughout the
respective periods covered thereby, except as otherwise expressly noted therein,
subject to, in the case of the unaudited interim financial statements, normal
year-end adjustments and the lack of footnote disclosures; and

(B) present fairly in all material respects the consolidated financial condition
of the Company and its Subsidiaries as of the dates thereof and results of
operations for the periods covered thereby.

(b) The pro forma unaudited consolidated balance sheet of the Company and its
Subsidiaries dated January 28, 2012 delivered on the Restatement Effective Date
and attached hereto as Schedule 3.11(b), was based on the unaudited consolidated
balance sheet of the Company and its Subsidiaries dated October 29, 2011, and
was prepared in accordance with GAAP, with only such adjustments thereto as
would be required in a manner consistent with GAAP.

(c) As of the Restatement Effective Date, since January 29, 2011 there has been
no Material Adverse Effect.

(d) The Credit Parties and their Subsidiaries have no Indebtedness other than
Indebtedness permitted pursuant to Section 5.5 and have no Contingent
Obligations other than Contingent Obligations permitted pursuant to Section 5.9.

(e) As of the Restatement Effective Date, the financial performance projections
attached hereto as Schedule 3.11(e) (which includes pro forma consolidated
statements of income and cash flows, prepared on a monthly basis, for the twelve
Fiscal Months ended February 2, 2013), represent the Borrowers’ best good faith
estimate of future financial performance and are based on assumptions believed
by the Borrowers to be fair and reasonable in light of current market
conditions, it being acknowledged and agreed by Agent and Lenders that
projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by such projections may
differ from the projected results.

3.12 Environmental Matters. Except as set forth in Schedule 3.12, and except as
could not reasonably be expected to result in any Material Environmental
Liability, (a) the operations of each Credit Party and each Subsidiary of each
Credit Party are and have been in compliance with all applicable Environmental
Laws, including obtaining, maintaining and complying with all Permits required
by any applicable Environmental

 

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Law, (b) no Credit Party and no Subsidiary of any Credit Party is party to, and
no Credit Party and no Subsidiary of any Credit Party and no Real Estate is
subject to or the subject of, any pending (or, to the knowledge of any Credit
Party, threatened) order, action, investigation, suit, proceeding, audit, claim,
demand, dispute or notice of violation or of potential liability or similar
notice relating to any Environmental Laws, (c) no Lien in favor of any
Governmental Authority securing, in whole or in part, Environmental Liabilities
has attached to any property of any Credit Party, (d) no Credit Party and no
Subsidiary of any Credit Party has caused or suffered to occur a Release at, to
or from any Real Estate, (e) all Real Estate is free of contamination by any
Hazardous Materials, and (f) no Credit Party and no Subsidiary of any Credit
Party has received any information request or notice of potential responsibility
under the Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. §§ 9601 et seq.) or any other Environmental Laws. Each Credit Party
has made available to Agent copies of all existing environmental reports,
reviews and audits and all documents pertaining to actual or potential
Environmental Liabilities, in each case to the extent such reports, reviews,
audits and documents are in the possession, custody or control of the Credit
Parties or their representatives and/or agents.

3.13 Regulated Entities. None of any Credit Party, any Person controlling any
Credit Party, or any Subsidiary of any Credit Party, is (a) an “investment
company” within the meaning of the Investment Company Act of 1940 or (b) subject
to regulation under the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute, any Canadian
federal, provincial, territorial, local or foreign statute, rule or regulation
limiting its ability to incur Indebtedness, pledge its assets or perform its
Obligations under the Loan Documents.

3.14 Solvency. Both before and after giving effect to (a) the Loans made and
Letters of Credit issued on or prior to the date this representation and
warranty is made or remade, (b) the Term B Loans made on or after the
Restatement Effective Date, (c) the disbursement of the proceeds of such Loans
and Term B Loans by the Borrowers, and (d) the payment and accrual of all
Transaction Expenses, both (i) the Credit Parties taken as a whole are, and
(ii) each Borrower individually is, Solvent.

3.15 Labor Relations. There are no strikes, work stoppages, slowdowns or
lockouts existing, pending (or, to the knowledge of any Credit Party,
threatened) against or involving any Credit Party or any Subsidiary of any
Credit Party, except for those that could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in Schedule
3.15, as of the Restatement Effective Date, (a) there is no collective
bargaining or similar agreement with any union, labor organization, works
council or similar representative covering any employee of any Credit Party or
any Subsidiary of any Credit Party, (b) no petition for certification or
election of any such representative is existing or pending with respect to any
employee of any Credit Party or any Subsidiary of any Credit Party and (c) to
the knowledge of the Credit Parties, within the last twelve (12) months, no such
representative has sought certification or recognition with respect to any
employee of any Credit Party or any Subsidiary of any Credit Party.

 

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3.16 Intellectual Property. Schedule 3.16 (which Schedule 3.16 shall be updated
not later than five (5) days after the end of each Fiscal Quarter) sets forth a
true and complete list of the following Intellectual Property each Credit Party
owns, licenses or otherwise has the right to use as of the Restatement Effective
Date or the date of any relevant update to such Schedule 3.16: (i) Intellectual
Property (other than Intellectual Property consisting of IP Licenses not
material to the business of the Credit Parties) that is registered or subject to
applications for registration by a Credit Party, (ii) material Internet Domain
Names of a Credit Party and (iii) material Intellectual Property of a Credit
Party (other than trade secrets, unregistered copyrights and software licensed
to a Credit Party), separately identifying that which is owned and licensed to
such Credit Party and including for each of the foregoing items (1) the owner,
(2) the jurisdiction in which such item has been registered or otherwise arises
or in which an application for registration has been filed, (3) as applicable,
the registration or application number and registration or application date and
(4) any IP Licenses or other rights (including franchises) granted by such
Credit Party with respect thereto (it being understood that non-exclusive
licenses of Intellectual Property to third-parties in connection with limited
marketing and sales programs and promotions and non-exclusive licenses of
Intellectual Property to any other Credit Party shall not be specified on such
Schedule). Each Credit Party and each Subsidiary of each Credit Party owns, or
is licensed to use, all Intellectual Property necessary to conduct its business
as currently conducted except for such Intellectual Property the failure of
which to own or license could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. To the knowledge of
each Credit Party, (a) the conduct and operations of the businesses of each
Credit Party and each Subsidiary of each Credit Party does not infringe,
misappropriate, dilute, violate or otherwise impair any Intellectual Property
owned by any other Person and (b) no other Person has contested any right, title
or interest of any Credit Party or any Subsidiary of any Credit Party in, or
relating to, any Intellectual Property, other than, in each case, as cannot
reasonably be expected to affect the Loan Documents and the transactions
contemplated therein and could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.

3.17 Brokers’ Fees; Transaction Fees. Except for fees payable to Agent and
Lenders and for the fees specified on Schedule 3.17 to be paid on the
Restatement Effective Date, none of the Credit Parties or any of their
respective Subsidiaries has any obligation to any Person in respect of any
finder’s, broker’s or investment banker’s fee in connection with the
transactions contemplated hereby.

3.18 Insurance. Schedule 3.18 lists all insurance policies of any nature
maintained, as of the Restatement Effective Date, for current occurrences by
each Credit Party, including issuers, coverages and deductibles. Each of the
Credit Parties and each of their respective Subsidiaries and their respective
Properties are insured with financially sound and reputable insurance companies
which are not Affiliates of the Credit Parties, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar Properties in localities where
such Person operates (it being understood that, as of the Restatement Effective
Date, Agent and Lenders agree that the insurance policies set forth on Schedule
3.18 are maintained with financially sound and reputable insurance companies and
the deductibles set forth therein and risks covered thereby are acceptable to
Agent and the Lenders).

 

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3.19 Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except as set
forth in Schedule 3.19, as of the Restatement Effective Date, no Credit Party
and no Subsidiary of any Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All issued and outstanding Stock and Stock Equivalents of each of
the Credit Parties and each of their respective Subsidiaries are duly
authorized, validly issued and fully paid. All issued and outstanding Stock and
Stock Equivalents of each of the Credit Parties (other than Talbots (Canada)
Corporation) and each of their respective Subsidiaries (other than Talbots
(Canada) Corporation) are non-assessable. All issued and outstanding Stock and
Stock Equivalents of each Subsidiary of the Company are free and clear of all
Liens other than, with respect to the Stock and Stock Equivalents of the
Borrowers (other than the Company) and Subsidiaries of the Borrowers, those in
favor of Agent, for the benefit of the Secured Parties, and those permitted
pursuant to Sections 5.1(o) and 5.1(p). All such securities were issued in
compliance with all applicable state, provincial and federal laws concerning the
issuance of securities. All of the issued and outstanding Stock of each Credit
Party (other than the Company) and each Subsidiary of each Credit Party is owned
by each of the Persons and in the amounts set forth in Schedule 3.19 (which
Schedule 3.19 shall be updated concurrently by the Credit Parties with the
delivery of each Borrowing Base Certificate pursuant to Section 4.2(d) to
reflect any transactions expressly permitted pursuant to this Agreement). Except
as set forth in Schedule 3.19 or as permitted by Section 5.2(e), and other than
with respect to the Company, there are no pre-emptive or other outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or Stock Equivalents or any Stock or Stock Equivalents of its
Subsidiaries. Set forth in Schedule 3.19 is a true and complete organizational
chart of the Borrowers and all of their Subsidiaries on the Restatement
Effective Date.

3.20 Jurisdiction of Organization; Chief Executive Office. Schedule 3.20 lists
each Credit Party’s jurisdiction of organization, legal name and organizational
identification number, if any, and the location of such Credit Party’s chief
executive office or sole place of business and its domicile (within the meaning
of the Civil Code of Quebec), in each case as of the Restatement Effective Date,
and such Schedule 3.20 also lists all jurisdictions of organization and legal
names of such Credit Party for the five years preceding the Restatement
Effective Date.

3.21 Locations of Inventory, Equipment and Books and Records. Each Credit
Party’s Inventory and equipment (other than (a) Inventory or equipment in
transit, (b) equipment out for repair, and (c) other Inventory and equipment,
provided that (i) the aggregate value such Inventory and equipment maintained
pursuant to this clause (c) shall not exceed $500,000 at any time and (ii) such
property maintained pursuant to this clause (c) shall in no event be included in
the calculation of the Borrowing Base) and books and records concerning the
Collateral are kept at the locations listed in Schedule 3.21 (which Schedule
3.21 shall be updated concurrently with the delivery of each Borrowing Base
Certificate pursuant to Section 4.2(d) by the Credit Parties).

 

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3.22 Deposit Accounts and Other Accounts. Schedule 3.22 lists all banks and
other financial institutions at which any Credit Party maintains deposit or
other accounts (including, without limitation, all Control Accounts) as of the
Restatement Effective Date, and such Schedule correctly identifies the name,
address and telephone number of each depository, securities intermediary or
commodities intermediary, as applicable, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor. The Credit Parties shall, concurrently with the delivery of each
Borrowing Base Certificate pursuant to Section 4.2(d) by the Credit Parties,
update Schedule 3.22, as necessary, to add or replace any account in accordance
with the requirements of Section 4.11(d).

3.23 Government Contracts. Except as set forth in Schedule 3.23, as of the
Restatement Effective Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party’s Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727), the
Financial Administration Act (Canada) or any similar state, provincial, local or
foreign law.

3.24 Trade Relations. As of the Restatement Effective Date, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship of any Credit Party with any supplier essential to its operations.

3.25 Bonding; Licenses. Except as set forth in Schedule 3.25, as of the
Restatement Effective Date, no Credit Party is a party to or bound by any surety
bond agreement, indemnification agreement therefor or bonding requirement with
respect to products or services sold by it.

3.26 Subordinated Debt. As of the Restatement Effective Date, the Borrowers have
delivered to Agent a complete and correct copy of all documents governing
Subordinated Indebtedness (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). All Obligations, including the L/C
Reimbursement Obligations, constitute Indebtedness entitled to the benefits of
the subordination provisions contained in the Subordination Agreement.

3.27 Full Disclosure. None of the representations or warranties made by any
Credit Party or any of their Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in each exhibit, report, statement or certificate furnished
by or on behalf of any Credit Party or any of their Subsidiaries in connection
with the Loan Documents (including the offering and disclosure materials, if
any, delivered by or on behalf of any Credit Party to Agent or the Lenders prior
to the Restatement Effective Date), contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.

 

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3.28 Foreign Assets Control Regulations and Anti-Money Laundering. Each Credit
Party and each Subsidiary of Credit Party is and will remain in compliance in
all material respects with all U.S. economic sanctions laws, Executive Orders
and implementing regulations as promulgated by the U.S. Treasury Department’s
Office of Foreign Assets Control (“OFAC”), and all applicable anti-money
laundering and counter-terrorism financing provisions of the Bank Secrecy Act
and all regulations issued pursuant to it. No Credit Party and no Subsidiary or
Affiliate of a Credit Party (i) is a Person designated by the U.S. government on
the list of the Specially Designated Nationals and Blocked Persons (the “SDN
List”) with which a U.S. Person cannot deal with or otherwise engage in business
transactions, (ii) is a Person who is otherwise the target of U.S. economic
sanctions laws such that a U.S. Person cannot deal or otherwise engage in
business transactions with such Person or (iii) is controlled by (including
without limitation by virtue of such Person being a director or owning voting
shares or interests), or acts, directly or indirectly, for or on behalf of, any
Person or entity on the SDN List or a foreign government that is the target of
U.S. economic sanctions prohibitions such that the entry into, or performance
under, this Agreement or any other Loan Document would be prohibited under U.S.
law.

3.29 Patriot Act; Proceeds of Crime Act. The Credit Parties, each of their
Subsidiaries and each of their Affiliates are in compliance with (a) the Trading
with the Enemy Act, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B Chapter V, as amended) and
any other enabling legislation or executive order relating thereto, (b) the
Patriot Act, (c) the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada), (d) the Criminal Code (Canada) and (e) other applicable
federal, state or provincial laws relating to “know your customer” and
anti-money laundering rules and regulations. No part of the proceeds of any Loan
will be used directly or indirectly for any payments to any government official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, or other
applicable law.

3.30 Collateral Documents.

(a) The Guaranty and Security Agreement and Canadian Security Agreement create
in favor of the Agent, for the benefit of the Secured Parties referred to
therein, a legal, valid, continuing and enforceable security interest in the
Collateral (as defined in each of the Guaranty and Security Agreement and the
Canadian Security Agreement), the enforceability of which is subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
The financing statements, releases and other filings are in appropriate form and
have been or will be filed in the offices specified in Schedule II of the
Guaranty and Security Agreement or Schedule 1 of the Canadian Security
Agreement, as applicable. Upon such filings and/or the obtaining of “control,”
(as defined in the UCC or PPSA, as applicable) the Agent will have a perfected
Lien on, and

 

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security interest in, to and under all right, title and interest of the grantors
thereunder in all Collateral that may be perfected by filing, recording or
registering a financing statement or analogous document (including without
limitation the proceeds of such Collateral subject to the limitations relating
to such proceeds in the UCC or PPSA, as applicable) or by obtaining control,
under the UCC or PPSA, as applicable (in effect on the date this representation
is made) in each case prior and superior in right to any other Lien, except
(i) Permitted Liens described in Sections 5.1(i) and 5.1(o), (ii) Permitted
Liens as of the Restatement Effective Date or having priority by operation of
law, and (iii) the Liens described in Section 5.1(p) with respect to the
Supplemental L/C Facility Cash Collateral.

(b) When the Guaranty and Security Agreement (or a short form thereof) is filed
in the United States Patent and Trademark Office and the United States Copyright
Office when financing statements, releases and other filings in appropriate form
are filed in the offices specified in Schedule II of the Guaranty and Security
Agreement or Schedule 1 of the Canadian Security Agreement, as applicable, the
Agent shall have a fully perfected Lien on, and security interest in, all right,
title and interest of the applicable Loan Parties in such Intellectual Property
(as defined in the Guaranty and Security Agreement or the Canadian Security
Agreement, as applicable) in which a security interest may be perfected by
filing, recording or registering a security agreement, financing statement or
analogous document in the United States Patent and Trademark Office or the
United States Copyright Office (it being understood that subsequent recordings
in the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, may be necessary to perfect a Lien on registered
trademarks, trademark applications and copyrights acquired by the Loan Parties
after the Restatement Effective Date), except (i) Permitted Liens described in
Section 5.1(o), or (ii) Permitted Liens as of the Restatement Effective Date or
having priority by operation of law.

(c) The Mortgages create in favor of the Agent, for the benefit of the Secured
Parties referred to therein, a legal, valid, continuing and enforceable Lien in
the Mortgaged Property (as defined in the Mortgages), the enforceability of
which is subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. Upon the filing or recording of the Mortgages with the
appropriate Governmental Authorities, the Agent will have a perfected Lien on,
and security interest in, to and under all right, title and interest of the
grantors thereunder in all Mortgaged Property that may be perfected by such
filing (including without limitation the proceeds of such Mortgaged Property),
in each case prior and superior in right to any other Lien, except for
(i) Permitted Liens described in Sections 5.1(i) and 5.1(o) and (ii) Permitted
Liens as of the Restatement Effective Date or having priority by operation of
law.

 

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3.31 J. Jill Entities. None of the J. Jill Entities owns any assets individually
or in the aggregate in excess of $250,000 or conducts any business, other than
as expressly permitted by Section 5.25 hereof.

ARTICLE IV.

AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Lender shall have
any Revolving Loan Commitment hereunder, or any Loan or other Obligation (other
than contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied:

4.1 Financial Statements. Each Credit Party shall maintain, and shall cause each
of its Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to permit the
preparation of consolidated financial statements in conformity with GAAP
(provided that monthly financial statements shall not be required to have
footnote disclosures and are subject to normal year-end adjustments). The
Borrowers shall deliver to Agent and each Lender by Electronic Transmission and
in detail reasonably satisfactory to Agent and the Required Lenders:

(a) as soon as available, but not later than ninety (90) days after the end of
each Fiscal Year, a copy of the audited consolidated balance sheet of the
Company and each of its Subsidiaries as at the end of such year and the related
consolidated statement of income or operations, shareholders’ equity and cash
flows for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, and accompanied by the report of any “Big
Four” or other nationally-recognized independent public accounting firm
reasonably acceptable to Agent which report shall (i) contain an unqualified
opinion, stating that such consolidated financial statements present fairly in
all material respects the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and (ii) not
include any explanatory paragraph expressing substantial doubt as to going
concern status;

(b) as soon as available, but not later than forty-five (45) days after the end
of each Fiscal Quarter of each year, a copy of the unaudited consolidated
balance sheet of the Company and each of its Subsidiaries, and the related
consolidated statement of income and cash flows as of the end of such Fiscal
Quarter and for the portion of the Fiscal Year then ended, all certified on
behalf of the Company by an appropriate Responsible Officer of the Borrower
Representative as being complete and correct and fairly presenting, in all
material respects, in accordance with GAAP, the financial position and the
results of operations of the Borrowers and their Subsidiaries, subject to normal
year-end adjustments and absence of footnote disclosures; and

(c) as soon as available, but not later than (x) thirty (30) days after the end
of each Fiscal Month (subject to clause (y) herein below) of each

 

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year or (y) forty-five (45) days after the end of the last Fiscal Month
contained in each Fiscal Quarter, a copy of (i) the unaudited consolidated
balance sheet of the Company and each of its Subsidiaries, and the related
consolidated statement of income and cash flows as of the end of such Fiscal
Month and for the portion of the Fiscal Year then ended, and (ii) such financial
statements as may be requested by, and in form and substance satisfactory to,
Agent reflecting the financial position and the results of operations of the
Subsidiaries of the Company that are not Credit Parties, all certified on behalf
of the Company by an appropriate Responsible Officer of the Borrower
Representative as being complete and correct and fairly presenting, in all
material respects, in accordance with GAAP, the financial position and the
results of operations of the Borrowers and their Subsidiaries, subject to normal
year-end adjustments and absence of footnote disclosures.

4.2 Appraisals; Certificates; Other Information. The Borrowers shall furnish to
Agent and each Lender by Electronic Transmission:

(a) together with each delivery of financial statements pursuant to subsections
4.1(a), 4.1(b) and 4.1(c), (i) a management discussion and analysis report, in
reasonable detail, signed by the chief financial officer of the Borrower
Representative, describing the operations and financial condition of the Credit
Parties and their Subsidiaries for the Fiscal Month and the portion of the
Fiscal Year then ended (or for the Fiscal Year then ended in the case of annual
financial statements), and (ii) a report setting forth in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the most recent projections for the current
Fiscal Year delivered pursuant to subsection 4.2(k) and discussing the reasons
for any significant variations;

(b) together with each delivery of financial statements pursuant to subsections
4.1(a), 4.1(b) and 4.1(c), a Financial Statement Compliance Certificate;

(c) promptly after the same are sent, copies of all financial statements and
reports which any Credit Party sends to its shareholders or other equity
holders, as applicable, generally and promptly after the same are filed, copies
of all financial statements and regular, periodic or special reports which such
Person may make to, or file with, the Securities and Exchange Commission or any
successor or similar Governmental Authority;

(d) as soon as available and in any event (i) within ten (10) days after the end
of each Fiscal Month, a Borrowing Base Certificate, certified on behalf of the
Borrowers by a Responsible Officer of the Borrower Representative, setting forth
the Borrowing Base and the Term Loan Borrowing Base of each Borrower as at the
end of the most-recently ended Fiscal Month, and (ii) on the 24th day of each
Fiscal Month, a Borrowing Base Certificate solely with an update of the gross
accounts receivables and the value of all Inventory as

 

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of the 21st day of such Fiscal Month; provided, however, that, from and after
any time Availability shall be less than twenty percent (20%) of the Maximum
Borrowing Availability (without giving effect to the Term Loan Push Down Reserve
or the Term Loan Reserve Amount) then in effect, and until the Borrowers shall
be able to demonstrate daily Availability of not less than twenty percent
(20%) of the Maximum Borrowing Availability (without giving effect to the Term
Loan Push Down Reserve or the Term Loan Reserve Amount) for each day for a
period of ninety (90) consecutive days thereafter, a Borrowing Base Certificate
shall be delivered no less frequently than on each Tuesday of each calendar
week, certified on behalf of the Borrowers by a Responsible Officer of the
Borrower Representative, setting forth the Borrowing Base of each Borrower as of
the last day of the immediately preceding week, provided, further, that, if an
Event of Default has occurred and is continuing, a Borrowing Base Certificate
shall be delivered to the Agent at any time and for any period as may be
requested by the Agent;

(e) concurrently with the delivery of the Borrowing Base Certificate, a
perpetual Inventory report accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;

(f) concurrently with the delivery of the Borrowing Base Certificate, a monthly
trial balance showing Accounts (including PL Credit Card Receivables relating to
Private Label Credit Cards) outstanding aged from invoice date as follows: 1 to
30 days, 31 to 60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;

(g) the financial and collateral reports described on Schedule 4.2(g) hereto, at
the times set forth in such Schedule;

(h) concurrently with the delivery of the Borrowing Base Certificate or at such
more frequent intervals as Agent may request from time to time (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Restatement Effective Date), collateral reports, including all
additions and reductions (cash and non-cash) with respect to Credit Card
Receivables of the Credit Parties in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion each of which shall be prepared by the Borrower Representative as of
the last day of the immediately preceding week or the date two (2) days prior to
the date of any request;

(i) to Agent, at the time of delivery of each of the monthly financial
statements delivered pursuant to subsection 4.1(c);

(i) a reconciliation of the most recent Borrowing Base, general ledger and
month-end Inventory reports of each Borrower to such Borrower’s general ledger
and monthly financial statements delivered

 

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pursuant to subsection 4.1(c), in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion;

(ii) a reconciliation of (A) the perpetual inventory by location, (B) the
inventory and accounts receivable aging to each Borrower’s most recent Borrowing
Base Certificate, general ledger and most recent Financial Statements delivered
pursuant to subsection 4.1(c) and (C) the accounts payable aging to each
Borrower’s general ledger and most recent Financial Statements delivered
pursuant to subsection 4.1(c), in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion;

(iii) a reconciliation of the outstanding Loans as set forth in the monthly loan
account statement provided by Agent to each Borrower’s general ledger and
monthly Financial Statements delivered pursuant to subsection 4.1(c), in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; and

(iv) an aging of accounts payable accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion.

(j) at the time of delivery of each of the monthly or annual financial
statements delivered pursuant to Section 4.1, (i) a listing of government
contracts of each Borrower subject to the Federal Assignment of Claims Act of
1940 or any similar state or municipal law; and (ii) a list of any applications
for the registration of any Patent, Trademark or Copyright filed by any Credit
Party with the United States Patent and Trademark Office, the United States
Copyright Office, the Canadian Intellectual Property Office or any similar
office or agency in each case entered into or filed in the prior Fiscal Quarter;

(k) as soon as available and in any event no later than (i) forty-five (45) days
after the last day of each Fiscal Year of the Company, (A) projections of the
Company and its Subsidiaries consolidated financial performance for the
forthcoming three Fiscal Years on a year by year basis, and for the forthcoming
Fiscal Year on a month by month basis, and (B) an operating plan of the Borrower
Representative for the forthcoming Fiscal Year, with such projections and such
operating plan, in each case, to be in form and substance reasonably
satisfactory to Agent and (ii) sixty (60) days after the last day of each Fiscal
Year of the Borrowers, an operating plan approved by the Board of Directors of
the Borrower Representative for the forthcoming Fiscal Year, in form and
substance reasonably satisfactory to Agent;

(l) promptly upon receipt thereof, copies of any reports submitted by the Credit
Parties’ independent registered public accounting firm in

 

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connection with each annual, interim or special audit or review of any type of
the financial statements or internal control systems of any Credit Party made by
such accountants, including any comment letters submitted by such accountants to
management of any Credit Party in connection with their services;

(m) upon Agent’s request from time to time, the Credit Parties shall permit and
enable Agent to obtain appraisals in form and substance and from appraisers
reasonably satisfactory to Agent stating (i) the then Net Orderly Liquidation
Value, or such other value as determined by Agent, of all or any portion of the
Inventory, In-Transit Inventory and/or PL Credit Card Receivables from Private
Label Credit Cards of any Credit Party or any Subsidiary of any Credit Party,
provided, that notwithstanding any provision herein to the contrary, the
Borrowers shall only be obligated to reimburse Agent for the expenses of such
appraisals occurring (A) up to three (3) times in any twelve (12) consecutive
month period, in the event that (x) no Event of Default has occurred and is
continuing and (y) Availability shall not have been less than an amount equal to
twenty percent (20%) of the Maximum Borrowing Availability (without giving
effect to the Term Loan Push Down Reserve or the Term Loan Reserve Amount)
(based upon the applicable Borrowing Base Certificate received by Agent at such
time) at any time during such twelve consecutive month period, (B) up to four
(4) times in any twelve consecutive month period, in the event that Availability
shall have been less than an amount equal to twenty percent (20%) of the Maximum
Borrowing Availability (without giving effect to the Term Loan Push Down Reserve
or the Term Loan Reserve Amount) (based upon the applicable Borrowing Base
Certificate received by Agent at such time) at any time during such twelve
consecutive month period, and (C) any time an Event of Default has occurred and
is continuing, and (ii) the fair market value, or such other value of any Real
Estate of any Credit Party or any Subsidiary of any Credit Party, solely to the
extent required to comply with FIRREA;

(n) at such times and in the manner set forth in the Private Label Credit Card
Access and Monitoring Agreement, copies of all such reports, summaries and other
documents and other information required pursuant to such agreement;

(o) promptly upon the consummation of the transactions relating to the
Supplemental L/C Facility or any Permitted Refinancing, copies certified by a
Responsible Officer of the Borrower Representative as complete and correct of
the Supplemental L/C Facility Documents or the documents relating to any
Permitted Refinancing, as the case may be;

(p) as soon as practicable, in any event at least five (5) Business Days prior
thereto, any waiver, consent, amendment or permanent prepayment or permanent
commitment reduction (and the amount thereof) pursuant to Term Loan B Documents,
Supplemental L/C Facility Documents, or any documents relating to any Permitted
Refinancing, as the case may be;

 

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(q) promptly, such additional business, financial, corporate affairs, perfection
certificates and other information (including, without limitation, information
relating to any Private Label Credit Card) as Agent may from time to time
reasonably request;

(r) concurrently with the delivery of each of the monthly financial statements
delivered pursuant to Section 4.1, a report, in form and substance reasonably
satisfactory to Agent setting forth a summary of (i) all litigation,
investigations, proceedings or suspensions arising after the Restatement
Effective Date which may exist at any time between any Credit Party or any
Subsidiary of any Credit Party and any Governmental Authority and (ii) all good
faith, bona fide disputes (other than any initial internal review by such Credit
Party in the determination of whether a good faith, bona fide dispute exists)
between any Credit Party or any Subsidiary of a Credit Party and a lessor of any
Real Estate described in Section 3.6(b)(i)(2);

(s) promptly, and in any event within 3 Business Days after the filing thereof,
copies of all UCC financing statements (including continuation statements) filed
by Talbots Finance and the Company in respect of PL Credit Card Receivables; and

(t) Upon Agent’s reasonable request from time to time, but not more than once in
any calendar year, the Credit Parties shall furnish within sixty (60) days of
such request a five-year projection of the ERISA minimum contributions for any
pension plan (within the meaning of Section 3(z) of ERISA) that is subject to
Title IV of ERISA and that is maintained by or contributed to by any ERISA
Affiliate, which projections shall be prepared by the actuarial firm then
preparing the annual actuarial valuation report for such plan.

4.3 Notices. The Borrowers shall notify promptly Agent and each Lender of each
of the following (and in no event later than five (5) Business Days after a
Responsible Officer becoming aware thereof):

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

(b) any breach or non-performance of, or any default under, any Contractual
Obligation of any Credit Party or any Subsidiary of any Credit Party, or any
violation of, or non-compliance with, any Requirement of Law, which could
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect, including a description of such breach,
non-performance, default, violation or non-compliance and the steps, if any,
such Person has taken, is taking or proposes to take in respect thereof;

(c) any new dispute, litigation, investigation, proceeding or suspension arising
after the Restatement Effective Date which may exist at any time between any
Credit Party or any Subsidiary of any Credit Party and any

 

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Governmental Authority which could reasonably be expected to result in
(x) Liabilities in excess of $1,000,000 (excluding amounts covered by insurance,
but solely to the extent the relevant independent third party insurer has not
denied coverage therefor) or (y) a Material Adverse Effect;

(d) the commencement of, or any material development in, any litigation or
proceeding affecting any Credit Party or any Subsidiary of any Credit Party
(i) in which the amount of damages claimed is $2,500,000 (or its equivalent in
another currency or currencies) or more (excluding amounts covered by insurance,
but solely to the extent the relevant independent third party insurer has not
denied coverage therefor), (ii) in which injunctive or similar relief is sought
and which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect, or (iii) in which the relief sought is an injunction or
other stay of the performance of this Agreement or any other Loan Document;

(e) (i) the receipt by any Credit Party of any notice of violation of or
potential liability or similar notice under Environmental Law that could
reasonably be expected to result in any Material Environmental Liability,
(ii)(A) unpermitted Releases, (B) the existence of any condition that could
reasonably be expected to result in violations of or Liabilities under, any
Environmental Law or (C) the commencement of, or any material change to, any
action, investigation, suit, proceeding, audit, claim, demand, dispute alleging
a violation of or Liability under any Environmental Law which in the case of
clauses (A), (B) or (C) could reasonably be expected to result in Material
Environmental Liabilities, (iii) the receipt by any Credit Party of notification
that either (x) any Collateral included in the calculation of the Borrowing Base
is subject to any Lien or (y) any other property of any Credit Party is subject
to any material Lien, in each case, in favor of any Governmental Authority
securing, in whole or in part, Environmental Liabilities and (iv) any proposed
acquisition or lease of Real Estate, if such acquisition or lease could have a
reasonable likelihood of resulting in Material Environmental Liabilities;

(f) (i) on or prior to any filing by any ERISA Affiliate of any notice of any
reportable event under Section 4043 of ERISA, or intent to terminate any Title
IV Plan, a copy of such notice, (ii) promptly, and in any event within ten
(10) days, after any officer of any ERISA Affiliate knows or has reason to know
that a request for a minimum funding waiver under Section 412 of the Code or
Form 10 Notice of Reportable Event has been filed with respect to any Title IV
Plan or Multiemployer Plan, a notice describing such waiver request or Form 10
Notice of Reportable Event and any action that any ERISA Affiliate proposes to
take with respect thereto, together with a copy of any notice filed with the
PBGC or the IRS pertaining thereto, (iii) promptly, and in any event within ten
(10) days after any officer of any ERISA Affiliate knows or has reason to know
that an ERISA Event will or has occurred, a notice describing such ERISA Event,
and any action that any ERISA Affiliate proposes to take with respect thereto,
together with a copy of any notices received from or filed with the PBGC, IRS,
Multiemployer Plan or other Benefit Plan pertaining thereto, (iv) promptly,

 

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and in any event within ten (10) days after any officer of any ERISA Affiliate
knows or has reason to know of material changes in the required amount of
payment or contributions to any Benefit Plan (including but not limited to any
attempt by the PBGC under Section 4062(e) of ERISA or otherwise to obtain
additional contributions beyond the ERISA minimum required contributions, a
consensual security interest, a letter of credit, or guarantee of liabilities),
(v) the complete or partial withdrawal by a Canadian Credit Party from
participation in a “multi-employer pension plan” as defined under the Pension
Benefits Act (Ontario) or any similar type of plan subject to pension benefits
standards legislation of another jurisdiction in Canada, or the termination in
whole or in part of a Canadian Pension Plan, where such withdrawal or
termination is reasonably expected to result in a material liability of the
Canadian Credit Party; and (vi) the creation of any Lien on the property of a
Borrower or its Subsidiaries in favor of the PBGC (other than a Lien in respect
of employee contributions withheld from pay but not yet remitted to a Canadian
Pension Plan or Canadian Benefit Plan);

(g) any Material Adverse Effect subsequent to the date of the most recent
audited financial statements delivered to Agent and Lenders pursuant to this
Agreement;

(h) any material change in accounting policies or financial reporting practices
by any Credit Party or any Subsidiary of any Credit Party;

(i) any labor controversy resulting in or threatening to result in any strike,
work stoppage, boycott, shutdown or other labor disruption against or involving
any Credit Party or any Subsidiary of any Credit Party if the same could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;

(j) the creation, establishment or acquisition of any Subsidiary or the issuance
by or to any Credit Party of any Stock or Stock Equivalent (other than issuances
by the Company of Stock or Stock Equivalent not requiring a mandatory prepayment
hereunder);

(k) (i) the creation, or filing with the IRS, the CRA or any other Governmental
Authority, of any material Contractual Obligation or other document extending,
or having the effect of extending, the period for assessment or collection of
any income or franchise or other material taxes with respect to any Tax
Affiliate, (ii) the creation of any Contractual Obligation of any Tax Affiliate,
or the receipt of any request directed to any Tax Affiliate, to make any
material adjustment under Section 481(a) of the Code, by reason of a change in
accounting method or otherwise, (iii) any notice of an assessment of any tax
liabilities in excess of $250,000 received by any Borrower or any Subsidiary
from the IRS or any other Governmental Authority, together with copies of any
documents relating to such assessment or (iv) the entering into by any Borrower
or any Subsidiary of any settlement or other agreement with respect to any tax
liabilities, together with copies of all documents relating thereto;

 

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(l) any “default” or “event of default” under any Term Loan B Documents,
Supplemental L/C Facility Documents, or any documents relating to any Permitted
Refinancing, as the case may be;

(m) any notice of default (in respect of a default which has not been cured
prior to the receipt of such notice) under any Real Estate lease or any lease
guaranteed by any Credit Party, including a description of such default, the
Real Estate affected thereby and the steps, if any, such Person has taken, is
taking or proposes to take in respect thereof; and

(n) any notices or acknowledgements of financing statements or other Lien
filings received by the Borrowers or their Subsidiaries as provided in
Section 4.16, together with a copy of any such financing statement or Lien
filing.

Each notice pursuant to this Section 4.3 shall be in electronic form accompanied
by a statement by a Responsible Officer of the Borrower Representative, on
behalf of the Borrowers, setting forth details of the occurrence referred to
therein, and stating what action the Borrowers or other Person proposes to take
with respect thereto and at what time. Each notice under subsection 4.3(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or other Loan Document that have been breached or violated.

4.4 Preservation of Corporate Existence, Etc. Each Credit Party shall, and shall
cause each of its Subsidiaries to:

(a) preserve and maintain in full force and effect its organizational existence
under the laws of its jurisdiction of incorporation, organization or formation,
as applicable, except, with respect to the Borrowers’ Subsidiaries, in
connection with transactions permitted by Section 5.3;

(b) preserve and maintain in full force and effect (i) its good standing under
the laws of its jurisdiction of incorporation, organization or formation, as
applicable, and (ii) all rights, privileges, qualifications, permits, licenses
and franchises necessary in the normal conduct of its business except (x) in the
case of this clause (ii), in connection with any sale of assets permitted by
Section 5.2) and (ii) in each case, in connection with transactions permitted by
Section 5.3 and or except as could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect;

(c) use its commercially reasonable efforts, in the Ordinary Course of Business,
to preserve its business organization and preserve the goodwill and business of
the customers, suppliers and others having material business relations with it,
the non-preservation of which could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect;

 

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(d) preserve or renew all of its registered trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect; and

(e) conduct its business and affairs without infringement of or interference
with any Intellectual Property of any other Person except as could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, and comply in all material respects with the terms of
its material IP Licenses.

4.5 Maintenance of Property. Each Credit Party shall maintain, and shall cause
each of its Subsidiaries to maintain, and preserve all its Property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and shall make all necessary repairs thereto and renewals
and replacements thereof except where the failure to do so could not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.

4.6 Insurance.

(a) Each Credit Party shall, and shall cause each of its Subsidiaries to,
(i) maintain or cause to be maintained in full force and effect all policies of
insurance referenced in Section 3.18 with respect to the property and businesses
of the Credit Parties and such Subsidiaries (including policies of life, fire,
theft, product liability, public liability, Flood Insurance, property damage,
other casualty, employee fidelity, workers’ compensation, business interruption
and employee health and welfare insurance), with insurance companies or
associations (in each case that are not Affiliates of the Borrowers) having a
financial strength rating of A or better, and a financial size category of IX or
better, from A.M. Best Company, of a nature and providing such coverage as is
sufficient and as is customarily carried by businesses of the size and character
of the business of the Credit Parties and (ii) cause all such insurance relating
to any property or business of any Credit Party to name Agent as additional
insured or loss payee, as appropriate. All policies of insurance on real and
personal property of the Credit Parties will contain an endorsement showing loss
payable to Agent and extra expense, business interruption endorsements, notice
of cancellation and such other endorsements as reasonably requested by Agent,
each in form and substance reasonably acceptable to Agent. Notwithstanding the
requirement in subsection (i) above, Federal Flood Insurance shall not be
required for (x) Real Estate not located in a Special Flood Hazard Area, or
(y) Real Estate located in a Special Flood Hazard Area in a community that does
not participate in the National Flood Insurance Program.

(b) Unless the Credit Parties provide Agent with evidence of the insurance
coverage required by this Agreement, Agent may purchase insurance at the Credit
Parties’ expense to protect Agent’s and Lenders’ interests in the Credit
Parties’ and their Subsidiaries’ properties. Agent shall endeavor to

 

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provide prompt notice to the Borrower Representative if Agent shall elect to
purchase insurance pursuant to this Section 4.6(b); provided that Agent shall
have no liability to any Credit Party for the failure to provide any such
notice. This insurance may, but need not, protect the Credit Parties’ and their
Subsidiaries’ interests. The coverage that Agent purchases may not pay any claim
that any Credit Party or any Subsidiary of any Credit Party makes or any claim
that is made against such Credit Party or any Subsidiary in connection with said
Property. The Credit Parties may later cancel any insurance purchased by Agent,
but only after providing Agent with evidence that there has been obtained
insurance as required by this Agreement. If Agent purchases insurance, the
Credit Parties will be responsible for the costs of that insurance, including
any charges, fees and expenses incurred by Agent in connection with the
placement of insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance shall be added to the
Obligations and shall bear interest at the Base Rate plus the Applicable Margin
for Revolving Loans and the default rate under subsection 1.3(c), and shall be
due and payable upon demand of the Agent. The costs of the insurance may be more
than the cost of insurance the Credit Parties may be able to obtain on their
own.

4.7 Payment of Obligations. Each Credit Party shall, and shall cause each of its
Subsidiaries to, pay, discharge and perform as the same shall become due and
payable or required to be performed:

(a) (i) all federal, provincial, and state income tax liabilities and other tax
liabilities, assessments and governmental charges or levies upon it or its
Property, unless the same are being contested in good faith by appropriate
proceedings diligently prosecuted which stay the filing or enforcement of any
Lien and for which adequate reserves in accordance with GAAP are being
maintained by such Person and (ii) all Liabilities (including tax liabilities,
assessments and governmental charges or levies upon it or its Property) under
any settlement agreement, payment plan or other similar Contractual Obligation
or agreement entered into in connection with any of the matters specified in
Schedule 3.10 between any Credit Party or Subsidiary of a Credit Party and any
Governmental Authority.

(b) all lawful claims which, if unpaid, would by law become a Lien upon its
Property unless the same are being contested in good faith by appropriate
proceedings diligently prosecuted which stay the imposition or enforcement of
any Lien and for which adequate reserves in accordance with GAAP are being
maintained by such Person;

(c) all Indebtedness (other than immaterial Indebtedness (x) not exceeding
$1,000,000 in the aggregate and (y) the failure to so pay or perform could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect), as and when due and payable, but subject to any
subordination provisions contained herein, in any other Loan Documents and/or in
any instrument or agreement evidencing such Indebtedness;

 

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(d) all obligations under any Contractual Obligation to which such Credit Party
or any of its Subsidiaries is bound, or to which it or any of its Property is
subject, except where (x) such obligations are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
are being maintained by such Person or (y) the failure to perform could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect; and

(e) payments to the extent necessary to avoid the imposition of a Lien with
respect to, or the involuntary termination of any underfunded Benefit Plan.

4.8 Compliance with Laws. Each Credit Party shall, and shall cause each of its
Subsidiaries to, comply with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business, except where the failure
to comply could not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.

4.9 Inspection of Property and Books and Records.

(a) Each Credit Party shall maintain and shall cause each of its Subsidiaries to
maintain proper books of record and account, in which full, true and correct
entries in material conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of such
Person.

(b) Each Credit Party shall, and shall cause each of its Subsidiaries to, with
respect to each owned, leased, or controlled property, during normal business
hours and upon reasonable advance notice (unless an Event of Default shall have
occurred and be continuing, in which event no notice shall be required and Agent
shall have access at any and all times during the continuance thereof):
(i) provide access to such property to Agent and any of its Related Persons, as
frequently as Agent determines to be appropriate; and (ii) permit Agent and any
of its Related Persons to conduct field examinations, audit, inspect and make
extracts and copies (or take originals if reasonably necessary) from all of such
Credit Party’s books and records, and evaluate and make physical verifications
of the Inventory and other Collateral in any manner and through any medium that
Agent considers advisable in its reasonable judgment, in each instance, at the
Credit Parties’ expense; provided that the Credit Parties shall only be
obligated to reimburse the Agent for the reasonable expenses for (A) up to three
(3) field examinations, audits or inspections in every twelve (12) month period,
in the event that (x) no Event of Default has occurred and is continuing and
(y) Availability shall not have been less than an amount equal to twenty percent
(20%) of the Maximum Borrowing Availability (without giving effect to the Term
Loan Push Down Reserve or the Term Loan Reserve Amount) (based upon the
applicable Borrowing Base Certificate received by Agent at such time) at any
time during such twelve consecutive month period and (B) up to four (4)

 

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such field examinations, audits and inspections in any twelve consecutive month
period, in the event that Availability shall have been less than an amount equal
to twenty percent (20%) of the Maximum Borrowing Availability (without giving
effect to the Term Loan Push Down Reserve or the Term Loan Reserve Amount)
(based upon the applicable Borrowing Base Certificate received by Agent at such
time) at any time during such twelve consecutive month period. There shall be no
limit on the number of field examinations, audits and inspections conducted
during the occurrence and continuance of an Event of Default and all such field
examinations, audits and inspections shall be at the sole cost and expense of
the Credit Parties. Any Lender may accompany Agent or its Related Persons in
connection with any inspection at such Lender’s expense.

(c) Each Credit Party shall, and shall cause each of its Subsidiaries to, permit
Agent and any of its Related Persons from time to time, subject (except when a
Default or Event of Default exists) to reasonable notice, to discuss with its
officers, employees, agents, advisors and independent accountants such Person’s
business, financial condition, assets (including Inventory, Credit Card
Receivables and Private Label Credit Card programs), prospects and results of
operations, and each such officer, employee, agent, advisor and independent
accountant is hereby authorized and instructed to discuss and cooperate with
Agent or such Related Person regarding the same.

(d) The Credit Parties shall, and shall cause its Subsidiaries to, comply with
the Private Label Credit Card Access and Monitoring Agreement and the PLCC
Certificate.

(e) The Credit Parties shall, and shall cause its Subsidiaries to, cause not
less than one (1) physical inventory to be undertaken at not less than
ninety-five (95%) percent of the Credit Parties’ Stores in each fifteen
(15) consecutive calendar month period and one (1) physical inventory to be
undertaken at each of the Credit Parties’ distribution centers in each twelve
(12) consecutive calendar month period, at the expense of the Credit Parties,
and in each case consistent with past practices, conducted by the inventory
taker retained by the Credit Parties on the Restatement Effective Date or, if
such inventory taker is replaced, then by an inventory taker reasonably
satisfactory to Agent and following such methodology as is consistent with the
methodology used in the immediately preceding inventory or as otherwise may be
satisfactory to Agent. Agent, at the expense of the Credit Parties, may
participate in and/or observe each scheduled physical count of Inventory which
is undertaken on behalf of any Credit Party. The Borrower Representative, within
fifteen (15) days following the completion of such inventory, shall provide
Agent with a reconciliation of the results of such inventory (as well as of any
other physical inventory or cycle counts undertaken by a Credit Party) and shall
post such results to the Credit Parties’ stock ledgers and general ledgers, as
applicable. Notwithstanding the foregoing, if any changes to the methodology or
procedures used in conducting any such physical inventory occur after the
Restatement Effective Date and such methodology or procedures are not acceptable
to Agent in its reasonable

 

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discretion, Agent may require the Credit Parties, at their own expense, to
re-conduct such physical inventory using third-party inventory takers reasonably
satisfactory to Agent. The Credit Parties shall also permit Agent, in its
reasonable discretion, if any Default or Event of Default exists, to cause such
additional inventories to be taken as Agent determines (each, at the expense of
the Credit Parties).

4.10 Use of Proceeds. The Borrowers shall use the proceeds of the Loans solely
as set forth in Section 3.8(b).

4.11 Cash Management Systems.

(a) Each Credit Party shall enter into, and cause each depository, securities
intermediary or commodities intermediary to enter into, Control Agreements
providing for “full” cash dominion with respect to each Control Account,
securities, commodity or similar account (including, without limitation, any
lockbox or similar arrangements) maintained by such Person as of or after the
Restatement Effective Date. Credit Parties shall (except solely to the extent
the failure to do so shall have either (i) not resulted from any act or omission
of any Credit Party or (ii) resulted from the isolated failure by any employee
of any Credit Party to comply with the formal cash management procedures of the
Credit Parties not affecting more than ten (10) Stores at any time, in any case,
so long as any such failure shall not be material in any respect):

(A) cause (1) all cash payments received by them at any Store (other than petty
cash maintained in Store cash registers to facilitate point of sale
transactions, consistent with past practices and proceeds of Term Priority
Collateral) to either (I) be delivered, no less frequently than one (1) time
each calendar week, into the possession of an Approved Armored Car Carrier for
deposit into a Control Account or Local Deposit Account, provided that until
such time as such cash payments shall be delivered into the possession of an
Approved Armored Car Carrier, such cash payments shall (x) within one Business
Day after the receipt thereof, be maintained in a safe located at a Store in
accordance with past practices and (y) thereafter, shall not be used to service
any petty cash or Store expense reimbursement needs, (II) be deposited into a
Control Account or Local Deposit Account within one (1) Business Day after the
receipt thereof (other than such payments as may be inadvertently misdirected or
mis-delivered, which payments shall be promptly deposited in accordance with
this Section upon the correction of any such error) or (III) be mailed, no less
frequently than two (2) times each calendar week, directly to the bank at which
a Control Account or Local Deposit Account is maintained for deposit into such
Control Account or Local Deposit Account, and (2) all other payments received at
any Store (including, without limitation, all checks, drafts or other similar
items of payment) to be deposited into a Control Account or Local Deposit
Account within one (1) Business Day after the receipt thereof (it being
understood that, in the case of checks, drafts and other similar items of
payment that are deposited electronically, such items may be delivered into the
possession of an Approved Armored Car Carrier together with any cash pursuant to
clause (i)(A)(1) above);

 

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(B) establish lockboxes subject to Control Agreements and direct all Account
Debtors (other than in connection with delinquent collection efforts, pursuant
to which the applicable Account Debtors shall be directed to remit payment
directly to the Credit Parties’ chief executive office) to remit all payments
directly to those lockboxes; and

(C) cause all funds in local store deposit accounts which do not constitute
Control Accounts (“Local Deposit Accounts”) to be transferred on a daily basis
to a Control Account that is subject to a Control Agreement.

(b) Each of the Credit Parties agrees that only proceeds of Term Priority
Collateral shall be deposited in the Term Loan Priority Accounts (as defined in
the Term Loan B Intercreditor Agreement).

(c) Each Control Agreement shall provide, among other things, that (i) the
depository, securities intermediary or commodities intermediary executing such
agreement has no rights of setoff or recoupment or any other claim against such
account, other than for payment of its service fees and other charges directly
related to the administration of such account and for returned checks or other
items of payment (except as Agent may otherwise agree in writing), and (ii) from
and after the Restatement Effective Date, except for cash and Cash Equivalents
maintained by the Credit Parties pursuant to Section 5.22, all amounts received
in any Control Account shall be swept daily into the Collection Account or
another Control Account which is swept daily into the Collection Account.

(d) All amounts deposited in the Collection Account shall be deemed received by
Agent in accordance with Section 1.10(a) and shall be applied (and allocated) by
Agent in accordance with Section 1.10(c)(i) or Section 1.10(c)(ii), as the case
may be. In no event shall any amount be so applied unless and until such amount
shall have been credited in immediately available funds to the Collection
Account.

(e) Credit Parties may amend Schedule 3.22 to add or replace any deposit account
or other account; provided, that (i) Agent shall have consented in writing (such
consent not be unreasonably withheld) in advance to the opening of such account
with the relevant depository, securities intermediary or commodities
intermediary and (ii) with respect to any additional or replacement Control
Account, securities account, or commodities account, except as Agent may
otherwise agree in writing, prior to the time of the opening of such account,
the applicable Credit Party and the applicable depository, securities
intermediary or commodities intermediary shall have executed and delivered to
Agent a Control Agreement.

(f) Credit Parties shall close any of their respective accounts (and establish
replacement accounts in accordance with clause (d) hereof) promptly and in any
event within thirty (30) days following notice from Agent

 

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that the creditworthiness of any bank holding an account is no longer acceptable
in Agent’s reasonable judgment, or as promptly as practicable and in any event
within one-hundred and twenty (120) days following notice from Agent that the
operating performance, funds transfer or availability procedures or performance
with respect to accounts of the depository, securities intermediary or
commodities intermediary holding such accounts or Agent’s liability under any
Control Agreement with such depository, securities intermediary or commodities
intermediary is no longer acceptable in Agent’s reasonable judgment.

(g) Upon Agent’s request, each Borrower shall use its commercially reasonable
efforts to cause each depository with which it maintains any Local Deposit
Account to promptly enter into a Control Agreement with respect to such Local
Deposit Accounts maintained at such depository and if such Control Agreement
cannot be obtained, the Agent may require the Credit Parties to close such Local
Deposit Accounts and transfer all funds therein to a Control Account subject to
a Control Agreement at a financial institution reasonably satisfactory to the
Agent.

4.12 Leases. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located, except
for such payments or other obligations that (a) relate to closed Stores
(including, without limitation, Stores owned by the J. Jill Entities) where no
Collateral included in the calculation of the Borrowing Base most recently
delivered by the Borrower Representative to the Agent is or may be located or
(b)(i) are either (1) being contested in good faith by appropriate proceedings
or (2) the subject of a good faith, bona fide dispute related to the leased
premises (including such payments and such obligations that are the subject of
an earnest internal review by such Credit Party in the determination of whether
a good faith, bona fide dispute exists with respect to such payments and such
obligations) consistent with the practices of the Borrowers and their
Subsidiaries on the Restatement Effective Date, provided that, in the case of
this clause (2), upon receipt of any notice of default under the applicable
lease, the applicable Credit Party or Subsidiary of a Credit Party shall
promptly pay and perform its obligations under such lease, irrespective of
whether the bona fide dispute is then continuing, except solely to the extent
that (A) the continued failure to so pay or perform in connection with such good
faith, bona fide dispute could not reasonably be expected to result in the
termination of any such lease (provided that such Credit Party or such
Subsidiary of a Credit Party shall promptly at the time the continued failure to
so pay or perform could reasonably be expected to result in the termination of
any such lease, either (x) commence a proceeding pursuant to clause (b)(i)(1)
above, which proceeding shall seek to stay any such termination and such relief
shall have been granted by the relevant court, or (y) deem the applicable Store
subject to such lease a closed Store pursuant to clause (a) above (it being
agreed that all Collateral located at such store shall be promptly excluded from
the calculation of the Borrowing Base and the Borrowers shall deliver an updated
Borrowing Base Certificate to the Agent demonstrating the exclusion of such
Collateral)) and (B) the failure to so pay or perform under such lease,
individually or in the aggregate with all other leases which are the subject of
a bona fide dispute, could not reasonably be expected to result in a Material
Adverse Effect, and (ii) in any case, for which adequate reserves in accordance
with GAAP are being maintained by such Person.

 

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4.13 Further Assurances.

(a) Each Credit Party shall ensure that all written information, exhibits and
reports furnished to Agent or the Lenders do not and will not contain any untrue
statement of a material fact and do not and will not omit to state any material
fact or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will promptly
disclose to Agent and the Lenders and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement
or recordation thereof.

(b) Promptly upon request by Agent, the Credit Parties shall (and, subject to
the limitations hereinafter set forth, shall cause each of their Subsidiaries
to) take such additional actions and execute such documents as Agent may
reasonably require from time to time in order (i) to carry out more effectively
the purposes of this Agreement or any other Loan Document, (ii) to subject to
the Liens created by any of the Collateral Documents any of the Properties,
rights or interests covered by any of the Collateral Documents, (iii) to perfect
and maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Secured Parties the rights granted or now or hereafter intended to be granted to
the Secured Parties under any Loan Document (including, without limitation, by
conducting such searches under the Uniform Commercial Code in any jurisdiction,
at such times (including periodic intervals), as Agent may reasonably require or
request). Without limiting the generality of the foregoing and except as
otherwise approved in writing by Required Lenders, the Credit Parties shall
cause each of their Domestic Subsidiaries (other than Domestic Subsidiaries
owned indirectly through a Foreign Subsidiary and other than Excluded
Subsidiaries) and, to the extent no 956 Impact exists or would result directly
therefrom, Foreign Subsidiaries, and Domestic Subsidiaries owned indirectly
through a Foreign Subsidiary, to guaranty the Obligations and to cause each such
Subsidiary to grant to Agent, for the benefit of the Secured Parties, a security
interest in, subject to the limitations hereinafter set forth, all of such
Subsidiary’s Property to secure such guaranty (other than Stock or Stock
Equivalents in any Subsidiary except as specifically provided below).
Furthermore and except as otherwise approved in writing by Required Lenders,
each Credit Party shall, and shall cause each of its Domestic Subsidiaries
(other than Domestic Subsidiaries owned indirectly through a Foreign Subsidiary
and other than Excluded Subsidiaries) to, pledge all of the Stock and Stock
Equivalents of each of its Domestic Subsidiaries (other than Domestic
Subsidiaries owned indirectly through a Foreign Subsidiary and other than
Excluded Subsidiaries) and First Tier Foreign Subsidiaries (provided that with
respect to any First Tier Foreign Subsidiary, if a 956 Impact exists or would
result directly therefrom such pledge shall be limited to sixty-five percent

 

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(65%) of such Foreign Subsidiary’s outstanding voting Stock and Stock
Equivalents and one hundred percent (100%) of such Foreign Subsidiary’s
outstanding non-voting Stock and Stock Equivalents) and to the extent no 956
Impact exists or would result directly therefrom, each of its Foreign
Subsidiaries to pledge all of the Stock and Stock Equivalent of each of its
Subsidiaries, in each instance, to Agent, for the benefit of the Secured
Parties, to secure the Obligations. In connection with each pledge of Stock and
Stock Equivalents, the Credit Parties shall deliver, or cause to be delivered,
to Agent, irrevocable proxies and stock powers and/or assignments, as
applicable, duly executed in blank. In the event any Credit Party or any
Domestic Subsidiary (other than Domestic Subsidiaries owned indirectly through a
Foreign Subsidiary) and, to the extent no 956 Impact exists or would result
directly therefrom, any Foreign Subsidiary, and any Domestic Subsidiaries owned
indirectly through a Foreign Subsidiary, of any Credit Party acquires any Real
Estate, simultaneously with such acquisition, such Person shall execute and/or
deliver, or cause to be executed and/or delivered, to Agent, (v) if requested by
Agent in its reasonable judgment, an appraisal complying with FIRREA, (w) within
forty-five days of receipt of notice from Agent that Real Estate is located in a
Special Flood Hazard Area, Federal Flood Insurance as required by subsection
4.6(a), (x) a fully executed Mortgage, in form and substance reasonably
satisfactory to Agent together with an A.L.T.A. lender’s title insurance policy
issued by a title insurer reasonably satisfactory to Agent, in form and
substance and in an amount reasonably satisfactory to Agent insuring that the
Mortgage is a valid and enforceable first priority Lien on the respective
property, free and clear of all defects, encumbrances and Liens, (y) then
current A.L.T.A. surveys, certified to Agent by a licensed surveyor sufficient
to allow the issuer of the lender’s title insurance policy to issue such policy
without a survey exception and (z) an environmental site assessment prepared by
a qualified firm reasonably acceptable to Agent, in form and substance
reasonably satisfactory to Agent. A “956 Impact” will be deemed to exist to the
extent the issuance of a guaranty by, grant of a Lien by, or pledge of
two-thirds or greater of the voting Stock and Stock Equivalents of, a Foreign
Subsidiary, would result in incremental income tax liability as a result of the
application of Section 956 of the Code. In addition to the obligations set forth
in subsections 4.6(a) and 4.13(b)(w), within forty-five days after written
notice from Agent to Credit Parties that any Real Estate is located in a Special
Flood Hazard Area, Credit Parties shall satisfy the Federal Flood Insurance
requirements of subsection 4.6(a).

4.14 Environmental Matters. Without limiting the generality of the foregoing,
each Credit Party shall, and shall cause each of its Subsidiaries to, comply
with all applicable Environmental Laws (including by implementing any Remedial
Action necessary to achieve such compliance or that is required by orders and
directives of any Governmental Authority) except where the failure to comply
could not reasonably be expected to, individually or in the aggregate, result in
a Material Environmental Liability. Without limiting the foregoing, if Agent at
any time has a reasonable basis to believe that there exist violations of
Environmental Laws by, or Environmental Liabilities of, any Credit Party or any
Subsidiary of any Credit Party that, individually or in the aggregate, could
reasonably be expected to result in any Material Environmental Liabilities, then

 

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each Credit Party shall, promptly upon receipt of request from Agent, cause the
performance of, such environmental audits and assessments, including subsurface
sampling of soil and groundwater, and cause the preparation of such reports, in
each case as Agent may from time to time reasonably request. Such audits,
assessments and reports shall be conducted and prepared by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance reasonably acceptable to Agent.

4.15 Intentionally Omitted.

4.16 Lien Searches. Promptly following receipt of the acknowledgment copy of any
financing statements filed under the UCC or PPSA in any jurisdiction or any
other Lien filed in any filing office in any jurisdiction (other than any Liens
filed by Agent), deliver to Agent completed requests for information listing
such financing statement or Lien filing and all other effective financing
statements or Lien filings filed in such jurisdiction that name any Credit Party
as debtor, together with copies of such other financing statements or Lien
filings.

4.17 Maintenance of New York Process Agent. In the case of a Canadian Credit
Party, maintain in New York, New York or at such other location in the United
States of America as may be reasonably satisfactory to Agent, a Person acting as
agent to receive on its behalf and on behalf of its property service of process.

4.18 Canadian Pension Benefit Plans. Each Canadian Credit Party shall cause each
of its Canadian Pension Plans (other than any Canadian Pension Plan which is a
“multi-employer pension plan”, as defined under the Pension Benefits Act
(Ontario) or any similar type of plan subject to pension benefits standards
legislation of another jurisdiction in Canada) to be duly registered and
administered in all material respects in compliance with the Pension Benefits
Act (Ontario) or other applicable pension benefits standards legislation and all
other applicable laws (including regulations, orders and directives), and the
terms of the Canadian Pension Plans and any agreements relating thereto. Each
Canadian Credit Party shall ensure:

(a) that no Lien arises on any of its assets in respect of any Canadian Pension
Plan (other than Liens in respect of employee contributions withheld from pay
but not yet due to be remitted to any Canadian Pension Plan);

(b) it makes all required contributions to any Canadian Pension Plan when due;
and

(c) no Canadian Pension Plan provides benefits on a defined basis.

4.19 Post-Closing Covenant. Each Credit Party, as applicable, shall execute and
deliver the documents and complete the tasks set forth on Schedule 4.19, in each
case within the time limits specified on such Schedule (or such later times as
determined by Agent).

 

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ARTICLE V.

NEGATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Lender shall have
any Revolving Loan Commitment hereunder, or any Loan or other Obligation (other
than contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied:

5.1 Limitation on Liens. No Credit Party shall, and no Credit Party shall suffer
or permit any of its Subsidiaries to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of
its Property, whether now owned or hereafter acquired, other than the following
(“Permitted Liens”):

(a) any Lien existing on the Property of a Credit Party or a Subsidiary of a
Credit Party on the Restatement Effective Date and set forth in Schedule 5.1
securing Indebtedness outstanding on such date and permitted by subsection
5.5(c), including replacement Liens on the Property currently subject to such
Liens securing Indebtedness permitted by subsection 5.5(c);

(b) any Lien created under any Loan Document;

(c) Liens for taxes, fees, assessments or other governmental charges (i) which
are not past due or remain payable without penalty, or (ii) the non-payment of
which is permitted by Section 4.7;

(d) statutory carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s, freight, quasi-freight, fisherman’s lay, wage liens or other
similar statutory Liens arising in the Ordinary Course of Business which are not
past due or remain payable without penalty or which are being contested in good
faith and by appropriate proceedings diligently prosecuted, which proceedings
have the effect of preventing the forfeiture or sale of the Property subject
thereto and for which adequate reserves in accordance with GAAP are being
maintained;

(e) Liens (other than any Lien imposed by ERISA or other applicable law relating
to Canadian Pension Plans) consisting of pledges or deposits required in the
Ordinary Course of Business in connection with workers’ compensation,
unemployment insurance and other social security legislation or to secure the
performance of tenders, statutory obligations, surety, stay, customs and appeals
bonds (and cash collateral with respect thereto), bids, leases, governmental
contract, trade contracts, performance and return of money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed money)
or to secure liability to insurance carriers;

(f) Liens consisting of judgment or judicial attachment liens (other than for
payment of taxes, assessments or other governmental charges), provided that the
enforcement of such Liens is effectively stayed and all such Liens secure claims
in the aggregate at any time outstanding for the Credit Parties and their
Subsidiaries not exceeding $2,000,000;

 

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(g) easements, rights-of-way, zoning and other restrictions, minor defects or
other irregularities in title, and other similar encumbrances incurred in the
Ordinary Course of Business which do not secure any monetary obligations and
which, either individually or in the aggregate, do not in any case materially
detract from the value of the Property subject thereto or interfere in any
material respect with the ordinary conduct of the businesses of any Credit Party
or any Subsidiary of any Credit Party;

(h) Liens on any Property acquired (including any Property acquired from a
Person that is consolidated or amalgamated with or merged with or into any
Credit Party or any Subsidiary of a Credit Party or outstanding at the time any
Person becomes a Subsidiary of any Credit Party) or held by any Credit Party or
any Subsidiary of any Credit Party securing Indebtedness incurred or assumed for
the purpose of financing (or refinancing) all or any part of the cost of
acquiring such Property and permitted under subsection 5.5(d); provided that
(i) any such Lien attaches to such Property concurrently with or within sixty
(60) days after the acquisition thereof, (ii) such Lien attaches solely to the
Property so acquired in such transaction and the proceeds thereof, and (iii) the
principal amount of the debt secured thereby does not exceed 100% of the cost of
such Property;

(i) Liens securing Capital Lease Obligations permitted under subsection 5.5(d);

(j) any interest or title of a lessor or sublessor under any lease permitted by
this Agreement;

(k) non-exclusive licenses and sublicenses granted by a Credit Party and leases
or subleases (by a Credit Party as lessor or sublessor) to third parties in the
Ordinary Course of Business not interfering with the business of the Credit
Parties or any of their Subsidiaries and which either individually or in the
aggregate do not materially detract from the value of the Property subject
thereto;

(l) Liens in favor of collecting banks arising by operation of law under
Section 4-210 of the Uniform Commercial Code or, with respect to collecting
banks located in the State of New York, under 4-208 of the Uniform Commercial
Code;

(m) Liens (including the right of set-off) in favor of a bank or other
depository institution arising as a matter of law encumbering deposits;

(n) Liens in favor of customs and revenue authorities arising as a matter of law
which secure payment of customs duties in connection with the importation of
goods in the Ordinary Course of Business;

 

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(o) Liens securing Indebtedness permitted pursuant to Section 5.5(f) relating to
the Term Loan B Documents; provided that such Liens are subject to, and have the
priority set forth in, the Term Loan B Intercreditor Agreement in all respects;
and

(p) Liens securing Indebtedness permitted pursuant to Section 5.5(g) relating to
the Supplemental L/C Facility Documents; provided that such Liens (i) attach
solely to the Supplemental L/C Facility Cash Collateral which is on deposit with
the Supplemental L/C Facility Agent and (ii) are subject to, and have the
priority set forth in, the Supplemental L/C Facility Intercreditor Agreement in
all respects; and

(q) any extension, renewal or replacement (or successive extensions, renewals or
replacements), as a whole or part, of any of the foregoing, so long as any such
extension, renewal, or replacement is limited to all or any part of the same
property that secured the Lien as extended, renewed or replaced (plus
improvements on such property) and the principal amount of the indebtedness or
obligation secured thereby is not increased.

5.2 Disposition of Assets. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including the Stock of any Subsidiary of
any Credit Party, whether in a public or a private offering or otherwise, and
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except:

(a) dispositions to any Person other than an Affiliate of a Credit Party of
(x) inventory in the Ordinary Course of Business or (y) worn-out, obsolete or
surplus assets (including Real Estate and Intellectual Property so long as any
Net Proceeds are applied to repayment of the Term Loan B Obligations in
accordance with the Term Loan B Agreement) having a book value not exceeding
$2,000,000 in the aggregate in any Fiscal Year, in the Ordinary Course of
Business;

(b) dispositions (other than of (i) the Stock of any Subsidiary of any Credit
Party or (ii) any Credit Card Receivables or PL Credit Card Receivables of any
Credit Party) not otherwise permitted hereunder which are made for fair market
value and the mandatory prepayment in the amount of the Net Proceeds of such
disposition is made if and to the extent required by Section 1.8; provided, that
(i) at the time of any disposition, no Event of Default shall exist or shall
result from such disposition, (ii) not less than 80% of the aggregate sales
price from such disposition shall be paid in cash at closing and (iii) the
aggregate fair market value of all assets (other than the Essex Property) so
sold by the Credit Parties and their Subsidiaries, together, shall not exceed
$2,000,000 in any Fiscal Year;

(c) dispositions of Cash Equivalents;

 

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(d) dispositions in connection with any Permitted Store Closure;

(e) disposition of the assets of any Foreign Subsidiary, which is not a Credit
Party, including the Stock thereof, provided that no Foreign Subsidiary shall
dispose of any Intellectual Property;

(f) dispositions of defaulted Accounts for collection purposes for fair value,
provided that such Accounts are not included in the calculation of the Borrowing
Base (as reflected in the most recent Borrowing Base Certificate delivered by
the Borrower Representative to the Agent);

(g) transactions permitted under Section 5.1(k);

(h) dispositions of Intellectual Property set forth in Part B of Schedule 3.16
to AEON co., Ltd. or its Affiliates; and

(i) dispositions of Intellectual Property in the Ordinary Course of Business
through the failure to maintain any obsolete or unused Intellectual Property,
having only a de minimis value.

5.3 Consolidations and Mergers. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to merge, consolidate or amalgamate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except (a) upon not less than five (5) Business Days’ prior written notice to
Agent, (i) any Subsidiary of a Borrower may merge or amalgamate with, or
dissolve or liquidate into, a Borrower or a Wholly-Owned Subsidiary of a
Borrower which is a Domestic Subsidiary and (ii) Talbots Finance may merge with,
or dissolve or liquidate into, any other Borrower, provided that (x) such
Borrower or such Wholly-Owned Subsidiary which is a Domestic Subsidiary (as
applicable) or the successor by amalgamation thereto shall be the continuing or
surviving entity, (y) all actions required to maintain perfected Liens on the
Stock of the surviving entity and other Collateral in favor of Agent shall have
been completed, and (z) such transaction shall not cause any breach of the
provisions of Section 5.24 (and to the extent reasonably requested by the Agent,
the Credit Parties shall provide favorable opinions of its legal counsel as to
such matters affecting the Private Label Credit Card Agreements as the Agent may
reasonably request), (b) any Foreign Subsidiary may merge or amalgamate with or
dissolve or liquidate into another Foreign Subsidiary provided if a First Tier
Foreign Subsidiary is a constituent entity in such merger, dissolution or
liquidation, such First Tier Foreign Subsidiary or the successor by amalgamation
thereto shall be the continuing or surviving entity, (c) transaction permitted
under Section 5.2(e) may be consummated and (d) each Excluded Subsidiary (other
than TCNB) may be dissolved.

5.4 Acquisitions; Loans and Investments. No Credit Party shall and no Credit
Party shall suffer or permit any of its Subsidiaries to (i) purchase or acquire,
or make any

 

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commitment to purchase or acquire any Stock or Stock Equivalents, or any
obligations or other securities of, or any interest in, any Person, including
the establishment or creation of a Subsidiary, or (ii) make or commit to make
any Acquisitions, or any other acquisition of all or substantially all of the
assets of another Person, or of any business or division of any Person,
including without limitation, by way of merger, amalgamation, consolidation or
other combination or (iii) make or purchase, or commit to make or purchase, any
advance, loan, extension of credit or capital contribution to or any other
investment in, any Person including a Borrower, any Affiliate of a Borrower or
any Subsidiary of a Borrower (the items described in clauses (i), (ii) and
(iii) are referred to as “Investments”), except for:

(a) Investments in cash and Cash Equivalents;

(b) Investments consisting of extensions of credit (or contribution of capital)
by any Credit Party to any other Credit Party; provided, that: (i) if any Credit
Party executes and delivers to any other Credit Party a note (collectively, the
“Intercompany Notes”) to evidence any such intercompany Indebtedness, that
Intercompany Note shall be pledged and delivered to Agent pursuant to the
Guaranty and Security Agreement as additional collateral security for the
Obligations; (ii) each Credit Party shall accurately record all intercompany
transactions on its books and records; (iii) at the time any such intercompany
loan or advance is made by any Credit Party to any other Credit Party and after
giving effect thereto, each such Credit Party shall be Solvent; and (iv) such
intercompany loans shall be on terms, including subordination terms, reasonably
satisfactory to the Agent;

(c) Intentionally Omitted;

(d) Intentionally Omitted;

(e) Investments consisting of extensions of credit by any Subsidiary of a
Borrower that is not a Credit Party to any Credit Party; provided, that:
(i) each Credit Party and its Subsidiaries shall accurately record all
intercompany transactions on its books and records; and (ii) such intercompany
loans shall be subordinated to the Obligations as evidenced by a subordination
agreement in form and substance reasonably satisfactory to Agent and shall
otherwise be on terms, reasonably satisfactory to the Agent;

(f) Investments by Subsidiaries of the Borrowers that are not Credit Parties in
other Subsidiaries that are not Credit Parties;

(g) Investments consisting of creation of a new Subsidiary; provided that such
new Subsidiary shall (i) be added as a Credit Party to this Agreement in a
manner acceptable to the Agent and (ii) comply with the requirements set forth
in Section 4.13(b);

(h) Investments consisting of the Minimum TCNB Deposit;

 

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(i) Investments necessary to satisfy TCNB’s obligations as a national bank
pursuant to Requirements of Law, including the Community Reinvestment Act of
1977, to support low and moderate income consumers, consisting of loans made by
TCNB through Access Capital Strategies (which amount as of the date hereof is
approximately $250,000);

(j) Investments received as the non-cash portion of consideration received in
connection with transactions permitted pursuant to subsection 5.2(b);

(k) Investments acquired in connection with the settlement of delinquent
Accounts in the Ordinary Course of Business or in connection with the bankruptcy
or reorganization of suppliers or customers;

(l) Investments existing on the Restatement Effective Date and set forth on
Schedule 5.4;

(m) Investments in the J. Jill Entities in connection with the satisfaction of
Contingent Obligations permitted under Section 5.9(i), provided that the
aggregate proceeds of all such Investments shall be used solely to pay and
satisfy such Contingent Obligations;

(n) loans or advances to employees permitted under Section 5.6;

(o) Investments consisting of any transactions permitted under Section 5.3 and
Section 5.6(e); and

(p) Investments consisting of extensions of credit by any Credit Party to TCNB;
provided, that: (i) no Default or Event of Default has occurred and is
continuing or would arise as a result of such Investment, (ii) such Investment
is made in the Ordinary Course of Business, (iii) TCNB shall execute and deliver
to the applicable Credit Party a Subsidiary Intercompany Note to evidence such
intercompany Indebtedness, which Subsidiary Intercompany Note shall be pledged
and delivered to Agent pursuant to the Guaranty and Security Agreement as
additional collateral security for the Obligations; (iv) each Credit Party and
TCNB shall accurately record all intercompany transactions on its books and
records; (v) at the time any such intercompany loan or advance is made by any
Credit Party to TCNB and after giving effect thereto, TCNB shall be Solvent;
(vi) the aggregate amount of such intercompany Indebtedness owing by TCNB
pursuant to this clause (d) shall not exceed $2,500,000 at any one time
outstanding; and (vii) Agent shall have received a certificate of a Responsible
Officer of the Borrower Representative certifying, and as appropriate setting
forth calculations demonstrating, that the Credit Parties and their Subsidiaries
have complied with each of the conditions set forth in clauses (i) through
(vi) of this proviso, which certificate shall be in form and substance
reasonably satisfactory to Agent.

 

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5.5 Limitation on Indebtedness. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, create, incur, assume, permit to
exist, or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness, except:

(a) the Obligations;

(b) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 5.9;

(c) Indebtedness existing on the Restatement Effective Date and set forth in
Schedule 5.5 including Permitted Refinancings thereof;

(d) Indebtedness consisting of Capital Lease Obligations or secured by Liens
permitted by Section 5.1(h) and Permitted Refinancings thereof, provided, that
Indebtedness permitted under this clause (d) and Contingent Obligations
permitted under Section 5.9(n) shall not exceed $5,000,000 in the aggregate at
any time outstanding;

(e) unsecured intercompany Indebtedness permitted pursuant to subsections
5.4(b), 5.4(e) and 5.4(f);

(f) Indebtedness under the Term Loan B Documents in an aggregate principal
amount not to exceed $75,000,000 minus the aggregate amount of principal
repayments made in respect thereof, and including Permitted Refinancings
thereof, subject to the terms of the Term Loan B Intercreditor Agreement;

(g) Indebtedness under the Supplemental L/C Facility Documents entered into
after the Restatement Effective Date in an aggregate principal amount not to
exceed $25,000,000 or such greater amount reasonably acceptable to the Agent and
the Required Lenders, and including Permitted Refinancings thereof; provided,
however, that (i) both before and after giving effect to the Supplemental L/C
Facility Documents, no Default or Event of Default shall exist, (ii) the
Supplemental L/C Facility Documents shall be in form and substance, and the
Supplemental L/C Facility shall be on terms and conditions, reasonably
satisfactory to the Agent and the Required Lenders, (iii) the terms and
conditions of the Supplemental L/C Facility Intercreditor Agreement shall be
reasonably acceptable to the Agent and the Required Lenders and the Supplemental
L/C Facility Intercreditor Agreement shall be in full force and effect and
(iv) prior to the consummation of any Supplemental L/C Facility transaction,
Agent shall have received an officer’s certificate (in form and substance
reasonably satisfactory to Agent) from a Responsible Officer of the Borrower
Representative certifying that the conditions set forth in this clause (g) are
satisfied; and

 

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(h) other unsecured Indebtedness not exceeding $10,000,000 in the aggregate at
any time outstanding owing to Persons that are not Affiliates of the Credit
Parties.

5.6 Employee Loans and Transactions with Affiliates. No Credit Party shall, and
no Credit Party shall suffer or permit any of its Subsidiaries to, enter into
any transaction with any Affiliate of a Borrower or of any such Subsidiary,
except:

(a) As set forth on Schedule 5.6 hereof and as in effect as of the Restatement
Effective Date;

(b) as expressly permitted by this Agreement; or

(c) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of such Credit Party or such Subsidiary upon fair
and reasonable terms no less favorable to such Credit Party or such Subsidiary
than would be obtained in a comparable arm’s length transaction with a Person
not an Affiliate of a Borrower or such Subsidiary;

(d) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of such Credit Party or such Subsidiary upon fair
and reasonable terms, procuring directors and officers liability insurance
policies;

(e) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of such Credit Party or such Subsidiary upon fair
and reasonable terms, transactions made in connection with employee benefit
plans;

(f) loans or advances to employees of Credit Parties for travel, entertainment
and relocation expenses and other ordinary business purposes in the Ordinary
Course of Business not to exceed $2,500,000 in the aggregate outstanding at any
time, provided, that no Default or Event of Default has occurred and is
continuing or would arise as a result of such transaction at the time of its
occurrence;

(g) Intentionally Omitted; and

(h) non-cash loans or advances made by the Company to employees of Credit
Parties that are simultaneously used by such Persons to purchase Stock or Stock
Equivalents of the Company.

5.7 Compensation. No Credit Party shall, and no Credit Party shall permit any of
its Subsidiaries to, pay any management, consulting or similar fees to any
Affiliate of any Credit Party other than fees paid to any Credit Party, provided
that any such fees paid by a Borrower shall only be paid to another Borrower.

 

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5.8 Margin Stock; Use of Proceeds. No Credit Party shall, and no Credit Party
shall suffer or permit any of its Subsidiaries to, use any portion of the Loan
proceeds, directly or indirectly, to purchase or carry Margin Stock or repay or
otherwise refinance Indebtedness of any Credit Party or others incurred to
purchase or carry Margin Stock, or otherwise in any manner which is in
contravention of any Requirement of Law or in violation of this Agreement.

5.9 Contingent Obligations. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Contingent Obligations except in respect of the Obligations and
except:

(a) endorsements for collection or deposit in the Ordinary Course of Business;

(b) Rate Contracts entered into in the Ordinary Course of Business for bona fide
hedging purposes and not for speculation with Agent’s prior written consent;

(c) Contingent Obligations of the Credit Parties and their Subsidiaries (other
than Contingent Obligations relating to the J. Jill Sale, which Contingent
Obligations are set forth on Schedule 5.9(i)) existing as of the Restatement
Effective Date and listed in Schedule 5.9(c), including extension and renewals
thereof which do not increase the amount of such Contingent Obligations or
impose materially more restrictive or adverse terms on the Credit Parties or
their Subsidiaries as compared to the terms of the Contingent Obligation being
renewed or extended;

(d) Contingent Obligations arising under indemnity agreements to title insurers
to cause such title insurers to issue to Agent title insurance policies;

(e) Contingent Obligations arising with respect to customary indemnification
obligations in favor of (i) sellers in connection with Acquisitions permitted
hereunder, (ii) purchasers in connection with dispositions permitted under
subsection 5.2(b), and (iii) vendors in connection with contracts entered into
in the Ordinary Course of Business;

(f) Contingent Obligations arising under guarantees made in the Ordinary Course
of Business with respect to obligations of any Credit Party, which obligations
are otherwise permitted hereunder; provided that if such obligation is
subordinated to the Obligations, such Contingent Obligation shall be
subordinated to the same extent;

(g) Contingent Obligations relating to the reimbursement of, or payment of fees
or interest to, Li & Fung, Ltd. or its Affiliates in connection with any letter
of credit or payment made by such Person for the benefit of any Credit Party on
account of the shipment or purchase of Inventory in the Ordinary Course of
Business;

 

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(h) Contingent Obligations consisting of repurchase obligations of the Credit
Parties and their Subsidiaries incurred in the Ordinary Course of Business in
connection with any required advance purchase by any manufacturer, of fabric,
trim or other raw materials that are not utilized in the production of
Inventory;

(i) Contingent Obligations set forth on Schedule 5.9(i) (which schedule shall
identify the obligator in respect thereof) arising pursuant to, or in connection
with, the J. Jill Sale;

(j) Contingent Obligations arising with respect to customary indemnification
obligations in respect of chargebacks in favor of any credit card issuer or
processor under any Credit Card Agreements; and

(k) Contingent Obligations arising in connection with the Supplemental L/C
Facility;

(l) Contingent Obligations arising under Letters of Credit;

(m) Contingent Obligations arising under the Term Loan B Agreement; and

(n) other Contingent Obligations provided, that Contingent Obligations permitted
under this Section 5.9(n) and Indebtedness permitted under Section 5.5(d) shall
not exceed $5,000,000 in the aggregate at any time outstanding.

5.10 Compliance with ERISA; Canadian Pension Plan. No ERISA Affiliate shall
cause or suffer to exist (a) any event that could result in the imposition of a
Lien on any asset of a Credit Party or a Subsidiary of a Credit Party with
respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event,
that would, in the aggregate, result in Liabilities in excess of $2,000,000. No
Credit Party shall cause or suffer to exist any event that could result in the
imposition of a Lien (other than a Lien in respect of which employee
contributions are withheld from pay but not yet remitted to a Canadian Pension
Plan) with respect to any Benefit Plan, Canadian Benefit Plan or Canadian
Pension Plan. No Canadian Pension Plan shall provide benefits on a defined
benefit basis.

 

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5.11 Restricted Payments. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, (i) declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any Stock or Stock Equivalent, (ii) purchase, redeem
or otherwise acquire for value any Stock or Stock Equivalent now or hereafter
outstanding or (iii) make any payment or prepayment of principal of, premium, if
any, interest, fees, redemption, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to, Subordinated Indebtedness (the
items described in clauses (i), (ii) and (iii) above are referred to as
“Restricted Payments”); except that any Wholly-Owned Subsidiary of a Borrower
may declare and pay dividends to a Borrower or any other Credit Party and a
Foreign Subsidiary may pay dividends to any other Foreign Subsidiary, and except
that:

(a) the Company may declare and make dividend payments or other distributions
payable solely in its Stock or Stock Equivalents;

(b) the Company may purchase Stock or Stock Equivalents from its employees upon
demand by any such employee in connection with the satisfaction of his or her
tax withholding obligations pursuant to employee benefit plans, provided that
(x) the aggregate amount of all such Restricted Payments in any Fiscal Year
shall not exceed $2,000,000 and (y) no Default or Event of Default has occurred
and is continuing or would arise as a result of any such Restricted Payment; and

(c) the Borrowers may redeem or repurchase from officers, directors and
employees Stock and Stock Equivalents in the Ordinary Course of Business in
connection the departure of such officer, director or employee from the Company
or its Subsidiaries; provided that the amount paid for such redemption or
repurchase shall not exceed $0.01 per share redeemed or repurchased.

5.12 Change in Business. No Credit Party shall, and no Credit Party shall permit
any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business conducted by the Credit
Parties and their Subsidiaries on the date hereof or any business substantially
related and incidental thereto.

5.13 Change in Structure. Except as expressly permitted under Sections 5.2(e),
5.3, 5.4(f), 5.4(g) and 5.11, no Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to, make any material changes in its equity
capital structure, issue any Stock or Stock Equivalents (other than common Stock
or common Stock Equivalents of the Company) or amend any of its Organization
Documents in any material respect and, in each case, in any respect adverse to
Agent or Lenders; provided that the Credit Parties shall be permitted to issue
Stock of the Company pursuant to the Equity Plan.

5.14 Changes in Accounting, Name or Jurisdiction of Organization. No Credit
Party shall, and no Credit Party shall suffer or permit any of its Subsidiaries
to, (a) make any significant change in accounting treatment or reporting
practices, except as required by GAAP, (b) change the Fiscal Year or method for
determining Fiscal Quarters or Fiscal Months of any Credit Party or of any
consolidated Subsidiary of any Credit Party, (c) change its name as it appears
in official filings in its jurisdiction of organization or (d) change its
jurisdiction of organization, in the case of clauses (c) and (d), without at
least thirty (30) days’ prior written notice to Agent.

5.15 Amendments to Subordinated Indebtedness. No Credit Party shall, and no
Credit Party shall permit any of its Subsidiaries directly or indirectly to,
change or amend the terms of any Subordinated Indebtedness not subject to the
Subordination Agreement,

 

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if the effect of such change or amendment is to: (a) increase the interest rate
on such Indebtedness; (b) shorten the dates upon which payments of principal or
interest are due on such Indebtedness; (c) add or change in a manner adverse to
the Credit Parties any event of default or add or make more restrictive any
covenant with respect to such Indebtedness; (d) change in a manner adverse to
the Credit Parties the prepayment provisions of such Indebtedness; (e) change
the subordination provisions thereof (or the subordination terms of any guaranty
thereof); or (f) change or amend any other term if such change or amendment
would materially increase the obligations of the Credit Parties or confer
additional material rights on the holder of such Indebtedness in a manner
adverse to the Credit Parties, Agent or Lenders.

5.16 No Negative Pledges.

(a) No Credit Party shall, and no Credit Party shall permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual restriction or encumbrance of any kind
on the ability of any Credit Party or Subsidiary to pay dividends or make any
other distribution on any of such Credit Party’s or Subsidiary’s Stock or Stock
Equivalents or to pay fees, including management fees, or make other payments
and distributions to a Borrower or any Credit Party. No Credit Party shall, and
no Credit Party shall permit any of its Subsidiaries to, directly or indirectly,
enter into, assume or become subject to any Contractual Obligation prohibiting
or otherwise restricting the existence of any Lien upon any of its assets in
favor of Agent, whether now owned or hereafter acquired except in connection
with any document or instrument governing Liens permitted pursuant to Sections
5.1(h), 5.1(i), 5.1(o) or 5.1(p), provided that any such restriction contained
therein relates only to the asset or assets subject to such Permitted Liens.

(b) No Credit Party shall issue any Stock or Stock Equivalents (i) if such
issuance would result in an Event of Default under Section 7.1(k) and
(ii) unless such Stock and Stock Equivalents (other than Stock and Stock
Equivalents issued by the Company and any Excluded Equity Issuance) are pledged
to Agent, for the benefit of the Secured Parties, as security for the
Obligations pursuant in accordance with the terms of the Guaranty and Security
Agreement.

5.17 OFAC; Patriot Act, Proceeds of Crime Act. No Credit Party shall, and no
Credit Party shall permit any of its Subsidiaries to fail to comply with any of
the requirements set forth in Section 3.28 or Section 3.29.

5.18 Sale-Leasebacks. No Credit Party shall, and no Credit Party shall permit
any of its Subsidiaries to, engage in a sale leaseback, synthetic lease or
similar transaction involving any of its assets.

5.19 Hazardous Materials. Except as could not reasonably be expected to result
in Material Environmental Liabilities, no Credit Party shall, and no Credit
Party shall permit any of its Subsidiaries to, cause or suffer to exist any
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Material at, to or from any Real Estate that would violate any Environmental
Law, form the basis for any Environmental Liabilities or otherwise materially
adversely affect the value or marketability of any Real Estate (whether or not
owned by any Credit Party or any Subsidiary of any Credit Party).

5.20 Prepayments of Other Indebtedness. No Credit Party shall, directly or
indirectly, voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of any Indebtedness
prior to its scheduled maturity, other than (a) the Obligations,
(b) Indebtedness secured by a Permitted Lien if the asset securing such
Indebtedness has been sold or otherwise disposed of in a transaction permitted
hereunder, provided that any payment or prepayment of any Term Loan B
Obligations pursuant this clause (b) shall be limited to and made solely with
the Net Proceeds received by any Credit Party from the sale or other disposition
of Term Priority Collateral, (c) the Term Loan B Obligations and Indebtedness
under subsection 5.5(g) and 5.5(h), provided that in each case (i) no Default or
Event of Default has occurred and is continuing or would arise as a result of
such payment, (ii) the average daily Availability (on a pro forma basis after
giving effect to such payment) shall be not less than $75,000,000 for (x) the
ninety (90) day period preceding such prepayment of the Term Loan B Obligations
and (y) for the immediately succeeding period of twelve consecutive months
following the date of such payment and (iii) Agent shall have received a
certificate, in form and substance reasonably satisfactory to Agent, of a
Responsible Officer of the Borrower Representative certifying that the
conditions set forth in clauses (i) and (ii) herein are satisfied and attaching
supporting calculations demonstrating the same; (d) a Permitted Refinancing of
Indebtedness permitted under subsection 5.5(c), 5.5(d), 5.5(f) (subject to the
Term Loan B Intercreditor Agreement) or 5.5(g) (subject to the Supplemental L/C
Facility Intercreditor Agreement), (d) prepayment of intercompany Indebtedness
to Credit Parties, and (e) in connection with the re-characterization, as a
contribution to equity, or the conversion to Stock of existing Investments
consisting of extensions of credit by (x) any Credit Party to Talbots (Canada)
Corporation or (y) Talbots (Canada) Corporation to any Credit Party, in each
case, as permitted under Sections 5.4(d) and (e).

5.21 Amendments or Waivers of Term Loan B Credit Documents and the Supplemental
L/C Facility Documents. No Credit Party shall, and no Credit Party shall permit
any of its Subsidiaries to, agree to any amendment, restatement, supplement or
other modification to, or waiver of any of its material rights under, the Term
Loan B Credit Documents, the Supplemental L/C Facility Documents or any
Permitted Refinancings thereof, if such amendment, restatement, supplement or
other modification to, or waiver of material rights, would be prohibited by the
applicable Intercreditor Agreement, without obtaining the prior written consent
of Required Lenders to such amendment, restatement, supplement or other
modification or waiver.

5.22 Cash Accumulation. No Credit Party shall permit cash and Cash Equivalents
in an aggregate amount in excess of $10,000,000 (other than (i) Supplemental L/C
Facility Cash Collateral, (ii) cash necessary for the Credit Parties to satisfy
the current liabilities incurred by them in the ordinary course of their
business and without acceleration of the satisfaction of such current
liabilities, (iii) the Minimum

 

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TCNB Deposit, (iv) the J. Jill Contingent Obligation Deposit, (v) cash deposits
in an amount not to exceed $9,500,000 maintained with insurers in respect of
casualty insurance programs of the Credit Parties and their Subsidiaries in
accordance with, and in a minimum amounts necessary to satisfy requirements
under high deductible casualty insurance programs maintained in the Ordinary
Course of Business, and (vi) cash necessary to cash collateralize customs bonds
in the Ordinary Course of Business in an amount not to exceed $8,500,000 at any
time (or such greater amount required pursuant to any Requirement of Law)) to
accumulate and be maintained in deposit, securities, commodity or similar
account of the Credit Parties; provided that any such accumulated amounts shall
be maintained in accounts subject to a Control Agreement; and provided, however,
that the Credit Parties’ obligations under this Section 5.22 shall be suspended
if, and for so long as, there are no Loans outstanding.

5.23 Collateral Proceeds. No Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to commingle (a) proceeds from any Loans with any
proceeds of the Term Loan B or (b) any Proceeds of ABL Priority Collateral with
any Proceeds of Term Priority Collateral.

5.24 Private Label Credit Card Agreements. No Credit Party shall, and no Credit
Party shall permit any Subsidiary to, amend, restate, supplement or otherwise
modify, or waive any rights under, or terminate any of the Private Label Credit
Card Agreements, in each case in a manner adverse to Agent or any other Secured
Party, except as required pursuant to any Requirement of Law (it being
understood that any such adverse change shall be promptly disclosed to Agent and
thereafter Agent shall have the right to exclude the relevant Eligible PL Credit
Card Accounts or to provide for appropriate Reserves in its Permitted Discretion
for Eligible PL Credit Card Accounts to the extent necessary to account for such
adverse change). Notwithstanding the foregoing to the contrary, no Credit Party
shall, and no Credit Party shall permit any Subsidiary to, amend, restate,
supplement or otherwise modify, or waive any rights under, or terminate any of
the Private Label Credit Card Agreements or otherwise take (or omit to take) any
action, in each case, which causes the transfer of Accounts or rights to payment
arising under any Private Label Credit Card from TCNB to the Company or Talbots
Finance or from Talbots Finance to the Company to cease being characterized as a
perfected “true sale” (for the avoidance of any doubt, each Credit Party shall
file or cause to be filed and remain in full force and effect at all times all
necessary UCC financing statements to effect such “true sale” in respect of all
such Accounts and other rights to payment so transferred, provided that all
continuation statements in respect of any such initial UCC financing statements
shall be filed no later than thirty (30) days prior to the date the applicable
financing statements shall lapse).

5.25 J. Jill Entities. No Credit Party shall permit any J. Jill Entity to engage
in any business or activity other than (a) maintaining, satisfying or otherwise
terminating each of its leases existing as of the date hereof, (b) participating
in tax, accounting and other administrative activities as a Subsidiary of a
consolidated group of companies, including the Credit Parties, and
(c) activities incidental to the business or activities described in clauses
(a) and (b) of this Section 5.25.

 

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ARTICLE VI.

[INTENTIONALLY OMITTED]

ARTICLE VII.

EVENTS OF DEFAULT

7.1 Events of Default. Any of the following shall constitute an “Event of
Default”:

(a) Non-Payment. Any Credit Party fails (i) to pay when and as required to be
paid herein, any amount of principal of, or interest on, any Loan, including
after maturity of the Loans, or to pay any L/C Reimbursement Obligation or
(ii) to pay within three (3) Business Days after the same shall become due, any
fee or any other amount payable hereunder or pursuant to any other Loan
Document;

(b) Representation or Warranty. Any representation, warranty or certification by
or on behalf of any Credit Party or any of its Subsidiaries made or deemed made
herein, in any other Loan Document, or which is contained in any certificate,
document or financial or other statement by any such Person, or their respective
Responsible Officers, furnished at any time under this Agreement, or in or under
any other Loan Document, shall prove to have been incorrect in any material
respect (without duplication of other materiality qualifiers contained therein)
on or as of the date made or deemed made;

(c) Specific Defaults. Any Credit Party fails to perform or observe any term,
covenant or agreement contained in any of subsections 4.3(a), 4.4(a) and 4.4(d),
4.7(a)(ii) or 9.10(d), Sections 4.1, 4.2 (other than subsections 4.2(a), 4.2(c),
4.2(i), 4.2(l), 4.2(o), 4.2(p), 4.2(q) and 4.2(r)), 4.6, 4.9 (other than
subsection 4.9(a)), 4.10, or 4.11 (other than subsections 4.11(c)(i) and
4.11(e)) or Article V;

(d) Other Defaults. Any Credit Party or Subsidiary of any Credit Party fails to
perform or observe any other term, covenant or agreement contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of (x) fifteen (15) days, in the case of a covenant or agreement
contained in Sections 4.3 (other than Section 4.3(a)) of this Agreement or 4.19,
or (z) thirty (30) days, in the case of any other covenant or agreement, after
the earlier to occur of (i) the date upon which a Responsible Officer of any
Credit Party becomes aware of such default and (ii) the date upon which written
notice thereof is given to the Borrower Representative by Agent or Required
Lenders;

(e) Cross-Default. Any Credit Party or any Subsidiary of any Credit Party
(i) fails to make any payment in respect of any Indebtedness (other than the
Obligations) or Contingent Obligation having an aggregate principal

 

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amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $3,000,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure continues after
the applicable grace or notice period, if any, specified in the document
relating thereto on the date of such failure; or (ii) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated maturity
(without regard to any subordination terms with respect thereto), or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded;

(f) Insolvency; Voluntary Proceedings. A Borrower, individually, ceases or
fails, or the Credit Parties and their Subsidiaries on a consolidated basis,
cease or fail, to be Solvent, or any Credit Party or any Subsidiary of any
Credit Party: (i) generally fails to pay, or admits in writing its inability to
pay, its debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its
business in the ordinary course, except in connection with a transaction
permitted under Section 5.3; (iii) commences any Insolvency Proceeding with
respect to itself; or (iv) takes any action to effectuate or authorize any of
the foregoing;

(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against any Credit Party or any Subsidiary of any Credit
Party (other than either of the J. Jill Entities), or any writ, judgment,
warrant of attachment, execution or similar process, is issued or levied against
any such Person’s Properties with a value in excess of $2,000,000 individually
or in the aggregate and any such proceeding or petition shall not be dismissed,
or such writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within forty-five (45) days after
commencement, filing or levy; (ii) any Credit Party or Subsidiary of any Credit
Party (other than either of the J. Jill Entities) admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) any Credit Party or any Subsidiary of any Credit Party
(other than either of the J. Jill Entities) acquiesces in the appointment of a
receiver, receiver-manager, interim receiver, monitor, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or business;

 

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(h) Monetary Judgments. One or more judgments, non-interlocutory orders, decrees
or arbitration awards shall be entered against any one or more of the Credit
Parties or any of their respective Subsidiaries involving in the aggregate a
liability of $5,000,000 or more (net of insurance coverage provided by a carrier
and for which liability has been acknowledged in writing by such carrier), and
the same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of thirty (30) days after the entry thereof;

(i) Non-Monetary Judgments. One or more non-monetary judgments, orders or
decrees shall be rendered against any one or more of the Credit Parties or any
of their respective Subsidiaries which has or could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect, and
there shall be any period of ten (10) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;

(j) Collateral. Any material provision of any Loan Document shall for any reason
cease to be valid and binding on or enforceable against any Credit Party or any
Subsidiary of any Credit Party thereto or any Credit Party or any Subsidiary of
any Credit Party shall so state in writing or bring an action to limit its
obligations or liabilities thereunder; or any Collateral Document shall for any
reason (other than pursuant to the terms thereof) cease to create a valid
security interest in the Collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and first
priority security interest subject only to Permitted Liens;

(k) Ownership. A Change in Control shall occur;

(l) Invalidity of Subordination Provisions. The subordination provisions of the
Subordination Agreement or any agreement or instrument governing any
Subordinated Indebtedness shall for any reason be revoked or invalidated, or
otherwise cease to be in full force and effect, or any Person shall contest in
any manner the validity or enforceability thereof or deny that it has any
further liability or obligation thereunder, or the Obligations, for any reason
shall not have the priority contemplated by this Agreement or such subordination
provisions;

(m) Term Loan B Documents and Supplemental L/C Facility Documents. Any default
or breach of any condition or covenant, or any other event shall occur or
condition shall exist, under the Term Loan B Documents or the Supplemental L/C
Facility Documents or any instrument relating to any such Indebtedness, if the
effect of such event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity;

 

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(n) Invalidity of Term Loan B Intercreditor Agreement or the Supplemental L/C
Facility Intercreditor Agreement. Any of the Term Loan B Intercreditor Agreement
or the Supplemental L/C Facility Intercreditor Agreement shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and effect (other
than in accordance with its terms), any Credit Party shall contest in any manner
the validity or enforceability thereof or deny that it has any further liability
or obligation thereunder, the Obligations, for any reason, shall not have the
priority contemplated by the Term Loan B Intercreditor Agreement or the
Supplemental L/C Facility Intercreditor Agreement, as the case may be, or any
party (other than Agent or any Lender) to the Term Loan B Intercreditor
Agreement or the Supplemental L/C Facility Intercreditor Agreement fails to
perform or observe any term, covenant or agreement contained therein; or

(o) ERISA. (i) An ERISA Event occurs with respect to a Benefit Plan (including,
but not limited to any Multiemployer Plan) which has resulted or could
reasonably be expected to result in liability of any Credit Party under Title IV
of ERISA to such Benefit Plan or the PBGC in an aggregate amount in excess of
$2,000,000 or which could reasonably likely result in a Material Adverse Effect,
or (ii) a Credit Party or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $2,000,000 or which could reasonably
likely result in a Material Adverse Effect;

(p) Canadian Pension Plans. Any event or condition shall occur or exist with
respect to a Canadian Pension Plan that could reasonably be expected to subject
any Canadian Credit Party to any tax, penalty or other liabilities under the
Pension Benefits Act (Ontario) or any other applicable pension benefits
standards legislation or other applicable laws in an aggregate amount in excess
of $2,000,000, or if a Canadian Credit Party is in default with respect to
required payments to a Canadian Pension Plan in an aggregate amount in excess of
$2,000,000 or any Lien arises on the assets of a Canadian Credit Party (save for
contribution amounts not yet due) in connection with any Canadian Pension Plan;
or

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

7.2 Remedies. Upon the occurrence and during the continuance of any Event of
Default, Agent may, and shall at the request of the Required Lenders:

(a) declare all or any portion of the Revolving Loan Commitment of each Lender
to make Loans or of each L/C Issuer to issue Letters

 

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of Credit to be suspended or terminated, whereupon such Revolving Loan
Commitments shall forthwith be suspended or terminated;

(b) declare all or any portion of the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, all fees and premiums, if any
(including amounts due under Section 1.9), and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable; without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by each Credit Party; and/or

(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection
7.1(f) or 7.1(g) above (in the case of clause (i) of subsection 7.1(g) upon the
expiration of the forty-five (45) day period mentioned therein), the obligation
of each Lender to make Loans and the obligation of each L/C Issuer to issue
Letters of Credit shall automatically terminate and the unpaid principal amount
of all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of Agent, any Lender or
any L/C Issuer. On the Revolving Termination Date, any Lender may terminate its
and its Affiliates’ Bank Products in accordance with the documents governing
such Bank Products.

7.3 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.

7.4 Cash Collateral for Letters of Credit. If an Event of Default has occurred
and is continuing, this Agreement (or the Aggregate Revolving Loan Commitment)
shall be terminated for any reason, or if any Letters of Credit remain
outstanding for any reason whatsoever after the Revolving Termination Date or if
otherwise required by the terms hereof, Agent may, and upon request of Required
Lenders, shall, demand (which demand shall be deemed to have been delivered
automatically upon any acceleration of the Loans and other obligations hereunder
pursuant to Section 7.2), and the Borrowers shall thereupon deliver to Agent, to
be held for the benefit of the L/C Issuers, Agent and the Lenders entitled
thereto, an amount of cash equal to 107% of the amount of L/C Reimbursement
Obligations as additional collateral security for Obligations. Agent may at any
time apply any or all of such cash and cash collateral to the payment of any or
all of the Credit Parties’ Obligations. The remaining balance of the cash
collateral will be returned to the Borrowers when all Letters of Credit have
been terminated or discharged, the Aggregate Revolving Loan Commitments have
been terminated and all Obligations have been indefeasibly paid in full in cash.

 

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ARTICLE VIII.

THE AGENT

8.1 Appointment and Duties.

(a) Appointment of Agent. Each Lender and each L/C Issuer hereby appoints GE
Capital (together with any successor Agent pursuant to Section 8.9) as Agent
hereunder and authorizes Agent to (i) execute and deliver the Loan Documents and
accept delivery thereof on its behalf from any Credit Party, (ii) take such
action on its behalf and to exercise all rights, powers and remedies and perform
the duties as are expressly delegated to Agent under such Loan Documents and
(iii) exercise such powers as are incidental thereto.

(b) Duties as Collateral and Disbursing Agent. Without limiting the generality
of clause (a) above, Agent shall have the sole and exclusive right and authority
(to the exclusion of the Lenders and L/C Issuers), and is hereby authorized, to
(i) act as the disbursing and collecting agent for the Lenders and the L/C
Issuers with respect to all payments and collections arising in connection with
the Loan Documents (including in any proceeding described in subsection 7.1(g)
or any other bankruptcy, insolvency or similar proceeding), and each Person
making any payment in connection with any Loan Document to any Secured Party is
hereby authorized to make such payment to Agent, (ii) file and prove claims and
file other documents necessary or desirable to allow the claims of the Secured
Parties with respect to any Obligation in any proceeding described in subsection
7.1(f) or (g) or any other bankruptcy, insolvency or similar proceeding (but not
to vote, consent or otherwise act on behalf of such Person), (iii) act as
collateral agent for each Secured Party for purposes of the perfection of all
Liens created by such agreements and all other purposes stated therein,
(iv) manage, supervise and otherwise deal with the Collateral, (v) take such
other action as is necessary or desirable to maintain the perfection and
priority of the Liens created or purported to be created by the Loan Documents,
(vi) except as may be otherwise specified in any Loan Document, exercise all
remedies given to Agent and the other Secured Parties with respect to the
Collateral, whether under the Loan Documents, applicable Requirements of Law or
otherwise and (vii) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided, however, that Agent hereby appoints,
authorizes and directs each Lender and L/C Issuer to act as collateral sub-agent
for Agent, the Lenders and the L/C Issuers for purposes of the perfection of
Liens with respect to any deposit account maintained by a Credit Party with, and
cash and Cash Equivalents held by, such Lender or L/C Issuer, and may further
authorize and direct the Lenders and the L/C Issuers to take further actions as
collateral sub-agents for purposes of enforcing such Liens or otherwise to
transfer the Collateral subject thereto to Agent, and each Lender and L/C Issuer
hereby agrees to take such further actions to the extent, and only to the
extent, so authorized and directed.

 

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(c) Limited Duties. Under the Loan Documents, Agent (i) is acting solely on
behalf of the Secured Parties (except to the limited extent provided in
subsection 1.4(b) with respect to the Register), with duties that are entirely
administrative in nature, notwithstanding the use of the defined term “Agent”,
the terms “agent”, “Agent” and “collateral agent” and similar terms in any Loan
Document to refer to Agent, which terms are used for title purposes only,
(ii) is not assuming any obligation under any Loan Document other than as
expressly set forth therein or any role as agent, fiduciary or trustee of or for
any Lender, L/C Issuer or any other Person and (iii) shall have no implied
functions, responsibilities, duties, obligations or other liabilities under any
Loan Document, and each Secured Party, by accepting the benefits of the Loan
Documents, hereby waives and agrees not to assert any claim against Agent based
on the roles, duties and legal relationships expressly disclaimed in clauses
(i) through (iii) above.

8.2 Binding Effect. Each Secured Party, by accepting the benefits of the Loan
Documents, agrees that (i) any action taken by Agent or the Required Lenders
(or, if expressly required hereby, a greater proportion of the Lenders) in
accordance with the provisions of the Loan Documents, (ii) any action taken by
Agent in reliance upon the instructions of Required Lenders (or, where so
required, such greater proportion) and (iii) the exercise by Agent or the
Required Lenders (or, where so required, such greater proportion) of the powers
set forth herein or therein, together with such other powers as are incidental
thereto, shall be authorized and binding upon all of the Secured Parties.

8.3 Use of Discretion.

(a) Agent shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents); provided, that Agent shall not be required to take any
action that, in its opinion or the opinion of its counsel, may expose Agent to
liability or that is contrary to any Loan Document or applicable Requirement of
Law; and

(b) Agent shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Credit Party or its Affiliates that is
communicated to or obtained by Agent or any of its Affiliates in any capacity.

8.4 Delegation of Rights and Duties. Agent may, upon any term or condition it
specifies, delegate or exercise any of its rights, powers and remedies under,
and delegate or perform any of its duties or any other action with respect to,
any Loan Document by or through any trustee, co-agent, employee,
attorney-in-fact and any other Person (including any Secured Party). Any such
Person shall benefit from this Article VIII to the extent provided by Agent.

 

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8.5 Reliance and Liability.

(a) Agent may, without incurring any liability hereunder, (i) treat the payee of
any Note as its holder until such Note has been assigned in accordance with
Section 9.9, (ii) rely on the Register to the extent set forth in Section 1.4,
(iii) consult with any of its Related Persons and, whether or not selected by
it, any other advisors, accountants and other experts (including advisors to,
and accountants and experts engaged by, any Credit Party) and (iv) rely and act
upon any document and information (including those transmitted by Electronic
Transmission) and any telephone message or conversation, in each case believed
by it to be genuine and transmitted, signed or otherwise authenticated by the
appropriate parties.

(b) None of Agent and its Related Persons shall be liable for any action taken
or omitted to be taken by any of them under or in connection with any Loan
Document, and each Secured Party, each Borrower and each other Credit Party
hereby waive and shall not assert (and each of the Borrowers shall cause each
other Credit Party to waive and agree not to assert) any right, claim or cause
of action based thereon, except to the extent of liabilities resulting primarily
from the gross negligence or willful misconduct of Agent or, as the case may be,
such Related Person (each as determined in a final, non-appealable judgment by a
court of competent jurisdiction) in connection with the duties expressly set
forth herein. Without limiting the foregoing, Agent:

(i) shall not be responsible or otherwise incur liability for any action or
omission taken in reliance upon the instructions of the Required Lenders or for
the actions or omissions of any of its Related Persons selected with reasonable
care (other than employees, officers and directors of Agent, when acting on
behalf of Agent);

(ii) shall not be responsible to any Lender, L/C Issuer or other Person for the
due execution, legality, validity, enforceability, effectiveness, genuineness,
sufficiency or value of, or the attachment, perfection or priority of any Lien
created or purported to be created under or in connection with, any Loan
Document;

(iii) makes no warranty or representation, and shall not be responsible, to any
Lender, L/C Issuer or other Person for any statement, document, information,
representation or warranty made or furnished by or on behalf of any Credit Party
or any Related Person of any Credit Party in connection with any Loan Document
or any transaction contemplated therein or any other document or information
with respect to any Credit Party, whether or not transmitted or (except for
documents expressly required under any Loan Document to be transmitted to the
Lenders) omitted to be transmitted by Agent, including as to completeness,
accuracy, scope or adequacy thereof, or for the scope, nature or results of any
due diligence performed by Agent in connection with the Loan Documents; and

(iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any provision of any Loan Document, whether any

 

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condition set forth in any Loan Document is satisfied or waived, as to the
financial condition of any Credit Party or as to the existence or continuation
or possible occurrence or continuation of any Default or Event of Default and
shall not be deemed to have notice or knowledge of such occurrence or
continuation unless it has received a notice from the Borrower Representative,
any Lender or L/C Issuer describing such Default or Event of Default clearly
labeled “notice of default” (in which case Agent shall promptly give notice of
such receipt to all Lenders);

and, for each of the items set forth in clauses (i) through (iv) above, each
Lender, L/C Issuer and each Borrower hereby waives and agrees not to assert (and
each Borrower shall cause each other Credit Party to waive and agree not to
assert) any right, claim or cause of action it might have against Agent based
thereon.

(c) Each Lender and L/C Issuer (i) acknowledges that it has performed and will
continue to perform its own diligence and has made and will continue to make its
own independent investigation of the operations, financial conditions and
affairs of the Credit Parties and (ii) agrees that it shall not rely on any
audit or other report provided by Agent or its Related Persons (an “Agent
Report”). Each Lender and L/C Issuer further acknowledges that any Agent Report
(i) is provided to the Lenders and L/C Issuers solely as a courtesy, without
consideration, and based upon the understanding that such Lender or L/C Issuer
will not rely on such Agent Report, (ii) was prepared by Agent or its Related
Persons based upon information provided by the Credit Parties solely for Agent’s
own internal use, (iii) may not be complete and may not reflect all information
and findings obtained by Agent or its Related Persons regarding the operations
and condition of the Credit Parties. Neither Agent nor any of its Related
Persons makes any representations or warranties of any kind with respect to
(i) any existing or proposed financing, (ii) the accuracy or completeness of the
information contained in any Agent Report or in any related documentation,
(iii) the scope or adequacy of Agent’s and its Related Persons’ due diligence,
or the presence or absence of any errors or omissions contained in any Agent
Report or in any related documentation, and (iv) any work performed by Agent or
Agent’s Related Persons in connection with or using any Agent Report or any
related documentation.

(d) Neither Agent nor any of its Related Persons shall have any duties or
obligations in connection with or as a result of any Lender or L/C Issuer
receiving a copy of any Agent Report. Without limiting the generality of the
forgoing, neither Agent nor any of its Related Persons shall have any
responsibility for the accuracy or completeness of any Agent Report, or the
appropriateness of any Agent Report for any Lender’s or L/C Issuer’s purposes,
and shall have no duty or responsibility to correct or update any Agent Report
or disclose to any Lender or L/C Issuer any other information not embodied in
any Agent Report, including any supplemental information obtained after the date
of any Agent Report. Each Lender and L/C Issuer releases, and agrees that it
will not assert, any claim against Agent or its Related Persons that in any way
relates

 

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to any Agent Report or arises out of any Lender or L/C Issuer having access to
any Agent Report or any discussion of its contents, and agrees to indemnify and
hold harmless Agent and its Related Persons from all claims, liabilities and
expenses relating to a breach by any Lender or L/C Issuer arising out of such
Lender’s or L/C Issuer’s access to any Agent Report or any discussion of its
contents.

8.6 Agent Individually. Agent and its Affiliates may make loans and other
extensions of credit to, acquire Stock and Stock Equivalents of, engage in any
kind of business with, any Credit Party or Affiliate thereof as though it were
not acting as Agent and may receive separate fees and other payments therefor.
To the extent Agent or any of its Affiliates makes any Loan or otherwise becomes
a Lender hereunder, it shall have and may exercise the same rights and powers
hereunder and shall be subject to the same obligations and liabilities as any
other Lender and the terms “Lender”, “Lender”, “Required Lender” and any similar
terms shall, except where otherwise expressly provided in any Loan Document,
include, without limitation, Agent or such Affiliate, as the case may be, in its
individual capacity as Lender, Lender or as one of the Required Lenders,
respectively.

8.7 Lender Credit Decision.

(a) Each Lender and each L/C Issuer acknowledges that it shall, independently
and without reliance upon Agent, any Lender or L/C Issuer or any of their
Related Persons or upon any document (including any offering and disclosure
materials in connection with the syndication of the Loans) solely or in part
because such document was transmitted by Agent or any of its Related Persons,
conduct its own independent investigation of the financial condition and affairs
of each Credit Party and make and continue to make its own credit decisions in
connection with entering into, and taking or not taking any action under, any
Loan Document or with respect to any transaction contemplated in any Loan
Document, in each case based on such documents and information as it shall deem
appropriate. Except for documents expressly required by any Loan Document to be
transmitted by Agent to the Lenders or L/C Issuers, Agent shall not have any
duty or responsibility to provide any Lender or L/C Issuer with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of any Credit Party or any
Affiliate of any Credit Party that may come in to the possession of Agent or any
of its Related Persons.

(b) If any Lender or L/C Issuer has elected to abstain from receiving MNPI
concerning the Credit Parties or their Affiliates, such Lender or L/C Issuer
acknowledges that, notwithstanding such election, Agent and/or the Credit
Parties will, from time to time, make available syndicate-information (which may
contain MNPI) as required by the terms of, or in the course of administering the
Loans to the credit contact(s) identified for receipt of such information on the
Lender’s administrative questionnaire who are able to receive and use all
syndicate-level information (which may contain MNPI) in accordance

 

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with such Lender’s compliance policies and contractual obligations and
applicable law, including federal, state, provincial and territorial securities
laws; provided, that if such contact is not so identified in such questionnaire,
the relevant Lender or L/C Issuer hereby agrees to promptly (and in any event
within one (1) Business Day) provide such a contact to Agent and the Credit
Parties upon request therefor by Agent or the Credit Parties. Notwithstanding
such Lender’s or L/C Issuer’s election to abstain from receiving MNPI, such
Lender or L/C Issuer acknowledges that if such Lender or L/C Issuer chooses to
communicate with Agent, it assumes the risk of receiving MNPI concerning the
Credit Parties or their Affiliates.

8.8 Expenses; Indemnities; Withholding.

(a) Each Lender agrees to reimburse Agent and each of its Related Persons (to
the extent not reimbursed by any Credit Party) promptly upon demand, severally
and ratably, for any costs and expenses (including fees, charges and
disbursements of financial, legal and other advisors and Other Taxes paid in the
name of, or on behalf of, any Credit Party) that may be incurred by Agent or any
of its Related Persons in connection with the preparation, syndication,
execution, delivery, administration, modification, consent, waiver or
enforcement (whether through negotiations, through any work-out, bankruptcy,
restructuring or other legal or other proceeding or otherwise) of, or legal
advice in respect of its rights or responsibilities under, any Loan Document.

(b) Each Lender further agrees to indemnify Agent and each of its Related
Persons (to the extent not reimbursed by any Credit Party), severally and
ratably, from and against Liabilities (including, to the extent not indemnified
pursuant to Section 8.8(c), taxes, interests and penalties imposed for not
properly withholding or backup withholding on payments made to or for the
account of any Lender) that may be imposed on, incurred by or asserted against
Agent or any of its Related Persons in any matter relating to or arising out of,
in connection with or as a result of any Loan Document, any Related Document or
any other act, event or transaction related, contemplated in or attendant to any
such document, or, in each case, any action taken or omitted to be taken by
Agent or any of its Related Persons under or with respect to any of the
foregoing; provided, however, that no Lender shall be liable to Agent or any of
its Related Persons to the extent such liability has resulted primarily from the
gross negligence or willful misconduct of Agent or, as the case may be, such
Related Person, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order.

(c) To the extent required by any applicable law, Agent may withhold from any
payment to any Lender under a Loan Document an amount equal to any applicable
withholding tax. If the IRS, CRA or any other Governmental Authority asserts a
claim that Agent did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate certification form was not
delivered, was not properly executed, or fails to establish an exemption from,
or reduction of, withholding tax with respect to a

 

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particular type of payment, or because such Lender failed to notify Agent or any
other Person of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason), or Agent
reasonably determines that it was required to withhold taxes from a prior
payment but failed to do so, such Lender shall promptly indemnify Agent fully
for all amounts paid, directly or indirectly, by such Agent as tax or otherwise,
including penalties and interest, and together with all expenses incurred by
Agent, including legal expenses, allocated internal costs and out-of-pocket
expenses. Agent may offset against any payment to any Lender under a Loan
Document, any applicable withholding tax that was required to be withheld from
any prior payment to such Lender but which was not so withheld, as well as any
other amounts for which Agent is entitled to indemnification from such Lender
under this Section 8.8(c).

8.9 Resignation of Agent or L/C Issuer.

(a) Agent may resign at any time by delivering notice of such resignation to the
Lenders and the Borrower Representative not less than 30 days prior to the
effective date of such resignation set forth in such notice or, if no such date
is set forth therein, upon the date such notice shall be effective in accordance
with the terms of this Section 8.9. If Agent delivers any such notice, the
Required Lenders shall have the right to appoint a successor Agent. If, within
30 days after the retiring Agent having given notice of resignation, no
successor Agent has been appointed by the Required Lenders that has accepted
such appointment, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent from among the Lenders. Each appointment under this clause
(a) shall be subject to the prior consent of the Borrowers, which may not be
unreasonably withheld but shall not be required during the continuance of an
Event of Default.

(b) Effective immediately upon its resignation, (i) the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents, (ii) the
Lenders shall assume and perform all of the duties of Agent until a successor
Agent shall have accepted a valid appointment hereunder, (iii) the retiring
Agent and its Related Persons shall no longer have the benefit of any provision
of any Loan Document other than with respect to any actions taken or omitted to
be taken while such retiring Agent was, or because such Agent had been, validly
acting as Agent under the Loan Documents and (iv) subject to its rights under
Section 8.3, the retiring Agent shall take such action as may be reasonably
necessary to assign to the successor Agent its rights as Agent under the Loan
Documents. Effective immediately upon its acceptance of a valid appointment as
Agent, a successor Agent shall succeed to, and become vested with, all the
rights, powers, privileges and duties of the retiring Agent under the Loan
Documents.

(c) Any L/C Issuer may refuse to issue a Letter of Credit in its sole
discretion.

 

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8.10 Release of Collateral or Guarantors. Each Lender and L/C Issuer hereby
consents to the release and hereby directs Agent to release (or, in the case of
clause (b)(ii) below, release or subordinate) the following:

(a) any Subsidiary of a Borrower from its guaranty of any Obligation if all of
the Stock and Stock Equivalents of such Subsidiary owned by any Credit Party are
sold or transferred in a transaction permitted under the Loan Documents
(including pursuant to a waiver or consent); and

(b) any Lien held by Agent for the benefit of the Secured Parties against
(i) any Collateral that is sold, transferred, conveyed or otherwise disposed of
by a Credit Party in a transaction permitted by the Loan Documents (including
pursuant to a waiver or consent), (ii) any property subject to a Lien permitted
hereunder in reliance upon subsection 5.1(h), 5.1(i), 5.1(o) or 5.1(p), and
(iii) all of the Collateral and all Credit Parties, upon (A) termination of the
Revolving Loan Commitments, (B) payment and satisfaction in full of all Loans,
all L/C Reimbursement Obligations and all other Obligations under the Loan
Documents and all Obligations arising under Secured Rate Contracts, that Agent
has theretofore been notified in writing by the holder of such Obligation are
then due and payable (or, as an alternative with respect to Obligations arising
under Secured Rate Contracts, other arrangements acceptable to the holder of
such Obligations are made), (C) deposit of cash collateral with respect to all
contingent Obligations (or, as an alternative to cash collateral in the case of
any Letter of Credit Obligation, receipt by Agent of a back-up letter of
credit), in amounts and on terms and conditions and with parties satisfactory to
Agent and each Indemnitee that is, or may be, owed such Obligations (excluding
contingent Obligations (other than L/C Reimbursement Obligations) as to which no
claim has been asserted) and (D) to the extent requested by Agent, receipt by
Agent and the Secured Parties of liability releases from the Credit Parties each
in form and substance acceptable to Agent.

Each Lender and L/C Issuer hereby directs Agent, and Agent hereby agrees, upon
receipt of at least five (5) Business Days’ advance notice from the Borrower
Representative, to execute and deliver or file such documents and to perform
other actions reasonably necessary to release the guaranties and Liens when and
as directed in this Section 8.10.

8.11 Additional Secured Parties. The benefit of the provisions of the Loan
Documents directly relating to the Collateral or any Lien granted thereunder
shall extend to and be available to any Secured Party that is not a Lender or
L/C Issuer party hereto as long as, by accepting such benefits, such Secured
Party agrees, as among Agent and all other Secured Parties, that such Secured
Party is bound by (and, if requested by Agent, shall confirm such agreement in a
writing in form and substance acceptable to Agent) this Article VIII and
Sections 9.3, 9.9, 9.10, 9.11, 9.17, 9.24 and 10.1 (and, solely with respect to
L/C Issuers, subsection 1.1(b)) and the decisions and actions of Agent and the
Required Lenders (or, where expressly required by the terms of this Agreement, a
greater proportion of the Lenders or other parties hereto as required herein) to
the same extent a Lender is bound; provided, however, that, notwithstanding the
foregoing, (a) such

 

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Secured Party shall be bound by Section 8.8 only to the extent of Liabilities,
costs and expenses with respect to or otherwise relating to the Collateral held
for the benefit of such Secured Party, in which case the obligations of such
Secured Party thereunder shall not be limited by any concept of pro rata share
or similar concept, (b) each of Agent, the Lenders and the L/C Issuers party
hereto shall be entitled to act at its sole discretion, without regard to the
interest of such Secured Party, regardless of whether any Obligation to such
Secured Party thereafter remains outstanding, is deprived of the benefit of the
Collateral, becomes unsecured or is otherwise affected or put in jeopardy
thereby, and without any duty or liability to such Secured Party or any such
Obligation and (c) except as otherwise set forth herein, such Secured Party
shall not have any right to be notified of, consent to, direct, require or be
heard with respect to, any action taken or omitted in respect of the Collateral
or under any Loan Document.

8.12 Documentation Agent and Syndication Agent. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Documentation Agent and Syndication Agent shall not have any
duties or responsibilities, nor shall the Documentation Agent and Syndication
Agent have or be deemed to have any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Documentation Agent and Syndication Agent. At any
time that any Lender serving (or whose Affiliate is serving) as Documentation
Agent and/or Syndication Agent shall have transferred to any other Person (other
than any Affiliates) all of its interests in the Loans and the Revolving Loan
Commitment, such Lender (or an Affiliate of such Lender acting as Documentation
Agent or Syndication Agent) shall be deemed to have concurrently resigned as
such Documentation Agent and/or Syndication Agent.

8.13 Intercreditor Agreements. The Lenders hereby irrevocably authorize the
Agent to enter into the Supplemental L/C Facility Intercreditor Agreement upon
the Required Lenders’ approval of the terms thereof, and agree to be bound by
the provisions of the Supplemental L/C Facility Intercreditor Agreement.

8.14 Information Regarding Bank Products and Secured Rate Contracts. Each Lender
agrees that, upon the reasonable request of the Agent, it shall from time to
time provide the Agent with updated information regarding the Bank Product
Amounts or obligations under Secured Rate Contracts in order to facilitate the
Agent’s administration of the credit facilities hereunder (it being understood
that upon the failure of any Lender or any Affiliate of a Lender to provide such
information, the Agent may, in its discretion, allocate and/or exclude the Bank
Product Amounts or obligations under Secured Rate Contracts of such Lender or
such Affiliate from the “Obligations” and from distributions under
Section 1.10(c)(ii)).

8.15 Quebec Security. For the purposes of the grant of security under the laws
of the Province of Quebec which may now or in the future be required to be
provided by any Credit Party, the Agent is hereby irrevocably authorized and
appointed to act as the holder of an irrevocable power of attorney (fondé de
pouvoir) (within the meaning of Article 2692 of the Civil Code of Quebec) in
order to hold any hypothec granted under

 

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the laws of the Province of Quebec as security for any debenture, bond or other
title of indebtedness that may be issued by any such Credit Party pursuant to a
deed of hypothec and to exercise such rights and duties as are conferred upon a
fondé de pouvoir under the relevant deed of hypothec and applicable laws (with
the power to delegate any such rights or duties). Moreover, in respect of any
pledge by any such Credit Party of any such debenture, bond or other title of
indebtedness as security for any Obligations, the Agent shall also be authorized
to hold such debenture, bond or other title of indebtedness as agent and pledgee
for its own account and for the benefit of all or any of the Secured Parties,
the whole notwithstanding the provisions of Section 32 of An Act respecting the
Special Powers of Legal Persons (Quebec). Any person who becomes a Secured Party
or successor Agent shall be deemed to have consented to and ratified the
foregoing appointment of the Agent as fondé de pouvoir and as agent and
mandatary on behalf of the relevant Secured Parties. For greater certainty, the
Agent, acting as the holder of an irrevocable power of attorney (fondé de
pouvoir), shall have the same rights, powers, immunities, indemnities and
exclusions from liability as are prescribed in favour of the Agent in this
Agreement, which shall apply mutatis mutandis. In the event of the resignation
and appointment of a successor Agent, such successor Agent shall also act as the
holder of an irrevocable power of attorney (fondé de pouvoir).

ARTICLE IX.

MISCELLANEOUS

9.1 Amendments and Waivers.

(a) No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by any Credit Party
therefrom, shall be effective unless the same shall be in writing and signed by
Agent, the Required Lenders (or by Agent with the consent of the Required
Lenders), and the Borrowers, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Lenders directly affected thereby (or by Agent
with the consent of all the Lenders directly affected thereby), in addition to
Agent and the Required Lenders (or by Agent with the consent of the Required
Lenders) and the Borrowers, do any of the following:

(i) increase or extend the Revolving Loan Commitment of any Lender (or reinstate
any Revolving Loan Commitment terminated pursuant to subsection 7.2(a)) or
increase the Aggregate Revolving Loan Commitment;

(ii) postpone or delay any date fixed for, or reduce or waive, any scheduled
installment of principal or any payment of interest, fees or other amounts
(other than principal) due to the Lenders (or any of them) or L/C Issuer
hereunder or under any other Loan Document (for the avoidance of doubt,
mandatory prepayments pursuant to Section 1.8 (other than under subsection
1.8(a)) may be postponed, delayed, waived or modified with the consent of
Required Lenders);

 

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(iii) reduce the principal of, or the rate of interest specified herein or the
amount of interest payable in cash specified herein on any Loan, or of any fees
or other amounts payable hereunder or under any other Loan Document, including
L/C Reimbursement Obligations;

(iv) amend this Section 9.1 or the definitions of Required Lenders or any
provision providing for consent or other action by all Lenders or change the
percentage of the Revolving Loan Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for the Lenders or any of
them to take any action hereunder;

(v) (A) amend the definitions of “Second Priority Collateral”, “Term Priority
Collateral”, “ABL Priority Collateral”, “Term Push Down Reserve” or “Term Loan
Reserve Amount” in a manner adverse to the Lenders or (B) amend Section 1.10(c)
in any manner that would alter the order of treatment or the pro rata sharing of
payments required thereby;

(vi) discharge any Credit Party from its respective payment Obligations under
the Loan Documents, or release all or substantially all of the Collateral,
except as otherwise may be provided in this Agreement or the other Loan
Documents; or

(vii) subordinate (x) any Lien granted pursuant to the Loan Documents or (y) the
Obligations, in each case other than pursuant to the Term Loan B Intercreditor
Agreement or as otherwise permitted hereunder;

it being agreed that all Lenders shall be deemed to be directly affected by an
amendment or waiver of the type described in the preceding clauses (iv), (v) and
(vi).

(b) No amendment, waiver or consent shall, unless in writing and signed by
Agent, the Swingline Lender or the L/C Issuer, as the case may be, in addition
to the Required Lenders or all Lenders directly affected thereby, as the case
may be (or by Agent with the consent of the Required Lenders or all the Lenders
directly affected thereby, as the case may be), affect the rights or duties of
Agent, the Swingline Lender or the L/C Issuer, as applicable, under this
Agreement or any other Loan Document. No amendment, modification or waiver of
this Agreement or any Loan Document altering the order of treatment of
Obligations arising under Secured Rate Contracts in a manner adverse to any
Secured Swap Provider or otherwise resulting in Obligations owing to any Secured
Swap Provider becoming unsecured (other than releases of Liens permitted in
accordance with the terms hereof), shall be effective without the written
consent of such Secured Swap Provider or, in the case of a Secured Rate Contract
provided or arranged by GE Capital or an Affiliate of GE Capital, GE Capital.

 

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(c) No amendment or waiver shall amend or waive compliance with any condition
precedent to the obligations of Lenders to make any Revolving Loan in
Section 2.2, unless the same shall be in writing and signed by Agent, each
Lender and each L/C Issuer (or by Agent with the consent of each Lender and each
L/C Issuer).

(d) No amendment or waiver shall amend or modify the definitions of Eligible
Credit Card Accounts, Eligible PL Credit Card Accounts, Eligible Inventory,
Eligible In-Transit Inventory, Availability Block, or Borrowing Base, including
any increase in the percentage advance rates in the definition of Borrowing
Base, in a manner which would increase the availability of credit under the
Revolving Loan unless the same shall be in writing and signed by Agent and all
Lenders (or by Agent with the consent of all Lenders).

(e) Notwithstanding anything to the contrary contained in this Section 9.1,
(w) Borrowers may amend Schedules 3.16, 3.19 and 3.21 upon notice to Agent,
(x) Borrowers may amend Schedules 3.22, provided that the Borrowers shall have
complied with the requirements set forth in Section 4.11, (y) Agent may amend
Schedule 1.1(a) to reflect Sales entered into pursuant to Section 9.9, and
(z) Agent and Borrowers may amend or modify this Agreement and any other Loan
Document to grant a new Lien for the benefit of the Secured Parties, extend an
existing Lien over additional property for the benefit of the Secured Parties or
join additional Persons as Credit Parties; provided that no Credit Card
Receivables, PL Credit Card Receivables or Inventory of such Person shall be
included as Eligible Credit Card Accounts, Eligible PL Credit Card Accounts,
Eligible Inventory or Eligible In-Transit Inventory until a field examination
(and, if required by Agent, an Inventory appraisal) with respect thereto has
been completed to the satisfaction of Agent, including the establishment of
Reserves required in Agent’s Permitted Discretion.

9.2 Notices.

(a) Addresses. All notices and other communications required or expressly
authorized to be made by this Agreement shall be given in writing, unless
otherwise expressly specified herein, and (i) addressed to the address set forth
on the applicable signature page hereto, (ii) posted to Intralinks® (to the
extent such system is available and set up by or at the direction of Agent prior
to posting) in an appropriate location by uploading such notice, demand,
request, direction or other communication to www.intralinks.com, faxing it to
866-545-6600 with an appropriate bar-code fax coversheet or using such other
means of posting to Intralinks® as may be available and reasonably acceptable to
Agent prior to such posting, (iii) posted to any other E-System approved by or
set up by or at the direction of Agent or (iv) addressed to such other address
as shall be notified in writing (A) in the case of the Borrowers, Agent and the
Swingline Lender, to the other parties hereto and (B) in the case of all other
parties, to the Borrower Representative and Agent. Transmissions made by
electronic mail or E-Fax to Agent shall be effective only (x) for notices where
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specifically authorized by this Agreement, (y) if such transmission is delivered
in compliance with procedures of Agent applicable at the time and previously
communicated to Borrower Representative, and (z) if receipt of such transmission
is acknowledged by Agent.

(b) Effectiveness. (i) All communications described in clause (a) above and all
other notices, demands, requests and other communications made in connection
with this Agreement shall be effective and be deemed to have been received
(i) if delivered by hand, upon personal delivery, (ii) if delivered by overnight
courier service, one (1) Business Day after delivery to such courier service,
(iii) if delivered by mail, three (3) Business Days after deposit in the mail,
(iv) if delivered by facsimile (other than to post to an E-System pursuant to
clause (a)(ii) or (a)(iii) above), upon sender’s receipt of confirmation of
proper transmission, and (v) if delivered by posting to any E-System, on the
later of the Business Day of such posting and the Business Day access to such
posting is given to the recipient thereof in accordance with the standard
procedures applicable to such E-System; provided, however, that no
communications to Agent pursuant to Article I shall be effective until received
by Agent.

(ii) The posting, completion and/or submission by any Credit Party of any
communication pursuant to an E-System shall constitute a representation and
warranty by the Credit Parties that any representation, warranty, certification
or other similar statement required by the Loan Documents to be provided, given
or made by a Credit Party in connection with any such communication is true,
correct and complete except as expressly noted in such communication or
E-System.

(c) Each Lender shall notify Agent in writing of any changes in the address to
which notices to such Lender should be directed, of addresses of its Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as Agent shall reasonably
request.

9.3 Electronic Transmissions.

(a) Authorization. Subject to the provisions of subsection 9.2(a), each of
Agent, Lenders, each Credit Party and each of their Related Persons, is
authorized (but not required) to transmit, post or otherwise make or
communicate, in its sole discretion, Electronic Transmissions in connection with
any Loan Document and the transactions contemplated therein. Each Credit Party
and each Secured Party hereto acknowledges and agrees that the use of Electronic
Transmissions is not necessarily secure and that there are risks associated with
such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.

(b) Signatures. Subject to the provisions of subsection 9.2(a), (i)(A) no
posting to any E-System shall be denied legal effect merely because it is

 

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made electronically, (B) each E-Signature on any such posting shall be deemed
sufficient to satisfy any requirement for a “signature” and (C) each such
posting shall be deemed sufficient to satisfy any requirement for a “writing”,
in each case including pursuant to any Loan Document, any applicable provision
of any UCC, PPSA, the federal Uniform Electronic Transactions Act, the
Electronic Commerce Act, 2000 (Ontario), the Electronic Signatures in Global and
National Commerce Act and any substantive or procedural Requirement of Law
governing such subject matter, (ii) each such posting that is not readily
capable of bearing either a signature or a reproduction of a signature may be
signed, and shall be deemed signed, by attaching to, or logically associating
with such posting, an E-Signature, upon which Agent, each Secured Party and each
Credit Party may rely and assume the authenticity thereof, (iii) each such
posting containing a signature, a reproduction of a signature or an E-Signature
shall, for all intents and purposes, have the same effect and weight as a signed
paper original and (iv) each party hereto or beneficiary hereto agrees not to
contest the validity or enforceability of any posting on any E-System or
E-Signature on any such posting under the provisions of any applicable
Requirement of Law requiring certain documents to be in writing or signed;
provided, however, that nothing herein shall limit such party’s or beneficiary’s
right to contest whether any posting to any E-System or E-Signature has been
altered after transmission.

(c) Separate Agreements. All uses of an E-System shall be governed by and
subject to, in addition to Section 9.2 and this Section 9.3, the separate terms,
conditions and privacy policy posted or referenced in such E-System (or such
terms, conditions and privacy policy as may be updated from time to time,
including on such E-System) and related Contractual Obligations executed by
Agent and Credit Parties in connection with the use of such E-System.

(d) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE
PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF AGENT, ANY LENDER OR ANY OF THEIR
RELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS
OR ELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS
THEREIN. NO WARRANTY OF ANY KIND IS MADE BY AGENT, ANY LENDER OR ANY OF THEIR
RELATED PERSONS IN CONNECTION WITH ANY E-SYSTEMS OR ELECTRONIC COMMUNICATION,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS. Each Borrower, each other Credit Party executing this Agreement and
each Secured Party agrees that Agent has no responsibility for maintaining or
providing any equipment, software, services or any testing required in
connection with any Electronic Transmission or otherwise required for any
E-System.

 

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9.4 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. No course of dealing between any Credit Party, any Affiliate
of any Credit Party, Agent or any Lender shall be effective to amend, modify or
discharge any provision of this Agreement or any of the other Loan Documents.

9.5 Costs and Expenses. Any action taken by any Credit Party under or with
respect to any Loan Document, even if required under any Loan Document or at the
request of Agent or Required Lenders, shall be at the expense of such Credit
Party, and neither Agent nor any other Secured Party shall be required under any
Loan Document to reimburse any Credit Party or any Subsidiary of any Credit
Party therefor except as expressly provided therein. In addition, the Borrowers
agree to pay or reimburse upon demand (a) Agent for all reasonable out-of-pocket
costs and expenses incurred by it or any of its Related Persons, in connection
with the investigation, development, preparation, negotiation, syndication,
execution, interpretation or administration of, any modification of any term of
or termination of, any Loan Document, any commitment or proposal letter
therefor, any other document prepared in connection therewith or the
consummation and administration of any transaction contemplated therein, in each
case including Attorney Costs of Agent, Collateral audits and appraisals,
background checks and similar expenses, (b) subject to the limitations set forth
in Sections 4.2(m) and 4.9 and any limitations set forth in the Private Label
Credit Card Access and Monitoring Agreement, Agent for all reasonable costs and
expenses incurred by it or any of its Related Persons in connection with
internal audit reviews, insurance reviews, field examinations and Collateral
examinations and analysis, including any analysis of any Private Label Credit
Card program (which shall be reimbursed, in addition to the out-of-pocket costs
and expenses of such examiners or other advisors, at the per diem rate per
individual charged by Agent or its Related Persons for its examiners and
advisors), (c) Agent for all reasonable out-of-pocket costs and expenses
incurred by it or any of its Related Persons in connection with periodic UCC or
PPSA searches conducted by Agent and analysis of the results thereof (which
shall occur no less frequently than once each calendar month or such other
intervals and times as reasonably determined by Agent), (d) each of Agent, its
Related Persons, each Lender and each L/C Issuer and each of their respective
Related Persons for all costs and expenses incurred in connection with (i) any
refinancing or restructuring of the credit arrangements provided hereunder in
the nature of a “work-out”, (ii) the enforcement or preservation of any right or
remedy under any Loan Document, any Obligation, with respect to the Collateral
or any other related right or remedy or (iii) the commencement, defense, conduct
of, intervention in, or the taking of any other action with respect to, any
proceeding (including any bankruptcy or insolvency proceeding) related to any
Credit Party, any Subsidiary of any Credit Party, Loan Document, or Obligation
(or the response to and preparation for any subpoena or request for document
production relating thereto), including Attorney Costs and (e) fees and
disbursements of Attorney Costs of one law firm on behalf of all Lenders (other
than Agent) incurred in connection with any of the matters referred to in clause
(d) above.

 

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9.6 Indemnity.

(a) Each Credit Party agrees to indemnify, hold harmless and defend Agent, each
Lender, each L/C Issuer and each of their respective Related Persons (each such
Person being an “Indemnitee”) from and against, subject to any express
limitations set forth in this Agreement or in any other Loan Document, all
Liabilities (including brokerage commissions, fees and other compensation, but
excluding taxes described in Section 10.1, which shall be subject to the
indemnification provisions (and any limitations thereon) set forth in such
Section 10.1) that may be imposed on, incurred by or asserted against any such
Indemnitee in any matter relating to or arising out of, in connection with or as
a result of (i) any Loan Document, any Obligation (or the repayment thereof),
any Letter of Credit, the use or intended use of the proceeds of any Loan or the
use of any Letter of Credit or any securities filing of, or with respect to, any
Credit Party, (ii) any commitment letter, proposal letter or term sheet with any
Person or any Contractual Obligation, arrangement or understanding with any
broker, finder or consultant, in each case entered into by or on behalf of any
Credit Party or any Affiliate of any of them in connection with any of the
foregoing and any Contractual Obligation entered into in connection with any
E-Systems or other Electronic Transmissions, (iii) with respect to any act,
event or transaction related, contemplated in or attendant to any of the
foregoing, any actual or prospective investigation, litigation or other
proceeding, whether or not brought by any such Indemnitee or any of its Related
Persons, any holders of securities or creditors (and including attorneys’ fees
in any case), whether or not any such Indemnitee, Related Person, holder or
creditor is a party thereto, and whether or not based on any securities or
commercial law or regulation or any other Requirement of Law or theory thereof,
including common law, equity, contract, tort or otherwise or (iv) any other act,
event or transaction related, contemplated in or attendant to any of the
foregoing (collectively, the “Indemnified Matters”); provided, however, that no
Credit Party shall have any liability under this Section 9.6 to any Indemnitee
with respect to any Indemnified Matter, and no Indemnitee shall have any
liability with respect to any Indemnified Matter other than (to the extent
otherwise liable), to the extent such liability has resulted primarily from the
gross negligence or willful misconduct of such Indemnitee, as determined by a
court of competent jurisdiction in a final non-appealable judgment or order.
Furthermore, each of each Borrower and each other Credit Party executing this
Agreement waives and agrees not to assert against any Indemnitee, and shall
cause each other Credit Party to waive and not assert against any Indemnitee,
any right of contribution with respect to any Liabilities that may be imposed
on, incurred by or asserted against any Related Person.

(b) Without limiting the foregoing, “Indemnified Matters” includes all
Environmental Liabilities, including those arising from, or otherwise involving,
any property of any Credit Party or any Subsidiary of any Credit Party or any
actual, alleged or prospective damage to property or natural resources or harm
or injury alleged to have resulted from any Release on, upon or into such

 

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property or natural resource or any property on or contiguous to any Real Estate
of any Credit Party or any Subsidiary of any Credit Party, whether or not, with
respect to any such Environmental Liabilities, any Indemnitee is a mortgagee
pursuant to any leasehold mortgage, a mortgagee in possession, the
successor-in-interest to any Credit Party or any Subsidiary of any Credit Party
or the owner, lessee or operator of any such property through any foreclosure
action, in each case, except to the extent such Environmental Liabilities
(i) are incurred solely following foreclosure by Agent or following Agent or any
Lender having become the successor-in-interest to the applicable Credit Party or
Subsidiary of a Credit Party and (ii) are attributable solely to acts of such
Indemnitee.

9.7 Marshaling; Payments Set Aside. No Secured Party shall be under any
obligation to marshal any property in favor of any Credit Party or any other
Person or against or in payment of any Obligation. To the extent that any
Secured Party receives a payment from a Borrower, from any other Credit Party,
from the proceeds of the Collateral, from the exercise of its rights of setoff,
any enforcement action or otherwise, and such payment is subsequently, in whole
or in part, invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not occurred.

9.8 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that any assignment by any Lender shall be
subject to the provisions of Section 9.9, and provided, further, that no
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.

9.9 Assignments and Participations; Binding Effect.

(a) Binding Effect. This Agreement shall become effective when it shall have
been executed by the Borrowers, the other Credit Parties signatory hereto and
Agent and when Agent shall have been notified by each Lender and the initial L/C
Issuer that such Lender or L/C Issuer has executed it. Thereafter, it shall be
binding upon and inure to the benefit of, but only to the benefit of, the
Borrowers, the other Credit Parties hereto (in each case except for
Article VIII), Agent, each Lender and each L/C Issuer receiving the benefits of
the Loan Documents and, to the extent provided in Section 8.11, each other
Secured Party and, in each case, their respective successors and permitted
assigns. Except as expressly provided in any Loan Document (including in
Section 8.9), none of any Borrower, any other Credit Party, any L/C Issuer or
Agent shall have the right to assign any rights or obligations hereunder or any
interest herein.

(b) Right to Assign. Each Lender may sell, transfer, negotiate or assign (a
“Sale”) all or a portion of its rights and obligations hereunder (including all
or a portion of its Revolving Loan Commitments and its rights and

 

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obligations with respect to Loans and Letters of Credit) to (i) any existing
Lender, (ii) any Affiliate or Approved Fund of any existing Lender or (iii) any
other Person (subject to the last sentence of this Section 9.9(b)) acceptable
(which acceptance shall not be unreasonably withheld or delayed) to Agent, each
L/C Issuer that is a Lender and, as long as no Event of Default is continuing,
the Borrower Representative (which acceptances of the L/C Issuers and the
Borrower Representative shall be deemed to have been given unless an objection
is delivered to Agent within five (5) Business Days after written notice of a
proposed sale is delivered to such L/C Issuers and Borrower Representative, as
applicable); provided, however, that (w) for each Loan, the aggregate
outstanding principal amount (determined as of the effective date of the
applicable Assignment) of the Loans, Revolving Loan Commitments and Letter of
Credit Obligations subject to any such Sale shall be in a minimum amount of
$1,000,000, unless such Sale is made to an existing Lender or an Affiliate or
Approved Fund of any existing Lender, is of the assignor’s (together with its
Affiliates and Approved Funds) entire interest in such facility or is made with
the prior consent of the Borrower Representative (to the extent required) and
Agent, (x) such Sales shall be effective only upon the acknowledgement in
writing of such Sale by Agent, (y) interest accrued prior to and through the
date of any such Sale may not be assigned, and (z) such Sales by Non-Funding
Lenders shall be subject to Agent’s prior written consent in all instances.
Unless consented to by the Agent and the Lenders, no Lender may consummate a
Sale of all or a portion of its rights and obligations hereunder to a Credit
Party, an Affiliate of a Credit Party, a holder of Subordinated Debt or a known
Affiliate of such a holder or a holder of the Term Loan B or any known Affiliate
of such holder.

(c) Procedure. The parties to each Sale made in reliance on clause (b) above
(other than those described in clause (e) or (f) below) shall execute and
deliver to Agent an Assignment via an electronic settlement system designated by
Agent (or, if previously agreed with Agent, via a manual execution and delivery
of the Assignment) evidencing such Sale, together with any existing Note subject
to such Sale (or any affidavit of loss therefor acceptable to Agent), any tax
forms required to be delivered pursuant to Section 10.1 and payment of an
assignment fee in the amount of $3,500 to Agent, unless waived or reduced by
Agent; provided, that (i) if a Sale by a Lender is made to an Affiliate or an
Approved Fund of such assigning Lender, then no assignment fee shall be due in
connection with such Sale, and (ii) if a Sale by a Lender is made to an assignee
that is not an Affiliate or Approved Fund of such assignor Lender, and
concurrently to one or more Affiliates or Approved Funds of such Assignee, then
only one assignment fee of $3,500 shall be due in connection with such Sale
(unless waived or reduced by Agent). Upon receipt of all the foregoing, and
conditioned upon such receipt and, if such Assignment is made in accordance with
clause (iii) of subsection 9.9(b), upon Agent (and the Borrower, if applicable)
consenting to such Assignment, from and after the effective date specified in
such Assignment, Agent shall record or cause to be recorded in the Register the
information contained in such Assignment.

 

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(d) Effectiveness. Subject to the recording of an Assignment by Agent in the
Register pursuant to subsection 1.4(b), (i) the assignee thereunder shall become
a party hereto and, to the extent that rights and obligations under the Loan
Documents have been assigned to such assignee pursuant to such Assignment, shall
have the rights and obligations of a Lender, (ii) any applicable Note shall be
transferred to such assignee through such entry and (iii) the assignor
thereunder shall, to the extent that rights and obligations under this Agreement
have been assigned by it pursuant to such Assignment, relinquish its rights
(except for those surviving the termination of the Revolving Loan Commitments
and the payment in full of the Obligations) and be released from its obligations
under the Loan Documents, other than those relating to events or circumstances
occurring prior to such assignment (and, in the case of an Assignment covering
all or the remaining portion of an assigning Lender’s rights and obligations
under the Loan Documents, such Lender shall cease to be a party hereto).

(e) Grant of Security Interests. In addition to the other rights provided in
this Section 9.9, each Lender may grant a security interest in, or otherwise
assign as collateral, any of its rights under this Agreement, whether now owned
or hereafter acquired (including rights to payments of principal or interest on
the Loans), to (A) any federal reserve bank (pursuant to Regulation A of the
Federal Reserve Board), without notice to Agent or (B) any holder of, or trustee
for the benefit of the holders of, such Lender’s Indebtedness or equity
securities, by notice to Agent; provided, however, that no such holder or
trustee, whether because of such grant or assignment or any foreclosure thereon
(unless such foreclosure is made through an assignment in accordance with clause
(b) above), shall be entitled to any rights of such Lender hereunder and no such
Lender shall be relieved of any of its obligations hereunder.

(f) Participants and SPVs. In addition to the other rights provided in this
Section 9.9, each Lender may, (x) with notice to Agent, grant to an SPV the
option to make all or any part of any Loan that such Lender would otherwise be
required to make hereunder (and the exercise of such option by such SPV and the
making of Loans pursuant thereto shall satisfy the obligation of such Lender to
make such Loans hereunder) and such SPV may assign to such Lender the right to
receive payment with respect to any Obligation and (y) without notice to or
consent from Agent or the Borrowers, sell participations to one or more Persons
in or to all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Revolving Loans
and Letters of Credit); provided, however, that, whether as a result of any term
of any Loan Document or of such grant or participation, (i) no such SPV or
participant shall have a commitment, or be deemed to have made an offer to
commit, to make Loans hereunder, and, except as provided in the applicable
option agreement, none shall be liable for any obligation of such Lender
hereunder, (ii) such Lender’s rights and obligations, and the rights and
obligations of the Credit Parties and the Secured Parties towards such Lender,
under any Loan Document shall remain unchanged and each other party hereto shall
continue to deal solely with such Lender, which shall remain the holder of the
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the Register, except that (A) each such participant and SPV shall be entitled to
the benefit of Article X, but, with respect to Section 10.1, only to the extent
such participant or SPV delivers the tax forms such Lender is required to
collect pursuant to subsection 10.1(f) and then only to the extent of any amount
to which such Lender would be entitled in the absence of any such grant or
participation and (B) each such SPV may receive other payments that would
otherwise be made to such Lender with respect to Loans funded by such SPV to the
extent provided in the applicable option agreement and set forth in a notice
provided to Agent by such SPV and such Lender, provided, however, that in no
case (including pursuant to clause (A) or (B) above) shall an SPV or participant
have the right to enforce any of the terms of any Loan Document, and (iii) the
consent of such SPV or participant shall not be required (either directly, as a
restraint on such Lender’s ability to consent hereunder or otherwise) for any
amendments, waivers or consents with respect to any Loan Document or to exercise
or refrain from exercising any powers or rights such Lender may have under or in
respect of the Loan Documents (including the right to enforce or direct
enforcement of the Obligations), except for those described in clauses (ii) and
(iii) of subsection 9.1(a) with respect to amounts, or dates fixed for payment
of amounts, to which such participant or SPV would otherwise be entitled and, in
the case of participants, except for those described in clause (vi) of
subsection 9.1(a). No party hereto shall institute (and each Borrower shall
cause each other Credit Party not to institute) against any SPV grantee of an
option pursuant to this clause (f) any bankruptcy, reorganization, insolvency,
liquidation or similar proceeding, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper of such SPV;
provided, however, that each Lender having designated an SPV as such agrees to
indemnify each Indemnitee against any Liability that may be incurred by, or
asserted against, such Indemnitee as a result of failing to institute such
proceeding (including a failure to get reimbursed by such SPV for any such
Liability). The agreement in the preceding sentence shall survive the
termination of the Revolving Loan Commitments and the payment in full of the
Obligations.

(g) Each Lender that sells a participation to one or more Persons in or to all
or a portion of its rights and obligations under the Loan Documents shall,
acting solely for this purpose as a non-fiduciary agent of the Borrowers and
solely for tax purposes, establish and maintain a register on which it enters
the name and address of each participant and the principal amounts (and stated
interest) of each participant’s interest in any Loan or other obligations under
the Loan Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
to any Person except to the extent that such disclosure is necessary to
establish that the Loans are in “registered form” within the meaning of Sections
163(f), 871(h)(2) and 881(c)(2) of the Code. The entries in the Participant
Register shall be conclusive absent manifest error, and such Lender shall treat
each Person whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice
to the contrary.

 

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9.10 Non-Public Information; Confidentiality.

(a) Non-Public Information. Agent, each Lender and L/C Issuer acknowledges and
agrees that it may receive material non-public information (“MNPI”) hereunder
concerning the Credit Parties and their Affiliates and agrees to use such
information in compliance with all relevant policies, procedures and applicable
Requirements of Laws (including United States federal and state security laws
and regulations and Canadian federal, provincial and territorial security laws
and regulations).

(b) Confidential Information. Each Lender, L/C Issuer and Agent agrees to use
all reasonable efforts to maintain, in accordance with its customary practices,
the confidentiality of information obtained by it pursuant to any Loan Document
and designated in writing by any Credit Party as confidential, except that such
information may be disclosed (i) with the Borrower Representative’s consent,
(ii) to Related Persons of such Lender, L/C Issuer or Agent, as the case may be,
or to any Person that any L/C Issuer causes to issue Letters of Credit
hereunder, that are advised of the confidential nature of such information and
are instructed to keep such information confidential in accordance with the
terms hereof, (iii) to the extent such information presently is or hereafter
becomes (A) publicly available other than as a result of a breach of this
Section 9.10 or (B) available to such Lender, L/C Issuer or Agent or any of
their Related Persons, as the case may be, from a source (other than any Credit
Party) not known by them to be subject to disclosure restrictions, (iv) to the
extent disclosure is required by applicable Requirements of Law or other legal
process or requested or demanded by any Governmental Authority, (v) to the
extent necessary or customary for inclusion in league table measurements,
(vi) (A) to the National Association of Insurance Commissioners or any similar
organization, any examiner or any nationally recognized rating agency or
(B) otherwise to the extent consisting of general portfolio information that
does not identify Credit Parties, (vii) to current or prospective assignees,
SPVs (including the investors or prospective investors therein) or participants,
direct or contractual counterparties to any Secured Rate Contracts and to their
respective Related Persons, in each case to the extent such assignees,
investors, participants, counterparties or Related Persons agree to be bound by
provisions substantially similar to the provisions of this Section 9.10 (and
such Person may disclose information to their respective Related Persons in
accordance with clause (ii) above), (viii) to any other party hereto, and
(ix) in connection with the exercise or enforcement of any right or remedy under
any Loan Document, in connection with any litigation or other proceeding to
which such Lender, L/C Issuer or Agent or any of their Related Persons is a
party or bound, or to the extent necessary to respond to public statements or
disclosures by Credit Parties or their Related Persons referring to a Lender,
L/C Issuer or Agent or any of their Related Persons. In the event of any
conflict between the terms of this Section 9.10 and those of any other
Contractual Obligation entered into with any Credit Party (whether or not a Loan
Document), the terms of this Section 9.10 shall govern.

 

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(c) Tombstones. Each Credit Party consents to the publication by Agent or any
Lender of advertising material relating to the financing transactions
contemplated by this Agreement using any Credit Party’s name, product
photographs, logo or trademark. Agent or such Lender shall provide a draft of
any advertising material to Borrower Representative for review and comment prior
to the publication thereof.

(d) Press Release and Related Matters. No Credit Party shall, and no Credit
Party shall permit any of its Affiliates to, issue any press release or other
public disclosure (other than any document filed with any Governmental Authority
or any press release issued in connection therewith) using the name, logo or
otherwise referring to GE Capital or of any of its Affiliates, the Loan
Documents or any transaction contemplated therein to which Agent is party
without the prior consent of GE Capital except to the extent required to do so
under applicable Requirements of Law and then, only after consulting with GE
Capital.

(e) Distribution of Materials to Lenders and L/C Issuers. The Credit Parties
acknowledge and agree that the Loan Documents and all reports, notices,
communications and other information or materials provided or delivered by, or
on behalf of, the Credit Parties hereunder (collectively, the “Borrower
Materials”) may be disseminated by, or on behalf of, Agent, and made available,
to the Lenders and the L/C Issuers by posting such Borrower Materials on an
E-System. The Credit Parties authorize Agent to download copies of their logos
from its website and post copies thereof on an E-System.

(f) Material Non-Public Information. The Credit Parties hereby agree that if
either they, any parent company or any Subsidiary of the Credit Parties has
publicly traded equity or debt securities in the U.S. or Canada, they shall (and
shall cause such parent company or Subsidiary, as the case may be, to)
(i) identify in writing, and (ii) to the extent reasonably practicable, clearly
and conspicuously mark such Borrower Materials that contain only information
that is publicly available or that is not material for purposes of U.S. federal
and state securities laws as “PUBLIC”. The Credit Parties agree that by
identifying such Borrower Materials as “PUBLIC” or publicly filing such Borrower
Materials with the Securities and Exchange Commission and any other applicable
securities commission or securities regulatory authority, then Agent, the
Lenders and the L/C Issuers shall be entitled to treat such Borrower Materials
as not containing any MNPI for purposes of U.S. federal and state securities
laws. The Credit Parties further represent, warrant, acknowledge and agree that
the following documents and materials shall be deemed to be PUBLIC, whether or
not so marked, and do not contain any MNPI: (A) the Loan Documents, including
the schedules and exhibits attached thereto, and (B) administrative materials of
a customary nature prepared by the Credit Parties or Agent (including, Notices
of Borrowing, Notices of Conversion/Continuation, L/C requests, Swingline
requests and any similar requests or notices posted on or through an E-System).
Before distribution of any Borrower Materials, the Credit Parties agree to
execute and

 

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deliver to Agent a letter authorizing distribution of the evaluation materials
to prospective Lenders and their employees willing to receive MNPI, and a
separate letter authorizing distribution of evaluation materials that do not
contain MNPI and represent that no MNPI is contained therein.

9.11 Set-off; Sharing of Payments.

(a) Right of Setoff. Each of Agent, each Lender, each L/C Issuer and each
Affiliate (including each branch office thereof) of any of them is hereby
authorized, without notice or demand (each of which is hereby waived by each
Credit Party), at any time and from time to time during the continuance of any
Event of Default and to the fullest extent permitted by applicable Requirements
of Law, to set off and apply any and all deposits (whether general or special,
time or demand, provisional or final) at any time held and other Indebtedness,
claims or other obligations at any time owing by Agent, such Lender, such L/C
Issuer or any of their respective Affiliates to or for the credit or the account
of the Borrowers or any other Credit Party against any Obligation of any Credit
Party now or hereafter existing, whether or not any demand was made under any
Loan Document with respect to such Obligation and even though such Obligation
may be unmatured. No Lender or L/C Issuer shall exercise any such right of
setoff without the prior consent of Agent or Required Lenders. Each of Agent,
each Lender and each L/C Issuer agrees promptly to notify the Borrower
Representative and Agent after any such setoff and application made by such
Lender or its Affiliates; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
under this Section 9.11 are in addition to any other rights and remedies
(including other rights of setoff) that Agent, the Lenders, the L/C Issuer,
their Affiliates and the other Secured Parties, may have.

(b) Sharing of Payments, Etc. If any Lender, directly or through an Affiliate or
branch office thereof, obtains any payment of any Obligation of any Credit Party
(whether voluntary, involuntary or through the exercise of any right of setoff
or the receipt of any Collateral or “proceeds” (as defined under the applicable
UCC or the PPSA, as applicable) of Collateral) other than pursuant to
Section 9.9 or Article X and such payment exceeds the amount such Lender would
have been entitled to receive if all payments had gone to, and been distributed
by, Agent in accordance with the provisions of the Loan Documents, such Lender
shall purchase for cash from other Lenders such participations in their
Obligations as necessary for such Lender to share such excess payment with such
Lenders to ensure such payment is applied as though it had been received by
Agent and applied in accordance with this Agreement (or, if such application
would then be at the discretion of the Borrowers, applied to repay the
Obligations in accordance herewith); provided, however, that (a) if such payment
is rescinded or otherwise recovered from such Lender or L/C Issuer in whole or
in part, such purchase shall be rescinded and the purchase price therefor shall
be returned to such Lender or L/C Issuer without interest and (b) such Lender
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be able to exercise all its rights of payment (including the right of setoff)
with respect to such participation as fully as if such Lender were the direct
creditor of the applicable Credit Party in the amount of such participation. If
a Non-Funding Lender or Impacted Lender receives any such payment as described
in the previous sentence, such Lender shall turn over such payments to Agent in
an amount that would satisfy the cash collateral requirements set forth in
subsection 1.11(b).

9.12 Counterparts; Facsimile Signature. This Agreement may be executed in any
number of counterparts and by different parties in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.

9.13 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.

9.14 Captions. The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.

9.15 Independence of Provisions. The parties hereto acknowledge that this
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.

9.16 Interpretation. This Agreement is the result of negotiations among and has
been reviewed by counsel to Credit Parties, Agent, each Lender and other parties
hereto, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Lenders or Agent
merely because of Agent’s or Lenders’ involvement in the preparation of such
documents and agreements. Without limiting the generality of the foregoing, each
of the parties hereto has had the advice of counsel with respect to Sections
9.18 and 9.19.

9.17 No Third Parties Benefited. This Agreement is made and entered into for the
sole protection and legal benefit of the Borrowers, the Lenders, the L/C Issuers
party hereto, Agent and, subject to the provisions of Section 8.11, each other
Secured Party, and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. Neither Agent nor any Lender shall have any obligation
to any Person not a party to this Agreement or the other Loan Documents.

 

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9.18 Governing Law and Jurisdiction.

(a) Governing Law. The laws of the State of New York shall govern all matters
arising out of, in connection with or relating to this Agreement, including,
without limitation, its validity, interpretation, construction, performance and
enforcement.

(b) Submission to Jurisdiction. Any legal action or proceeding with respect to
any Loan Document shall be brought exclusively in the courts of the State of New
York located in the City of New York, Borough of Manhattan, or of the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, each party executing this Agreement hereby accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts; provided that nothing in this Agreement
shall limit the right of Agent to commence any proceeding in the federal or
state courts of any other jurisdiction to the extent Agent determines that such
action is necessary or appropriate to exercise its rights or remedies under the
Loan Documents. The parties hereto (and, to the extent set forth in any other
Loan Document, each other Credit Party) hereby irrevocably waive any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that any of them may now or hereafter have to the bringing of
any such action or proceeding in such jurisdictions.

(c) Service of Process. Each party hereto hereby irrevocably waives personal
service of any and all legal process, summons, notices and other documents and
other service of process of any kind and consents to such service in any suit,
action or proceeding brought in the United States of America with respect to or
otherwise arising out of or in connection with any Loan Document by any means
permitted by applicable Requirements of Law, including by the mailing thereof
(by registered or certified mail, postage prepaid) to the address of the
Borrowers specified herein (and shall be effective when such mailing shall be
effective, as provided therein). Each Credit Party agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.

(d) Non-Exclusive Jurisdiction. Nothing contained in this Section 9.18 shall
affect the right of Agent or any Lender to serve process in any other manner
permitted by applicable Requirements of Law or commence legal proceedings or
otherwise proceed against any Credit Party in any other jurisdiction.

9.19 Waiver of Jury Trial. THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW,
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT
OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS WAIVER APPLIES
TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE.

 

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9.20 Entire Agreement; Release; Survival.

(a) THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT OF THE PARTIES AND SUPERSEDE
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER THEREOF
AND ANY PRIOR LETTER OF INTEREST, COMMITMENT LETTER, CONFIDENTIALITY AND SIMILAR
AGREEMENTS INVOLVING ANY CREDIT PARTY AND ANY LENDER OR ANY L/C ISSUER OR ANY OF
THEIR RESPECTIVE AFFILIATES RELATING TO A FINANCING OF SUBSTANTIALLY SIMILAR
FORM, PURPOSE OR EFFECT OTHER THAN THE FEE LETTER. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THIS AGREEMENT AND ANY OTHER LOAN DOCUMENT, THE TERMS OF
THIS AGREEMENT SHALL GOVERN (UNLESS SUCH TERMS OF SUCH OTHER LOAN DOCUMENTS ARE
NECESSARY TO COMPLY WITH APPLICABLE REQUIREMENTS OF LAW, IN WHICH CASE SUCH
TERMS SHALL GOVERN TO THE EXTENT NECESSARY TO COMPLY THEREWITH).

(b) Execution of this Agreement by the Credit Parties constitutes a full,
complete and irrevocable release of any and all claims which each Credit Party
may have at law or in equity in respect of all prior discussions and
understandings, oral or written, relating to the subject matter of this
Agreement and the other Loan Documents. In no event shall any Indemnitee be
liable on any theory of liability for any special, indirect, consequential or
punitive damages (including any loss of profits, business or anticipated
savings). Each of each Borrower and each other Credit Party signatory hereto
hereby waives, releases and agrees (and shall cause each other Credit Party to
waive, release and agree) not to sue upon any such claim for any special,
indirect, consequential or punitive damages, whether or not accrued and whether
or not known or suspected to exist in its favor.

(c) Any indemnification or other protection provided to any Indemnitee pursuant
to this Section 9.20, Sections 9.5 (Costs and Expenses) and 9.6 (Indemnity) and
Articles VIII (Agent) and X (Taxes, Yield Protection and Illegality) shall
(x) survive the termination of the Revolving Loan Commitments and the payment in
full of all other Obligations and (y) inure to the benefit of any Person that at
any time held a right thereunder (as an Indemnitee or otherwise) and,
thereafter, its successors and permitted assigns.

9.21 Anti-Money Laundering Legislation Acts. Each Lender that is subject to the
Patriot Act, Proceeds of Crime (Money Laundering) and Terrorist Financing Act
(Canada), and other applicable anti-money laundering laws (collectively,
“Anti-Money Laundering Legislation”) hereby notifies the Credit Parties that
pursuant to the requirements of the Anti-Money Laundering Legislation, it is
required to obtain, verify

 

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and record information that identifies each Credit Party, which information
includes the name and address of each Credit Party and other information that
will allow such Lender to identify each Credit Party in accordance with the
applicable Anti-Money Laundering Legislation.

9.22 Replacement of Lender. Within forty-five (45) days after (or such later
date as agreed to by Agent): (i) receipt by the Borrower Representative of
written notice and demand from any Lender that is not Agent or an Affiliate of
Agent (an “Affected Lender”) for payment of additional costs as provided in
Sections 10.1, 10.3 and/or 10.6; or (ii) any failure by any Lender (other than
Agent) to consent to a requested amendment, waiver or modification to any Loan
Document in which Required Lenders have already consented to such amendment,
waiver or modification but the consent of each Lender (or each Lender directly
affected thereby, as applicable) is required with respect thereto, the Borrowers
may, at their option, notify Agent and such Affected Lender (or such defaulting
or non-consenting Lender, as the case may be) of the Borrowers’ intention to
obtain, at the Borrowers’ expense, a replacement Lender (“Replacement Lender”)
for such Affected Lender (or such defaulting or non-consenting Lender, as the
case may be), which Replacement Lender shall be reasonably satisfactory to Agent
and shall not be a Credit Party or an Affiliate thereof. In the event the
Borrowers obtain a Replacement Lender within forty-five (45) days (or such later
date as agreed to by Agent) following notice of its intention to do so, the
Affected Lender (or defaulting or non-consenting Lender, as the case may be)
shall sell and assign its Loans and Revolving Loan Commitments to such
Replacement Lender, at par, provided that the Borrowers have reimbursed such
Affected Lender for its increased costs for which it is entitled to
reimbursement under this Agreement through the date of such sale and assignment.
In the event that a replaced Lender does not execute an Assignment pursuant to
Section 9.9 within five (5) Business Days after receipt by such replaced Lender
of notice of replacement pursuant to this Section 9.22 and presentation to such
replaced Lender of an Assignment evidencing an assignment pursuant to this
Section 9.22, the Borrowers shall be entitled (but not obligated) to execute
such an Assignment on behalf of such replaced Lender, and any such Assignment so
executed by the Borrowers, the Replacement Lender and Agent, shall be effective
for purposes of this Section 9.22 and Section 9.9. Notwithstanding the
foregoing, with respect to a Lender that is a Non-Funding Lender or an Impacted
Lender, the Borrowers or Agent may obtain a Replacement Lender and execute an
Assignment on behalf of such Non-Funding Lender or an Impacted Lender at any
time and without prior notice to such Non-Funding Lender or an Impacted Lender
and cause its Loans and Revolving Loan Commitments to be sold and assigned at
par. Upon any such assignment and payment and compliance with the other
provisions of Section 9.9, such replaced Lender shall no longer constitute a
“Lender” for purposes hereof; provided, that any rights of such replaced Lender
to indemnification hereunder shall survive.

9.23 Joint and Several. Each Borrower is part of a group of affiliated Persons,
and each Borrower expects to receive substantial direct and indirect benefits
from the extension of the credit facility established pursuant to this
Agreement. In consideration of the foregoing, each Borrower hereby irrevocably
and unconditionally agrees that it is jointly and severally liable for all of
the liabilities, obligations, covenants and agreements

 

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of the Borrowers hereunder and under the other Loan Documents, whether now or
hereafter existing or due or to become due. The obligations of the Borrowers
under the Loan Documents may be enforced by the Agent and the Lenders against
any Borrower or all Borrowers in any manner or order selected by the Agent or
the Required Lenders in their sole discretion. Each Borrower hereby irrevocably
waives (i) any rights of subrogation and (ii) any rights of contribution,
indemnity or reimbursement, in each case, that it may acquire or that may arise
against any other Borrower due to any payment or performance made under this
Agreement, in each case until all Obligations shall have been fully satisfied.
Without limiting the foregoing provisions of this Section 9.23, each Borrower
acknowledges and agrees that:

(a) its obligations under this Agreement shall remain enforceable against it
even though such obligations may be unenforceable or not allowable against any
other Borrower due to the existence of an insolvency proceeding involving any
other Borrower;

(b) its obligations under this Agreement are independent of the obligations of
any other Borrower, and a separate action or actions may be brought and
prosecuted against it in respect of such obligations irrespective of whether any
action is brought against any other Borrower or any other Borrower is joined in
any such action or actions;

(c) it hereby irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to, any or all of the following:

(i) any lack of validity or enforceability of this Agreement, any other Loan
Document or any agreement or instrument relating hereto or thereto in respect of
any other Borrower;

(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the obligations of any other Borrower under or in respect of
this Agreement, the other Loan Documents, or any other amendment or waiver of or
any consent to departure from this Agreement or any other Loan Document, in
respect of any other Borrower;

(iii) any change, restructuring or termination of the structure or existence of
any other Borrower;

(iv) the failure of any other Person to execute or deliver any other agreement
or the release or reduction of liability of any other Person with respect to any
obligations of the Borrowers under this Agreement or any other Loan Document;

(v) any other circumstance (including any statute of limitations but other than
the Obligations having been fully satisfied) or any existence of or reliance on
any representation by any other Person that might otherwise constitute a defense
available to, or a discharge of, any other Borrower; or

 

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(vi) the application of any Loan proceeds to, or the extension of any other
credit for the benefit of, any other Borrower, any other Credit Party, or any of
their Subsidiaries;

(d) its obligations under this Agreement and the other Loan Documents shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any such obligations is rescinded or must otherwise be returned
by any Person upon the insolvency, bankruptcy or reorganization of any other
Borrower, all as though such payment had not been made; and

(e) it hereby unconditionally and irrevocably waives any right to revoke its
joint and several liability under the Loan Documents and acknowledges that such
liability is continuing in nature and applies to all obligations of the
Borrowers under the Loan Documents, whether existing now or in the future.

9.24 Creditor-Debtor Relationship. The relationship between Agent, each Lender
and the L/C Issuer, on the one hand, and the Credit Parties, on the other hand,
is solely that of creditor and debtor. No Secured Party has any fiduciary
relationship or duty to any Credit Party arising out of or in connection with,
and there is no agency, tenancy or joint venture relationship between the
Secured Parties and the Credit Parties by virtue of, any Loan Document or any
transaction contemplated therein.

9.25 Actions in Concert. Notwithstanding anything contained herein to the
contrary, each Lender hereby agrees with each other Lender that no Lender shall
take any action to protect or enforce its rights against any Credit Party
arising out of this Agreement or any other Loan Document (including exercising
any rights of setoff) without first obtaining the prior written consent of Agent
or Required Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the other Loan Documents
shall be taken in concert and at the direction or with the consent of Agent or
Required Lenders.

ARTICLE X.

TAXES, YIELD PROTECTION AND ILLEGALITY

10.1 Taxes.

(a) Except as otherwise provided in this Section 10.1, each payment by any
Credit Party under any Loan Document shall be made free and clear of all present
or future taxes, levies, imposts, deductions, charges or withholdings imposed by
any Governmental Authority and all liabilities with respect thereto (and without
deduction for any of them) (collectively, but excluding the taxes set forth in
clauses (i), (ii), (iii) and (iv) below, the “Taxes”) other than for (i) taxes
measured by overall net income (however denominated, including, but not limited
to, taxes imposed on or measured by the recipient’s income (and any backup
withholding with respect thereto), and branch profits taxes), franchise taxes
imposed in lieu of net income taxes and taxes based on any

 

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Secured Party’s capital, gross receipts, assets, liabilities or property (or
other similar taxes) in each case imposed on any Secured Party by the
jurisdiction (or any political subdivision thereof) in which such Secured Party
is organized, maintains its principal office or applicable Lending Office or
that are otherwise imposed as a result of a present or former connection between
the Secured Party and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Secured Party having
executed, delivered or performed its obligations or received a payment under, or
enforced, any Loan Document), (ii) taxes that are directly attributable to the
failure (other than as a result of a change in any Requirement of Law occurring
after the date the relevant Secured Party acquired its interest in any Loan
Document) by any Secured Party to deliver the documentation required to be
delivered pursuant to clause (f) below or as a result of any inaccurate or
incorrect documentation, (iii) withholding taxes imposed on amounts payable to
or for the account of a Secured Party pursuant to any Requirement of Law in
effect on the date on which (x) such Secured Party acquires its interest in any
Loan Document (other than pursuant to an assignment request by a Credit Party
under Section 9.22) or (y) such Secured Party changed its Lending Office, except
in each case to the extent that, pursuant to Section 10.1, amounts with respect
to such withholding taxes were payable either to such Secured Party’s assignor
immediately before such Secured Party became a party hereto or to such Secured
Party immediately before it changes its Lending Office, or (iv) any U.S. Federal
withholding taxes imposed under FATCA.

(b) If any Taxes shall be required by Requirements of Law to be deducted from or
in respect of any amount payable under any Loan Document to any Secured Party
(i) such amount shall be increased as necessary to ensure that, after all
required deductions for Taxes are made (including deductions applicable to any
increases to any amount under this Section 10.1), such Secured Party receives
the amount it would have received had no such deductions for such Taxes been
made, (ii) the relevant Withholding Agent shall make such deductions, (iii) the
relevant Withholding Agent shall timely pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable
Requirements of Law and (iv) within thirty (30) days after such payment is made,
the relevant Withholding Agent shall deliver to Agent an original or certified
copy of a receipt evidencing such payment or other evidence of payment
reasonably satisfactory to Agent; provided, however, and for the avoidance of
doubt, that no such increase shall be made under this clause (b) with respect
to, and no Credit Party shall be required to indemnify any Secured Party
pursuant to clause (d) below for any taxes described in clauses (i), (ii),
(iii) or (iv) of Section 10.1(a) above.

(c) In addition, the Credit Parties agree to pay, and authorize Agent to pay in
their name, any stamp, documentary, excise or property tax, charges or similar
levies imposed by any applicable Requirement of Law or Governmental Authority
and all Liabilities with respect thereto (including by reason of any delay in
payment thereof), in each case arising from the execution,

 

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delivery or registration of, or otherwise with respect to, any Loan Document or
any transaction contemplated therein (except any such taxes that are imposed as
a result of an assignment or a sale of a participation, other than pursuant to
an assignment request by a Credit Party under Section 9.22) (collectively,
“Other Taxes”). The Swingline Lender may, without any need for notice, demand or
consent from the Borrowers or the Borrower Representative, by making funds
available to Agent in the amount equal to any such payment, make a Swing Loan to
the Borrowers in such amount, the proceeds of which shall be used by Agent in
whole to make such payment. Within thirty (30) days after the date of any
payment of Other Taxes by any Credit Party, the Borrowers shall furnish to
Agent, at its address referred to in Section 9.2, the original or a certified
copy of a receipt evidencing payment thereof or other evidence of payment
reasonably satisfactory to Agent.

(d) Without duplication of Section 10.1(b) above, the Borrowers shall reimburse
and indemnify, within thirty (30) days after receipt of written demand therefor
(with copy to Agent), each Secured Party for all Taxes and Other Taxes
(including any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 10.1) paid by such Secured Party and any Liabilities
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. A certificate of the Secured Party (or
of Agent on behalf of such Secured Party) claiming any compensation under this
clause (d), setting forth in reasonable detail the calculation of amounts to be
paid thereunder and delivered to the Borrower Representative with copy to Agent,
shall be conclusive, binding and final for all purposes, absent manifest error.
In determining such amount, Agent and such Secured Party may use any reasonable
averaging and attribution methods.

(e) Any Secured Party claiming any additional amounts payable pursuant to this
Section 10.1 shall use its commercially reasonable efforts (consistent with its
internal policies and Requirements of Law) to change the jurisdiction of its
Lending Office if such a change would reduce or eliminate any such additional
amounts (or any similar amount that may thereafter accrue) and would not, in the
sole determination of such Secured Party, be otherwise disadvantageous to such
Secured Party.

(f) (i) Each Non-U.S. Lender Party, at each of the following times, shall (v) on
or prior to the Restatement Effective Date, (w) on or prior to the date such
Non-U.S. Lender Party becomes a “Non-U.S. Lender Party” hereunder, (x) on or
prior to the date on which any such form or certification expires or becomes
obsolete, (y) after the occurrence of any event requiring a change in the most
recent form or certification previously delivered by it pursuant to this clause
(i) and (z) from time to time if requested by the Borrower Representative or
Agent (or, in the case of a participant or SPV, the relevant Lender), provide
Agent and the Borrower Representative (or, in the case of a participant or SPV,
the relevant Lender) with two completed originals of each of the following, as
applicable: (A) Forms W-8ECI (claiming exemption from U.S.

 

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withholding tax because the income is effectively connected with a U.S. trade or
business), W-8BEN (claiming exemption from, or a reduction of, U.S. withholding
tax under an income tax treaty) and/or W-8IMY (together with appropriate forms,
certifications and supporting statements) or any successor forms, (B) in the
case of a Non-U.S. Lender Party claiming exemption under Sections 871(h) or
881(c) of the Code, Form W-8BEN (claiming exemption from U.S. withholding tax
under the portfolio interest exemption) or any successor form and a certificate
in form and substance acceptable to Agent and the Borrower Representative that
such Non-U.S. Lender Party is not (1) a “bank” as described in
Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the
Borrowers as described in Section 881(c)(3)(B) of the Code, or (3) a “controlled
foreign corporation” as described in Section 881(c)(3)(C) of the Code, or
(C) any other applicable document prescribed by Requirements of Law certifying
as to the entitlement of such Non-U.S. Lender Party to such exemption from
United States withholding tax or reduced rate with respect to all payments to be
made to such Non-U.S. Lender Party under the Loan Documents with such
supplementary documentation as may be prescribed by Requirements of Law to
permit Borrower to determine the withholding or deduction required to be made.
Unless the Borrower Representative and Agent have received forms or other
documents satisfactory to them indicating that payments under any Loan Document
to or for a Non-U.S. Lender Party are not subject to U.S. withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the
applicable Withholding Agent shall withhold amounts required to be withheld by
applicable Requirements of Law from such payments.

(ii) Each U.S. Lender Party, at each of the following times, shall (v) on or
prior to the Restatement Effective Date, (w) on or prior to the date such U.S.
Lender Party becomes a “U.S. Lender Party” hereunder, (x) on or prior to the
date on which any such form or certification expires or becomes obsolete,
(y) after the occurrence of any event requiring a change in the most recent form
or certification previously delivered by it pursuant to this clause (f) and
(z) from time to time if requested by the Borrower Representative or Agent (or,
in the case of a participant or SPV, the relevant Lender), provide Agent and the
Borrower Representative (or, in the case of a participant or SPV, the relevant
Lender) with two completed originals of Form W-9 (certifying that such U.S.
Lender Party is entitled to an exemption from U.S. backup withholding tax on
payments pursuant to the Loan Documents) or any successor form.

(iii) If a payment made to or for the account of a U.S. Lender Party or Non-U.S.
Lender Party under this Agreement would be subject to U.S. federal withholding
tax imposed by FATCA if such party were to fail to comply with the applicable
reporting requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Code, as applicable), such party shall deliver to the Borrower
Representative and Agent, at the time or times prescribed by applicable
Requirements of Law and at such time or times reasonably requested by the
Borrower Representative or Agent, such documentation prescribed by applicable
Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the Borrower
Representative or Agent

 

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as may be necessary for the Borrower Representative and Agent to comply with
their obligations under FATCA, to determine that such U.S. Lender Party or
Non-U.S. Lender party, as applicable, has or has not complied with such party’s
obligations under FATCA and, as necessary, to determine the amount to deduct and
withhold from such payment.

(iv) Each Lender having sold a participation in any of its Obligations or
identified an SPV as such to Agent shall collect from such participant or SPV
the documents described in this clause (f) and provide them to Agent and
Borrower Representative.

(v) A Secured Party shall promptly notify each Credit Party and Agent if any
form or other documentation previously submitted pursuant to this clause
(f) becomes incorrect or invalid or if such Secured Party otherwise determines
that it is no longer in a position to provide any previously delivered forms or
documentation.

(g) If the Credit Parties determine that a reasonable basis exists for
contesting a Tax or Other Tax, each Secured Party shall, subject to maintaining
the confidentiality of confidential information and preserving all applicable
privileges and immunities, reasonably cooperate with the Credit Parties as the
Credit Parties may reasonably request in challenging such Tax or Other Tax,
provided, that the Credit Parties shall (i) pay or reimburse all reasonable
costs and expenses incurred by such Secured Party or any of its Related Persons,
in connection with any such contest (including, without limitation, any
investigation, development, preparation or negotiation arising from such
contest) and (ii) indemnify, hold harmless and defend each Secured Party and its
Related Persons from and against all Liabilities that may be imposed on,
incurred by or asserted against any such Person in any matter arising out of, in
connection with or as a result of any such contest.

(h) If Agent, any Lender or any L/C Issuer determines, in its sole and absolute
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by a Borrower or with respect to which a Borrower
has paid additional amounts pursuant to this Section 10.1, it shall pay to such
Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by such Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses incurred by Agent, such Lender or such L/C Issuer, as the
case may be, and without interest, provided that the Borrowers, upon the request
of Agent or such Lender, agrees to repay the amount paid over to any Borrower
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to Agent, such Lender or such L/C Issuer in the event
Agent, such Lender or such L/C Issuer is required to repay such refund to such
Governmental Authority. This subsection shall not be construed to require Agent,
such Lender or such L/C Issuer to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to any Borrower or
any other Person or to impose on the Agent or any Lender a duty to pursue or
obtain any such refund.

 

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(i) The agreements in this Section 10.1 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

10.2 Illegality. If after the date hereof any Lender shall determine that the
introduction of any Requirement of Law, or any change in any Requirement of Law
or in the interpretation or administration thereof, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its Lending Office to make LIBOR Rate Loans, then,
on notice thereof by such Lender to the Borrowers through Agent, the obligation
of that Lender to make LIBOR Rate Loans shall be suspended until such Lender
shall have notified Agent and the Borrower Representative that the circumstances
giving rise to such determination no longer exists.

(a) Subject to clause (c) below, if any Lender shall determine that it is
unlawful to maintain any LIBOR Rate Loan, the Borrowers shall prepay in full all
LIBOR Rate Loans of such Lender then outstanding, together with interest accrued
thereon, either on the last day of the Interest Period thereof if such Lender
may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 10.4.

(b) If the obligation of any Lender to make or maintain LIBOR Rate Loans has
been terminated, the Borrower Representative may elect, by giving notice to such
Lender through Agent that all Loans which would otherwise be made by any such
Lender as LIBOR Rate Loans shall be instead Base Rate Loans.

(c) Before giving any notice to Agent pursuant to this Section 10.2, the
affected Lender shall designate a different Lending Office with respect to its
LIBOR Rate Loans if such designation will avoid the need for giving such notice
or making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.

10.3 Increased Costs and Reduction of Return.

(a) If any Lender or L/C Issuer shall determine that, due to either (i) the
introduction of, or any change in, or in the interpretation of, any Requirement
of Law or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
in the case of either clause (i) or (ii) subsequent to the date hereof, there
shall be any increase in the cost to such Lender or L/C Issuer of agreeing to
make or making, funding or maintaining any LIBOR Rate Loans or of issuing or
maintaining any Letter of Credit, then the Borrowers shall be liable for, and
shall from time to time, within thirty (30) days of demand therefor by such
Lender or L/C Issuer (with a copy of such demand to Agent), pay to Agent for the
account of such Lender or L/C Issuer, additional amounts as are sufficient to
compensate

 

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such Lender or L/C Issuer for such increased costs; provided, that the Borrowers
shall not be required to compensate any Lender or L/C Issuer pursuant to this
subsection 10.3(a) for any increased costs incurred more than 180 days prior to
the date that such Lender or L/C Issuer notifies the Borrower Representative, in
writing of the increased costs and of such Lender’s or L/C Issuer’s intention to
claim compensation thereof; provided, further, that if the circumstance giving
rise to such increased costs is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.
Notwithstanding the foregoing, this Section 10.3 shall not apply with respect to
Taxes or Other Taxes, or with respect to the imposition of, or any change in the
rate of, any taxes described in clauses (i), (ii), (iii) or (iv) of
Section 10.1(a).

(b) If any Lender or L/C Issuer shall have determined that:

(i) the introduction of any Capital Adequacy Regulation;

(ii) any change in any Capital Adequacy Regulation;

(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof; or

(iv) compliance by such Lender or L/C Issuer (or its Lending Office) or any
entity controlling the Lender or L/C Issuer, with any Capital Adequacy
Regulation;

in the case of any of clauses (i) – (iv) subsequent to the date hereof, affects
the amount of capital required or expected to be maintained by such Lender or
L/C Issuer or any entity controlling such Lender or L/C Issuer and (taking into
consideration such Lender’s or such entities’ policies with respect to capital
adequacy and such Lender’s or L/C Issuer’s desired return on capital) determines
that the amount of such capital is increased as a consequence of its Revolving
Loan Commitment(s), loans, credits or obligations under this Agreement, then,
within thirty (30) days of demand of such Lender or L/C Issuer (with a copy to
Agent), the Borrowers shall pay to such Lender or L/C Issuer, from time to time
as specified by such Lender or L/C Issuer, additional amounts sufficient to
compensate such Lender or L/C Issuer (or the entity controlling the Lender or
L/C Issuer) for such increase; provided, that the Borrowers shall not be
required to compensate any Lender or L/C Issuer pursuant to this subsection
10.3(b) for any amounts incurred more than 180 days prior to the date that such
Lender or L/C Issuer notifies the Borrower Representative, in writing of the
amounts and of such Lender’s or L/C Issuer’s intention to claim compensation
thereof; provided, further, that if the event giving rise to such increase is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

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(c) Notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith shall be deemed to be a
change in a Requirement of Law under subsection (a) above and/or a change in a
Capital Adequacy Regulation under subsection (b) above, as applicable,
regardless of the date enacted, adopted or issued.

10.4 Funding Losses. The Borrowers agree to reimburse each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:

(a) the failure of the Borrowers to make any payment or mandatory prepayment of
principal of any LIBOR Rate Loan (including payments made after any acceleration
thereof);

(b) the failure of the Borrowers to borrow, continue or convert a Loan after the
Borrower Representative has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;

(c) the failure of the Borrowers to make any prepayment after the Borrowers have
given a notice in accordance with Section 1.7;

(d) the prepayment (including pursuant to Section 1.8) of a LIBOR Rate Loan on a
day which is not the last day of the Interest Period with respect thereto; or

(e) the conversion pursuant to Section 1.6 of any LIBOR Rate Loan to a Base Rate
Loan on a day that is not the last day of the applicable Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans hereunder or from fees
payable to terminate the deposits from which such funds were obtained; provided
that, with respect to the expenses described in clauses (d) and (e) above, such
Lender shall have notified Agent of any such expense within two (2) Business
Days of the date on which such expense was incurred. Solely for purposes of
calculating amounts payable by the Borrowers to the Lenders under this
Section 10.4 and under subsection 10.3(a): each LIBOR Rate Loan made by a Lender
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR used in determining the
interest rate for such LIBOR Rate Loan by a matching deposit or other borrowing
in the interbank Eurodollar market for a comparable amount and for a comparable
period, whether or not such LIBOR Rate Loan is in fact so funded.

10.5 Inability to Determine Rates. If Agent shall have determined in good faith
that for any reason adequate and reasonable means do not exist for ascertaining
the LIBOR for any requested Interest Period with respect to a proposed LIBOR
Rate Loan or that the LIBOR applicable pursuant to subsection 1.3(a) for any
requested Interest Period with respect to a proposed LIBOR Rate Loan does not
adequately and fairly reflect the

 

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cost to the Lenders of funding or maintaining such Loan, Agent will forthwith
give notice of such determination to the Borrower Representative and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until Agent revokes such notice in writing.
Upon receipt of such notice, the Borrower Representative may revoke any Notice
of Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Borrower Representative does not revoke such notice, the Lenders shall make,
convert or continue the Loans, as proposed by the Borrower Representative, in
the amount specified in the applicable notice submitted by the Borrower
Representative, but such Loans shall be made, converted or continued as Base
Rate Loans.

10.6 Reserves on LIBOR Rate Loans. The Borrowers shall pay to each Lender, as
long as such Lender shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional costs on the unpaid principal amount of each LIBOR
Rate Loan equal to actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall be
conclusive absent manifest error), payable on each date on which interest is
payable on such Loan provided the Borrower Representative shall have received at
least fifteen (15) days’ prior written notice (with a copy to Agent) of such
additional interest from the Lender. If a Lender fails to give notice fifteen
(15) days prior to the relevant Interest Payment Date, such additional interest
shall be payable fifteen (15) days from receipt of such notice.

10.7 Certificates of Lenders. Any Lender claiming reimbursement or compensation
pursuant to this Article X shall deliver to the Borrower Representative (with a
copy to Agent) a certificate setting forth in reasonable detail the amount
payable to such Lender hereunder and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.

ARTICLE XI.

DEFINITIONS

11.1 Defined Terms. The following terms have the following meanings:

“ABL Priority Collateral” shall have the meaning specified in the Term Loan B
Intercreditor Agreement.

“Account” means, as at any date of determination, all “accounts” (as such term
is defined in the UCC or in the PPSA, as applicable or, to the extent governed
by the Civil Code of Québec, defined as “claims” for the purposes of the Civil
Code of Québec) of the Credit Parties, including, without limitation, the unpaid
portion of the obligation of a customer of a Credit Party in respect of
Inventory purchased by and shipped to such customer and/or the rendition of
services by a Credit Party, as stated on the respective invoice of a Credit
Party, net of any credits, rebates or offsets owed to such customer.

 

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“Account Debtor” means the customer of a Credit Party who is obligated on or
under an Account.

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of fifty percent (50%) of the
Stock and Stock Equivalents of any Person or otherwise causing any Person to
become a Subsidiary of a Borrower, or (c) a merger or amalgamation or
consolidation or any other combination with another Person.

“Affected Lender” has the meaning specified in Section 9.22.

“Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the Stock (either directly or through ownership of Stock
Equivalents) of a Person shall for the purposes of this Agreement, be deemed to
be an Affiliate of the other Person. Notwithstanding the foregoing, neither
Agent nor any Lender shall be deemed an “Affiliate” of any Credit Party or of
any Subsidiary of any Credit Party solely by reason of the provisions of the
Loan Documents.

“Affiliated Lenders” means, as to any Lender, such Lender and its Affiliates and
Approved Funds.

“Agent” means GE Capital in its capacity as administrative agent for the Lenders
hereunder, and any successor administrative agent.

“Agent Report” has the meaning specified in Section 8.5(c).

“Aggregate Revolving Exposure” means, at any time, the aggregate Revolving
Exposure of all the Lenders at such time.

“Aggregate Revolving Loan Commitment” means the combined Revolving Loan
Commitments of the Lenders, which shall initially be in the amount of
$200,000,000, as such amount may be reduced from time to time pursuant to this
Agreement.

“Anti-Money Laundering Legislation” has the meaning specified in Section 9.21.

“Applicable Margin” means the applicable LIBOR Rate Loan margin or Base Rate
Loan margin in effect from time to time determined as set forth below based upon
Average Availability for the immediately preceding calendar quarter pursuant to
the appropriate column under the table below; provided, however that for the
period commencing on the Restatement Effective Date through the last day of the
first full calendar month following the six (6) month anniversary of the
Restatement Effective

 

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Date, the Applicable Margin (i) if a Base Rate Loan, shall not be not less than
1.75% per annum, and (b) if a LIBOR Rate Loan, shall not be less than 2.75% per
annum:

Revolving Loans and Swing Loans

 

Level

  

Average Availability

   LIBOR Rate
Loan Margin     Base Rate Loan
Margin  

I

   Less than or equal to $66,500,000      3.00 %      2.00 % 

II

   Greater than $66,500,000 but less than or equal to $133,000,000      2.75 % 
    1.75 % 

II

   Greater than $133,000,000      2.50 %      1.50 % 

The Applicable Margin shall be subject to increase or decrease on a calendar
quarter basis. Not more than ten (10) Business Days after the first day of each
calendar quarter, the Agent shall determine the Applicable Margin for such
calendar quarter (which shall be effective as of the first Business Day of such
calendar quarter) based on the Average Availability for the immediately
preceding calendar quarter. In the event that the Agent is unable to determine
the Applicable Margin for any calendar quarter for any reason (including,
without limitation, the failure of the Borrowers to deliver a Borrowing Base
Certificate), then the Applicable Margin shall be deemed to be set at Level I.

Notwithstanding anything herein to the contrary, Swing Loans may not be LIBOR
Rate Loans.

“Approved Armored Car Carrier” means a four party armored car carrier that has
entered into an Armored Car Control Agreement with the Agent and the Term Loan B
Agent for the benefit of the Secured Parties.

“Approved Fund” means, with respect to any Lender, any Person (other than a
natural Person) that (a) (i) is or will be engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the Ordinary Course of Business or (ii) temporarily warehouses loans
for any Lender or any Person described in clause (i) above and (b) is advised or
managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any
Person (other than an individual) or any Affiliate of any Person (other than an
individual) that administers or manages such Lender.

 

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“Armored Car Control Agreement” means an agreement, reasonably satisfactory to
Agent, establishing Agent’s control with respect to the cash, checks or other
items obtained by an armored car carrier from any Credit Party or otherwise
under the armored car carrier’s control, custody or possession pursuant to any
agreement or arrangement with any Credit Party.

“Assignment” means an assignment agreement entered into by a Lender, as
assignor, and any Person, as assignee, pursuant to the terms and provisions of
Section 9.9 (with the consent of any party whose consent is required by
Section 9.9), accepted by Agent, in substantially in the form of Exhibit 11.1(a)
or any other form approved by Agent.

“Attorney Costs” means and includes all reasonable fees and disbursements of any
law firm or other external counsel.

“Availability” means, at any time, the amount by which (a) the Maximum Borrowing
Availability at such time, exceeds (b) the Aggregate Revolving Exposure at such
time. Availability shall at all times be calculated based on trade payables
being paid currently in accordance with payment practices for the Borrowers in
effect as of the Restatement Effective Date, expenses and liabilities being paid
in the ordinary course of business and without acceleration of sales.

“Availability Block” means, at any time, an amount equal to the sum of (a) an
amount equal to the greater of (i) $17,500,000 and (ii) an amount equal to the
lesser of (x) ten percent (10.00%) of the Aggregate Revolving Loan Commitment
then in effect, and (y) ten percent (10.00%) of the Borrowing Base (without
giving effect to the Term Loan Push Down Reserve), based upon the most recent
Borrowing Base Certificate received by Agent, plus (b) during a Term Loan
Trigger Event Period, the Term Loan Reserve Amount.

“Average Availability” means, for any period, the average daily Availability
during such period.

“Bank Product” shall mean any of the following products, services or facilities
extended to any Credit Party (or any Affiliate of a Credit Party) or any of its
Subsidiaries by GE Capital or any of its Affiliates or by any Lender or any of
its Affiliates: (a) any services provided from time to time in connection with
operating, collections, payroll, trust, or other depository or disbursement
accounts, including automatic clearinghouse, controlled disbursement,
depository, electronic funds transfer, information reporting, lockbox, stop
payment, overdraft and/or wire transfer services; (b) commercial credit card and
purchasing cards; (c) leases and letters of credit and (d) other banking
products or services approved by the Agent; provided, however, that, except for
Bank Products that have been provided or arranged by GE Capital or an Affiliate
of GE Capital, for any of the foregoing to be included for purposes of a
distribution under Section 1.10(c)(ii)(sixth) and for the purposes of the
definition of “Obligations”, the applicable bank product provider and the
applicable Credit Party or Subsidiary must have provided written notice to Agent
of (i) the existence of such Bank Product, (ii) the maximum dollar

 

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amount of obligations arising thereunder (“Bank Product Amount”), and (iii) the
methodology to be used by such parties in determining the Bank Product Amount
owing from time to time.

“Bank Product Amount” has the meaning specified in the definition of Bank
Product.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.), as amended.

“Base Rate” means, for any day, a rate per annum equal to the highest of (a) the
rate last quoted by The Wall Street Journal as the “Prime Rate” in the United
States or, if The Wall Street Journal ceases to quote such rate, the highest per
annum interest rate published by the Federal Reserve Board in Federal Reserve
Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime
loan” rate or, if such rate is no longer quoted therein, any similar rate quoted
therein (as determined by Agent) or any similar release by the Federal Reserve
Board (as determined by Agent), (b) the sum of 3.00% per annum and the Federal
Funds Rate, and (c) the sum of (x) LIBOR calculated for each such day based on
an Interest Period of three months determined two (2) Business Days prior to
such day, plus (y) 1.00%. Any change in the Base Rate due to a change in any of
the foregoing shall be effective on the effective date of such change in the
Federal Funds Rate or LIBOR for an Interest Period of three months.

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

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of
ERISA (whether governed by the laws of the United States or otherwise) to which
any Credit Party incurs or otherwise has any obligation or liability, contingent
or otherwise.

“Borrower” and “Borrowers” has the meaning specified in the preamble to this
Agreement.

“Borrower Materials” has the meaning specified in Section 9.10(d).

“Borrower Representative” has the meaning specified in Section 1.12.

“Borrowing” means a borrowing hereunder consisting of Loans made to or for the
benefit of the Borrowers on the same day by the Lenders pursuant to Article I.

“Borrowing Base” means, as of any date of determination by Agent, from time to
time, an amount equal to the sum at such time of:

(a) up to 85% of the book value of Eligible Credit Card Accounts at such time;

(b) up to 85% of the book value of Eligible PL Credit Card Accounts at such
time, multiplied by the NOLV Factor for PL Credit Card Receivables from Private
Label Credit Cards;

 

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(c) up to 85% of the book value of Eligible Inventory valued at the lower of
cost or market on a first-in, first-out basis, multiplied by the NOLV Factor for
Inventory; and

(d) up to 85% of the book value of Eligible In-Transit Inventory valued at the
lower of cost or market on a first-in, first-out basis, multiplied by the NOLV
Factor for In-Transit Inventory;

in each case less Reserves imposed pursuant to the terms of this Agreement,
including without limitation Section 11.10 or as otherwise established by Agent
at such time in its Permitted Discretion. Notwithstanding the foregoing, in no
event shall the amount of the Borrowing Base comprised of Eligible In-Transit
Inventory exceed the lesser of (x) $25,000,000 and (y) ten percent (10.00%) of
the sum of those items identified in clauses (a) through (d) above.

“Borrowing Base Certificate” means a certificate of the Borrower Representative,
on behalf of each Borrower and each Guarantor, in substantially the form of
Exhibit 11.1(b) hereto, duly completed as of a date acceptable to Agent in its
sole discretion and signed by the Borrower Representative.

“Business Day” means any day other than a Saturday, Sunday or other day on which
federal reserve banks are authorized or required by law to close and, if the
applicable Business Day relates to any LIBOR Rate Loan, a day on which dealings
are carried on in the London interbank market.

“Canadian Credit Party” or “Canadian Credit Parties” means each Credit Party
organized under the laws of Canada or any province or territory thereof.

“Canadian Benefit Plan” means any plan, fund, program, or policy, whether oral
or written, formal or informal, funded or unfunded, insured or uninsured,
providing material employee benefits, including medical, hospital care, dental,
sickness, accident, disability, life insurance, retirement or savings benefits,
under which any Credit Party has any liability with respect to any employee or
former employee, but excluding any Canadian Pension Plans.

“Canadian Pension Plan” means a pension plan that is registered under the
Pension Benefits Act (Ontario) or other applicable pension benefits standards
legislation of another Canadian province or territory and the Income Tax Act
(Canada) and that is (a) maintained or sponsored by any Canadian Credit Party or
any Canadian Subsidiary for its employees, (b) maintained pursuant to a
collective bargaining agreement, or other arrangement under which more than one
employer makes contributions and to which any Canadian Credit Party or any
Canadian Subsidiary is making or accruing an obligation to make contributions,
or (c) a plan with respect to which any Canadian Credit Party has incurred or
may incur liability, including contingent liability either to such plan or to
any Person or Governmental Authority, including the FSCO. For purposes of
clarity, “Canadian Pension Plan” shall not include the group registered
retirement savings plan in which the employees of any Canadian Credit Party or
any Canadian Subsidiary participate and which is not subject to any pension
benefits standards legislation or the registered pension plan provisions of the
Income Tax Act (Canada).

 

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“Canadian Security Agreement” means that certain Security Agreement, dated as of
even date herewith, in form and substance reasonably acceptable to Agent, by
Talbots (Canada) Corporation in favor of the Agent, for the benefit of the
Secured Parties, as the same may be amended, restated and/or modified from time
to time, together with each other guaranty and security agreement executed and
delivered by any other Canadian Credit Party in favor of the Agent, for the
benefit of the Secured Parties.

“Capital Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Lender or of any corporation controlling a Lender.

“Capital Lease” means any leasing or similar arrangement which, in accordance
with GAAP, is classified as a capital lease.

“Capital Lease Obligations” means all monetary obligations of any Credit Party
or any Subsidiary of any Credit Party under any Capital Leases.

“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or
directly, unconditionally and fully guaranteed or insured by the United States
federal government or (ii) issued by any agency of the United States federal
government the obligations of which are fully backed by the full faith and
credit of the United States federal government, (b) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial
paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person
organized under the laws of any state of the United States, (d) any
Dollar-denominated time deposit, insured certificate of deposit, overnight bank
deposit or bankers’ acceptance issued or accepted by (i) any Lender or (ii) any
commercial bank that is (A) organized under the laws of the United States, any
state thereof or the District of Columbia, (B) “adequately capitalized” (as
defined in the regulations of its primary federal banking regulators) and
(C) has Tier 1 capital (as defined in such regulations) in excess of
$250,000,000 and (e) shares of any United States money market fund that (i) has
substantially all of its assets invested continuously in the types of
investments referred to in clause (a), (b), (c) or (d) above with maturities as
set forth in the proviso below, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating obtainable
for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (a), (b), (c) or
(d) above shall not exceed 365 days.

“Change in Control” means the occurrence of any of the following: (a) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
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properties or assets of the Company and its Subsidiaries, taken as a whole, to
any “person” (as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934); (b) the adoption by the shareholders of Company of a plan
relating to the liquidation or dissolution of the Company; (c) the Company (by
way of a report or any other filing pursuant to Section 13(d) of the Securities
Exchange Act of 1934, proxy, vote, written notice or otherwise) becomes aware of
the acquisition by any “person” or “group” (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, or
any successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Securities Exchange Act of 1934, or any successor
provision), in a single transaction or in a series of related transactions, by
way of merger, consolidation or other business combination or purchase of
beneficial ownership (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, or any successor provision) of 50% or more of the total
voting power of the voting Stock and Stock Equivalents of the Company; (d) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors; (e) the Company consolidates with, or
merges with or into, any Person, or any Person consolidates with, or merges with
or into, the Company, in any such event pursuant to a transaction in which any
of the outstanding voting Stock and Stock Equivalents of the Company or such
other Person is converted into or exchanged for cash, securities or other
property or (f) except pursuant to a transaction permitted under Section 5.3,
the Company ceases to own, directly or indirectly, one hundred percent (100%) of
the issued and outstanding Stock and Stock Equivalents of each of the other
Borrowers, the other Credit Parties or any Subsidiary of any of them, in each
case, free and clear of all Liens, rights, options, warrants or other similar
agreements or understandings, other than Liens in favor of Agent, for the
benefit of the Secured Parties.

“Closing Date” means April 7, 2010.

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

“Collateral” means all Property and interests in Property and proceeds thereof
now owned or hereafter acquired by any Credit Party, that is at any time subject
to a security interest or Lien in favor of Agent, on behalf of itself, the
Lenders and the other Secured Parties, pursuant to the Guaranty and Security
Agreement or any other Collateral Document, in each case, to secure the
Obligations.

“Collateral Documents” means, collectively, the Guaranty and Security Agreement,
the Canadian Security Agreement, the IP Security Agreements, the Mortgages, each
Control Agreement, Armored Car Control Agreement, and all other guaranties,
security agreements, pledge agreements, patent security agreement, trademark
security agreements, lease assignments, bailee agreements, customs broker
agreements, guarantees, general security agreement, deed of hypothec and other
similar agreements, and all amendments, restatements, modifications or
supplements thereof or thereto, by or between any one or more of any Credit
Party and any Lender, L/C Issuer or Agent for the benefit of Agent, the Lenders
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Lenders, L/C Issuers or Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable documents now
or hereafter filed in accordance with the UCC or comparable law) against any
such Person as debtor in favor of any Lender, L/C Issuer or Agent for the
benefit of Agent, the Lenders and the other Secured Parties, as secured party,
as any of the foregoing may be amended, restated and/or modified from time to
time.

“Collection Account” means that certain account of Agent, account number ending
in xxxx9513 (with account name “General Electric Capital Corporation CFS CIF
Collection Account”) in the name of Agent at Deutsche Bank Trust Company
Americas (ABA# 021-001-033, or such other account as may be specified in writing
by Agent as the “Collection Account.”

“Company” has the meaning specified in the Preamble hereto.

“Contingent Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person: (a) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (b) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (c) under
any Rate Contracts; (d) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement; or
(e) for the obligations of another Person through any agreement to purchase,
repurchase or otherwise acquire such obligation or any Property constituting
security therefor, to provide funds for the payment or discharge of such
obligation or to maintain the solvency, financial condition or any balance sheet
item or level of income of another Person. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if not a fixed and determined amount, the maximum amount
so guaranteed or supported.

“Continuing Directors” means, as of any date of determination, those members of
the Board of Directors of the Company, each of whom: (1) was a member of such
Board of Directors on the Closing Date; or (2) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.

“Contractual Obligations” means, as to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument, license agreement, document or
agreement to which such Person is a party or by which it or any of its Property
is bound.

“Control Account” means each deposit account now or hereafter owned by the
Credit Parties, other than (i) payroll accounts (so long as each such payroll
account is a zero balance account), withholding tax and other fiduciary
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operating accounts with cash or cash equivalents not exceeding $1,000,000 at any
time in the aggregate for all such local store operating accounts and
(iii) deposit accounts not maintained in the United States or Canada with cash
or cash equivalents not exceeding $500,000 at any time in the aggregate for all
such accounts.

“Control Agreement” means a tri-party or four-party (as applicable) deposit
account, securities account, or commodities account control agreement by and
among the applicable Credit Party, Agent, Term Loan B Agent (as the case may be)
and the depository, securities intermediary or commodities intermediary, and
each in form and substance satisfactory to Agent and in any event providing to
Agent “control” of such deposit account, securities or commodities account
(including, without limitation, any lockbox or similar arrangements) within the
meaning of (a) Articles 8 and 9 of the UCC or (b) the PPSA.

“Conversion Date” means any date on which the Borrowers convert a Base Rate Loan
to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan.

“Copyrights” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any applicable law in or relating to copyrights and all
mask work, database and design rights, whether or not registered or published,
all registrations and recordations thereof and all applications in connection
therewith.

“Copyright Security Agreement” means the Amended and Restated Copyright Security
Agreement, dated as of even date herewith, made in favor of Agent, for the
benefit of the Secured Parties, by each applicable Credit Party, as amended from
time to time.

“CRA” means Canada Revenue Agency.

“Credit Card Agreements” shall mean all agreements or notices, each in form and
substance reasonably satisfactory to Agent, now or hereafter entered into by
Borrowers with any credit card issuer or any credit card processor, as the same
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, including, without limitation, any agreements or notices entered into
in connection with any Private Label Credit Cards and descriptions of all such
agreements in effect on the Restatement Effective Date are reflected on Schedule
11.1(a); provided, that any such credit card agreement or notice shall provide,
among other things, that each such credit card processor shall transfer all
proceeds due with respect to credit card charges for sales (net of expenses and
chargebacks of the credit card issuer or processor) by Borrowers received by it
(or other amounts payable by such credit card processor) into a designated
concentration account on a daily basis, or on such other basis as the Agent may
agree in writing in the exercise of its Permitted Discretion.

“Credit Card Receivables” shall mean, collectively, all present and future
rights of Borrowers to payment from (a) any major credit card issuer or major
credit card processor arising from sales of goods or rendition of services to
customers who have purchased such goods or services using a credit or debit card
and (b) any major credit

 

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card issuer or major credit card processor in connection with the sale or
transfer of Accounts arising pursuant to the sale of goods or rendition of
services to customers who have purchased such goods or services using a credit
card or a debit card, including, but not limited to, all amounts at any time due
or to become due from any major credit card issuer or major credit card
processor under the Credit Card Agreements or otherwise.

“Credit Parties” means each Borrower, each Guarantor and each other Person
(i) which executes a guaranty of the Obligations, (ii) which grants a Lien on
all or substantially all of its assets to secure payment of the Obligations and
(iii) all of the Stock of which is pledged to Agent for the benefit of the
Secured Parties.

“Customer List” means all customer lists in whatever form maintained.

“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured or otherwise remedied during such
time) constitute an Event of Default.

“Disposition” means (a) the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
subsections 5.2(a), 5.2(c) and 5.2(g), and (b) the sale or transfer by a
Borrower or any Subsidiary of a Borrower of any Stock or Stock Equivalent issued
by any Subsidiary of a Borrower and held by such transferor Person.

“Dollars”, “dollars” and “$” each mean lawful money of the United States of
America.

“Domestic Subsidiary” means any Subsidiary, including Talbots (Canada)
Corporation other than a Foreign Subsidiary.

“Electronic Transmission” means each document, instruction, authorization, file,
information and any other communication transmitted, posted or otherwise made or
communicated by e-mail or E-Fax, or otherwise to or from an E-System or other
equivalent service acceptable to Agent.

“Eligible Credit Card Accounts” means all of the Credit Card Receivables (net of
fees) of the Borrowers that arise in the ordinary course of business, which have
been earned by performance, that are not excluded as ineligible by virtue of one
or more of the criteria set forth below and are reflected in the most recent
Borrowing Base Certificate delivered by the Borrower Representative to the
Agent. None of the following shall be deemed to be Eligible Credit Card
Accounts:

(a) Credit Card Receivables due from major credit card processors that have been
outstanding for more than five (5) Business Days from the date of sale;

(b) Credit Card Receivables due from major credit card processors with respect
to which a Borrower does not have good, valid and marketable title thereto, free
and clear of any Lien (other than (x) the Liens of the Agent and (y) Liens
permitted by, and subject to the requirements of, subsection 5.1(o) and
subsection 5.1(p));

 

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(c) Credit Card Receivables due from major credit card processors that are not
subject to a first priority perfected security interest in favor of the Agent,
as applicable, for its own benefit and the benefit of the other Lenders;

(d) Credit Card Receivables due from major credit card processors which are
disputed, or with respect to which a claim, counterclaim, offset or chargeback
has been asserted by the related credit card processor (but only to the extent
of such dispute, counterclaim, offset or chargeback);

(e) Credit Card Receivables due from major credit card processors as to which
the credit card processor has the right under certain circumstances to require
the Borrowers to repurchase such Accounts from such credit card processor;

(f) Except as otherwise approved by the Agent, Credit Card Receivables due from
major credit card processors as to which the Agent has not received an
acceptable Credit Card Agreement;

(g) Accounts due from major credit card processors (other than Visa, Mastercard,
American Express, Diners Club and Discover) which the Agent determines, in its
Permitted Discretion, to be unlikely to be collected;

(h) Credit Card Receivables due from major credit card processors which are not
located in the United States of America;

(i) Credit Card Receivables that are not denominated in U.S. dollars; or

(j) Credit Card Receivables arising from Private Label Credit Cards.

Notwithstanding the above, the Agent reserves the right, at any time and from
time to time after the Restatement Effective Date, to adjust the criteria set
forth above, to establish new criteria and to adjust the applicable advance rate
with respect to Eligible Credit Card Accounts, in its Permitted Discretion,
subject to the approval of all Lenders in the case of adjustments, new criteria
or changes in the applicable advance rates which have the effect of making more
credit available. The Agent shall have the right to establish, modify or
eliminate Reserves against Eligible Credit Card Accounts (including, without
limitation, for estimates, chargeback or other accrued liabilities or offsets by
credit card processors and amounts to adjust for claims, offsets, defenses or
counterclaims or other material disputes with an Account Debtor) from time to
time in its Permitted Discretion.

“Eligible In-Transit Inventory” means, without duplication of other Eligible
Inventory, all finished goods Inventory owned by a Borrower, which Inventory is
initially located outside of the United States and is in transit for not more
than thirty (30) days directly from the point of shipment to one of such
Borrower’s points of sale located in the continental United States (“In-Transit
Inventory”), provided that (a) a Borrower has title to such In-Transit Inventory
and except as otherwise agreed by Agent in its Permitted Discretion, as to which
payment in full has been made by a Borrower or as to which such

 

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Borrower’s payment obligations are fully covered by a Letter of Credit which has
been provided by such Borrower to the vendor of such Inventory (or an agent
which shall provide payment in respect of such Inventory), in each case,
pursuant to such arrangements as shall be reasonably satisfactory to Agent,
(b) such In-Transit Inventory is not subject to a negotiable bill of lading or
other negotiable document of title and the shipping documents relating to such
In-Transit Inventory (including, without limitation, so-called “forwarders cargo
receipts” or “non-negotiable seaway bills of lading”) acceptable to Agent have
been delivered to Agent or an agent acting on behalf of Agent or an agent of
such agent and such shipping documents name a Borrower as owner and shipper and
Agent, as secured party, as consignee (or such other arrangements reasonably
satisfactory to the Agent relating to such shipping documents in respect of such
Inventory shall have been made), (c) is insured under the cargo transit policy
identified in Schedule 3.18 or a renewal or replacement policy with respect
thereto that provides substantially the same or better coverage, (d) such
In-Transit Inventory is subject, to the reasonable satisfaction of Agent, to a
first priority perfected security interest in and lien upon such In-transit
Inventory in favor of Agent (except for any possessory lien upon such goods in
the possession of a freight carrier or shipping company securing only the
freight charges for the transportation of such goods to such Credit Party for
which Reserves reasonably satisfactory to Agent have been established with
respect thereto) for its own benefit and the benefit of the other Secured
Parties, (e) each relevant freight carrier, freight forwarder, customs broker
and shipping company in possession of such In-Transit Inventory or, to the
extent requested by Agent, documents relating thereto shall have (x) entered
into bailee arrangements satisfactory to Agent, for the benefit of the Secured
Parties and (y) indicated or otherwise acknowledged Agent’s security interest in
such In-Transit Inventory and in any shipping documents issued or carried by
such freight carrier or shipping company (including, without limitation,
waybills, airway bills, seaway bills, receipts, or any similar document), in
each case, in a manner satisfactory to Agent, and (f) otherwise meets the
criteria for “Eligible Inventory” hereunder (other than the eligibility criteria
set forth in clause (f) or (s) of the definition of “Eligible Inventory”);
provided, that the parties acknowledge and agree that no In-Transit Inventory
will be included in the Borrowing Base unless Borrowers make a written request
for inclusion to Agent and Agent otherwise agrees in its Permitted Discretion,
subject to the terms contained herein. Agent shall have the right to establish,
modify, or eliminate Reserves against Eligible In-Transit Inventory from time to
time in its Permitted Discretion. In addition, Agent reserves the right, at any
time and from time to time after the Restatement Effective Date, to adjust any
of the applicable criteria, to establish new criteria and to adjust advance
rates with respect to Eligible In-Transit Inventory in its Permitted Discretion,
subject to the approval of all Lenders in the case of adjustments, new criteria
or changes in advance rates which have the effect of making more credit
available.

“Eligible Inventory” means all of the finished goods Inventory owned by a
Borrower and properly reflected in the most recent Borrowing Base Certificate
delivered by Borrower Representative to Agent, except any Inventory to which any
of the exclusionary criteria set forth below applies. Eligible Inventory shall
not include the following Inventory of a Borrower:

 

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(a) Inventory that is excess, obsolete, unsaleable, shopworn, seconds (other
than Inventory fit for sale in the Ordinary Course of Business at its outlet
Store locations) or samples (including, without limitation, Inventory used for
floor planning and marketing purposes or located in any call center or so-called
“sample room”);

(b) Inventory that is damaged or unfit for sale;

(c) Inventory is located at any site if the aggregate book value of Inventory at
any such location is less than $25,000;

(d) Inventory that is placed on consignment;

(e) Inventory that (i) is not located on premises owned, leased or rented by a
Borrower and set forth in Schedule 3.21, (ii) is stored at a leased location,
unless (x) a reasonably satisfactory landlord waiver has been delivered to
Agent, or (y) Reserves reasonably satisfactory to Agent have been established
with respect thereto, (iii) is stored with a bailee or warehouseman unless (x) a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
with respect thereto and (y) Reserves reasonably satisfactory to Agent have been
established with respect thereto, (iv) is located at an owned location subject
to a mortgage in favor of a lender other than Agent, unless a reasonably
satisfactory mortgagee waiver has been delivered to Agent, or (v) is located at
a closed Store;

(f) Inventory that is in transit, except for Inventory in transit between
domestic locations of the Borrowers as to which Agent’s Liens have been
perfected at origin and destination;

(g) Inventory subject to any licensing, trademark, trade name or copyright
agreements with any third parties which would require any consent of any third
party for the sale or disposition of that Inventory (which consent has not been
obtained) or the payment of any monies to any third party upon such sale or
other disposition (to the extent of such monies);

(h) Inventory that consists of packing or shipping materials, or manufacturing
supplies;

(i) Inventory that consists of tooling or replacement parts;

(j) Inventory that consists of display items (other than such Inventory which is
undamaged and fit for sale in the Ordinary Course of Business );

(k) Inventory that consists of goods which have been returned to the vendor;

(l) Inventory that consists of goods which have been returned by any buyer
(other than such Inventory which is undamaged and fit for sale in the Ordinary
Course of Business );

 

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(m) Inventory that consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;

(n) Inventory that is not covered by insurance reasonably acceptable to Agent;

(o) Inventory that is not owned by a Borrower or is subject to Liens other than
Permitted Liens described in Sections 5.1(b), 5.1(c), 5.1(d), 5.1(f), 5.1(o) and
5.1(p) (provided that, with respect to Permitted Liens described in Sections
5.1(c), 5.1(d) and 5.1(f), Reserves reasonably satisfactory to Agent have been
established with respect thereto) or rights of any other Person (including the
rights of a purchaser that has made progress payments and the rights of a surety
that has issued a bond to assure a Borrower’s performance with respect to that
Inventory);

(p) Inventory that is not subject to a first priority perfected Lien in favor of
Agent on behalf of itself and the Secured Parties, except for Liens described in
Section 5.1(d) (subject to Reserves);

(q) Inventory that is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except Liens in favor of Agent, on behalf of itself and the
Secured Parties;

(r) Inventory (other than raw materials) that is not of a type held for sale in
the Ordinary Course of Business of such Borrower;

(s) Inventory that is located outside of the United States; or

(t) Inventory that consists of raw materials, parts, work-in-process,
subassemblies or other unfinished goods.

Agent shall have the right to establish, modify, or eliminate Reserves against
Eligible Inventory from time to time in its Permitted Discretion. In addition,
Agent reserves the right, at any time and from time to time after the
Restatement Effective Date, to adjust any of the applicable criteria, to
establish new criteria and to adjust advance rates with respect to Eligible
Inventory in its Permitted Discretion, subject to the approval of all Lenders in
the case of adjustments, new criteria or changes in advance rates which have the
effect of making more credit available.

“Eligible PL Credit Card Accounts” means all of the PL Credit Card Receivables
(net of unapplied cash) of Talbots Finance and or the Company that are purchased
in the ordinary course of business from TCNB (or, in the case of the Company,
TCNB or Talbots Finance) pursuant to the Private Label Credit Card Agreements,
that are not excluded as ineligible by virtue of one or more of the criteria set
forth below and are reflected in the most recent Borrowing Base Certificate
delivered by the Borrower Representative to the Agent. None of the following
shall be deemed to be Eligible PL Credit Card Accounts:

(a) PL Credit Card Receivables that are more than sixty (60) days past the
contractual due date therefor;

 

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(b) PL Credit Card Receivables (i) which have not been originated by TCNB and
sold to Talbots Finance and/or the Company pursuant to the Private Label Credit
Card Agreements, (ii) as to which the sale to Talbots Finance and/or the
Company, as the case may be, has not been fully perfected pursuant to
arrangements satisfactory to the Agent, (iii) for which Talbots Finance and/or
the Company has not made payment in cash to TCNB pursuant the Private Label
Credit Card Agreements, (iv) which do not constitute “Eligible Receivable” under
the Private Label Credit Card Agreements, and (v) with respect to which Talbots
Finance and/or the Company does not have good, valid and marketable title
thereto, free and clear of any Lien (other than (x) the Liens of the Agent and
(y) Liens permitted by, and subject to the requirements of, Section 5.1(o) and
Section 5.1(p));

(c) PL Credit Card Receivables that are not subject to a first priority
perfected security interest in favor of the Agent, as applicable, for its own
benefit and the benefit of the other Lenders;

(d) PL Credit Card Receivables which are subject to recourse, are disputed, or
with respect to which a claim, counterclaim, offset or chargeback has been
asserted (but only to the extent of such dispute, counterclaim, offset or
chargeback);

(e) PL Credit Card Receivables which are evidenced by a promissory note or other
instrument for the payment of money;

(f) PL Credit Card Receivables that are transferred, in whole or in part, by
TCNB to Talbots Finance (i) after the time that the Federal Deposit Insurance
Corporation becomes the conservator or receiver of TCNB in accordance with the
Federal Deposit Insurance Act, (ii) in transactions that are not characterized
as “true sales” under Rhode Island law under the opinion by Edwards Wildman
Palmer LLP delivered to Agent on the Restatement Effective Date, and (iii) that
would constitute “fraudulent transfers” pursuant to 12 U.S.C. § 1821(d)(17);

(g) PL Credit Card Receivables as to Accounts where the obligor thereon has died
or been declared incompetent, or (i) has voluntarily commenced any proceeding or
filed any petition seeking liquidation, reorganization or other relief under any
federal or state bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) has applied for or consented to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official,
(iii) has made a general assignment for the benefit of creditors, (iv) shall
have become unable, admitted in writing its inability or failed generally to pay
his debts as they become due; or (v) an involuntary proceeding shall have been
commenced or an involuntary petition shall be filed against such obligor seeking
any of the foregoing;

 

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(h) PL Credit Card Receivables as to Accounts which have been classified as
counterfeit, canceled or fraudulent or for which any card issued in connection
therewith has been stolen or lost;

(i) PL Credit Card Receivables which have been charged-off or should have been
charged-off in accordance with Requirements of Law or in accordance with the
Borrowers usual and customary practices;

(j) PL Credit Card Receivables with respect to which the obligor is subject to
any consumer credit counseling;

(k) PL Credit Card Receivables which the Agent determines, in its Permitted
Discretion, to be unlikely to be collected;

(l) PL Credit Card Receivables due from account debtors which are not located in
the United States of America; or

(m) PL Credit Card Receivables that are not denominated in U.S. dollars.

Notwithstanding the above, the Agent reserves the right, at any time and from
time to time after the Restatement Effective Date, to adjust the criteria set
forth above, to establish new criteria and to adjust the applicable advance rate
with respect to Eligible PL Credit Card Accounts, in its Permitted Discretion,
subject to the approval of all Lenders in the case of adjustments, new criteria
or changes in the applicable advance rates which have the effect of making more
credit available. The Agent shall have the right to establish, modify or
eliminate Reserves against Eligible PL Credit Card Accounts (including, without
limitation, for estimates, chargeback or other accrued liabilities or offsets by
credit card processors and amounts to adjust for material claims, offsets,
defenses or counterclaims or other material disputes with an Account Debtor, and
including any deterioration in the credit quality of TCNB) from time to time in
its Permitted Discretion.

“Environmental Laws” means all Requirements of Law and Permits imposing
liability or standards of conduct for or relating to the regulation and
protection of human health, safety (including, human, health and safety in the
workplace), the environment and natural resources, and including public
notification requirements and environmental transfer of ownership, notification
or approval statutes.

“Environmental Liabilities” means all Liabilities (including costs of Remedial
Actions, natural resource damages and costs and expenses of investigation and
feasibility studies, including the cost of environmental consultants and the
cost of attorney’s fees) that may be imposed on, incurred by or asserted against
any Credit Party or any Subsidiary of any Credit Party as a result of, or
related to, any claim, suit, action, investigation, proceeding or demand by any
Person, arising under any Environmental Law or in connection with any
environmental, health or safety condition or with any Release and resulting from
the ownership, lease, sublease or other operation or occupation of property by
any Credit Party or any Subsidiary of any Credit Party, whether on, prior or
after the date hereof.

 

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“Equity Plan” means The Talbots, Inc. 1993 Executive Stock Based Incentive Plan,
The Talbots, Inc. 2003 Executive Stock Based Incentive Plan (as amended), The
Talbots, Inc. Restated Directors Plan as of February 3, 2007, and any amended,
successor or equity plan that may be approved from time to time by the Board of
Directors of the Compensation Committee of the Company.

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

“ERISA Affiliate” means, collectively, any Credit Party and any Person under
common control or treated as a single employer with, any Credit Party, within
the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” means any of the following: (a) a reportable event described in
Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been duly
waived under the applicable regulations, Section 4043(c) of ERISA) with respect
to a Title IV Plan; (b) the withdrawal of any ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any ERISA Affiliate from any Multiemployer
Plan; (d) with respect to any Multiemployer Plan, the filing of a notice of
reorganization, insolvency or termination (or treatment of a plan amendment as
termination) under Section 4041A of ERISA; (e) the filing of a notice of intent
to terminate a Title IV Plan (or treatment of a plan amendment as termination)
under Section 4041 of ERISA; (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any
required contribution to any Title IV Plan or Multiemployer Plan when due;
(h) the imposition of a lien under Section 412 or 430(k) of the Code or
Section 303 or 4068 of ERISA on any property (or rights to property, whether
real or personal) of any ERISA Affiliate; (i) the failure of a Benefit Plan or
any trust thereunder intended to qualify for tax exempt status under Section 401
or 501 of the Code or other Requirements of Law to qualify thereunder; (j) a
Title IV plan (other than the Talbots Inc. Pension Plan) is in “at risk” status
within the meaning of Code Section 430(i); (k) a Multiemployer Plan is in
“endangered status” or “critical status” within the meaning of Section 432(b) of
the Code or Sections 304 or 305 of ERISA; and (l) any other event or condition
that might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of any material
liability upon any ERISA Affiliate under Title IV of ERISA other than for PBGC
premiums due but not delinquent.

“Essex Property” means the Owned Real Estate of the Company and known and
numbered as 1 Essex Square, Essex, Connecticut.

“Event of Default” has the meaning specified in Section 7.1.

 

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“Event of Loss” means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property; (b) any pending or
threatened institution of any proceedings for the condemnation or seizure of
such Property or for the exercise of any right of eminent domain; or (c) any
actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such Property, or confiscation of such Property or the
requisition of the use of such Property.

“Excluded Equity Issuance” means Net Issuance Proceeds resulting from the
issuance of (a) Stock or Stock Equivalents by the Company to directors,
management or employees of a Credit Party under any employee stock option or
stock purchase plan or other employee benefits plan in existence from time to
time, (b) Stock or Stock Equivalents by a Wholly-Owned Subsidiary of a Borrower
to a Borrower or another Wholly-Owned Subsidiary of a Borrower constituting an
Investment permitted hereunder, and (c) Stock or Stock Equivalents by a Foreign
Subsidiary of such Foreign Subsidiary to qualify directors where required
pursuant to a Requirement of Law or to satisfy other requirements of applicable
law, in each instance, with respect to the ownership of Stock of Foreign
Subsidiaries.

“Excluded Subsidiaries” means TCNB and the J. Jill Entities.

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

“Exiting Lender” means any “Lender” (under and as defined in the Existing Credit
Agreement) that is not a Lender hereunder.

“E-Fax” means any system used to receive or transmit faxes electronically.

“E-Signature” means the process of attaching to or logically associating with an
Electronic Transmission an electronic symbol, encryption, digital signature or
process (including the name or an abbreviation of the name of the party
transmitting the Electronic Transmission) with the intent to sign, authenticate
or accept such Electronic Transmission.

“E-System” means any electronic system approved by Agent, including Intralinks®
and ClearPar® and any other Internet or extranet-based site, whether such
electronic system is owned, operated or hosted by Agent, any of its Related
Persons or any other Person, providing for access to data protected by passcodes
or other security system.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable)
and any current or future regulations or official interpretations thereof.

“Federal Flood Insurance” means Federally backed Flood Insurance available under
the National Flood Insurance Program to owners of real property improvements
located in Special Flood Hazard Areas in a community participating in the
National Flood Insurance Program.

 

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“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to Agent on such day on such transactions as determined by
Agent in a commercially reasonable manner.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.

“Fee Letter” means the letter agreement, dated as of the Restatement Effective
Date, between the Borrower Representative and Agent, as amended from time to
time.

“FEMA” means the Federal Emergency Management Agency, a component of the U.S.
Department of Homeland Security that administers the National Flood Insurance
Program.

“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as amended.

“Final Availability Date” means the earlier of the Revolving Termination Date
and one (1) Business Day prior to the date specified in clause (a) of the
definition of Revolving Termination Date.

“Financial Statement Compliance Certificate” means a certificate of a
Responsible Officer of the Borrower Representative in substantially the form of
Exhibit 4.2(b) hereto.

“First Tier Foreign Subsidiary” means a Foreign Subsidiary held directly by a
Credit Party or indirectly by a Credit Party through one or more Domestic
Subsidiaries.

“Fiscal Month” means each monthly accounting period of Borrowers calculated in
accordance with the National Retail Federation calendar.

“Fiscal Quarter” means successive 13-week periods (each such 13 week period to
begin on a Sunday and end on a Saturday) of Borrowers of any Fiscal Year;
provided that for any 53-week Fiscal Year, the last Fiscal Quarter of such
Fiscal Year shall consist of the successive 14-week period from and including
the first day after the third Fiscal Quarter of such Fiscal Year through and
including the last day of such Fiscal Year.

“Fiscal Year” means the annual accounting period of Borrowers ending on the
Saturday nearest to January 31st in each calendar year calculated in accordance
with the National Retail Federation calendar.

“Flood Insurance” means, for any Real Estate located in a Special Flood Hazard
Area, Federal Flood Insurance or private insurance that meets the requirements
set forth by FEMA in its Mandatory Purchase of Flood Insurance Guidelines. Flood
Insurance

 

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shall be in an amount equal to the full replacement cost of such Real Estate or
as otherwise reasonably required by Agent, with deductibles reasonably
acceptable to Agent.

“Foreign Subsidiary” means, with respect to any Person, a Subsidiary of such
Person that is a “controlled foreign corporation” under Section 957 of the Code,
but excluding, for all purposes of this Agreement, Talbots (Canada) Corporation.

“Funds Flow Memorandum” has the meaning specified in Section 2.1(l).

“GAAP” means generally accepted accounting principles in the United States set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
accounting profession), which are applicable to the circumstances as of the date
of determination, subject to Section 11.3 hereof.

“Gift Card Reserve” means, at any time of determination, an amount of at least
forty-seven percent (47%) of the aggregate value at such time of all outstanding
gift certificates and gift cards of the Credit Parties or any of their
Subsidiaries entitling the holder thereof to use all or a portion of the value
of any such gift certificate or gift card to pay all or a portion of the
purchase price for any Inventory of the Credit Parties.

“Governmental Authority” means any nation or government, any state, provincial,
territorial or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

“Guarantors” means, collectively, the Subsidiaries of the Borrowers listed on
Schedule 3.19 on the Restatement Effective Date (other than the Excluded
Subsidiaries) and each other Subsidiary of the Borrowers that shall be required
to execute and deliver a guaranty or guaranty supplement pursuant to
Section 4.13(b). As of the Restatement Effective Date, the Guarantors are
Talbots Classics, Inc.; Talbots Import, LLC; Birch Pond Realty Corporation;
TALBOTS (CANADA) INC.; and Talbots (Canada) Corporation.

“Guaranty and Security Agreement” means that certain Amended and Restated
Guaranty and Security Agreement, dated as of even date herewith, in form and
substance reasonably acceptable to Agent, by the Borrowers and the Guarantors in
favor of Agent, for the benefit of the Secured Parties, as the same may be
amended, restated and/or modified from time to time, together with each other
guaranty and security agreement executed and delivered by any other Credit Party
in favor of the Agent, for the benefit of the Secured Parties.

 

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“Hazardous Materials” means any substance, material or waste that is regulated
or otherwise gives rise to liability under any Environmental Law, including but
not limited to any “Hazardous Waste” as defined by the Resource Conservation and
Recovery Act (RCRA) (42 U.S.C. § 6901 et seq. (1976)), any “Hazardous Substance”
as defined under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) (42 U.S.C. §9601 et seq. (1980)), any contaminant,
pollutant, petroleum or any fraction thereof, asbestos, asbestos containing
material, polychlorinated biphenyls, mold, and radioactive substances or any
other substance that is toxic, ignitable, reactive, corrosive, caustic, or
dangerous.

“Impacted Lender” means any Lender that fails promptly to provide Agent, upon
Agent’s request, satisfactory assurance that such Lender will not become a
Non-Funding Lender.

“Indebtedness” of any Person means, without duplication: (a) all indebtedness
for borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (other than trade payables
entered into in the Ordinary Course of Business); (c) the face amount of all
letters of credit issued for the account of such Person and without duplication,
all drafts drawn thereunder and all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments issued
by such Person; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of Property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to Property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such Property); (f) all Capital Lease Obligations; (g) the principal
balance outstanding under any synthetic lease, off-balance sheet loan or similar
off balance sheet financing product; (h) all obligations, whether or not
contingent, to purchase, redeem, retire, defease or otherwise acquire for value
any of its own Stock or Stock Equivalents (or any Stock or Stock Equivalent of a
direct or indirect parent entity thereof) prior to the date that is 180 days
after the scheduled Revolving Termination Date, valued at, in the case of
redeemable preferred Stock, the greater of the voluntary liquidation preference
and the involuntary liquidation preference of such Stock plus accrued and unpaid
dividends; (i) all indebtedness referred to in clauses (a) through (h) above
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 Property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness;
and (j) all Contingent Obligations described in clause (a) of the definition
thereof in respect of indebtedness or obligations of others of the kinds
referred to in clauses (a) through (i) above; provided, that “Indebtedness”
shall not include any assessment, imposition or other governmental charge
relating to Taxes (or any interest or penalties related thereto).

“Indemnified Matters” has the meaning specified in Section 9.6.

“Indemnitees” has the meaning specified in Section 9.6.

 

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“Insolvency Proceeding” means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, arrangement, liquidation, receivership, dissolution, winding-up or
relief of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case in (a) and (b) above, undertaken under U.S. or Canadian,
federal, state, provincial or foreign law, including the Bankruptcy Code or the
Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act
(Canada), and the Winding-up and Restructuring Act (Canada).

“Intellectual Property” means all rights, title and interests in or relating to
intellectual property arising under any applicable law and all IP Ancillary
Rights relating thereto, including all Copyrights, Customer Lists, Patents,
Trademarks, Internet Domain Names, Trade Secrets and IP Licenses.

“Intercreditor Agreements” means, collectively, the Term Loan B Intercreditor
Agreement and the Supplemental L/C Facility Intercreditor Agreement.

“Interest Payment Date” means, (a) with respect to any LIBOR Rate Loan, the last
day of each Interest Period applicable to such Loan and (b) with respect to Base
Rate Loans (including Swing Loans) the second day of each Fiscal Month.

“Interest Period” means, with respect to any LIBOR Rate Loan, the period
commencing on the Business Day such Loan is disbursed or continued or on the
Conversion Date on which a Base Rate Loan is converted to the LIBOR Rate Loan
and ending on the date one, two or three months thereafter, as selected by the
Borrower Representative in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:

(a) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end
on a day which is not a Business Day, that Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;

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

(c) no Interest Period for any Revolving Loan shall extend beyond the Revolving
Termination Date.

“Internet Domain Names” means all internet domain names, whether or not
trademarks, registered in any generic top level domain by any authorized private
registrar or Governmental Authority.

 

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“In-Transit Inventory” has the meaning specified in the definition of “Eligible
In-Transit Inventory”.

“Inventory” means all of the “inventory” (as such term is defined in the UCC or
the PPSA, as applicable) of the Credit Parties, including, but not limited to,
all merchandise, raw materials, parts, supplies, work-in-process and finished
goods intended for sale, together with all the containers, packing, packaging,
shipping and similar materials related thereto, and including such inventory as
is temporarily out of a Credit Party’s custody or possession, including
inventory on the premises of others and items in transit.

“Investments” has the meaning specified in Section 5.4.

“IP Ancillary Rights” means, with respect to any other Intellectual Property, as
applicable, all foreign counterparts to, and all divisionals, reversions,
continuations, continuations-in-part, reissues, reexaminations, renewals and
extensions of, such Intellectual Property and all income, royalties, proceeds
and Liabilities at any time due or payable or asserted under or with respect to
any of the foregoing or otherwise with respect to such Intellectual Property,
including all rights to sue or recover at law or in equity for any past, present
or future infringement, misappropriation, dilution, violation or other
impairment thereof, and, in each case, all rights to obtain any other IP
Ancillary Right.

“IP License” means all Contractual Obligations (and all related IP Ancillary
Rights), whether written or oral, granting any right, title and interest in or
relating to any Intellectual Property, other than shrink-wrap licenses or
licenses for off-the-shelf software.

“IP Security Agreements” means, collectively, the Patent Security Agreement,
Copyright Security Agreement and Trademark Security Agreement, in each case,
made in favor of Agent, for the benefit of the Secured Parties, by each
applicable Credit Party, as amended from time to time.

“IRS” means the Internal Revenue Service of the United States and any successor
thereto.

“Issue” means, with respect to any Letter of Credit, to issue, extend the
expiration date of, renew (including by failure to object to any automatic
renewal on the last day such objection is permitted), increase the face amount
of, or reduce or eliminate any scheduled decrease in the face amount of, such
Letter of Credit, or to cause any Person to do any of the foregoing. The terms
“Issued” and “Issuance” have correlative meanings.

“J. Jill Contingent Obligation Deposit” mean cash, in an aggregate amount not to
exceed $7,000,000, on deposit at deposit account number ending xxxx0180
maintained by the Company with HSBC Bank USA, National Association, provided
that such account shall be subject to a Control Agreement.

“J. Jill Entities” means J. Jill, LLC and J. Jill, G.P.

 

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“J. Jill Sale” means the sale of the J. Jill Entities, pursuant to that certain
Asset Purchase Agreement, dated as of June 7, 2009, by and among the Company,
Talbots Group, J. Jill, LLC, Birch Pond Realty Corporation and Jill Acquisition
LLC.

“Landlord Lien State” means the states of Washington, Virginia, Pennsylvania and
such other state(s), province(s), territory(ies) or jurisdictions in which a
landlord’s claim for rent or other obligations has priority over the Lien of
Agent in any of the Collateral.

“Large Inventory Location” means any distribution center, warehouse,
cross-docking station or storage facility at which Inventory is located.

“L/C Issuer” means any Lender or an Affiliate thereof or a bank or other legally
authorized Person, in each case, reasonably acceptable to Agent, in such
Person’s capacity as an issuer of Letters of Credit hereunder.

“L/C Reimbursement Agreement” means, collectively, the Master Agreement for
Standby Letters of Credit and the Master Agreement for Documentary Letters of
Credit.

“L/C Reimbursement Date” has the meaning specified in Section 1.1(b)(v).

“L/C Reimbursement Obligation” means, for any Letter of Credit, the obligation
of the Borrowers to the L/C Issuer thereof, as and when matured, to pay all
amounts drawn under such Letter of Credit.

“L/C Request” has the meaning specified in Section 1.1(b)(ii).

“L/C Sublimit” has the meaning specified in Section 1.1(b)(i)(A).

“Lender” has the meaning specified in the preamble to this Agreement.

“Lender-Related Distress Event” means, with respect to any Lender or any Person
that directly or indirectly controls such Lender (each a “Distressed Person”),
(a) a voluntary or involuntary case with respect to such Distressed Person under
the Bankruptcy Code or any similar bankruptcy laws of its jurisdiction of
formation, (b) a custodian, conservator, receiver or similar official is
appointed for such Distressed Person or any substantial part of such Distressed
Person’s assets, (c) such Distressed Person is subject to a forced liquidation,
merger, sale or other change of majority control supported in whole or in part
by guaranties or other support (including, without limitation, the
nationalization or assumption of majority ownership or operating control by) the
U.S. government or other Governmental Authority, or (d) such Distressed Person
makes a general assignment for the benefit of creditors or is otherwise
adjudicated as, or determined by any Governmental Authority having regulatory
authority over such Distressed Person or its assets to be, insolvent or
bankrupt. For purposes of this definition, control of a Person shall have the
same meaning as in the second sentence of the definition of “Affiliate”.

 

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“Lending Office” means, with respect to any Lender, the office or offices of
such Lender specified as its “Lending Office” beneath its name on the applicable
signature page hereto, or such other office or offices of such Lender as it may
from time to time notify the Borrower Representative and Agent.

“Letter of Credit” means documentary or standby letters of credit issued for the
account of the Borrowers by L/C Issuers, and bankers’ acceptances issued by a
Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations. For the avoidance of doubt, Letters of Credit shall include any
Outstanding Letters of Credit.

“Letter of Credit Obligations” means all outstanding obligations incurred by
Agent and Lenders at the request of the Borrowers or the Borrower
Representative, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of Letters of Credit by L/C Issuers or the
purchase of a participation as set forth in subsection 1.1(b) with respect to
any Letter of Credit. The amount of such Letter of Credit Obligations shall
equal the maximum amount that may be payable by Agent and Lenders thereupon or
pursuant thereto.

“Liabilities” means all claims, actions, suits, judgments, damages, losses,
liability, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, taxes, commissions, charges, disbursements and expenses, in each case of
any kind or nature (including interest accrued thereon or as a result thereto
and fees, charges and disbursements of financial, legal and other advisors and
consultants), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.

“LIBOR” means, for each Interest Period, the higher of (a) the offered rate per
annum for deposits of Dollars for the applicable Interest Period that appears on
Reuters Screen LIBOR 01 Page as of 11:00 A.M. (London, England time) two
(2) Business Days prior to the first day in such Interest Period or (b) the
offered rate per annum for deposits of Dollars for an Interest Period of three
(3) months that appears on Reuters Screen LIBOR 01 Page as of 11:00 A.M.
(London, England time) two (2) Business Days prior to the first day of the
applicable Interest Period. If no such offered rate exists, such rate will be
the rate of interest per annum, as determined by Agent at which deposits of
Dollars in immediately available funds are offered at 11:00 A.M. (London,
England time) two (2) Business Days prior to the first day in such Interest
Period by major financial institutions reasonably satisfactory to Agent in the
London interbank market for such Interest Period for the applicable principal
amount on such date of determination.

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

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge or deposit arrangement, encumbrance, lien (statutory or otherwise) or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
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relates as debtor, under the UCC, PPSA or any comparable law) and any contingent
or other agreement to provide any of the foregoing, and with respect to any
Credit Parties organized under the laws of Canada (or any province or territory
thereof) any deemed, statutory or constructive trust or prior claim in, on or of
such asset but not including the interest of a lessor under a lease which is not
a Capital Lease.

“Lien Waiver” means an agreement, in form and substance satisfactory to the
Agent, and otherwise which (a) for any Collateral located on leased premises,
the lessor waives or subordinates any Lien it may have on the Collateral, and
agrees to permit the Agent to enter upon the premises and remove the Collateral
or to use the premises to store or dispose of the Collateral; (b) for any
Collateral held by a warehouseman, processor, shipper or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any documents in its possession relating to the Collateral as agent for the
Agent, and agrees to deliver the Collateral to the Agent upon request; and
(c) for any Collateral held by a repairman, mechanic or bailee, such Person
acknowledges the Agent’s Lien, waives or subordinates any Lien it may have on
the Collateral, and agrees to deliver the Collateral to the Agent upon request.

“Loan” means an extension of credit by a Lender to the Borrowers pursuant to
Article I, and may be a Base Rate Loan or a LIBOR Rate Loan.

“Loan Documents” means this Agreement, the Notes, the Fee Letter, the L/C
Reimbursement Agreement, the Collateral Documents, the Subordination Agreement,
the Intercreditor Agreements, the Private Label Credit Card Access and
Monitoring Agreement, PLCC Certificate, the Borrowing Base Certificate and all
documents delivered to Agent and/or any Lender in connection with any of the
foregoing.

“Local Deposit Accounts” has the meaning specified in Section 4.11.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Federal Reserve Board.

“Master Agreement for Documentary Letters of Credit” means that certain master
agreement for documentary letters of credit, dated as of August 31, 2010 by and
among the Credit Parties and the Agent, as amended, restated or otherwise
supplemented from time to time.

“Master Agreement for Standby Letters of Credit” means that certain master
agreement for standby letters of credit, dated as of August 31, 2010 by and
among the Credit Parties and the Agent, as amended, restated or otherwise
supplemented from time to time.

“Material Adverse Effect” means: (a) a material adverse change in, or a material
adverse effect upon, the operations, business, Properties, condition (financial
or otherwise) or prospects of any Borrower or the Credit Parties taken as a
whole; (b) a material impairment of the ability of any Borrower or the Credit
Parties, taken as a whole, to perform in any material respect their respective
obligations under any Loan Document; (c) a material impairment of the rights and
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Lender under any Loan Document or (d) a material adverse effect upon (i) the
legality, validity, binding effect or enforceability of any Loan Document,
(ii) the perfection or priority of any Lien granted to the Lenders or to Agent
for the benefit of the Secured Parties under any of the Collateral Documents or
(iii) the realizable value of the Collateral.

“Material Environmental Liabilities” means (a) Environmental Liabilities
exceeding $1,000,000 in the aggregate in connection with Real Estate
constituting Term Priority Collateral (excluding costs and expenses of
investigation and feasibility studies, including the cost of environmental
consultants and the cost of attorneys’ fees) and (b) $5,000,000 in the aggregate
in connection with all other Real Estate.

“Maximum Borrowing Availability” means, at any time, an amount equal to the
lesser of (a) the Aggregate Revolving Loan Commitment then in effect and (b) the
result of (i) the Borrowing Base at such time minus (ii) the Availability Block
at such time.

“Maximum Lawful Rate” has the meaning specified in Section 1.3(d).

“Measurement Period” means, at any date of determination, the most recently
completed four Fiscal Quarters of the Borrowers.

“Minimum TCNB Deposit” means, with respect to the Company, the minimum deposit
balance required to be maintained by the Company on deposit with TCNB pursuant
to Requirements of Law.

“MNPI” has the meaning specified in Section 9.10(a).

“Mortgage” means any deed of trust, leasehold deed of trust, mortgage, leasehold
mortgage, deed to secure debt, leasehold deed to secure debt or other document
creating a Lien on Real Estate or any interest in Real Estate.

“Multiemployer Plan” means any multiemployer plan, as defined in Section 3(37)
or 4001(a)(3) of ERISA, as to which any ERISA Affiliate incurs or otherwise has
any obligation or liability, contingent or otherwise.

“National Flood Insurance Program” means the program created by the U.S.
Congress pursuant to the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as revised by the National Flood Insurance
Reform Act of 1994, that mandates the purchase of flood insurance to cover real
property improvements located in Special Flood Hazard Areas in participating
communities and provides protection to property owners through a Federal
insurance program.

“Net Issuance Proceeds” means, in respect of any issuance of debt or equity,
cash proceeds (including cash proceeds as and when received in respect of
non-cash proceeds received or receivable in connection with such issuance), net
of underwriting discounts and reasonable out-of-pocket costs and expenses paid
or incurred in connection therewith in favor of any Person not an Affiliate of a
Borrower.

 

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“Net Orderly Liquidation Value” means the cash proceeds of Inventory, In-Transit
Inventory and/or PL Credit Card Receivables from Private Label Credit Cards, as
applicable, which could be obtained in an orderly liquidation (net of all
liquidation expenses, costs of sale, operating expenses and retrieval and
related costs), as determined pursuant to the most recent third-party appraisal
of such Inventory, In-Transit Inventory and/or PL Credit Card Receivables from
Private Label Credit Cards delivered to Agent by an appraiser reasonably
acceptable to Agent.

“Net Proceeds” means proceeds in cash, checks or other cash equivalent financial
instruments (including Cash Equivalents) as and when received by the Person
making a Disposition and insurance proceeds received on account of an Event of
Loss, net of: (a) in the event of a Disposition (i) the direct costs relating to
such Disposition excluding amounts payable to a Borrower or any Affiliate of a
Borrower, (ii) sale, use or other taxes paid or payable as a result of such
Disposition, and (iii) amounts required to be applied to repay principal,
interest and prepayment premiums and penalties on Indebtedness secured by a Lien
on the asset which is the subject of such Disposition and (b) in the event of an
Event of Loss, (i) all money actually applied to repair or reconstruct the
damaged Property or Property affected by the condemnation or taking, (ii) all of
the costs and expenses reasonably incurred in connection with the collection of
such proceeds, award or other payments, and (iii) any amounts retained by or
paid to parties having superior rights to such proceeds, awards or other
payments.

“NOLV Factor” means at any time (a) with respect to Inventory, the quotient of
the Net Orderly Liquidation Value of Inventory divided by the book value of
Inventory, (b) with respect to PL Credit Card Receivables of the Borrowers that
arise in the Ordinary Course of Business from Private Label Credit Cards, the
quotient of the Net Orderly Liquidation Value of such PL Credit Card Receivables
divided by the book value of such PL Credit Card Receivables, in each case,
expressed as a percentage and (c) with respect to In-Transit Inventory, the
quotient of the Net Orderly Liquidation Value of In-Transit Inventory divided by
the book value of In-Transit Inventory, in each case, as reflected on the most
recent appraisal received by Agent; provided that with respect to Inventory and
In-Transit Inventory in order to more accurately reflect the dates when a sale
of such Inventory and/or In-Transit Inventory might take place, the Agent may,
in the Agent’s Permitted Discretion, (i) calculate the NOLV Factor based upon
the Net Orderly Liquidation Value of Inventory and/or In-Transit Inventory for
the periods occurring after the date on which the Borrowing Base is being
calculated or (ii) impose Reserves to reflect the likely future sale date of
such Inventory and/or In-Transit Inventory. The NOLV Factor will be increased or
reduced promptly upon receipt by Agent of each updated appraisal.

“Non-Funding Lender” means any Lender (a) that has failed to fund any payments
required to be made by it under the Loan Documents within two (2) Business Days
after any such payment is due, (b) that has given verbal or written notice to a
Borrower, Agent or any Lender or has otherwise publicly announced that such
Lender believes it will fail to fund all payments required to be made by it or
fund all purchases of participations required to be funded by it under this
Agreement and the other Loan Documents, (c) as to which Agent has a good faith
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of such Lender has defaulted in fulfilling its obligations (as a lender, agent
or letter of credit issuer) under one or more other syndicated credit facilities
or (d) with respect to which one or more Lender-Related Distress Events has
occurred with respect to such Person or any Person that directly or indirectly
controls such Lender and Agent has determined that such Lender may become a
Non-Funding Lender. For purposes of this definition, control of a Person shall
have the same meaning as in the second sentence of the definition of Affiliate.

“Non-U.S. Lender Party” means each of Agent, each Lender (or any transferee or
assignee thereof), each L/C Issuer, each SPV and each participant, in each case
that is not a United States person as defined in Section 7701(a)(30) of the
Code.

“Note” means any Revolving Note or Swingline Note and “Notes” means all such
Notes.

“Notice of Borrowing” means a notice given by the Borrower Representative to
Agent pursuant to Section 1.5, in substantially the form of Exhibit 11.1(c)
hereto.

“Notice of Conversion/Continuation” has the meaning specified in Section 1.6(a).

“Obligations” means (i) all Loans (including Letters of Credit) and other
Indebtedness, advances, debts, liabilities, obligations, covenants and duties
owing by any Credit Party to any Lender, Agent, any L/C Issuer, any Secured Swap
Provider or any other Person required to be indemnified, that arises under any
Loan Document or any Secured Rate Contract, whether or not for the payment of
money, whether arising by reason of an extension of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired and (ii) all obligations and
liabilities in respect of Bank Products owing by any Credit Party or any of its
Subsidiaries to GE Capital or any of its Affiliates or any Lender or any of its
Affiliates, now existing or hereafter arising and however acquired.

“Ordinary Course of Business” means, in respect of any transaction involving any
Person, the ordinary course of such Person’s business, as conducted by any such
Person in accordance with past practice and undertaken by such Person in good
faith and not for purposes of evading any covenant or restriction in any Loan
Document.

“Organization Documents” means, (a) for any corporation or other corporate body
(including an unlimited company, unlimited liability company, unlimited
liability corporation), the certificate or articles of incorporation, the bylaws
(if any), the memorandum of association and articles or certificates of
formation, any certificate of determination or instrument relating to the rights
of preferred shareholders of such corporation or other corporate body and any
shareholder rights agreement or shareholder agreement, (b) for any partnership,
the partnership agreement and, if applicable, certificate of limited
partnership, (c) for any limited liability company, the operating agreement and
articles or certificate of formation, or (d) any other document setting forth
the manner of election or duties of the officers, directors, managers or other
similar persons, or the designation, amount or relative rights, limitations and
preference of the Stock of a Person.

 

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“Other Taxes” has the meaning specified in Section 10.1(b).

“Outstanding Letters of Credit” means those Letters of Credit issued for the
account of the Borrowers and outstanding as of the Restatement Effective Date
set forth on Schedule 11.1(c).

“Overadvance” has the meaning specified in Section 1.1(a).

“Owned Real Estate” means Real Estate owned by a Borrower in fee simple
absolute.

“Participant Register” has the meaning specified in Section 9.9(g).

“Patents” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any applicable law in or relating to letters patent and
applications therefor.

“Patent Security Agreement” means the Amended and Restated Patent Security
Agreement, dated as of even date herewith made in favor of Agent, for the
benefit of the Secured Parties, by each applicable Credit Party, as amended from
time to time.

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.

“PBGC” means the United States Pension Benefit Guaranty Corporation any
successor thereto.

“Permits” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other Contractual Obligations with, any
Governmental Authority, in each case whether or not having the force of law and
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

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

“Permitted Liens” has the meaning specified in Section 5.1.

“Permitted Refinancing” means Indebtedness constituting a refinancing or
extension of (A) Indebtedness permitted under Section 5.5(c), 5.5(d), or 5.5(g)
that (a) has an aggregate outstanding principal amount not greater than the
aggregate principal amount of the Indebtedness being refinanced or extended,
(b) has a weighted average maturity (measured as of the date of such refinancing
or extension) and maturity no shorter than that of the Indebtedness being
refinanced or extended, (c) is not entered into as part of a sale leaseback
transaction, (d) is not secured by a Lien on any assets other

 

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than the collateral securing the Indebtedness being refinanced or extended,
(e) the obligors of which are the same as the obligors of the Indebtedness being
refinanced or extended, (f) in the case of Indebtedness permitted under
Section 5.5(g), the lender party to such Permitted Refinancing transaction
agrees to be bound by Supplemental L/C Facility Intercreditor Agreement, and
(g) is otherwise on terms no less favorable to the Credit Parties, taken as a
whole, than those of the Indebtedness being refinanced or extended; or
(B) Indebtedness under the Term Loan B Documents, to the extent permitted under,
and subject in all respects to, the Term Loan B Intercreditor Agreement;
provided, however, that such Indebtedness shall not constitute a “Permitted
Refinancing” if, at the time such Indebtedness is incurred, created or assumed,
a Default or Event of Default has occurred and is continuing or would result
therefrom.

“Permitted Store Closures” means (y) the closure or liquidation of a Store in
the United States by the Borrowers or any Subsidiary of the Borrowers; provided
that (a) neither the Borrowers nor any of their Subsidiaries shall close or
liquidate, as of any date of determination, in any Fiscal Year Stores
representing more than 5% of all Stores in the United States at the commencement
of such Fiscal Year and (b) if the number of Stores that the Borrowers or their
Subsidiaries intend to close or liquidate on any date of determination in a
Fiscal Year when aggregated with the number of Stores closed or liquidated by
the Borrowers or their Subsidiaries prior to such date within the same Fiscal
Year exceed thirty (30) Stores in the United States, then all such Stores that
are being closed or liquidated on such date plus any Stores closed or liquidated
on any date thereafter in the same Fiscal Year shall be closed or liquidated by
a liquidator or under the supervision of a consultant (such liquidator or
consultant shall be reasonably acceptable to the Agent) and pursuant to
liquidation or consulting arrangements reasonably acceptable to Agent and
(z) the closure or liquidation of a Store outside of the United States.

“Person” means an individual, partnership, corporation, limited liability
company, body corporate (including an unlimited company, unlimited liability
company, unlimited liability corporation), business trust, joint stock company,
trust, unincorporated association, joint venture or Governmental Authority.

“PLCC Certificate” means the Certificate regarding Private Label Credit Card
Agreements, dated as of the Restatement Effective Date, from the Borrowers and
TCNB to the Agent.

“PL Credit Card Receivables” shall mean, collectively, all present and future
Accounts and rights to payment owned by Talbots Finance and/or the Company, and
as to which Talbots Finance and/or the Company has title, arising from sales of
goods or rendition of services in the ordinary course of business, which have
been earned by performance, to customers who have purchased such goods or
services using a Private Label Credit Card.

“Pledged ULC Shares” has the meaning specified in Section 11.8.

 

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“PPSA” means the Personal Property Security Act of Ontario (or any successor
statute) or similar legislation of any other Canadian jurisdiction, including,
without limitation, the Civil Code of Quebec, the laws of which are required by
such legislation to be applied in connection with the issue, perfection,
enforcement, opposability, priority, validity or effect of security interests or
other applicable Liens.

“Private Label Credit Card” shall mean a credit card that bears the Company’s
trademark and/or logo and is issued and administered pursuant to the Private
Label Credit Card Agreements.

“Private Label Credit Card Agreements” shall mean each of the documents set
forth on Schedule 11.1(b) governing the arrangements among the Borrowers and
their Subsidiaries with respect to each Private Label Credit Card, each as in
effect on the Restatement Effective Date.

“Private Label Credit Card Access and Monitoring Agreement” shall mean the
Private Label Credit Card Access and Monitoring Agreement, dated as of the
Restatement Effective Date, between Agent, Term Loan B Agent, the Borrowers and
TCNB.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, and whether tangible or intangible.

“Rate Contract Reserve” means the aggregate amount of reserves established by
the Agent from time to time in its Permitted Discretion in respect of the
Obligations of the Credit Parties under any Secured Rate Contract.

“Rate Contracts” means swap agreements (as such term is defined in Section 101
of the Bankruptcy Code) and any other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates.

“Real Estate” means any Owned Real Estate or Real Estate leased, subleased or
otherwise operated or occupied by any Credit Party or any Subsidiary of any
Credit Party.

“Register” has the meaning specified in Section 1.4(b).

“Related Persons” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor (including those retained in connection with the satisfaction or
attempted satisfaction of any condition set forth in Article II) and other
consultants and agents of or to such Person or any of its Affiliates.

“Releases” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material into
or through the environment.

 

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“Remedial Action” means all actions required to (a) clean up, remove, treat or
in any other way address any Hazardous Material in the indoor or outdoor
environment, (b) prevent or minimize any Release so that a Hazardous Material
does not migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care with respect to any
Hazardous Material.

“Rent and Charges Reserve” means the aggregate of (a) all rent and other amounts
owing by any Credit Party, that is not paid within ten (10) days of the due date
therefor, to any landlord, warehouseman, processor, repairman, mechanic,
shipper, freight forwarder or other Person who possesses any Collateral or could
assert a Lien on any Collateral, and (b) in the case of Inventory located at a
leased premise located in a jurisdiction that permits the imposition of a
landlord’s lien that is senior or superior to the Liens of Agent on such
Inventory or at a Large Inventory Location, a reserve at least equal to two
months’ rent payable to any such Person, unless such Person has executed a Lien
Waiver satisfactory to the Agent.

“Required Lenders” means, as of any date of determination, (a) at any time that
there shall be less than four (4) Lenders, Agent and at least one (1) other
Lender such that collectively, Agent and such Lender hold more than fifty
percent (50%) of the sum of the Aggregate Revolving Loan Commitment then in
effect, or if the Aggregate Revolving Loan Commitments have terminated, Agent
and such Lender hold more than fifty percent (50%) of the sum of the aggregate
unpaid principal amount of Loans (other than Swing Loans) then outstanding,
outstanding Letter of Credit Obligations, amounts of participations in Swing
Loans and the principal amount of unparticipated portions of Swing Loans and
(b) at any time there shall be four (4) or more Lenders, at least two
(2) Lenders then holding at least fifty percent (50%) of the sum of the
Aggregate Revolving Loan Commitment then in effect, or if the Aggregate
Revolving Loan Commitments have terminated, Lenders then holding more than fifty
percent (50%) of the sum of the aggregate unpaid principal amount of Loans
(other than Swing Loans) then outstanding, outstanding Letter of Credit
Obligations, amounts of participations in Swing Loans and the principal amount
of unparticipated portions of Swing Loans.

“Requirements of Law” means, as to any Person, any law (statutory or common),
ordinance, treaty, rule, regulation, order, policy, other legal requirement or
determination of an arbitrator or of a Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to which
such Person or any of its Property is subject.

“Replacement Lender” has the meaning specified in Section 9.22.

“Reserves” means, with respect to the Borrowing Base, (a) the Rent and Charges
Reserve, (b) the Gift Card Reserve, (c) the Rate Contract Reserve, (d) reserves
in respect of Bank Products established by Agent in its Permitted Discretion,
(e) reserves in respect of “freight-in” charges or other similar charges, costs
or expenses established by Agent in its Permitted Discretion, (e) the Term Loan
Push Down Reserve, (f) additional reserves established by Agent, in its
Permitted Discretion, from time to time against Eligible

 

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Credit Card Accounts, Eligible PL Credit Card Accounts, Eligible Inventory or
Eligible In-Transit Inventory (including, without limitation, in respect of
merchandise credits, shrink, customs charges in respect of in-transit Inventory,
customer refunds due, freight or insurance claims, ad valorem taxes, sales taxes
and other taxes and any other claims or liabilities that are or could become
senior to, or pari passu, in priority to the security interests and Liens of the
Agent (in any case, whether or not a Default or Event of Default results from
the failure to pay any of the foregoing)), and (g) such other reserves as Agent
may, in its Permitted Discretion determine to implement (including, without
limitation, reserves in respect of amounts that Agent reasonably determines may
be required or desirable to fund any Insolvency Proceeding of any Credit Party
and/or to provide for any “carve-out” for such Insolvency Proceeding). Without
limiting the generality of the foregoing, Reserves (other than the Term Loan
Push Down Reserve) established to ensure the payment of accrued interest
expenses or Indebtedness shall be deemed to be an exercise of Agent’s Permitted
Discretion. The Term Loan Push Down Reserve shall be established in accordance
with the terms set forth in Section 11.10.

“Responsible Officer” means the chief executive officer or the president of a
Borrower or Borrower Representative, as applicable, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants or delivery of financial information, the
chief financial officer or the treasurer of a Borrower or Borrower
Representative, as applicable, or any other officer having substantially the
same authority and responsibility.

“Restatement Effective Date” means the date on which the conditions specified in
Section 2.1 are satisfied. The Restatement Effective Date shall be February 16,
2012.

“Restricted Payments” has the meaning specified in Section 5.11.

“Revolving Exposure” means, with respect to any Lender at any time, the sum of
(a) the outstanding principal amount of such Lender’s Revolving Loans plus
(b) the aggregate outstanding Letter of Credit Obligations of such Lender plus
(c) an amount equal to its Revolving Loan Commitment Percentage of the aggregate
principal amount of Overadvances and Swing Loans outstanding at such time.

“Revolving Loan” has the meaning specified in Section 1.1(a).

“Revolving Loan Commitment” has the meaning specified in Section 1.1(a).

“Revolving Loan Commitment Percentage” means, as to any Lender, the percentage
equivalent of such Lender’s Revolving Loan Commitment, divided by the Aggregate
Revolving Loan Commitment.

“Revolving Note” means a promissory note of the Borrowers payable to the order
of a Lender in substantially the form of Exhibit 11.1(d) hereto, evidencing
Indebtedness of the Borrowers under the Revolving Loan Commitment of such
Lender.

 

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“Revolving Termination Date” means the earlier to occur of: (a) February 16,
2017; and (b) the date on which the Aggregate Revolving Loan Commitment shall
terminate in accordance with the provisions of this Agreement.

“Sale” has the meaning specified in Section 9.9(b).

“Second Priority Collateral” means, collectively, (a) in the case of the Term
Loan B, the Term Priority Collateral and (b) in the case of the Supplemental L/C
Facility Supplemental L/C Facility Cash Collateral; provided, however, that all
such Second Priority Collateral shall be subject to the Intercreditor Agreements
in all respects.

“Secured Party” means Agent, each Lender, each L/C Issuer, each other Indemnitee
and each other holder of any Obligation of a Credit Party including each Secured
Swap Provider and each provider of Bank Products.

“Secured Rate Contract” means any Rate Contract between any Credit Party (or an
Affiliate of a Credit Party) and the counterparty thereto, which (a) has been
provided or arranged by GE Capital or an Affiliate of GE Capital, or (b) Agent
has acknowledged in writing constitutes a “Secured Rate Contract” hereunder
after the applicable Lender or Affiliate of a Lender and the applicable Credit
Party or Subsidiary have provided written notice to Agent of (i) the existence
of such Rate Contract, (ii) the maximum dollar amount of obligations arising
thereunder, and (iii) the methodology to be used by such parties in determining
the amount referred to in clause (ii) owing from time to time.

“Secured Swap Provider” means (a) a Lender or an Affiliate of a Lender (or a
Person who was a Lender or an Affiliate of a Lender at the time of execution and
delivery of a Rate Contract) who has entered into a Secured Rate Contract with
any Credit Party (or an Affiliate of a Credit Party) , or (b) a Person with whom
Borrower has entered into a Secured Rate Contract provided or arranged by GE
Capital or an Affiliate of GE Capital, and any assignee thereof.

“Settlement Date” has the meaning specified in Section 1.11(b).

“Software” means (a) all computer programs, including source code and object
code versions, (b) all data, databases and compilations of data, whether machine
readable or otherwise, and (c) all documentation, training materials and
configurations related to any of the foregoing.

“Solvent” means, with respect to any Person as of any date of determination,
that, as of such date, (a) the value of the assets of such Person (both at fair
value and present fair saleable value) is greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person,
(b) such Person is able to pay all liabilities of such Person as such
liabilities mature and (c) such Person does not have unreasonably small capital.
In computing the amount of contingent or unliquidated liabilities at any time,
such liabilities shall be computed at the amount that, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

 

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“Special Flood Hazard Area” means an area that FEMA’s current flood maps
indicate has at least a one percent (1%) chance of a flood equal to or exceeding
the base flood elevation (a 100-year flood) in any given year.

“SPV” means any special purpose funding vehicle identified as such in a writing
by any Lender to Agent.

“Stock” means all shares of capital stock (whether denominated as common stock
or preferred stock), equity interests, beneficial, partnership or membership
interests, joint venture interests, participations or other ownership or profit
interests in or equivalents (regardless of how designated) of or in a Person
(other than an individual), whether voting or non-voting.

“Stock Equivalents” means all securities convertible into or exchangeable for
Stock or any other Stock Equivalent and all warrants, options or other rights to
purchase, subscribe for or otherwise acquire any Stock or any other Stock
Equivalent, whether or not presently convertible, exchangeable or exercisable.

“Store” means any retail department store operated by the Company or any of its
Subsidiaries.

“Subordinated Indebtedness” means any Indebtedness of any Credit Party or any
Subsidiary of any Credit Party which is subordinated to the Obligations as to
right and time of payment and as to other rights and remedies thereunder and
having such other terms as are, in each case, reasonably satisfactory to Agent.

“Subordination Agreement” means, collectively, each subordination agreement by
and among Agent, the applicable Credit Parties, the applicable Subsidiaries of
the Credit Parties and the holders of Subordinated Indebtedness, each in form
and substance satisfactory to Agent and each evidencing and setting forth the
priority of the Obligations over such Subordinated Indebtedness, as the same may
be amended, restated and/or modified from time to time subject to the terms
thereof.

“Subsidiary” of a Person means any corporation, association, limited liability
company, partnership, joint venture or other business entity of which more than
fifty percent (50%) of the voting Stock, is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.

“Supplemental L/C Facility” means a letter of credit facility provided by the
Supplemental L/C Facility Issuers and the Supplemental L/C Facility Lenders to
the Borrowers in the maximum principal amount acceptable to the Agent.

“Supplemental L/C Facility Agent” means agent (if any) for the Supplemental L/C
Facility Issuers and the Supplemental L/C Facility Lenders under the
Supplemental L/C Facility Documents.

“Supplemental L/C Facility Agreement” means a letter of credit facility
agreement entered into after the Restatement Effective Date by and among the

 

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Borrowers, the Supplemental L/C Facility Agent, the Supplemental L/C Facility
Issuers, the Supplemental L/C Facility Lenders and the other parties thereto (if
any), in form and substance, and on terms and conditions, reasonably
satisfactory to the Agent.

“Supplemental L/C Facility Cash Collateral” means cash and Cash Equivalent
collateral in an amount not to exceed 105% of the maximum face amount of the
outstanding letters of credit issued under the Supplemental L/C Facility;
provided, however, that all such Supplemental L/C Facility Cash Collateral shall
be subject to the Supplemental L/C Facility Intercreditor Agreement in all
respects

“Supplemental L/C Facility Documents” means the letter of credit facility
documents under or relating to the Supplemental L/C Facility (including the
Supplemental L/C Facility Agreement), as modified, amended, supplemented or
restated, and in effect from time to time in accordance with the terms hereof
and of the Supplemental L/C Facility Intercreditor Agreement, all in form and
substance, and on terms and conditions, reasonably acceptable to the Agent.

“Supplemental L/C Facility Intercreditor Agreement” means the intercreditor
agreement by and between Agent, Term Loan B Agent, the Supplemental L/C Facility
Agent, the Supplemental L/C Facility Issuers and/or the Supplemental L/C
Facility Lenders (as the case may be), the Credit Parties and the other parties
thereto (if any), in form and substance, and on terms and conditions, reasonably
acceptable to the Agent and the Required Lenders, as amended, restated,
supplemented, or otherwise modified from time to time; provided that (i) the
priority of the Liens (if any) securing the Supplemental L/C Facility
Obligations shall be subject in all respects to the Liens securing the
Obligations except that such Liens securing the Supplemental L/C Facility
Obligations may have priority over the Liens securing the Obligations solely
with respect to Supplemental L/C Facility Cash Collateral (it being understood
that the Agent shall retain a second priority Lien on such Supplemental L/C
Facility Cash Collateral).

“Supplemental L/C Facility Issuers” means the letter of credit issuers under the
Supplemental L/C Facility Agreement.

“Supplemental L/C Facility Lenders” means the lenders under and as defined in
the Supplemental L/C Facility Agreement.

“Supplemental L/C Facility Obligations” means the obligations in respect of the
Supplemental L/C Facility.

“Swingline Commitment” means $20,000,000.

“Swingline Lender” means, each in its capacity as Swingline Lender hereunder, GE
Capital or, upon the resignation of GE Capital as Agent hereunder, any Lender
(or Affiliate or Approved Fund of any Lender) that agrees, with the approval of
Agent (or, if there is no such successor Agent, the Required Lenders) and the
Borrowers, to act as the Swingline Lender hereunder.

 

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“Swingline Note” means a promissory note of the Borrowers payable to the order
of the Swingline Lender, in substantially the form of Exhibit 11.1(e) hereto,
evidencing the Indebtedness of the Borrowers to the Swingline Lender resulting
from the Swing Loans made to the Borrowers by the Swingline Lender.

“Swingline Request” has the meaning specified in clause (ii) of subsection
1.1(c).

“Swing Loan” has the meaning specified in clause (i) of subsection 1.1(c).

“Tax Affiliate” means, (a) each Borrower and its Subsidiaries and (b) any
Affiliate of a Borrower with which such Borrower files or is required to file
tax returns on a consolidated, combined, unitary or similar group basis.

“Tax Returns” has the meaning specified in Section 3.10.

“Taxes” has the meaning specified in Section 10.1(a).

“TCNB” means Talbots Classics National Bank.

“Term Loan B” means a term loan from the Term Loan B Lenders to the Borrowers in
the original principal amount of $75,000,000 pursuant to the Term Loan B
Documents.

“Term Loan B Agent” means Wells Fargo Bank, National Association, or such other
Person from time to time party to the Term Loan B Document acting in its
capacity as agent for the Term Loan B Lenders.

“Term Loan B Agreement” means the Term Loan Agreement, dated as of the
Restatement Effective Date with respect to the Term Loan B, and by and among the
Borrowers, the Term Loan B Agent and the Term Loan B Lenders.

“Term Loan B Documents” means the loan documents under or relating to the Term
Loan B (including the Term Loan B Agreement), as modified, amended, supplemented
or restated, and in effect from time to time in accordance with the terms hereof
and of the Term Loan B Intercreditor Agreement, all in form and substance
reasonably acceptable to the Agent.

“Term Loan B Intercreditor Agreement” means the intercreditor agreement dated as
of the Restatement Effective Date, by and between Agent, the Term Loan B Agent,
the Credit Parties and the other parties thereto (if any), in form and
substance, and on terms and conditions, reasonably acceptable to the Agent and
the Required Lenders, as amended, restated, supplemented, or otherwise modified
from time to time.

“Term Loan B Lenders” means the “Lenders” under and as defined in the Term Loan
B Agreement.

 

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“Term Loan B Obligations” means the “Term Obligations” under and as defined in
the Term Loan B Intercreditor Agreement as in effect on the Restatement
Effective Date.

“Term Loan B Outstandings” has the meaning specified for “Term Loan Outstanding”
in the Term Loan B Agreement as in effect on the Restatement Effective Date.

“Term Loan Borrowing Base” has the meaning specified in the Term Loan B
Agreement, as may be amended in accordance with the Term Loan B Intercreditor
Agreement.

“Term Loan Push Down Reserve” means the amount, as of the date of determination,
equal to the difference, if a positive number, between the Term Loan B
Outstandings minus the Term Loan Borrowing Base.

“Term Loan Push Down Reserve Correction Notice” shall have the meaning specified
in Section 11.10(a).

“Term Loan Reserve Amount” means an amount equal to the lesser of (a) five
percent (5%) of the Borrowing Base, based upon the most recent Borrowing Base
Certificate received by Agent, and (b) $10,000,000.

“Term Loan Trigger Event Period” means at any time (a) Availability is less than
$20,000,000, or (b) after an Event of Default pursuant to Sections 7.1(f) or
7.1(g) has occurred and until such time as the Term Loan B Lenders otherwise
agree in a writing which expressly states that Agent may rely thereon.

“Term Priority Collateral” shall have the meaning specified in the Term Loan B
Intercreditor Agreement as in effect on the Restatement Effective Date.

“Title IV Plan” means a pension plan subject to Title IV of ERISA, other than a
Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any
obligation or liability, contingent or otherwise.

“Total Facility Unused Ratio” means, for any period, the percentage derived by
dividing (a) the result of (i) the average daily Aggregate Revolving Loan
Commitment during such period minus (ii) the sum of (x) average daily balance of
all Revolving Loans outstanding during such period plus (y) the average daily
amount of Letter of Credit Obligations during such period, by (b) the average
daily Aggregate Revolving Loan Commitment during such period.

“Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to trade
secrets, confidential information, formulas, designs, devices, technology,
know-how and other proprietary information;, research and development,
inventions, methods, processes, compositions and other trade secrets, whether or
not patentable.

 

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“Trademark” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any applicable law in or relating to trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos and other source or business
identifiers and, in each case, all goodwill associated therewith, all
registrations and recordations thereof and all applications in connection
therewith.

“Trademark Security Agreement” means the Amended and Restated Trademark Security
Agreement, dated as of even date herewith, made in favor of Agent, for the
benefit of the Secured Parties, by each applicable Credit Party, as amended from
time to time.

“Transactions Expenses” means all costs and expenses incurred by the Credit
Parties in connection with (i) the transactions under the Loan Documents, and
(ii) the transactions under the Term Loan B Documents.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

“ULC” has the meaning specified in Section 11.8.

“United States” and “U.S.” each means the United States of America.

“Unused Commitment Fee” has the meaning specified in Section 1.9(b).

“Unused Commitment Fee Rate” means, for any calendar month, the applicable
percentage per annum set forth below determined by reference to the Total
Facility Unused Ratio for the prior calendar month:

 

Level

  

Total Facility Unused Ratio

   Unused
Commitment
Fee Rate  

I

  

Greater than 50%

     0.50 % 

II

  

Less than or equal to 50%

     0.375 % 

Prior to the beginning of the first full calendar month following the six month
anniversary of the Restatement Effective Date, the Unused Commitment Fee Rate
shall be determined as if Level I were applicable. Thereafter, the Unused
Commitment Fee Rate shall be subject to increase or decrease on a calendar month
basis. Not more than ten (10) Business Days after the first day of each calendar
month, the Agent shall determine the Unused Commitment Fee Rate for such
calendar month (which shall be effective as of the first Business Day of such
calendar month) based on the Total Facility Unused Ratio for the prior calendar
month.

 

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“U.S. Lender Party” means each of Agent, each Lender (or any transferee or
assignee thereof), each SPV and each participant, in each case that is a United
States person as defined in Section 7701(a)(30) of the Code.

“Wholly-Owned Subsidiary” means any Subsidiary in which (other than directors’
qualifying shares required by law) one hundred percent (100%) of the Stock and
Stock Equivalents, at the time as of which any determination is being made, is
owned, beneficially and of record, by any Credit Party, or by one or more of the
other Wholly-Owned Subsidiaries, or both.

“Withholding Agent” means any Credit Party (including the Borrower
Representative) and the Agent.

11.2 Other Interpretive Provisions.

(a) Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement or in any other Loan Document shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto. The meanings of defined terms shall be equally applicable to
the singular and plural forms of the defined terms. Terms (including
uncapitalized terms) not otherwise defined herein and that are defined in the
UCC or the PPSA, as applicable, shall have the meanings therein described.

(b) The Agreement. The words “hereof”, “herein”, “hereunder” and words of
similar import when used in this Agreement or any other Loan Document shall
refer to this Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document; and
subsection, section, schedule and exhibit references are to this Agreement or
such other Loan Documents unless otherwise specified.

(c) Certain Common Terms. The term “documents” includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced. The term “including” is not limiting and means “including
without limitation.”

(d) Performance; Time. Whenever any performance obligation hereunder or under
any other Loan Document (other than a payment obligation) shall be stated to be
due or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business Day. In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”; the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and including.”
If any provision of this Agreement or any other Loan Document refers to any
action taken or to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be interpreted to encompass any and all means,
direct or indirect, of taking, or not taking, such action.

 

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(e) Contracts. Unless otherwise expressly provided herein or in any other Loan
Document, references to agreements and other contractual instruments, including
this Agreement and the other Loan Documents, shall be deemed to include all
subsequent amendments, thereto, restatements and substitutions thereof and other
modifications and supplements thereto which are in effect from time to time, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document.

(f) Laws. References to any statute or regulation are to be construed as
including all statutory and regulatory provisions related thereto or
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

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

11.3 Accounting Terms and Principles. All accounting determinations required to
be made pursuant hereto shall, unless expressly otherwise provided herein, be
made in accordance with GAAP. No change in the accounting principles used in the
preparation of any financial statement hereafter adopted by the Company shall be
given effect for purposes of measuring compliance with any provision of Article
V or VI unless the Borrowers, Agent and the Required Lenders agree to modify
such provisions to reflect such changes in GAAP and, unless such provisions are
modified, all financial statements and similar documents provided hereunder
shall be provided together with a reconciliation between the calculations and
amounts set forth therein before and after giving effect to such change in GAAP.
Notwithstanding any other provision contained herein, all terms of an accounting
or financial nature used herein shall be construed, and all computations of
amounts and ratios referred to in Article V and Article VI shall be made,
without giving effect to any election under Statement of Financial Accounting
Standards 159 (or any other Financial Accounting Standard having a similar
result or effect) to value any Indebtedness or other liabilities of any Credit
Party or any Subsidiary of any Credit Party at “fair value.” A breach of a
financial covenant contained in Article VI shall be deemed to have occurred as
of any date of determination by Agent or as of the last day of any specified
measurement period, regardless of when the financial statements reflecting such
breach are delivered to Agent.

11.4 Payments. Agent may set up standards and procedures to determine or
redetermine the equivalent in Dollars of any amount expressed in any currency
other than Dollars and otherwise may, but shall not be obligated to, rely on any
determination made by any Credit Party or any L/C Issuer. Any such determination
or redetermination by Agent shall be conclusive and binding for all purposes,
absent manifest error. No determination or redetermination by any Secured Party
or any Credit Party and no other currency conversion shall change or release any
obligation of any Credit Party or of any Secured Party (other than Agent and its
Related Persons) under any Loan Document, each of which agrees to pay separately
for any shortfall remaining after any conversion and payment of the amount as
converted. Agent may round up or down, and may set up appropriate mechanisms to
round up or down, any amount hereunder to nearest higher or lower amounts and
may determine reasonable de minimis payment thresholds.

 

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11.5 Amendment and Restatement of Existing Credit Agreement. On the Restatement
Effective Date, this Agreement shall amend, restate and supersede the Existing
Credit Agreement in its entirety, except as provided in this Section 11.5. On
the Restatement Effective Date, the rights and obligations of the parties
evidenced by the Existing Credit Agreement shall be evidenced by this Agreement
and the other Loan Documents and the grant of security interest in the
Collateral by the relevant Loan Parties under the Existing Credit Agreement and
the other “Loan Documents” (as defined in the Existing Credit Agreement) shall
continue under but as amended by this Agreement and the other Loan Documents,
and shall not in any event be terminated, extinguished or annulled but shall
hereafter be governed by this Agreement and the other Loan Documents. All
references to the Existing Credit Agreement in any Loan Document or other
document or instrument delivered in connection therewith shall be deemed to
refer to this Agreement and the provisions hereof. Nothing contained herein
shall be construed as a novation of the “Obligations” outstanding under and as
defined in the Existing Credit Agreement, which shall remain in full force and
effect, except as modified hereby.

11.6 Québec Matters. For purposes of any assets, liabilities, Collateral or
entities located in the Province of Québec and for all other purposes pursuant
to which the interpretation or construction of this Agreement may be subject to
the laws of the Province of Québec or a court or tribunal exercising
jurisdiction in the Province of Québec, (a) “personal property” shall include
“movable property”, (b) “real property” or “real estate” shall include
“immovable property”, (c) “tangible property” shall include “corporeal
property”, (d) “intangible property” shall include “incorporeal property”,
(e) “security interest”, “mortgage” and “security” shall include a “hypothec”,
“right of retention”, “prior claim” and a resolutory clause, (f) all references
to filing, perfection, priority, remedies, registering or recording under the
UCC or a PPSA shall include publication under the Civil Code of Québec, (g) all
references to “perfection” of or “perfected” security or security interest shall
include a reference to an “opposable” or “set up” hypothec, security or security
interest as against third parties, (h) any “right of offset”, “right of setoff”
or similar expression shall include a “right of compensation”, (i) “goods” shall
include “corporeal movable property” other than chattel paper, documents of
title, instruments, money and securities, (j) an “agent” shall include a
“mandatary”, (k) “construction security” shall include “legal hypothecs”,
(l) “joint and several” shall include “solidary”, (m) “gross negligence or
willful misconduct” shall be deemed to be “intentional or gross fault”,
(n) “beneficial ownership” shall include “ownership on behalf of another as
mandatary”; (o) “easement” shall include “servitude”, (p) “priority” shall
include “prior claim”, (q) “survey” shall include “certificate of location and
plan”, (r) “state” shall include “province”, (s) “fee simple title” shall
include “absolute ownership”, and (t) “accounts” shall include “claims”.

11.7 Language. The parties herein have expressly requested that this Agreement
and all related documents be drawn up in the English language. A la demande
expresse des parties aux présentes, cette convention et tout document y afférent
ont été rédigés en langue anglaise.

 

155

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11.8 Unlimited Liability Companies. Notwithstanding any provisions to the
contrary contained in this Agreement, any other Loan Document or any other
document or agreement among all or some of the parties hereto, with regard to
any Collateral which consists of shares or membership interests in an unlimited
company, unlimited liability company or unlimited liability corporation
incorporated or otherwise formed under the laws of the Province of Nova Scotia
or any other applicable province of Canada (the “Pledged ULC Shares”), any
Credit Party who has granted a security interest in Pledged ULC Shares or any
Credit Party that is as of the date of this Agreement a sole registered or
beneficial owner of Pledged ULC Shares will remain so until such time as such
Pledged ULC Shares are fully and effectively transferred into the name of Agent,
any of the Lenders or other Secured Parties, or any other Person on the books
and records of such unlimited company, unlimited liability company or unlimited
liability corporation (“ULC”). Nothing in this Agreement, any other Loan
Document or any other document or agreement among all or some of the parties
hereto is intended to or shall constitute Agent, any of the Lenders or other
Secured Parties or any Person other than such Credit Party to be a member or
shareholder of any ULC for the purposes of the Companies Act (Nova Scotia) or
other Applicable Law until such time as written notice is given to such Credit
Party and all further steps are taken so as to register the Agent, a Lender, a
Secured Party or another Person as holder of the Pledged ULC Shares on the books
of the ULC. The granting of the security interest pursuant to this Agreement or
any other Loan Document is not intended to make Agent, or any of the Lenders or
other Secured Parties, a successor to such Credit Party as a member or
shareholder of any ULC, and neither Agent nor any of the Lenders or other
Secured Parties any of their respective successors or assigns hereunder shall be
deemed to become a member or shareholder of any ULC by accepting this Agreement
or any other Loan Document or exercising any right granted herein or therein
unless and until such time, if any, when Agent, any of the Lenders or other
Secured Parties or any successor or assign thereof expressly becomes a
registered member or shareholder of such ULC. Such Credit Party shall be
entitled to receive and retain for its own account any dividends or other
distributions, if any, in respect of the Collateral which is Pledged ULC Shares
(subject to any security interest which such Credit Party has granted in such
dividend or other distribution) and shall have the right to vote such Pledged
ULC Shares and to control the direction, management and policies of the ULC
issuing such Pledged ULC Shares to the same extent as such Credit Party would if
such Pledged ULC Shares were not the subject of a Lien granted to Agent, any of
the Lenders or other Secured Parties, or to any other Person pursuant hereto or
pursuant to any other Loan Document. To the extent any provision hereof or any
other Loan Document would otherwise have the effect of constituting Agent, any
of the Lenders or any Person other than an Credit Party as a member or
shareholder of any ULC prior to such time as written notice is delivered to such
Credit Party and the ULC Shares held by such Credit Party are registered in the
name of the Agent, such provision shall be severed herefrom and be ineffective
with respect to the relevant Pledged ULC Shares without otherwise invalidating
or rendering unenforceable this Agreement or such other Loan Document or
invalidating or rendering unenforceable such provision insofar as it relates to
Collateral other than Pledged ULC Shares. Notwithstanding anything herein or in
any other Loan Document to the contrary neither Agent, the Lenders nor any of
the Secured Parties nor any of their respective successors or assigns shall be
deemed to have assumed

 

156

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or otherwise become liable for any debts or obligations of any ULC. Except upon
the exercise by Agent, any of the Lenders or other Persons of rights to sell or
otherwise dispose of Pledged ULC Shares or other remedies following the
occurrence and during the continuance of an Event of Default, and upon notice to
the Credit Party which has not been rescinded, such Credit Party shall not cause
or permit, or enable any ULC in which it holds Pledged ULC Shares to cause or
permit, Agent or any of the Lenders or other Secured Parties to: (i) be
registered as member or shareholder of such ULC; (ii) have any notation entered
in its favor in the share register of such ULC; (iii) be held out as member or
shareholder of such ULC; (iv) receive, directly or indirectly, any dividends,
property or other distributions from such ULC by reason of Agent, any of the
Lenders or other Secured Parties or any other Person holding a security interest
in the Pledged ULC Shares; or (v) act as a member or shareholder of such ULC, or
exercise any rights of a member or shareholder of such ULC, including the right
to attend a meeting of such ULC or vote the shares of such ULC.

11.9 Intercreditor Agreement. Each Lender hereby (a) consents to the
subordination of the Liens securing the Obligations on the terms set forth in
the Term Loan B Intercreditor Agreement, (b) agrees that this Agreement and the
other Loan Documents, and the rights and remedies of the Agent and the Lenders
hereunder and thereunder, are subject to the terms of the Term Loan B
Intercreditor Agreement (and to the extent any term of this Agreement or any
other Loan Document conflicts or is inconsistent with the terms hereof, the
terms of the Term Loan B Intercreditor Agreement shall control), (c) agrees that
it will be bound by and will take no actions contrary to the provisions of the
Term Loan B Intercreditor Agreement and (d) hereby authorizes and instructs the
Agent to enter into the Term Loan B Intercreditor Agreement and to subject the
Liens securing the Obligations to the provisions thereof.

11.10 Credit Parties’ Acknowledgment of Term Loan Push Down Reserve and Term
Loan Reserve Amount.

(a) For the purposes of determining the Term Loan Push Down Reserve, each of the
Credit Parties agrees that Agent shall be entitled to rely solely on the
calculation thereof made by the Borrowers as reflected in the most recent
Borrowing Base Certificate delivered by the Borrowers to Agent, unless Agent is
notified in writing by the Term Loan B Agent that such calculation is inaccurate
and providing Agent with the correct calculation of the Term Loan Push Down
Reserve (“Term Loan Push Down Reserve Correction Notice”), and, in such event,
Agent shall be entitled to rely solely on the calculation of the Term Loan Push
Down Reserve made by the Term Loan B Agent as reflected in the Term Loan Push
Down Reserve Correction Notice. Upon receipt by Agent of a Borrowing Base
Certificate or a Term Loan Push Down Reserve Correction Notice, as applicable,
the Credit Parties agree and acknowledge that Agent shall implement any
adjustments to the Term Loan Push Down Reserve as set forth in such Borrowing
Base Certificate or such Term Loan Push Down Reserve Correction Notice, as the
case may be. Each of the Credit Parties agrees that neither Agent nor any
Secured Party shall have any liability for relying on the calculation of the
Term Loan Push Down Reserve as set forth in a Borrowing

 

157

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Base Certificate delivered by the Borrowers to Agent or in the Term Loan Push
Down Reserve Correction Notice delivered by the Term Loan B Agent to Agent, as
the case may be. Each of the Credit Parties agrees that in the event of any
discrepancy or dispute between the Term Loan B Agent (or any Term Loan B Lender)
and the Credit Parties as to the amount of the Term Loan Push Down Reserve,
Agent and the other Secured Parties shall be entitled to rely solely on the
calculation of the Term Loan Push Down Reserve as determined by the Term Loan B
Agent and shall have no liability to any Credit Party or any other Person for
doing so.

(b) Each of the Credit Parties agrees and acknowledges that (i) the
implementation of the Term Loan Reserve Amount during the Term Loan Trigger
Event Period is a requirement under the Term Loan B Intercreditor Agreement and
under the Term Loan B Agreement, (ii) Agent’s implementation of the Term Loan
Reserve Amount during the Term Loan Trigger Event Period is not an exercise of
Agent’s Permitted Discretion in imposing such a Reserve and the Term Loan
Reserve Amount cannot be waived or otherwise changed without the prior written
consent of the Term Loan B Agent, and (iii) Agent and the other Secured Parties
shall have no liability to any Credit Party or any other Person for the
implementation of the Term Loan Reserve Amount during the Term Loan Trigger
Event Period.

[Signature Pages Follow]

 

158

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

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

 

BORROWERS: THE TALBOTS, INC. By:  

/s/ Michael Scarpa

Name:   Michael Scarpa Title:  

Chief Operating Officer,

Chief Financial Officer and Treasurer

FEIN:  

 

THE TALBOTS GROUP, LIMITED PARTNERSHIP By:  

/s/ Michael Scarpa

Name:   Michael Scarpa Title:   Vice President and Treasurer FEIN:  

 

TALBOTS CLASSICS FINANCE

COMPANY, INC.

By:  

/s/ Richard T. O’Connell, Jr.

Name:   Richard T. O’Connell, Jr. Title:   Vice President FEIN:  

 

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

BORROWER REPRESENTATIVE: THE TALBOTS, INC. By:  

/s/ Michael Scarpa

Name:   Michael Scarpa Title:  

Chief Operating Officer,

Chief Financial Officer and Treasurer

 

Address for wire transfers:

The Talbots, Inc.

HSBC Bank USA, N.A. ABA No.  

 

Acct. No.  

 

Talbots Funding Acct Company 100

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

OTHER CREDIT PARTIES: TALBOTS CLASSICS, INC. By:  

/s/ Richard T. O’Connell, Jr.

Name:   Richard T. O’Connell, Jr. Title:   Vice President FEIN:  

 

TALBOTS IMPORT, LLC By:  

/s/ Richard T. O’Connell, Jr.

Name:   Richard T. O’Connell, Jr. Title:   Vice President FEIN:  

 

BIRCH POND REALTY CORPORATION By:  

/s/ Richard T. O’Connell, Jr.

Name:   Richard T. O’Connell, Jr. Title:   Vice President FEIN:  

 

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

OTHER CREDIT PARTIES (cont’d): TALBOTS (CANADA), INC. By:  

/s/ Richard T. O’Connell, Jr.

Name:   Richard T. O’Connell, Jr. Title:   Vice President FEIN:  

 

TALBOTS (CANADA) CORPORATION By:  

/s/ Richard T. O’Connell, Jr.

Name:   Richard T. O’Connell, Jr. Title:   Vice President FEIN:  

 

Address for notices for all Credit Parties:

c/o The Talbots, Inc.

One Talbots Drive

Hingham, MA 02043

Attn: Chief Operating Officer and

Chief Financial Officer

Facsimile: (781) 741–7771

With a Copy to: c/o The Talbots, Inc. 211 South Ridge Street Rye Brook, NY 10573
Attn: General Counsel Facsimile: (914) 934-9136

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

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent, Swingline Lender and as a Lender
By:  

/s/ Mark J. Forti

Name:   Mark J. Forti Title:   Duly Authorized Signatory Address for Notices:
General Electric Capital Corporation 401 Merritt 7 Norwalk, CT 06851 Attention:
Talbots Account Manager Facsimile: (203) 229 - 5562 With a copy to: General
Electric Capital Corporation 201 Merritt 7 PO Box 5201 Norwalk, CT. 06851
Attention: Talbot’s Counsel/John Pistocchi Facsimile: (203) 956 - 4002 Address
for payments:

ABA No.  

 

Account Number  

 

Deutsche Bank Trust Company Americas New York, New York

Account Name:  

 

Reference:  

 

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

Lenders: TD BANK, N.A. By:  

/s/ Jeffrey Saperstein

Name:   Jeffrey Saperstein Title:   Vice President Address for notices: One
Commerce Square 2005 Market Street, 2nd Floor Philadelphia, PA 19103 Attn:
Jeffrey Saperstein Facsimile: 215-282-2981 317 Madison Avenue New York, NY 10017
Attention: Nick Malatestinic Facsimile: 212-299-5739 Lending office: 2005 Market
Street, 2nd Floor Philadelphia, PA 19103

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:  

/s/ Cory Loftus

Name:   Cory Loftus Title:   Director

Address for notices:

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108 Attn: Brent Shay Telephone: (617) 624-4463
Facsimile: (866) 328-8544 With a copy to: Choate, Hall & Stewart LLP Two
International Place

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

Boston, Massachusetts 02110 Attention: Kevin J. Simard, Esq. Telephone:
(617) 248-4086 Facsimile: (617) 502-4086 Lending office: Wells Fargo Bank,
National Association One Boston Place, 18th Floor Boston, Massachusetts 02110

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

Schedule 1.1(a)

Revolving Loan Commitments

 

Lender

   Revolving Loan
Commitment  

General Electric Capital Corporation

   $ 155,000,000.00   

TD Bank, N.A.

   $ 15,000,000.00   

Wells Fargo Bank, National Association

   $ 30,000,000.00      

 

 

 

Total:

   $ 200,000,000.00      

 

 

 

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

EXHIBIT 1.1(b)

TO

CREDIT AGREEMENT

FORM OF L/C REQUEST

THE L/C ISSUER under the Credit Agreement referred to below

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent under the Credit Agreement referred to below

                    , 20    

Re: The Talbots, Inc., Talbots Classics Finance Company, Inc. and The Talbots
Group, Limited Partnership (the “Borrowers”)

Reference is made to the Amended and Restated Credit Agreement, dated as of
February 16, 2012 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrowers, The Talbots, Inc., as Borrower Representative, each other “Credit
Party” that is a party thereto, the financial institutions from time to time
party thereto as lenders (collectively, the “Lenders”) and General Electric
Capital Corporation, as administrative agent for the Lenders (in such capacity
and together with its successors and permitted assigns, the “Agent”).
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.

The Borrower Representative, on behalf of the Borrowers, hereby gives you
notice, irrevocably, pursuant to Section 1.1(b)(ii) of the Credit Agreement, of
its request for your Issuance of a Letter of Credit, in the form attached
hereto, for the benefit of                      , in the amount of $        , to
be issued on                     , 20     (the “Issue Date”) with an expiration
date of                      , 20    .

The undersigned hereby certifies that, except as set forth on Schedule A
attached hereto, the following statements are true on the date hereof and will
be true on the Issue Date, both before and after giving effect to the Issuance
of the Letter of Credit requested above and any Loan to be made or any other
Letter of Credit to be Issued on or before the Issue Date:

(i) the representations and warranties set forth in Article III of the Credit
Agreement and elsewhere in the Loan Documents are true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that are already qualified or
modified by materiality in the text thereof) with the same effect as though made
on and as of such Issue Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) as of such earlier date;

 

Exhibit 1.1(b) - 1

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

(ii) the Aggregate Revolving Exposure does not exceed the Maximum Borrowing
Availability; and

(iii) no Default or Event of Default has occurred and is continuing.

[remainder of page left intentionally blank]

 

Exhibit 1.1(b) - 2

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

 

THE TALBOTS, INC.,
as Borrower Representative

By:

   

Name:

 

Title:

 

 

Exhibit 1.1(b) - 3

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

SCHEDULE A

[None.]

 

Exhibit 1.1(b) - 4

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

EXHIBIT 1.1(c)

TO

CREDIT AGREEMENT

FORM OF SWINGLINE REQUEST

GENERAL ELECTRIC CAPITAL CORPORATION

as Agent under the Credit Agreement referred to below

                    , 20    

Re: The Talbots, Inc., Talbots Classics Finance Company, Inc. and The Talbots
Group, Limited Partnership (the “Borrowers”)

Reference is made to the Amended and Restated Credit Agreement, dated as of
February 16, 2012 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrowers, The Talbots, Inc., as Borrower Representative, each other “Credit
Party” that is a party thereto, the financial institutions from time to time
party thereto as lenders (collectively, the “Lenders”) and General Electric
Capital Corporation, as administrative agent for the Lenders (in such capacity
and together with its successors and permitted assigns, the “Agent”).
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.

The Borrower Representative, on behalf of Borrowers, hereby gives you
irrevocable notice pursuant to Section 1.1(c)(ii) of the Credit Agreement that
it requests Swing Loans under the Credit Agreement (the “Proposed Advance”) and,
in connection therewith, sets forth the following information:

A. The date of the Proposed Advance is                     , 20     (the
“Funding Date”).

B. The aggregate principal amount of Proposed Advance is $        .

The undersigned hereby certifies that, except as set forth on Schedule A
attached hereto, the following statements are true on the date hereof both
before and after giving effect to the Proposed Advance and any other Loan to be
made or Letter of Credit to be issued on or before the Funding Date:

(i) the representations and warranties set forth in Article III of the Credit
Agreement and elsewhere in the Loan Documents are true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that are already qualified or
modified by materiality in the text thereof) with the same effect as though made
on and as of such Funding Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) as of such earlier date;

 

Exhibit 1.1(c) - 1

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

(ii) the Aggregate Revolving Exposure does not exceed the Maximum Borrowing
Availability; and

(iii) no Default or Event of Default is continuing.

[remainder of page left intentionally blank]

 

Exhibit 1.1(c) - 2

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

 

Sincerely,

 

THE TALBOTS, INC.,
as Borrower Representative

By:

   

Name:

 

Title:

 

 

Exhibit 1.1(c) - 3

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

SCHEDULE A

[None.]

 

Exhibit 1.1(c) - 4

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

EXHIBIT 1.6

TO

CREDIT AGREEMENT

FORM OF NOTICE OF CONVERSION/CONTINUATION

GENERAL ELECTRIC CAPITAL CORPORATION

as Agent under the Credit Agreement referred to below

                    , 20    

Re: The Talbots, Inc., Talbots Classics Finance Company, Inc. and The Talbots
Group, Limited Partnership (the “Borrowers”)

Reference is made to the Amended and Restated Credit Agreement, dated as of
February 16, 2012 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrowers, The Talbots, Inc., as Borrower Representative, each other “Credit
Party” that is a party thereto, the financial institutions from time to time
party thereto as lenders (collectively, the “Lenders”) and General Electric
Capital Corporation, as administrative agent for the Lenders (in such capacity
and together with its successors and permitted assigns, the “Agent”).
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.

The Borrower Representative, on behalf of Borrowers, hereby gives you
irrevocable notice, pursuant to Section 1.6 of the Credit Agreement of its
request for the following (the “Proposed Conversion/Continuation”):

(i) a continuation, on                     , 20    , as LIBOR Rate Loans having
an Interest Period of      months of Loans in an aggregate outstanding principal
amount of $         having an Interest Period ending on the proposed date for
such continuation;

(ii) a conversion, on                     , 20    , to LIBOR Rate Loans having
an Interest Period of      months of Loans in an aggregate outstanding principal
amount of $         ; and

(iii) a conversion, on                     , 20    , to Base Rate Loans, of
Loans in an aggregate outstanding principal amount of $        .

The undersigned hereby certifies that, except as set forth on Schedule A
attached hereto, the following statements are true on the date hereof both
before and after giving effect to the Proposed Conversion/Continuation:

(i) the representations and warranties set forth in Article III of the Credit
Agreement and elsewhere in the Loan Documents are true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that are already qualified or
modified by materiality in the

 

Exhibit 1.6 - 1

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

text thereof) with the same effect as though made on and as of the date of such
Proposed Conversion/Continuation, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) as of such earlier date;

(ii) the Aggregate Revolving Exposure does not exceed the Maximum Borrowing
Availability; and

(iii) no Default or Event of Default is continuing.

[remainder of page left intentionally blank]

 

Exhibit 1.6 - 2

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

 

Sincerely,

 

THE TALBOTS, INC.,
as Borrower Representative

By:

   

Name:

 

Title:

 

 

Exhibit 1.6 - 3

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

SCHEDULE A

[None.]

 

Exhibit 1.6 - 4

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

EXHIBIT 2.1

TO

CREDIT AGREEMENT

CLOSING CHECKLIST

[On File With Agent]

 

Exhibit 2.1 - 1

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

EXHIBIT 4.2(b)

TO

CREDIT AGREEMENT

FINANCIAL STATEMENT COMPLIANCE CERTIFICATE

Financial Statement Date:                     , 20    

 

To: General Electric Capital Corporation, as Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of February 16, 2012 (as amended, restated, extended, supplemented or
otherwise modified in accordance with the terms thereof, the “Credit
Agreement”), among The Talbots, Inc., a Delaware corporation (the “Company”),
Talbots Classics Finance Company, Inc., a Delaware corporation (“Talbots
Finance”) and The Talbots Group, Limited Partnership, a Massachusetts limited
partnership (“Talbots Group”, and together with the Company and Talbots Finance,
collectively, the “Borrowers”), each other Credit Party that is a party thereto,
the Lenders from time to time party thereto, and General Electric Capital
Corporation, as administrative agent for the Lenders (in such capacity and
together with its successors and permitted assigns, the “Agent”). Capitalized
terms used herein but not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Credit Agreement.

The undersigned Responsible Officer1 hereby certifies as of the date hereof that
he/she is the                      of the Company, and that, as such, he/she is
authorized to execute and deliver this Financial Statement Compliance
Certificate (the “Certificate”) to the Agent, the L/C Issuers and each Lender on
the behalf of the Borrowers, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. The Company has delivered the year-end audited financial statements required
by Section 4.1(a) of the Credit Agreement for the Fiscal Year of the Company
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. The Company has delivered the unaudited financial statements required by
Section 4.1(b) of the Credit Agreement for the Fiscal Quarter of the Company
ended as of the above date. Such financial statements are complete and correct
and fairly present, in all material respects, in accordance with GAAP, the
financial position and the results of operations of Borrowers and their
Subsidiaries, subject to normal year-end audit adjustments and the absence of
footnote disclosures.

 

1  This certificate should be from the chief financial officer or treasurer of
the Borrower Representative, or any other officer having substantially the same
authority and responsibility.

 

Exhibit 4.2(b) - 1

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

[Use following paragraph 1 for fiscal month-end financial statements]

1. The Company has delivered the unaudited financial statements required by
Section 4.1(c) of the Credit Agreement for the Fiscal Month of the Company ended
as of the above date. Such financial statements are complete and correct and
fairly present, in all material respects, in accordance with GAAP, the financial
position and the results of operations of Borrowers and their Subsidiaries,
subject to normal year-end audit adjustments and the absence of footnote
disclosures.

2. The undersigned has reviewed and is familiar with the terms of the Credit
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the Borrowers and their Subsidiaries during the fiscal period
covered by such financial statements.

3. A review of the activities of the Borrowers and their Subsidiaries during
such fiscal period has been made under the supervision of the undersigned with a
view to determining whether during such fiscal period the Credit Parties
performed and observed all their obligations under the Loan Documents, and

[select one:]

[to the best knowledge of the undersigned, during such fiscal period each Credit
Party performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default has occurred and is continuing.]

– or –

[to the best knowledge of the undersigned, the following covenants or conditions
have not been performed or observed and the following is a list of each such
Default and its nature and status:]

4. The representations and warranties of the Credit Parties contained in Article
III of the Credit Agreement and all representations and warranties of any Credit
Party that are contained in any document furnished at any time under or in
connection with the Loan Documents, are true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) on and as of the date hereof, except to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that are already qualified or modified by materiality in the text
thereof) as of such earlier date.

[Signature Page to follow]

 

Exhibit 4.2(b) - 2

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
                     , 20    .

 

THE TALBOTS, INC.,
as Borrower Representative By:     Name:   Title:  

 

Exhibit 4.2(b) - 3

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EXHIBIT 11.1(a)

TO

CREDIT AGREEMENT

FORM OF ASSIGNMENT

This ASSIGNMENT, dated as of the Effective Date, is entered into between
             (“the Assignor”) and              (“the Assignee”).

The parties hereto hereby agree as follows:

 

Borrower:    The Talbots, Inc., a Delaware corporation, The Talbots Group,
Limited Partnership, a Massachusetts limited partnership, and Talbots Classics
Finance Company, Inc., a Delaware corporation (together, the “Borrowers”) Agent:
   General Electric Capital Corporation, as administrative agent for the Lenders
referred to below (in such capacity and together with its successors and
permitted assigns, the “Agent”) Credit Agreement:    Amended and Restated Credit
Agreement, dated as of February 16,2012 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Borrowers, The Talbots, Inc., as Borrower Representative, each other
“Credit Party” that is a party thereto, the financial institutions from time to
time party thereto as lenders (collectively, the “Lenders”) and the Agent (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”; capitalized terms used herein without
definition are used as defined in the Credit Agreement) [Trade Date:   
                    ,             ]1 Effective Date:                        ,
            2

 

1 

Insert for informational purposes only if needed to determine other arrangements
between the assignor and the assignee.

2 

To be filled out by Agent upon entry in the Register.

 

Exhibit 11.1(a) - 1

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Aggregate Revolving

Loan Commitments

      for all Lenders      

   Revolving Loan
Commitment3
      assigned4          Percentage
    Assigned5          $                $                          .            
% 

 

  

 

  

 

 

  $                $                          .             % 

 

  

 

  

 

 

  $                $                          .             % 

 

  

 

  

 

 

 

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

3 

Including Loans and interests, participations and obligations to participate in
Letter of Credit Obligations and Swing Loans.

4 

Amount to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date. The aggregate
amounts are inserted for informational purposes only to help in calculating the
percentages assigned which, themselves, are for informational purposes only.

5 

Set forth, to at least nine (9) decimals, the Assigned Interest as a percentage
of the Aggregate Revolving Loan Commitment. This percentage is set forth for
informational purposes only and is not intended to be binding. The assignments
are based on the amounts assigned not on the percentages listed in this column.

 

Exhibit 11.1(a) - 2

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Section 1. Assignment. Assignor hereby sells and assigns to Assignee, and
Assignee hereby purchases and assumes from Assignor, Assignor’s rights and
obligations in its capacity as Lender under the Credit Agreement (including
Liabilities owing to or by Assignor thereunder) and the other Loan Documents, in
each case to the extent related to the amounts identified above (the “Assigned
Interest”).

Section 2. Representations, Warranties and Covenants of Assignors. Assignor
(a) represents and warrants to Assignee and the Agent that (i) it has full power
and authority, and has taken all actions necessary for it to execute and deliver
this Assignment and to consummate the transactions contemplated hereby, (ii) it
is the legal and beneficial owner of its Assigned Interest and that such
Assigned Interest is free and clear of any Lien and other adverse claims, and
(iii) by executing, signing and delivering this assignment via ClearPar® or any
other electronic settlement system designated by the Agent, the Person signing,
executing and delivering this Assignment on behalf of the Assignor is an
authorized signatory for the Assignor and is authorized to execute, sign and
deliver this Assignment, (b) makes no other representation or warranty and
assumes no responsibility, including with respect to the aggregate amount of the
Loans and Revolving Loan Commitments, the percentage of the Loans and Revolving
Loan Commitments represented by the amounts assigned, any statements,
representations and warranties made in or in connection with any Loan Document
or any other document or information furnished pursuant thereto, the execution,
legality, validity, enforceability or genuineness of any Loan Document or any
document or information provided in connection therewith and the existence,
nature or value of any Collateral, (c) assumes no responsibility (and makes no
representation or warranty) with respect to the financial condition of any
Credit Party or the performance or nonperformance by any Credit Party of any
obligation under any Loan Document or any document provided in connection
therewith, and (d) attaches any Notes held by it evidencing at least in part the
Assigned Interest of such Assignor (or, if applicable, an affidavit of loss or
similar affidavit therefor) and requests that the Agent exchange such Notes for
new Notes in accordance with Section 1.2 of the Credit Agreement.

Section 3. Representations, Warranties and Covenants of Assignees. Assignee
(a) represents and warrants to Assignor and the Agent that (i) it has full power
and authority, and has taken all actions necessary for Assignee, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby,
(ii) it is [not an Affiliate or an Approved Fund of a Lender][an Affiliate or an
Approved Fund of             , a Lender]6, (iii) it is sophisticated with
respect to decisions to acquire assets of the type represented by the Assigned
Interest assigned to it hereunder and either Assignee or the Person exercising
discretion in making the decision for such assignment is experienced in
acquiring assets of such type, and (iv) by executing, signing and delivering
this Assignment via ClearPar® or any other electronic settlement system
designated by the Agent, the Person signing, executing and delivering this
Assignment on behalf of the Assignor is an authorized signatory for the Assignor
and is authorized to execute, sign and deliver this Agreement, (b) appoints and
authorizes the Agent to take such action as administrative agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, (c) shall perform in accordance with their terms all
obligations that, by the terms of the Loan Documents, are required to be
performed by it as a Lender,

 

6  Delete as appropriate.

 

Exhibit 11.1(a) - 3

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(d) confirms it has received such documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and shall continue to make its own credit decisions in taking or not
taking any action under any Loan Document independently and without reliance
upon Agent, any L/C Issuer, any Lender or any other Indemnitee and based on such
documents and information as it shall deem appropriate at the time,
(e) acknowledges and agrees that, as a Lender, it may receive material
non-public information and confidential information concerning the Credit
Parties and their Affiliates and their Stock and agrees to use such information
in accordance with Section 9.10 of the Credit Agreement, (f) specifies as its
applicable lending offices (and addresses for notices) the offices at the
addresses set forth beneath its name on the signature pages hereof, (g) shall
pay to the Agent an assignment fee in the amount of $3,500 to the extent such
fee is required to be paid under Section 9.9 of the Credit Agreement, and (h) to
the extent required pursuant to Section 10.1(f) of the Credit Agreement,
attaches two completed originals of Forms W-8ECI, W-8BEN, W-8IMY or W-9 and, if
applicable, a portfolio interest exemption certificate.

Section 4. Determination of Effective Date; Register. Following the due
execution and delivery of this Assignment by Assignor, Assignee and, to the
extent required by Section 9.9 of the Credit Agreement, the Borrowers, this
Assignment (including its attachments, if any) will be delivered to the Agent
for its acceptance and recording in the Register. The effective date of this
Assignment (the “Effective Date”) shall be the later of (a) the acceptance of
this Assignment by the Agent and (b) the recording of this Assignment in the
Register. The Agent shall insert the Effective Date when known in the space
provided therefor at the beginning of this Assignment.

Section 5. Effect. As of the Effective Date, (a) Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment, have the
rights and obligations of a Lender under the Credit Agreement and (b) Assignor
shall, to the extent provided in this Assignment, relinquish its rights (except
those surviving the termination of the Aggregate Revolving Loan Commitments and
payment in full of the Obligations) and be released from its obligations under
the Loan Documents other than those obligations relating to events and
circumstances occurring prior to the Effective Date.

Section 6. Distribution of Payments. On and after the Effective Date, the Agent
shall make all payments under the Loan Documents in respect of each Assigned
Interest (a) in the case of amounts accrued to but excluding the Effective Date,
to Assignor and (b) otherwise, to Assignee.

Section 7. Miscellaneous. (a) The parties hereto, to the extent permitted by
law, waive all right to trial by jury in any action, suit, or proceeding arising
out of, in connection with or relating to, this Assignment and any other
transaction contemplated hereby. This waiver applies to any action, suit or
proceeding whether sounding in tort, contract or otherwise.

(b) On and after the Effective Date, this Assignment shall be binding upon, and
inure to the benefit of, the Assignor, Assignee, the Agent and their Related
Persons and their successors and assigns.

(c) This Assignment shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of New York.

 

Exhibit 11.1(a) - 4

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(d) This Assignment may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.

(e) Signature pages may be detached from multiple separate counterparts and
attached to a single counterpart. Delivery of an executed signature page of this
Assignment by facsimile transmission or Electronic Transmission shall be as
effective as delivery of a manually executed counterpart of this Assignment.

[remainder of page left intentionally blank]

 

Exhibit 11.1(a) - 5

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

 

[NAME OF ASSIGNOR],
as Assignor By:     Name:   Title:   [NAME OF ASSIGNEE],
as Assignee By:     Name:   Title:   Lending Office for LIBOR Rate Loans:
[Insert Address (including contact name, fax number and e-mail address)] Lending
Office (and address for notices) for any other purpose: [Insert Address
(including contact name, fax number and e-mail address)]

 

Exhibit 11.1(a) - 6

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ACCEPTED and AGREED

this          day of              20    :

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent By:     Name:   Title:  
[LENDER], as L/C Issuer By:     Name:   Title:  

[THE TALBOTS, INC., as

the Borrower Representative]7

By:     Name:   Title:  

 

7  Include only if required pursuant to Section 9.9 of the Credit Agreement.

 

Exhibit 11.1(a) - 7

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EXHIBIT 11.1(b)

TO

CREDIT AGREEMENT

FORM OF BORROWING BASE CERTIFICATE

The Talbots, Inc.

[See Attached]

 

Exhibit 11.1(b) - 1

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LOGO [g303862sch103.jpg]

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LOGO [g303862sch104.jpg]

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LOGO [g303862sch105.jpg]

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LOGO [g303862sch106.jpg]

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Form of Borrowing Base Certificate - Exhibit 11.1(b)

The Talbots, Inc.

Worksheet 4 - Eligible In-Transit Inventory

 

     Cost  

In-Transit Inventory Which Has Been Paid For

   $ —     

In-Transit Inventory On Vendor Terms

  

Total In-Transit Inventory

   $ —     

Ineligibles:

  

(a)    Consigned

   $ —     

(b)    In-Transit Inventory > 30 Day From Shipment Point

   $ —     

(c)    Unpaid And Documentation Threshold Not Met

  

(d)    Not Subject To A First Priority Lien In Favor Of Agent

  

(e)    Other

   $ —     

(f)     Other

   $ —     

(g)    Other

   $ —     

(h)    Other

   $ —     

(I)     Other

   $ —     

(j)     Other

   $ —     

In-Transit Inventory Before 2% Reserve

   $ —     

2% Reserve

   $ —        

 

 

 

Eligible In-Transit Inventory

   $ —     

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Form of Borrowing Base Certificate - Exhibit 11.1(b)

The Talbots, Inc.

Worksheet 5 - Eligible Supplemental Inventory

 

     Cost  

In-Transit Inventory Which Has Been Paid For

  

In-Transit Inventory On Vendor Terms

  

Total In-Transit Inventory

   $ —     

Ineligibles:

  

(a)    Consigned

  

(b)    In-Transit Inventory > 35 Day From Shipment Point

  

(c)    Unpaid And Documentation Threshold Not Met

  

(d)    Not Subject To A First Priority Lien In Favor Of Agent

  

(e)    Other

  

(f)     Other

  

(g)    Other

  

(h)    Other

  

(I)     Other

  

(j)     Other

  

Elgible Supplemental Inventory Before

  

2% Reserve

     

 

 

 

Eligible Supplemental Inventory

  

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EXHIBIT 11.1(c)

TO

CREDIT AGREEMENT

FORM OF NOTICE OF BORROWING

GENERAL ELECTRIC CAPITAL CORPORATION

as Agent under the Credit Agreement referred to below

___________________, 20__

Re: The Talbots, Inc., Talbots Classics Finance Company, Inc. and The Talbots
Group, Limited Partnership (the “Borrowers”)

Reference is made to the Amended and Restated Credit Agreement, dated as of
February 16, 2012 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrowers, The Talbots, Inc., as Borrower Representative, each other “Credit
Party” that is a party thereto, the financial institutions from time to time
party thereto as lenders (collectively, the “Lenders”) and General Electric
Capital Corporation, as administrative agent for the Lenders (in such capacity
and together with its successors and permitted assigns, the “Agent”).
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.

The Borrower Representative, on behalf of Borrowers, hereby gives you
irrevocable notice, pursuant to Section 1.5 of the Credit Agreement of its
request of a Borrowing (the “Proposed Borrowing”) under the Credit Agreement
and, in that connection, sets forth the following information:

A. The date of the Proposed Borrowing is                     , 20     (the
“Funding Date”).

B. The aggregate principal amount of requested Loans is $            , of which
$ consists of Base Rate Loans and $             consists of LIBOR Rate Loans
having an initial Interest Period of              months.

The undersigned hereby certifies that, except as set forth on Schedule A
attached hereto, the following statements are true on the date hereof and will
be true on the Funding Date, both before and after giving effect to the Proposed
Borrowing and any other Loan to be made or Letter of Credit to be Issued on or
before the Funding Date:

(i) the representations and warranties set forth in Article III of the Credit
Agreement and elsewhere in the Loan Documents are true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that are already qualified or
modified by materiality in the text thereof) with the same effect as though made
on and as of such Funding Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) as of such earlier date;

 

Exhibit 11.1(c) - 1

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(ii) the Aggregate Revolving Exposure does not exceed the Maximum Borrowing
Availability; and

(iii) no Default or Event of Default is continuing.

[remainder of page left intentionally blank]

 

Exhibit 11.1(c) - 2

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Sincerely,

THE TALBOTS, INC.,

as Borrower Representative

By:     Name:   Title:  

 

Exhibit 11.1(c) - 3

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EXHIBIT 11.1(d)

TO

CREDIT AGREEMENT

FORM OF [AMENDED AND RESTATED] REVOLVING NOTE

 

Lender: [NAME OF LENDER]    New York, New York Principal Amount: $            
   _____________, 20__

FOR VALUE RECEIVED, the undersigned, The Talbots, Inc., a Delaware corporation
(the “Company”), Talbots Classics Finance Company, Inc., a Delaware corporation
(“Talbots Finance”) and The Talbots Group, Limited Partnership, a Massachusetts
limited partnership (“Talbots Group”, and together with the Company and Talbots
Finance, collectively, the “Borrowers”), hereby jointly and severally promise to
pay to the lender set forth above (the “Lender”) the principal amount set forth
above, or, if less, the aggregate unpaid principal amount of all Loans (as
defined in the Credit Agreement referred to below) of the Lender to the
Borrowers, payable at such times and in such amounts as are specified in the
Credit Agreement.

The Borrowers jointly and severally promise to pay interest on the unpaid
principal amount of the Loans from the date made until such principal amount is
paid in full, payable at such times and at such interest rates as are specified
in the Credit Agreement. Demand, diligence, presentment, protest and notice of
non-payment and protest are hereby waived by the Borrower.

Both principal and interest are payable in Dollars to General Electric Capital
Corporation, as Agent, at the address set forth in the Credit Agreement, in
immediately available funds.

This Note is one of the Notes referred to in, and is entitled to the benefits
of, the Amended and Restated Credit Agreement, dated as of February 16, 2012 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among the Borrowers, The Talbots, Inc., as
Borrower Representative, for itself and the other Borrowers, each other “Credit
Party” that is a party thereto, the Lender, the other financial institutions
from time to time party thereto as lenders and General Electric Capital
Corporation, as administrative agent for the Lender and such other financial
institutions (in such capacity and together with its successors and permitted
assigns, the “Agent”). Capitalized terms used herein without definition are used
as defined in the Credit Agreement.

[This Note amends and restates that certain Revolving Note dated April 7, 2010
in the original principal amount of $[        ] executed and delivered by the
Borrowers to the Lender (the “Existing Note”). This Note is executed and
delivered in substitution for, but not in satisfaction of, the Existing Note.]

The Credit Agreement, among other things, (a) provides for the making of Loans
by the Lender to the Borrowers in an aggregate amount not to exceed at any time
outstanding the Principal Amount set forth above, the indebtedness of the
Borrowers resulting from such Loans

 

Exhibit 11.1(d) - 1

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being evidenced by this Note and (b) contains provisions for acceleration of the
maturity of the unpaid principal amount of this Note upon the happening of
certain stated events and also for prepayments on account of the principal
hereof prior to the maturity hereof upon the terms and conditions specified
therein.

This Note is a Loan Document, is entitled to the benefits of the Loan Documents
and is subject to certain provisions of the Credit Agreement, including without
limitation, Sections 9.18(b) (Submission to Jurisdiction), 9.19 (Waiver of Jury
Trial), 9.23 (Joint and Several) and 11.2 (Other Interpretive Provisions)
thereof.

This Note is a registered obligation, transferable only upon notation in the
Register, and no assignment hereof shall be effective until recorded therein.

This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.

[remainder of page left intentionally blank]

 

Exhibit 11.1(d) - 2

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IN WITNESS WHEREOF, each Borrower has caused this Note to be executed and
delivered by its duly authorized officer as of the day and year and at the place
set forth above.

 

THE TALBOTS, INC. By:     Name:   Title:  

 

TALBOTS CLASSICS FINANCE COMPANY, INC. By:     Name:   Title:  

 

THE TALBOTS GROUP, LIMITED PARTNERSHIP By:     Name:   Title:  

 

Exhibit 11.1(d) - 3

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EXHIBIT 11.1(e)

TO

CREDIT AGREEMENT

FORM OF [AMENDED AND RESTATED] SWINGLINE NOTE

 

Swingline Lender: General Electric Capital Corporation    New York, New York
Principal Amount: $20,000,000    ____________, 20__

FOR VALUE RECEIVED, the undersigned, The Talbots, Inc., a Delaware corporation
(the “Company”), Talbots Classics Finance Company, Inc., a Delaware corporation
(“Talbots Finance”) and The Talbots Group, Limited Partnership, a Massachusetts
limited partnership (“Talbots Group”, and together with the Company and Talbots
Finance, collectively, the “Borrowers”), hereby jointly and severally promise to
pay to the swingline lender set forth above (the “Swingline Lender”) the
principal amount set forth above, or, if less, the aggregate unpaid principal
amount of all Swing Loans (as defined in the Credit Agreement referred to below)
of the Swingline Lender to the Borrowers, payable at such times and in such
amounts as are specified in the Credit Agreement.

The Borrowers jointly and severally promise to pay interest on the unpaid
principal amount of the Swing Loans from the date made until such principal
amount is paid in full, payable at such times and at such interest rates as are
specified in the Credit Agreement. Demand, diligence, presentment, protest and
notice of non-payment and protest are hereby waived by the Borrower.

Both principal and interest are payable in Dollars to General Electric Capital
Corporation, as Agent, at the address set forth in the Credit Agreement, in
immediately available funds.

This Note is one of the Notes referred to in, and is entitled to the benefits
of, the Amended and Restated Credit Agreement, dated as of February 16, 2012 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among the Borrowers, The Talbots, Inc., as
Borrower Representative, for itself and the other Borrowers, each other “Credit
Party” that is a party thereto, the Swingline Lender, the other financial
institutions from time to time party thereto as lenders and General Electric
Capital Corporation, as administrative agent for the Swingline Lender and such
other financial institutions (in such capacity and together with its successors
and permitted assigns, the “Agent”). Capitalized terms used herein without
definition are used as defined in the Credit Agreement.

[This Note amends and restates that certain Swingline Note dated April 7, 2010
in the original principal amount of $20,000,000 executed and delivered by the
Borrowers to the Swingline Lender (the “Existing Note”). This Note is executed
and delivered in substitution for, but not in satisfaction of, the Existing
Note.]

 

Exhibit 11.1(e) - 1

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The Credit Agreement, among other things, (a) provides for the making of Swing
Loans by the Swingline Lender to the Borrowers in an aggregate amount not to
exceed at any time outstanding the principal amount set forth above, the
indebtedness of the Borrowers resulting from such Swing Loans being evidenced by
this Note and (b) contains provisions for acceleration of the maturity of the
unpaid principal amount of this Note upon the happening of certain stated events
and also for prepayments on account of the principal hereof prior to the
maturity hereof upon the terms and conditions specified therein.

This Note is a Loan Document, is entitled to the benefits of the Loan Documents
and is subject to certain provisions of the Credit Agreement, including without
limitation, Sections 9.18(b) (Submission to Jurisdiction), 9.19 (Waiver of Jury
Trial), 9.23 (Joint and Several) and 11.2 (Other Interpretive Provisions)
thereof.

This Note is a registered obligation, transferable only upon notation in the
Register, and no assignment hereof shall be effective until recorded therein.

This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.

[remainder of page left intentionally blank]

 

Exhibit 11.1(e) - 2

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IN WITNESS WHEREOF, each Borrower has caused this Note to be executed and
delivered by its duly authorized officer as of the day and year and at the place
set forth above.

 

THE TALBOTS, INC. By:     Name:   Title:  

 

TALBOTS CLASSICS FINANCE COMPANY, INC. By:     Name:   Title:  

 

THE TALBOTS GROUP, LIMITED PARTNERSHIP By:     Name:   Title:  

 

Exhibit 11.1(e) - 3